OFFICE OF THE AUDITOR GENERAL - Collaborative Africa

THE REPUBLIC OF UGANDA

OFFICE OF THE AUDITOR GENERAL

ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR

ENDED 30TH JUNE 2014

VOLUME 2

CENTRAL GOVERNMENT

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iii

Table Of Contents

List Of Acronyms And Abreviations ................................................................................................ viii

1.0 Introduction .......................................................................................................................... 1

2.0 Report And Opinion Of The Auditor General On The Government Of Uganda

Consolidated Financial Statements For The Year Ended 30th June, 2014 ....................... 38

Accountability Sector................................................................................................................... 55

3.0 Treasury Operations .......................................................................................................... 55

4.0 Ministry Of Finance, Planning And Economic Development ............................................. 62

5.0 Department Of Ethics And Integrity ................................................................................... 87

Works And Transport Sector ...................................................................................................... 90

6.0 Ministry Of Works And Transport ....................................................................................... 90

Justice Law And Order Sector .................................................................................................. 120

7.0 Ministry Of Justice And Constitutional Affairs .................................................................. 120

8.0 Jlos, Law And Order Sector Secretariat .......................................................................... 140

9.0 Ministry Of Internal Affairs ................................................................................................ 177

10.0 Uganda Police Force ....................................................................................................... 188

11.0 Uganda Prisons Services ................................................................................................. 214

12.0 Judiciary Department ....................................................................................................... 223

13.0 Department Of Public Prosecutions ................................................................................. 240

14.0 National Citizenship And Immigration Control ................................................................. 242

Public Sector Management ....................................................................................................... 268

15.0 Ministry Of Local Government ......................................................................................... 268

16.0 Office Of The Prime Minister............................................................................................ 332

17.0 Ministry Of Public Service ................................................................................................ 349

Security Sector ........................................................................................................................... 355

18.0 Ministry Of Defence.......................................................................................................... 355

19.0 Office Of The President ................................................................................................... 366

20.0 State House ..................................................................................................................... 369

iv

Agriculture Sector ...................................................................................................................... 371

21.0 Ministry Of Agriculture, Animal Industry And Fisheries ................................................... 371

22.0 Nationalagricultural Advisory Services (Naads) .............................................................. 406

23.0 National Agricultural Research Organisation (Naro) ....................................................... 422

Energy Sector ............................................................................................................................. 441

24.0 Ministry Of Energy And Mineral Development ................................................................. 441

Health Sector............................................................................................................................... 472

25.0 Ministry Of Health ............................................................................................................. 472

26.0 Uganda Blood Transfusion Services ............................................................................... 509

27.0 Butabika Mental Referral Hospital ................................................................................... 516

28.0 Uganda Cancer Institute .................................................................................................. 518

29.0 Uganda Heart Institute ..................................................................................................... 524

30.0 Mulago Referral Hospital Complex .................................................................................. 526

31.0 Arua Regional Referral Hospital ...................................................................................... 544

32.0 Mbale Regional Referral Hospital .................................................................................... 546

33.0 Kabale Regional Referral Hospital ................................................................................... 549

34.0 Lira Regional Referral Hospital ........................................................................................ 551

35.0 Gulu Regional Referral Hospital ...................................................................................... 552

36.0 Mbarara Regional Referral Hospital ................................................................................ 554

37.0 Fort Portal Regional Referral Hospital ............................................................................. 555

38.0 Jinja Regional Referral Hospital ...................................................................................... 557

39.0 Soroti Regional Referral Hospital .................................................................................... 560

40.0 Masaka Regional Referral Hospital ................................................................................. 561

41.0 Mubende Regional Referral Hospital ............................................................................... 563

42.0 Moroto Regional Referral Hospital ................................................................................... 564

43.0 Hoima Regional Referral Hospital ................................................................................... 566

44.0 China-Uganda Friendship Hospital Naguru ..................................................................... 568

v

Education Sector ........................................................................................................................ 573

45.0 Ministry Of Education And Sports .................................................................................... 573

46.0 Makerere University ......................................................................................................... 591

47.0 Makerere University Business School ............................................................................. 612

48.0 Uganda Management Institute ......................................................................................... 615

49.0 Mbarara University Of Science And Technology ............................................................. 618

50.0 Kyambogo University ....................................................................................................... 622

51.0 Busitema University ......................................................................................................... 650

52.0 Gulu University ................................................................................................................. 653

Gender And Labour Sector ....................................................................................................... 658

53.0 Ministry Of Gender, Labour And Social Development ..................................................... 658

Water And Environment Sector ................................................................................................ 672

54.0 Ministry Of Water And Enviroment .................................................................................. 672

55.0 Ministry Of Trade, Industry And Cooperatives ................................................................. 705

56.0 Ministry Of Tourism Wildlife And Antiquities .................................................................... 716

Land Sector ................................................................................................................................. 721

57.0 Ministry Of Lands, Housing And Urban Development ..................................................... 721

Information And Communication Sector ................................................................................. 745

58.0 Ministry Of Information And Communications Technology ............................................. 745

Public Administration Sector .................................................................................................... 749

59.0 Ministry Of Foreign Affairs ............................................................................................... 749

60.0 East African Community Affairs ....................................................................................... 752

Social Sector ............................................................................................................................... 753

61.0 Ministry Of Gender, Labour And Social Development ..................................................... 753

Missions ...................................................................................................................................... 762

62.0 Uganda Embassy, Abu Dhabi .......................................................................................... 762

63.0 Uganda High Commission, Abuja .................................................................................... 762

vi

64.0 Uganda, Embassy Addis Ababa ...................................................................................... 768

65.0 Ankara Embassy .............................................................................................................. 771

66.0 Uganda, Embassy Beijing ................................................................................................ 772

67.0 Uganda Embassy, Berlin ................................................................................................. 773

68.0 Uganda Embassy Brussels .............................................................................................. 776

69.0 Uganda High Commission, Bujumbura............................................................................ 782

70.0 Uganda Embassy, Cairo .................................................................................................. 784

71.0 Uganda High Commission, Canberra .............................................................................. 802

72.0 Uganda Embassy, Copenhagen ...................................................................................... 806

73.0 Uganda High Commission, Dar Es Salaam ..................................................................... 808

74.0 Uganda High Commission, Washington .......................................................................... 810

75.0 The Permanent Mission Of The Republic Of Uganda To The United Nations And Other

International Organizations In Geneva ............................................................................ 812

76.0 Uganda Permanent Mission To The United Nations, New York ..................................... 819

77.0 Uganda Consulate, Guangzhou, China ........................................................................... 820

78.0 Uganda Embassy Juba .................................................................................................... 821

79.0 Uganda Embassy, Khartoum ........................................................................................... 823

80.0 Uganda High Commission, Kigali .................................................................................... 824

81.0 Uganda Embassy, Kinshasa ............................................................................................ 828

82.0 Uganda High Commission, London ................................................................................. 836

83.0 Uganda Embassy, Moscow ............................................................................................. 838

84.0 Uganda High Commission, Nairobi .................................................................................. 840

85.0 Uganda High Commission, New Delhi ............................................................................. 842

86.0 Uganda High Commission, Ottawa .................................................................................. 843

87.0 Uganda Embassy, Paris .................................................................................................. 845

88.0 Uganda High Commission, Pretoria ................................................................................ 850

89.0 Uganda Embassy, Rome ................................................................................................. 853

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90.0 Uganda Embassy Tokyo .................................................................................................. 859

91.0 Uganda Embassy, Tripoli ................................................................................................. 861

92.0 Uganda High Commission, Tehran .................................................................................. 862

93.0 Uganda Embassy In Riyadh ............................................................................................ 864

94.0 Uganda Embassy In Mogadishu ...................................................................................... 865

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LIST OF ACRONYMS AND ABREVIATIONS

AIDS Acquired Immune Deficiency Syndrome

ART Anti-Retroviral Therapy

BFP Budget Framework Paper

BOU Bank of Uganda

BTC Belgium Technical Cooperation

CAES College of Agriculture and Environment Sciences

CAO Chief Administrative Officer

CDC Center for Disease Control

CEDAT College of Engineering Design Art and Technology

CEES College of Education and External Studies

CEMAS Computerized Education Management and Accounting System

CHOGM Commonwealth Heads of Governments Meeting

CHS College of Health Sciences

CHUSS College of Humanities and Social Sciences

CIID Criminal Intelligence and Investigations Department

COBAMS College of Business and Management Sciences

COCIS College of Computing and Information Sciences

COMESA Common Market for Eastern & Southern Africa

CONAS College of Natural Sciences

COVAB College of Veterinary Medicine and BioSecurity

CUFH China Uganda Friendship Hospital

DHO District Health Officer

DSCs District Service Commissions

EAC East African Community

ED Executive Director

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EFT Electronic Funds Transfer

ESAAG East and Southern African Association of Accountant Generals

ESC Education Service Commission

FAR Fixed Asset Register

FIEFOC Farm Income Enhancement and Forest Conservation

FOC Faculty of Commerce

FY Financial Year

GoU Government of Uganda

HC Health Centre

HIV Human Immunodeficiency Virus

HSC Health Service Commission

HSC Health Service Commission

IAS International Accounting Standards

IAS International Accounting Standards

ICGR International Conference for Great Lakes Region

ICT Information and Communications Technology

ICT Information Communication Technology

IFMS Integrated Financial Management System

ITFC Institute of Tropical Forest Conservation

JCRC Joint Clinical Research Center

JLOS Justice, Law and Order Sector

JMS Joint Medical stores

KCCA Kampala Capital City Authority

KYU Kyambogo University

L.T.C ward Lymphoma Treatment Centre

LANs Local Area Networks

LC Letter of Credit

LCs Letters Of Credit

M&E/MIS Monitoring & Evaluation/Management Information System

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MDAs Ministries, Departments and Agencies

MEACA Ministry of East African Affairs

MFPED Ministry of Finance Planning And Economic Development

MICT Ministry of Information and Communications Technology

MKCCAP Mulago Kampala Capital City Authority Project

MNRH Mulago National Referral Hospital

MoES Ministry of Education and Sports

MoFA Ministry of Foreign Affairs

MoFPED Ministry of Finance, Planning and Economic Development

MoGLSD Ministry of Gender, Labour & Social Development

MoH Ministry of Health

MoLHUD Ministry of Lands, Housing and Urban Development

MoTWA Ministry of Tourism Wildlife and Antiquities

MOU Memorandum of Understanding

MTIC Ministry of Trade, Industry and Cooperatives

MUBS Makerere University Business School

MUECCA (A) Makerere University Establishment of Constituent College Order Amended

MUK Makerere University

MUST Mbarara University of Science and Technology

MWE Ministry of Water and Environment

NBI National Backbone Infrastructure

NCBS National College of Business Studies

NDA National Drug Authority

NHIS National Health Insurance Scheme

NMS National Medical Stores

NTC National Teachers College

NTR Non Tax Revenue

NWSC National Water and Sewerage Corporation

OAG Office of the Auditor General

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OPD Out Patients Departments

PAC Public Accounts Committee

PAYE Pay As You Earn

PFAA Public Finance and Accountability Act

PFAR Public Finance and Accountability Regulation

PIC Planning Investment Committee

PPDA Public Procurement & Disposal of Assets

PPS Private Patients Services

PS Permanent Secretary

PS/ST Permanent Secretary/Secretary to the treasury

PSC Public Service Commission

PSU Pharmaceutical Society of Uganda

PWD People With Disability

S.T.C ward Solid Tumor Centre ward

TAI Treasury Accounting Instruction

UAC Uganda AIDS Commission

UBTS Uganda Blood Transfusion Services

UCI Uganda Cancer Institute

UGX Uganda Shillings

UHI Uganda Heart Institute

ULC Uganda Land Commission

ULC Uganda Land Commission

UNHRO Uganda National Health Research Organisation

UNICEF United Nations International Children's Emergency Fund

URA Uganda Revenue Authority

USD United States Dollar

WAN Wide Area Network

WRS Warehouse Receipt System

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1

1.0 INTRODUCTION

I am required by Article 163(3) of the Constitution of the Republic of Uganda and Section

13 and 19 of the National Audit Act 2008 to audit and report on the Public Accounts of

Uganda and of all public offices including the Courts, the Central and Local Government

Administrations, Universities and Public Institutions of like nature and any Public

Corporations or other bodies established by an Act of Parliament.

Under Article 163 (4) of the Constitution, I am also required to submit to Parliament by

31st March annually a Report of the Accounts audited by me for the year immediately

preceding. I am therefore, issuing this report in accordance with the above provisions.

This is Volume two of my Annual Report to Parliament and it covers financial audits

carried out on Central Government Ministries, Departments, Agencies, Universities and

Uganda Missions abroad.

In this introduction, I give an overview of the financial audit work carried out, status of

completion of the audits, summary of the audit opinions issued on the financial

statements of the entities audited and a summary of the key audit findings arising from

the audit.

Section 2 presents my findings and audit opinion on Government of Uganda Consolidated

Financial Statements including major observations.

Section 3 contains the detailed audit findings on each entity audited.

STATUS OF COMPLETION OF AUDITS

Financial Audits

A total of 107 entities comprising of Ministries, Agencies, Commissions, Departments,

Uganda Missions abroad, Public Universities, Referral Hospitals and the Consolidated

Government of Uganda Financial Statements, were audited during the year ended 30th

June 2014. Accordingly, separate audit reports were issued for each of them.

2

Out of the 107 entities audited, 75 entities had unqualified opinions, and 32 had qualified

opinions. Included in 107 are 17 entities that are contained in Volume 6. The basis used

to arrive at the audit opinion is described in the separate reports issued on individual

entities. The table below summarises the types of audit opinions issued on each of the

entities audited:-

No Entity Category Sector Opinion

1 Uganda Consolidated Fund MDA Accountability Qualified

2 Treasury Operations MDA Accountability Qualified

3 Directorate Of Ethics and

Integrity

MDA Accountability Qualified

4 Ministry of Education And

Sports

MDA Education Qualified

5 Makerere University MDA Education Qualified

6 Kyambogo University MDA Education Qualified

7 Gulu University MDA Education Qualified

8 Ministry Of Energy And

Mineral Development

MDA Energy Qualified

9 Ministry of Health MDA Health Qualified

10 Arua Regional Referral

Hospital

MDA Health Qualified

11 Lira Regional Referral

Hospital


12 Gulu Regional Referral

Hospital


13 China-Uganda Friendship

Hospital Naguru


14 Uganda Cancer Institute MDA Health Qualified

15 Ministry of Information And

Communications

Technology

MDA ICT Qualified

3


16 Ministry of Justice and

Constitutional Affairs

MDA JLOS Qualified

17 Ministry of Internal Affairs MDA JLOS Qualified

18 Uganda Prisons Services MDA JLOS Qualified

19 Directorate of Public

Prosecutions

MDA JLOS Qualified

20 National Citizenship and

Immigration Control

MDA JLOS Qualified

21 Office of the Prime Minister MDA PSM Qualified

22 Ministry of Public Service MDA PSM Qualified

23 Ministry of Lands, Housing

And Urban Development

MDA Lands & Housing Qualified

24 Ministry of Local

Government

MDA PSM Qualified

25 Ministry of Foreign Affairs MDA Public Sec Admin Qualified

26 Uganda Embassy,

Khartoum

MDA Public Sec Admin Qualified

27 Ministry of Trade, Industry

And Cooperatives

MDA Trade & Tourism Qualified

28 Ministry of Water And

Environment

MDA Water & Environment Qualified

29 Electoral Commission Commission Administration Qualified

30 Public Service Commission Commission PSM Qualified

31 Local Government Finance

Commission

Commission PSM Qualified

32 Uganda National Roads

Authority

SA / SE Works Qualified

33 Ministry Of Finance,

Planning and Economic

Development

MDA Accountability Unqualified

4


34 Ministry Of Agriculture,

Animal Industry And

Fisheries

MDA Agriculture Unqualified

35 National Agricultural

Research Organisation

(NARO)

MDA Agriculture Unqualified

36 Makerere University

Business School

MDA Education Unqualified

37 Uganda Management

Institute


38 Mbarara University of

Science And Technology


39 Busitema University MDA Education Unqualified

40 Ministry of Gender Labour

and Social Development

MDA Social Development Unqualified

41 Butabika Mental Referral

Hospital

MDA Health Unqualified

42 Mulago Referral Hospital

Complex


43 Mbale Regional Referral

Hospital


44 Kabale Regional Referral

Hospital


45 Mbarara Regional Referral

Hospital


46 Fort Portal Regional

Referral Hospital


47 Jinja Regional Referral

Hospital


5


48 Soroti Regional Referral

Hospital


49 Masaka Regional Referral

Hospital


50 Mubende Regional Referral

Hospital


51 Moroto Regional Referral

Hospital


52 Hoima Regional Referral

Hospital


53 Uganda Blood Transfusion

Services


54 Uganda Heart Institute MDA Health Unqualified

55 Uganda Police Force MDA JLOS Unqualified

56 Judiciary Department MDA JLOS Unqualified

57 East African Community

Affairs

MDA Public Sec Admin Unqualified

58 Uganda Embassy, ABU

DHABI


59 Uganda High Commission,

Abuja


60 Uganda, Embassy Addis

Ababa


61 Ankara Embassy MDA Public Sec Admin Unqualified

62 Ganda, Embassy Beijing MDA Public Sec Admin Unqualified

63 Uganda Embassy, Berlin MDA Public Sec Admin Unqualified

64 Uganda Embassy Brussels MDA Public Sec Admin Unqualified


Bujumbura


6


66 Uganda Embassy, Cairo MDA Public Sec Admin Unqualified


Canberra


68 Uganda Embassy,

Copenhagen



Washington


70 Uganda Embassy Tehran MDA Public Sec Admin Unqualified

71 Uganda Embassy Dar-salam MDA Public Sec Admin Unqualified

72 The Permanent Mission Of

The Republic Of Uganda To

UN


73 Nations and Other

International Organizations

In


74 Uganda Consulate,

Guangzhou, China


75 Uganda Embassy Juba MDA Public Sec Admin Unqualified


Kigali


77 Uganda Embassy, Kinshasa MDA Public Sec Admin Unqualified


London


79 Uganda Embassy, Moscow MDA Public Sec Admin Unqualified


Nairobi



New Delhi



Ottawa


7


83 Uganda Embassy, Paris MDA Public Sec Admin Unqualified


Pretoria


85 Uganda Embassy, Rome MDA Public Sec Admin Unqualified

86 Uganda Embassy Tokyo MDA Public Sec Admin Unqualified

87 Uganda Embassy, Tripoli MDA Public Sec Admin Unqualified

88 Ministry of Defence MDA Security Unqualified

89 Office of the President MDA Security Unqualified

90 State House MDA Security Unqualified

91 Ministry of Tourism Wildlife

And Antiquities

MDA Trade & Tourism Unqualified

92 Ministry of Works And

Transport

MDA Works & Transport Unqualified

93 Equal Opportunities

Commission

SA/SE Accountability Unqualified

94 Education Service

Commission

Commission Education Unqualified

95 Uganda Aids Commission Commission Health Unqualified

96 Health Service Commission Commission Health Unqualified

97 Uganda Human Rights

Commission

Commission JLOS Unqualified

98 Judicial Service Commission Commission JLOS Unqualified

99 Uganda Law Reform

Commission

Commission JLOS Unqualified

100 Uganda Registration

Services Bureau

SA /SE JLOS Unqualified

101 Uganda Land Commission Commission Lands & Housing Unqualified

102 Parliamentary Commission Commission Legislature Unqualified

8


103 Parliamentary Pension

Scheme

SA / SE Legislature Unqualified

104 Kampala Capital City

Authority

SA / SE PSM Unqualified

105 The Uganda Road Fund SA /SE Works Unqualified

106 Embassy of Uganda in

Mogadishu


107 Uganda Embassy In Riyadh MDA Public Sec Admin Unqualified

The table and graphs below provide a breakdown of the types of opinions issued:-

Types of Opinions issued since 2010 by numbers and percentage:-

Types of

Opinions

Year ending 30th June

2010 % 2011 % 2012 % 2013 % 2014 %

Unqualified 40 40 61 59 47 45 60 58 75 70

Qualified 58 57 41 40 51 47 39 38 32 30

Disclaimer 3 3 1 1 7 7 4 4 0 0

Adverse 0 0 0 0 0 1 0 0 0 0

Figure showing the types of opinions issued for 2013/2014:-

9

Figure showing Trends of Types of Opinions Issued since 30th June 2010:-

Figure showing comparision of types of opinions issued since 30th June 2010:-

Special Audits

10

During the period under review, I undertook two special Audits of; Kyambogo University

and Uganda Government Payroll, which were completed and the highlights of these

reports have been included in this Volume.

1.2 KEY FINDINGS CENTRAL GOVERNMENT ONE

CENTRAL GOVERNMENT ISSUES

Government has undertaken various PFM reforms which have led to

improvements in public financial management notably the management

of the payroll and the Treasury Single Account among others. However,

Government continues to have challenges which require attention. The

key findings below indicate selected areas of concern which require

Government intervention.

1.2.1 Contingency Provisions for court awards

During the year, contingent liabilities in respect of cases before court

under the Ministry of Justice and Constitutional Affairs rose from

UGX.2.2 trillion in the previous year to UGX.4.3 trillion during the year

under review implying an increase of 95%. Besides, the Accounting

Officers explained that the provision excludes those that intend to sue

Government. This situation is untenable and likely to create an

additional burden on the public resources. There is need for Government

to examine the issue further with a view to establishing the likely causes

in order to facilitate Government to arrive at a sustainable solution.

1.2.2 Court Awards and Compensations

Unsettled Court awards and compensations have continued to

accumulate over the years rising from 54bn in 2012 to 164bn in July

2013 and 442Bn in 2014 and yet Government does not seem to have

adequate budget provision for these obligations. For the period 2012 to

2014 only UGX.13bn was budgeted for. The consequence of this state of

affairs has led to interest payments for non-settlement amounting to

11

UGX.60bn. The Accounting Officer attributes this to inadequate

provision of funds to clear the arrears. I advised management to

continue liaising with Parliament and Ministry of Finance, Planning and

Economic Development to ensure that these accumulated arrears of

compensation are cleared.

1.2.3. Irregular Payments – Loss, Likely loss and Nugatory Expenditure

A review of payment certificates revealed irregularities related to

payments for works not executed, payments for defective works and

payments that could have been avoided with better procurement

planning and contract management. The likely losses will crystallize into

losses unless management takes measures to have them recovered. The

irregular payments noted for the projects were likely losses

(UGX.45,315,967,993, USD.1,848,205 and Euro.68,558), losses (

UGX.300,279,163 and Euro.66,698) and nugatory expenditure

(UGX.2,464,934,174 and USD.3,663,761).

1.2.4. Under absorption of Government Funds

Projects failed to absorb funds totaling to UGX.217,393,823,773 and

Government entities returned unspent balances of UGX.9,412,704,745

to the Consolidated Fund indicating partial service delivery. Most

affected service delivery areas were road constructions, agro

processing, household income improvement, health and education

services. The low absorption capacity was attributed to inefficiencies in

the management of procurements, delayed accountability,

incompetence by contractors, inadequate planning among others. In the

circumstances, service delivery is undermined.

I advised management to review the causes and develop strategies to

ensure timely implementation of projects and programs.

1.2.5 Pension liabilities

12

Outstanding Pension liabilities under the Ministry of Public Service

increased by UGX.81,245,706,749 (326.2%) during the year under

review. This is an indication that the ministry‟s rate of accumulation of

pension arrears is significantly high, which might not be sustained by

Government.

Further, it was noted that a total of 19,135 pensioners who had attained

the maximum pensionable period of 15 years were still on the ministry‟s

payroll and earning monthly pension yet they had not furnished the

ministry with life certificates. As such, a total of UGX.12,727,686,849

paid in respect of their monthly pensions during the year under review

could not be supported in the absence of life certificates.

1.2.6 Comprehensive payroll verification

On the request of Accounting Officers, a total of 15,021 records were

deleted from the payroll for various reasons which included: death,

retirement and/or abscondment. Government incurred a total of

UGX.39,183,937,122 on these employees in respect of the wage bill

from July, 2013 up to the respective periods the individual employees

were deleted from the payroll in the FY 2013/14 alone.

It was also noted that, as a result of the mandatory validation and

biometric data capture exercise for government employees, a total of

8,589 employees have not been accounted for by 130 entities/votes,

although they remain on the government payroll. These employees are

being paid a monthly total of UGX.4,563,318,131 which translates into

UGX.54,759,817,572 per annum. There is need for Government to make

a follow up on the matter to ensure the affected employees are verified

or deleted.

1.2.7 Congested Prisons

Uganda Prisons Services has experienced an increase in the prisoners‟

population since the merger and takeover of 174 Local Administrations

13

Prisons in 2006, from a daily average of 19,179 prisoners in 2006 to

41,516 by June 2014. According to management, the available capacity

is only 16,040 prisoners. As a consequence, some of the prisons had

capacities of over 500%. With the current prisoner numbers, there has

been a strain on the facilities, staff and food. The Accounting Officer

attributes this to failure to match the growing prisoner population to the

facilities. These facilities have not been increased to match the

numbers. There is need for government to look into the matter with a

view to providing additional resources to support the Uganda Prisons.

1.2.8 Inadequate Facilitation of Government Analytical Labs

The Directorate of Government Analytical Laboratories is mandated to

provide scientific advisory and analytical services to government

departments responsible for administration of Justice and the general

public. However, the directorate is inadequately facilitated as evidenced

with inadequate infrastructure, limited funding and under staffing. As

such, the department was only able to respond to 52.5% of court

sermons and resolved 35% of the cases received. Not only does the

government stand to lose cases as a result but also the inadequacies

delay timely justice. There is need to facilitate the government facility

with adequate resources.

1.2.9 Settlement of Electricity Bills

Government entered into an agreement with UMEME in which the latter

was required to offset Government bills that remained outstanding for a

period of more than 60 days. Total Government debt as at 31st January

2013 amounts to UGX.62.7bn. I noted that there are no regular

reconciliations on the escrow account taking into account moneys that

MDAs have paid. The Accounting Officers attributed this to lack of

information regarding payments from the Escrow Account to enable

them undertake the reconciliations. There is need for Government to

undertake reconciliation to avoid any eventual over payments.

14

1.2.10 Land Matters

As reported in my previous year audit findings, land matters have again

remained an issue featuring in my current year audit report. A number

of instances have been noted where Government entities have

continued to lose out on land to encroachers.

This is notably seen with NARO, Ministry of Agriculture and Fisheries

Uganda Police and Universities. The challenge these entities are facing

result from inadequate resources to have their land surveyed, titled and

secured. Further, I noted that the Uganda Land Commission which is

mandated to hold Government Land in trust does not have an updated

register of all the land it holds in trust for Government. There is a need

to address land issues in Government Institutions.

1.2.11 Redundant Teachers SACCO Fund

During the year, the Government offered to contribute UGX.25bn to the

teachers‟ SACCO fund over a five year period with the objective of

enabling teachers access affordable credit financing. UGX.4,317,423,564

was released to Micro Finance Support Centre during the year under

review. The funds have not been accessed by the intended beneficiary

teachers because the fund management had become a source of conflict

between UNATU and the Ministry. Unless the disagreement surrounding

the fund management is resolved, the intended objective will not be

achieved.

1.2.12 Non-Retention of NTR by UCIC

According to section 3 of the Uganda Citizenship and Immigration

Control Act, NTR collected by the entity should be retained and treated

as appropriation in Aid. To the contrary, UGX.68,778,391,313 collected

in respect was automatically remitted to the Consolidated Fund contrary

to the UCIC Act. It is noted that due to inadequate funding the entity

has not been able to operate as envisaged. Due to these inadequacies,

the processing of passports takes on average 30 days as opposed to an

15

ideal time of 8 days. Further, it was observed that one officer handles

80 passport applications per day instead of 50 applications in an ideal

situation.

Management attributed this to inadequate staffing, lack of

interconnectivity passport issuing system and infrastructure. There is

need for Government to consider additional resources for the entity.

1.2.13 Delayed Contracts

It was observed that a number of Government contracts/projects for a

total of UGX.39,642,990,522, Us$.1,930,524 and Euros.512,288 that had

been ongoing or were started during the financial year lagged behind

schedule or demonstrated signs of failure. It was also noted that a

number of these contracts/projects had exceeded their completion

dates while others had been abandoned. These delays ranged between

three months and three years. The delays in contract execution were

attributed to insufficient funding and inadequate supervision of contract

implementation by the responsible entities. This may have resulted into

losses to Government and failure to achieve the intended objectives of

the procurements/contracts.

There is need for closer supervision of these projects to ensure timely

service delivery.

1.2.14 Payables/domestic arrears

The total value of payables/domestic arrears increased by UGX.138.166

billion (approximately 12%) from UGX.1.127 trillion in the financial year

2012/2013 to UGX.1.265 trillion in the year 2013/2014. The trend

shows a steady increase in the payables figures, which indicates that the

current approaches to address the problem are not effectively working.

The debt figure may become unmanageable as it appears to be spiralling

out of control.

16

There is need to revisit the current approaches of arrears management

with a view to reducing the growth in domestic arrears.

1.2.15 Mining/Exploration Licences

Section 105 of the Mining act 203 provides for payment of any royalty

assessed to be settled within 30 days. It was observed that 174

companies whose licences had expired defaulted on arrears of royalties

amounting to UGX.850,240,000. Further, 17 licence holders had not

provided the required records and audited financial statements to the

Ministry of Energy. There was no follow up by management on

defaulters for purposes of compliance. There is need for the Ministry to

closely follow up licence holders to avoid losses to government.

1.2.16 Audit of Kyambogo University

A special audit was undertaken for the University and it was noted

among other findings that a total of 10,486 students were admitted by

Kyambogo University without making applications. This was found to be

irregular. The University needs to strengthen controls relating to

administration of students to the University.

1.3.0 GENERAL FINDINGS

1.3.1 DELAYED CONTRACTS

It was observed that a number of Government contracts/projects for a total of

UGX. 39,642,990,522, Us$.1,930,524 and Euros 512,288 that had been ongoing or

were started during the financial year lagged behind schedule or demonstrated

signs of failure. It was noted that a number of these contracts/projects had

exceeded their completion dates while others had been abandoned. The delays

were between 3 months and 3 years. The delays in contract execution were

attributed to insufficient funding and inadequate supervision of contract

17

implementation by the responsible entities. This may have resulted into losses to

Government and failure to achieve the intended objectives of the

procurements/contracts. Table 1 below refers.

Table 1 Delayed contracts

Entity Contract (UGX) USD $s Euros Time

delayed

Justice Law

and Order Sector

projects

Construction of the Law

Development Centre Auditorium

3,977,880,902 0 0 over 15

months

Construction works of regional laboratory in

Gulu

436,445,468 0 0 Over 6years

Construction Regional Laboratory in Mbarara

535,191,985 0 0 Over 3 years

Procurement of Liquid

Chromatography Tandem Mass Spectrometer

(LCTMS)

0 786,595 0 Over

9months

Construction of Makindye Family Court

910,209,442 0 0 Over 2 and ½

years

Uganda Police

Force

Construction of Nateete divisional headquarters

2,358,000,000 0 0 Over 3years

Construction of Buliisa Police station

450,000,000 0 0 Over 1 year

Construction of 4 storeyed classroom block

,Kabalye Police Training

School

4,324,964,501 0 0 Over 3years

Uganda

Prisons Services

Construction of a twin

ward at Ruimi Prisons Farm

618,909,737 0 0 6months

construction of a cotton

store at Mubuku prison

farm

149,982,339 0 0 Delayed

2months

even after the

extension date of

January

2015

18

Entity Contract (UGX) USD $s Euros Time delayed

Community

Agriculture Infrastruct

ure Improveme

nt Prog.I

construct Agro Processing

facilities in the three sub-counties of; Nagongera (2

rice hullers), Merikit (2 rice hullers) and

Nabuyoga (1 maize mill

and 2 rice hullers) all in Tororo District

227,594,063 0 0 Delayed

by over 3years

and the project

closed in

December 2014.

CAIIP Prog.II

Community access road under Batch B Agwata

Atidi-Kachung road in Agwata Sub County in

Dokolo District

428,915,399 0 0 The works were

abandoned after

12months delay

Ministry Of

Agriculture, Animal

Industry

And Fisheries

Renovation of Ministry's

premises in Entebbe

144,214,834 0 0 Over

1year

supply of tractors 0 34,336

0

ATAAS

(Grant) EU, WB and

Danida

delivery of project

vehicles

0

1,109,593

0 Over 1

and ½ years

Uganda Manageme

nt Institute

Construction of new classroom block and

office block.

21,324,058,054 0

0 Over 1 and ½

years

Rehabilitation of hostel 2,543,323,798 0 0 Over 1 and ½

years

Ministry of Water And

Environme

nt

Consultancy Services for Feasibility Studies,

Detailed Designs and

Construction Supervision of Water Supply Systems

Under Lot3: for Namulonge-Kiwenda-

Busiika and Kiwoko, Butalanga and

Rehabilitation of Katuugo

and Improvement of Kakooge and Migeera

Water Supply Systems

1,213,300,000 0 0 Over 3months

19

Entity Contract (UGX) USD $s Euros Time delayed

Consultancy Services for

Feasibility Studies and Detailed Designs Under

Lot2: for Busaana Kayunga,Kabembe-Kalagi-

Naggalama and Kakunyu-

Kiyindi and Construction Supervision for

Rehabilitation of Buvuma

0 0 512,288 Over

3months

TOTAL 39,642,990,522 1,930,524 512,288

1.3.2 Mischarged Expenditure

Expenditures from various entities totalling to UGX. 51,728,901,102 were charged

on items which do not reflect the nature of the expenditure. Such a practice

impacts on the credibility of the financial statements, since the figures reported

therein do not reflect true amounts expended on the affected expenditure items. I

however noted an improvement over the last three years where mischarged

expenditures have been reducing from UGX.256,976,089,113 in the FY 2011/2012

to UGX.97,896,448,777 in 2012/2013 and UGX. 51,728,901,102 in 2013/2014.

Over the three years, the mischarges have reduced by 86%. There is still need for

accounting officers to enforce strict adherence to the provisions regarding

reallocation of funds. Table 2 and 3 below refers.

Table 2 Mischarged Expenditure

2011/2012 2012/2013 2013/2014

Mischarged Expenditures 256,976,089,113 97,896,448,777 51,728,901,102

Percentages Reduction

From 2011/12

0 % 62 % 86 %

20

-

50,000,000,000

100,000,000,000

150,000,000,000

200,000,000,000

250,000,000,000

300,000,000,000

2011/2012 2012/2013 2013/2014

Mischarged Expenditure for the last three Financial years

Amount (shs)

Table 3 Mischarged Expenditures

Entity Amount Mischarged –

UGX

Accountability Sector

Ministry Of Finance, Planning and Economic Development 2,208,201,055

Department Of Ethics and Integrity 275,372,736

Works and Transport Sector

Ministry of Works And Transport 48,153,093

Uganda National Roads Authority 3,501,412,812

Ministry of Justice and Constitutional Affairs 615,047,805

Ministry of Internal Affairs 421,104,192

Uganda Police Force 132,090,477

Uganda Prisons Services 637,537,384

JLOS SECTOR

Judiciary Department 423,909,500

Judicial Service Commission 86,527,567

Uganda Law Reform Commission 77,415,412

DPP 454,431,122

Uganda Registration Services Bureau - Operations 239,197,478

National Citizenship And Immigration Control 5,906,786,217

Public Sector Management

Ministry of Local Government 2,497,433,465

Office of the Prime Minister 5,564,282,629

21

Entity Amount Mischarged –

UGX

Ministry of Public Service 1,721,329,414

Public Service Commission 512,592,443

Local Government Finance Commission 241,919,355

Ministry of Gender, Labour and Social Development 66,982,475

Expanding Social Protection (2013) 11,976,000

Agriculture Sector

National Agricultural Research Organisation (NARO) 206,704,980

Energy Sector

Ministry of Energy And Mineral Development 3,038,506,327

Land Sector

Ministry of Lands, Housing And Urban Development 543,519,621

Ministry of Trade, Industry And Cooperatives 592,962,823

Ministry of Tourism Wildlife And Antiquities 115,112,418

WATER SECTOR

Ministry of Water and Environment 1,545,058,115

NEMA 942,053,402

MISSIONS

Uganda Embassy Brussels 150,514,718

HEALTH SECTOR

Ministry of Health 2,644,401,389

Uganda Blood Transfusion Services 27,880,704

Uganda Cancer Institute 656,275,672

Butabika Hospital 74,863,427

Mulago Hospital Complex 1,756,710,500

Education Sector

Ministry of Education and Sports 11,841,989,175

Makerere University 969,917,237

Kyambogo University 978,727,963

Total 51,728,901,102

1.3.3 UNACCOUNTED FOR FUNDS

A total of UGX.85,785,457,670, US$.530,861, EURO137,327 inform of advances to

staff, payments to service providers, cash withdrawals, imprest, remittances to

Districts, borrowings for carrying out activities in various entities remained un-

accounted for by the time of audit contrary to the Public Finance and Accounting

Regulations. Table 4 below refers.Delays in accounting for funds may encourage

22

falsification of documents. I advised management to adhere to the provisions in

the Public Finance and Accountability Regulations.

Table 4 Unaccounted for Funds

Entity UGX US$ EURO

Ministry Of Finance, Planning and Economic Development

1,619,879,097

Strengthening Evidence Based Decision Making II-MOFPED

74,903,000

Transport Sector Development

Project SDR 120,000,000

23,632,667


Uganda Law Reform

Commission

63,000,000

Ministry of Local Government 137,542,000

District lively hood support Programme

183,219,506

Northern Uganda Social Action

Fund

58,826,655,271

Uganda Good Governance

(UGOGO) Programme

109,402,538


Kampala Capital City Authority 74,547,100

Parliamentary Commission 27,401,000

NAADS secretariat 8,460,120,471

Ministry Of Energy And Mineral

Development

122,889,501

Energy for Rural Transformation II Project –

Private Sector Foundation

Uganda (PSFU) Component

455,000

Ministry of Gender, Labour and

Social Development

25,000,000

Ministry of Health 121,360,800

East African Public Health Laboratories Networking

Project (EAPHLNP)

31,377,000

Uganda Health Systems

Strengthening Project (UHSSP)

27,007,487

Uganda Global Fund to Fight Aids, Tuberculosis and

Malaria Project - MALARIA

COMPONENT ROUND 7

518,614

Arua Regional Referral Hospital 359,130,640

Mbale Regional Referral

Hospital

23,526,000

Lira Regional Referral Hospital 106,394,580

Gulu Regional Referral Hospital 219,224,118

23

Entity UGX US$ EURO

Mbarara Regional Referral Hospital

10,164,220

Soroti Regional Referral

Hospital

23,466,678

Hoima Regional Referral

Hospital

12,520,753

China-Uganda Friendship Hospital Naguru

1,500,129,768

Ministry of Education And

Sports

873,759,757

Ministry of Public service 302,018,445

Ministry of Education and

Sports Universal Post Primary Education and Training

(UPPET) Project

10,008,317,486


Economic Policy Research Centre (EPRC)

62,020,000

Norwegian Programme for

Capacity Development in Higher Education and Research

for Development (NORHED) Funded Projects

12,247

Adaptation of small scale biogas

digesters for use in rural households in sub-

Saharan Africa Project

137,327

Mbarara University of Science And Technology

17,407,000


Gulu University 728,758,584

Ministry of Water And Environment

202,890,333

Lake Victoria Environmental

Management Project Phase II (LVEMP II)

30,758,200

Water and Sanitation

Development Facility - East (WSDF-E)

19,417,500

Ministry of Trade, Industry And

Cooperatives

215,110,206

Uganda High Commission,

Bujumbura

13,748,041

Uganda Embassy, Cairo 52,625,621

Uganda Embassy, Kinshasa 61,253,767

85,785,457,670 530,861 137,327

24

1.3.4 Un-Accounted for Taxes

During the year under review, seven MDAs did not account for taxes amounting to

UGX.2,524,676,637 contrary to the requirements of the Income Tax Act 1997 (as

amended). These un-accounted for taxes included UGX.1,965,825,158 relating to

un-remitted tax deductions from payments made to suppliers and

UGX.558,851,479 un-deducted tax from eligible payments. Table 5 and 6 refer.

The failure to deduct and remit taxes directly impacts on collections by the

Uganda Revenue Authority. I advised Accounting Officers to comply with the tax

law.

Table 5 Un-remitted taxes Entity Amount

Health Service Commission 17,945,553

Mulago Referral Hospital Complex 1,867,853,563


Busitema University 36,894,052

Total 1,965,825,158

Table 6 Un-Deducted taxes Entity Amount

Local Government Finance

Commission

72,542,866



Total 558,851,479

Grand Total 2,524,676,637

1.3.5 Outstanding Commitments

It was noted that a number of government entities have continued to enter into

commitments beyond the available funds. This is contrary to the commitment

control system which requires the accounting officer to commit Government within

the provided funds. The total amount of domestic arrears has continued to

increase over the years to UGX.1.274 trillion, as illustrated in the table 7 and

graph below:-

25

Table 7: domestic arrears for the last three years

Details Amounts (UGX)

2011/2012 2012/2013 2013/14

Domestic

arrears

763,186,161,377 1,127,241,181,530 1,274,539,269,438

Graph 1: showing the increase in domestic arrears

I have advised that Treasury needs to come up with a strategy on how it intends

to address the problem of the increasing domestic arrears.

Table Domestic arrears details Ministry/Department Amount

Office of the President 11,182,915,772

State House 529,849,725

Office of the Prime Minister 28,666,752

Ministry of Defence 81,928,017,200


Ministry of Foreign Affairs 32,395,526,489

Ministry of Justice and Constitutional Affairs 442,173,233,469

Ministry of Finance, Planning and Economic 74,273,703,301

Ministry of Internal Affairs 1,347,504,072

26

Ministry/Department Amount

Ministry of Agriculture, Animal Industry and Fisheries

13,412,965


Ministry of Lands, and Environment 9,786,954,419



Ministry of Trade, Industry and Cooperatives 4,373,220,288

Ministry of Works, Housing and Communication 137,149,140

Ministry of Energy and Minerals 11,369,575,619

Ministry of Gender, Labour and Social Development 4,773,792,282

Ministry of Water & Environment 3,002,380,703

Ministry of Communication & ICT 1,251,589,543

Ministry of East African Affairs 3,104,636,201

Judiciary 7,884,204,435

Electoral Commission 8,139,451,273

Inspectorate of Government 66,789,517

Law Reform Commission 486,899,069

Uganda Human Rights Commission 10,398,832

Uganda Aids Commission 231,162,155

Uganda Industrial Research Institution 10,495,093

Directorate of Ethics & Integrity 269,736,264


Uganda Heart Institute 405,417,044

Uganda Tourism Board 252,420

Uganda Road Fund 113,721,073

UGANDA REGISTRATION SERVICES BURREAU 14,894,636,149

NATIONAL CITIZENSHIP & IMM CTRL 39,750,123,409

KCCA 9,806,247,065

EQUAL OPPORTUNITIES COMMISSION 2,948,596

Accountant Generals office 49,732,652

Education Service Commission 18,489,607

Directorate of Public Prosecutions 898,836,756


National Agricultural Research Organisation 743,038,883

Uganda Police 46,702,959,156

Uganda Prisons 46,597,708,858



National Environment Management Institute 446,656

27

Ministry/Department Amount

Uganda Blood Transfusion Service 35,195,800

NAADS 450,484,312

UNBS 514,191

Uganda Lands Commission 7,163,296,958

ESO 3,072,785,870

Mulago Hospital Complex 8,901,380,582


Arua Hospital 42,038,550

Gulu Hospital 1,478,683,569

Hoima Hospital 24,198,822

Jinja Hospital 821,384,282

Kabale Hospital 13,329,254

Masaka Hospital 88,937,450

Mbale Hospital 266,412,236

Soroti Hospital 164,195,808

Lira Hospital 3,144,629

Mbarara Regional Hospital 979,056,740

Naguru Referral hospital 15,440,299

Uganda Mission , New York 372,744,046

Uganda High Commission in the United Kingdom 22,343,922

Uganda High Commission in India 136,735,355

Uganda High Commission in Egypt 156,458,196

Uganda High Commission in Kenya 41,344,046

Uganda High Commission in Nigeria 1,963,510

Uganda High Commission in South Africa 34,456,347

Uganda Embassy in the United States 35,737,665

Uganda Embassy in Ethiopia 437,876,327

Uganda Embassy in China 398,313,217

Uganda Embassy in Rwanda 1,035,112

Uganda Embassy in Belgium 37,729,811

Uganda Embassy in Italy 7,367,626

Uganda Embassy in DRC 131,225,090

Uganda Embassy in France 1,441,784

Uganda Embassy in Russia 8,599,658

Uganda Embassy in Australia 11,197,141

GRAND TOTAL 1,274,539,269,438

28

1.3.6 Budget performance

Budget shortfall

I noted that sixteen MDAs budgeted to receive UGX.1,945,157,932,133, out of

which UGX.750,336,029,473 was received translating into a 39% out-turn for the

financial year. This left a funding gap of UGX.1,194,926,969,786 (61%). Details

are in the table 8 below: Failure to release the budgeted funds to the MDAs

affected implementation of the planned activities which affects fulfilment of their

mandates in the long run. I advised Accounting Officers to take up this matter

with the relevant authorities to ensure all the budgeted funds are released so as to

accomplish planned activities.

Table 8 Budget shortfall Entity Budget

(UGX)

Received (UGX) Shortfall (UGX) %age of

shortfall

Department of Ethics and integrity

5,404,295,598 5,219,309,500 184,986,098 3.4

Ministry of Internal

Affairs

10,916,219,910 10,734,020,200 182,199,710 1.6

National Agriculture

Research

Organization

41,867,739,709 35,027,197,017 6,840,542,692 16.3

Statements of

Quality Infrastructure and

Standards

Programme (QUISP)

9,737,388,600 3,136,178,649 6,601,209,951 67.7

Vegetable Oil

Development

Project (VODP), Phase II

35,215,199,674 22,737,879,128 12,477,320,546 35.4

Inspectorate Of Government- IGG

34,209,254,859 34,128,691,768 80,563,091 0.23

Ministry of Lands,

Housing and Urban Development

17,277,762,153 15,256,559,842 2,021,202,311 11.7

Ministry of Energy

And Mineral Development

1,305,566,104,201 189,656,857,225 1,115,909,246,976 85

President‟s Office 73,619,648,221 73,561,071,202 58,577,019 0.079

Ministry of Tourism, Wildlife and

Antiquities

13,612,395,000 12,309,697,806 1,302,697,194 9.5

Uganda Export Promotions Board

5,916,691,307 1,459,163,507 4,457,527,800 73.3

China-Uganda 9,548,296,000 7,187,921,785 2,360,374,215 24.7

29

Entity Budget (UGX)

Received (UGX) Shortfall (UGX) %age of shortfall

Friendship Hospital,

Naguru

Ministry of Justice

and Constitutional

Affairs

60,643,372,903 57,225,590,343 3,417,782,560 5.6

Ministry of Work

and Transport

119,061,202,859 91,677,910,743 27,383,292,116 23

Ministry Of Education And

Sports

197,562,361,139 186,558,729,377 11,003,631,762 6

Ministry Of Education And

Sports- Muni University

5,000,000,000 4,459,251,381 540,748,619 10.4

Totals. 1,945,157,932,133 750,336,029,473 1,194,821,902,660

1.3.7 Under absorption of Government Funds

Government entities returned unspent balances of UGX.9,412,704,745 to the

consolidated Fund and Projects failed to absorb funds totalling to

UGX.217,393,823,773 indicating partial service delivery. Most affected service

delivery areas were road constructions, agro processing, household income

improvement, and health and education services. The low absorption was

attributed to inefficiencies in the management of procurements, delayed

accountability, incompetence by contractors, poor planning among others. In the

circumstances, service delivery is undermined.

I advised management to review the causes and develop strategies to ensure

these Projects/Programmes are implemented timely. The table 9 below refers.

Table 9: Under absorption of Government Funds Entity Amount (UGX)


SIDA support to Competitiveness Investment climate project 46,176,200

Rural Financial Services Project 25,871,247

FINMAP 9,245,168,202

DFID/DANIDA Support IGG 397,123,848

Directorate Of Ethics and Integrity 16,141,555

30

Entity Amount (UGX)

Justice Law and Order Sector 31,311,690,369




CAIIP Prog. II 49,863,220,272

CAIIP Prog. III 42,765,790,733

Market and Agriculture Trade Improvement project 20,900,695,536

District lively hood support programme 661,108,818



PUBLI SECTOR REFORM PROGRAMME 262,479,735




Ministry Of Agriculture, Animal Industry And Fisheries 83,070,501

NAADS secretariat 374,488,912

Vegetable Oil Development Project 2 6,240,584,580

East African Agricultural Productivity program (EAAPP) 9,426,703,017

ATAAS (Grant) EU, WB and Danida 26,287,401,192

Electricity Sector Development Project (ESDP) 758,679,600


Global Fund HSS 1,106,657,333

Global Fund Malaria Round 4 119,652,304

Uganda Blood Transfusion Services 503,763


Butabika Mental Referral Hospital 323,725,696



Mbale Regional Referral Hospital 2,737,071

Fort Portal Regional Referral Hospital 124,615,088

Education Service Commission 47,607,960

Lake Victoria Environmental Management-Project Phase II 3,533,295,929

District Commercial Officers Services Support Project 3,804,561,600

TRACE 101,446,800


Leveraging Municipal Infrastructure Improvement

Investments( LMIII) Project

315,127,600

Transforming Settlements of the Urban Poor in Uganda

(TSUPU)

433,195,201

Uganda Land Commission 995,000

Ministry of Information And Communications Technology 60,509,764

Ministry of Foreign Affairs 65,593,054

East African Community Affairs 11,425,154

31

Entity Amount (UGX)

National council of Children 124,449,360

Ministry of Tourism, Wildlife and Antiquities 20,929,857

Uganda High Commission, Washington 10,248,222

Uganda Consulate, Guangzhou, China 66,487,046

Uganda Embassy, Tripoli 15,778,349

TOTAL 217,393,823,773

1.3.8 WASTEFUL/NUGATORY EXPENDITURE

Good practice requires Accounting officers to reduce cases of apparent waste,

extravagant administration or failure to achieve value for money due to

management‟s laxity in the conduct of operations, however I noted wasteful

expenditure to the tune of UGX 7,478,849,806.and USD 3,663,761. These arose as

a result of interest on late payments, parking fees for grounded vehicles, delayed

handover of sites, court settlements among others. Table 10 below refers. This

affected the implementation of activities in the MDA‟s and on the overall service

delivery.

I advised management to adhere to the contract arrangements with a view of

avoiding such expenses.

Table 10 Wasteful/Nugatory Expenditure Entity Amount (UGX) USD


Uganda National Roads Authority 2,464,934,174 3,663,761




China-Uganda Friendship Hospital, Naguru 8,054,900

Ministry of Water And Environment 1,120,908,971

Uganda Embassy, ABU DHABI 2,048,822



TOTAL 7,478,849,806 3,663,761

32

1.3.9 ADVANCES TO STAFF PERSONAL ACCOUNTS:

A number of accounting officers advanced a total sum of UGX.12,014,225,502 to

their staff, through their individual personal accounts. Table 11 below refers. I

noted a reduction of 26% as compared to the previous year amount of

UGX.16,284,144,090. Although there has been an improvement/decline in

absolute terms, I advised the accounting officers to avoid the practice as it is

contrary to regulations, highly risky and exposes government funds to loss since

accounting officers have no control over individual‟s bank accounts. Management

was advised to adhere to the regulations.

Table 11 Advances to Staff Personal Accounts Entity Amount

Directorate Of Public Prosecutions 68,730,000



Parliamentary Commission 3,429,105,022



Uganda Health Systems Strengthening Project (UHSSP) 10,515,333

Mbarara University of Science And Technology 17,407,000

TOTAL 12,014,225,502

1.3.10 UN-AUTHORISED/EXCESS EXPENDITURE

An analysis of budget estimates and the actual expenditure of ministries,

departments and agencies revealed unauthorized/excess expenditure to the tune

of UGX. 24,946,031,342 mostly by foreign missions, universities and the energy

fund contrary to Section 17 and section 9 (5) of the PFAA, 2003. Table 12 below

refers. There was no authority in form of approved re-allocation or Virement

warrants obtained to incur over expenditure. Management was advised to adhere

to the relevant sections of the law.

Table 12 Un-Authorised/Excess Expenditure Entity Amount

Energy Fund 10,432,195,553

Makerere University 4,037,303,551

Makerere University Business School 1,936,187,681

33

Entity Amount


Kyambogo University 5,135,749,119

National Youth Council 51,750,000

Uganda, Embassy Addis Ababa 142,915,235


Uganda High Commission, Canberra 41,160,736

Uganda Embassy Juba 1,282,122,285

Uganda High Commission, London 461,037,361

Uganda Embassy New York 321,435,728

TOTAL 24,946,031,342

1.3.11IRREGULARITIES IN PROCUREMENTS

I noted that a number of entities conducted procurements worth

UGX.7,404,413,312 and US$.34,336 that violated the provisions of the

procurement law and its regulations. Table 13 below refers. The violations were

mainly in form of delays, un-planned procurements, use of non-prequalified

suppliers, un-accomplished procurements, un-authorised direct procurements,

non-delivery of four tractors and insufficient procurement records.

I advised Accounting Officer to always adhere to the provisions of the

procurement laws and regulations.

Table 13 Procurement Irregularity Entity Procurement

Irregularity Amount

Ministry of Works And Transport

Delays in the procurement evaluation process Nil

Ministry of Local Government

Pre-qualified framework contracts Nil

Ministry of Gender, Labour and Social Development

Non-Disposal of Obsolete Assets Nil

Office of the President Procurements not in the entity`s procurement plan

64,037,000

Ministry Of Trade, Industry And Cooperatives

Un implemented activities in the procurement plan

Un supported procurement

1,866,080,000

45,900,000

Ministry Of Agriculture, Animal Industry And Fisheries

Un planned procurement Incomplete renovation works Delayed Supply of 4 tractors

59,659,384 144,214,834 US$.34,336

Butabika Mental Referral Hospital

Un authorised additional funding above contractual figures

83,169,990

34

Entity Procurement Irregularity

Amount

Uganda Cancer Institute

Irregular Amendment of contract 2,197,609,659

Mulago Referral Hospital Complex

Direct Procurements ( Non Use of Prequalified Service providers)

Irregular Procurements Procurement of Parking Management Services

(unplanned and No records)

504,358,000

128,956,377

Ministry of Education And Sports

Delayed Procurement Process Nil

Makerere University Business School

Contract not cleared by the Solicitor General 152,707,104

Gulu University Direct Procurements 34,444,000

Ministry of Water And Environment

Delays in the procurement evaluation process Nil

Ministry of Trade, Industry And

Cooperatives

Un implemented activities in the procurement plan

Un supported procurement

1,866,080,000

45,900,000

Ministry of Foreign Affairs

Failure to submit progress Reports on Waivers and Deviations Given by PPDA

Nil

Uganda High Commission, Abuja

Non Compliance with the PPDA Act regulations Nil

Uganda Embassy, Cairo

Absence of a Procurement Plan Absence of Evaluation Committee Botched Renovation of the Official Residence Procurement of Office Laptops ( lack of technical

specification and evaluation report) Redesigning of the Chancery Reception ( lack of

evaluation committee report)

Nil

Nil Nil

Nil

Uganda High Commission, Canberra

Lack of procurement files 62,567,529

Uganda Embassy, Copenhagen

Lack of a procurement plan Nil

Uganda Embassy, Darla salaam

Irregular Procurements 116,645,135

Uganda Embassy, Tehran

Lack of a list of prequalified suppliers 32,084,300

1.3.12 Outstanding Receivables UGX. 136,620,085,336

During the review, it was noted that receivables worth UGX. 136,620,085,336 had

not been received by the various Ministries, Departments and Agencies and were

therefore still outstanding as at 30th June 2014 as summarized in table 14 below:

There is a risk that the activities for which these receivables were appropriated

were not carried out and this could have affected the implementation of planned

activities. I explained to the Accounting Officers that there seems to be laxity in

following up of the receivables and ensuring their recovery. I advised management

to expedite the recovery process and have all the receivables recovered.

Table 14 Outstanding Receivables

35

ENTITY AMOUNT


CAIIP Prog.II 672,139,959

CAIIP Prog.III 599,242,578

F/ Portal Hospital 7,775,000

Inspectorate of Government 62,170,000


Masaka Hospital 67,000,000

Mbale Hospital 2,625,000


Ministry of Foreign Affairs 3,343,140,729


Ministry of Information and Communications Technology 3,452,442


Ministry of Public Service 18,600,628

Ministry of Water & Environment 7,464,502,592

Ministry of Works & Transport 6,283,365,438

Moroto Regional Hospital 1,000,000

Mubende Regional Hospital 215,408,183

Naguru Hospital 62,039,827

National Citizenship and Immigration 8,628,412,000

National Planning Authority 3,648,966

Public Procurement and Disposal of Assets Authority 181,348,048


Uganda Blood Transfusion Service 124,356,004

Uganda Embassy in Belgium 82,653,340

Uganda Embassy in Berlin 233,199,891

Uganda Embassy in Burundi 3,966,456

Uganda Embassy in Canberra 13,366,531

Uganda Embassy in China 5,776,157

Uganda Embassy in Denmark 76,729,177

Uganda Embassy in Guangzhou 43,187,644

Uganda Embassy in Japan 274,164

Uganda Embassy in Moscow 46,827,823

Uganda Embassy in Rwanda 116,929,199

Uganda Embassy in Saudi Arabia 3,676,677

Uganda Embassy in The Us 327,593,565

Uganda Embassy in UAE Dubai 420,133,538


Uganda High Commission In India 14,203,221

Uganda High Commission In Kenya 44,644,765

Uganda High Commission In South Africa 7,585,007

Uganda Investment Authority 7,415,815,646

Uganda Mission At The Un, New York 646,745,100

Uganda Police 3,759,853,523

Uganda Prisons 2,437,182,189

Kampala Capital City Authority 72,258,023,654



36

ENTITY AMOUNT

Uganda Human Rights Commission 162,418,338

Uganda Land Commission 150,000,000


Uganda Registration Services Bureau - Liquidation Acc‟t 8,177,490,354


Uganda Road Fund 1,860,291,838


TOTAL 136,620,085,336

1.3.13 Staff shortages

Section 15(9) of the Standing Orders, 2010 mandates the Ministry of Public

Service to determine the structure, terms and conditions of service in Government

entities. Good strategic planning also requires an entity to carry out human

resource planning to ensure that an adequate number of qualified staff is in place

to carry out the operational activities of an entity so as to enable her achieve

strategic objectives. A review of the staffing structures of various MDAs however

revealed a number of vacant posts in a number of entities. The Table 15 below

refers: Inadequate staffing affects the timely implementation of the Ministry's

activities. It may adversely impact on the entities in the achievement of its

strategic objectives.

I advised Accounting Officers to make concerted efforts in liaising with all

stakeholders to ensure that vacant posts are filled to enable the Ministry

adequately deliver on its mandate.

Table 15 Staff shortages

Entity Approved Filled Vacant % shortfall

Min of Ethics and Integrity

59 46 14 24

Min of ICT 93 76 17 18

Min of Internal Affairs 35

Min of Lands 839 343 486 59

Min of Gender Labour

and Social Development

609 276 333 55

Mulago Hospital 1477 1290 187 12

DPP - - 31 -

Judiciary - - 297 -

Min of Tourism 43

Uganda Management Institute.

219 182 37 17

Makerere University. 2780 1484 1296 46

37

Entity Approved Filled Vacant % shortfall

MAAIF:-Department of Crop Protection

21

Min of Justice and Constitutional Affairs.

10

Min of Works

East African Civil

Aviation Academy.

Kireka Division of

Material Testing

76

70

54

46

22

25

29

32

Arua Regional Referral Hospital

354 301 53 15

Moroto Regional Referral

Hospital

386 153 233 60

Soroti Regional Referral

Hospital

344 259 85 25

Fort Portal Regional Referral Hospital

421 310 111 26

Hoima Regional Referral

Hospital

401 209 192 45

Jinja Regional Referral

Hospital

417 364 47 11

Kabale Regional Referral Hospital

350 227 123 35

Mbale Regional Referral

Hospital (PDU)

2

Mbarara Regional

Referral Hospital

620 437 183 30

Butabika Hospital 433 346 87 20

Uganda Blood

Transfusion Service

116 98 16 14

Kyambogo University 1550 830 720 46

Judicial Service Commission.

10

Uganda Road Fund 31 22 9 29

Parliamentary Commission.

485 403 80 16.5

Uganda Aids Commission 84 56 28 33

Health Service Commission

63 51 12 19

38

2.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE

GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL

STATEMENTS FOR THE YEAR ENDED 30TH JUNE, 2014

THE RT. HON. SPEAKER OF PARLIAMENT

I am mandated by Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as

amended), to audit and report on the public accounts of Uganda and of all public offices,

including the courts, the central and local government administrations, universities and

public institutions of like nature, and any public corporation or other bodies or

organizations established by an Act of Parliament.

I have audited the accompanying consolidated financial statements of Government of

Uganda for the year ended 30th June 2014. These financial statements comprise of the

Statement of Financial Position as at 30th June 2014, Statement of Financial Performance,

Statement of Changes in Equity, Cash flow Statement together with other accompanying

statements, notes and accounting policies.

Management‟s Responsibility for the Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and

Section 8 of the Public Finance and Accountability Act (PFAA), 2003, the Accounting

Officers are accountable to Parliament for the funds and resources of the Votes/Entities

under their control. The Accountant General is also responsible for the preparation and

fair presentation of Consolidated Financial Statements in accordance with the

requirements of the Financial Reporting Guide, 2008, and for such internal control as

management determines necessary to enable the preparation of financial statements that

are free from material misstatement whether due to fraud or error.

Auditor‟s Responsibility

39

My responsibility as required by Article 163 of the Constitution of the Republic of Uganda,

1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008 is to express

an opinion on these statements based on my audit. I conducted the audit in accordance

with International Standards of Supreme Audit Institutions (ISSAIs). Those standards

require that I comply with the ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the

amounts and disclosures in the financial statements as well as evidence supporting

compliance with relevant laws and regulations. The procedures selected depend on the

Auditor‟s judgment, including the assessment of risks of material misstatement of the

financial statements whether due to fraud or error. In making those risk assessments, the

Auditor considers internal controls relevant to the entity‟s preparation of financial

statements in order to design audit procedures that are appropriate in the circumstances

but not for purposes of expressing an opinion on the effectiveness of the entity‟s internal

control. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a

basis for my qualified audit opinion.

Part „„A‟‟ of this report sets out my opinion on the financial statements. Part “B” which

forms an integral part of this report presents in detail all the significant audit findings

made during the audit which have been brought to the attention of management.

PART “A”

Basis for Qualified Opinion

Un supported budget movement - UGX.264,546,614,000

In the Ministerial Policy Statement, management of Treasury Operations requested for

UGX.224billion to cater for external debt principal payments. However, this figure was

revised upwards to UGX.470,546,614,000 in the approved budget estimates. I was not

40

provided with the required documentation to provide justification and basis for the

upward revision of UGX.264,546,614,000.

Mischarge of Expenditure – UGX.49,972,190,602

A review of the expenditures revealed that various entities charged wrong expenditure

codes to the tune of UGX.49,972,190,602. This practice undermines the budgeting

process and the intentions of the appropriating authority as funds are not fully utilised for

the intended purposes. The practice also leads to financial misreporting.

Unaccounted for Advances

A total of UGX.84,323,243,109, advanced to staff to carry out activities in various entities

remained un-accounted for by the time of audit, contrary to the Public Finance and

Accounting Regulations. Delays in accounting for funds may encourage misappropriation.

Qualified Opinion

In my opinion, except for the possible effects of the matters described in the Basis for

Qualified Opinion paragraph, the consolidated financial statements of Government of

Uganda for the year ended 30th June 2014 are prepared, in all material respects, in

accordance with the Financial Reporting Guide, 2008 and section 31(6) of the Public

Finance and Accountability Act, 2003, of the Laws of Uganda.

Emphasis of Matter

Without qualifying my opinion further, attention is drawn to the following additional

matters which are also included in part B of this report and my annual report to

Parliament.

Contingent Liabilities - UGX.4,384,339,987,635

As disclosed in in the statement of contingent liabilities, Government contingent liabilities

are reported at UGX.4,384,339,987,635 up from UGX.2,275,442,213,858 the previous

year. The trend appears unsustainable in the event that a significant percentage

crystallizes into liabilities.

Classified Expenditure

41

As disclosed in note 7, a total of UGX.426,439,648,203 relates to classified expenditure.

In compliance with Regulation 12 of the Public Finance and Accountability (Classified

Expenditure) Regulations 2003, this expenditure was audited separately and a separate

audit report issued.

John F.S. Muwanga

AUDITOR GENERAL

KAMPALA

27th March, 2015

42

PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL

STATEMENTS OF THE UGANDA CONSOLIDATED FUND ACCOUNT FOR THE

FINANCIAL YEAR ENDED 30TH JUNE 2014

This Section outlines the detailed audit findings, management responses, and my

recommendations in respect thereof.

2.1 INTRODUCTION

Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended)

requires me to audit and report on the public accounts of Uganda and all public

offices including the courts, the central and local government administrations,

universities, and public institutions of the like nature and any public corporation or

other bodies or organizations established by an Act of Parliament. Accordingly, I

carried out the audit of the Government of Uganda Consolidated Financial

Statements to enable me report to Parliament.

2.2 BACKGROUND INFORMATION

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as

amended) and Section 8 of the Public Finance and Accountability Act, 2003, the

Accounting Officers are accountable to Parliament for the funds and resources of

the Votes/Entities under their control. The Accountant General is appointed as the

Accounting Officer and Receiver of Revenue for the Consolidated Fund. He is

responsible for establishing and maintaining a system of Internal Controls

designed to provide reasonable assurance that the transactions recorded are

within the authority and properly record the use of all public funds by the

Government of the Republic of Uganda. Accordingly, the Accountant General is

responsible for the preparation and fair presentation of Consolidated Financial

Statements in accordance with the requirements of the Public Finance and

Accountability Act, 2003, and the modified cash basis of accounting.

The accompanying Government of Uganda consolidated financial statements

provide a record of the Governments‟ financial performance for the year 2013/14

43

and the financial position of the consolidated fund as at 30th June 2014, in

accordance with the Public Finance and Accountability Act, 2003.

2.3 AUDIT SCOPE

The audit was carried out in accordance with International Standards of Supreme

Audit Institutions (ISSAIs) and accordingly included a review of the accounting

records and agreed procedures as was considered necessary. In conducting my

reviews, special attention was paid to establish whether;

a. The consolidated financial statements have been prepared in accordance

with consistently applied Accounting Policies and fairly present the

revenues and expenditures of government for the year and of the

consolidated financial position of the Consolidated Fund as at the end of

the year.

b. All funds were utilized with due attention to economy and efficiency and

only for the purposes for which the funds were provided.

c. Management was in compliance with the Government of Uganda financial

regulations.

d. To evaluate and obtain a sufficient understanding of the internal control

structure of the department, assess control risk and identify reportable

conditions, including material internal control weaknesses.

e. All necessary supporting documents, records and accounts have been kept

in respect of all activities, and are in agreement with the consolidated

financial statements presented.

2.4 AUDIT PROCEDURES PERFORMED

The following audit procedures were undertaken:-

a. Revenue

Obtained schedules of all revenues collected and reconciled the amounts to the

entity‟s cashbooks and bank statements.

44

b. Expenditure

The entity payment vouchers were examined for proper authorization, eligibility

and budgetary provision, accountability and support documentation.

c. Internal Control System

Reviewed the internal control system and its operations to establish whether

sound controls were applied throughout the period audited.

d. Entity Financial Statements

Examined, on a test basis, evidence supporting the amounts and disclosures in the

financial statements; assessed the accounting principles used and significant

estimates made by management; as well as evaluating the overall financial

statement presentation.

2.5 FINDINGS

2.5.1 Budget Performance

During the year under review, government realised domestic revenue amounting

to UGX.8,558,164,372,769 out of the projected amount of

UGX.8,760,700,000,000, representing a 98% performance. A total of

UGX.468,539,890,855 was also realised from grants.

Further noted was that although a total of UGX.11,909,327,199,837 was

appropriated for utilization by MDAs, government released a sum of

UGX.9,951,405,146,965 to the MDAs to cater for their planned activities. This

represents 84% of the approved budget as summarized in the table below.

Table showing Budget Performance by Classification

Summary Approved Estimates (Ugx)

Actual Released (Ugx) Performance Percen

tage

Ministries 4,082,118,540,426 2,829,005,115,553 69%

Agencies 5,600,222,403,447 4,965,527,511,837 89%

Referral Hospitals 128,334,797,129 110,399,214,895 86%

Embassies abroad 89,508,388,833 88,628,155,914 99%

District Councils 1,885,871,113,747 1,837,334,896,715 97%

45

2.6 SUPPLEMENTARY EXPENDITURE - UGX.56,133,336,950

Article 156(2) of the Constitution of the Republic Government 1995 (as amended)

prescribes that if in respect of any financial year it is found that the amount

appropriated for any purpose under the Appropriation Act is insufficient or that a

need has arisen for expenditure for a purpose for which no amount has been

appropriated by the Act, a supplementary estimate showing the sums required or

spent shall be laid down before Parliament and in the case of excess expenditure,

within four months after the money is spent.

Section 12 (1) of the Budget Act 2001 stipulates that total supplementary

expenditure that requires additional resources over and above what is

appropriated by Parliament shall not exceed 3% of the total approved budget for

that financial year without prior approval of Parliament.

I noted during a detailed analysis of the supplementary expenditure that an excess

of UGX.56,133,336,950, which is 0.4% above the approved 3% as per the Budget

Act, was spent without prior approval by parliament. However, the provision in the

Budget Act appears not to be in harmony with the provision in the Constitution

with regard to approval of a supplementary expenditure. I have accordingly

advised government to seek a legal interpretation of the above provisions so as to

have them harmonised.

2.7 Payment of Gross Tax for Ineligible Items

In a letter dated 25th June, 2013, referenced TPD 167/238/19 from the Minister of

State for Finance to the Commissioner General, Uganda Revenue Authority (URA),

Government committed itself to support the Agriculture Sector, in particular the

textile sub sector, by paying Value Added Tax (VAT) and Import duty on raw

materials imported for manufacturing textiles, and VAT on the supply of

manufactured textiles. This was subject to the condition that the raw materials

Urban/municipal

Councils

123,271,956,255 120,510,252,051 98%

Totals

11,909,327,199,837

9,951,405,146,965 84%

46

would exclusively be used to manufacture textiles. The interventions would make

locally manufactured textiles cheaper and, thus promoting the growing of crops

that provide fiber.

I noted that the Ministry of Finance, Planning, and Economic Development paid a

sum of UGX.653,893,113 in taxes, on behalf of private companies in relation to

the goods which were not raw materials used in the manufacturing of textiles.

These included items such as already woven and printed Polyester bed sheet

materials. This practice undermines the intentions of Government, due to the fact

that imported textile materials eventually become cheaper and suffocate the

demand for locally manufactured textiles. This negatively impacts on the demand

for agriculture produce.

I advised Management to always keenly observe the conditions set by Government

before approving such tax payments, and to consider initiating recovery measures

of the amounts irregularly expended.

2.8 Contingent liabilities - UGX.4,384,339,987,635

A contingent liability is a possible cash outflow whose occurrence is dependent on

an event which is not in the control of an organization. Including figures as

contingent liabilities implies that management‟s assessment shows a possibility of

a cash outflow in a near future.

During the year under review, the balance for contingent liabilities increased from

UGX.2,275,442,213,858 as at 30th June, 2013, to UGX.4,384,339,987,635 as at

30th June, 2014, representing a 93% increment. This is an equivalent of 54% of

the tax revenue collected by URA during the year under review. It was further

noted that out of the reported amount, 98% was arising from legal proceedings

against Government under the Ministry of Justice and Constitutional Affairs. In the

event that all these liabilities crystalize, Government will be required to use close

to 50% of its annual budget to meet these liabilities, which is likely to adversely

affect implementation of other government programmes.

47

In response, management explained that mitigation against accumulation of such

contingent liabilities requires Government wide responsibility and effort. I

concurred with this explanation and accordingly advised Government to look into

this matter so as to arrive at a sustainable solution.

2.9 Payroll Management

The Government of Uganda has been implementing a centralized payroll payment

process which has been characterized by numerous weaknesses. Under this

process, most Accounting Officers perceived their role within the payroll payment

process as implementing the assignment on behalf of Ministry of Public Service

(MoPS), but without full responsibility and accountability on what happens in the

process. In addition, MoPS did not have adequate resources to manage a

centralized payroll process. This resulted into delayed payments, inclusion of ghost

employees on the payroll, delays in staff accessing the Government payroll and

repeated removal and reinstatement of staff on the payroll. Details of these

findings are contained in my report on the comprehensive audit of the

Government payroll issued in February 2015.

During the year under review, a reform to decentralize the payroll payment

process was initiated. Under the new decentralized salary payment process,

individual votes are required to upload, process and pay salaries from their votes‟

respective salary accounts in BoU. The Accounting Officers are therefore fully

responsible for their payrolls including the timing of monthly salary payments. The

new arrangement has had significant improvements in the management of the

payroll payment process, especially in the areas of timely payment, exclusion of

ghosts, prompt inclusion on the payroll of newly appointed staff and fully

assigning payroll responsibility to Accounting Officers.

While the principle of decentralised management has had its merits, the lack of

adequate controls supported by a strengthened payroll monitoring system, poses

a risk to the management of the decentralised model. The decentralised payroll

process without clear controls at the different Votes may in the long run just

transfer the same payroll challenges to the Votes. Besides, at the time of the

48

audit, each Accounting Officer processed payroll data using the IPPS from which a

payroll was generated monthly. This was then transferred to the IFMS, IPPS

interface in „plain text format‟ and then manually uploaded into the IFMS for

payment. However, the „plain text format‟ used in this process is not a secure

format and is open to uncontrolled modification, which, if changes were made,

could go undetected due to the absence of any form of change log.

In response, management acknowledged that upload of files is open to

modifications but the Accounting Officers are required to run an invoice register

and reconcile it with the payroll before approval of invoices. I advised Treasury

and MoPS management, to implement a software mechanism, which enables the

movement of encrypted payment related data from the IPPS to the IFMS.

2.10 Unauthorized Receipt of grants by MDAs

Section 57 of the Public Finance and Accountability Act, 2003, states that, “Any

grants made to the Government shall be received by the Minister (Minister for

Finance) on behalf of Government and shall be paid into and form part of the

Consolidated Fund or a special fund established for a specific purpose”. Ideally,

the Ministries, Departments and Agencies (MDA‟s) are expected to identify project

needs for donor support and come up with proposals through the Sector Working

Groups. The development committee at MOFPED then conducts a feasibility study

of the project proposal and thereafter identifies Development Partners for funding.

Once the source of funding is identified, an MoU between the Minister for Finance

and the Development partner is signed. The grants are then entered in the

Ministry of Finance‟s Debt Management and Financial analysis System (DMFAS) for

onward monitoring and reporting.

Comparison of notifications from Bank of Uganda sent to MOFPED relating to

funds received from Development Partners and total grants reported in the DMFAS

revealed that grants worth USD.15,322,575 received in Bank of Uganda by various

government Ministries, Departments and Agencies were not in the DMFAS. In

addition, grants worth USD.98,052,299 received from various Development

49

Partners for various research initiatives by Makerere University over a three year

period were not found on the system.

Management explained that they did not have any documentation pertaining to

the said funds and that only grants with agreements or MoUs that involved

MoFPED were included in the system. This may imply that funds were solicited on

behalf of GoU without involvement of the Minister responsible for Finance, and are

therefore unknown to the Ministry. This creates risks of: double financing by both

GoU and donors; abuse of funds by recipients; uninformed allocation of GoU funds

and the risk of using GoU funded activities to account for donor funds and/or vice

versa. It also implies that the total of Grants reported in the consolidated financial

statements is understated and misleading. I advised government to put in place a

mechanism to track all grants received on its behalf and accordingly monitor their

performance.

2.11 The Treasury Single Account

With effect from 1st October 2013, Government of Uganda (GoU) introduced a

Treasury Single Account (TSA) in which all government cash balances are

aggregated into a set of linked accounts. The primary objective of the TSA was to

ensure management of GoU aggregate cash balances in order to: Minimize

transaction costs during budget execution; Ensure efficient control and monitoring

of funds released to various Government agencies; and better coordination

between fiscal and monetary policy implementation initiatives of government.

The operations of the TSA over the period under review were analysed, and it was

noted that despite having challenges in the transition period, the implementation

has been largely successful. It was noted that: the arrangement has led to the

closure of a number of redundant accounts, which could have been avenues for

misuse of funds; it has greatly improved treasury cash management; as at 30th

June, 2014, cash is only available to entities which can absorb it; and it is

envisaged that in subsequent years, borrowing from the domestic market will be

greatly reduced.

50

However, I noted that the TSA is heavily dependent on strong budget controls on

the IFMS given that invoice funding is from a basket. At the moment, paid

transactions can still be presented as voided on the system and this creates extra

budgetary funds. In addition, budget journals can still be used to bypass all other

controls available in the budget revision process. I advised the Accountant General

to further strengthen the system and manual controls regarding budget revision so

as to harness all the benefits of a Treasury Single Account.

2.12 Payables

Audit reviewed the status of payables (domestic arrears) as at 30th June, 2014 and

noted that despite adopting the commitment control system, the total value of

payables increased by UGX.138.166 billion (approximately 12%) from UGX.1.127

trillion in the financial year 2012/2013 to UGX.1.265 trillion in the year 2013/2014.

This is further illustrated in the table and graph below;

Table 1: domestic arrears for the last four years

Financial Year

2010/2011 2011/2012 2012/2013 2013/2014

Amounts (Ugx)

473,654,629,150 763,186,161,377 1,127,241,181,530 1,265,406,925,415

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

2010/2011 2011/2012 2012/2013 2013/2014

Am

ou

nt

-U

gx (

'00

0)

Financial Year

Trend of Payables Position

Amounts - Ugx ('000)

51

The current status shows a steady increase in the payables figures, which

indicates that the current approaches to address the problem are not effectively

working. The debt figure may become unmanageable as it appears to be spiraling

out of control.

In response, various Accounting Officers explained that the Commitment Control

System cannot control certain types of expenditures such as the contractual

obligations of rent, wage and contributions to International Organizations. This is

further complicated by the budget credibility issues whereby certain Accounting

Officers may not budget adequately for some of the known expenditures.

Sometimes even when they budget adequately, in cases where budgets are cut to

finance supplementary budgets, arrears can be created.

I have advised that Treasury needs to evaluate the current approach that is being

utilized to control domestic arrears and consider making improvements in order to

reverse the spiraling trend.

2.13 Mischarge of Expenditure - UGX.49,972,190,602

Expenditure amounting UGX.49,972,190,602 by several votes in respect of various

activities was charged wrongly to item codes meant for other activities resulting in

misstatement of amounts expended on the affected item codes. These were done

without authority from Permanent Secretary/Secretary to Treasury (PS/ST).

Mischarges impact on the credibility of the financial statements, since the figures

reported therein do not reflect true amounts expended on the affected

expenditure items.

There is need for Accounting Officers to streamline budgeting processes and to

enforce strict adherence to the provisions regarding reallocation of funds.

Table showing entities that had mischarged expenditure

Entity AMOUNT MISCHARGED -

UGX

Accountability Sector


52

Department Of Ethics and Integrity 275,372,736

Works and Transport Sector





Uganda Police Force 132,090,477

Uganda Prisons Services 637,537,384

JLOS SECTOR




DPP 454,431,122


National Citizenship And Immigration Control 5,906,786,217

Public Sector Management







Expanding Social Protection (2013) 11,976,000

Agriculture Sector

National Agricultural Research Organisation (NARO) 206,704,980

Energy Sector


Land Sector



Ministry of Tourism Wildlife And Antiquities 115,112,418

WATER SECTOR

Ministry of Water and Environment 1,545,058,115

NEMA 942,053,402

MISSIONS


HEALTH SECTOR


53

Uganda Blood Transfusion Services 27,880,704



Education Sector




Total 49,972,190,602

2.14 Unaccounted for Funds

A sum of UGX.84,323,243,109, remained unaccounted for at the end of the year.

This comprised of funds advanced to staff to carry out various activities in various

Ministries, Departments and Agencies. This is contrary to the Public Finance and

Accountability Regulations which require all such advances to be accounted for

within 60 days on completion of the related activity. Delayed accountability for

funds may lead to falsification of accountability documents.

I advised the Accounting Officers to adhere to Regulations by ensuring that before

another amount is advanced, a previous one ought to be fully accounted for.

Table showing unaccounted for advances

Entity AMOUNT - UGX


Strengthening Evidence Based Decision Making II-MOFPED 74,903,000

Transport Sector Development Project SDR 120,000,000 23,632,667




District lively hood support Programme 183,219,506

Northern Uganda Social Action Fund 58,826,655,271

Uganda Good Governance (UGOGO) Programme 109,402,538


Kampala Capital City Authority 74,547,100


NAADS secretariat 8,460,120,471

Ministry Of Energy And Mineral Development 122,889,501

Energy for Rural Transformation II Project – Private Sector Foundation Uganda (PSFU) Component

455,000

54

Entity AMOUNT - UGX



East African Public Health Laboratories Networking Project (EAPHLNP)

31,377,000

Uganda Health Systems Strengthening Project (UHSSP) 27,007,487

Arua Regional Referral Hospital 359,130,640



Gulu Regional Referral Hospital 219,224,118

Mbarara Regional Referral Hospital 10,164,220

Soroti Regional Referral Hospital 23,466,678

Hoima Regional Referral Hospital 12,520,753

China-Uganda Friendship Hospital Naguru 1,500,129,768

Ministry of Education and Sports 873,759,757

Ministry of Education and Sports Universal Post Primary

Education and Training (UPPET) Project

10,008,317,486


Economic Policy Research Centre (EPRC) 62,020,000



Gulu University 728,758,584

Ministry of Water And Environment 202,890,333

Lake Victoria Environmental Management Project Phase II (LVEMP II)

30,758,200

Water and Sanitation Development Facility - East (WSDF-E) 19,417,500


Uganda High Commission, Bujumbura 13,748,041

Uganda Embassy, Cairo 52,625,621

Uganda Embassy, Kinshasa 61,253,767

Ministry of Public Service 302,018,445

TOTAL 84,323,243,109

55

ACCOUNTABILITY SECTOR

3.0 TREASURY OPERATIONS

3.1 Un supported budget movement

It was noted that in the ministerial policy statement submitted to Parliament for

the year under review, management requested for UGX.224billion to cater for

External Debt Principal Payments. It was however noted that, in the approved

budget estimates, a total of UGX.470,546,614,000 was allocated for external debt

principal repayments. I was not provided with the required documentation to

support the upward revision of UGX.264,546,614,000.

It was further noted that of the approved amount, a total of UGX.329,197,200,187

representing 70% of the external debt budget, was vired to other expenditure

items. Management explained that while it is true that external debt amortization

was UGX.224bn, they had factored in domestic debt interest to allow for any

interest shortfall. However, it should be noted that domestic debt interest was

budgeted for elsewhere to a tune of UGX.860bn. This is an indicator of

weaknesses in the budget formulation which undermines the credibility of the

budgeting processes.

I have advised Management to strengthen its budgeting processes so as to arrive

at realistic estimates. Management is further requested to provide the basis for the

above budget revisions as well as virements.

3.2 Payments in respect of Mandamus Orders

It was noted that Parliament did not appropriate funds for expenditure on item

282104, in respect to payments for third party compensations under the Treasury

Operations Vote. However, management made virements from external debt

payments to the tune of UGX.87,992,164,680 to cater for third party

compensations. The following observations have been noted;

a) The force of Mandamus orders

I noted that the mandate to settle court awards is vested with the Ministry of

Justice and Constitutional Affairs and the line item was provided for as a statutory

56

charge on the Consolidated Fund. During the year under review, the Ministry of

Justice and Constitutional Affairs paid domestic arrears amounting to

UGX.8,561,690,269 in respect of Court Awards and compensations. The payment

of UGX.87,628,710,396 to several beneficiaries by the Ministry of Finance Planning

and Economic Development under mandamas orders creates a distortion within

the established payment frameworks.

The Accounting Officer explained that authority to effect the payments was

communicated in a letter Ref. MA/57/012/M and dated 13th June 2013 by the

Attorney General to the Minister of Finance, Planning and Economic Development.

I advised management that the issue of mandate be resolved to ensure

conformance with set laws.

b) Disregard of MoUs

Due to cash flow constraints, Memoranda of Understanding (MoUs) were entered

by MOFPED with the representatives of the would-be beneficiaries to spread the

payments over a longer period without attracting extra interest. However, there

were instances of payments by the Ministry of Finance, Planning and Economic

Development, beyond the agreed installments. This trend needs to be checked if

any benefits are to be reaped from signing the MOU‟s.

Table showing payments not in in line with payment plans as per MoUs

Court case Amount agreed on in MoU - Ugx

Amount paid - Ugx

Amounts that could have been paid in

later years - Ugx

C/S No.22/2001 4,808,185,200 8,488,185,200 3,680,000,000

C/S No.16/2009 10,349,786,849 15,700,289,135 5,350,502,286

C/S No.469/2004 618,610,131 1,136,370,000 517,759,869

Total 15,776,582,180 25,324,844,335 9,548,262,155

c) Unreliable balances

As a result of uncoordinated operations/payments, the balances being reported by

the Solicitor General have not fully taken into account payments made by the

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Ministry of Finance, Planning and Economic Development; details of variances are

shown below;

Table showing reported balances Court case Amount

Awarded - Ugx

Amount Paid by

MOFPED - Ugx

Expected Balan

ce - Ugx

Balance per MOJCA

- Ugx

Over statement - Ugx

C/S No.22/2001

21,294,000,000 8,488,185,200 12,805,814,800 21,294,000,000 8,488,185,200

C/S No.98/2008

6,018,427,774 3,171,794,441 2,846,633,333 4,200,000,000 1,353,366,667

C/S No.16/2009

44,760,128,000 15,700,289,135 29,059,838,865 35,000,000,000 5,940,161,135

Total 15,781,7

13,002 Under the circumstances, the cross vote payments will affect the validity of the

reported outstanding balances of court awards and compensations and may

eventually lead to overpayments. Besides, the reported payables both under

MOJCA and in the Consolidated Accounts were overstated by Ugx.15,781,713,002,

as a result of failure to reconcile the payments in question.

Non deduction of taxes

In accordance with Section 61 of the Income Tax Act, Cap.340 a compensation

payment derived by a person takes the character of the item that is compensated.

I noted that except for payments to one law firm, no taxes from interest earned,

legal fees, and compensation for loss of business were withheld from the other

payments as required by Sections 118 and 120 of the Income Tax Act. This could

be attributed to the fact that the Ministry of Finance did not have details of the

breakdown of outstanding amounts.

I have advised that whereas the letter from the Solicitor General sets out

responsibility, it is imperative that accounting mechanisms are put in place to

ensure that transactions are captured in both entities to reflect the correct

position. In addition, the Accounting Officer is advised to ensure compliance with

the provisions under the Income Tax Act, with regard to deduction of withholding

taxes, while effecting such payments.

3.3 Domestic Investment

A sum of UGX.1,928,989,607,673 is reported as the net worth for domestic

investments. I reviewed the accompanying schedule and noted that Entities with a

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total net worth of UGX.249,298,051,082, had their net worth unchanged for the

financial years ending 30th June, 2013 and 30th June, 2014 as shown in the table

below. However I was not provided with evidence to confirm this position. It is

highly unlikely that such investments remained static for the two years. In the

absence of evidence to support this position, there is a risk that the balance for

domestic investments is misstated.

Table showing entities with unchanged Net worth

ENTERPRISE HISTORICAL COST - UGX

Net worth as at - UGX

30/6/2013 30/6/2014

GOVT. PARASTATALS ( 100 % HOLDING)

Post Bank Uganda Ltd 7,999,998,200 13,972,130,667 13,972,130,667

Uganda Electricity Transmission Co Ltd

61,229,404,597

(8,998,569,000)

(8,998,569,000)

Amber House 5,000,000,000 22,898,824,358 22,898,824,358

Uganda Printing and Publishing Corporation

3,542,271,000

7,305,996,584

7,305,996,584

Posta Uganda 19,487,176,000 22,428,287,000 22,428,287,000

National Medical Stores 12,932,830,091 22,447,283,000 22,447,283,000

Uganda Railways Corporation

39,989,832,000

73,721,730,000

73,721,730,000

National Enterprises Corp

42,336,083 21,507,069,815 21,507,069,815

Uganda Crane Industries

Ltd.

16,280,574,639

247,363,838

247,363,838

175,530,116,262 175,530,116,262

MINORITY SHAREHOLDING (LESS THAN 50% HOLDING )

Phoenix logistics (31/07/08)

5,097,599,190

2,333,706,820

2,333,706,820

Kinyara Sugar Works Ltd 3,000,456,160 66,818,850,000 66,818,850,000

LAP textiles Limited 2,405,378,000 2,405,378,000 2,405,378,000

71,557,934,820 71,557,934,820

PREFERENCE SHARES

Good Africa Coffee (20/06/08)

2,210,000,000

2,210,000,000

2,210,000,000

2,210,000,000 2,210,000,000

249,298,051,082 249,298,051,082

3.4 Un recognized Investment in M/S Victoria International Airways Ltd

In a letter dated 12th July, 2006 referenced EDP.73/100/01, the then Minister for

Finance requested the Solicitor General to make a capital injection of USD.250,000

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into M/S Victoria International Airways Ltd (VIA Uganda) for purchase of shares in

the same company by the Government of Uganda. The funds were to be obtained

from the proceeds from the liquidation of the defunct Uganda Airlines Corporation,

in which the Registrar General was appointed as the official receiver. The Solicitor

General accordingly effected this payment, as per his letter to the Minister,

referenced ADM/11/158/01, dated 25th July 2006.

However, I noted that this investment is not reflected in the Treasury books of

account. There is no information pertaining to dividends (if any) that have been

remitted to GoU ever since the investment was undertaken and no record of

government representation on the Board of Directors. In the circumstances, there

is risk of Government losing this investment to the private owners of the airline.

Besides, the decision to acquire shares in a private company doing the same

business from which the Government was divesting at the time appears not to

have been properly evaluated.

In response, management explained that they did not have any information

pertaining to this investment. I have advised management to follow up this matter

and secure a share certificate for the investment, recognize it in the books of

account and obtain board representation.

3.5 Performance of loans

A review of the loan disbursements revealed that several loans appeared to be

performing poorly, with some nearing expiry, while others reached the closing

date without fully disbursing. Details are shown below;

Table showing performance of some loans Creditor Project Name Curren

cy Loan Amount

Disbursed % Disbursed

Date Signed Closing Date

ADF Road Sector Support project 4

AFU 72,940,000 - 0% 11/12/13 30/6/18

BADEA Urban Markets & Agric Products

USD 10,000,000 44,645 0% 16-Jul-09 30-Mar-15

GOVT. OF GERMANY

132 KV Double Circuit Tr. Line

EUR 15,000,000 -

0% 24-Oct-13 24-Oct-17

IDB CAIIP III IDI 5,210,000 0% 14-Jun-12 31-Dec-16

OPEC FUND Energy Dev't & Acces Expansion

USD 10,000,000 -

0% 29-Jan-13 31-Dec-16

SAUDI ARABIA

Rural Electrification

SAR 41,250,000 -

0% 13-Oct-11 30-Oct-14

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Creditor Project Name Currency

Loan Amount

Disbursed % Disbursed

Date Signed Closing Date

FUND Project

ADF Supp. to Higher Education(HEST

AFU 67,000,000 882,987.25 1% 5-Jul-13 30-Jun-18

BADEA Rural Electrification Project

USD 10,000,000 51,770 1% 22-Jul-10 30-Sep-14

BADEA Nakaseke Technical Institute

USD 5,000,000 101,723 2% 28-Jun-11 30-Jun-14

IDB Specialized Mater. & Neonatal

IDI 14,080,000 321,843.84 2% 4-Apr-12 30-Jun-16

IDB National Educ Sup. Phase II

IDI 9,010,000 225,285.04 3% 30-Jun-11 31-Dec-15

IDB Rural Income & Employment

IDI 6,600,000 310,045.00 5% 22-Feb-10 30-Jun-14

IDB IDB-SMALL BRIDGES IN N.&NE UGA

IDI 7,000,000 391,999.32 6% 22-Dec-08 31-Dec-14

IDA Water Mgt & Dev't Project

SDR 87,100,000 6,425,496.65 7% 22-May-13 31-Dec-18

BADEA Line Of Credit-UDBL

USD 4,500,000 615,523.70 14% 12-May-09 31-Mar-15

JICA Electric Grids of Nile Equator

JPY 5,406,000,000

890,333,539 16% 26-Mar-10 1-Dec-17

ADF 3rd Community Agric Infrastruc

AFU 40,000,000 6,978,800.48 17% 10-Jun-11 31-Dec-16

BADEA N.NE Bridges USD 7,000,000 1,177,910.09 17% 20-Oct-05 31-Dec-14

KUWAIT FUND

KUWAIT FUND FOR UDBL

KWD 3,000,000 816,785.78 27% 22-Sep-10 30-Jun-15

IDB National Education Support

IDI 8,660,000 2,437,451.14 28% 24-Jun-10 31-Dec-14

OPEC FUND Vocational Education Project

USD 22,950,000 6,611,023.34 29% 23-Mar-10 31-Dec-14

ADF Kampala Sanitation Program 1

AFU 35,000,000 10,587,456.20 30% 11-May-09 31-Dec-14

ADF Interconnect Nile Elect Grids

AFU 7,590,000 2,362,395.70 31% 13-May-09 31-Dec-14

IDA 2nd L.Victoria Enviro Mgt Proj

SDR 17,600,000 8,571,811.09 49% 29-Oct-09 31-Dec-14

ADF Mbarara Nkenda Power Lines

AFU 52,510,000 29,767,184.98 57% 13-May-09 31-Dec-14

JICA Bujagali Interconnection Proj.

JPY 3,484,000,000

1,990,709.71 57% 30-Oct-07 21-Mar-15

Such low levels of performance undermine the attainment of planned development

targets and renders commitment charges paid in respect of undisbursed funds

nugatory.

Management explained that poor Loan performance is attributed to both internal

(GoU) and External (Creditor) factors. The major internal factors include

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procurement challenges, compensation of third parties and lack of Land titles for

Large Infrastructure Projects. The main external factor is lack of legal and

regulatory framework to enable implementation of some Loans from the Islamic

development Bank. Government is fast tracking the Financial Institutions Act

amendment, to enable Islamic/Shariah Banking to operate. I have advised

government to identify and resolve any bottlenecks hindering the smooth

implementation of the above projects as well as explore ways of expediting the

processes so as to improve on service delivery.

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4.0 MINISTRY OF FINANCE, PLANNING AND ECONOMIC

DEVELOPMENT

4.1 Mischarge of expenditure

The Government Chart of Accounts defines the nature of expenditures for each

item code. The intention is to facilitate better and consistent classification of

financial transactions and also track budget performance per item. A review of

records for the year under audit revealed that UGX.2,208,201,055 was charged on

items which do not reflect the nature of the expenditure incurred. This constituted

of 0.9% total expenditure for the Ministry. Mischarge of expenditure impacts on

the credibility of the financial statements since the figures reported therein do not

reflect true amounts expended on the respective items. It further impacts on the

appropriateness of the future budgets since the reported actual figures are

misleading.

Management explained that this was a result of the difference between Chart of

Accounts classification of expenditure items and Output Budgeting Tool (OBT).

While the newly passed Public Finance Act is based on outputs, the chart of

accounts has not been aligned to the new budgeting methodology.

I advised management to liaise with Treasury to align the chart of accounts to the

budgeting tool for appropriate reporting.

4.2 Un-supported Gross Tax payments

Gross tax payments made to URA are expected to be made against commitment

forms properly supported with import documentation and tax assessments. A

review of the underlying documentations revealed that UGX.1,114,667,735 was

not supported with import taxation documentation and URA tax assessments. In

the above circumstances, I was unable to confirm that the gross tax payments

were eligible.

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I advised management to always ensure that payments from the gross tax

account are properly supported, otherwise funds are recoverable.

4.3 Gross Tax Payments for Non-Qualifying Items

As part of Government support to the Agriculture Sector value chain and in

particular the Textile sub-sector, Government was meant to pay VAT on imported

raw materials for the manufacturers of textiles. A review of a sample of payments

for import taxes on behalf of the textile beneficiary companies revealed that the

beneficiary company imported finished textiles (Bales 100 % polyester printed

fabric) worth UGX.1,659,611,200 and UGX.144 million was for goods described as

polyester bed sheets. This is contrary to the purpose for which the incentive was

established. Importation of printed fabric and bed sheets materials will not benefit

the local cotton farmers as had been intended. Ideally, to support the agricultural

sector, beneficiary companies ought to have been procuring all the cotton

ginned/produced in the country and not bringing in printed fabric. It was therefore

irregular for the Ministry to make such payments on these finished products

without carrying out due diligence.

I advised management to restrict tax payments to only raw materials as per

Government policy for the textile sub-sector. Management should initiate recovery

measures for all payments made in respect of semi and finished products (bed

sheets and printed fabric).

4.4 Un-supported tax payments for clearance of textile materials

According to the circular ref: EDP 81/137/05 by the Accounting Officer it was

indicated that for a company to qualify for the incentive of exemption of VAT

/import duty in the textile industry, they needed to present PAYE and NSSF returns

for verification of the minimal number of employees required, an investment

license from Uganda Investment Authority, among other requirements. However,

it was noted that UGX.980,735,024 was paid to URA in relation to taxes for textile

imports without proof that the above requirements had been fulfilled.

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There is a risk that the objective of setting the above conditions was not achieved

and that the beneficiaries did not qualify.

I advised management to ensure that all beneficiary companies always provide the

required information as verified and cleared prior to making payments for the

incentives.

4.5 AGRICULTURE CREDIT FACILITY (ACF)

The Agricultural Credit Facility (ACF) was set up in 2009 by Government in

partnership with commercial banks, Credit Institutions and Uganda Development

Bank (the Participating Financial Institutions (PFIs) with the aim of providing

medium and long term loans to projects engaged in agriculture and agro-

processing on more favourable terms than usually available from Financial

Institutions. During the year, a sum of UGX.30bn was deposited by the Ministry of

Finance, Planning and Economic Development onto the ACF Escrow account for

onward remittance to the Bank of Uganda Capital Account. The memorandum of

Understanding (MOU) and progress report for the period ending September 2014

from Bank of Uganda were reviewed and the following noted:

a) Non-utilization of Agricultural Credit Facility

The escrow account held by the Accountant General‟s office in BoU closed with the

UGX.30 billion because these funds had not been transferred to the ACF capital

account as at 30th June 2014. The ACF capital account is an account where funds

released are held for onward disbursement to the Participating Financial

Institutions (PFIs). It was noted that a sum of UGX.16,507 million was held on the

ACF capital account un-utilized at the year-end. This implies that a total of

UGX.46.507 billion released for the ACF activities remained idle on the two

accounts during the year. The objective for which the funds were appropriated

and released may not be achieved.

Management explained that Bank of Uganda (BoU) disburses funds to the

Participating Financial Institutions (PFIs) with respect to only approved eligible

projects whose pace of flow depends on the PFIs. This project conception had

little input from BOU as a stakeholder but during implementation a number of

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challenges existed that required a revision of the implementation policy and MOU

to ensure that there is adequate absorption of the funds.

I advised management to expedite the revision of the policy and MoU to address

the implementation challenges.

b) ACF GoU contribution

According to the financing MoU, Government was supposed to contribute UGX.30

billion annually and the Participating Financial Institutions (PFIs) were to match

the GoU contribution thereby creating a revolving pool of loanable fund amounting

to UGX.60 billion for eight years.

A review of Bank of Uganda Report for the period ending September 2014

revealed that capitalization of the fund by Government should have grown to

UGX.150 billion to date. However, government has to date remitted only

UGX.93bn to cover disbursements and commitments made since inception leaving

a shortfall of UGX.57 billion. Since Government is not fully meeting its stated

requirements as per the MoU sustainability of the facility may be tampered.

Management explained that although Government has not fully remitted the

budgetary allocations, BoU has not run out of funds for onward disbursement to

PFIs in respect of eligible borrowers. The slow pace of disbursements was due to

low absorption caused by failure by beneficiaries to meet the criteria for obtaining

the loan i.e. the criteria‟s put in place for one to obtain the loan were marked as

stringent for the targeted/potential borrowers as opposed to the currently

benefiting high level farmers.

I advised the Accounting Officer to renew the criteria in place and ensure that the

pace of absorption is improved. In the meantime GoU contributions should be

matched with the MoU for implementation as agreed.

c) Potential Loss of ACF borrowed funds

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BoU report revealed that six projects that accessed farmer and agro processors

loans amounting to UGX.2,122,193,576 were classified as delinquent and been

forwarded to Bank of Uganda for writing off. Table below refers:

PFI Project Amount (UGX)

KCB Formula Feeds Ltd 1,314,411,429

KCB Pearl Mixed Farm 392,857,142

Tropical Bank Ltd Tom O‟lalobo 325,000,000

Centenary Rural Dev‟t Soroti Diary Ltd 48,019,341

DFCU Lira Integrated School 23,654,500

DFCU Bunya SACCO 18,251,164

Total 2,122,193,576

Unless adequate recovery measures are taken, Government risks losing the above

funds or even more if the current low recovery rate continues. It appears that the

appraisal by PFIs to ascertain viability, feasibility and eligibility by PFIs as one of

their roles was not properly undertaken.

Management should liaise with BoU to compel the PFIs to ensure proper due

diligence is done prior to issuing loans to save Government from losing money due

to the poor loan portfolio management on the part of the PFIs.

4.6 Un-supported utility payments

Section 181 of the TAI requires all vouchers to contain full particulars of each

service or goods and be accompanied by such supporting documents as may be

required so as to enable them to be checked without reference to any other

documents. However, it was noted that UGX.415,192,655 paid to National Water

and Sewerage Corporation was not supported with tax invoices and

acknowledgement receipts. I was therefore unable to ascertain that the payments

were actually made to the utility company.

I advised management to make a follow up of the acknowledgements with NWSC.

4.7 Budget Performance Review

Analysis of budget performance indicated that some planned activities were not

fully performed despite the entity receiving 97% of its budget.

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Output 140301 – Accounting and Financial Management Policy,

coordination and monitoring

Under this activity, it had been planned to conduct (12) audits of foreign missions

and (2) IT audits. However, only one mission audit was achieved and no IT

reviews were conducted.

Management explained that because of resource constraints, this activity was

dropped. The IT audits were not carried out because of inadequate capacity. The

Ministry is now undergoing restructuring to provide for IT auditing.

I advised management to expedite capacity building undertakings and have the

audits carried out.

Output 140156 Lottery Services

It had been planned to collect UGX.2bn from the National Lottery as government

share on the Lottery collections. However, it was noted that only UGX.0.08bn was

collected leading to a shortfall of UGX.1.92bn. It had also been planned to procure

an electronic monitoring system to monitor Lotteries, Gaming and Pool Betting for

enhanced monitoring of revenue generation by URA and the Lottery Board. This

too was not achieved.

Management explained that this was due to loopholes in the prevailing law that

illegal operators exploited to set up illegal lotteries that were in direct competition

with the National Lottery (NL). This curtailed the National Lottery collection.

Regulations have since been put in place to strengthen the weak law. Meanwhile

illegal Lotteries are being phased out.

Funds for the electronic monitoring system were not provided and the system

could not be procured. This procurement had been budgeted for UGX.400m. The

procurement has been included among unfunded activities for the Ministry BFP of

2015/16.

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I advised management to secure the resources and have the electronic Monitoring

System in place. I also advised management to address the weaknesses in the

current law to guide the operations of National Lottery Board.

Output: 140103 - Capitalization of Financial Institutions

The Ministry had planned to disburse a total of UGX.16 billion as Graduate Venture

Capital during the year however no disbursements were made. Failure to achieve

all planned activities may negatively affect the Ministry performance and

achievement of its strategic objectives.

Management explained that the funding for Graduate Venture Capital was

transferred to Ministry of Gender by Parliament when approving the final budget

for FY 2013/14.

4.8 ENTERPRISE UGANDA: Funding gap

Enterprise Uganda (EU) is a public entity duly registered and constituted according

to the Laws of Uganda with the objectives among others to work with Government

to promote Government policies, directives and programmes. EU envisages Micro,

Small and Medium Scale Enterprises (MSMEs) as important vehicles for expanding

production, providing self-employment and generally enhancing economic growth

in the country. This is in line with the government objective of enhancing the

quality and availability of gainful employment and uplifting the standards of living

in households.

During the year, EU had budgeted to receive Government support of

UGX.2,410,000,000 but only UGX.2,199,375,000 was released which is 91.26%

leading to a budget shortfall of UGX.210,625,000. Despite the shortfall in

Government releases, audit appreciates that most of the planned activities were

achieved. I noted that during the year, EU had planned to train a total of 5,000

participants both rural and urban households and equip them with skills to

start small enterprises. However, it was noted that 4,768 (95.36%) were

trained in the districts of Wakiso, Tororo, Kayunga and Kiruhura. 322

intended participants were not trained. I urged management to liaise with the

69

Ministry of Finance, Planning and Economic Development to source for sufficient

funding to meet its budget plans. This was attributed to the funding gap.

4.9 RURAL FINANCIAL SERVICES PROGRAMME

The Rural Financial Services Programme (RFSP) supports the Rural Financial

Services Strategy (RFSS) which is one of the pillars of the Prosperity for All (PFA)

vision of government, which aims at ensuring that every economically active

Ugandan earns some basic income, through production, marketing and agro-

processing of products. This programme ended in December, 2014 and a review

of the activities for the financial year 2013/2014, revealed the following:

a) Lack of proof of ownership of motor cycles

The Government through RFSP put in place rural development strategy and

availed funds to be used to equip SACCOs with kits which include money safes,

filing cabinets, bicycles, salaries for staff and office rent. Under this arrangement

through a grant, 188 motor cycles were distributed to SACCOs to facilitate them in

form of transport. Accordingly, RFSP officials were paid allowances worth

UGX.10,480,000 to enable verification of transfer of ownership of these motor

cycles from UCSCU to beneficiary SACCOS. However, it was noted that by the time

of audit (December, 2014), only (36) motor cycles had been transferred to the

SACCOS leaving with the balance still in the names of UCSCU. Delay in transfer of

ownership may result in costs to UCSCU in case accidents or other eventualities

happen.

Management attributed the delay to lack of Tax Identification Numbers by SACCOS

but RFSP has guided them on how to register with URA.

I advised RFSP management to expedite the transfer process. b) Assets - Verification of assets provided to support SACCOs

During the closure of the project, management of RFSP carried out verification of

the assets register to validate data for update. At the end of the exercise, a

verification report was produced. The following was observed from the report:

70

Oribicin SACCO

Oribicin SACCO had been reportedly closed because of failure to pay back loans

worth UGX.78,000,000 which was borrowed by the former SACCO Chairman who

also later passed on. However, it was noted that there was no documentation to

indicate the status of the assets such as money safe, filing cabinets and bicycles.

The possibility of recovery of these assets appears remote.

Gulu Municipal and Bufunjo SACCOs

The asset verifications report also indicates that Gulu and Bufunjo SACCOs had

been closed because of mismanagement of funds by their respective Boards and

management; although this was not quantified. It was noted that the where about

of the motor cycle for Bufunjo and the kits for Gulu municipal SACCO were yet to

be established. There is a possibility that they could have been stolen or being

used for non-SACCO related activities.

Management explained that both cases have been forwarded to the department of

Cooperatives, and the respective District Cooperative offices to revamp or turn

around the activities of the SACCOs. It is only after the turnaround activities have

failed that the SACCOs will be liquidated.

I advised management of RFSP to provide a clear status report regarding the

assets of the above SACCOs.

c) Un-sustainable strategy of strengthening of the Apex Institutions

By the closure of the RFSP project, Uganda Cooperative Savings and Credit Union

Limited UCSCU), the implementing partner had established (15) regional offices in

the four regions of the country as had been targeted. However, it was noted that

with the project support coming to an end, UCSCU downscaled the regional offices

from (15) to (4) (Northern, Western, Eastern and Central). Only a few field liaison

officers were employed in the rest of the regions for increased efficiency in the

utilization of resources.

Under this arrangement, there is a risk that UCSCU may not provide services to

the SACCOs on a sustainable basis.

71

Management explained that Government has made provisions for providing

additional technical and financial support to UCSCU in order to ensure that UCSCU

becomes sustainable in the next five years, as per the revised UCSCU business

plan. This commitment is contained in the Loan agreement and Aide Memoirs

signed between IFAD/GOU.

The outcome of the above commitment is awaited.

4.10 THE POPULATION SECRETARIAT (POPSEC)

The population secretariat (POPSEC) is a semi-autonomous department under

Ministry of Finance Planning and Economic Development (MOFPED) established

under The National Population Act, 2014 responsible for the implementation of the

policy decisions of the National Population Council and promote the integration of

population factors in development planning at the national and lower levels in

accordance with the agreed frame work under the National Development Plan.

The following observations were made.

a) Lack of National Population Council

The population Secretariat (POPSEC) developed a five year National Population

Action Plan (NPAP) in 2010 giving National Population Council the key role of

providing strategic direction. Consequently, Parliament passed the National

Population Council Act on July 23rd 2013 and assented by H.E. the President on

January, 6th 2014. However, it was noted that the National Population Council had

not been established at the time of writing this report. This may negatively affect

policy formulation and strategic guide on the implementation of the objectives of

POPSEC.

Management explained that POPSEC was advised by the First Parliamentary

Counsel that the Act will be operational after full registration.

I urged management to liaise with the responsible authorities to ensure that the

National Population Council is urgently established.

72

4.11 TAX APPEAL TRIBUNAL

a) Un-resolved tax disputes

The tribunal had planned to resolve 100 tax disputes countrywide during the year

but only 90 cases were resolved leaving a balance of 10 tax disputes outstanding

at the year-end.

The registrar Tax Tribunal explained that the 10 outstanding disputes were filed

towards the end of the financial year and could not be completed before the year

end. These cases have however been carried forward.

I urged management to always ensure that planned targets are attained and

timely.

b) Failure to conduct planned circuit sessions

According to the annual budget performance, the tribunal had planned to conduct

circuit sessions (regional case hearings) in the regions of Mbale, Gulu, Mbarara

and Arua. The objective of conducting circuit sessions was to take tribunal sittings

to the regional offices to encourage and enable up-country tax payers lodge and

have their cases arbitrated upon within the respective localities. The circuit

sessions were not conducted.

Management explained that full circuits could not be held due to a shortfall in

funding. The outstanding upcountry disputes were carried forward.

I advised management to ensure that the implications for failure to conduct the

above activity are properly highlighted in the next budget to enable its funding.

4.12 NON-PERFORMING ASSETS RECOVERY TRUST (NPART)

a) Stalling of the Winding up Bill

The Non-Performing Assets Recovery Trust Act (NPART) was enacted on 10th

October 1994 and was to run for a period of (3) years. However, it was noted that

73

the NPART Act has been extended by Parliamentary resolutions for a number of

times, the last extension being the period ending 9th October 2007.

In view of the above, it was noted that the Act has served its purpose and it was

time to wind-up the trust and repeal the Act. However, it was noted that passing

of the bill (winding up) appears to have stalled since October, 2007.

This in turn has delayed the achievement of the winding-up bill of repealing of the

NPART Act, winding up of the affairs of the Trust, The Sinking Fund and the

Tribunal and transfer to Government of all assets.

Government continues to spend money on NPART without any legal basis as its

mandate has long expired without any further renewals. For instance, a total of

UGX.249,999,999 was released during the year out of which UGX.141,905,060

(56.76%) was spent on employee costs alone.

Management explained that the bill was presented to the committee of the cabinet

which made recommendation for the Ministry‟s action. The Act has been edited

and ready for submission to the cabinet.

I urged management to continue liaising with the relevant authorities to expedite

the passing of the bill.

b) Un-spent balance not returned to Treasury

Section 19(1) of the Public Finance and Accountability Act provides that any

unspent balance at the close of the year shall be repaid to the consolidated fund.

According to the cashbook presented for audit, NPART had un-spent balance of

UGX.20,032,804 at the year-end which was not returned to the UCF as required

by the regulation.

Management explained that the instruction to transfer the funds was bounced by

BoU and the matter has been forwarded to Accountant General to direct BoU to

return the money to the UCF.

The outcome of the above management action is awaited.

74

4.13 PRESIDENTIAL INITIATIVE ON BANANA INDUSTRIAL DEVELOPMENT

(PIBID)

a) Failure to return un-spent funds to the Consolidated Fund

According to the Internal Audit and Inspectorate report for financial year

2013/2014, PIBID project had un-spent funds to a tune of UGX.4,259,043,697 as

at 30th June, 2014. However, the amount was not returned to the Consolidated

Fund account as required. The funds were retained and utilized during the year

without authority from the Accountant General and the Permanent

Secretary/Secretary to the Treasury.

Management explained that the funds were meant to pay for machinery for the

Banana Plant from an International Company based on Germany whose contract

had not been finalised by close of the year. The contract was only signed on 10th

July 2014 and request to hold money was made to PS/ST on 11th July, 2014.

However, no response was received. The funds were finally spent in the

subsequent year 2014/15.

b) Doubtful fuel consumption

UGX. 90,018,707 spent on fuel was not supported by fuel requisition vouchers

indicating the purpose, motor vehicle movement log book justifying fuel usage and

activity reports confirming occurrence. In the above circumstances, the

expenditures appear doubtful.

Management explained that all payments for fuel are effected through a fuel

company. Noted variances during the reconciliation are effectively adjusted and

reflected in the subsequent remittances.

As a way forward, management explained that it will always ensure that the

reconciliations are regularly and timely done as this will easily enable identification

of discrepancies and allow a fast correction of anomalies.

75

4.14 IRISH AID SUPPORT TO GENDER & EQUITY BUDGETING (EDUCATION

SECTOR AND KARAMOJA SUB-REGION)

(a) General Standards of Accounting and Internal Control Systems

It was noted that management had complied in all material respects with the

financing agreement and GoU financial regulations except for the following matter:

i) Retention and expenditure of funds after suspension of the project

As at 17th July 2013, the project had total available funds of UGX.65,571,546

composed of un-spent project funds worth UGX.30,384,506 and UGX.35,187,040

refunded to the bank account being funds for activities not undertaken.

In July 2013 the donors suspended project funding following the financial scandal

at Office of the Prime Minister. It was noted that the funds were retained and

spent after the suspension period. The authority from the development partners to

retain and spend these funds was not sought.

Although management explained that the funds were spent because the

development partners did not object to the continued payment of project staff

salaries from the available balance, I was not provided with communication to this

effect.

I advised management to always seek authority prior to spending project balances

after closure of the projects.

4.15 FINANCIAL MANAGEMENT AND ACCOUNTABILITY PROGRAMME

(FINMAP)

(a) Compliance with programme financing agreement and government

financial regulations

The Programme complied with the covenants with Programme agreement and

Government Financial Regulations except for the following matters;

i) Statutory Deductions

76

It was noted that there were instances where withholding taxes were not

deducted from some payments made to suppliers of goods and services yet these

suppliers were not exempted from withholding tax. Examples of such payments

were as follows;

Company Name Amount

UGX

Withholding Tax

UGX

Comments

Inline Print

Services

9,524,567 571,474 Tax not withheld

Hotel Brovad 70,692,000 4,241,520 Tax not withheld

Com Events

Coalition

34,080,000

2,044,800

“

Adventcity Ltd 7,265,440 435,926 “

Innovative

Furniture Ltd

10,576,001

634,560

“

Kabu General

Agencies

18,940,000

1,136,400

“

Total 9,064,680

Non compliance with all the provisions of the Income Tax Act could lead to heavy

penalties and interest being imposed on the project by the relevant authorities.

Management explained that there was an oversight especially because the IFMS

did not deduct automatically. The providers in question were still working with

FINMAP and the taxes would be recovered from the next payments.

I advised management to ensure that all the provisions of the tax laws were

complied with in order to avoid associated penalties and interest.

ii) Delayed project activities

My review of the project budget for the year indicated a number of project

activities that were not carried out as planned by the end of the year. These

include the following:

77

Code Activity

Delayed activities‟

Budget ( UGX)

Management response

1.1.1.2 Training of users of

IMEM

55,323,360 The IMEM was not yet

finalized and hence training

could not be programmed.

1.2.1.2 Conduct consultative

stakeholder

workshops and

disseminate final

report analyzing

national revenue

base

91,310,400

A more comprehensive

internal study to analyze the

current tax system with a

view towards generating

revenue enhancement

measures for FY 14/15 was

conducted instead, and a

report has been compiled

and disseminated.

2.1.1.1 Undertake

consultancy for the

automation of the

system

107,424,000

The procurement process for

the consultancy to develop

the OBT was delayed

following a decision to fund

and procure the activity

through the mainstream GoU

budget and procurement

modalities respectively

2.3.1.1 Undertake

consultancy for the

review of the

GoU/MTEF

134,280,000

The review of the GoU/MTEF

was placed on hold pending

further policy guidance by

top management on how to

proceed

3.1.1.3 Procure IFMIS audit

tools and conduct

security related

training

1,074,240,000 The procurement was held

back by the delays in the

finalization of the security

audit and its attendant

recommendations.

78

Code Activity


Budget ( UGX)

Management response

3.1.4.1 Undertake a

consultancy to

develop noncurrent

assets module of

IFMIS: conduct

related user training

and change

management

sessions

174,606,970 It was resolved that the

development of the non-

current assets module be

included in a (subsequent)

contract with Oracle for post

IFMS upgrade technical

support.

3.1.5.1 Set up the system

application: conduct

ICT trainings, and

procure licenses

268,560,000 The activity was put on hold

pending the successful

upgrade of the IFMS to

version 12.

3.1.6.6 Disaster recovery site

set up and tested

18,595,094 Un-anticipated delays in the

procurement process, arising

in large part from delayed

disbursement of funds by

development partners.

4.1.1.2 Conduct monitoring

of implementation of

RAM, hot and cold

reviews

27,574,000 This was due to operational

delays in the

commencement of the RAM

training.

4.1.1.1 Acquire forensic tools

for the Unit‟s lab






4.1.4.1 Acquire ERA licenses

for 30 staff






79

Code Activity


Budget ( UGX)

Management response

4.1.5.1 Conduct training for

30 internal audit

staff


procurement of the

software.

4.1.6.1 Conduct hands on

training for IA staff

in Quality Assurance

120,852,000 The activity was re-

programmed to the next FY.

4.1.7.1 Undertake Quality

Assurance reviews

and specialized

training for

supervision and

inspection staff.



5.1.1.2 Conduct pilot of

Alternative Energy

Sources for IFMIS in

LGs

268,560,000 None of the bidders were

identified to have the

requisite experience and

competence for the activity,

which has now been

postponed to next FY.

5.1.1.8 Conduct post

implementation

change management

sessions at 26 Tier 2

sites +6 Tier 1

rollout undertaken


processing of the funds for

the activity.

5.1.1.9 Conduct basic ICT

trainings for new

users at the IFMIS

LG sites at 26 Tier 2

sites +6 Tier 1

rollout



the activity.

80

Code Activity


Budget ( UGX)

Management response

5.1.3.1 Engage consultancy

to roll out IFMIS Tier

2 solution to 13 LG

sites

4,748,140,800 Un-anticipated delays in the





5.1.4.1 Review the LG Act to

clarify the

jurisdiction of

parliament and the

LGPAC






5.1.4.2 Conduct capacity

building for

members of the

LGPACs and their

support staff on

LGPAC






5.1.4.3a Conduct capacity

assessment for the

LGPACs targeting

committee members

and support staff,

Design capacity

building programme






81

Code Activity


Budget ( UGX)

Management response

5.1.4.3b Conduct capacity

assessment for

LGPACs targeting

Conduct capacity

assessment for the

LGPACs targeting

committee members

and support staff,

Design capacity

building programme

(task force)



the activity arising in large

part from delayed


development partners..

6.1.2.3A PFM Advisor

recruited (by 1 Jan

2014)

241,704,000 A decision was taken not to

proceed until further notice.

6.1.3.1 Undertake take

consultancy for the

road map for the

integration of

Accounting and

Budgeting systems.

107,424,000 This activity was placed on

hold following a policy

directive that this activity

would be led (under FINMAP

III) by the new department

of MIS in the Accountant

General's Office (AGO), in

collaboration with NITAU.

6.1.2.2 Acquire and

disseminate IEC

materials to enhance

staff capacity and

public awareness on

accountability.

61,768,800

There were no related

activities that were initiated

by the component

6.1.3.1 Commission studies,

benchmarks and

reviews of PFM

implementation

93,996,000



by the component

Total

9,245,168,202

82

Code Activity


Budget ( UGX)

Management response

3.1.5.1 Set up the system

application: conduct

ICT trainings, and

procure licenses

268,560,000 The activity was put on hold

pending the successful

upgrade of the IFMS to

version 12.

3.1.6.6 Disaster recovery site

set up and tested






4.1.1.2

Conduct monitoring

of implementation of

RAM, hot and cold

reviews

27,574,000 This was due to operational

delays in the

commencement of the RAM

training.

4.1.1.1 Acquire forensic tools

for the Unit‟s lab






4.1.4.1 Acquire ERA licenses

for 30 staff






4.1.5.1

Conduct training for

30 internal audit

staff


procurement of the

software.

4.1.6.1

Conduct hands on

training for IA staff

in Quality Assurance



83

Code Activity


Budget ( UGX)

Management response

4.1.7.1 Undertake Quality

Assurance reviews

and specialized

training for

supervision and

inspection staff.



5.1.1.2 Conduct pilot of

Alternative Energy

Sources for IFMIS in

LGs

268,560,000 None of the bidders were

identified to have the

requisite experience and

competence for the activity,

which has now been

postponed to next FY.

5.1.1.8 Conduct post

implementation

change management

sessions at 26 Tier 2

sites +6 Tier 1

rollout undertaken



the activity.

5.1.1.9 Conduct basic ICT

trainings for new

users at the IFMIS

LG sites at 26 Tier 2

sites +6 Tier 1

rollout



the activity.

5.1.3.1 Engage consultancy

to roll out IFMIS Tier

2 solution to 13 LG

sites

4,748,140,800 Un-anticipated delays in the





84

Code Activity


Budget ( UGX)

Management response

5.1.4.1 Review the LG Act to

clarify the

jurisdiction of

parliament and the

LGPAC






5.1.4.2 Conduct capacity

building for

members of the

LGPACs and their

support staff on

LGPAC






5.1.4.3a Conduct capacity

assessment for the

LGPACs targeting

committee members

and support staff,

Design capacity

building programme






5.1.4.3b Conduct capacity

assessment for

LGPACs targeting

Conduct capacity

assessment for the

LGPACs targeting

committee members

and support staff,

Design capacity

building programme

(task force)



the activity arising in large

part from delayed


development partners..

6.1.2.3A PFM Advisor

recruited (by 1 Jan

2014)

241,704,000 A decision was taken not to

proceed until further notice.

85

Code Activity


Budget ( UGX)

Management response

6.1.3.1 Undertake take

consultancy for the

road map for the

integration of

Accounting and

Budgeting systems.

107,424,000 This activity was placed on

hold following a policy

directive that this activity

would be led (under FINMAP

III) by the new department

of MIS in the Accountant

General's Office (AGO), in

collaboration with NITAU.

6.1.2.2 Acquire and

disseminate IEC

materials to enhance

staff capacity and

public awareness on

accountability.

61,768,800



by the component

6.1.3.1 Commission studies,

benchmarks and

reviews of PFM

implementation

93,996,000 There were no related


by the component

Total 9,245,168,202

Unless project activities are carried out as planned, the intended purpose of the

project may not be achieved.

I advised management to endeavor to set project milestone and deliverables for

specific periods so as to track project performance and progress.

(b) General Standard of Accounting and Internal Control

A review was carried out on the programme system of financial management and

it was noted that management had instituted adequate controls to manage

programme resources.

86

4.16 SIDA SUPPORT TO COMPETITIVENESS INVESTMENT CLIMATE

STRATEGY (CICS) PROJECT

(a) Compliance with the SIDA/GOU Financing Agreement Provisions

and GOU Financial Regulations

It was noted that management complied with the covenants contained in the

financing agreement and Government of Uganda Financial Regulations except for

the following instance:

i) Lack of authorization to spend UGX.47,010,645

Article 4 Section 5 of the agreement required that funds transferred to Uganda for

purposes of a project and not utilized by 30th June 2013 shall be repaid to Sweden

within three months of that date. It was noted that out of the balance carried

forward from the previous (UGX.47,010,645) UGX.46,176,200 was spent without

seeking for authority/objection from donors contrary to the financing agreement. I

explained to management that this was a deviation that may result in poor donor

relations in case there is need to engage in other future financing agreements.

Management explained that the funds were already committed towards SIDA –

CICS Secretariat activities. After payment of the activities a balance of

UGX.834,445 was left on the account which balance will be returned to the

development partners as per the agreement.

I advised the project coordinator to ensure compliance with financing agreement

with regard to authority for retention and expenditure of un-spent balance after

the project closure.


A review of the following areas was carried out:-

Accounting system and policies.

Book keeping.

Management and control of both bank and cash accounts.

Purchases and payments.

Fixed assets management.

87

It was noted that management‟s control structure environment, accounting system

and policies and control procedures were generally adequate to ensure prudent

use of, and accountability in the project.

4.17 RURAL FINANCIAL SERVICES PROJECT

(a) Delayed implementation of field activities

While the annual work plan and budget for the closure period activities was

finalised on 14 June 2013 and approval for the same obtained from IFAD through

a no –objection notice on 4 July 2013, the program closure activities were

scheduled to have been completed and paid for by 31 December 2013. I noted

that there were some program activities totalling UGX.25,871,247 that were not

fully completed by the end of the year and were therefore carried forward to 2014.

These include external audit costs, vehicle maintenance costs, validation and field

work costs.

The delay in completing project activities had a spill over effect on other closure

activities like the finalisation of program reports. This may have resulted into a

diversion of funds to other uses other than those for which the funds were

approved.

Management explained that almost all programme activities were carried out and

closed off. Those that were not closed off were contractual in nature and were

not settled in time due to the shortcoming in the system.

I advised management to ensure that in future program activities are implemented

on a timely basis.

5.0 DIRECTORATE OF ETHICS AND INTEGRITY

5.1 Mischarged Expenditure-UGX.275,372,736

The Parliament of Uganda appropriates funds in accordance with the needs of the

country and this appropriation is implemented through the budget in which funds

are tagged to particular activities and outputs using account codes and MTEF

codes. A review of the Directorate‟s expenditures revealed that the entity charged

88

wrong expenditure codes to a tune of UGX.275,372,736. The practice is contrary to

the intentions of the appropriating authority and leads to incorrect financial

reporting.

The Accounting Officer attributed this to inadequate budget on some codes and

yet work had to proceed. Management also attributed the problem to the de-

linkage between IFMS and output budgeting.

I advised management to undertake realistic budget and whenever necessary

request for reallocations or virements, as provided for under the TAI. I also

advised management to contact the Accountant General to resolve the de-linkage.

5.2 Funding gap-UGX.181,598,834

According to the statement of appropriation account based on services voted by

Parliament, the Directorate had budgeted to receive transfers from treasury worth

UGX.5,404,295,598 however, UGX.5,219,309,500 was received, creating a funding

gap of UGX.184,986,098. The shortfall directly affected the settlement of

outstanding commitments of UGX.265,071,856 brought forward from the prior

year.

The Accounting Officer explained that the PS/ST had been requested to provide

explanation for the funding gap but no response had been received.

I advised management to continue liaising with Treasury for purposes of ensuring

that the appropriated resources are released.

5.3 Vacant positions

A review of the Directorate approved structure/establishment indicated that

whereas 59 posts were approved, only 46 had been filled by the year-end leaving

14 vacant posts unfilled. The most affected departments were the information

center and the legal department as indicated in the table below.

Post Tile Approved Filled Vacant Salary

Legal Department

89

Commissioner Legal Services 1 0 1 UIE

Legal Officer 2 0 2 U4

Information Center

Principal Information Scientist 1 0 1 U2

Communications Officer 1 0 1 U3

Information Scientist 3 2 1 U4

Lack of such essential staff may negatively impact on the entity's service delivery.

The Accounting Officer explained that the delay in recruitments was caused by

lack of the Public Service Commission in place, but the requests have now been

submitted to the commission for action.

I advised management to liaise with the responsible authorities and ensure that

the key vacant posts are urgently filled.

90

WORKS AND TRANSPORT SECTOR

6.0 MINISTRY OF WORKS AND TRANSPORT

6.1 Payment of Consolidated allowances- UGX.2,444,859,353

During the year, a total of UGX.2,444,859,353 was paid out in gross consolidated

allowances to staff contrary to the requirements of Public Service Standing Orders.

I noted that there was no authority to pay such allowances on top of salary

already paid. In the circumstances, I could not confirm the regularity of the

quarterly consolidated allowances.

In response, the accounting officer explained that payments were effected to

motivate staff since their salaries were considered very low.

I advised the accounting officer to seek authority from ministry of public service or

have if officially regularized.

6.2 Mischarge of Expenditure

Expenditure totaling to UGX.48,153,093 was inappropriately charged on budget

lines to fund activities that were not planned and without authority. I explained to

management that mischarge of expenditure translates into misrepresentation of

expenditure balances in the financial statements. The practice is also not in line

with the intentions of the appropriating authority.

In response, the Accounting Officer acknowledged that challenges exist in

matching GoU budgeting principles that are driven by Output Based objectives,

Public Finance Management best practices and generally acceptable accounting

principles.

I advised management to liaise with the Accountant General with a view of

streamlining the budget process and also ensure that sufficient funds are allocated

to key account areas. Should there be need for reallocation, authority for the

virement should be sought before any reallocations are undertaken.

91

6.3 Budget Performance

a) Funding Gap

During the review, I noted that the Ministry budgeted to receive

UGX.119,061,202,859 out of which a sum of UGX.91,677,910,743 was received

translating into a 77% out-turn for the financial year. This left a funding gap of

UGX.27,383,292,116. The gap affected the implementation of planned activities

for year as summarized below;

Departments

/Directorate

Planned activities not completed

Transport

Regulation

32 bus operator licenses not processed; 10% Bus routes not monitored.

Coordination office for aircraft accident investigations not

established.

Capacity of the Air Transport Regulation division to regulate the aviation not developed.

Transport

services and

infrastructure

Procurement of rehabilitation and upgrade of railway wagon ferry MV Pamba not done;

Progress on the upgrade Kampala Kasese railway line delayed. No progress on the New Ferry to replace Kabalega –Opening

Southern Route.

92

Departments

/Directorate

Planned activities not completed

Construction

standards and

quality

assurance

9 reports on materials testing, quality control and research on construction materials not produced.

Compliance to set engineering standards 49 MDAs not fully

monitored.

Environment and social impact assessment reports on two Development projects prepared not done;

The National Building Review Board (NBRB) was not appointed

and the secretariat not established.

Contractor for the outstanding Phase 2 works at Kyabazinga‟s Palace not fully paid.

Procurement of Moisture testing filed equipment and Mobile

Lab testing equipment not done.

Environmental Audits on on-going projects not conducted.

Training of 40 Local Government staff in RAMPS not conducted.

District, urban

and

community

access roads

Computerized Vehicle Maintenance management system (CVMMS) not developed.

85 drivers not tested and certified.

4 supervision vehicles for the Regional Mechanical Workshops of Bugembe, Mbarara, Gulu, including Chief Mechanical workshop not procured.

Rehabilitation of selected office blocks and workshop facilities of Gulu, Mbarara, and Bugembe Regional Mechanical Workshops not achieved.

Policy,

planning and

support

services

The planned 127 staff were not recruited. Monitor the 20,000 km of the National Roads network in 72

Districts not accomplished.

Consultant to carry out a study for the establishment of a Maritime was not achieved;

Consultant to develop boat building standards not procured.

93

Failure to release the budgeted funds to the Ministry affected implementation of

the planned activities which affects fulfilment of the ministry‟s mandate in the long

run.

I advised management to ensure that the matter is always followed up during the

year with the Ministry of Finance, Planning and Economic Development to ensure

all the budgeted funds are released to the Ministry.

6.4 Grounded motor vehicles

Inspection of Works premises revealed that the Ministry had 105 grounded motor

vehicles in different locations. Out of the 105; ten (10) vehicles were in private

locations as shown below;

S/No. Reg. No Make / Type Location

1 UR0182 14oktober Wheel Loader Bwanda Covent Masaka

2 UG0822W Caterpillar Wheel Loader Kapchorwa T.C

3 UG790W Mitsubishi Dumper Truck Kira T.C

4 UG791W Mitsubishi Dumper Truck Kira T.C

5 UG0805W Sakai Pneumatic Roller Kira T.C

6 UG0836W Bomag Vibro Roller Kira T.C

7 UW0865 Bomag Pneumatic Roller Kira T.C

8 UW0173 Ford Bitumen Truck Kira T.C

9 UG0787W Caterpillar Wheel Loader Sunset Garage- Mengo

10 UG0035W Nissan Pick Up URRU

I noted that most of the vehicles have been grounded for more than 4 years and

some were in a very bad shape as reflected in the sample pictures taken in the

photographs below;

94

Grounded Vehicle at MELTEC-

Mbale

Other vehicle Parts loaded

on a grounded vehicle at

Kireka Materials testing

A grounded car packed

under a shade of a

building at transport

Licensing Board grounds.

The grounded vehicles continue to deteriorate in their economic value due to

depreciation arising from the long stay without maintenance. In response, the

Accounting Officer explained that vehicles were relocated and lined for boarding

off.

I advised management to expedite the boarding process with a view to avoiding

further deterioration of the vehicles.

6.5 Inspection

As part of the audit, inspection and audit of the Ministry upcountry stations and

other operational areas including the Institutions under the control of the Ministry

were carried out and below are the findings;

a) Mbarara Regional Mechanical Workshop i. Grounded Tractors

Physical inspection of the mechanical workshop showed that there were three

tractors belonging to different districts as shown in the table and picture below;

Tractor Details Date received in

workshop

Owner district

LG0002-42 Tractor Massey Ferguson 28/07/2010 Rukungiri District

LG0020-21 Tractor Massey Ferguson 04/02/2010 Kisoro District

LG0045-62 Tractor Massey Ferguson 01/06/2011 Isingiro District

95

The three tractors in the workshop belonging to the 3 districts stated above.

I noted that the tractors have been in the garage for over three years and their

long stay in the garage could have hampered the work at the districts. Besides,

there was no proper explanation why the tractors were not repaired and taken

back to their respective districts. Some parts of the tractors were found

disjointed.

In response, management explained that the tractors have been in the garage for

over 3 years but this arose from Uganda Road Fund (URF) failure to fund the

Regional Mechanical Workshops (RMWs). Some repairs have been done but once

the necessary funds are secured, the major repairs will be carried out.

I advised management to expeditiously repair the tractors and have them taken

back to the respective districts for use.

ii. Office sharing

I noted that the Mbarara Mechanical Workshop regional offices were housed in

two office blocks that belong to Ministry of Works. The block has four office rooms

of which two are occupied by Ministry of works and the other two by Ministry of

Local Government. The lower office block has 12 office rooms. 5 rooms were

occupied by Ministry of works; Diary Development Authority occupied 4 rooms

while Ministry of Agriculture occupied 3 office rooms. The following was noted;

There was no evidence of Memorandum of Understanding or tenancy

agreements signed between the Ministry of Works and other Government

Agencies/ Ministries. I could therefore not get the terms and conditions of

occupancy which translates into loss of NTR to Government.

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It was not clear how other services in the blocks such as power, water,

security, office cleaning and compound maintenance were handled among the

occupants.

Interview with Workshop management showed that the building was renovated

by the Ministry of Local Government under un-clear terms. I could not establish

how much was paid for the service and under what terms the Ministry of Local

Government did the repairs.

In the circumstances, I could not rule out the possibility of loss of revenue.

In response, the Accounting officer explained that the arrangement of sharing

between MAAIF, MoLG and MoWT has been in place since 1989. The Ministry is

formalizing the relationship with the two entities through a memorandum of

understanding. This will cover extensively on sharing and payment of power,

water, security, office cleaning and compound maintenance.

I advised the accounting officer to ensure the terms of occupancy are clearly

defined. Management was also advised to expedite the MoU arrangements

streamlining use of government structure.

b) East African Civil Aviation Academy

i. The Academy Legal Status

The East African Civil Aviation Academy (EACAA) is a centre of excellence in

aviation training for the region that was revived by the East African community

whose awards are recognized by the education regulations all over the world.

EACAA was established in September 1971 as the East Africa Civil Aviation Flying

School of excellence under the Directorate of Civil Aviation (DCA) of the East

African Community (EAC), with Government of Uganda, EAC and the United

Nations Development Programme and the International Civil Aviation Organization

UNDP/ICAO as the main contributors. While GoU upgraded the Soroti Airfield

runway from grass surface to asphalt, EAC financed the construction of the school

buildings, staff housing and navigation facilities as well as providing the

administration staff and some technical personnel like counterpart instructors, Air

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traffic controllers and Meteorologists. East African Airways provided the bulk of

counterpart flying and engineering instructors.

During the audit, it was observed that the Institution operates more like a

department under MoWT, headed by a director who reports to the Permanent

Secretary. I noted there was no legal framework that supports the operations of

the Academy under Ministry of Works.

The academy did not produce final accounts. I noted that there is no reporting

frame work/basis that is well defined for independent preparation of final accounts

as the legal frame work is no clear. In the circumstances, I could not appraise fully

the operational results of the Academy.

In response; the Accounting Officer explained that the Ministry is discussing with

Public Service to operationalize the Academy operations and its possibilities of

becoming autonomous.


ii. Staffing gaps

A review of the Academy staffing structure as at 1st November 2014 revealed that

the Academy had 76 approved positions. However, out of the approved posts, only

54 (71%) positions were filled leaving 22 posts (29%) not filled. Specifically, I

noted the following issues under the two departments.

iii. Flying School Department

The three top most positions of Chief Flying Instructor, Principal Flying Instructor

and the Senior Flying Instructor were not filled which puts the operations of the

school at risk of failing to achieve its mandate.

iv. Works and Estates Section

The Position of Senior Assistant Engineering Officer (Civil) was not filled. The

unfilled post is too critical that a gap could have negative effects on the entity‟s

service delivery.

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In response, management explained that the existence of vacancies in the

technical posts was mainly due to challenges in attracting suitable candidates

owing to the poor remuneration offered by the Academy compared to the market.

The low salary was also a cause for the high turnover however effective 1st July

2014, the salaries of the technical staff were enhanced and a new salary structure

for the technical staff of the academy was issued.

I advised management to continue following up the matter with the relevant

authorities to ensure the posts are filled for improved service delivery as the legal

status of the academy is being resolved.

v. Grounded aeroplanes

Inspection of the aeroplanes revealed that out of eight aeroplanes that the

academy had only two (5X-UAN and 5x LWE) were operational. The other six were

grounded as shown as in the table below;

S/N Registration number Reason for being grounded.

1 5X-ELG Engine overhaul.

2 5X –CEA Engine overhaul

3 5X-UWD Major Frame overhaul.

4 5X –VIC Accident that damaged the tail part

5 5X-KYO Engine problem and propeller.

6 5X-SRI As a result of getting an accident.

I explained to management that the grounded aeroplanes negatively impact on

the operations of the Academy. There is a risk that if maintenance of these planes

is not given priority assets may deteriorate further.

I advised management to plan and have all the aeroplanes repaired so that they

are put back to use.

c) Gulu Regional Mechanical Work Shop

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The following was noted during the inspection of the workshop;

i. Shared offices and Workshop Yard between Gulu Regional

Mechanical Workshop and UNRA - Gulu Station

During the review, I noted that the Gulu regional mechanical office premises are

shared by both Gulu Regional Mechanical Workshop and UNRA-Gulu Station and

the following anomalies were noted;

There was no evidence of Memorandum of understanding signed between the

two entities for co-existence in the same premises.

Although the two entities each had its own water meters and electricity

meters, the service bay and the parking yard were still shared. I explained to

management that the shared service bay could cause inconvenience in case

both entities have repair works at the same time.

Both of the two entities‟ grounded and running vehicles were mixed up in the

parking yard with no demarcations and as a result the park yard space was

getting congested.

It was not clear as to which entity was responsible for maintenance of the

shared parking yard and the security of the premises.

I explained to management that there is a possibility of duplicate payments for the

same services leading to loss of Government funds.

In response, management explained that a draft Memorandum of Understanding

to clear the misunderstanding was prepared and forwarded to Solicitor General for

advised.

The outcome of management effort is awaited.

d) Kireka Division of Materials Testing And Research

The Division of Materials Testing and research falls under the department of

Construction Standards and Quality Management in the Directorate of Engineering

and Works, in the Ministry. The division is mandated to provide technical

(engineering) services to the entire Construction Industry in the Country; through

among others testing of construction materials to ascertain their suitability and

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compliance to standards, offering advisory services on quality of construction

materials, and conducting research on construction materials and technologies.

Inspection of the division premises revealed the following;

i. Inadequate Funding

During the year, the division had budget estimates of UGX.4,275,651,000 for both

wages and non- wages, however, a review of the Ministry‟s performance for year,

showed that UGX.2,805,233,000 (66%) was spent on wages and official activities

of the Division. Funds totalling to UGX.1,470,418,000 were not released to the

division hence crippling the activities of the division. I noted that this affected

mainly monitoring and development of policies, guidelines and strategies. I

explained to management that in view of the growing construction industry in

Uganda, there is need for increased monitoring and development of standard

guidelines/policies to enhance quality of construction materials.

In response, the accounting officer explained that during the year, the budget was

partially funded by MOFPED and recurrent activities were therefore scaled down to

fit within the funds released.

I advised the Accounting Officer to liaise with Ministry of Finance Planning and

Economic Development and ensure funds releases are improved to allow the entity

to enforce monitoring for enhanced quality of standards.

ii. Staffing Gaps

At the time of inspection (December 2014), the division had 46 (68%) vacancies

filled and 25 (32%) unfilled against the approved establishment of the division of

70 vacancies. I noted that some of the unfilled vacancies were senior positions

that included the two Principal Engineers. I explained to management that staffing

gaps of this magnitude impacts negatively on the operations and activities of the

Ministry. There is a risk that the Unit could fail to attain its mandate.

In response, management explained that all the posts were cleared by Ministry of

Public Service for filling; and the vacant posts were finally advertised.

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Management anticipates that in 2015 the ten (10) Civil Engineers will be recruited

and absorbed in the division.

I await the outcome of management‟s commitment.

iii. Lack of Essential Laboratory Facilities/Equipment

I noted that at the division, vital equipment and chemicals were lacking for its

effective laboratory and field operations. Interview with management showed that

the unavailable equipment and chemicals included;

Set of drilling rig for geotechnical investigations;

Digital steel testing equipment for testing steel products;

Geo- physical soil testing equipment for foundation soil investigations;

Assorted structural integrity testing equipment (non – destructive tests)

Road pavement condition survey equipment and

Assorted chemical reagents.

I explained to management that lack of essential equipment and chemicals is a

serious hindrance to the attainment of the Ministry mandate and its objectives.

In response, management explained that the procurement of essential laboratory

equipment and chemicals is always limited by lack of adequate funds in the

budget. Once the funds are available, the position will improve. Other possible

means of re-tooling the laboratories is being pursued e.g. through support from

Development Partner.

I advised management to take up the matter with Ministry of Finance for adequate

funding so as to purchase the necessary equipment and chemicals. I urge

management to continue pursuing the development partners for funding.

iv. Inadequate transport equipment

The division has got six upcountry laboratories at Arua, Gulu, Mbale, Jinja,

Mbarara, and Fort portal. However, inspection of the four (4) available vehicles

allocated to the division showed that only one pickup was in fair running condition

while the others were constantly breaking down and grounded. I explained to

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management that inadequate transport could affect execution of field activities of

the division.

In response, the accounting officer explained that the Ministry acquired new

Vehicles from which one was allocated to the Department and indicated that the

process of rationalizing the usage of the available fleet of Vehicles is on-going.

I await the outcome of the above commitment.

v. Lack of Monitoring and Supervision from the Ministry Head

quarter

During the review, I noted that the Division hardly receives any team from head

Office to carry out supervision and monitoring of the division activities. I explained

to management that frequent monitoring and supervision of the activities carried

out at the division would enhance productivity of the division.

In response, the accounting officer explained that monitoring and supervision

mechanisms have been put in place to ensure proper coordination of all activities

in the Ministry which include holding regular meetings, reporting, and spot

checking of departmental activities and operations.

I advised management to implement the supervision and monitoring mechanisms

put in place for effective service delivery.

vi. Laboratory equipment not labeled

Physical inspection of the division laboratories revealed that the chemical

containers and laboratory apparatus and equipment were not labelled for quick

identification, safe custody and to avoid a mix up of materials. There is a risk of

using a wrong chemical on an experiment that could easily produce inaccurate and

unproductive test results. Besides, the equipment may easily get lost through

theft.

In their response, management explained that all laboratory equipment have serial

numbers and the equipment details are usually recorded and kept as part of the

store‟s records at the time of receipt/acquisition. Chemicals and Reagents normally

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have labels on their containers for ease of identification. However management

acknowledged that unique marking of the laboratory facilities would reinforce the

record keeping system which is hoped to be undertaken when funds are secured.


e) Inspection of Okokorio And Agule Ferry Landing Sites on Lake

Bisina

Okokorio and Agule Ferry Landing sites are located on Lake Bisina in Katakwi and

in Kumi Districts respectively. MOWT contracted two (2) Local companies to

construct the Landing sites. A consultant was also procured to supervise the

construction of both sites on behalf of the Ministry.

The funding for the above works was from the Prime Minister‟s office in 2008. In

last year‟s audit; it was noted that while the Pontoon ferry was delivered at CME

(Ministry or Works and Transport) at a cost of Euros.1,502,000 and a consultant

engaged, the construction works for the landing sites and approach roads had not

commenced by end of the year and this resulted in UGX.5,245,466,352 to lie idle

on the deposit account.

During the financial year under review; a total of UGX.2,844,237,389 was paid for

the construction of landing sites and UGX.2,401,228,963 was committed awaiting

the consultants advise. Below is a summary of inspection findings;

f) Inspection of Okokorio ferry landing site - Katakwi district

The contract price for the construction works was agreed at UGX.2,230,878,835.

The contract commencement date was 3rd April 2013 and at the close of the

Financial Year, the Ministry had paid three (3) Interim Payment Certificates

totalling to UGX.1,094,248,185. During inspection of the landing site on the 17th of

October, 2014 I noted the following;

(i) The project was behind schedule as the scheduled completion date had been

set for 2nd January 2014. There was no evidence that the liquidated

damages was being charged.

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(ii) The contract conditions require that the site Engineer prepares the Site Diary

which details the dairy activities carried out on the site. The site Diary is

signed by the Site Engineer and is certified by the Resident Engineer who is

a permanent representative of the Ministry of Works and Transport on Site.

However, I noted that the hard copy of the site Diary that is required to be

certified by the Resident Engineer was not prepared. This short coming

raised doubt on the Interim Payment Certificates (IPC) that were raised by

the Resident Engineer and eventually paid by the Ministry.

(iii) The Consulting firm that is responsible for supervision of the construction did

not have a permanent staff on site.

(iv) The site Engineer confirmed that whenever he comes up with technical

challenges or technical issues to consult, he rings the Resident Engineer who

is based in Kampala and who sends the Clerk of Works that issue out

instructions to the site Engineer on site. The Clerk of Works last issued

instructions to the Site Engineer on the 6th October, 2014 a sign of

inadequate supervision.

There is a risk that the contractor could do shoddy work due to inadequate

supervision and works may be delayed. Delayed works come with challenges that

range from increased costs and supervision.

In response, management explained that the delay was due to flooding in the

project area which necessitated the review of the design to cater for low and high

level docking. These are compensation events which will be evaluated when the

final account is prepared and if found necessary liquidated damages will be

charged. Management further explained that the poor performance of the

consultant led to shoddy works and accordingly the Ministry has withheld payment

to the consultant pending further evaluation. The Ministry instructed the contractor

to correct defects at his own cost. Management has also constituted an in-house

team to complete the works.

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I advised management to increase its supervision role and ensure that the defects

are corrected within the agreed timelines.

g) Inspection of the landing site- General findings:

i. The Docking area

Inspection of the docking areas showed that the activity was coming to a

completion except for the access road to the docking area that was not yet

completed as per the picture below:

Incomplete access road to the docking area

The construction of the ferry has delayed.

In response, management explained that the Ministry team has been constituted

to complete the outstanding works and the assembling of the ferry has already

been directed to begin at the Site.

I urged management to monitor the construction works closely and ensure the

works are concluded.

ii. Poorly constructed sideways of access road to the docking area

The sideways of the access road to the docking area were not dug to the bed of

the Lake. The work was on-going and the sideways were being supported by the

installed Gabions. There is a possibility that the Access road will be washed away.

See the pictures below;

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Poorly constructed sideways of access Road

Incomplete parking yard above. The parking yard should be covered with

stabilized Mar rum

Completed passengers shade.

In response, management explained that the contractor has been instructed to

correct all the observed defects. On the issue of covering the parking area, the

Ministry has put in place the team to complete outstanding works which will

include laying of pavers on the stabilized surface, fencing of the area, gabion

works and handrails. The outcome of the above commitment is awaited.

iii. Failure to implement the original plan of the Okokorio ferry

landing site

Review of the plan of the Okokorio Ferry Landing site showed that some activities

included in the original plan were excluded from the contract. These included; the

servants‟ quarters residence, the Administration Block and the Water treatment

Plant which were all not built. I explained to management in case the above

essential activities are not done, this will affect operations of the ferry services in

future.

In response, management explained that at the time of contract packaging, the

items were found non-essential and were not included in the Bills of Quantities.

However the passenger shade has been re-modelled to include an office as well as

residence. Furthermore; it was explained that rain water harvesting facility was

put in place to provide adequate water for domestic use.

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I advised Management to revisit the contract and ensure that the activities agreed

on be undertaken.

h) Inspection of Agule Ferry Landing Site on Lake Bisina in Kumi

district

The MOWT contracted a Local company to construct Agule Ferry Landing site at a

contract price of UGX.1,653,530,183. The contract commencement date was 1st

Sept.2012 and the planned completion date was set for 31st May 2013. At the

close of the Financial year, the Ministry had paid five (5) Interim Payment

Certificates totaling to UGX.1,452,564,020.The Landing site was inspected on 17th

Oct, 2014 and below are the findings;

(i) The contractor is behind schedule by more than 2 years and at the time of

audit; there was no evidence that liquidated damages were being charged.

(ii) The construction procedures and guidelines require that the site Engineer

should prepare the Site Diary which details the dairy activities carried out on

site. The site Diary is signed by the Site Engineer and is certified by the

Resident Engineer who is a permanent representative of the Ministry on Site.

However, the Site Manager never had a copy of the site Diary that should

have been certified by the Resident Engineer. He claimed it was with the

Site Engineer who was not at the site. This short coming raised doubt on the

Interim Payment Certificates (IPC) that were raised by the Resident Engineer

and eventually paid by the Ministry.

(iii) A review of the Visitors book and interview with the Site Manager revealed

that the Resident Engineer representing the consultant last visited the Site

on 02nd November 2013, in the presence of an Engineer representing the

Ministry of Works. There was no evidence that the contract for the

supervising consultant was terminated. There is a risk that the resident

engineer could have abandoned the site and hence shoddy work could easily

go undetected and the contractor paid all his dues.

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In response, management acknowledged that the project was behind schedule

mainly due to flooding in the project area which necessitated the review of the

design to cater for low and high level docking. These are compensation events

which will be evaluated when the final account is prepared and if found necessary,

liquidated damages will be charged. Management admitted that the performance

of a Consultant was not satisfactory and stated that the Ministry has withheld

payment to the consultant pending further evaluation. An in-house team to

complete the works has now been constituted.


i) Inspection of the landing site - General Findings;

i. Lack of a sign post

The Contractor has not yet installed a sign post as evidence that it is the company

constructing the site, and indicating that the Consulting firm and the Ministry are

funding the construction.

ii. Lack of an office at the construction site

The contractor does not have an office at the site.

iii. Completed Docking Area

Inside view of the completed passenger shade.

The inside part of the passenger shade was

completed but seats in the middle of the

shade were not constructed.

Completed six stances latrine

The six stance latrine was completed but

lacked the handles along the carriage

way to the latrine.

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Incomplete parking yard.

The parking yard is supposed to be

covered with stabilized mar rum that is

not yet done

In response management explained that the seats in the middle of the shade and

the handles along the carriage way will be fixed as extra works.

I advised management to ensure the remaining works is completed to ensure

safety of passengers.

iv. Failure to implement the original plan of the ferry landing site.

A review of the plan of the Agule Ferry Landing site showed that some activities

included in the original Plan were excluded from the Contract. These included the

servants‟ quarters residence, the Administration Block and the Water treatment

Plant that had not been constructed. There is a risk that the essential activities not

undertaken may affect operations of the ferry services when it begins operations.

In response, management explained that at the time of contract packaging, the

items were found non-essential and were not included in the Bills of Quantities.

However the passenger shade has been re-modelled to include an office as well as

residence. Furthermore; rain water harvesting facility was put in place to provide

adequate water for domestic use.

I advised management to ensure all the above issues are handled to avoid ferry

service interruptions.

6.6 Transport Licensing Board (TLB) Operations

a) Review of Performance - In land water Transport Vessels

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One of the functions of the transport licensing Board (TLB) is to carry out

Inspection and licensing of Inland Water Transport Vessels under the Inland Water

Control Act (1939) and to conduct periodic Inland Water Transport Vessel

inspection and licensing at the various landing sites on the lakes and navigable

sections of River Nile. A review of this function showed that a smaller number of

vessels were licensed compared to the available operating vessels during the year

which translates into failure to collect revenue from the operating vessels. There

was no evidence that all the vessels were licensed as there was no data base for

all the operating vessels.

There is a possibility that unworthy vessels may continue plying water routes

endangering the lives and properties of sailors.

In response, management explained that the number of vessels inspected and

licensed was lower than those plying different inland waterways. This has been

caused by a number of factors listed below;

Capacity gaps due to ceiling of required personnel; the Ministry has engaged

Ministry of Public Service to address the gap during the restructuring exercise.

The e-Tax platform is not very convenient for boat owners to pay for their

licences. Most landing sites where these boats are found have no banking

facilities or reliable internet.

Most of these landing sites are remote areas with poor network coverage

which makes it hard to use the e-tax platform.

Management further explained that though enforcement by use of patrol is

sometimes insufficient; this option will be improved through coordination.

I advised management to ensure all the functions of the TLB are implemented.

b) Limited Storage Space for Important Data

Traffic and Road Safety Act section 71 (2) requires that; the Board shall furnish to

the Minister once in every year a list of routes and packages of routes covering the

whole of Uganda, selected and assembled so as to provide transport services to

meet reasonable passenger demand and which will be reasonably efficient and

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economic either as listed singly or otherwise for both large and small prospective

operators. However during the review, I noted that the Board has data relating to

statistics for granted routes for buses that is manually stored and bulky but has

got limited storage space. I explained to management that there is a possibility of

data getting misplaced and or mixed up causing unnecessary delays in retrieving

of data needed for operations.

In their response, management acknowledged that most data on granted routes

for buses is still manually kept but indicated the Ministry will initiate a procurement

for a consultant to design a software package that stores all these records

including records for all Passenger Vehicles Inspected and Licensed. Procurement

of computers to be used by this software is in advanced stages. The Ministry has

also put in place a Transport Data Management System to store all the data for

the sector.


c) Lack of adequate Office space for Operations

Physical inspection of the TLB offices showed that the Board has limited space

compared to the nature of operations that requires attending to the general public

most of the time. I noted that the Board has various sections each carrying out a

specific activity however; there is limited space for operations such as inspection

of long vehicles like Buses. Below is a picture of clients waiting to be served and

TLB offices clearly reflecting the shortage of space.

TLB clients waiting outside due to limited

space inside the assessment office

Main Block Office at TLB which

accommodates office of the Secretary to

the Board, Accounts Section, and the

reception.

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Despite the challenge; I noted that the Office of the Prime Minister (OPM) stores

some food relief in one of the oldest structures behind the TLB offices that further

congests the premises occupying the limited space where other vehicles for

inspection would be packed. It was not clear under which terms the OPM uses

such a store and besides, the structure is too old and does not seem to be fit for

storing food and or valuables. I explained to management that limited space for

buses creates a bad image and doubt as to whether thorough tests are carried

out. I also explained to management that Limited space may easily accelerate

inefficiencies.

Management responded that indeed the office space at TLB was insufficient

however, construction is on-going for a new office block which will also act as a

Maritime Administration block. The Ministry has also written to the OPM to relocate

their store in order to provide more space for vehicle inspection. The procurement

of a firm to provide motor vehicle inspection services is in advanced stages which

will also relieve the problem of lack of space for vehicle inspection.

I advised management to plan and address the above challenge for enhanced

efficiency.

d) Lack of reliable vehicles for field activities

Physical inspection of vehicles used by TLB while carrying out field operations

revealed that the current fleet of vehicles used by the Board was not mechanically

sound and this hinders the major field activities such as inspection and licensing of

passenger Service Vehicles (PSVs), monitoring bus operations and safety

sensitization campaigns for both water and road transport. There is a risk that

such poorly maintained vehicles could cause accidents while carrying out field

work.

Management explained that that at the time of audit inspection, vehicles allocated

to TLB were in a bad condition hindering TLB activities however, the Ministry has

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since allocated a brand new pick up as part of the general pool and also initiated

procurement for the repair of the existing vehicles.

Management action on the matter is awaited.

e) Review of Computerized Driving Permits operations

As part of the review, the computerized driving permits project was inspected

focusing on the effectiveness of the process of acquiring a driving permit and the

control environment. One activity of Printing and Issuing of Driving Permits to

establish the effectiveness of internal controls regarding printing and issuing was

sampled and the following limitations were noted;

a) Lack of Data Recovery Center

b) Lack of Computerized Archive

c) Lack of an efficient interface between URA and Face Technologies Ltd.

There is a risk that in case of fire or any disaster the available data could get

destroyed. The ministry has not backed up the data to date.

In response, management explained that the Ministry has finalized the

procurement to establish a Data Recovery Centre and the related works have

commenced. For the computerized archive, it was explained this was due to the

fact that partly some functions both administration and management of driving

permits were done by URA. The files were therefore sent from URA to MoWT and

thereby forming a backlog at the registry. The process of computerizing the

archives has been budgeted for in the financial year 2015/16.

I advised management to work out modalities of establishing a Data Recovery

Center to ensure issuance of driving permits is not hugely interrupted due to

unforeseen challenges at the main facility.

f) Lack of Water Transport Standards/operational guidelines/policy

The Inland Water Control Act (1939) Section 3 requires that every person applying

for a license for the carriage of passengers or goods by ship shall submit to the

Board; particulars of the type or types and numbers of ships to be used,

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particulars of the construction, motive power and cargo capacity of every such

ship, the total number of crew to be carried in every such ship, the number of

passengers every such ship is intended to carry, the places between which the

ships are intended to be navigated and the services to be provided by the ships.

However during the review; I noted that the Ministry has no standards/guidelines

in place to guide the operations of the water transport. I explained to

management that lack of standards could lead to unforeseeable challenges

including loss of lives and revenue to Government.

Management explained that Uganda is a member of the International Maritime

Organization (IMO) and as such is required to follow standards and guidelines

issued by the IMO such as the International Convention on the Safety of Life at

Sea (SOLAS) and the International Convention on Marine Pollution. Management

indicated that it will come up with standards and guidelines to guide the user.

I advised management to ensure standards/policy guidelines are put in place to

guide transport operations on water.

6.7 EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT (EATTFP)

(a) Compliance With The Financing Agreement And Government Of

Uganda Provisions

Project Management complied in all material respects with the provisions in the

agreement and GoU regulations except in the following matter;

(i) Unreleased Budgeted Project Funds (IDA & GOU)

Analysis of budget for the year showed that the Project expected funding from IDA

and GOU to a tune UGX.894,846,000 and UGX.11,910,000,000 respectively.

However, I noted that only UGX.14,227,175,761 was received from IDA and

UGX.2,357,076,832 from GOU translating into 45% performance of the total

budgeted funds for the year as summarised in the schedule below;

Details Budgeted

Amount

Actual Receipts Variance Remarks

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IDA Funds 24,894,846,000 14,227,175,761 10,667,670,239 43% of funds not

applied for

due to the

low rate of

absorption.

GOU funds 11,910,000,000 2,357,076,832 9,552,923,168 80% of the budget

not funded.

Total 36,759,845,000 16,584,252,593 20,220,593,407

Funds totalling to UGX.9,552,923,168 (26 % of the total budget) from GOU was

not released to the project. Low absorption capacity coupled with the non-release

of funds from GOU affects implementation of the planned activities and could lead

to unnecessary project extension costs.

Management explained that the unreleased funds from GOU had been budgeted

for taxes that were finally waived by Ministry of Finance as at 30th June 2014 while

the slow disbursement of funds from IDA was a result of delayed completion of

works for Malaba OSBP and Mukono Railway ICD (Inland customs Department).

I advised management to take up the matter with appropriate authorities for

purposes of obtaining adequate funding and enforce monitoring to ensure project

activities are completed as scheduled.

(b) General Standard Of Accounting And Internal Control

A review of the project financial management system was carried out and it was

observed that management had instituted adequate controls to manage project

resources.

(c) Project Implementation

(i) Inspection of construction works at One Stop Border Posts

(OSBP)

I inspected four OSBPs at Katuna, Mutukula, Mirama, Busia, Malaba and Mukono

ICD was carried out between the 24th August and 5th September 2014.

It was noted that works at all the OSBPs and Mukono Railway ICD were behind

schedule despite several requests to have the project extended.

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Specific observations at each inspection site are as below:

BUSIA OSBP

The construction of Busia OSBP at a contract sum of UGX.15,898,641,294 was for

a period of 12 months. Works commenced on 29th August 2013 and was to be

completed on 28th August, 2014. At the time of inspection, the agreed time period

had expired and the construction works were far behind schedule. At the time of

reporting, the progress of works was estimated at 60% and the contractor had

provisionally been given the extension up to end of December 2014. Such delays

have an effect on project performance.

In response, management explained that some major works could not commence

due to the need to keep the border operational. Management further indicated

that there was a funding challenge for extra works which were omitted at the

bidding stage yet the works were essential for OSBP operations. These include

purchase and installation of fire-fighting equipment, Generator and Stabilizer,

borehole, relocation of the national fiber optic cable, and extension of truck

parking yard. The cost variation to cater for the above extra works was estimated

at about UGX.2 billion and that TMEA was soliciting for the funds.

I advised management to liaise with the PS/ST and IDA on the matter and have

the extra works urgently funded to avoid any delays and costs associated with

project extension.

MALABA OSBP

The construction of Malaba OSBP was agreed at a contract sum of

UGX.15,708,759,579 to be completed within 12 months effective 29th August

2013. The expected date of completion was scheduled to 28th August, 2014

however, this period had expired before completion of works. At the time of

inspection, works were estimated at 75% completion. As at the time of reporting,

I noted that management had not secured a “No Objection” for the project

extension from the IDA. Non completion is likely to extend the project life further.

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In their response, management explained that the Contractor‟s performance was

affected by delayed relocation of URA customs office and delayed construction of

exit road by UNRA. The Ministry applied for an extension of the IDA credit in

March 2014 however, the extension has not been secured. Management has

continued to work with the contractor to achieve practical completion of major

works by the credit closure date of 30th September 2014. Presently, the average

physical progress of works at Malaba is estimated at 94% and full completion will

be achieved by end of November 2014.

I advised management to seek for an extension and have the construction

finalized.

MUTUKULA OSBP

The construction of Mutukula OSBP commenced on 6th September 2013 at a

contract sum of UGX.18,793,900,201. The expected date of completion was 5th

September 2014, however, at the time of inspection, the expected date had

expired yet a substantial amount of work had not been done. Delayed completion

of works has greatly affected the performance of the project.

Management explained that the contractor‟s underperformance was a result of

partial site possession by the contractor due to land disputes with Project Affected

Persons which caused a design review/alteration in the project area; delayed

relocation of Government border agencies (Immigration and Police); additional

excavations due to marshy soil; and less mobilization by the contractor.

However, the above issues have been resolved and the average physical progress

of works was presently at 60% completion. The contract was also extended to 2nd

December 2014 to enable the contractor complete all outstanding works.

I advised management to monitor the contractor closely and ensure that the

works are completed within the extended timelines.

KATUNA OSBP

The construction of Katuna OSBP at a contract sum of UGX.8,951,277,750

commencement on 13th June 2014 and was estimated to be completed on 13th

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June, 2015. At the time of inspection, the contractor had completed demolishing

of the existing structures preparing the site for construction works to commence.

It was evident that works may not be completed at the set period.

I advised management to ensure close monitoring so that the project is completed

on schedule.

MIRAMA HILLS OSBP

The Construction of OSBP at Mirama Hills at a contract sum of US $ 7,817,703.32

commenced on 4th July 2013 and the revised completion date had been set for

19th September 2014. At the time of inspection, the extension had expired and

the physical progress of works achieved was estimated at 70%. Delayed

completion of works affects border post operations and could lead to unnecessary

project extension costs.

Management explained that the slow progress was attributed to the Supervision

Consultant who is based in Nairobi where decisions and instructions are taken;

contract administration differences with former Project Architect which caused

delays in procurement of materials and processing of documents/payments;

additional scope due to demolitions and bulk excavations; heavy rains in South

Western Uganda and low mobilization by the Contractor. Management indicated

that the above issues have now been resolved and the average physical progress

of works had reached 80%. Consequently, the contractor was given up to end of

December to complete all outstanding works. The contractor has also been served

a notice to charge liquidated damages.

I advised management to enforce the provisions of the contracts and ensure that

the contractor speeds up the works at the border posts to avoid escalation of

contract costs.

MUKONO ICD

The Construction of proposed Railway Inland Container Depot (ICD) at Mukono by

an international construction company at a contract sum of US $ 8,688,120,112

commenced on 10th December 2012 and was expected to be completed on 10th

December 2013 but was later revised to 9th June 2014. At the time of inspection,

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the constructions were estimated at 50% completion way below expected

performance. As explained earlier, delays are likely to affect the project

performance and time extensions.

Management explained that the contractor‟s underperformance was caused by

among others; partial site possession due to disputes between Uganda Railways

Corporation (URC) and Mukono District Council over the ownership of existing

warehouses that was later resolved in July 2014; death of the Contractor`s site

engineer in December 2013; and increased scope of works on the office block and

container platform.

However, all the above challenges were resolved and extension sought from the

financiers to the end of December 2014 and the average physical progress of ICD

works was presently estimated at 85% completion. It was further indicated that

the contractor has been served with a notice to charge liquidated damages.

I advised management to increase suspension and monitoring with a view of

having the construction completed within the extended time period.

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JUSTICE LAW AND ORDER SECTOR

7.0 MINISTRY OF JUSTICE AND CONSTITUTIONAL AFFAIRS

7.1 Mischarge of Expenditure – UGX.615,047,805

The Parliament of Uganda appropriates funds annually in accordance with the

needs of each MDA. This appropriation is implemented through the budget in

which funds are tagged to particular activities and outputs using account and

MTEF codes.

A review of the Ministry‟s payments revealed that there were mischarges under

various codes during the year under review, totalling to UGX.615,047,805. These

payments were made without requisite authority. The practice undermines the

budgeting process and the intentions of the appropriating authority. The practice

also leads to financial misreporting.

The Accounting Officer explained that the practice is regrettable, and they are

working towards eliminating it.

I advised the Accounting Officer to streamline the budgeting process and ensure

that funds are allocated to budget lines in accordance with priorities. Any

reallocations should be undertaken in accordance with the regulations.

7.2 Outstanding Commitments – UGX.442,173,233,469

The Ministry of Justice and Constitutional Affairs had accumulated outstanding

commitments totaling UGX.442,173,233,469 as at 30th June 2014. The outstanding

commitments comprised of court awards and compensations UGX

440,484,898,505, unpaid rent, UGX 976,958,385, withholding tax UGX 11,998,536

and other obligations UGX 699,378,043.

The outstanding commitments position rose from UGX.164,163,005,576 at the end

of the previous year to UGX.442,173,233,469 at the end of the current financial

year, (169% increase). It is important that government examines the causes of

these losses with an objective of minimizing them.

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It was further noted that there are delays in settling claims which are likely to lead

to the accumulation of unpaid Court awards and compensations and other claims

to unmanageable amounts. The delayed payments may also lead to penalties in

interest and other related charges.

The Accounting Officer explained that the cause of the accumulation is due to

inadequate funding and lack of instructions from line Ministries when they have

committed the offence. The Accounting Officer promised to meet the Ministry of

Finance, Planning and Economic Development to discuss the minimization of

accumulation of Court awards and also avoid delays in payment. The Accounting

Officer also suggested other alternatives such as devising means of settling court

awards, holding meetings and conducting workshops with some of the entities

concerning their obligations, as well as advocating for transfer of settlement of

liabilities to the responsible MDAs.

I urged the Accounting Officer to continue with dialoguing with a view of

minimizing court awards and compensations.

7.3 Court awards and compensations

a) Rise in Contingent Liabilities – UGX.4,295,304,082,625

During the year, contingent liabilities rose from UGX.541,554,003,100 to

UGX.4,295,304,082,625 as per the Statement of Contingent Liabilities as at 30th

June 2014. This indicates a 693% increase in this category of liabilities. This

situation is untenable and likely to create an additional burden on the public

resources.

The Accounting Officer explained that the contingent liabilities include only the

filed suits and excludes intentions to sue. He further explained that the figure of

UGX.4,295,304,082,625 provided in the contingent liabilities is for the most

probable cases that may be lost.

There is need for Government to examine the issue further with a view to

establishing the likely causes in order to facilitate Government to arrive at a

sustainable solution.

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b) Budgeting for Court Awards and Compensations

I noted that whereas the Court awards and compensations have continued to

accumulate over the years, budget allocations and releases have not improved to

cover the obligations. The table below shows the Court awards and compensations

at the end of each year, subsequent budgets and releases made to settle the

obligations:

No Financial

Year From

Outstanding

Amount at start

of Year (UGX.)

Approved

Budgeted

Amount Year

(UGX.)

Amount Paid

(UGX.)

1 1st July 2012 54,009,997,832 4,346,998,000 20,746,165,234

2 1st July 2013 82,342,100,818 4,346,998,000 5,361,160,000

3 1st July 2014 164,163,101,576 4,347,324,000 8,500,551,991

From the analysis, it is clear that insufficient funds have been budgeted and

released to cover the outstanding amount over the years. This has partly caused

the accumulation of the arrears.

The Accounting Officer explained that this matter has remained a relentless

challenge to the Ministry, as the Ministry of Finance, Planning and Economic

Development over years has not taken into consideration the existence of two

distinct provisions in MTEF ceiling of Court Awards and Compensations that is

current and the arrears. He further explained that the unsettled amounts will

continue to accumulate if sufficient provisions are not made.

I advised that in the budget preparation process and provisions in MTEF ceilings

on Court Awards and Compensations, consideration should be made to provide for

Current and Arrears of Court Awards and Compensations. I also advised that

Management should continue liaising with Parliament and MoFPED to ensure that

these cumulative arrears of compensations are cleared.

c) Accumulation of interest on Court awards and compensations –

UGX.60,396,783,924

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According to Section 26(2) of the Civil Procedures Act Cap 71, court may in the

decree order interest at such rate as the court deems reasonable to be paid on the

principal sum adjudged from the date of the suit.

I noted that in several court cases ruled against Government, court awarded

interest ranging from 6%-25% and even up to 40% in some cases, per annum on

the court awards.

It was observed that as a result of government‟s failure to pay these court awards

on time, interest of UGX.60,396,783,924 has accumulated over time and in some

of the cases interest is now greater that the principal award. At the current rate of

payment it would be difficult for government to extinguish the total outstanding

debt in court awards.

The Accounting Officer explained that budget ceilings are set and no amount of

negotiations with MOFPED have borne additional funds.

I advised the Accounting Officer to ensure that adequate planning is made to

promptly settle payments related to these cases to avoid interest charges and

other related charges that may arise therefrom.

d) Failure to document guidelines for payment of court awards and

compensations

An interview with management and a review of documentation revealed that the

Ministry established a committee on compensations, out of court settlement and

court awards. The Committee sits every quarter to determine which cases to

prioritize for payment.

I noted that whereas the Committee has been in existence for some years now, it

is not supported by any documentation or clear approval from management. I also

noted that there are no documented guidelines on the payment of Court awards

and compensations.

In the absence of documented guidelines it becomes difficult to establish whether

the settlements were done in a transparent manner.

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I further noted that the criteria for priority of payment of court awards and

compensations are not documented. As a result of undocumented payment

guidelines, there is a payment backlog and aging out of claims is becoming

difficult. For instance, there are claimants who have never received any payment

dating as early as year 1999, yet those awarded by court in recent years are being

cleared.

The Accounting Officer explained that the committee to manage court awards and

compensations looks at the funds available and distributes them accordingly. The

criteria used include; First in first out, Mandamus cases, High interest rates,

Human rights cases, and Medical grounds.

I advised the Accounting Officer that the internal guidelines for management of

court awards and compensations should be documented and followed.

e) Management of Court Awards and Compensation Files

(i) Inadequate Records Management

It was observed that the records management of Court awards and compensations

is inadequate because the Ministry‟s case management filling system is still a

manual one. MoJCA works with case and advice request files that require tracing,

quick movement and action which is not possible in the manual system. For

example it is not possible to identify cases with high interest charges. It was also

noted that MOJCA cannot easily ascertain the number of claims that have been

cleared and those outstanding at a given time. As the Directorate of Civil litigation

has pending cases for a long time, tracing the documentation from manual records

can be cumbersome and subject to abuse.

The Accounting Officer explained that the Ministry is in the process of securing a

service provider to computerize the system.

I advised the Accounting Officer to expedite the process of computerizing records

so as to improve information flow and protection.

(ii) Ledger Card Management:

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During the audit of court awards and compensations, a sample of files was

reviewed to ascertain whether the amounts reported on the ledger cards actually

tallied with the outstanding amounts awarded in the cases. The following were

observed about the ledger cards;

(a) Lack of ledger cards:

It was observed that certain files lacked ledger cards contrary to best practice.

This is risky because one cannot easily ascertain how much money has been paid

and how much is outstanding. It also raises questions of figures raised in the final

accounts as payments made and outstanding balances. Examples of the cases

with missing cards are; Benon Turyamureeba & 132 Others Vs Attorney General

Misc. Application 440/2005 and Capt. Samuel Nsubuga & Others Vs. AG CS.

547/2007.

The Accounting Officer explained that some files do not have ledger cards because

some of the required information is not readily available on the file.

I advised the Accounting officer to ensure that the files are updated and the ledger

cards opened.

(b) Ledger cards are not properly updated:

Best practice dictates that while maintaining a ledger card, it should be opened on

the date of award and the amounts awarded indicated, subsequently, when

payments are made, they should be entered onto the card with their

corresponding dates indicated and at the end of the year. The ledger cards should

be updated to get the figure outstanding as at the close of the year. During the

audit of the files, it was observed that the ledger cards were not properly updated.

On some files, when payments were made, they were not reflected on the ledger

cards. It was further noted that all the cards were not updated at each year end

while on other cards, the opening figure was not that awarded but a figure

“brought forward”. This raises doubt about the figures reported in the final

accounts as outstanding especially for awards that earn interest.

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Furthermore, computations were carried out on some files and outstanding figures

compared to what was reported on the ledger cards and major differences were

observed. Of the five files sampled the total difference was UGX.1,769,667,605.

There is a risk of failure to track payments made on various cases.

The Accounting Officer explained that they are constantly improving the use of

Ledger cards and ensuring that they are updated. He also explained that they will

be phasing them out as they move towards computerization.

I wait the result of management efforts on improving the custody of the

information.

(c) Ledger cards lacking serial numbers:

It was also observed that certain ledger cards were not serially numbered. This is

risky because a ledger card can be plucked out and replaced with another without

anyone noticing. Furthermore, it was observed that there are two types of ledger

cards that are used. This is risky too because having two sets of source

documents can be misleading as they can be tampered with or manipulated.

The Accounting Officer explained that the ledger cards that are not serially

numbered (ledger sheets) were first used when the Ministry had just embarked

on opening up ledgers on every compensation/ court awards file but management

later realized that this type of ledger cards were not appropriate as they seemed

to be weak and also lacked numbers. Management stopped their use and resolved

that serialized ledger cards instead be procured and the ledgers sheets which were

already on files be phased out slowly as the files continue to be updated by

replacing them with serialized ledger cards which is ongoing.

I advised the Accounting Officer to ensure that the ledger cards are serialized.

(iii) Inadequate filing and mix up of records

For every case handled by MOJCA, a file is opened on which all documentation

related to the case is kept. I observed however that some files contained

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documents relating to other cases, and some files were missing key documents.

For example the documents of Mugwere Yekosofati Vs. AG HCCS 28/2007 were

misfiled in Administrator General Vs. Bwanika James & Others SCCA No.7/2003.

Improper filing of documents may lead to loss of cases.

The Ministry should ensure that all documents are properly filed on their

respective files.

(iv) Poor information flow

To maintain and enhance internal operations of an organization, information must

flow both vertically and horizontally, hence the need to maintain designated places

for easy access and retrieval.

However, it was observed that many files are kept in state attorneys‟ offices

instead of the Civil Registry and in many instances; they are not well protected

from outsiders. Furthermore, files relating to completed cases are delayed to be

approved, thus resulting into understatement of payables in financial Statements.

Failure to get hold of the pertinent information will mean that the liabilities in the

Financial Statements will be understated.

Management appreciated the observation.

I advised that all concluded cases should be forwarded to the Director, Civil

Litigation who in turn forwards them to higher authorities for approval and for

capture in the database.

(v) Access to Registries

The Ministry of Justice operates both security and open registries. Inside the said

registries, important and confidential records are kept. It is in this regard that

access to these registries should be restricted to authorized personnel to avoid any

likely compromise on the information contained in the files (being accessed by

unauthorized people).

However, observation indicates that any person can easily access the registries,

particularly the Civil Litigation Registry. This statement is confirmed by people we

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found seated on the chairs where the staff who man the registry are supposed to

be. Worse still, there are times when the registry is left open without a single staff

with outsiders standing by the entrance. There is danger in leaving the registry

unattended by staff because the non-staff can easily access information on the

files which could result into loss of cases wince the other party‟s lawyers may

access information that may disadvantage the Government‟s defence.

The Accounting Officer noted the observation and pledged to ensure that the

registries are properly manned and a circular to this effect has been issued.

I advised the Accounting Officer that the Ministry‟s registries should be manned in

such a way that no unauthorized person is allowed to have access to them. I also

advised that no registry should be left open when all the staff in charge are out so

as to avoid strangers getting access to vital information. Staff manning the

registries should ensure that the registry is not left unattended.

f) Lack of Follow up on Cases Won by Government

A review of the sampled cases revealed that a total of over 50 cases have been

won by Government, with an estimated claimable amount of UGX.32,101,000,000.

The Attorney General is commended for this achievement and for a saving of

UGX.100,892,976,730 on the cases won.

However, I also noted cases where the Attorney General was awarded costs and

other payments by court, the costs had not been recovered, by the time of the

audit.

Management attributed the failure to recover/enforce court awards to lack of

resources for initiating recovery/execution proceedings. Government continues to

lose non-tax revenue in the won cases which could be used to offset outstanding

court awards.

The Accounting Officer responded that they followed up on cases won and some

money has been sent to the Treasury. The Accounting Officer further explained

that in the case of costs, Courts have said they are not entitled to instruction fees.

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In the near future, they intend to engage executioners/court bailiffs with authority

from the Chief Registrar and MOFPED.

I advised the Accounting Officer to put in place a clear follow up mechanism to

ensure recovery of monies due to Government.

7.4 Staffing Gaps in the Directorate of Civil Litigation

It was noted that the Directorate has thirty technical staff under the director.

Three Commissioners, Seven Principal State Attorneys, five Senior State Attorneys

and fifteen State Attorneys. However, as per the staffing structure, the Directorate

is supposed to have a total number of forty lawyers. The available number of staff

is inadequate to handle over five thousand existing files and the ever increasing

number of cases arising out of continued litigation against Government.

The understaffing causes fatigue and deteriorating morale for the current staff and

creates case backlogs.

The Accounting Officer explained that the approved structure for Directorate of

Civil Litigation provides for twenty five Legal Staff and twenty one are filled. A

submission was made to Public Service Commission on 27th November, 2014 for

filling of the three vacant posts of Senior State Attorney. The Accounting Officer

further explained that they expect the number of staff to increase when the

proposed structure is approved.

I advised the Accounting Officer to follow up with the relevant authorities to

ensure adequate staffing of the Directorate.

7.5 Failure by the Attorney General to file a defence

I observed that in some cases, the Attorney General did not file a defence or failed

to appear and defend cases filed against Government. The Government loses

funds in these cases that have not been defended by the Attorney General.

Failure to defend Government leads to loss of cases and eventually loss of public

funds.

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The Accounting Officer explained that they sometimes delay to get instructions, for

example, in the case of Fuelex (U) Ltd Vs AG HCCS 825 of 2007. He also explained

in some instances they are unable to go to Court because of matters beyond their

control.

I advised the Accounting Officer to ensure adequate planning and scheduling of

available staff resources to ensure that cases are attended to.

7.6 Payment of procurement claims arising from breach of contracts by

other Line Ministries

According to Section 59 (2) of the Public Procurement and Disposal of Public

Assets Act, 2003, a procurement or disposal shall only be initiated or continued on

the confirmation that funding, in the full amount over the required period, is

available or will be made available at the time the contract commitment is made.

However, I observed that some Ministries enter into contracts and later breach the

terms of the contract by failing to pay the contractors or service providers who sue

the Attorney General in his representative capacity as the chief legal officer of

government. These Ministries are unresponsive when called upon to assist the

Attorney General to defend their actions and as a result the Attorney Generals

loses these cases which escalates the outstanding payments on court awards. The

table below contains sampled cases:

Case File

Judgment

Date

Decratal

Sum

(UGX.)

Interest

Outstanding

(UGX.)

Balance

(UGX.)

Ministry

New World

Services Ltd vs

AG CS 650/2013

23/7/2014 147,200,000 147,200,000 Ministry of

Defense

Prime

Constructors Ltd

Vs. AG HCCS

55/08

07/06/2010 1,322,098,06

2

718,454,817 1,967,851,47

6

Ministry of

Water

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Case File

Judgment

Date

Decratal

Sum

(UGX.)

Interest

Outstanding

(UGX.)

Balance

(UGX.)

Ministry

Combined

Services Limited

Vs. Attorney

General HCCS

657 of 2003

20/03/2009 176,791,511 176,791,511 Ministry of

Water

There is laxity by Government Ministries in aiding the Attorney General‟s chambers

to efficiently perform his role.

The Accounting Officer agreed with the observation, and explained that the

Ministry has communicated to MDAs about the consequences of not meeting their

obligations.

I advised that each Ministry should bear the legal costs arising from breach of

contract to reduce laxity in providing Defence in cases against Government.

7.7 Irregular Compensation to Lowi Roadways Ltd

Whenever the Ministry receives any compensation issues, be it relating to movable

chattels or land, the final decision arrived at as to how much should be paid to the

complainant, should be based on the advice of experts in pertinent fields. As far as

land is concerned, the advice of the Chief Government Valuer is paramount while

that of the Chief Mechanical Engineer (Ministry of Works) comes into play

concerning motor vehicles.

It was noted that a payment of UGX.1,959,485,948 was made to a Law Firm on

behalf of a client for loss of Buses destroyed in an ambush by Kony rebels and the

attendant loss of earnings. Instead of soliciting competent advice and assistance

of pertinent experts in the areas mentioned, the Ministry went ahead and paid the

sum of money based on the advice of a Principal State Attorney who lacks the

knowledge and skills of the Chief Mechanical Engineer. The resulting amount

arrived at is likely to have been misstated and probably caused financial loss to

Government.

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The Accounting Officer responded that the vehicles were bombed and the Attorney

General used his discretion to determine the values for compensation.

I advised that determination of the amount payable to claimants in compensation

issues should be arrived at by involving Government technical officers.

7.8 Fuelex (U) Limited vs. AG HCCS 825 of 2007

The Plaintiffs sued the Attorney General for recovery of UGX.59,801,899 being

amounts wrongly deducted as Withholding Tax (WHT) from the payments for fuel

supplied to the Ministry of defence, interest thereon, general damages and costs

of the suit. Court entered a default judgment and awarded 59,801,899 as WHT

wrongly withheld, costs at the rate of 25% from 24th October 2007 until full

payment and costs of the suit.

A detailed review of the case noted the following:-

The Attorney General did not appear and defend and as a result Government

was not effectively represented.

The court ordered that the defendant may recover the monies paid to the

plaintiff from URA in lieu of the monies refunded. The money has not yet

been recovered from URA.

To date, the decree has not been satisfied yet the decretal sum and costs

continue to accrue interest which as at 30/6/2014 had accumulated to the

tune of about UGX.114,261,333. The outstanding balance as reflected on the

ledger card now stands at UGX.182,218,133.

There is a risk that Government will lose more funds in interest in case the amount

remains outstanding.

The Accounting Officer responded that efforts will be made to contact MOFPED for

necessary funding and as soon as it releases the funds, they will have the amount

settled.

I advised the Accounting Officer to follow up with MOFPED to have the amount

settled expeditiously.

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7.9 Delays by the Chief Government Valuer to issue valuation reports

In the process of handling compensations and court awards, MOJCA is required to

determine the value of property for which the claimant seeks compensation. In

doing this, the Ministry calls and relies on Government agencies such as the Chief

Government valuer or Chief Mechanical Engineer with the relevant expertise in the

matter. I however observed that in some of the cases, the Chief Government

valuer delayed to provide the Attorney General with a valuation report, despite

constant reminders. Details are shown in the table below:

S/No. Case File No Date when the

request was made

Date when

valuation report

was issued

2. Metropolitan properties Ltd Vs.

Attorney General CS 102/2009.

12th August 2013 13th Dec 2013

3. Mbuya Blocks Limited Vs. AG

and 2 Ors HCCS No. 293/2005

11th May 2010 25th March 2011

There is a risk that a delay by the Chief Government Valuer to issue valuation

reports can result into reliance by court on the plaintiff‟s valuation which can

inevitably lead to loss of colossal sums of money by Government.

The Accounting Officer suggested that the Chief Government Valuer be advised to

make timely valuations and send the reports.

I advised the Accounting Officer to make regular follow up with the Chief

Government Valuer.

7.10 Human Resource and Strategic management issues

a) Delayed restructuring processes

Good strategic planning requires an entity to carry out human resource planning to

ensure that adequate number of qualified staff is in place to carry out the

operational activities of an entity so as to enable her achieve strategic objectives.

Section15(A-a) of the Standing Orders, 2010 mandates the Ministry of Public

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Service to determine the structure, terms and conditions of service in Government

entities.

A review of the Ministry‟s Strategic Investment Plan (2012/13-2016/17) revealed

that management of the Ministry came up with a proposed macro organization

structure that would enable her to fulfil its mandate. The Ministry of Public Service

has in the past few years been restructuring MDAs including MoJCA. The process

has however been slow implying that the proposed macro organization structure is

not yet approved by the Ministry of Public Service. Consequently, all MoJCA

Directorates are operating below the required staffing levels and this has been

rated as a high risk in the Ministry‟s Strategic Investment Plan. As noted in the

previous year audit report, unless the proposed macro organization structure is

approved and operationalized, implementation of Ministry‟s strategic plan may be

negatively affected.

The Accounting Officer explained that the restructuring exercise is awaiting the

issue of a certificate of financial implications from the Ministry of Finance, Planning

and Economic Development.

I advised the Accounting Officer to follow up the approval of the proposed macro

organization structure by dialoguing with the Ministry of Public Service, Cabinet

and Ministry of Finance Planning and Economic Development, to enable the

Ministry deliver on her mandate.

b) Staffing gaps in the existing organization structure

Despite the fact that the proposed macro organization structure has not been

approved as noted in para.7.4.1 above, various posts in the existing organization

structure have remained vacant. These include key posts of: Commissioner Civil

Litigation (Institutions); Commissioner Legal Drafting (LG); Administrator General,

Principal Personal Secretaries, Principal State Attorney and Principal Accountant.

A review of the Ministry‟s ministerial policy statement revealed that this situation

was mainly attributed to the current freeze on recruitment and the wage bill

constraints which prevented the recruitment of more staff. Lack of staff in vital

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positions of the organization affects the performance and overall achievement of

organization‟s goals and objectives. The existing members of staff may be

overworked leading to staff demotivation and staff turnover.

The Accounting Officer explained that they are in the process of filling the vacant

posts.

I advised the Accounting Officer to continue liaising with the Ministries responsible

and have the gaps filled.

c) Failure to Approve Centre for Alternative Dispute Resolution

(CADRE) by Ministry of Public Service

The Arbitration and Conciliation Act, 2000 (Cap.4) is an amendment of the laws

relating to Domestic Arbitration, International Commercial Arbitration,

Enforcement of Foreign arbitral awards and to define the law relating to

conciliation. The Act establishes the Centre for Arbitration and Dispute Resolution

(CADRE). The role of CADRE is to promote arbitration and alternative dispute

resolution to decongest the Commercial Court and to create a conducive business

environment for promotion of business to attract investments.

The Ministry of Justice together with the JLOS Sector Secretariat and the Ministry

of Public Service (MoPS) finalized the institutional arrangements of establishing

CADRE in accordance with the Arbitration and Reconciliation Act Cap. 4 and this

was approved by the CADRE Council. The organizational structure was then

submitted to the MoPS for approval but to date nothing has been done. Failure to

approve CADRE body defeats the good intention of formulating it and loss of the

intended benefits.

The Accounting Officer responded that the Hon. Attorney General wrote to the 1st

Deputy Prime Minister and the Minister of Public Service requesting for his

intervention to have this matter finally resolved.

I advised management to continue liaising with the responsible authorities and

ensure that CADRE is approved to allow its operation.

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7.11 Delays in Settlement of Commitments

Best practice requires that once a commitment is entered into, there is need to

ensure that funds are available to settle the commitment upon delivery of goods

and services. Regulation 105(1) of the PPDA Regulations, 2003 also requires a

procuring and disposal entity not to initiate any procurement proceedings or

activities for which funds are neither available nor adequate.

A review of the accounting records revealed that commitments totaling to

UGX.629,235,292 settled during the year were prompted by notices of intention to

sue or signing consent agreements between the Ministry and the service providers

as a result of delayed settlement. It was further noted that some of the payments

related to the previous years.

Delayed settlement of creditors can result into the following:

Double payments as a result of failure to differentiate paid invoices from un-

paid ones over time.

Budgetary indiscipline as a result of incurring expenditure in the periods to

which it does not relate.

Legal suits against the Ministry and loss of trust by the service providers.

The Accounting Officer explained that delays in settlement of commitments are

occasioned by the inadequate budget received by the Ministry and emergencies

that the Ministry is bound to comply with.

I advised the Accounting Officer to always liaise with the relevant authorities for

adequate funding.

7.12 Land and Fleet management

a) Lack of Land titles for Regional Offices

While the Ministry has made improvements by acquiring regional Offices in

Mbarara, Gulu, Mbale and Arua, at the time of writing of this report, there was no

evidence of ownership of this property in form of land titles. There is a risk of loss

137

of valuable property to other claimants or encroachers. Karamoja office which is

opening soon faces a similar problem.

The Accounting Officer responded that Ministry is in advanced stages of securing

the said land titles.

I await the results of management efforts.

b) Un-disposed of vehicles

Treasury Accounting Instructions Section 816 requires a Government entity to

maintain an operating records/register for each vehicle to record its history,

performance, servicing, overheads and repairs among other things, in sufficient

details for periodic assessments to be made of its performance compared to its

cost of up keep. Once the vehicle is not cost effective, it should be boarded off.

A review of the Board of Survey Report dated 18th July, 2013, revealed that an

adhoc Board of Survey which sat on 14th June 2013 and resolved to boarded off 8

unserviceable vehicles. However, by the time of writing this report, the said

vehicles had not been disposed off. Most of the vehicles are parked in the

Ministry‟s parking yard thus wasting the valuable space. Failure to dispose of the

grounded vehicles can also result into:

storage costs especially those vehicles kept in garages;

Loss in value of the vehicles due to depreciation;

Theft of vehicle parts and vandalism of idle vehicles in the garages.

The Accounting Officer explained that the process of disposal delayed due to the

need to ensure that the process was transparently done. The process is now on

course and the vehicles are expected to be boarded off soon.

I advised management to expedite this disposal process to prevent the vehicles

from further deterioration.

c) Vehicle repairs and maintenance

The Ministry sends its fleet to prequalified garages for routine repairs and

maintenance. Under normal circumstances, each vehicle is supposed to have a

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ledger maintained for it by the transport officer and another by accounts section

for the purpose of knowing which vehicle frequents the garage. Similarly, all the

repairs invoices should be endorsed by the transport officer indicating that the

repairs were actually carried out. On the contrary, during the year the procedures

indicated above were not undertaken.

I advised the Accounting Officer to increase the vehicle monitoring and supervision

roles and have the required process started and finally implemented.

7.13 Budget performance

The Ministry‟s approved recurrent budget for the year amounted to

UGX.60,643,372,903. However, by the close of the financial year,

UGX.57,225,590,343 had been received (representing about 94.4% of the budget)

leading to a shortfall of UGX.3,384,225,686. The shortfall in the releases partly

affected implementation of planned activities. While some planned activities were

partially implemented or others were not implemented at all. The table below

refers:

Planned Key Activity

Expected Output Actual output Variance

Administrator General-Estates Registration and Inspection

Issuing 350 land

transfers

350 land transfers

to be issued.

159 land transfers

to be issued.

241 land transfers not

issued. (68%) under performance

Apply to Court to

grant 25 letters of administration

25 letters of

administration applied for

1 letters of

administration applied for

24 letters of

administration not applied for (96%) under

performance

200 Estates to be filed for winding up

200 Estates filed for winding up

34 Estates filed for winding up

166 Estates not filed for winding up. (83%) under

absorption.

wind up 80 Estates 80 Estates wound up

34 Estates wound up

46 Estates not wound up (57.5%) under

performance

Law Council

Holding 60

disciplinary committee meetings

and conclude at least

150 cases

60 disciplinary

committee meetings held and

150 cases

concluded.

53 disciplinary

committee meetings held

and 60 cases

concluded.

07 meetings not held

(12%) under performance and 90 cases not

concluded (60%) under

absorption.

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The Accounting Officer explained that there were several reasons why the

institution failed to achieve the targets. Among these were the irreconcilable

differences among land and property beneficiaries who were disagreeing on the

distribution, missing land titles and bureaucracies in the land office. There were

also numerous adjournments due to absence of parties in respect of cases

handled by the law Council.

I advised the Accounting Officer to plan adequately and ensure that all planned

activities for which funds are released are completed to enable the Ministry deliver

its mandate.

7.14 Capital Development Budget

During the process of budgeting, the Ministry is supposed to make estimates of

financial resources to be expended in carrying out planned activities in a given

period (a financial year in case of MDAs). The budgeted expenditure includes both

Recurrent and Development.

It was noted that the Ministry of Justice has no provision for Capital Development

budget. The lack of the said budget has rendered the Ministry unable to meet its

Capital Development obligations. It was noted that what appears as an approved

budget under Capital Development are donor funds which are channeled through

MOJCA to JLOS. Lack of Capital Development has forced the Ministry to use some

of its meager resources to purchase fixed assets such as office equipment and

furniture, which results into mischarge since no money is provided in the budget

estimates.

The Accounting Officer explained that they have raised this concern severally but

are still awaiting the Ministry of Finance, Planning and Economic Development to

provide the required funding.

I urged management to keep liaising with the relevant stakeholders for funding.

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8.0 JLOS, LAW AND ORDER SECTOR SECRETARIAT

8.1 JLOS SECRETARIAT AND GENERAL OBSERVATIONS

(a) Budget performance

During the year, the Justice, Law and Order Sector (JLOS) Secretariat received a

total of UGX.62,359,810,419 to facilitate operations of the various JLOS

components. At the beginning of the year, the Secretariat also had unspent

balance totaling UGX.19,603,254,264. The total available funds for spending for

the year amounted to UGX.81,841,588,727.

UGX.50,529,898,358 was subsequently spent during the year by the various

implementing agencies leaving a balance of UGX.31,311,690,369 unspent. The

table below shows the opening and closing balances as well as expenditures by

various entities during the year.

No Institution Opening

Balance (JLOS)

Adjustment

to Opening

Balance

Receipts Total Funding

Available

Expenditure

UGX

Closing Bal.

UGX

1 Uganda Law

Society 124,450 - 605,520,100 605,584,600 305,551,600 300,033,000

2 Uganda Law

Reform Comm. 17,490,404 0 1,772,605,000 1,790,094,000 1,549,207,000 240,887,000

3 Local Government 26,197,000 70,969,000 412,825,000 509,991,000 412,050,000 97,941,000

4 Law Development

Centre 3,925,472 - 1,944,560,000 1,948,485,472 1,763,562,885 184,922,587

5 Tax Appeals

Tribunal 88,727,706 - 367,403,000 456,130,706 388,755,095 67,375,611

5 Directorate of

Public Prosecution 14,119,108 - 3,611,000,000 3,625,119,108 3,172,618,418 452,500,690

7 Uganda Reg.

Serv. Bureau 648,436,381 7,837,000 932,300,000 1,588,573,381 743,215,955 845,357,426

8 Ministry of

Internal Affairs 362,268,010 - 3,571,787,034 3,934,055,044 3,880,839,977 53,215,067

9 Uganda Police

Force 1,742,461,000 80,538,000 4,155,067,000 5,978,066,000 3,683,370,000 2,294,696,000

10 Uganda Prisons

Services 1,727,128,658 - 5,827,765,000 7,554,893,658 5,529,465,894 2,025,427,764

11 Judicial Service

Commission 3,154 1,387,596,000 1,387,599,000 1,212,374,000 175,225,000

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No Institution Opening

Balance (JLOS)

Adjustment

to Opening

Balance

Receipts Total Funding

Available

Expenditure

UGX

Closing Bal.

UGX

12

Min. of Gender,

Labour & Social

Dev‟t

566,746,713 - 759,832,000 1,326,578,713 1,184,326,000 142,252,713

13 Judiciary 977,014,855 -9,855 9,651,325,400 10,628,330,400 7,175,472,474 3,452,857,926

14

Administrator

General Public

Trustee

121,221,795 - 576,644,000 697,865,795 572,142,768 125,723,027

15

Uganda Human

Rights

Commission

70,422,757 1,010,000 963,007,243 1,034,440,000 548,060,000 486,380,000

16 Min. of Justice &

Const. Affairs 1,917,431 -1,917,431 1,372,000,000 1,372,000,000 1,365,596,545 6,403,455

17 Secretariat

(Donner) 6,405,083,230 268,162,485 9,306,938,190 15,443,858,935 9,234,376,101 6,209,482,834

18 Secretariat (IFMS) 3,392,177 -3,392,177 3,072,075,970 3,072,075,970 3,044,601,261 27,474,709

19

Nat Citizenship &

Immigration

Control

1,630,547,244 - 1,616,293,756 3,246,841,000 1,372,042,000 1,874,799,000

20 MOJCA (CBL) 205,301,589 -8,286,500 1,943,010,174 2,140,025,263 2,112,837,544 27,187,719

21 JLOS House Acc 4,990,725,130 - 8,092,000,000 13,082,725,130 861,177,289 12,221,547,841

22

Taxes on

Machinery,

Furniture & Veh.

- - 418,255,552 418,255,552 418,255,552 -

Grand Total 19,603,254,264 -

121,412,890 62,359,810,419 81,841,588,727 50,529,898,358 31,311,690,369

I explained to management that failure to utilize the available funds implies that

planned activities were partially or not implemented. This may lead to failure by

the management to attain the programme objectives.

Management explained that the out of the unspent balance, UGX.12,221,547,841

was earmarked for the construction of the JLOS House and the balance was

committed to on-going construction works both at the JLOS headquarters, and at

the participating JLOS institutions.

I advised Management to properly supervise the on-going works with a view of

concluding the activities within the agreed timelines.

(b) Shortfall in the Budget Releases

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A comparison of the approved JLOS budget and work plan for the 2013/14 with

funds released for the financial year revealed shortfalls in funding to the tune of

UGX.1,222,161,000. The table below shows funding shortfalls for the three

participating JLOS institutions:

No Institution Budget (UGX) Releases (UGX) Shortfall (UGX)

1 Uganda

Human Rights

Commission

1,186,465,000 963,007,000 223,458,000

2 Uganda Police 4,530,385,000 4,154,917,000 375,468,000

3 Uganda Prisons

Services

6,451,000,000 5,827,765,000 623,235,000

Total 12,167,850,000 10,945,689,000 1,222,161,000

Shortfall in funding impacts negatively on the implementation of planned activities

under Programme.

Management explained that the Sector experienced the shortfall because the

Secretariat did not receive the fourth quarter funding planned for the year.

Management was advised to liaise with the relevant stakeholders to ensure

adequate funding for implementation of planned activities.

(c) Delayed implementation of activities

The Secretariat had a total of UGX.18,557,638,979 available for implementation of

activities, out of which UGX.11,124,870,437 (60%) was spent, leaving a balance of

UGX.7,432,768,542. A review of Secretariat records indicated that some planned

and funded activities were partially or not implemented at all. These include

among others; construction of new Justice Centers; procurement and supply of

furniture to up country Justice Centers and electronic media outreach

programmes.

143

I explained to management that non-implementation of the activities also hinders

the Programme from achieving its intended objectives.

Management explained that most of the activities referred to are now on-going the

delay was due to the need to adhere to the government commitment control

guidelines and ensure that procurement processes are adhered to as per the PPDA

law.

Management is advised to make plans and budgets cautiously and realistically and

ensure that activities are implemented in accordance with the approved plans.

(d) Field inspections at Bulambuli Police Station

Field inspections were carried out in the district of Bulambuli to verify the

construction works that were on-going. The findings are below:

Construction of police station

A contract for construction of Bulambuli Police Station was awarded to a local

company at a contract price of UGX.474,426,916. Out of the contracted amount,

UGX.191,938,718 had been paid at the time of audit. The contract period was

agreed to be two years and completion date was scheduled at the end of the

2012/2013 financial year. Field inspections revealed that the works were still

incomplete (approximately up to 70% of the works had been completed). The

building had stayed for one and a half years without any progress in construction

works, implying that the works had been abandoned. The inspection also revealed

the following;

There was no furniture supplied yet furniture had been budgeted for in the

year under review.

Cracked and wet ceiling was observed at the balcony due to inadequately

placed gutter outlets thus damaging the walls and ceiling.

Perforated walls were noted due to capillarity. According the BOQ, damp proof

course known as Pluvex or other equally and approved damp proof course

weighing not less than 0.5 Kg per meter was to be used to avoid wet

environment that weakens the walls due to capillarity.

144

Poor quality flush doors of which one for juvenile cell is already damaged.

According to the BOQ, 45mm thick solid flush doors overall sizes 850x2075mm

were to be fitted. However, low quality thin solid flush doors were installed.

Male cell copings had not been completed.

The team observed that the Police Station waiting room was already serving

as store for produce-maize, questioning its use for the intended purpose.

See pictures below:

Front and rear views of Bulambuli Police Headquarter

Perforated wall due to capillarity

Waiting room used for store purposes Water tank not installed, weak tank stands

noted

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Spoilt poor quality flush door Rusting sink in the wash room

The delays in completion of the Project and the related defects deny beneficiaries

of the intended services.

Management explained that the completion of the Project is behind schedule, and

that on a number of occasions the contractor had been warned of the slow pace of

completion. Several meetings have been held with the contractor but with little

progress seen. Right now options for sourcing a sub-contractor to finish the

remaining works are being explored. The defects observed in Bulambuli will be

corrected by the contractor before handing over.

I await the results of management commitment on the matter.

8.2 MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT (MOGLSD)


During the year, a total of UGX. 759,832,000 was released for the implementation

of the MoGLSD-JLOS activities against the approved budget of UGX.906,600,000.

A total of UGX.1,326,578,713 was available for JLOS activities under the Ministry

for the financial year 2013/2014 (UGX 566,746,713 brought forward from the

previous year and UGX.759,832,000 released in the current year).

UGX.1,184,326,000 was utilized leaving a balance of UGX.142,252,713 at the end

of the financial year, indicating an absorption capacity of 89%. The planned

activities not implemented included the review of Probation function/Probation Act

and the development of management guidelines for remand homes and

rehabilitation centres.

146

The slow implementation of the planned activities has a negative effect on the

objectives of the project.

Management explained that the funds were committed and the activities were on-

going. The draft reports for the two consultancy works have been submitted to

the Ministry and were being reviewed by senior stake holders for in-depth input.

I advised Management to expedite the implementation of activities to enable

finalisation of the activities within the agreed timelines.

8.3 LAW DEVELOPMENT CENTRE (LDC)


During the year, a total of UGX.1,948,485,472 was available for approved JLOS

activities. Out of this amount, UGX.1,763,562,885 (77%) was expensed leaving a

balance of UGX.184,922,587. It was noted that some planned activities were not

implemented. The table below refers:

Code Activity/Planned

Out Put

Actual out Puts Variance Budgeted/

Released

Funds

000‟s

Amount

Spent

000‟s

Remarks

2.1.1.26 Complete

construction of LDC

Auditorium

Auditorium has been

roofed. Internal works

of tiling, Air

conditioning are still

on going.

700,000 700,000 Not achieved

although

funds had

been released

2.1.1.51 1 Recording

equipment

Procurement process

has been completed

waiting for delivery of

the recording

equipment

I recording

equipment not

procured

80,000 0 Not achieved

2.5.2.2 Women cell Procurement process

completed, contract

signed , work slated

to begin by 1st Sept

2014

Not achieved 100,000 0 Not achieved

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Under absorption of funds in the period in which they are planned does not only

lead to overspill of activities to the next planning periods but also the

implementation of the activities may be affected due to increased prices.

Management explained that the unspent balance of UGX.184,922,587 was meant

for activities that had not yet been done but whose procurement process had

already been completed. The activities were still on-going and are about to be

completed.

I advised management to ensure follow up of project activities to enable timely

attainment of Programme objectives.

(b) Stalled Construction of the Law Development Centre Auditorium

In a bid to alleviate the shortage of lecture rooms at the Centre, management with

funding from the Justice Law and Order sector, the Ministry of Finance (GOU) and

the Centre‟s non tax revenue, contracted a local company to construct a befitting

auditorium at the centre at a contract sum of UGX.3,977,880,902. It was

envisaged that the auditorium would accommodate up to 1000 students as well as

provide office space for some staff. The Contract period was agreed to start on

30th May 2012 and end on 11th June 2013.

It was however noted that the completion of the auditorium has delayed by over

15 months (as of 6th October 2014). It was also noted that the auditorium was

commissioned for use on 4th April 2014, despite it being incomplete.

The pictures below show the current state of the auditorium:

148

Ceiling without Gypsum Plaster Board

Un-tiled floor without seats and other fittings

Figure 1 Uninstalled electrical fittings

149

Unfinished compound

The delay in the completion of the auditorium has led to the failure by

management to address the issue of shortage of lecture rooms at the Centre. The

delay may also lead to increased construction costs due to inflation and other

related costs.

Management explained that the contractor submitted variations in respect of air

conditioning, auditorium chairs, and extra works in respect of the pagolar and

landscaping in 2013. The variations and extra works were referred to Ministry of

Works and Transport for a technical opinion. The report from the Ministry is being

awaited.

I advised Management to follow up with Ministry of Works and ensure that the

auditorium is completed.

8.4 MINISTRY OF INTERNAL AFFAIRS (MOIA)


During the year, a total of UUGX.3,571,787,034 was released for the

implementation of JLOS activities under the Ministry against the approved budget

of UGX.3,361,660,000. A total of UGX.3,934,055,044 was available for JLOS

activities for the financial year 2013/2014 (UGX.362,268,010 brought forward from

the previous year and UGX.3,571,787,034 released in the year under review).

Records availed indicate that almost all the funds were utilized, leaving only a

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balance of UGX.53,000,000. It was however noted that some activities worth

UGX.963,000,000 were not implemented, as shown in the table below:

Specific Activities Total Release

(UGX)

Study on implementation of community service and its impact

in Uganda - 12 years after inception

50,000,000

Set up wide area network to link departments 21,000,000

Consultancy to design a database for storage of data on vital

government installations / information and management of

explosives

5,000,000

Specialized Camera 5,000,000

Laptops for field data capture 6,000,000

Heavy duty Photocopier (multi-purpose) - to reduce Cs

forms/photocopying costs

15,000,000

LCD projector 7,000,000

Vehicle for Monitoring and inspection 120,000,000

Procure saloon motor vehicle for transporting Forensic experts

to attend courts outside Kampala

120,000,000

Procure LC/MS to increase success rate of analytical forensic

examinations in explosives, chemical war agents, food

additives, plant and animal poisons

400,000,000

Carry out counter terrorism awareness programs by GSO 50,000,000

Benchmark on international best practices in Namibia on

managing recidivism by NCS

29,000,000

Procure personal protective equipment for incidence response 30,000,000

Finalization of the Client Charter (MIA/F&A) 50,000,000

Motorcycles for NFP (2012/13) 55,000,000

Total 963,000,000

Failure to implement planned activities has a negative effect on the objectives of

the programme.

151

Management explained that by the time of audit, the activities were still under

implementation.

I advised Management to ensure that planned activities are implemented timely in

accordance with approved work plans.

(b) Delayed construction works of regional laboratory in Gulu

During the year, the Ministry paid UGX.30,409,733 to a local company for the

construction of Gulu Regional Government Laboratory. This was a 4th payment to

the contractor bringing the total payments to UGX.236.330,768 out the contract

sum of UGX.436,445,468. A contract signed between the Ministry and the

contractor was not availed for audit and there was no proof that the Ministry owns

the land on which the laboratory is being constructed. Scanty information obtained

indicated the following:

The contract was entered into on 28th January 2008 and was to be executed

within 22 calendar weeks commencing on 22nd February, 2008. The

completion date was scheduled for 28th July, 2008.

The scope of works comprised construction of a single block laboratory

building including associated electro-mechanical installations and external

works.

The Ministry was to appoint a project manager responsible for monitoring and

supervising the works.

On 16th April 2012, three years and nine month after the expected completion

date, MOWT staff visited the construction site and made the following

observations:

Construction works had not been completed 277 weeks past the date of

completion.

The contractor had submitted a claim of UGX.104,651,368 which included

items of work not fully completed like the ceiling, painting of internal walls,

doors and windows, electrical installations and external walls.

The amount due to the contractor according to the Ministry‟s

assessment/valuation report (valuation No.3) was UGX.30,409,733. This

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however could not be substantiated as the valuation certificate was not on file

and besides, a contract management file was not availed for review.

The contractor carried out extra works without any authorization as required

by the contact.

There was no evidence that the title had been secured.

On inquiry about the status of the laboratory, I was informed that the laboratory

had been plastered but the contractor abandoned the site. Instead of terminating

the contract due to failure to complete the project, the Ministry went ahead and

paid UGX.30,409,733 to the contractor on 30th October 2013.

Failure to complete the project impacts on the service delivery and undermines the

objectives of the project. It is likely that by the time the contract is resumed, the

cost to completion will have increased leading to loss of public funds.

Management explained that this contract met a lot of challenges and the work

could not continue. The contract is now under review following the approval by

PPDA. Management is in the process of securing another contactor.

Management was advised to establish the loss as a result of abandonment of the

site by the former contractor and accordingly evoke the necessary provisions in

the contract. Management was also advised to expedite the process of securing

another contractor in accordance with the PPDA Act.

(c) Delayed completion of the Regional Laboratory in Mbarara

On 31st May 2009, the Ministry entered into a contract with a local company for

the construction of a regional laboratory in Mbarara at a contract price of

UGX.454,015,728. The contract price was revised twice upwards by

UGX.81,176,257 (which is 17.9%) to arrive at UGX.535,191,985 (first by

UGX.16,705,437 and then by UGX. 64,470,820). To date the Ministry has paid a

total of UGX.514,775,133 to the contractor leaving a balance of only

UGX.20,416,852. The project management file was not availed, however, review

of the scanty information available revealed the following:

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The construction which begun on 21st May 2011 was to take a duration of 22

calendar weeks to be completed by 19th November 2011. Despite the project

completion date having been extended twice to 31st December 2012, the

construction was completed on 16th October 2013, 4 years and 5 months of

signing the contract, and it took nearly a year for the building to be handed

over to the Ministry.

The land title for the land on which the laboratory was constructed was not

availed for audit review.

The project objectives have not been achieved in this regard and this could have

also led to extra costs on supervision and material price changes.

Management explained that the Regional Laboratory construction was

subsequently completed and the building was handed over to the Ministry. They

further explained that the Land Title is being processed and the Ministry is in touch

with Uganda Land Commission and Mbarara District Land Board.

I advised Management to ensure that projects are closely monitored and

completed in a timely manner to achieve the intended objectives and avoid

nugatory expenditure associated with implementation delays.

(d) Delayed Procurement of Liquid Chromatography Tandem Mass

Spectrometer (LCTMS)

On 12th June, 2014, the Ministry entered into a contract with a local company to

supply Liquid Chromatography Tandem Mass Spectrometer, for use by the

Directorate of Government Analytical Laboratory at contract sum of USD

786,594.66. I noted that the equipment which had been budgeted for at

UGX.500,000,000 was estimated to cost UGX.1,600,000,000 when initiating the

procurement.

Subsequently the contract was awarded at USD.786,594.66 (approximately

UGX.2,084,475,849) which was above the estimated price. According to the

payment terms, 80% (approximately UGX.1,667,580,679) of the contract price

was to be paid on delivery but only UGX.400, 000,000 was released for the

procurement. It was not explained why the Ministry entered into a contract when

154

it did not have enough funds contrary to PPDA regulations, and how it would raise

the total 80% of the contract price in case the equipment is delivered. Under the

circumstances, there is a likelihood of breach of contract by the Ministry which

may attract penalties.

In addition to the entity entering into a contract with limited funds the contract did

not contain a time frame. There was no evidence that the estimated value of the

equipment was based on the market price or on results of enquiry from the

manufacturers of the equipment. Lack of this analysis posed a risk of exaggeration

of the estimated price.

Management explained that the Ministry entered into the contract when they did

not have enough funds, but JLOS headquarters made a commitment to avail the

funds in the financial years 2014/15 and 2015/16.

I advised management to always carry out market surveys to make more accurate

cost estimates, and to always make a commitment when funds are available to

settle the resultant obligation. I also urged management to ensure that the

contractual agreements are finalised and supply is undertaken as agreed.

(e) Electronic Data Management System for the NGO Board

During the year, a local company was contracted by the Ministry to develop of an

Electronic Data Management System (EDMS) for the NGO Board at a contract price

of UGX.237,048,420. According to the terms of payment, 15% of the contract

price was to be paid to the company upon submission of an acceptable inception

report and 20% on submission of an acceptable design of an EDMS with

appropriate security architecture.

The Ministry subsequently paid the contractor UGX.35,557,263 being 15% of the

contract price upon submission of the inception report. However, I was not

provided with evidence that the inception report was discussed and found

acceptable to warrant the payment as provided for in the contract. Similarly, 20%

of the contract price worth UGX.47,409,684 was paid for the design of the EDMS,

but there was no evidence that the design was submitted and found appropriate

155

before payment would be effected. I was also not provided with approval as

granted by NITAU.

In the absence of the inception report and the design of the EDMS, I could not

verify that the payments were appropriately made. In the circumstance, the

system may not have been sufficiently developed to serve the intended purpose.

I advised management to review the agreed contractual terms and follow the

terms to conclusion. I also advised management to follow up with NITAU to

ascertain whether the EDMS is appropriate to serve the intended purpose.

8.5 UGANDA LAW SOCIETY (ULS)


During the year, a total of UGX.605,584,600 was available to ULS to finance

planned JLOS activities against the budgeted amount of UGX.580,000,000. Out of

the releases, only UGX.305,551,600 was utilized while UGX.300,033,000 remained

unutilized at the close of the year. The funds remained on account even after the

close of the year. The delay or failure to implement planned activities denies

beneficiaries of the intended benefits. Non-implementation of the activities also

hinders the Programme from achieving its intended objectives.

Management explained that the unspent funds were a contribution towards the

construction of the ULS Resource Centre. The activity was not undertaken because

a number of steps needed to be completed before construction could begin. The

steps included but were not limited to retaining services of a Consulting Firm and

Project Manager to carry out the pre-construction, actual construction and post

construction process, preparation of detailed designs and site plans, and ground

plans.

I advised Management to make plans and budgets cautiously and realistically and

ensure that activities are implemented in accordance with the approved plans.

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8.6 MINISTRY OF LOCAL GOVERNMENT (MOLG)


A total of UGX.509,991,000 was available for approved JLOS activities for the

2013/14 financial year. However, only UGX.412,050,000 was utilized (representing

81% absorption) leaving unutilized balance of UGX.97,941,000. A review of the

project's performance as per the performance report revealed that some planned

activities had not been done, while others remained incomplete. The table below

refers:

Planned Key Activity

Approved Budget (UGX 000)

Actual amount Released (UGX 000)

Actual Expenditure

(UGX 000)

Expected Output

Actual output Remarks

OUTCOME 2. ACCESS TO JLOS SERVICES ENHANCED

2.3.3.5 Printing and distribution 6000 copies of LCC Regulations

42,000 41,500 16,460 6,000 copies of LCC Regulations Printed and distributed.

1,071 copies of LCC Regulations Printed and 294 copies distributed.

There was 17.8% absorption capacity to print and 27% to distribute the printed copies.

2.3.3.6 Printing and distribution 6000 copies of Module on Local Administration of Justice.

20,000 20,000 14,718 6000 copies of Module on Local Administration of Justice Printed and distributed.

1100 copies of Module on Local Administration of Justice Printed and 128 distributed.

There was 18.3% absorption capacity to print and 11.6% to distribute the printed copies.

Sub Total 62,000 61,500 31,178

The slow implementation of the planned activities indicates that there is no proper

coordination between those responsible for approval of the activities and the

implementers.

Management explained that the cause was due to delayed procurements which

have now been concluded. I advised Management to carry out adequate planning

and to requisition for only those funds that can be put to proper use during the

financial year. Funds should be released to the entity based on realistic plans and

budgets.

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8.7 UGANDA HUMAN RIGHTS COMMISSION (UHRC)

(a) Budget Performance

The Commission had budgeted for UGX.1,186,465,000 to be able to implement the

outlined activities under JLOS Programme. However, only UGX.963,007,000 was

received resulting into a budget shortfall of UGX.223,458,000. Further, during the

year, a total of UGX.1,034,440,000 was available for implementation of approved

JLOS activities (including the balance brought forward from the previous year of

UGX.70,422,000 and a refunded amount of UGX.1,011,000) but, only

UGX.548,060,000 was spent resulting into an absorption of only 53%.

UGX.486,380,000 remained unutilized by year end. As a consequence some

planned and funded activities were partially or not implemented at all. These

included; printing of popular version of universal periodic review of Uganda which

was rolled over from the previous year registered only 30.8% performance,

conducting a documentation of human rights violations in the country particularly

in the Acholi Sub region and, the procurement and delivery of the civic education

van intended for conducting Constitutional education.

Management acknowledged the slow implementation of activities and pledged to

make improvements in the future.

I advised management to prepare realistic budgets for Programme activities and

ensure commitment in execution of activities to enable attainment of Programme

objectives.

8.8 JUDICIAL SERVICE COMMISSION (JSC)


The approved work plan and budget for the period 2013/14 indicated funding for

the JSC of UGX.1,464,606,000, out of which UGX.1,387,599,000 was received. Out

of UGX.1,387,599,000 received, UGX.1,212,374,000 was utilized (representing

87.4% of the funds received) leaving unspent balance UGX.175,225,000. A review

of the Programme‟s performance revealed that execution of various key planned

activities for which funds had been released remained incomplete or were not fully

achieved. These included; investigation trips; Disciplinary Committee Meetings,

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Development of an automated data base management system and development

of recruitment, discipline and training of judicial officers. Inadequate

implementation of the planned activities, affects the timely achievement of the

programme objectives.

Management explained that the above mentioned activities were still on-going by

the time of audit since all the related funds were earlier committed.

I advised Management to ensure that there is commitment in execution of

Programme activities to enable timely attainment of its objectives.

8.9 UGANDA REGISTRATION SERVICES BUREAU (URSB)


The Bureau had budgeted for UGX.847,286,000 to implement activities under JLOS

Programme and UGX.845,425,000 was received. The entity also received an

additional 86,875,000 from the Secretariat. Out of the total amount received only

UGX.179,823,000 was utilized, resulting into only 21% absorption. A comparison

of the entity‟s performance with the previous year also showed that the Bureau

has not been performing well and little improvement has been realized. The table

below refers:

Year Budgeted amount

Released

(UGX)

Funds Spent (UGX) Absorption Rate

2012/2013 855,250,000 360,354,000 42%

2013/2014 845,425,000 179,823,000 21%

This does not only lead to spill-overs of activities of the preceding periods which in

turn affect the implementation of future work plans but also the implementation of

the activities may be affected due to increase in prices and other factors beyond

management control.

Management explained that delayed procurements and adjustments in the work

plans affected the planned activities which were not anticipated yet they were

159

inevitable. Management regretted the position and indicated that they have since

stepped up the Policy Planning Unit and Procurement and Disposal Unit (PDU) to

ensure adequate coordination of work plan activities so that funds are utilized on

the planned activities in a timely manner.


8.10 UGANDA POLICE FORCE (UPF)


During the year, UUGX.4,155,067,000 (92%) was released to the Uganda Police

Force to finance planned JLOS activities against the approved budget of

UGX.4,530,385,000. The entity also had a balance of UGX.1,742,461,000 brought

forward from the previous year and UGX.80,538,000 refunds bringing total funds

available for expenditure to UGX.5,978,066,000. Out of the available funds,

UGX.3,683,370,000 was utilized leaving the balance of UGX..2,294,696,000. Out of

the un utilized funds, UGX.1,259,250,000 (78%) represents the planned activities

which were not implemented at all. Details of activities that were not implemented

are shown below:

Planned activity Amount released (UGX)

Construct a police station at Koboko 500,000,000

Provide support to forensics service (SOCO) with

50sets

250,000,000

Procure heavy duty photocopier 10,000,000

Induct 500PPCs into CID 15,000,000

Train 50 personnel (SOCO) in scenes of crime

management

30,000,000

Train 200 officers in first responders course 30,000,000

Train 100 officers in Homicide Investigations 40,000,000

Procure 50 speed guns 80,000,000

Induct 50 dog handlers 7,200,000

Stationery (50 counter books, 50 pens, 30 cm rulers,

50 canine officers manuals, 5 reams of paper

3,500,000

160

Planned activity Amount released (UGX)

Protective clothing 3,250,000

Basic trainee handling equipment (1metre leash and

choke)

66,000,000

Construct 10 canine units 65,000,000

Establish Human Rights committees in 5 regions

(Mbarara, Gulu, Hoima, Jinja & Masaka)

38,000,000

Procure motor vehicles for use in Democratic

policing and human rights observance in 5 Regions

120,000,000

Glass Door filing cabinet 1,300,000

Total 1,259,250,000

Delayed or non-implementation of planned activities may lead to failure by the

management to attain the programme objectives.

Management explained that the activities were not implemented due to various

reasons including; change of plan from construction of Police station at Koboko to

Kyenjojo, failure of supplier to deliver the forensics equipment, and shortage of

training space to train 500 PPCs into CIDs. The authority to divert some of the

funds into other activities also partly caused the delay to implement the planned

activities on time.

I advised Management to ensure that adequate planning is undertaken to allow

utilization of funds and in a timely manner.

(b) Under-utilization of un spent balances brought forward

At the beginning of the financial year under review, UPF had unspent balance of

UGX.1,742,461,000 which was brought forward from the previous years. During

the year, only UGX.1,140,987,000 representing 65% was spent leaving a balance

of UGX.601,474,000 unutilized. Details are below:

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Period Amount b/f

(Opening

balance)

Amount spent

during 2013/14

Closing Balance

(UGX.)

2011/2012 924,478,000 595,579,000 328,899,000

2012/2013 817,983,000 545,408,000 272,575,000

Total 1,742,461,000 1,140,987,000 601,474,000

A further review of the records revealed that vital activities such as the

procurement of the Automated Fingerprint Information System (AFIS) machine for

forensic investigations, and the training of 2,500 police officers which activities

relate to the previous period were not implemented. Details for brought forward

activities not implemented at all are as indicated in the table below:

Activity Amount (UGX)

Procurement AFIS machine 167,397,000

Recruit 2500 police officers 100,000,000

Procure patrol vehicles (balance

remained)

83,424,375

Refund of letter of credit 80,000,000

Total 430,821,375

The delay or failure to implement planned activities denies beneficiaries of the

intended services. Non-implementation of the activities also hinders the

Programme from achieving its intended objectives.

Management explained that the Automated Finger Print Information System (AFIS)

was initially budgeted for at UGX 3.0bn and JLOS Secretariat agreed to fund it in 3

years with an approved budget of UGX 1.0bn in the FY 2012/2013. However, only

UGX.500m was released to fund the first component of the AFIS (i.e Crime

Records Management System (CRMS)). The system was procured at UGX.343m

leaving a balance of UGX.167m. Because of the need to create linkages and widen

coverage to the entire country, another feasibility study was conducted which was

162

costed at UGX.18bn. This was presented to the JLOS technical committee for

funding but was declined considering the small Sector budget.

I advised Management to make realistic plans and budgets cautiously and

realistically and ensure that activities are implemented in accordance with the

approved plans. Management was further advised to engage the various

stakeholders to plan for the funding of the AFIS.

(c) Use of Force Account

During the audit, it was established that Force Account was used in the completion

of Kira Police Station at UGX.158,215,376, fencing Nagalama Dog Breeding Center

at UGX.49,337,235 and erecting of uniports at Busunju Police Barracks at

UGX.291,120,239 among others. Although the supplies used were procured in

accordance with the PPDA Act, there was no evidence that the direct, indirect and

overhead costs of using Force account were determined to be less than what a

contractor would demand, or that these were emergency situations and as such

there was no contractor willing to execute the assignment to warrant use of Force

account. In the absence of proper costing of the works to be carried out, I could

not ascertain whether the use of Force account was necessary and cost effective.

Management regretted the omission of not carrying out the cost benefit analysis

on a case by case basis. They further explained that the decision for in-house

construction has always been educated by cost comparisons based on unit rates

obtained from similar projects that were tendered out. They also explained that

UPF has come up with a new construction policy to address amongst others the

issue of in-house construction.


8.11 UGANDA PRISONS SERVICES (UPS)


During the year, a total of UGX.5,827,765,000 (90.3%) was released for the

implementation of Uganda Prisons Service JLOS activities against the approved

budget of UGX.6,451,000,000. The entity had a balance of UGX.1,727,128,658

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brought forward from last year bringing the total amount available for expenditure

to UGX.7,554,893,658. A review of the project's performance revealed that out of

the available funds, only UGX.5,529,465,894 was utilized leaving the balance of

UGX.2,025,427,764 unutilized. Various planned activities were not implemented,

while others remained incomplete, implying inadequate performance. The table

below shows some of the activities that were not implemented:

Specific activities

Approved

Budget

Funds

Released FY

2013/14

Funds

Spent

Un spent

Balance

%

Performance

Construction of

reception center at

Isingiro. 400,000,000

370,000,000

76,779,640

293,220,360

21

Construction of

reception center at

Kalong. 400,000,000

380,000,000

3,800,000

376,200,000

1

Construction of

reception center at

Amuru. 400,000,000

360,000,000

-

360,000,000

NIL

Reconstruction,

expansion and

modification of

Ndorwa Prison and

staff quarters 500,000,000

440,000,000 3,260,000

436,740,000

1

Renovation at

Tororo Prison 320,000,000

320,000,000

-

320,000,000

NIL

Total 2,020,000,000 1,870,000,000 83,839,640

1,786,160,360

Slow activity implementation was exhibited mostly in construction works. By the

time of inspection (August 2014), construction especially of UPS prisons at Tororo,

Ndorwa, Kabong and Isingiro was either far behind schedule or had not started at

all.

The slow implementation of the planned activities is an indication of lack of

coordination between those responsible for approval of the activities, and the

164

implementers. The delay or failure to implement planned activities denies

beneficiaries of the intended services.


reasons including; change in allocation of construction sites by the district

authority for example in Amuru and Kaabong, inaccessibility of some locations for

example Isingiro situated on a hill top and the works being undertaken in prisons

limiting contractor working time for example; Tororo.

I advised Management to carry out adequate planning to requisition for only those

funds that can be put to proper use during the financial year. Funds should be

released to the entity based on realistic plans and budgets.

8.12 JUDICIARY


During the year, a total of UGX.9,651,325,400 was released for the

implementation of the Judiciary JLOS activities against the approved budget of

UGX.9,222,000,000 (inclusive of a special release of UGX.810,000,000). A review

of the project's performance revealed that out of the available funds for

expenditure amounting to UGX.10,628,330,400 (including the brought forward

amount of UGX.977,005,000), only UGX.7,175,472,474 was spent (68%) leaving

the balance of UGX.3,452,857,926 unutilized. Various planned activities were not

implemented, while others remained incomplete, a sign of inadequate

performance. It was also noted that in some instances, the awarded contract

values exceeded the available funding. The table below refers:

Planned Key Activity Available

funding

Contractor Contract

Value

(UGX)

Remarks

2.1.1.1

Completion of

construction works,

equipping and furnishing

of Kabale and Mitiyana

courts

2,057,965,000 BMK

Hebron

Investment

1,479,014,000

1,089,776,000

Activity

delayed

Double cabins to

facilitate Chief

240,000,000 Victoria

Motors

240,000,000 Activity

delayed

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Planned Key Activity Available

funding

Contractor Contract

Value

(UGX)

Remarks

Magistrates for locus

visiting

Double cabins for

selected G1 Magistrates

in hard to reach areas

(Bundibugyo, Kisoro,

Buhweju, Buliisa and

Bukwo [choose 2])

240,000,000 Victoria

Motors


delayed

2.1.1.44

Acquire Court Recording

equipment for Kabale,

Soroti and Masaka High

Courts, Civil Divisions

(2) and one (1) for each

of the Chief Magistrates

Court at the High Court

Circuit Headquarters

230,000,000 International

Business

Solutions


delayed

2,815,465,000 3,278,790,000

The slow implementation of the planned activities is an indication of lack of

coordination between those responsible for approval of the activities, and the

implementers. Non-implementation of activities in the planned periods does not

only affect the performance of preceding work plans but also leads to increased

costs due to increases in prices.

Management explained that the implementation period of the activities mentioned

did not proceed according to the stipulated time and that the delay was due to the

long procurement procedures. Management further indicated that they have put in

efforts to expedite the implementation of the activities.

I await the results of the management efforts.

(b) Case Backlog performance

The Judiciary undertook to reduce a proportion of case backlogs at various levels.

A total of UGX.2,200,000,000 was budgeted under JLOS for the reduction of case

backlog of which UGX.1,890,000,000 was released for the activity during the year.

It was also noted that the sector has been allocating funds in the past years for

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the reduction of back log cases in the judicial system. In the past two years a total

of UGX.4,555,569,754 was spent on this item. However, it has been noted that

case backlogs are instead increasing rather than going down. Even with the

appointment of over 20 Judges to the Supreme Court, Court of appeal and the

High Court this has helped little to reduce the case backlog. Details of the trend

are in the table below:

Court Cases b/f Filed Disposed Pending Backlog Growth

Rate

2012/2013

Supreme Court 45 40 12 73 62.2% Increase

Court of appeal 3,622 1,060 226 4,456 23.0% Increase

High Court 33,492 20,758 13,640 40,610 21.3% Increase

Chief Magistrate Court 81,360 67,717 62,717 85,963 5.7% Increase

Magistrate Grade 1

23,677

48,985

47,171

25,888

7.7% Increase

Magistrate Grade 11 4,978

10,982

10,558

5,402

8.5% Increase

OVERALL 147,174 149,542 134,324 162,392 10.3 Increase

2013/2014

Supreme Court 73 74 82 65 11% Reducing

Court of appeal 4,456 1,251 891 4,816 8.1% Increase

High Court 40,610 24,739 17,485 47,864 17.9% Increase

Chief Magistrate Court 85,963 64,511 65,676 84,798 1.4 Reducing

Magistrate Grade 1 25,888 48,645 46,481 28,052 8.4% Increase

Magistrate Grade 11 5,402 13,204 12,979 5,627 4.2% Increase

Overall 162,392 152,424 143,594 5,627 5.4% Increase

The objective of reducing case backlog in the judicial system is therefore not being

achieved.

Management explained that the recruitment of more Judges and additional

funding has increased case disposal. However due to increased sensitization and

awareness of the public, the Judicial system has realized increased case filing.

This has led to an increase in the number of cases filed and the need for increased

funding and manpower.

167

I advised management to liaise with the relevant authority with a view of soliciting

for more funding and manpower in the Judiciary.

(c) Delayed construction of Makindye Family Court

In the period 2010/2011, the Judiciary undertook to construct Makindye Family

Court and a contract of UGX.910,209,442 was signed with a local company in

August 2012. In accordance with the terms of the contract, work was to start

within 14 days after the signing of the contract and was to be completed within a

year after the start of the project. A visit to the site in September 2013, one year

after contract commencement revealed that works had not been completed as

shown in the picture below:

Stalled Makindye Court civil works in September 2013

A subsequent field inspection to the site on 12th September 2014 (one year later)

revealed that the works were still incomplete and behind schedule. A few workers

were at site fixing tiles and face bricks and doors. The structure is shown in the

picture below:

Delayed Construction at Makindye Court as at 12-09-2014

168

Review of records revealed that a total of UGX.300,000,000 was allocated by the

JLOS Secretariat in the period 2010/2011 for the construction of the Family Court

and no further funds have been provided in the work plans for completion of the

court in subsequent years. It was however noted that a total of UGX.694,892,782

has been paid to the contractor from JLOS funds to complete the Court leaving an

outstanding amount of UGX.215,316,660.

Failure to include spill-over works in work plans and budgets of the subsequent

periods causes difficulty in securing funds for the pending works, and may lead to

diversions or incomplete works. The work is now behind schedule by over 12

months. The works should have been completed by August 2013. Delays in

construction works affect achievement of Project objectives.

Management explained that the performance of the contractor has been below

expectations and on several occasions the Judiciary has been warning the

contractor to finish the project on agreed time. Currently, the building is at

finishing level with a few electrical and final fittings work remaining for the

building to be completed. Due to the delay the contractor extended the

performance bond for one year and has also provided a new work schedule to

have the building completed by March 2015.

I advised Management to ensure that spill-over constructions and other works in

progress are catered for in the subsequent budgeting period for appropriate

allocation of funds.

8.13 DIRECTORATE OF CITIZENSHIP AND IMMIGRATION CONTROL (DCIC)


During the year, a total of UGX.1,626,293,756 was provided for the

implementation of the DCIC-JLOS activities against the approved budget of

UGX.1,728,008,000. A total of UGX.3,256,841,000 was available for spending

(including UGX.1,630,547,244 brought forward from the previous year). However,

only UGX.1,372,042,000 (42%) was utilized leaving a balance of

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UGX.1,884,799,000 unutilized at the end of the financial year. Several planned

and funded activities were not implemented as indicated in the table below:

No Planned activity Amount

released

(UGX)

Amount

spent

(UGX)

Remarks

1 Automate and link work processes

153,000,000

0 No work done

2 Interconnect borders with headquarter and

regional offices (PISCES)

69,960,000

0 No work done

3 Procure security equipment(fraud

detectors, security stamps)

100,000,000

0 No work done

4 Construct Ngom Oromo and Ntoroko border

posts

420,000,000

0 No work done

5 Construct staff accommodation at Mpondwe

and Oraba

140,000,000

0 No work done

6 Build ramps & modify counters at border

posts

46,472,000

0 No work done

7 Procure 3 Electronic billboards for

immigration information at Entebbe Airport

30,000,000

0 No work done

8 Not identified

30,000,000

0 No work done

9 Construction of Goli Border post

39,550,000

0 No work done

10 Decongest Registries

81,550,000

0 No work done

11 Construction of Atiak Border post

50,000,000

0 No work done

12 Automation of business processes

241,000,000

16,195 7% works

done

13 Develop and print operating procedures

manual

15,350

0 No work done

14 Ethics code in place, complaints system

established

70,000 0 No work done

The slow implementation of the planned activities has negative effect on the

achievement of the objectives of the project. Failure to implement the brought

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forward activities may imply that such activities are no longer vital to Project

objectives and the unspent balances should be returned to the Secretariat and

appropriated for other urgent activities.

Management acknowledged the observation and explained that the delay was

caused by the vigorous procurement process. Most of the procurements are at the

level of contract award.

I advised management to ensure that the procurement process is expeditiously

concluded and have the activities implemented in accordance with work plans.

(b) Delayed production of the Directorate Strategic plan

UGX.49,739,700 was paid to a local company towards producing an inception

report on the preparation of the Directorate Strategic Investment plan and its

associated Information Communication Technology (ICT) and Monitoring and

Evaluation (M & E) frameworks. According to the agreement signed in December,

2013 between the Directorate and the consultant, the execution of the contract

was to commence on 4th March, 2014 and end on 14th June, 2014.

However, by the time of audit (five months after the end of the contract period),

the consultant had not furnished the directorate with the deliverables specified in

the agreement. The delayed completion of the plan inhibits the smooth

implementation of the Directorate strategic objectives.

Management responded that the Directorate stopped the consultant from

executing the contract after the contractor had produced an inception report

because management had wanted to review the composition of the committee

first. However, after the composition of the committee had been reviewed and

the work on the SIP has now resumed.

I await the results of the management efforts.

(c) Field inspections

(i) Lack of Land Titles for border posts

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I carried out field inspections at the border posts and noted that management did

not obtain land titles for the land before commencing the construction of the

border posts. The affected posts include Bunagana, Kizinga and Kyanika. There is

a risk that the ownership of the land on which the border posts are constructed

can be contested.

I advised Management to follow up the ownership of the land.

(ii) Inadequate workmanship at Bunagana Border Post

The regional offices were constructed under a contract signed on 11th July, 2011

for a sum of UGX.188,845,241. The contract was to be executed within six months

with effect from 18th July 2011. The building was completed and handed over to

the directorate for occupation. The audit inspection carried out on 14th August

2014 revealed that although the construction had been done and completed, there

was evidence of inadequate workmanship and use of inferior materials, as detailed

below:

The toilet seat (water closet) and cistern were not properly installed leading to

flooding of the toilet room and those adjoining it during the flushing of the

toilet.

Whereas the agreement required the contractor to fix seven thick flash doors,

the contractor instead fixed semi-solid flash doors which are weaker and

cheaper than thick flash doors specified in the contract. Semi-solid flash door

which are easily damaged by both water and sunshine, were fixed both inside

and at the behind entrances (exterior) of the building where they are exposed

to rain and sunshine. It was not explained how the contractor could be allowed

to fix inferior doors when the project was managed by an engineer who also

worked as a project manager.

The doors were fitted without fixing a mosquito mesh on the ventilator. The

immigration officer had improvised for a mosquito mesh by fixing a steel vent

grill which is ideally meant for metallic (steel casement) windows and doors.

The improvised mosquito mesh (steel grill) has not served the purpose of a

mosquito mesh as mosquitoes freely pass through the grills.

172

It was observed that the plaster on the walls was failing. The cause of this

could be use of lower ratios of cement: lime: sand than those specified in the

bill of quantities of 1:2:9 for the first coat and 1:1:6 for the second coat. This

depicts inadequate supervision by the contract manager.

The photos below refer:

Figure 2: Bunagana Border Post office block.

Figure-2: Door without mosquito mesh. Figure-3: Improvised mosquito mesh.

Figure-4: Swollen and peeling Plaster off the walls

Under the circumstances, the building may not last the intended life period.

173

Management regretted the error and indicated that a plan is under way to rectify

the defects when funds are made available.

I advised management to always monitor/supervise the works before and after the

handover to avoid such uncalled for eventualities. In the meantime, I await

management efforts in rectifying the defects.

8.14 DIRECTORATE OF PUBLIC PROSECUTIONS (DPP)


During the year, a total of UGX.3,611,000,000 was released by the Ministry of

Justice as budgeted to finance planned JLOS activities. Out of UGX.3,611,000,000

released, UGX.3,172,618,418 was utilized leaving a balance of UGX.452,500,690

unspent (including UGX.14,119,108 brought forward from the previous year). As a

result, various planned activities were not implemented as detailed in the table

below:

No Specific activities Total

releases

Remarks

1 Open and resource 8 new DEPP

stations

200,000,000

Not implemented

2 Carry out major renovation of 3 DPP

buildings in F/Portal, Mbale and Masaka

(Lira)

200,000,000

Not implemented

3 Construct Guard house and toilets in 3

existing DPP offices in Paidha Moyo

and Adjumani

60,000,000

Not implemented

4 Construct and furnish 1new DPP office

in Kapchorwa

400,000,000

Not implemented

5 Procure & install solar equipment in 3

stations in Nakapiripirit, Arua and

Paidha

123,000,000

Not implemented

6 Preparation of anti-corruption

witnesses

100,000,000

Not implemented

174

The failure to implement planned activities is an indication of lack of

Management‟s commitment to Programme implementation, which hinders the

programme from achieving its intended objectives.


reasons including; lack of adequate staff and accommodation to resource the

proposed opening of the new offices, procurement challenges for example on

construction of guards houses and toilets of offices in Paidha, Moyo and Adjumani,

and interruption from external parties for example the court order of the anti-

corruption court on preparation of anti-corruption witnesses.

I advised Management to carry out adequate planning and to requisition for only

those funds that can be put to proper use during the financial year. Funds should

be released to the entity based on realistic plans and budgets.

8.15 UGANDA LAW REFORM COMMISSION (ULRC)


The approved work plan and revised budget for the period 2013/14 indicated

funding for the Uganda Law Reform Commission activities of UGX.1,790,094,000.

During the year, UGX.1,772,605,000 was received by the entity for funding of the

JLOS activities. However, although the Commission got almost all the required

funds, only UGX.1,549,207,000 was utilized representing 87% leaving an unspent

balance of UGX.240,887,000 (including a brought forward balance of

UGX.17,490,404 from the previous year). A review of the Commission‟s

performance report revealed that execution of some key activities for which funds

had been released remained incomplete. Details are as in the table below:

Planned Key

Activity

Approved

Budget

(UGX

Actual

amount

Released

(UGX)

Funds un-

utilized

(UGX)

Expected

Output

Actual

output

Remarks

OUTCOME 2. ACCESS TO JLOS SERVICES ENHANCED

175

Planned Key

Activity

Approved

Budget

(UGX

Actual

amount

Released

(UGX)

Funds un-

utilized

(UGX)

Expected

Output

Actual

output

Remarks

Study to

review the

Prisons Act,

1.1.1.17 Publish

the study report

5,000,000 5,000,000 5,000,000 Printed

published

report on

Prisons Act.

Nil

Though funds

were released

there was

100% under

absorption

1.5.1.9 Printing

of 200 statutory

hard copies of

the Revised

Edition

100,000,000 100,000,000 72,816,000 The funds are

not sufficient

and not

economically

feasible to

print only 200

copies.

No

Copies

printed.

Copies not

printed yet

100M was

released on

this item as

planned. 72%

under

absorption

1.5.1.11

Print the

Drafting Manual

15,000,000 15,000,000 15,000,000 Draft Manual Nil Nil absorption

as the money

was released

but not

expensed on

this item

Failure to implement planned activities affects the timely achievement of the

programme objectives.


reasons, for example; printing could not be done because the principal laws had

not been finalized. In the course of revision, it was discovered that many issues,

including conversion of fines and penalties into currency points needed more

consultation. Additionally the enabling law to authorize publication of the revised

laws of Uganda has not yet been passed by Parliament. It was realized that the

Commission was not the competent authority to issue the legislative drafting

manual. Accordingly there are consultations with the 1st Parliamentary Counsel on

176

the way forward. Those issues affected timely implementation of the planned

activities.

I advised Management to carry out adequate planning and to requisition for only

those funds that can be put to proper use during the financial year. Funds should

be released to the entity based on realistic plans and budgets.

8.16 MINISTRY OF JUSTICE AND CONSTITUTIONAL AFFAIRS

(a) Construction of Mini-JLOS Centre Moroto

JLOS Center/House Moroto was constructed and completed and commissioned on

14/02/2014 by Hon. Justice Steven Kavuma then Ag. Chief Justice and H.E.

Alphans Hennekens, Ambassador, Royal Netherlands Embassy. Refer to photos

below:

Mini JLOS centre Moroto

It was however noted on inspection that the House has remained un-occupied. It

has not been occupied apart from Prisons department with inadequately furnished

office of the Resident Prisons Officer (RPO). It has electricity and running water

without furniture and curtains. Offices for JLOS Secretariat were still empty. The

House also has an extension for Directorate of Citizenship and Immigration and

Government Analytical Laboratory and Community Service but all this remained

unoccupied with no furniture and curtains.

Underutilization of the building undermines the intensions of the Programme.

177

Management explained that efforts are underway to have all JLOS institutions

occupy the building. The delay was caused by lack of funds to procure the

required furniture and other office equipment.

Management efforts on the matter are awaited.

9.0 MINISTRY OF INTERNAL AFFAIRS

9.1 Mischarged expenditure




codes. However, it was noted that the Ministry charged wrong expenditure codes

to a tune of UGX.421,104,192 without authority from PS/ST. This constituted 15%

of the entity total expenditure. The practice of mischarge of expenditure

undermines the importance of the budgeting process and leads to misreporting.

The Accounting Officer attributed this to lack of sufficient funds on the respective

budget items/account codes as well as the emergencies that come at short notice.

He further explained that they will continue to request MoFPED for adequate

funding as well as increased ceilings for consumptive arrears in accordance with

Ministry operational experiences.

I advised the Accounting Officer to continue liaising with MOFPED to streamline

the budget process and ensure that sufficient funds are allocated to each account.

Authority should be sought before any reallocations are made.

9.2 Outstanding Payables

UGX.1,356,915,300 remained outstanding in payables at the end of the financial

year. The outstanding payables comprised of grants payable to RESCA of

UGX.1,317,292,748 and Umeme bills worth UGX.39,622,552. I explained to

178

management that accumulation of domestic arrears is in contravention of the

commitment control system.

Management attributed the outstanding payables to inadequate funding.

I advised Management to adhere to the commitment control system and liaise with

the relevant stakeholders to solicit for funding and have the outstanding

obligations settled.

9.3 Lack of certificates of title for Government land

The Ministry possesses various pieces of land in different parts of the country in

which Government has invested as shown in the table below. I was however not

availed with certificates of land title to verify ownership. Lack of ownership poses

a risk of loss of the land and developments thereon.

Location Plot No. Occupied by

Jinja Road Plot 75 Ministry Headquarters

Lourdel Road; Kampala Plot 2-4 Directorate of Government

Analytical Laboratories

Lyadda Road; Mbale Plot 15-35 Regional Government Laboratory -

Mbale

Kitunzi Road; Mbarara Plot 7 Regional Government Laboratory in

Mbarara

Princess road; Gulu Plot 4 C Regional laboratory-Gulu (Under

construction)

The Accounting Officer responded that efforts of pursuing Titles for all Ministry

land from Uganda Land Commission are in the process.

I advised the Accounting Officer to prioritize surveying of the Ministry land and

secure the titles to avoid any loss.

9.4 Staffing gaps

179

It was noted that the Ministry has 35 vacant posts. These include key posts of:

Principal Internal Auditor, two members of Amnesty Commission, DRT Member,

Commissioner-DGAL, Assistant Commissioner-DGAL, Principal Government

Analysts-DGAL, Senior Government Analysts-DGAL, Senior Lab. Technicians-DGAL,

and the Probation and Welfare Officer. The Table below refers:

PROGRAMME AFFECTED

POST/TITLE

APPROVED VACANT

POSTS

Finance &

Administration

(F&A)

Principal Internal

Auditor

1 1

Drivers 7 1

Amnesty

Commission (AC)

Members of

Commission

6 2

DRT Member 7 1

Accounts Assistant 1 1

Stores Assistant 1 1

Drivers 12 2

Office Attendants 2 1

Directorate of

Government

Analytical

Laboratories

(DGAL)

Commissioners 2 1

Asst. Commissioner 2 1

Principal Govt.

Analyst

8 4

Senior Govt.

Analyst

11 6

Senior. Lab.

Technicians

5 4

Personal Secretary 3 1

Steno. Secretary 2 1

Laboratory Assistant 9 1

Stores Assistant 2 1

Office Attendant 9 1

National Probation & Welfare 9 3

180

PROGRAMME AFFECTED

POST/TITLE

APPROVED VACANT

POSTS

Community Service

(NCS)

Officer

Non-Governmental

Organization Board

(NGO)

Stenographer 1 1

GRAND TOTAL 35

According to the Ministerial Policy Statement 2014/15, management plans to

recruit only three staff to fill the posts of one Laboratory Assistant and three

Probation Officers without considering the most affected and technical Directorate

of Government Analytical Laboratories. Inadequate staffing affects the timely

implementation of the Ministry's activities.

The Accounting Officer explained that the recruitment process could not be

undertaken because of the limited resources availed by the Ministry of Finance,

Planning and Economic Development. It has therefore become difficult to recruit

when the wage for the un-filled positions is not provided for in the budget.

I advised the Accounting Officer to make concerted efforts in liaising with all

stakeholders to ensure that vacant posts are filled to enable the Ministry

adequately deliver on its mandate.

9.5 Lack of an IT strategic plan

The Ministry has made substantial investment in IT Equipment including

procurement of computers, Laptops, Servers, Network racks etc. However, the

Ministry does not have an IT Strategy/Plan to ensure that these facilities and data

captured therein are safeguarded and protected and also to ensure continuity in

operation in case any disaster strikes. It was further noted that the Ministry has

an internal backup drive in the server room which cannot be put to use due to lack

of the IT Strategy/ Policy. This exposes the Ministry to a risk of losing all the

information stored on the computers in case of virus attack and theft of the

equipment or fire breakout.

181

Management explained that there is a running strategic plan but in draft form.

I advised the Accounting Officer to have the IT strategy approved and

commissioned.

9.6 Directorate of Government Analytical Laboratories - DGAL

The Directorate of Government Analytical Laboratories is mandated to provide

scientific advisory and analytical services to government departments responsible

for the administration of Justice (Police, DPP, Judiciary); Statutory Regulatory

Bodies (NEMA, UNBS, URA, NDA); the Private Sector (UMA, PSF) and the public in

general (individuals, scientific researchers).

A review of the operating environment of the DGAL revealed the following:

a) Poor infrastructure and working environment at DGAL

Headquarters

The headquarters of the directorate are located at Wandegeya Kampala. A visit of

the offices revealed that the building housing the directorate was built way back in

1927 and is currently in a dilapidated state and needs urgent renovations. The

directorate looks abandoned and yet it plays an important role of providing

scientific and analytical evidence in administration of justice. The building which

houses eight scientific laboratories with expensive and sensitive equipment as well

as information is roofed with corrugated iron sheets which are old and require

replacement; and in some areas there are leakages. The drive ways and parking

area has potholes. DGAL headquarters photos are indicated below:

Main entrance of the directorate headquarters: Falling facial boards; Stairs in a sorry state; Building

looks abandoned

182

Rear view of the building: Left is behind the Commissioner‟s office; pothole with water visible. Right

is the window one of the laboratories, wall needs renovations.

Leaking ceiling that needs urgent repairs/renovations

Left: Front parking with big potholes filled with water. Right: Drive way with pot holes

Parking on the sides that needs re-tarmacking

183

With this state of infrastructure, the directorate may find it difficult to meet

adequately its mandate.

The Accounting Officer explained that management is cognizant of this appalling

situation and has always engaged MoFPED to increase the Ministry development

budget but with limited success. The Ministry gets a Paltry 103 Million as its

development Budget which cannot do much because of other pending capital

commitments.

I advised the Accounting Officer to engage all stakeholders including JLOS Swap

Programme to ensure that the Ministry secures funds to renovate the

infrastructure.

b) Case backlogs and Performance of the Directorate

The Directorate provides forensic expertise to back up police in complicated cases

such as mass murders and fire out breaks, and also provides expert evidence in

courts of law. During the year, the Directorate responded to only 42 (52.5%) of

the 80 court sermons received from Kampala and upcountry, and analyzed and

disposed of 518 (35%) of the 1480 cases received. The pending cases have

accumulated leading to case backlog mainly due to shortage of chemicals and

reagents to do forensic analysis. This has in many cases caused delays in

providing expertise evidence and government could be losing very important cases

due to lack of evidence to guide prosecution.

It was also noted that no funding was provided to facilitate the movement of

experts to crime scenes and courts of law. In 2013/14, the directorate only

managed to send experts to crime scenes and courts around Kampala being

unable to handle upcountry areas. This has greatly affected the level of crime

investigations and delivery of justice. With increasing levels of sophisticated crimes

and emerging issues in the Oil and Gas Sector, terrorism, bio terrorism and

poisons, it is apparent that the directorate is inadequately funded to execute its

mandate.

184

The Accounting Officer explained that the Ministry has consistently experienced

underfunding to most of the critical areas especially in analysing disposing off

emergency cases and procuring chemicals and reagents. Management therefore

has to rationalize the meagre resources to carry out very critical activities and this

has greatly affected performance.

I advised that Accounting Officer to engage all stakeholders to ensure that the

Ministry secures enough funding for the directorate.

c) Lack of Maintenance contracts for DGAL Equipment

The Directorate has a number of scientific equipment for analyzing forensic and

DNA specimens, checking water and waste water samples and analyzing

proficiency testing samples, etc. The equipment in question include, but not

limited to Genetic Analyiser, PCR Machine, RT- PCR, Vortex Mixer/Mini shaker,

Thermal Shaker, Electrophorus Machine, Autoclave sterilizer, Comparison

Microscope and Electrostatic Detection Apparatus.

The Directorate however does not have maintenance contracts for these key

equipment. Lack of maintenance contracts limits routine and timely maintenance

of the equipment. In the circumstances, the efficiency and effectiveness of the

equipment is compromised most especially during crisis and peak periods. As a

result, the life span of the equipment is shortened or threatened, yet the Ministry

may not have capacity to procure and replace with new equipment.

The Accounting Officer explained that there was inadequate allocation of funds for

servicing and maintenance of the equipment, calibration of GC/MS, HPLC, AAS and

UV-VIS. During the year under review, only UGX.19,037,000 was allocated

against required 13,000 US Dollars. Servicing and calibration of DNA and real-

time PCR, required UGX.20,000,000 against the allocated 35,000 US Dollars. The

budget is still too low to commit service contracts maintenance as the equipment

service providers are based abroad.

185

I advised that Accounting Officer to continue engaging all stakeholders to ensure

that the Ministry secures enough funding to undertake this critical activity.

9.7 Mbale Regional Laboratories

Mbale regional laboratory is a well-equipped laboratory supposed to cover the

eastern region by collecting, testing and analyzing samples for suspects. The

laboratory however lacks reagents to carry out tests and has become more of a

collection centre for the samples than a testing and analysis laboratory. Despite

the Government injecting a lot of money for constructing and equipping the

Laboratory, it cannot be fully utilized due to lack of chemicals, reagents and other

consumables. The samples collected are instead sent to the Kampala headquarters

for testing and analysis which greatly affects the timely crime investigations and

delivery of justice; and also non achievement of the overall objective of having a

regional centre.

In addition, the laboratory is run by a skeleton staff of two government analysts,

one cleaner/ receptionist, one Shamba boy and four police guards. The station has

a motor cycle as a means of transport which is not provided with fuel. The station

receives imprest of only four million to run the office for a quarter which is not

enough and not received in time. The last imprest was received in the second

quarter of the year.

Under the circumstances, it is evident that the Mbale Regional Laboratory may not

achieve its objective of contributing to timely administration of justice in the

Eastern Region through testing and analysis of various samples to be used for

testifying in courts of law.

The Accounting Officer responded that Management of the Ministry recognizes the

need with concern and will continue engaging MoFPED to avail funding.

I await the results of management commitment.


186

During the year, the Ministry of Internal Affairs received UGX.10,734,020,200

against the approved budget of UGX.10,916,219,910. The grants revenue

constituted 98.5% of the approved budget estimates. Subsequently, the Ministry

spent a total of UGX.10,358,868,929 which represented 96.5% of the amount

released.

However, a review of the Ministry‟s performance as per the annual physical

performance report indicated that some planned activities were not implemented,

while others remained incomplete despite release of 98.5% of the approved

budget. The table below refers:

Planned key activity Expected output Actual output Variance

Manage Amnesty

commission offices, six

Demobilization

Resettlement Teams

(DRTs) (Gulu, Kitgum.

Arua, Kasese, Central

and Mbale) and Beni

liaison office in DR

Congo

Amnesty

Commission offices,

six DRTs and the

liaison office in Beni

in the Democratic

Republic of Congo

well managed

The Amnesty

commission office,

the DRTs and the

liaison office in Beni

in the Democratic

Republic of Congo

were not well

managed.

Amnesty

commission had

accumulated arrears

of rent Amounting

to UGX.200,127,100

by the end of the

year. UGX 637m

due to the

Commission was not

released to the

Commission by the

Ministry.

Procurement of a

double-cabin pickup

for Amnesty

Commission

Motor vehicles and

other transport

equipment

The vehicle was not

purchased.

100% under

performance

Procure computer

supplies, Glassware,

chemicals and

laboratory

consumables for Mbale

Regional Laboratory;

Analyze and conclude

40% of received cases

at Mbale Regional

laboratory

Increased analytical

scope of the

laboratory

Computer supplies,

Glassware,

chemicals and

laboratory

consumables were

not procured; Only

20% of cases

received were

analyzed.

20% of cases not

analyzed

187


Conclude testing and

analysis within 9

months

Timely forensic

investigation

undertaken in

administration of

justice.

Out of 1,215

forensic cases

received only 444

were analyzed and

reported on

63.5% under

performance

Training Poison

Information Centre

operatives and

procurement of intox

data (a diagnostic

software) among other

requirements)

Strengthened Poison

Information Centre.

Activity was not

done

100% under

performance

Carry out forensic

study on oil and gas

industry contaminants

in water found in

Albertine region

(Bulisa District)

Oil and Gas industry

contaminants in

waters of Albertine

region monitored

Activity was not

done

100% under

performance

Procurement and

installation of

biometric access

control system at

DGAL

Electronic access

control system

installed at D/GAL

Activity was not

done

100% under

performance

Undertake District

study visits for best

practices in the

management of

Community Service

Orders.

Best practices in

community service

orders adopted and

applied

Activity was not

done

100%

underperformance

Continue with the

development of

National policy on

Community service

National policy on

Community service

Started the process

of developing the

Draft Policy on

corrections (National

corrections policy (in

place of National

Policy on

Community Service

only one

consultative meeting

was held.

The development of

the National

corrections

policy/National

policy on

Community service

was not given

priority.

Carry out Semi-annual

Monitoring and

Evaluation (M & E)

visits of Community

Service offenders

country wide.

Increased

supervision and

monitoring of

community service

offenders across the

country.

Monitored only

10% of the

community service

offenders.

90%

underperformance.

188


Setting up

rehabilitative projects

in 4 districts of Arua,

Bulambuli, Kapchorwa

and Kyenjojo

Rehabilitative

projects in 4 districts

of Arua, Bulambuli,

Kapchorwa and

Kyenjojo set up

The rehabilitative

projects were not

set up.

100%

underperformance

Monitoring 200

selected Non-

Governmental

Organizations (NGOs)

for Compliance with

the Law and the terms

and conditions of their

permits

200 NGOs

monitored

Only 90 NGOs were

monitored.

55%

underperformance

Renovation of two

residential buildings

for UNAFRI.

Two buildings for

UNAFRI renovated

The buildings were

not renovated.

100%

underperformance

Management‟s failure to implement activities as planned negatively affected the

Ministry performance and delivery on its mandate.

The Accounting Officer attributed the underperformance to inadequate funding.

I advised the Accounting Officer to liaise with all relevant stakeholders to solicit for

adequate funding and have the activities undertaken as planned.

10.0 UGANDA POLICE FORCE

10.1 Payables

Included in payables of UGX.46,702,959,156 are bills in respect of; water,

UGX.3,653,659,427; Umeme, UGX.14,443,914,497 and garages, UGX.736,243,151

which have been outstanding for more than a year. The opening balance on these

items was again reflected as closing balance indicating no movement in these

expenditure items. It is evident that management has not put in place sufficient

mechanisms to monitor and control these items. There is a risk of loss of

reputation and litigation by creditors. There is also a risk of power and water

disconnections by the utility companies.

189

Management attributed accumulation and non-clearance of domestic arrears to

underfunding of utility expenses which has been brought to the attention of

Ministry of Finance, Planning and Economic Development through various

communications. Management has in the meantime consulted with the Director

Internal Audit to have the electricity and water arrears verified with a view of

providing an adequate budget in FY 2015/16.

I reminded management that accumulation of domestic arrears is in contravention

of the commitment control systems and advised that the Accounting Officer

continue liaising with the responsible authorities for extra funding to clear the

outstanding arrears.


A review of the entity expenditures revealed that wrong expenditure codes were

charged to a tune of UGX.132,090,477 without authority contrary to chapter IV

section 156 of the TAIs. This practice does not only distort the intentions of

appropriating authority but also results into misreporting of the financial

statements balances.

Management explained that the Police budget is underfunded and as such it

cannot support the level of services that are required to fulfill its mandate. It was

therefore inevitable that certain items were used to fund critical activities resulting

into mischarges.

I advised management to streamline the budget process to ensure that sufficient

funds are allocated to each account code and to seek for authority before any

reallocations are made.

10.3 Unpaid assessment under Express Penalty Scheme recorded by URA –

UGX.672,130,000

The Express Penalty Scheme (EPS) was a policy introduced by Management where

traffic offenders were instantly apprehended, fined or cautioned. It was noted that

UGX.672,130,000 remained unpaid from Express Penalty Scheme assessment

190

captured on the URA portal as at 18th November 2014. The Police and URA have

not established any mechanism to follow up offenders for payment of the fines. It

was further noted that there is no consolidated record of offenders who are issued

tickets but do not report to URA for assessment. Under the circumstances, it was

difficult to enforce collection of all the revenue from the scheme.

Management explained that the Traffic and Road Safety(TRS) Directorate has

established mechanisms to follow up EPS defaulters. Such mechanisms include

daily tracking of EPS defaulters by EPS Tracking Unit on all major roads in Uganda.

Some traffic officers from stations that have internet connectivity have been

trained to track EPS defaulters. The World Bank is also supporting the TRS

Directorate through Ministry of Works and Transport to establish a Road Crash

Data Base System together with the computers and other necessary logistics that

will be used during the implementation and final rollout.

I advised management to implement the mechanisms in place to ensure that all

the revenue assessed is tracked and collected.

10.4 Land matters

a) Land titles and Land Fencing

Uganda Police Force has 665 pieces of land in the 106 Districts however; most of

them did not have titles as shown in the summary below. While 145 pieces of land

had been surveyed pending deed plans, 418 pieces of land were pending surveys.

Total No. of districts

where land is

located

Titled land Surveyed land

with deed plans

Pending surveys

and titling

process

665

Pieces

106 102 145 418

15% 21% 64%

Most of the land had not been fenced. Police was losing its land to rampant

encroachment due to lack of land titles and fencing. Some of the barracks affected

include the following:-

191

In Arua, 8 acres of land located south of the barracks that originally belonged

to the Police Special Force are now being used by the army. Also another

piece of land of about an acre is being claimed by a business man in town.

In Kiboga, the DPC was only able to show us the blue print of the area which

was also being claimed by a local politician.

It was difficult to establish the actual land area in Hoima Police station and

barracks as there was a claim of a two acre piece of land by the Municipal

authority.

In Masindi Police station and Barracks, there was encroachment of the 3 acre

piece of land behind the police station by the staff from water department.

Other stations and barracks without land titles include Nebbi, Yumbe, Atiak,

Gulu, Jinja, Kamuli, Iganga, Tororo, Lwakhakha, Mbale, Soroti, Serere,

Moroto, Kotido, Mityana, Mubende, Kyenjojo, Fort-portal, Kasese and

Kamengo.

Management explained that UPF lands department has extensively conducted

surveys and boundary openings of Police land but funding is inadequate to provide

fencing for the entire UPF stock.

I advised management to expedite surveying with a view of obtaining land titles in

order to protect the land from encroachers, and also source for funding to fence

off all police land across the country.

b) Encroachment of land at Nateete Police Station

Nateete land is titled on Plot 146 Kibuga, Block 18 measuring 3.252 hectares

registered under Uganda Land Commission on 5th July 2010 with user restricted to

Police Department (Police Station). However, the Force has not opened up

boundaries and fenced off the land to safeguard it from encroachers. The land has

since been encroached on and the Force has not used its Land Protection Unit

under CIID to recover the land. The extent of encroachment is shown in the

photos below:

192

Left: The trench that boarders with Police land, the rear view of encroachers

Right: The front view of the encroachers just overlooking the Station‟s park yard

Left: One of the permanent buildings built on Police land. The boundary of Police land is

slightly behind the building

Right: Some building belonging to encroachers. Inset is the Natete Police Station being

constructed.

Police land just adjacent to the Police station building under construction. The

encroachers have just sold it off to a private developer.

Management explained that the Nateete land was already encroached upon at the

time of titling. Boundaries were opened and the extent of the encroachment was

193

identified. Discussions have since been held with the encroachers and other

stakeholders and the Land Protection Unit was notified to take appropriate action.

The land that was not encroached upon is properly secured and occupied by

Police.

I advised management to continue using the services of its Local Protection Unit to

recover the land encroached on or take other actions which may involve legal

means.

10.5 Construction of Nateete Divisional Police Headquarters – Delayed

completion

The works at Nateete Divisional Police Headquarter were initiated after the station

was burnt down by rioters in 2010. The construction of the “roofed frame

structure” commenced in October 2011 and was supposed to be completed by

October 2014. The project under force account mechanism was originally

estimated to cost UGX.1.648bn but was later revised to UGX.2.358bn.

However, by February 2015, four months after the estimated completion date, the

works completed were estimated at only 75% according to the Project Manager.

By the time of inspection, there was no activity taking place and yet the condition

of the offices at the station was alarming. Although there were some building

materials on site, I was informed that funds for cement and labour to complete

casting the second floor slab were lacking. At this rate of progress, the building

might not be completed within the coming six years and the intended objectives of

the construction may not be achieved.

The photos below show the level of completion and the current structure used as

an office:

194

Above: Rear view of the building Front view of the building

Above: Materials at site (iron bars and timber)

Above: Current offices of the station

Management attributed the delays to inadequate funding. Although the completion

of the super structure required UGX.2.3bn, only UGX.1.8bn has been released and

spent on the Project. The balance of the funds to complete the Project was

budgeted but has not yet been released by MoFPED.

I advised management to continue engaging the MoFPED for adequate funds to

complete the building. Management was also advised to look into an option of

contracting out the remaining works to completion in order to solve the Station‟s

office accommodation problems and achieve the intended objectives of putting up

a model Divisional Police Headquarters.

10.6 Lack of staff accommodation at Nateete Police Station

195

Nateete Police Station has staff accommodation problems that need to be urgently

addressed. Police officers have no official accommodation but rather improvise for

their accommodation at the Police station themselves. The security of police

officers is at stake as they share accommodation with civilians who encroached on

Police land. The situation is made worse because the station is located in a

lowland which is more or less a wetland with full of mosquitoes and with poor

drainage. The poor living conditions impact on police officer‟s morale and

performance.

The physical situation can be observed from the photographs below:

Above: Self improvised accommodation for police officers.

Above left: A newly improvised shelter, on its left with poles, another officer trying to

put up his accommodation.

Above right: A police officer washing his clothes in front of his “house”. Inset is the

Police station building under construction

196

Above left: The old pit latrine and bath rooms. Officers still use the bathrooms for

bathing.

Above right: The new pit latrine police officers use.

In their response, management explained that due to inadequate budget, no funds

have been provided for construction of staff accommodation. The shortage of

funds for Police accommodation has always been highlighted in the Ministerial

Policy Statement (MPS) as presented to Parliament. The response from MoFPED

despite recommendations from Parliament to increase funding for Police

accommodation has not been positive. They further explained that staff

accommodation is being considered under the wider scope of Public Private

Partnerships for delivery of Police infrastructure.

I advised the Accounting Officer to mobilize funds by liaising with the responsible

Ministry and other stake holders to provide accommodation for the officers.

10.7 Construction of Yumbe Police Station

Construction of Yumbe Police Station started in Janury 2014 and was to be

completed by May, 2014. However, physical inspection undertaken on

31/01/2015 observed that eight months after the estimated completion date, the

project was estimated at 77% of completion. The construction had been at stand

still for six months since August 2014 when the building had just been roofed but

not plastered as shown in the photos below.

197

Roofed building but not yet platered

Above: Floor finishes not yet done Ceiling not yet finished

Management attributed delayed completion to inadequate funding. Ministry of

Finance Planning and Economic Development had promised to release funds to

complete the project in the 4th quarter of 2014/15.

I advised management to liaise with Ministry of Finance, Planning and Economic

Development and ensure that the funds are released.

10.8 Manafwa Police Station

The construction of the Police station was abandoned in June 2014 when it had

been roofed and ceiling casted. Windows, doors and their frames were not fitted

and the ceiling finishes and floor screed were not done. Besides, the station has

no provision for staff accommodation forcing the officers to rent outside the

barracks. The photos below show the structure:

198

Lack of good working environment impacts on the morale of the officers thereby

affecting the effectiveness and efficiency of the services delivered.

Management explained that the funding of this project was in phased manner.

Funding for the FY 2013/14 could only take the structure to the roofing level.

Although funds for completion were expected in 3rd Quarter of FY 2014/15, to date

no release had been effected which may further delay the completion.

I encouraged the Accounting Officer to continue requesting for funds and have the

Police station completed.

10.9 Olilim Police Training School (PTS)

(i) Inappropriate use of the Olilim PTS classroom block

A classroom block was constructed at Olilim PTS however; the block was turned

into accommodation for staff, an Armoury, a clinic and office. The workmanship

looked poor as evidenced by cracked floor which needed to be redone as seen in

the photo below:

Cracked floor

199

The building was not provided with the lightening arrester to guard against

lightening, and the rain gutters were not fitted to protect the building walls and

verandah from rain water. The staff provide accommodation by themselves and

use pit water for bathing and washing, which is hazardous for their health and

may negatively affect their effectiveness in providing police services. See photos

below:

Accommodation Accommodation bathing facilities

Management explained that lack of funds to urgently construct structures to house

the staff pushed the school administration to temporarily accommodate the

personnel in the classroom block. Plans to construct staff quarters are already

underway. The cracks in the classroom block were majorly attributed to the

vibrations resulting from explosive training conducted by Counter Terrorism

Directorate. The plan to supply safe water system to the training school has also

delayed due to lack of funds.

I advised management to plan accordingly and have the staff accommodated.

Efforts to have water supplied to the school is also awaited.

(ii) Delayed completion of the Administration block

The construction of the administration building was started in 2009 under Force

Account arrangement. The works have since stalled as the door shutters and

window glasses were not fitted, the floor screed was not done; only electricity

conducting was done while the ceiling had big cracks. The photo below shows the

incomplete administration block:

200

Incomplete administration block

Management attributed delayed completion to inadequate funding. The ceiling

cracks in the Administration block was a result of vibrations from the explosive

blasts during counter terrorism training that caused slight movements in the

ceiling.

I advised management to prioritize completion of the administration block.

10.10 Buliisa Police station and barracks

(i) Police station

The office block was constructed at an estimated cost of UGX.450million using

Force Account. The construction was to be completed within 10 months effective

December 2013, but this was not achieved due to late release of funds. Although

UGX.250 million was released within the first six months, completion of works was

delayed. Out of the balance required of UGX.200 million, UGX.137 million was

released in the second quarter of 2014/2015 while the remaining UGX.63 million is

yet to be released.

There was commendable work in progress by the time of the visit. The works

under execution included ceiling works, plumbing and block production. The

building however awaits fixing of steel doors, windows, plastering, floor screeding

and painting. The photos below refer:

201

It was also noted that the uniports being used need proper maintenance works

especially on the floor slabs for the officers to continue occupying them. Refer to

photos below:

In response, management indicated that funds for completion were expected in 3rd

Quarter of FY 2014/15, but these funds have not been released to date. Because

of insufficient budget, repairs of uniports have not yet been undertaken.

I advised management to mobilize the required funds from the responsible

Ministry and complete the building and also renovate the uniports.

10.11 Kabalye Police Training School (PTS)

Audit inspection of Kabalye PTS was carried out on 19thJanuary 2015. There were

three on-going construction projects:

a. A four (4) storeyed classroom block contracted by a local company.

b. An eight (8) unit accommodation block under Force Account.

c. Three dormitory (108 heads) blocks being constructed using hydra foam

technology.

202

A review of the construction works revealed the following:

a) Delayed completion of Four (4) Storeyed Classroom block

A contract for the construction of a Four-Storeyed Classroom Block for

UGX.4,324,964,501 was signed on 25th January 2011 between the Government of

Uganda represented by Ministry of Internal Affairs, Uganda Police Force and a

local company. The work was to be completed within 4 calendar months ending

24thMay 2011. However, despite various extensions of completion periods to 6th

March 2014 the Classroom Block had not been completed by 19/01/2015 when I

visited the site. I noted that delay in completion was partly contributed by late

clearance of contractor‟s certificates which has denied the trainees the benefits of

studying from a conducive environment, the objective for which the project was

started.

I advised management to intensify supervision and ensure that the works are

completed without delay.

b) Eight (8) Unit staff accommodation block by Force Account

Construction of the accommodation block begun in June 2014 and was to be

completed within eight months (end of February 2015). However, at the time of

inspection in January 2015, the project construction was behind schedule (as per

the photo below) with a few workers currently on site being assisted by four (4)

Korean expatriates under the supervision of the foreman and the engineer in

charge of the project. Labourers were sent on temporally leave due to lack of

funds to pay them.

203

Stage of completion of the accommodation block

Management attributed the slow progress to funding gaps which resulted into

phased construction.

I advised management to liaise with the responsible authorities for funding and

have the works completed.

c) Delayed completion of the Dormitory (108 heads) blocks being

constructed using hydra foam technology

The construction of the three dormitory blocks was started in May 2014 and

expected to be completed by October 2014. By January 2015 three months after

the expected completion date, one block was at the roofing stage, another one at

wall plate level, while the third was at slab level as shown in the photos below:

204

Construction dormitories under Hydra form technology

Management explained that insufficient funding led to some delays which affected

the contractors‟ cash flows, payment of labour costs and securing the building

materials and hence overall completion of the project works.

I advised management to prioritize the completion of the whole construction

project at the training school by allocating funds for the completion of the project.

10.12 Poor working conditions at Kanara Police Station

The station operates in a unipot and police officers lack accommodation facilities,

which negatively impact on staff morale. The OC Station informed the team that

the area local council offered land for use to the Police station but there is need

for lands department to formalize the details of titling. The photo below shows the

accommodation facilities:

205

Management explained that due to inadequate budget, funds have not yet been

earmarked for construction of the station and staff accommodation. It further

explained that the process of titling all Police lands is ongoing although the speed

was hampered by inadequate budget.

I encouraged management to continue engaging the MoFPED for appropriate

funding to improve its infrastructure. The Directorate of Engineering and Logistics

is also advised to follow up the acquisition of land title for the offered spaces.

10.13 Ishasha Police Post

The Police Post operates in a unipot. The Post is policed by seven officers; each

with one pair of uniform that was received in 2011. There is only one motor cycle

in good working condition and a bicycle that was grounded. I noted that policing

in the area poses a big challenge given the long distances involved. I informed

management that lack of adequate facilities negatively affects officers‟ morale and

hampers proper service delivery.

206

Uniports providing accommodation for staff

Management responded that funds have not yet been earmarked for construction

of the station and staff accommodation.

I advised the Accounting Officer together with the engineering directorate to

improve on the officers‟ welfare by constructing both the administration and

accommodation blocks, provide a vehicle and at least two pairs of uniform for

staff.

10.14 Fleet management

During audit inspection of Busia, Tororo, Mbale and Olilim, it was noted that some

fleet were not well maintained and their condition was deteriorating. Whereas

some vehicles were scrap and ought to have been boarded off, some lacked

spares and were grounded. The fleet has continued to lose value through

deterioration. It was further noted that although the Force has a draft fleet

management policy, it has not been approved to properly guide the fleet

management. The table and the photos below show the part of the deteriorating

fleet:

Police Station

Motor vehicle No. Make State

Busia UP 0284 Land Rover scrap

Tororo UP 1032 Lacks spares

Tororo UP 2611 Toyota Hilux Lacking Battery

Mbale No number Toyota Hilux scrap

207

Police Station

Motor vehicle No. Make State

Mbale UP 12299 Toyota Land cruiser Lacks spares

Mbale UP 2343 Lacks spares

Mbale UP 2819 Motor cycle Lacks spares

Mbale UDL 380R Motor cycle Lacks spares

Mbale Motor cycle Lacks spares

Olilim PTS UP 1038 Toyota Land cruiser Lacks spares

Amuria UP 2078 Motor cycle Lacks spares

Grounded vehicles

I advised the Accounting Officer to expedite the process of having the draft policy

approved. In addition, the Force should liaise with the Ministry of Works and

Transport to have the old fleet evaluated for possible boarding off to avoid further

loss of value.

10.15 Failure to complete evaluation for the purchase of the helicopters

Following the 2014 amendments to the PPDA regulations, post qualification

evaluation is mandatory under the Technical Compliance Selection evaluation

methodology. It was noted that the entity did not conduct post qualification as

required under the Reg. 15 (d) of the PPDA (Evaluation) Regulations, 2014.

Without post qualification the Entity risks awarding a contract to a bidder without

capacity to complete the contract.

Management explained that for the complex procurement such as procurement of

helicopters, the entity did a due diligence on manufacturers who were invited to

bid and did not envisage the need of carrying out a post assessment in this case.

208

The requirement was however noted and the entity will always comply in

subsequent complex procurements

The procurement and disposal Unit was advised to ensure that all stages of

evaluation are completed as established per evaluation methodology.

10.16 Lack of a policy on creation, development & maintenance of Police

Stations and Barracks

The Force lacks a policy on creation, development and maintenance of Police

Stations and Barracks in Uganda. This has been evidenced by the appalling state

of sanitation, poor/illegal electricity connection, limited safe and water access,

dilapidated and illegal state of infrastructure in the various police stations and

barracks. The barracks sampled and found to be in this state of affair include:

Masaka Police Station and Barracks, Kiboga Police Station and Barracks, Masindi

Police Station and Barracks and Nebbi Police Station and Barracks. Due to lack of a

policy, issues such as the required thresholds for in-house vs. outsourced

construction works and maintenance works, standard designs, details and

specifications procedures will not be clearly identified.

Management admitted to having no approved strategic investment plan and policy

guidelines on infrastructure. However, an accommodation master plan has already

been drafted together with the Construction Policy that is to address the key

issues pertaining to development and maintenance of infrastructure in the UPF.

The draft is yet to be presented to the Policy and Advisory Committee of UPF for

approval.

I await the approval and implementation of the policy.

10.17 Lack of adequate documentation of assets and other properties

There is inadequate documentation of assets and other properties of the Uganda

Police Force. Most of the RPCs and DPCs do not keep inventory of buildings, Land

and other Police properties. For instance, Atiak Police Station and Barracks lacks

an inventory register. In addition, the OC station complained of lack of uniforms.

209

Other stations & barracks without documentation of assets and other properties

are in Kiboga, Hoima, Masindi, Buliisa, Nebbi, Arua, Yumbe, Gulu, Lira and Apac.

There is a risk of loss of Police property.

I advised management to ensure that inventory of all police assets including land

and buildings is maintained at district and regional levels, while a central data

base for all the police assets is maintained at the directorate of logistics and

engineering.

10.18 Welfare issues

(i) Staff housing and accommodation

Due to old and inadequate houses, staff live in make shift structures (manyatas)

and dilapidated old buildings with leaking roofs, cracked walls and broken

windows/doors which expose occupants to hostile weather. Some Police Stations

and Barracks with poor accommodation include: Kiboga, Masindi, Bushenyi, Gulu,

Lira, Jinja, Kamuli, Iganga, Tororo, Mbale, Soroti, Moroto, Mityana, Mubende,

Kyenjojo, Sembabule, Masaka, Bushenyi and Hoima Police Station.

There is also a shortage of accommodation in Arua despite the renovation of 24

blocks. About 64 of the staff are not provided with accommodation and are renting

outside the barracks. In Yumbe, out of 51 staff at the headquarters, only 38 were

housed in the barracks and the rest were renting while some sleep in „manyatas‟.

In Atiak police station and barracks there is congestion in the four blocks meant to

house two families now housing four families. Poor accommodation negatively

affects staff morale and output.

Management explained that renovations and maintenance works have been

carried out in various barracks including Gulu, Arua, Atiak and Jinja Barracks.

However the rate of maintenance and reconstruction of staff accommodation is

very slow owing to budgetary limitations.

I advised management to consider regular renovation of the old police stations

and barracks and also construct new ones in districts without barracks as a means

of improving staff wellbeing.

210

(ii) Lack of Electricity connection

Many police stations and barracks do not have access to electricity. The electricity

connections to a number of Police stations and barracks is old and defective

causing electric shocks and damages to appliances. There is rampant irregular

connections of power to illegal structures (manyatas) which have become a threat

to the lives and properties of the officers and their families. Cases in point include:

Kiboga Police Barracks, Hoima Police Station, Nebbi Police Barracks, Lyantonde

Police Barracks, Mubende Police Station and barracks, Atiak Police Station and

Barracks.

In Jinja and Bushenyi Police Barracks, the electric wires were too old and exposed

on the wall surface. Some stations and barracks like Yumbe, Atiak, Kyenjojo, and

Kamwenge did not have electricity while Ibanda experienced unstable power

supply and the electrical circuit breaker and some of the electrical items are of low

gauge.

Management indicated that the Force is undertaking disconnections of all

substandard mains supply and replacing them with standard service cables.

Inadequate funding is however limiting the pace of executing the exercise.

I urged management to continue with the disconnections but also consider

providing electricity to all police stations and barracks throughout the country and

carry out routine inspection exercises for electricity connections on a quarterly

basis by a team of officials from Welfare, Logistics and Engineering together with

UMEME officials in order to ensure adequate connections and safety of the lives of

the police officers.

(iii) Lack of clean and safe water access

A number of Police Stations and Barracks especially in the recently created

Districts do not have access to clean and safe water. Atiak Police Station &

Barracks did not have water at the barracks and the nearest water source

“borehole” is about 300 meters away from the barracks. Arua Police Station and

211

Barracks is connected to tap water but water access is still a problem due to the

broken water taps. Other stations and barracks without water sources are in

Kiboga, Apac and Kamwenge. Safe water is essential for human life lack of which

negatively affects staff morale and output.

Management indicated that supply of clean piped water has been achieved in

many areas for example in Arua, Kyenjojo and Apac. Inadequate funding is

however limiting the pace of execution of this crucial activity.

I informed management that access to clean water is a right to life. I encouraged

it management to connect water to all the Police barracks and stations.

(iv) Poor sanitation

The sanitation condition in most barracks is appalling. There are no functioning

toilets since the old ones are filled up. The drainage systems are blocked and the

wastes spill onto the compounds. The barracks‟ compounds are very dirty, bushy

and have a bad odor. The conditions pose a health problem and lead to serious

outbreak of diseases if not attended to. The most affected barracks include:

Masindi Police Barracks, Arua Police Barracks, Gulu Police Barracks, Jinja Police

Barracks, Kamuli Police Barracks and Lwakhakha Police Barracks.

In Kamuli Police Barracks there was poor garbage and waste management.

Garbage piled up in heaps and some was scattered in the compound, while in

Lwakhakha Police Barracks, flashing toilets were not functioning well as manholes

had been blocked and sewage flows into the nearby river.

Poor sanitation, coupled with lack of safe water and accommodation have adverse

consequences on staff morale and output.

I advised management to consider carrying out total overhaul of the sewerage and

drainage systems in the affected barracks to avoid possible out breaks of diseases.

Regular inspection for cleanliness should be done by a team of officers from

welfare and the OC stations and barracks throughout the country. Funds should

be budgeted for quarterly maintenance of the stations and barracks.

212


A review of the budget showed that UGX.369.85bn was released against an

approved budget of UGX.375.35 bn. A review of the budget performance for the

year 2013/2014 revealed that some planned activities and targets were partially or

not achieved at all. Details are as per the table below:

Activities Details Budgeted

activity

Achieved Out put Remarks

Output

125602

Criminal

Investigations

Enhanced response and

investigation of violent

crime.

Increased crime

detection.

Reduced CIID case

workload.

Improved case

management

40,900 violent

crimes to be

investigated

and passed on

to DPP

26,548 cases

investigated &

passed on to DPP

14,352 not

concluded.

Purchase 16

double cabin

pickups for

regional CIID

offices.

13 double cabin

pickups purchased

3 double

cabin pickups

not purchased

Setup AFIS

system for

KMP

Not done AFIS system

for KMP not

set up

Output

125603

Counter

Terrorism

Improved public

awareness on terrorism.

-Increased capacity of

personnel to identify and

respond to terrorism

threats/Incidents

To ensure a

proportion of

69% public are

aware of signs

of terrorism

35% proportion of

public are aware of

signs of terrorism.

34% are not

aware.

It is also

unclear the

methodology

used to

determine the

proportion of

the public that

are aware of

terror threats.

Output

125610

Police

Administration

and Support

Services

-Enhanced Information

sharing and investigation.

-Enhanced participation in

UN peace keeping

operations.

-Enhanced cooperation

180 cases of

international

criminals to be

repatriated.

156 cases of

international

criminals

repatriated.

24 cases not

handled.

213

Activities Details Budgeted

activity

Achieved Out put Remarks

with partner states on

transnational/crime.

Output 1256

Police

services

Recruit and train 2000

PPCs and 500 cadets.

Recruit and

train 2000

PPCs and 500

cadets.

3,500 PPCs and

Cadets recruited

and undergoing

training

Output 1256

Police

services

Start Implementation of

PPP.

PPP

implementation

PPP Program not

implemented.

PPP Program

not

implemented

apart from

forming the

Negotiation

team.

Complete

pending

constructions

Police headquarters

CIID wing

completed.

Police Stations:

Natete (Phase II)

completed.

Kiira Div. hqtrs

completed.

Mukono Police

completed.

Output

125677

Contractual obligation on

Public Order Management

bill fulfilled.

Contractual

Obligation on

Public order

Management

bill fulfilled.

Fulfilled the

contractual

obligation on Public

Order Management

equipment.

Payment

completed.

Output

125609

Police,

Command,

Control and

Planning.

Strategic Policing

finalized.

Strategic

Policing

finalized.

Five year strategic

Policing Plan

developed.

Awaiting

implementatio

n.

Unimplemented activities hamper service delivery, and the appropriating

authority‟s objectives may not be met.

214

Management explained that some activities could not be implemented because of

inadequate funding.

I advised management to ensure adequate planning and implementation of

approved activities.

11.0 UGANDA PRISONS SERVICES

11.1 Mischarged Expenditure

Parliament appropriates funds annually in accordance with the needs of each MDA.

This appropriation is implemented through the budget in which funds are tagged

to particular activities and outputs using account and MTEF codes. A review of the

entity expenditures revealed that UGX.637,537,384 was charged on wrong

expenditure without authority for the reallocation. This practice does not only

distort the intentions of appropriating authority but also results into incorrect

reporting of the financial statements balances.

Management explained that some of the outputs like construction and renovation

had no related budgets such as allowances spent on their implementation as such

funds had to be reallocated from other expenditure codes. Management regretted

the anomaly and promised to address the issue in the next budgeting process.

I advised management to streamline the budget process to ensure that adequate

funds are allocated to each account code, and utilize the budget as appropriated.


11.2 Increased Payables Position

A review of the Statement of Financial Position revealed outstanding payables of

UGX.46,597,708,858. Payables worth UGX.18,028,999,698 were disclosed in the

statement of financial position as at 30th June 2014, implying that there has been

an increase in domestic arrears by UGX.28,568,709,160 (158%) from the closing

position of the previous year. It is evident that management has continued to

incur arrears without establishing sufficient mechanisms to monitor and control

215

them. There is a risk of loss of reputation and litigation due to non settlement of

creditors.

Management explained that the increase in payables was as a result of demand

for food items, electricity and water consumed during the year and not paid

accompanied by insufficient funding for these items.

I advised Management to clear the outstanding commitments as a first call on the

budget as guided by Accountant General. I also advised Management to liaise with

the relevant Government authorities for adequate funding.

11.3 Under performance of letters of credit

Statement of Financial Position had receivables of UGX.2,437,182,189 as at 30th

June 2014 which relate to outstanding letters of credit as at the end of year. Out

of this figure, LCs worth UGX.677,451,776 relate to the previous year in respect of

maintenance-civil, non-residential buildings and residential buildings. It was

observed that non-residential buildings and residential buildings LCs‟ performance

was quite low while maintenance civil did not perform at all. UGX.203,868,135 was

as a result transferred back to consolidated fund as shown below:

Activity

Balance

01/07/23

Paid

2013/2014 Balance C/F

Additions

2013/14

Transfer to

UCF

Balance

30/06/201

4

Maintenanc

e -civil 203,227,415 - 203,227,415 - 203,227,415 -

Non –

Residential

Building

207,691,509 146,196,986 61,494,523 - - 61,494,523

Residential

Building 886,931,752 474,201,914 412,729,838 1,590,798,548 640,720

2,002,887,6

66

Total 1,297,850,676 620,398,900 677,451,776 1,590,798,548 203,868,135

Underperformance of the letters of credit negatively affects the achievements of

the intended entity objectives.

216

Management explained that the letters of credit were still performing by the close

of the financial and some had fully performed awaiting payment of retention fees.

I advised management to continue supervising the projects that had not fully

performed and ensure that they are concluded.

11.4 Un-surveyed Land

The prisons service has a lot of un-surveyed land which needs formalization. Out

of 240 prisons, only 49 had land titles, 112 prisons land was not surveyed and 79

prisons are on either Kingdom or District land. Most of the untitled land is either

customary or mailo land under the Sub-county, Public/Mailo land under District

Land Boards or Mailo land under Buganda Kingdom. This poses a risk of

subdividing and allocating to private developers, and losing some of it to land

encroachers.

Management explained that the process of surveying prisons land where the entity

has control is underway. Negotiations to acquire kingdom land have also started.

Surveying and titling of land for the 60 prisons under Buganda Kingdom and 19

under District Local Government will only be possible after acquiring them.

UGX.1.12bn is required to survey the 112 un-surveyed prison land but only

UGX.100 million was provided. Due to budget constraints, survey of land will be

done in phases.

I advised Management to follow up with relevant stakeholders for purposes of

securing the required funding so that all the land owned by government is

surveyed and secured.

11.5 Congestion in prisons

Uganda Prisons Service has experienced an increase in the prisoners‟ population

since the merger and takeover of 174 Local Administration Prisons in 2006, from a

daily average of 19,179 prisoners in 2006 to 39,844 prisoners by January 2014. In

June 2014, Prisoner populations had risen to 41,516 prisoners. According to

management the current housing capacity is at 16,040 prisoners only. Compared

217

to the current prisoners‟ population (41,516), 25,476 prisoners cannot be

accommodated now. See the table below.

Categories Males Females Total

Convicts 17,382 720 18,102

Remands 22,136 1,038 23,175

Debtors 203 36 239

Total 39,722 1,794 41,516

Percentage (%) 95.7 4.3 100

Approved Capacity 16,040

Occupancy Rate (%) 258.8

Not accommodated 25,476

Increase in congestion of prisoners was associated with the following challenges:-

Overcrowding: I noted that 5 prisons that had occupancy rate of above

500% as indicated below. Space has become a challenge with the

growing numbers.

Prison Occupancy rate

Gulu 508%

Ntungamo 720%

Kisoro 906%

Kabale 651%

Rukungiri 530%

Low staff Numbers: With the increase of prison population, more staff

are needed to exploit production potential of prisons farms, match the

challenging profiles of offenders, monitor prisoners and reduce escape

routes. This has not been fully achieved because of a ban in recruitment.

Provision of basic necessities of life to both prisoner and staff:

These include uniforms, beddings and staff accommodation. This has been

a challenge due to the limited funding of the entity.

218

Increased food budget: The required annual prisoner‟s food budget for

the next financial year has been provided at UGX.50.006bn. However, the

budget MTEF provision has been set at UGX.23.298bn thus creating a

shortfall of UGX.26.708bn.

Increased utility costs: Initially, 36 stations were connected to electricity

power but currently 77 stations are connected. A total of 63 prison stations

are connected to water compared to 32 formerly connected as a result of

reduction of the bucket system. The water and electricity tariffs have thus

gone up from UGX.1,912 in 2006 to UGX.2,353 in 2013 and UGX.426/kwh to

UGX.525/kwh respectively.

The numbers have caused congestion of the prisons thus increasing the risks

of prisoners‟ escape, poor hygiene, diseases and rampant strikes as the

prisoners continue scampering for the little resources.

Despite the increase in the number of prisoners and utility connections,

accommodation and utility facilities have not increased proportionately.

Management attributed the problem of prisons congestion to the high prisoner

population growth of 10% per annum which is not matched with accommodation

requirements. The majority of prisons require expansion, major overhauls,

renovations, and re-construction but the prisons service lacked sufficient funds. A

proposal for renovation of prisons was submitted to Ministry of Finance, Planning

and Economic Development and a phased approach over a period of 5 years was

proposed. Ministry of Finance, Planning and Economic Development promised to

handle the renovation of prisons over a medium term.

I advised management to continue lobbying for additional resources to improve

the accommodation facilities of the inmates.


A review of the budget performance for the year 2013/2014 revealed that some

targets were not achieved despite receiving 99% of the approved budget. Details

219

are as per table below: Unimplemented activities hamper service delivery, and the

appropriating authority‟s objectives may not be met.

The Accounting Officer explained that some activities were not completed within

the year, and spilled over to the subsequent year. The delay was attributed to late

Key activities Performance/Achieved output

Survey and title 9 Prisons &

open boundaries for 4 Prisons

09 prisons land surveyed, 06 land titles

obtained and only 02 boundaries opened.

62% performance

Development and installation of

irrigation system at Ruimi

Prison Farm; Setup irrigation

system at Ruimi Prison Farm.

Technical study design and development of

irrigation system at Ruimi, Ibuga and Mubuku

on-going; Schematic designs completed but

Irrigation system not developed yet.

Renovation of Rwimi Prison Plumbing and electrical installations not done

yet

Construction of Kaabong prison Contractor secured, works not yet completed

Construction of Amur Prison Irrigation system not developed yet.

Construction of a second Twin

prisoner's ward at Ruimi Prison

Fixing of water tanks, connecting water and

electricity is ongoing. At roofing level by

January 2015

Construction of a cotton farm

store at Mobuku

Work on the super structure is ongoing,

currently at foundation stage; expected date

of completion is December 2014. Not

completed.

Estimated at 80% by January 2015

Construction of 14 blocks of

staff houses at Muinaina,

Kiyunga, Ruimi and Kapchorwa

Prisons.

All the building materials have been procured

and delivered on site. Kapchorwa is at roofing

stage and expected completion date for all

sites is December 2014, Muinaina nearing

completion.

500 staff to benefit from Duty

Free Shop

343 staff benefitted from Duty Free Shop.

31% did not benefit

220

acquisition of land from the districts, heavy rain at the beginning of some of the

projects and lengthy procurements among others. The Accounting Officer however

indicated that the activities were ongoing.

I advised the Accounting Officer to ensure that all planned activities for which

funds are released are carried out as planned.

11.7 Field inspections

A) Mbale Main Prison

During field inpection, it was observed that the prisons wards were leaking, some

prisoners uniforms were were old and some had got torn. The perimeter fence

was damaged and needed repair. The pictures below refer.

Leaking roof

Torn inmates‟ uniforms damaged fence

221

The inmates are living in poor health condition with a possibility of inmates

escaping because of the damaged fence. The inadequate clothing undermines the

status of Uganda prisons.

Management in their response indicated that the majority of prisons structures

were constructed in 1920s aimed at a smaller population. The structures have not

had major overhaul, renovation and maintenance. The Prison is among those

identified to be upgraded through renovation and new construction in the strategic

investment plan III (2012/13 – 2016/17), while the prisoner‟s uniforms will be

addressed soon.

I advised management to expedite the renovations of the prison to ensure that

prisoners‟ rights are not denied.

b) Ruimi Prisons Farm - Delayed construction of a twin ward

The construction worth UGX.618,909,737 commenced on 27th March 2014 and

was expected to be completed by 27th Sept 2014. The completion date was later

extended to 30th December 2014 with a variation of UGX.24,976,180 due to

changes on the ground beam and filling murram due to its location (earthquake

prone area). Delayed construction has negatively impacted on the intended

objective of availing accommodation for prisoners. By January 2015, the building

was at roofing level as shown in the photo below:

Construction on-going

Management attributed the delays to the heavy rains at the start of the project.

222

The contractor has been given up to April 2015 to have all the activities completed

and the wards handed over for occupation.

Management action on the matter is awaited.

c) Mubuku Prisons Farm - Delayed completion of the construction of

a cotton store

Construction of the cotton store at Mubuku Prison was contracted by a local

company at a contract price of UGX.149,982,339. The project that started on 26th

May 2014 was to be completed by 15th.January 2015 after an extension of two

months. However, during audit inspection in January 2015, the cotton store had

just been roofed and plastered outside but the doors had not been fixed and the

floor was yet to be casted and screed. The construction has been delayed, and

this has had a negative impact on storage of produce. Details are as shown in the

photos below:

Plastered outside walls

223

Inside walls not yet plastered Floor not yet casted

Management in their response attributed the delay to heavy rains at the start of

the project. Management promised that the works will be completed by end of

March 2015.

I advised the Accounting Officer to compel contractor to complete the construction

of the store on the agreed timelines.

12.0 JUDICIARY DEPARTMENT

12.1 Arrears of rent

It was noted that out of the payables of UGX.6,834,553,806 reflected in the

financial statements, UGX.3,010,447,187 comprised of sundry creditors (landlords)

who have not been paid rent due from use of their premises by Courts. Delayed

payment of rent may lead to reputation risk and eviction of the Courts to the

embarrassment of the Judiciary.

The Accounting Officer explained that rental bills accumulate because of the

increasing demand for Judicial Services yet the Judiciary lacks self-owned premises

across the country. Further, the funds released for rent are inadequate leading to

delayed payment to the landlords. The Accounting Officer further indicated that

the entity has requested for a supplementary from Ministry of Finance, Planning

and Economic Development to settle the arrears.

224

I await the results of management efforts. It is also advisable that in the long run

Judiciary should consider to construct its premises to minimize funds incurred in

rent.

12.2 Deposit of third party funds on operations account

In the miscellaneous application number 44 of 2012, the honourable commercial

Court delivered a judgment and awarded damages of UGX.494,990,000. The

amount was deposited on the entity operational account in the court of appeal

despite the fact that the Judiciary has an account in Bank of Uganda where

deposits are paid. I explained to the management that the risk of utilizing these

funds for court operations was high. A review of the bank statement indeed

revealed that the court had borrowed these funds for its day to today operations.

The Accounting officer explained that the deposit was as a result of a court order

and could not change until another order is issued after disposal of the case.

I advised the Accounting Officer to relate with the court and ensure that the funds

are deposited in the appropriate bank accounts.

12.3 Human Resource Management

a) Staffing Gaps

According to the staff establishment, 297 posts within the Judiciary had remained

vacant during the year. These included among others 8 Justices of Court of

appeal, 4 Justices of the Supreme Court and 8 High court Judges. Lack of staff in

vital positions affects the performance and overall achievement of organization‟s

goals and objectives. This could also be a contributory factor to case backlogs.

The Accounting Officer explained that the vacant posts were declared to the

Service Commissions and management await its decision.

I advised the Accounting Officer to liaise with the relevant stakeholders and

ensure that vacant posts are filled.

225

b) Performance Management- Absence of Appraisal system for

Judges

Section (A-m) 3 of the Public Service Standing Orders requires all responsible

officers to manage the performance of their Ministry or department to ensure that

the performance of organizations and individuals directly contribute to improved

service delivery and attainment of national development objectives.

However, it was noted that this mechanism did not exist in Judiciary. The entity;

Does not have annual performance plans developed at the beginning of every

financial year for Judicial Officers.

Does not hold performance review meetings to review the performance of the

Judicial Officers.

Does not monitor and evaluate performance of the department and individual

staff.

Does not prepare annual performance reports for both Judicial and non-

Judicial staff.

Does not carry out staff appraisals of both Judicial and non-Judicial staff.

In absence of a performance management system, staff will not have focus on the

organizational goals and priorities, show commitment to their work and also

improve on their competences through constructive feedback.

The Accounting Officer responded that Judicial Officers on the lower bench and

the non-Judicial Officers are appraised through the normal Public Service Appraisal

System. However this appraisal system appeared not appropriate for the Judges

and Justices. As a result of this, an appraisal tool that covers all officers within the

Judiciary has been developed by a consultant and is now being piloted.

I urged the management to have the appropriate tool finalised for implementation.

12.4 Department structure and issues of strategy

a) Operations of the High Court Circuits

Following the 1997-1998 post Constitution Judicial restructuring report, Judicial

services were decentralized to now twelve (12) High Court circuits. This was

226

intended to improve delivery of justice to all Ugandans. It was noted that whereas

the High Court circuits were supposed to be replicas of the High Court, the

concept of divisions at the High Court has not been rolled out to the High Court

circuits. This sometimes leads to some cases being transferred from High Court

circuits to the respective divisions at High Court in Kampala. This does not only

make justice expensive for the litigants, but can be a burden to the divisional

judges at the High Court hence leading to case backlogs. It may also cause

redundancy of the resident judges.

The Accounting Officer responded that by resolution of Parliament, the Judges of

the High Court are to be increased to 82. This will enable additional Judges to be

recruited to facilitate creation of additional High Court Circuits. The creation of

divisions at circuit level is a long term strategy which will be debated by the

Judiciary. In the meantime, the Resident Judges in the High Court circuits have

unlimited original jurisdiction and therefore handle all types of cases.

I advised that management considers the concept of High court circuits for

implementation.

b) Narrow Structure of the Court of Appeal

The Court of Appeal has jurisdiction to hear appeals from the High Courts. These

appeals come from court rulings of the High Court circuits and the High

Court divisions-including Civil division, Criminal division, Commercial division, Anti-

corruption division and Land division. A narrow structure of the court of appeal

was noted in as far as the handling of cases from the High Courts is concerned.

The eight divisions of the High Court and the High Court circuits all feed into the

Court of Appeal. This does not allow smooth flow of cases.

The Accounting Officer responded that Management agrees with the need to

expand the structure of the Court of Appeal. However, this is to be preceded with

a business study to determine the wage and non-wage requirements, the

infrastructure and case load.

227

I advised that there is need to broaden the structure of the Court of Appeal to

match with the High Court structure. This may go along in solving the case

backlog in the court.

c) Independence of the Judiciary

Article 128(1) of the Constitution of the Republic of Uganda states that in the

exercise of judicial power, the courts shall be independent and shall not be subject

to the control or direction of any person or authority. However, contrary to

legislation, the Judiciary has failed to assert its independence as it is treated as a

Department rather than an arm of Government and has no financial independence

and cannot recruit its own staff.

The Accounting Officer responded that the Draft Administration of Judiciary Bill

2013 was presented to Cabinet. Further discussion of the Bill was deferred until

Article 172 of the Constitution is amended to allow for the delinking of certain

cadres from the Public Service to the Judiciary.

I advised that effort should be made to delink the Judiciary from the main stream

Public Service in order to achieve autonomy in the management of its financial

and human resources in a bid to achieve its strategic objectives.

d) Absence of a Client Service Charter

Good practice requires that the judicature formulates Client Service Charter

showing commitment to provide quality service and how to work best with general

public. Over the years, the Judiciary has been in the spotlight on issues regarding

the integrity of both Judicial and non-judicial officers. Despite the negative

publicity, the Judiciary has not developed a client service charter.

The Accounting Officer responded that a draft Client Charter for the Judiciary has

been developed and will be operationalized in FY 2015/2016.

I advised the Accounting Officer that there is a need for the Judiciary to expedite

the implementation of the client charter that reflects its commitment to providing

a high quality service, and how the Judiciary can work hand in hand with the

general public to improve services.

228


The Parliament of Uganda also appropriates funds annually in accordance with the

needs of each MDA. This appropriation is implemented through the budget in

which funds are tagged to particular activities and outputs using account and

MTEF codes. A review of the payments for the Judiciary revealed that payments

amounting to UGX.423,909,500 were not charged under the appropriated and

rightful codes. These payments were made without requisite authority. The

practice does not only undermine the budgeting process and the intentions of the

appropriating authority but also leads to financial statements misreporting.

The Accounting Officer explained that the Judiciary has endeavoured to streamline

the budget in order to minimize mischarge of expenditure.

I advised that Management should allocate enough funds to budget lines in

accordance with priorities and reallocations should be undertaken whenever there

is need in accordance with the regulations.


Although the Judiciary received 98% of its budget, there was notable under

performance on the planned activities for the period under review. The table

below refers:

Planned

Activity

Planned Output Actual

Output

Variance Planned

Output

Cost

Actual

Output

Cost

Budget

Spent%

Disposal of

appeals and

suits in High

court

3,094 Criminal

suits

1,857

Criminal

suits and

391

criminal

appeals

disposed of

-846 21.154bn 21.696bn 102.6%

3,056 Family suits 2,186

family suits

disposed of

-870

388 Anti- 145 cases -243

229

Planned

Activity

Planned Output Actual

Output

Variance Planned

Output

Cost

Actual

Output

Cost

Budget

Spent%

corruption cases disposed of

3,070 Civil suits 2,558

Civil suits

and 234

Civil

appeals

disposed of

-278

1,297 Commercial

suits

1,754

Commercial

suits

disposed of

+457

1,546 Land Cases 1,413 land

cases

disposed of

-133

Disposal of suits

and appeals in

Magistrate

Courts

109,261 cases

disposed of

63,297

cases

disposed of

-45,964 15.899bn 15.942bn 100.3%

Construction

and

rehabilitation of

Judicial Courts

Commence

construction of

Lugazi and

Mayuge

Magistrate courts

No output The two

courts not

constructed

1.175bn 2.006bn 170%

The underperformance escalated the case backlogs and negatively impacted on

the achievement of the Judiciary mandate.

The Accounting Officer explained that the planning was ambitious and furthermore

the funds allocated were not only meant for court sessions but for other attendant

activities like visiting locus in quo, vehicle maintenance, fuel, rent and general

supplies of goods and services.

230

I advised the Accounting Officer that the Management team should make realistic

plans and ensure that all planned activities for which funds are released are

completed to enable the department deliver its mandate.

12.7 Field inspections - Books of Accounts and other operational concerns

Field inspections revealed the following;

No Court Observations

1 Jinja High Court and

Chief Magistrate‟s

Court

The High Court has a Senior Accounts Assistant

appointed as the substantive cashier. The cashier had last posted the books in March

2011.

Similarly at the Chief Magistrates court (which has

an Accounts Assistant), the books were last posted

in July 2009.

2 Kyegegwa Grade 1

Court

The Court is in rented premises and the space is not

adequate for Court operations.

This court has a wider coverage with distant places

in cases of visiting locus but it has no office vehicle thus making it costly to use public means.

3 Iganga Chief

Magistrate‟s Court

The court does not maintain an assets register.

The computers are not connected to CCAS System.

Revenues collections are done in the bank after

assessments by the Ag. Cashier, but it was noted

that the cashier does not issue general receipts. The court has no substantive cashier and all

accounts related functions are carried out by

records assistant. The cashbook is wrongly posted

for example bank charges which are expenses were recorded on the debit side of the cash book.

4 Kaliro GR I Court

There are no books of accounts maintained at this

court. This is because the Ag. Cashier lacks the competence to perform accounts related functions.

The Court has no exhibit store and the exhibits are

not recorded in the register. Exhibits are kept in the

registry. The returns are not submitted in time due to laxity

by the clerk.

5 Mbale High and Chief

Magistrate‟s Court

The mandatory books of Accounts such as Revenue

Collectors cash book, Bail deposit cash book,

Operational cash book, were in place but not updated.

Cases registers are in place but not properly posted.

Although there are many clerical officers, the team found out that there is no single officer responsible

for each register. There are gaps left in between the cases registered.

231


The Magistrates do not sign in the case registers, especially cases registered as complete to confirm

the results recorded in the registers.

Magistrates do not regularly supervise the Clerks to

confirm that, whatever is recorded in the register is a true picture of what inspired in the court.

Case returns are prepared but not submitted on

time. There were also cases of use of white wash to

correct mistakes in the registers. This is very risky in

that anybody can tamper with the information in the register.

Document filing was also found to be poor.

Though the court had an exhibit stores, it was

leaking and the floor is peeling off.

6 Sironko GR 1 Court The cashier does not issue general receipts to the

litigants, there were no monthly bank reconciliations.

Accountabilities for funds advanced for March 2014

were unavailable.

Case registers were not properly posted, there are

many blank spaces left in between the cases registered. The magistrates do not sign against the

results recorded by the clerks in the registers. Document filing was poor, files having loose

papers which are not numbered according to their

order.

7 Kabale High Court and

Chief Magistrate Court

Case registers are poorly posted, there is no specific

staff to record cases. There are gaps left in between cases registered. Mistakes are corrected by

overwriting, crossing and use of white wash. The Magistrates also do not sign the results for

completed cases entered in the registers by the

Clerks. Access to the Registry is not restricted. Document filing is not properly done. The

documents are not are not numbered and they are

just loose in the files. The exhibits register is in place but exhibits are not

regularly recorded when received.

It was also noted that, there is a dilapidated store

constructed with old iron sheets. The door does not even lock properly, risking exhibits to theft. It was

established that in January 2014, thugs broke into

the store and stole two bicycles and ten plastic chairs.

8 Nakasongola C/M

Court

Cases registers are in place but are not properly

posted: Criminal cases are mixed up with Juvenile

cases; there are gaps left in between the cases registered. The complete cases are not signed off in

the register by the chief magistrate The court has got enough space for the existing 9

staff. The offices are fairly furnished but there is no

232


photocopier, filing cabinet, and Solar system/ Generator because they do not have stable power.

Nakasongola court makes returns on a monthly

basis as required, but the reports submitted in most

cases are inaccurate for instance in February 2014, 46 criminal cases were reported and yet the actual

cases registered were 49. In January 2014, they reported zero civil cases and yet 2 were registered,

in March 2014, they registered 28 civil and reported 30.

9 General observation

across the Courts

In the courts where there is electricity and water, it

was noted that, the Office Supervisors do not

maintain utility ledgers. They did not even know the meter numbers and account numbers for their

respective courts. The bills were submitted for

payment as received by the courts. It was therefore not easy to verify these bills when the

courts submitting them have not given assurance that they are genuine.

The weak record keeping is likely to lead to inaccurate reporting on cases

reported and handled, loss of revenue, misuse of assets and, poor accountability.

The Accounting Officer explained that Management has put in place mechanisms

to address the weaknesses identified above through; training of staff, recruitment

and re-assignment of responsibilities


12.8 Loss of motorcycle

Motorcycle Registration No. UG0311J attached to Commercial court Division was

stolen at Senate Building Makerere University on Monday 6th February, 2012 from

a Process Server who had gone to serve a ruling notice. The circumstances

surrounding the theft of this motorcycle were not clear. The place the motorcycle

was stolen from is not where the server notice was to be delivered. In addition,

the time the officer claims the motorcycle was stolen (2.00 p.m.) differed from the

police reports (12:46 p.m). These inconsistencies in reporting were suspicious.

The Principal Human Resource Officer was requested by the Transport Officer to

take action against the Officer but there was no report to show whether

233

disciplinary action was taken against him. Failure to impose strong regulations on

officers upon any irregularity may lead to loss of Government resources.

The Accounting Officer explained that the case was reported to Police and

investigation is on-going.

I advised management to follow up the matter to conclusion.

12.9 DANIDA UGANDA GOOD GOVERNANCE PROGRAMME (UGOGO) –

SUPPORT TO THE JUSTICE, LAW AND ORDER SECTOR 2011-2016 31ST

DECEMBER, 2014

Use of out-dated Financial Policy and Procedures Manual

The Project has been using the Financial Policies and Procedures Manual

developed as far back as 2001 for the Judiciary Danida Support to discharge its

accountability function to DANIDA and the Government of Uganda. At the

beginning of the third phase of the Danida Support to Judiciary in March 2006, the

Registrar Planning and Development in consultation with the Project Director was

to propose amendments to these financial procedures to the Technical Committee

and facilitate the introduction of new instructions. I noted that no amendments

have since been made to these policies.

Management responded that they have been aware of the need to update its

Financial and Procurement Guidelines and stated that a consultant has already

been engaged to update the guidelines in close consultation with programme

management and the Royal Danish Embassy.

I await the out come of management efforts to update the Manual.

Non Compliance with Steering Committee meetings

The Programme policy document provides that a Steering Committee composed of

the Chief Justice and members of the Judiciary Planning and Development

Committee, and the Royal Danish Embassy would be the forum for the overall

234

coordination at policy level and was required to meet twice a year. However, it

was noted that during the year, the Steering Committee met only once. There is a

risk that the project may not have obtained the required guidance of the steering

committee.

Management explained that the infrequency of meetings was partly due to the fact

that for more than two years there was no substantive Chief Justice and the

Project was not clear as to whether the Acting Chief Justice can also fulfil the role

of the Chairperson of the Steering Committee.

I advised Management to organize regular meetings for the effective

implementation of the work plans.

Absence of Approved List of Suppliers

Section 7.2.2 of the Daninda Judiciary Support Project Financial Policies and

Procedures Manual states that; for all general stores items, an approved list of

suppliers will be maintained. These suppliers should have verifiable premises, be

registered for VAT purposes and issue valid tax invoices. It also states that the list

will be reviewed and updated regularly by the Technical Committee. However

during the audit it was observed that the Project did not maintain such a list.

Management explained that the Project uses a list of suppliers that consists of;

Firms from the PPDA Register of providers‟ website; Judiciary‟s list of prequalified

suppliers; and firms that were successfully used under the HUGGO phase and

have shown high quality service.

I advised Management to ensure compliance with the procedures Manual.

Repair of X-TRAIL Motor Vehicles

A contract for the repair of three x-trail motor vehicles- UG 290J, UG O271J, and

UG 274J of UGX.51, 170,000 was awarded to ACE Motors. It was noted that the

motor vehicles were not assessed before and after the repairs by mechanical

235

engineer. There are risks that the repairs where over costed or not completely

done as per the proforma invoices indicated leading to loss of programme funds.

Management responded that they had taken note and will in future ensure that an

independent assessment is done before and after repair of the vehicles. The

updated Financial Management Manual will also include clear policies regarding

the repair of vehicles.

I advised Management to source for technical support from competent individuals

in future.

Non-Deduction of Withholding Tax (WHT):

It was observed that WHT totalling to UGX.75,955,526 was not deducted whilst

effecting some payments in contravention of the Income Tax Act.

Failure to withhold tax could lead to penalties as stipulated in the Income Tax Act.

Management admitted the shortcoming and explained that they will endeavour to

recover WHT from the listed suppliers. Management further indicated that

clarification on tax exemptions and their applications will be sought from the Royal

Danish Embassy and URA. Respective provisions will thereafter be included in the

updated Financial Management Guidelines.

I advised Management to consult with Royal Danish Embassy and URA regarding

the Income Tax Act provisions.

i. Non-Deduction of PAYE:

The Income Tax Act, 1997 (as amended) section 117(1) states that; every

employer shall withhold tax from a payment of employment income to an

employee as prescribed by the regulations. During the year, the project paid

UGX.32,150,000 as monthly allowances to; the Project Administrator, Office

236

Attendant in charge of Resource Centre and the Driver. The project however did

not deduct and pay to URA PAYE of UGX.9,645,000.

This is contrary to the Income Tax Act requirement and could lead to penalties

from URA.

Management admitted the shortcoming and explained that they will recover the

PAYE from the employees. Management further stated that with effect from

January 2015 PAYE is deducted from all employees.

I advised Management to have consultations with the Royal Danish Embassy and

URA in respect of the tax provisions.

ii. Work plans and budgets

Budget Shortfall

I noted a shortfall of funding of the approved work plans of the Programme. The

total budget funding for the year under review stood at UGX.3,052,299,861 and

only UGX.2,075,513,072 was received resulting into a budget shortfall of

UGX.976,786,789.

The funding shortfall may in turn affect the implementation of the planned

activities.

Management explained that the commitments made by the Embassy towards the

project remain valid for the entire programme period. However, as part of due

diligence, the Embassy only disburses funds to the project on a needs basis that

is; according to the approved work plan/budget and upon receipt of satisfactory

progress and financial reports as well as evidence of reduced balance on the

project account.

I advised Management to undertake realistic budgeting in order to implement the

activities in accordance with approved work plans.

237

Physical Budget performance-Non-Partial implementation of planned

activities

UGOGO Project is component 2 of Sector Investment Plan III (SIP III) and is

aimed at promoting the rule of law as its overall strategic goal. In order to achieve

this goal, strategic objectives and activities are designed and medium term plans

are prepared in form of approved annual work plans and budgets.

A review of the Project's performance as per DANIDA 4th progress report (Work

plan IV) revealed that a number of activities remained un-implemented during the

year while others were partially implemented. The table below refers.

Targeted

outputs

Planned

activities to

achieve the

targeted out put

Budget

(UGX.)

Expenditu

re(UGX)

Status Remark

1 IMPLEMENTATION OF THE STRATEGIC INVESTMENT PLAN

1.1 JSIP 111

achievements

and challenges

in

implementation

identified

Conduct

consultancy for

mid-term review of

JSIP 111

(inclusive of

coordination costs)

84,800,000 1,360,000 Not

completed

(98%

under

performan

ce)

Terms of

reference for the

consultancy have

been drafted and

circulated for

review. Funds

reallocated to

cater for 3

trainings; one in

customer care

and another in

human rights.

PERFORMANCE ENHANCEMENT

2.2 Staff ownership

and adoption of

developed

appraisal tool

promoted

Conduct 3

sensitization

workshops for

Judiciary staff on

the use of the

developed

135,000,000 -- Not done

(100%

under

performan

ce)

Pending

completion of

development of

the Judiciary

performance

enhancement

238

Targeted

outputs

Planned

activities to

achieve the

targeted out put

Budget

(UGX.)

Expenditu

re(UGX)

Status Remark

performance

enhancement &

appraisal tool (100

pax per workshop)

tool.

3 CASE BACKLOG REDUCTION

4 REFORMS IN JUDICIARY TO ENHANCE ACCESS TO JUSTICE.

4.1 Information on

Judiciary

policies, cause

lists and

procedures

readily available

to the Public

Procure and install

one computer set

(monitor,

CPU,UPS, printer &

software) on 26

information desks

in Central and

Eastern regions

130,000,000 28,686,000 Not

completed

. (78%

under

absorption

/performa

nce)

14 Computers

procured pending

installation.

4.4 Adoption of

standard

punishment

measures for

criminals

Conduct two

sensitization

workshops on the

developed

Sentencing

Guidelines

90,000,000 -- Not

done.(100

%%

under

absorption

/performa

nce)

A proposal was

made for these

funds to be

reallocated

towards the roll

out of Plea

bargaining.

Management explained that the failure to fully implement planned activities

occurred due to various challenges faced during the year such as; dependence on

out-dated Procurement and Financial Management guidelines, increased backlog

of activities due to implementation of activities from previous work plans,

dependence on various departments and officers in implementation who were also

engaged in other Court business, some activities being reliant on the completion

of others, and uncertainties that occurred during the period regarding the

continuity of the Project.

239

I advised Management to ensure commitment to the execution of project activities

to enable timely attainment of the Programmes strategic objectives, by addressing

the above short comings.

Audit inspections

Field inspections were carried out at Jinja, Gulu and Mbarara High Courts. The

objectives of the inspections were to establish supply of recording equipment,

confirmation of installation and functioning of recording equipment in the courts,

and, existence and functioning of the small claims procedure whose subject matter

does not exceed UGX.10,000,000.

The equipment was supplied and installed and the small claims procedures were

implemented in the courts. However, the following exceptions were noted:

(i) Mbarara High Court - Court Recording Equipment:

The court recording equipment was supplied by the Project, comprising of; 8 micro

phones, Dell monitor, key board, CPU and mouse, PA Amplifier, Timer, D-Link easy

smart switch, Head phones, 4 Speakers, Recorder, and the transcription set that

including a CPU (Lenove) Monitor, Key board, Mouse and headphones.

However, it was noted that whereas the Court recording set was functioning and

was being put to use, the transcription set was not being utilized due to the

challenges below;

At the time of delivery, the CPU (Lenovo) power cable was not delivered with

the rest of the equipment. The IT personnel who installed the equipment

explained to the staff at the Mbarara High Court that the CPU uses a different

cable from those used by other brands and that meant they would have to

wait for it to be delivered. This has not happened to date. Therefore, another

computer is used for transcription and this takes place after the court session

is done.

Mbarara High Court lacks a transcriber. When the equipment was supplied and

installed, it required two personnel; a recorder and a transcriber so that during

a court hearing, the recording and transcription activities can take place

simultaneously. This is not possible at the Court, as the position of the

240

transcriber is not filled. Therefore the recorder ends up typing what has

transpired after the court session is done.

Management explained that they had not received any official communication

regarding the missing power cable. However, Management has taken note of the

issue and will follow up.

I advised Judiciary ICT Department to follow up the matter and ensure that the

equipment can be put to use.

13.0 DIRECTORATE OF PUBLIC PROSECUTIONS

13.1 Mischarged Expenditure

A review of the Directorate‟s expenditure revealed that the entity charged wrong

expenditure codes to a tune of UGX.454,431,122. The practice of mischarge of

expenditure violates the TAI, undermines the importance of the budgeting process

as well as the intentions of the appropriating authority and leads to misreporting.

The Accounting Officer explained that he was challenged with budget ceilings

within the Medium Term Expenditure Framework (MTEF), where only a few

priority areas could be funded. That left out a number of important areas either

under-funded or completely un-funded. Further, there arose a number of cases

that required the co-opting of a wide range of experts and staff at a scale that was

not anticipated during the budgeting process. However, the Accounting Officer

indicated that the Directorate has taken administrative measures to improve on

Budget discipline.

I advised management to streamline the budget process to ensure that adequate

funds are allocated to each account code and utilize the budget as appropriate.


13.2 Staffing gaps

241

It was noted that the Directorate had 31 vacant posts which were not filled. These

include a key post of the Assistant Director of Public Prosecutions. The Table

below refers. Inadequate staffing affects the timely implementation and delivery

of services which may adversely impact in the achievement of the entity strategic

objectives.

Post Title Scale No. of Vacancies Status

Ass. Director of Public

Prosecutions UISE 1 Vacant

Secretaries U5-U7 30 Vacant

Total 31

The Accounting Officer explained that the post of Assistant Director of Public

Prosecutions fell vacant as a result of the promotion of the then Deputy Director of

Public Prosecutions in December 2014. The recruitment process to fill the post of

Assistant Director of Public Prosecutions has however been initiated. The positions

of Secretary (U7-U5) have been vacant for some time as a result of transfers

within the Public Service. These vacancies have been declared to the Line Ministry

to have them filled.

I await the results of management efforts in having the posts filled.

13.3 Advances to Individual Personal Accounts - Non Compliance with

Treasury Accounting Instructions

Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), provide

that all payments should be made by the Accounting Officer directly to the

beneficiaries. Where this is not convenient, an imprest holder should be appointed

by the Accounting Officer with the approval of the Accountant General. On the

contrary, UGX.68,730,000 was advanced to Directorate staff through their

personal bank accounts to undertake direct procurements and other activities of

the Directorate. Such a practice of depositing huge funds on personal accounts

exposes Government funds to risk of loss, since the Ministry does not have any

control over such funds deposited on personal accounts.

242

The Accounting Officer responded that the Directorate recognizes the inherent

risks that are associated with advances and has tried to minimize this type of

payments. These payments relate to operational advances for office running

mainly to the Secretarial staff for newspapers, tea and refreshments.

I advised the Accounting Officer to avoid the practice and ensure strict adherence

with the requirements under the Treasury Accounting Instructions.


A review of the budget revealed that UGX.16,276,902,823 was released against

an approved budget of UGX.17,252,411,052, representing 94% of the budget

performance. Due to the budget shortfall, office and machinery and ICT

equipment together with its software estimated at UGX.876,295,000 was not

procured. Unimplemented activities hamper service delivery, and the appropriating

authority‟s objectives may not be met.

The Accounting Officer explained that part of the Development budget was not

released by the end of the financial year. This led to the non-implementation of

the planned ICT infrastructure. He further responded that the Directorate shall

continue to liaise with the MoFPED to have it honor the approved budget.

I advised the Accounting Officer to continue liaising with MoFEP for adequate

funding and effective implementation of the planned activities and service delivery.

14.0 NATIONAL CITIZENSHIP AND IMMIGRATION CONTROL


A review of the entity expenditures revealed that wrong expenditure codes were

charged to a tune of 5,906,786,217 without authority contrary to chapter IV

section 156 of the TAIs. This practice does not only distort the intentions of

appropriating authority but also results into misreporting in the financial

statements.

243

Management explained that the mass enrolment exercise had one output of

registering citizens. Some expenses like allowances to staff on the exercise were

budgeted and charged on contract staff salaries (211102) thus indicating a

mischarge whereas not. In some instances, funds for allowances would delay and

the Directorate charged equipment to pay allowances. However whenever funds

for allowances would come, equipment item would be refunded thus showing

mischarges. It was therefore inevitable that certain items were used to fund

critical activities at a time resulting into mischarges.

I advised management to streamline the budgeting process to ensure that

sufficient funds are allocated to each account code and to seek for authority

whenever there is need for extra funding before any reallocations are made.

14.2 Procurements of NSIS equipment

In accordance with Section 39 of the PPDA Act, 2003 and Regulations 62 (1)

(b)(1), 75(b), 78(1)(d), 79, and 80 of the PPDA Regulations 2003, the

Accounting Officer DICC delegated the procurement of additional machinery and

equipment for the National Security Information System (NSIS) to Internal

Security organization (ISO). The procurement of the machinery and equipment

was worth UGX.83,358,464,749 and USD.6,637,239 and reportedly delivered to

ISO. Information relating to the above transaction had just been received by

management of DICC at the time of concluding this report in March, 2015. As such

I was unable to conclude on the verification of this procurement before the

statutory reporting deadline.

14.3 Payables

Included in payables of UGX.39,750,093,409 is rent due to Civil Aviation Authority

of UGX.780,949,138; Property rent due to UPPC UGX.874,264,954 and a

contractual obligation to Mulbuaer of UGX.16,420,383,768 which have been

outstanding for more than a year. Delayed settlement of the outstanding

obligations can result into wasteful expenditure in form of litigation costs.

244

Management attributed accumulation and non-clearance of domestic arrears to

budget constraints which has been brought to the attention of Ministry of Finance,

Planning and Economic Development.

I reminded the Accounting Officer that accumulation of domestic arrears is in

contravention of the commitment control system and advised him to liaise with the

MoFPED for extra funding to clear the outstanding arrears.

14.4 Renting of premises from Ministry of Defence at Kololo ceremonial

grounds

The Directorate entered into a tenancy agreement with the Ministry of Defence

(MoD) to let the premises at Kololo ceremonial grounds to the Directorate at a

monthly rent of UGX.56m. The Building was to be used as a warehouse, offices,

issuance place for the National Identity cards and related activities under the

National Security Information System (NSIS) Project. Under the contract, MoD was

required to make NSIS Project specific modifications to put in a tenantable

condition at the cost of the Directorate. The cost of project specific modifications

was estimated by the Ministry of Works and Transport at UGX.947,089,983. The

following were observed:

a) Lack of costed Bills of Quantities and a schedule of materials

The Directorate paid a sum of UGX.1,619,089,983 to the Ministry of Defence. The

payment comprised of rent charge of UGX.672,000,000 for 12 months and

project specific modifications of UGX.947,089,983. However, the Bills of Quantities

were not costed to support the amount of UGX.947,089,983. I informed

management that in the absence of the costed BOQs it was difficult to establish

whether the funds paid were for the actual amount billed by the contractor.

Management explained that the works were done by MOD and promised to

communicate to the Ministry Accounting Officer over the matter.

245

I advised management to follow up the matter with Ministry of Defence and have

the necessary documentation provided for future use.

b) Payments to MOD account instead of Consolidated Funds

The rented premises (Kololo Cerebration Grounds) are owned by the Government

of Uganda and managed by the Ministry of Defence, a Government entity. Equally

the tenant is a Government entity both of which draw funds from the Consolidated

Fund. However, rent of UGX.672,000,000 was paid to the MoD account held in

Bank of Uganda. The justification for not paying directly to the Consolidated Fund

was not provided.

Management explained that the payment was in accordance with the tenancy

agreement with the MOD.

I await confirmation from MOD that the funds were transferred to the

Consolidated Fund.

14.5 Renovation works on the rented premises

On 26th July 2013, the Directorate entered into a contract with UPPC for the

renovation of the allocated premises for a contract sum of UGX.2,869,960,881.

The Directorate was to renovate blocks 1, 2 and 3 and demolish block 4 to

construct a new one in its place. The civil works were to last for 10 calendar

months from the commencement date 24th October, 2013 and completed on 24th

August 2014.

However, by the time of writing this report (March 2015), five months after the

expected completion date, the contractor had not completed the works. The last

certificate of work done was prepared on 24th April 2014 with the value of work

done put at UGX.434,084,280, implying that the works were at a level of 15% to

completion. Besides, the renovation works on Block 1 (see figure 1) had not

started.

246

Figure 1- Block 1: UPPC has declined to hand over Block 1 over a debt owed to it by

DCIC

Figure 2; Block 2 was still far from completion.

Figure 3: Block 3 was not yet completed.

247

Figure 4: Interior works at Block 3 were not yet completed.

According to management, Uganda Printing and Publication Corporation did not

hand over block 1 to DCIC as DCIC had failed to pay rent arrears of

UGX.874,264,954 owing to the Corporation. I noted that at this rate, the

Directorate may have to extend its rent with the Ministry of Defence as the UPPC

project is still behind schedule.

Management explained that funds for clearing the rent arrears have been secured

but the Solicitor General has declined to give legal advice on how to settle the

obligation because it was an oral contract between UPPC and Ministry of Internal

Affairs.

I advised management to regularise the contract and also expedite the payment of

arrears to the Corporation to allow the contractor renovate the block.

Management was further advised to liaise with the contractor to speed up the civil

works and complete the renovation of the buildings in order to accommodate the

project as its tenure at Kololo Ceremonial Grounds has ended.

14.6 Non-tax revenue not retained as Appropriation-In-Aid

According to Section 3 of the Uganda Citizenship and Immigration Control

amendment Act, Non-Tax Revenue collected by the entity should be retained and

treated as appropriated in Aid (A.A). To the contrary, UGX.68,778,391,313 was

collected as Non-Tax Revenue through the Uganda Revenue Authority system and

automatically remitted to the Consolidated Fund. The Ministry of Finance, Planning

and Economic Development has not authorised the Directorate to utilise the funds

248

at source in accordance with the Act. This has impacted on the Directorate in

implementation of its mandate.

The Accounting Officer explained that efforts by the Directorate to have the

sections of the law implemented have been futile. A number of meetings have

been held with Ministry of Finance but to no success. Management further

indicated that they are yet to consult with Solicitor General for interpretation of

the law.

I advised management to keep advocating for the operationalization of the section

of the Act to be able to improve on its service delivery.

14.7 Human Resource matters

a) Inadequate structure

The Directorate has an approved structure however, the structure does not have

certain key functions of administration and human resources. It relies on the

support of the Ministry of Internal affairs for some very critical and important

services. For example, DCIC does not have a Personnel and Administration

positions like the Under Secretary Finance and Administration, Principal Assistant

Secretary, Senior Assistant Secretary/Transport Officer, Principal Human Resource

Officer, Human Resource Officers, Principal Policy Analyst and Statistician in its

staffing structure. Whereas Management has taken efforts to have an adequate

structure in place, these efforts are yet to yield results. The Directorate

performance in terms of Human Resources Management and general

administration is currently being stifled.

Management explained that the Directorate is still awaiting the outcome of the

study carried out by Ministry of Public Service in regard to the structure.

I encouraged management to continue pursuing the matter with the Ministry of

Public Service for approval of the proposed structure.

b) Staffing gaps

249

A review of the Ministerial Policy Statement revealed that the Directorate has an

establishment of 375 post in the current structure out of which 32 posts are

vacant. This is in-spite of having an inadequate structure. These include key posts

of: Assistant Commissioners (3), Principal Immigration Officer (2), Principal

Procurement Officer, Senior Immigration Officer and the Internal Auditor. The

Table below refers:

PROGRAMME AFFECTED POST/TITLE APPROVED VACANT POSTS

Finance &

Administration

(F&A)

Principal Procurement

Officer

1 1

Internal Auditor 1 1

Records Officer 1 1

Personal Secretary 2 1

Stenographer Sec 5 1

Senior Accounts Assistant 5 2

Principal Stores Assistant 1 1

Office Typists 10 9

Driver 5 2

Inspectorate

and Legal

Services

Assistant Commissioner 2 1

Drivers 2 1

Citizenship and

Passport Control


Immigration Officer 26 1

Immigration

Control


Principl Immigration Officer 11 2

Senior Immigration Officer 32 1

Immigration Officer 107 1

Immigration Assistants 35 1

Office Typists 3 3

GRAND TOTAL 375 32

Inadequate staffing affects the timely implementation of the Directorate's activities

and adversely impacts on the Directorate in the achievement of its strategic

objectives.

250

Management explained that the recruitment process is on-going and was

optimistic that the vacant positions will be filled.

I advised management to closely follow up the matter to ensure that the vacant

posts are submitted to the Public Service Commission for further action.

14.8 Inspectorate and Legal Services

a) Lack of a Custody Centre

The Department deals with legal compliance. However, it lacks custody centres for

the suspects arrested from the field. Although the Uganda Citizenship and

Immigration Control (Establishment of Immigration Custody Centres) Regulations,

2012 is in place, the Directorate does not have this facility. Lack of such a facility

impacts on the operations of the Directorate as it cannot ably carry out its

mandate effectively and efficiently. The remedy has been to release the suspects

on immigration bond, pending removal/deportation/investigations into their cases

and this leads to delays in deporting or concluding investigations regarding the

suspects. Some suspects have ended up jumping immigration bond which

culminates associated costs in terms of searching for the culprits and time wasted.

Management explained that works on the custody Centre were temporarily

stopped due to administrative reviews on the project. Work will commence as

soon as the reviews are completed.

I advised management to expedite the administrative reviews and complete the

custody centre for temporary custody of immigration offenders pending

deportation and/or investigations to be concluded.

b) Inadequate Enforcement structure

The department has a Skeleton structure of 24 personnel with basically 15 officers

to carry out field activities across the country; that is; 3 Principal Immigration

Officers, 2 Senior Immigration Officers and 10 Immigration Officers. The structure

251

has been the same since 2007 despite the growing number of illegal entrants in

the country. The table below shows the staffing:

PROGRAMME POST APPROVED STRUCTURE

Legal an

Inspectorate

Services

Commissioner 1

Assistant Commissioners 2

Principal Immigration Officers 3

Senior Immigration Officer 2

Immigration Officer 10

Personal Secretary 1

Office typist 1

Driver 1

Office Attendant 1

TOTAL 24

Although the structure is fully filled, it is inadequate to cover the whole country

and as such, there is no proper presence of legal enforcement officers in the 8

regional offices. According to the Commissioner Inspectorate and Legal, each

regional office would minimally require a work force of 15 immigration/Legal

enforcement officers.

Lack of necessary staff limits supervision of the border points. This could lead to

increase in illegal immigrants.

In their response, management explained that the Ministry of Public Service

carried out human resource needs assessment in various votes across Government

including DCIC. The Directorate‟s concerns were duly captured and the

Directorate still awaits the outcome of the exercise. Management further stated

that the recruitment of 150 Immigration Officers and 150 Assistant Immigration

Officers is on-going, and hoped this will help bridge the staffing gap as it awaits

approval of the proposed staff structure by Ministry of Public Service.

252

I encouraged management to continue engaging the Ministry of Public Service for

an improved and adequate structure. Meanwhile the outcome of the recruitment

exercise is awaited.

c) Lack of connectivity of border entry points

The border posts are not interlinked to one another. Data on entrants, how long

they are to stay, where they are to stay and from where they can be picked in

case of overstay is not interlinked to all border posts for ease of coordination and

follow up. Currently enforcement officers do random checking which is not only

inconveniencing the public but is also costly in terms of fuel and time.

Management indicated that connectivity of border posts was included in the

budget for FY 2015/2016.

I advised management to ensure that they secure the necessary funds and install

a system that connects all the entry points with the headquarters to effectively

coordinate, monitor and verify persons entering the country and those staying in

the country illegally.

d) Inadequate funding and transport

The Department receives approximately UGX.200,000,000 per year for inspections

and investigations of illegal immigrants in the whole country. This includes funds

for fuel and allowances for the officers undertaking the activities. In addition the

department currently has only one pickup and two Mini buses one of which is in a

poor mechanical condition. Lack of sufficient funds and transport coupled with

inadequate structure practically renders the department inactive which make

monitoring entry points difficult.

Management explained that it has been liaising with Ministry of Finance for more

funding to secure adequate transport to facilitate the operations but with limited

success.

I advised management continue liaising with the relevant Ministry for additional

funds to cater for inspections, investigations and monitoring of entry points. The

253

Accounting Officer is encouraged to liaise with development partners to facilitate

movements and enable improve on the inspections, investigations and monitoring

of all entry points.

14.9 Passport Control Office

a) Inadequate infrastructure

The Passport Control Office is expected to receive, expeditiously process, issue

and deliver Passports in appropriate quantum to the diverse beneficiaries with

considerably less duress and excessive fatigue for efficient and effective delivery

of service. Inspection of the Citizenship and Passport Control Department revealed

that there is lack of sufficient infrastructure and conducive working conditions as

necessary prerequisite to deliver satisfactory services. The Passport Officers are

squeezed in dilapidated small rooms and other activities like receiving application

forms, interviewing applicants and issuing passports are carried out from the

improvised tents. The photos below refer:

Above: Applicants in the queue under the tents for interviews.

254

Above: Sometimes the numbers of applicants exceeds the capacity of the tents

and have to stand outside the tents:

Above: Ready passports stacked in boxes being delivered to the public under the

shade

255

Above: A clear view of the shade where passports are delivered/received from.

Management explained that they will continue liaising with the Ministry of Finance

for infrastructural funding to secure adequate office space. In the meantime, DCIC

is implementing a passport centre in Gulu this FY 2014/2015 and another centre in

Arua next FY 2015/2016 in a bid to decongest the centre.

Management is advised to liaise with the responsible Ministry to seek for funding

to secure proper accommodation for the Directorate. In the meantime, the

Directorate is encouraged to continue pursuing the decentralization of passport

centres to reduce on the congestion at headquarters.

b) Inadequate staffing

The Department is aggressively pursuing decentralization of Passports issuance

not only in Uganda but also in the earmarked areas of the Diaspora (Beijing,

Brussels and New Delhi) in addition to the existing issuance centres. This is done

in consideration of the demand and overall contribution of the saleable documents

to Non-Tax Revenue collection in the country.

However, the Department lacks human capacity to carry out this drive

notwithstanding the infrastructure and technological gaps. For instance,

decongesting the centre requires setting up alternative service centres within

256

Kampala district and opening up more regional offices (in addition to the existing

Mbarara and Mbale).

Currently, there are six (06) officers who receive, interview and process

approximately 450-600 applications daily, an average of 80 applications per officer

per day. The ideal situation for one Receiving Officer is an average of 50

applications a day. This is obviously a high ratio that impacts negatively on

performance.

Management indicated that they will liaise with Ministry Public Service to resolve

staffing problems.

I encouraged management to continue engaging the Ministry of Public Service for

an improved and adequate structure in the Directorate.

c) Delays in Passport delivery

The ideal turn-round time for Passport delivery is eight (08) working days.

However the increasing numbers in Passport applications averaging 450-630 files

daily inclusive of Renewal applications seriously threatens the status quo and has

pushed passport delivery period to between twenty (20) to thirty (30) or more

days. The continued reliance on one Passport Control Officer and his Deputy for

signing more than 600 files a day is rather a toll order.

Management explained that in the established Client Charter, the lead period to

issue a passport is 10 working days. In the meantime, the delays at approval

processes have been addressed by deploying two (2) more officers to make it four

(4) at the Kampala Office.

I advised management keep engaging the Ministry of Public Service more staff to

reduce on the lead time to at least an allowance level.

d) Lack of Inter connectivity of Passport Issuing System

257

In consideration of Clients interests and pursuant to Government Decentralization

program, the Department upgraded Mbarara and Mbale Passport offices into fully

fledged One-Stop Passport Personalization and issuance centres. The Department

of Citizenship and Passport Control also operates Passport Personalization and

issuance Centres in Pretoria, Washington and London.

However, all the passport systems at Regional and Mission issuance centres and at

the Headquarters are not interlinked. In such situations, details of the passports

issued at the missions and regions cannot be retrieved at the head quarter for

ease of information flow. In the absence of a system interlinking activities and

information of all the passport issuance centres, there is a risk of one person

processing more than one passport from different centres.

Management explained that the local remote sites in Mbale and Mbarara are

securely data linked with the Kampala Passport Office server and no possibility of

an applicant obtaining more than one passport by using different centers. The

abroad centers in Pretoria, Washington and London are not linked to Kampala but

are only meant for renewing/replacements already vetted passport applications.

No new passport applicants are handled by these centers. Management is

budgeting for connectivity of the three centres above in the FY 2015/2016.

I encouraged management to secure funds and procure and install an interlinking

system to avoid possibilities of people getting more than one passport from

different centres.

e) Records section/Registry

The department processes an average of 500 hundred files each day from

applicants. However, there is no proper system of keeping these files. In most

cases, people‟s files get misplaced during processing and when they are under

custody. The filling system is manual, and un-systematic and tracing or retrieving

files for renewal is a night mare and sometimes the files are lost which leaves the

258

public frustrated with the passport office. The problem is made worse with the

limited space as can be seen in the photo below:

I advised management to secure funds for establishing an adequate registry and

automate the record keeping system at the Directorate to improve on record

keeping and reduce the lead time to locate individual files.

14.10 Inspection of the strong room

Passports are processed in the strong room. The processes include but are not

limited to personalization of passports which is basically transferring of applicants‟

information from the file to the passport, capturing data into the system and

printing, quality assurance, passport signing and dispatch. The following were

observed:

a) Security/Physical control

The door to the control room is made of wood and enforced with metallic burglars.

However, the metallic burglar both on the door and windows are not strong

enough to match the importance of the strong room and to stop any serious

criminals interested in its access. There is need to replace the wooden door with

259

the metallic one and replace the weak metallic burglar with stronger ones to guard

against any unauthorized intended access to the strong room.

Management noted the recommendation and promised that funds to replace the

weak doors and burglar proofs will be budgeted for in the financial year

2015/2016.

I await management commitment on the matter.

b) Limited space

A discussion with the Commissioner Passport Control and Citizenship revealed that

the Directorate is supposed to migrate to E-Passport by close of the year 2015 in

accordance with ICAO‟s requirements. However, the Directorate has no suitable

space where to install the machines that process electronic passports. The

machines need a specious room with certain level of aeration due to high

technology that does not allow dust among others.

Currently, the department has been using the same strong room since 1998

despite the increase in the volume of passports processing that match with the

increased population. By 1998, 40-50 passports were processed a day compared

to an average of 300-400 processed currently. The working space in the strong

room is small and not enough for the volume of work involved. The sitting space is

small and congested which impacts on the effective processing of passports.

Management explained that the issue of limited space remains a challenge but the

Ministry of Finance has authorized the DCIC to engage the Private Developer

under the PPP arrangement in the implementation of e-passport. The office space

issue will be part of these negotiations.

I advised management that in the meantime, there is need to have an organized

bigger space where the data entrants are separated from quality assurance,

passport printing and passport signing, recording and dispatch. This would go a

long way in improving the working conditions of staff; reduce on time wastage

260

due to congestion and damage of passports through human error in the strong

room.

c) Labour shortage

The labour force is not enough to handle the current volume of work in the strong

room. On average, 350 passports are processed daily using 7 work stations. Staffs

in the strong room work through lunch break and over the weekends in order to

reduce on the workload. There is need to double the workstations and staff to be

able to handle the passport processing effectively.

Management acknowledged the increased demand for travel documents by

Ugandans and the need to gear up the production capacity and the Strong Room

Staff strength to equate the task. The future plan of e-passport is to double the

Strong Room capacity in terms of workstations and human resources.

I await management action on the matter.

14.11 Citizenship section

Citizenship section deals with receiving, processing and delivery of Citizenship

documents after consideration by the National Citizenship and Immigration Board.

It also handles and prepares for delivery Certificates of Identity and Conventional

Travel Documents (CTDs) issued out to refugees.

A quick look at the operations of the section for January 2015 revealed that the

section handled a number of documents as summarized below:

Type of documents handled Number of documents handled

Certificate of Identity 77

Number of Dual Citizenship applications 121

Record of Dual Citizenship granted 119

Number of Naturalized foreigners Still pending

Registered as Citizens 30

Dual Certificates issued 87

261

Type of documents handled Number of documents handled

Deferred applications 11

Like any other section, the section operates under harsh conditions, more so that

it deals with foreigners. This leaves the image of the country tainted. Below is one

of the offices the section operates from:

I advised management to allocate some funds to renovate the office to improve the

working environment.

Management took note of the recommendation of renovating the office and pledged

to continue requesting for funds to carry out renovations of office premises despite

limited releases from Ministry of Finance.

14.12 National Information Security Sysytem (NSIS) project

On 1st November 2013, Cabinet approved the NSIS strategy, which included the

roadmap, budget and governance structure. A countrywide Mass Enrolment was

launched on 13th April, 2014 by H.E. the President and on 14th April, 2014 enrolment

started across the country. The implementation was undertaken using a Multi

262

sectoral/Multi-Institutional approach, which was coordinated by the Ministry of

Internal Affairs. The implementation was guided by a roadmap (detailed

Implementation Plan) and managed by an organization structure that was approved

by Cabinet. The target was to register 18 million citizens who are 16 years and

above during mass enrolment and the continuous enrolment.

a) Update on the mass registration/enrolment exercise

Registration of citizens to facilitate issuance of national identity cards and for other

purposes started at Parish level on 11th April 2014. This went on up to 11thAugust

2014 when registration shifted to the sub-county level.

During the four months of registration of persons (April-August 2014), over

14.8million persons were registered, a performance of 82%. On the 12th August

2014, registration at sub-county level started and over 1.1million citizens were

registered. In view of the projected 18million target of those with 16 years and

above, about 2,424,000 are yet to be registered. A total of 15,970,000 (88.7 %)

based on the 18 million target was registered by 11th Jan 2015 both in Mass and

Continuous Registration exercise.

It was however noted that the Uganda Bureau of Statistics released Provisional

results of the 2014 National Population and Housing Census exercise, indicating

that 15,958,595 people out of the 34,900,000 are aged 16 years and above. In

case the statistics are correct, this would mean that 97.6% was registered, leaving

2.3% yet to be registered.

b) NSIS Equipment maintenance plan

The National Security Information system acquired various equipment (hardware

and software) that were deployed to capture, process and establish a national

information register, produce national IDs and issue the ID cards. These include

8,000 registration kits, a data processing centre with over 300 desktop computers,

a set of secure central equipment comprising of high end computer servers that

include Automated Fingerprint Identification System (AFIS), Facial Recognition

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System (FRS), high end database systems to store the captured data, and a setup

of a card personalized centre with four high end personalization machines that

produce 60,000 ID cards per day.

A review of the documents pertaining to the purchase of the equipment revealed

that the personalization machines consist of many movable parts that are prone to

breakages. The contract with the suppliers provided for a 6 months‟ free

maintenance in the first six months of production. The machines have been

producing cards since October 2014. The six months free period of maintenance

end on 31st March 2015 before the exercise is completed. An interaction with the

information technology team revealed that to maintain all the equipment for a

period April-June 2015 when the registration exercise is expected to be completed,

the project will require an estimated cost of UGX.5,542,700,000. The project

however has neither funds nor a budget to maintain these machines.

I advised management to properly justify the estimated maintenance costs and

liaise with relevant for funding to avoid equipment breakdowns.

14.13 Other observations

a) Board of Survey recommendations

A review of the board of survey report of 30/06/2014 noted that various

recommendations were made for implementation by DCIC management. These

include the following:

To create more space for storage of the assets and other items especially at

the border posts.

Equip the boarder offices with adequate furniture to enable the staff perform

their duties well.

Engrave all the assets at the border posts.

To submit a list of assets due for disposal indicating their locations and giving

reasons for their disposal.

Proceeds from the disposal of assets to be transferred to the consolidated

funds.

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However, by the time of audit, all the above recommendations had not been

implemented.

Management explained that the Directorate is apparently faced with a challenge of

space not only at the border points but also at the headquarters. However,

construction at various border points of Bunagana, Cyanika, Goli, KIzinga, Vura,

Amudat, Lia, Swan River, and Ntoroko is on-going and some sites are already

complete. This will help reduce the problem of space.

It was further explained that funds for purchase of furniture for a few border

stations were provided in the FY 2014/15 both in the MTEF budget and the JLOS

and the Procurements process are on-going. Meanwhile a team from various stake

holder MDAs has been assembled to handle the process of asset disposal and all

the proceeds from the sale will be deposited to the consolidated account as guided

by the financial regulations and the Office of the Auditor General.

I await the implementation of the Board of Survey recommendations.

b) Maintenance and servicing of Passport issuing system

The Directorate signed a contract with an International Company to maintain and

service of passport issuing Machines at the Headquarters, Washington, London

and Pretoria for a period of three years from 1st February 2011 to 31st January

2014. Unfortunately, by the time of audit inspection, the contractor had not

rendered material maintenance services to the three missions as provided for in

the contract and yet there were indications that the systems were about to break

down especially in Washington DC.

Regarding the operations at the Headquarters, it was observed that there was no

prompt technical support response from the supplier which adversely affects the

business process and service delivery to the community due to system break

down.

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Management acknowledged the observation and the Commissioner Citizenship and

Passport Control promised to work together with the Legal Department on

modalities of periodic review of the service contract.

I advised management to follow up the provisions in the maintenance contract

and ensure that the service provider renders satisfactory services. Payments to the

service provider should be based on actual performance supported by certified

reports from the Missions and user department at the Head quarter and this

should clearly be included in the maintenance contract. In future, the concerned

Missions should submit quarterly service provider`s performance reports to enable

management to monitor the performance.

c) Training of Staff at the Missions

Staff at the Missions do issue out VISAs and Passports however they have never

had formal training or instruction from the Immigration and passport departments

about the issuance of Uganda passports and VISAs. In addition, the concerned

Missions have no Immigration officers to handle the above functions. This may

result into obtaining inadequate information from the applicants. Errors and

omissions may not be ignored especially when printing passports.

Management explained that training clinics for Foreign Service Officers are

organized as funds may permit. One such training was organized in the 1st

Quarter of this FY 2014/2015. Funds to deploy Immigration Officers at Missions are also

being budgeted for in FY 2015/2016.

I advised management in consultation with Ministry of Foreign Affairs to organise

refresher courses for the staff handling VISAs and Passports at the Missions.

Training should be done regularly to update them with the new changes.

d) Implementation of Dual citizenship Act

The mission staff indicated that the implementation of the Dual citizenship Act is

unclear to them at the Missions. It is unclear as to what documents an applicant is

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supposed to fill and whether they can officiate at the swearing of the Oath of

Allegiance. Management acknowledged the observation and promised to handle

the matter during the subsequent trainings

I advised management to regularly organize training for the Mission staff to enable

them acquire the necessary skills and handle their work diligently.


Public Finance and Accountability Regulations, 2003, section 2.10 (b) entrusts the

Accounting officer with ensuring that all controls such as those contained in the

approved estimates and warrants are strictly observed. Budget estimates are

based on outputs to be achieved for the financial year and during implementation,

effort is required to be made to achieve the agreed objectives or targets of the

entity within the availed resources.

During the year, all the appropriated budget plus the supplementary totalling to

UGX.178,686,460,900 was released representing 100% release. A review of the

Department‟s budget performance for the year 2013/2014 revealed that some

targets were not achieved. The table below refers:

Planned Activities Expected Outputs Actual outputs(As per end of FY 2013/14 report)

Comments

Office of the Director Develop National Immigration Policy

National Immigration Policy

3rd draft of the National Immigration Policy prepared, pending a final meeting with stakeholders and costing of the policy

Costing of the Policy is pending

Finalize Development of the National Migration Policy

National Migration Policy National Migration Policy pending stakeholder consultation

Development of National Migration Policy stalled

Develop a 5 Year Strategic Plan for the Directorate

5 Year Strategic Plan Strategic Plan not developed

Strategic Plan Task Force Team is yet to be reconstituted. The Minister lifted the ban he had imposed on development of the strategic plan

Inspection and Legal Services Carry out inspections and investigations

Aliens arrested and investigated

1,114 suspected immigration offenders

No specific/quantifiable

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Planned Activities Expected Outputs Actual outputs(As per end of FY

2013/14 report)

Comments

arrested and/or investigated. Out of these 329 illegal immigrants, representing 29.5% of those apprehended were removed from the country.

targets/ performance indicators against which to evaluate performance

Support to National Citizenship and Immigration

Procure passport issuance system for Gulu

Issuance System in place System not procured Funds diverted to Mbarara and Mbale passport centers that were under budgeted for.

Construct Kaiso Tonya

and Segaboro border posts

Kaiso Tonya Commissioned Not constructed The contracts

committee declined to approve the procurement due to lack of proof ownership of land.

Construct Busunga border post

Busunga border commissioned

Not constructed

Construct Kaiso Tonya and Segaboro border posts

Kaiso Tonya Commissioned Not constructed The contracts committee declined to approve the procurement due to lack of proof ownership of land.

Procure system for electronic visa issuance

Visa issuance software Not procured The system was not procured.

Citizenship and Passport Control

Grant dual citizenship Aliens and former Ugandans granted dual citizenship

Granted 234 dual citizenship certificates of which 58 foreigners and 176 Ugandans in diaspora.

No specific performance indicators against which to measure performance

Immigration Control

ICT Master plan developed

ICT Master plan ICT Master plan not developed

ICT Master plan not developed

Management explained that the activities were not implemented because of

various challenges like land ownership and inadequate funding.

I informed management that unimplemented activities hamper service delivery

and the appropriating authority‟s objectives may not be met.

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PUBLIC SECTOR MANAGEMENT

15.0 MINISTRY OF LOCAL GOVERNMENT

a) Mischarge of Expenditure

A review of the Ministry of Local Government‟s expenditures revealed that the

entity charged wrong expenditure codes to a tune of UGX.2,497,433,465. This

constituted 8% of total expenditure for the Ministry. Mischarges undermine the

importance of the budgeting process as well as the intentions of the appropriating

authority and lead to misreporting.

Management explained that this was caused by quarterly release limitations which

forced management to charge items with cash balances to fund urgent and critical

activities. Management further explained that insufficient budget allocations and

severe cuts in consumptive areas by MOFPED led to this situation.

I advised management to liaise with the relevant authorities to streamline the

budget process to ensure that sufficient funds are allocated to each account.

Further, authority should be sought for any reallocations.

b) Unaccounted for remittance to Uganda Police Force – UGX.137,542,000

It was observed that UGX.137,542,000 was remitted by the Ministry to UPF to

cater for training of Police Fire and Rescue personnel on Fire fighting equipment

but this payment was not supported with a Memorandum of Understanding

between the two parties specifying the outputs, responsibilities and accountability

framework. Furthermore, I could not confirm whether the activity was undertaken

as no accountability documentation or report was availed for verification.

Management explained that UPF had been contacted to furnish them with the

accountabilities.

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I advised management to ensure funds are accounted for in time and also have

the MoU in place before any remittance of funds to third parties is effected in the

future.

c) Advances to Individual Personal Accounts –UGX.4,623,642,146

(i) Non-Compliance with Treasury Accounting Instructions

UGX.4,623,642,146 was advanced to Ministry staff through their personal bank

accounts to undertake direct procurements and other activities of the Ministry

contrary to Sections 227,228 and 229 of the Treasury Accounting Instructions.

Such a practice of depositing huge funds on personal accounts exposes

Government funds to risk of loss, since the Ministry does not have any control

over such funds deposited on personal accounts.

Management explained that the advances mainly related to activities and

workshops undertaken upcountry with staff from other Ministries/Local

Governments. Management further explained that staff from the Ministry acted as

Team leaders who were responsible for allowances and other facilitations for the

team members. All activities were carried out and activity reports filed.

I advised management to ensure strict adherence with the requirements of the

Treasury Accounting Instructions.

d) Payments for beautification of Kampala

A local Company entered into a contract with Ministry of Local Government for

beautification of the Clock-Tower-Nsambya-Gaba/Munyonyo Road corridor in 2007

ahead of the CHOGM activities and final certification of works was issued in May

2008. A review of the payments to the contactor revealed several issues as

follows;

(i) Nugatory Expenditure:

It was noted that UGX.107,989,414 has been outstanding since issuance of a

completion certificate by the consultant in May 2008. Because of that, interest

accrued on late payment rose to UGX.371,748,822 as at February 2012 (an

increment of 344%) leading to a payable sum of UGX.479,738,236. At the time

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of reporting, the payable had been made good. The interest paid is considered

nugatory.

(ii) Interest computation basis:

Clause 43.1 and 43.2 of the contract provided for interest on late payment by the

client to the Contractor from the date by which the payment should have been

made up to the date when the late payment is made at the prevailing rate of

interest for commercial borrowing.

It was noted that the basis for the contractors interest rate was unknown since the

clause did not specify the Bank for “prevailing commercial interest” purposes. The

contractor seems to have exploited the loophole to compute interest using his own

banks interest rate that might have been higher than Bank of Uganda rate.

Without providing the schedule for interest computation, I could not confirm the

accuracy of the amount and whether the right rate was used in the computation.

Management explained that the transaction was incurred during the CHOGM and it

was inevitable that the payment had to be settled although it was not included in

the domestic arrears. The Ministry of Finance, obligated votes to settle

outstanding claims under their votes the basis upon which the payment was later

made.

I advised management to avoid such losses in future by putting in place adequate

risk management controls, and paying suppliers and contractors promptly.

e) Motor vehicles and office equipment

a) Motor vehicle repairs and servicing

UGX.560,453,690 was spent on repairs and servicing of the Ministry‟s motor

vehicles during the year. However the following issues were noted which require

management attention;

Payment for grounded vehicles

UGX.13,869,979 was spent on four vehicles that were confirmed as having been

grounded throughout the year and were ineligible for any repairs.

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Cash payments

Cash payments to the tune of UGX.5,000,000 was paid to a staff for onward

remmittance to a pre-qualified supplier being funds to cater for repairs and

servicing Ministry motor vehicles instead of using direct EFT payment. This is

contrary to the financial regulations.

Management explained that the grounded vehicles were earmarked for disposal

but the Ministry failed to acquire a new fleet and the same vehicles remained in

use for the time the expenditure was incurred. Management also explained that

there was an emergency activity and garages had refused to offer services without

settlement of outstanding dues which led to the utilization of cash to undertake

the repairs.

I advised management to liaise with Ministry of Works and Transport and have

uneconomical motor vehicles boarded off.

b) Non-serviceable motor vehicles

An inspection of the Ministry‟s stores and motor vehicle yard revealed that there

were a number of un-serviceable motor vehicles and office equipment which were

occupying valuable space. There was no evidence of any initiated process for

disposal. Some of the vehicles were found abandoned in privately owned service

garages where they were exposed to risk of vandalism and further loss of value.

Non-disposal of un-serviceable motor vehicles and office equipment may lead to

loss in value through vandalization or theft and creates shortage of valuable

storage space.

Management explained that the Ministry through an Auctioneer carried out the

process of disposing off all the old vehicles last year. Unfortunately the fleet

continues to depreciate and more vehicles became unserviceable. The Ministry has

again initiated the process to dispose them off.

I await management‟s effort in the disposal process.

c) Nugatory payment of parking fees

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As noted in my previous year report, it was observed that during the year under

review, UGX.33,040,000 was again paid to a parking space service provider as

parking fees for 16 Ministry motor vehicles parked in the basement of Uganda

House contrary to Chapter 7, paragraph 705 of the Treasury Accounting

Instructions part 11-Stores that requires compilation of lists of unserviceable

vehicles for onward submission to the Accountant General requesting for their

disposal. The payments relate to the period January to June 2013

(UGX.15,292,800) and July to December 2013 (UGX.17,747,200). Inspection of

the parked vehicles in the basement revealed that these vehicles were grounded

and therefore expenses incurred on them are nugatory. There is risk of loss of the

vehicles given the incomplete vehicle register and vandalism which will reduce the

disposal value.

Management explained that the process of boarding off was in advanced stages.

I advised management to expedite the boarding off of grounded motor vehicles so

that wasteful funds paid for parking space is saved.

f) Non-deduction of Withholding tax

Section 120(1) of the Income Tax Act requires all Ministries to withhold tax from

supplies of any services of an amount or amounts in aggregate exceeding one

million shillings to any person in Uganda at the rate of 6% of the aggregate sums.

Further, section 124(1) of the Act requires a withholding tax agent to remit the tax

within fifteen days after month end.

Contrary to the above, I noted that withholding tax to the tune of UGX.93,970,920

from two payments was not deducted for onward remittance to URA. See the

table below;

S/N Description Gross amount (UGX.) 6% WHT

1 Rental payments to NSSF 1,354,050,785 81,243,047

2 Stationery purchases 245,453,819 12,727,873

Total 93,970,920

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The Ministry risks fines and penalties from URA that may be imposed for non-

adherence to the laws.

Management in response regretted the anomally and pledged to withhold tax from

the suppliers subsequent payments.

I advised management to ensure that due taxes are deducted and remitted to URA

as required by the Income Tax law.

g) Anomalies in Procurement

A sample of procurement files were selected to enable me audit the various stages

of the procurement process from initiation to contract management and a number

of observations ranging from undervaluation of taxes, bid and evaluation

manipulation, non-compliance to specifications in bid documents, defiance of

Public service authority, contract payments and limitation on bidders were noted.

Details are as below;

a) Limitation on bidders on procurement of energy packages

PPDA regulations 142(1), (2) and (3) requires a shortlist to include sufficient

bidders to ensure effective and real competition. Further, it requires a PDU to use

information from four sources i.e. PPDA register, entity prequalified list, any other

PDU list and market knowledge.

Three bidders were invited using market knowledge and two submitted bids for

the above mentioned procurements worth UGX.123,679,500. However, it was

noted that there was limitation as the PPDA register had at least four providers for

the service who would have been invited to bid and widen competition. As such

there was no adequate competition in this respect.

b) Non-compliance to specification

Review of the evaluation worksheets revealed that a company that bided for

supply of vehicles and motor cycles was non-compliant on the 4WD station wagon

of 3000cc with regard to “minimum dimensions” as the company was silent on

ground clearance that was required of 0.22m and fell short on the required length

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of 4.9m by submitting a bid of 4780mm. The company should have been

eliminated at this stage. The company however went on to win the contract.

Further, Government procedure requires authority from the Minister of Public

Service for procurement of vehicles. Authority on the procurement from the

Minister of state dated 31/3/2014 specified two double cabin pick-ups not

exceeding 2800cc; however the supplier was awarded to provide 3000cc vehicles.

Management explained that PDU‟s knowledge of the market was one of the

recognized databases under Rule 142(2) (d) for development of provider shortlist

and that three providers on the shortlist were considered sufficient. Management

further explained that registered providers will be accorded priority in future.

With regard to non-compliance to specifications, the evaluation and review of

specifications offered by providers involved expertise from MoWT and that certain

non-conformity could be waived under R178 (4), (5).

I advised management to ensure that the Procurement and Disposal Unit and

Contracts Committee adhere to the PPDA Act and regulations are strictly adhered

to.

h) Local Government Sector Investment Plan (LGSIP) Account

The Ministry operates a Bank Account “Local Government Sector Investment Plan”

with Bank of Uganda. At the end of the financial 2012/2013 the Ministry had a

balance of UGX.852,593,754 and during the financial year 2013/2014

management made several transfers totalling to UGX.440,697,837 from Treasury

Single Sub Account (TSSA) to this account for onward remittance to clearing firms.

Audit review of receipts and expenditures on this account revealed the following;

Rationale for maintenance of Bank account:

It was noted that the account has no project funding but rather receives transfers

from the Ministry Treasury Single Sub Account (TSSA) for onward remittance to

suppliers and Ministry staff which activities should have been effected from the

TSSA. It should also be noted that the Project closed some years back but

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Management did not close the account. This is contrary to Treasury Accounting

Instructions (TAIs). Such accounts are easily susceptible to irregular activities.

Financial reporting:

The balance brought forward of UGX.852,593,754 and spent during the year was

not reflected in any performance report for the year since it was neither project

funding nor appropriated by Parliament.

Management explained that Local Government Sector Investment Plan was a

Project and as such its expenditure could not be reflected in the statement of

financial performance but rather end of year balances are disclosed in the

schedule of Project balances. I explained to management that projects have

timelines, financing agreements, project appraisal documents and annual audit

reports which was not the case.

I advised management to consider closing the account in line with Accountant

Generals guidelines.

i) Payments for domestic arrears

Treasury Accounting Instructions 2003 Part 1 chapter IV section 188 specifies that

an officer authorized to incur expenditure will ensure that no payments due in any

financial year remain unpaid at the end of that year. Further, the established

commitment control system requires management to commit the Ministry only

when funding is appropriated and has been confirmed.

A review of the financial statements of the Ministry for the year ended June 2013

revealed that the Ministry had outstanding commitments of UGX.51,037,123.

However I noted that UGX.799,619,907 was paid to several companies for

settlement of arrears incurred in the previous financial years. This was a clear

indication of non-disclosure of full arrears. Summary of payments is as below;

S/N Description Amount (UGX)

1 Beautification – M/s Omega construction 479,738,236

2 Vehicle repairs 186,545,356

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3 Clearing and forwarding 133,336,315

799,619,907

The Ministry misrepresented their indebtedness in the previous financial

statements. Furthermore, the Ministry did not budget and neither did it have a

provision for item 321605 (domestic arrears) besides, supplementary funding was

not requested instead management mischarged already budgeted items. Under

the circumstances funds for planned activities appropriated by Parliament were

diverted to settle domestic arrears.

I advised management to adhere to the commitment control system and ensure

that verified domestic are verified, budgeted for and paid using the appropriate

expenditure account codes and are appropriately disclosed in the financial

statements.

j) Vacant Posts in the Establishment

Ministry of Local Government has an approved establishment structure of 165

staff. However a review of the established structure revealed that 16 posts were

not yet filled representing ten (10%) vacancy gap. Service delivery is hampered by

delays in filling the vacancies especially at senior management level and staff may

be overworked which may adversely affect their morale.

Management explained that some of the posts fell vacant because some staff were

interdicted while others were promoted to higher posts. Management further

explained that a submission had been made to Public Service Commission to have

the vacant posts filled.

I await management‟s effort in filling the vacant posts.

k) Budget Performance

Public Finance and Accountability Regulations 2.10(b) entrusts the Accounting

Officer with ensuring that all total controls such as those contained in the

approved estimates, warrants and others are strictly observed. Budget estimates

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are based on outputs to be achieved for the financial year and during

implementation, effort is required to be made to achieve the agreed objectives or

targets of the entity within the availed resources.

Review of the budget performance for the year under review revealed that some

targets were partially or not achieved despite release of funds to the vote

functions. Details are in the table below:

Vote function output

Item description

Planned outputs/ Quantity

Amount (UGX) budgeted

Amount released (UGX)

Actual output/ Quantity

Remarks

Project 1089a-LGSIP Support to District Development

132172-government building and administrative infrastructure

Construction of Sub-county headquarters at Nabweru Wakiso district

300,000,000 113,400,000 No construction has started

37% of the funds were received but construction has not started

Project 1089b-LGSIP Support to local councils development

132272-Government buildings and administrative infrastructure

Construction of Local government offices supported pledges

200,000,000 130,400,000 None No construction has started

Project 1089d-LGSIP Support to policy, planning and support

134975-Purchase of Motor Equipment and other Transport Equipment

Procurement of Motor vehicle

200,000,000 133,400,000 None -No vehicle was procured despite receiving 67% of the funds

Service delivery is hampered and the appropriating authority‟s objectives are not

met.

Management explained that funds were transfered to Mubende Town Council and

District for completion of a sanitation site and office block at district headquarters

respectively. Management further explained that funds for procurement of a

vehicle were used on vehicle maintenence.

I advised management to ensure that all activities are undertaken as planned.

15.2 UGANDA GOOD GOVERNANCE (UGOGO) PROGRAMME

a) Compliance with the Financing Agreement and GoU Financial

Regulations

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It was noted that the Programme management had complied material with

Financing Agreement Terms and Government of Uganda Financial Regulations

except in the following matters;

b) Lack of an Annual Procurement Plan

Procurements under the Uganda Good Governance Project were carried out

without a procurement plan contrary to the PPDA provisions Section 58. Annual

procurement plans help to rationalize procurements and ensure economy while

avoiding split procurements made on adhoc basis. This also enables subsequent

comparisons of planned implementation against actual procurements.

Management explained that the project did not have major procurements apart

from routine maintenance of vehicles and equipment plus a few stationery items

which were mainly done through the three quote system.

I advised management to put in place a procurement plan to ensure compliance to

Public Procurement and Disposal of Public Assets Act provisions.

c) Vacant Position of the Program Officer

It was noted that the position of Uganda Good Governance Program Officer was

vacant. This implied that some members of staff were overstretched since they

were taking activities beyond what was stipulated in their job description.

Management explained that the Unit recruited a Program Officer who lasted for 3

months only and considering the remaining period for the program and the time it

would take to recruit and orient the officer, it was decided that the work be

distributed among the different officers within the Unit and outputs are being

achieved through other officers within the Unit.

I advised Management to liaise with relevant government bodies to ensure that

the project achieves full establishment.

d) Procurement Irregularities

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The Public Procurement and Disposal of Public Assets (PPDA) Act 2003, and the

Local Government PPDA regulations 2006 require that all public procurement of

goods services and works comply with the procurement law. However services

worth UGX.8,800,000 were procured without following Public Procurement

Regulations and guidelines. The details of the transactions are in the table below:

Voucher No Date Payee Item procured Amount Remarks

358 12/09/2013 Paper

Capito Ltd

Supply of

stationery

1,800,000 Requisition from user

department made on 10/09/2013

Request for

quotations 12/09/2013

Proforma invoice

raised on 09/09/2013

Evaluation report

done by Nakasi Esperanza not dated.

393 The Leading Edge Printing

Services

7,000,000 One Proforma invoice

dated 05/08/2013, 8days before the

request for quotations

was sent on 13/08/2013

Evaluation report

signed by only one person and not dated

No receipt on file

from The Leading

Edge for the monies received.

Total 8,800,000

There is a risk that value for money might not have been obtained.

I advised management ensure compliance with the PPDA Act, Regulations and

Guidelines to strengthen the procurement processes.

e) General Standard of Accounting and Internal Control

A review was carried out on the system of accounting and internal control. It was

noted that management had instituted adequate controls to manage project

resources except in the following areas;

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f) Unacknowledged Payments

It was noted that payments in respect of Pay As You Earn, WHT and National

Social Security Fund lacked acknowledgment by respective statutory bodies. From

the sample payments reviewed UGX.87,549,248 was not supported with

acknowledgement receipts. Further, UGX.6,913,290 in respect of purchase of

stationery was not accounted for by way of receipts. I could not therefore

ascertain with reasonable accuracy as to whether those payments were actually

received by the intended beneficiaries.

Management explained that for tax deductions they were in the process of making

sure that tax payments were acknowledged through the monthly return system.

I advised management to ensure that the person responsible for making returns

should always endeavor to pick acknowledgement receipts and certificates as

proof of payment.

g) Missing voucher

Examination of accounts revealed that payment records amounting to

UGX.14,940,000 were missing from the expenditure files. The payments were in

favor of Joint Monitoring team –UGOGO activities. Missing documents indicate a

weakness in the projects records keeping function which could lead to loss of vital

records. In the absence of documentation, I could not verify whether the amounts

had been regularly withdrawn from the project accounts and applied for the

intended purposes.

Management explained that there was already restricted access to financial

information. They further explained that the voucher could have been misfiled and

they promised to trace it.

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I advised management to institute controls like restricted access to records to

ensure proper safeguard of the projects accounting documentation, and also to

trace the missing voucher for verification.

h) Students Complaints

According to demand notes issued by training institutions, the fees charged relate

to lecture costs, revision and study materials. During the head count exercise it

was noted that students complained that they do not get all the benefits as the

sponsoring program states, the program claims to be paying tuition fees, study

materials and revision for students but it was noted in some training centre‟s that

students pay for themselves revision fees and study materials.

Management explained that each student knows exactly what is being sponsored

by the Ministry and they have avenues of reporting to the respective personnel

departments of the respective local governments for the ministry to follow up with

the respective centre‟s and training colleges.

I advised management to investigate those complaints and ensure that students

obtain the required benefits and to always comply with the guidelines and

principles of local government sponsorship of students to pursue professional

courses.

i) Failure to Comply with Sponsorship Guidelines

According to the guidelines for sponsorship signed by the program and the training

centers a student is allowed to sit for a paper for a maximum of two sittings

failure to do so the student pays for him or herself for the third sitting. However it

was observed that this guideline is not being complied with as was noted from one

of the students of College for Professional Development from Gulu center who sat

for papers 6, 10 and 11 for three sittings and the program paying for him for all

the sittings. Non compliance with guidelines implies a risk of mismanaging the

program funds.

282

Management explained that the guideline was revised in the program meeting

considering that usually it is the finalists who repeat papers. They further stated

that it would be a great loss not to support the finalist until when they finally pass

the papers because they are likely to fall out.

I advised management to comply with the guidelines in place and always review

student‟s database to avoid such anomalies.

j) Review of Previous Year‟s Audit Issues

The status of implementation of previous recommendations as reviewed and the

table below provides the update.

Issue Managements

comments

Status

Accounting System

During the previous audit, it

was noted that the

programme support

team unit maintained a

manual accounting

system (excel spread

sheet) to record all its

accounting ledger

books. This rendered

accounting including

the preparation of Fund

Accountability

Statements is Laborious

and prone to errors.

Acknowledged. The

programme is

ending in a

year‟s time and

it is not one of

those that have

been prioritized

to be included

on the IFMS by

MoFPED due to

its remaining

life and size. For

the remaining

life, the Project

team has no

During the audit of the

period under review,

the audit team

noted that the

Programme is not

yet integrated to

IFMS.

283

Issue Managements

comments

Status

choice but to

continue with

manual

accounting

system.

Diversion of programme

funds

During the previous audit, we

observed that a staff of

the Ministry of Local

government was loaned

UUGX.14,270,000 from

UGOGO Funds to cater

for his tuition for a

course on sustainable

Local Economic

Development in

Netherlands on 19th

March 2013 Voucher

No. 219

Acknowledged. The

Ministry is

committed to

paying back this

debt. The

Ministry is

intending to

settle this debt

from the third

quarter release

from MoFPED .

During the review of the

current period there

was no evidence

that the money

talked of above had

actually been

refunded.

Internal Audit function


noted that internal

audit function was

lacking.

The internal audit

team‟s report

was still being

processed by

the time of the

audit. It is now

ready and

available for all

stake holders.

During the audit of the

period under review,

the audit team

observed that the

internal audit team

made reviews but

there was no report

of the findings.

However, the report was

not availed for

284

Issue Managements

comments

Status

inspection.

Lack of Memorandum of

Understanding

(MOU) with

professional training

institutions


observed that there

was no memorandum

of Understanding

(MOU) between the

Uganda Good

Governance (UGOGO)

Programme and the

Training institutions to

govern their

relationship and

accountability

arrangements.

Acknowledged. The

programme is in

its final life

stages so it did

not warranty to

start recruiting

the institutions

afresh for a

continuing

program. The

Ministry

continues to

issue operating

guidelines

which the

already

recruited

institutions use

until when the

project ends.

No MOU is in place.

285

15.3 COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT

PROGRAMME – PROJECT 1 (CAIIP 1)

a) Compliance With Financing Agreement And Government Of

Uganda Financial Regulations

It was noted that management had complied in all material aspects of the

financing agreement and GoU financial regulations except for the matters below;

b) Un-remitted Pay-As-You-Earn

UGX.188,840,643 was deducted and withheld as PAYE from salaries of Programme

staff during the year under review. However, these funds were not remitted to

URA. Furthermore PAYE arrears of UGX.147,392,099 noted in last year‟s audit

report remained unremitted. Non remittance of deductions is a violation of the tax

law which may lead to penalties and fines being imposed on the programme.

Management explained that the bilateral agreements with the Donors prohibit the

use of donor funds to meet the above obligations. GOU funds should have been

used to cater for both the PAYE and the NSSF Contributions. However, during the

year, remittance for PAYE was not done because counterpart funding of

UGX.53,000,000 was not enough to cater for all outstanding obligations.

I advised management to liaise with the relevant Government authorities and

ensure that the funds are released and remitted to the rightful authorities as

required by the law.

c) Failure to deduct 6%Withholding tax (WHT) from Service

providers

It was observed that Management did not withhold tax amounting to

UGX.304,715,889 on payments for services provided by non-exempt companies

contrary to the requirements of the tax law under Section 120(1) of the Income

286

Tax Act. Non-deduction of withholding tax may result in to penalties and fines

being imposed on the Programme by the tax body.

Management explained that the Project is being financed using Loan funds from

the African Development Bank (ADB) whose bilateral Agreement with Government

precludes the use of the loan funds for the payment of taxes relating to goods and

services required for the execution of the Project. Therefore deduction and

subsequent remittance of WHT under this Loan funding constitutes ineligible

expenditure which are grounds for suspension of disbursements of loan funds to

the Project.

I advised management to engage the Ministry of Finance, Planning and Economic

Development to ensure that withholding tax from outstanding payments to eligible

service providers is done and remitted to the tax body as required by the Income

Tax laws.

d) General Standards Of Accounting And Internal Control

(i) Spending at source

Project Operations Manual Part Two Paragraph 3.1 (Sub-sections 111 Flow of

funds) requires all project funds including GoU counterpart funding to be

deposited to special account held with Bank of Uganda.

However, it was noted that GoU contribution amounting to UGX.53,000,000 was

released by Ministry of Finance, Planning and Economic Development to the

project through the Ministry of Local Government Treasury General Account,

where these funds were spent on non project activities. Spending Project funds

by the Ministry does not only deny Project Management control over the funds but

also poses a risk of diverting the funds to activities outside the project.

Management explained that with the migration of Government accounting system

to the IFMS system, all the GOU project accounts were closed hence counterpart

funds for the project were transferred to the Ministry General account.

287

I advised management to ensure strict adherence to controls of project accounts

such as authorization and purpose of the expenditure for proper monitoring and

control.

e) Field Inspections

Field inspections were undertaken with a view of establishing among others,

Physical progress of civil works on district feeder roads and community access

roads; construction of rural markets and agro processing shelters. The extent of

supervision and monitoring by the respective District Local Governments were also

considered. The following matters were observed during inspections:-

Agro Processing facilities

(i) Apparent project overload to the contractor

A construction company was awarded a contract to construct Agro Processing

facilities in the three sub-counties of; Nagongera (2 rice hullers), Merikit (2 rice

hullers) and Nabuyoga (1 maize mill and 2 rice hullers) all in Tororo District at a

total cost of UGX.227,594,063. All agro processing facilities were to be executed

and completed within the same period. It was however noted that the contractor

lacked capacity to execute the contracts within the contract period and as a result

works had stalled for over three years. This led to the delayed completion of the

project hence a breach of contract. Refer to the pictures of Agro-Processing plants

shown below:

Incomplete rice hullers in Nagongera and Merikit sub-counties for over 3 years

The delayed works deprive the beneficiary community of intended services.

288

Management explained that the contractor had financial challenges after the

contracts had been signed. However, the construction of the shelters was

completed and agro process facilities were installed. Management further

explained that it had now downsized on the number of shelters being handled by

a single contractor in order to avoid work overload and ensure that the

construction of the shelters is completed in time to allow for the installation and

operationalization of the machines scheduled to ensure maximum benefit to the

communities.

I await the outcome of management‟s efforts.

(ii) Missing components for Agro process equipment

It was noted that some of the equipment for the agro processing plants in various

districts and sub counties visited lacked vital components like mortars, gear

switches and foundation bolts causing a delay in the installation process. Details

are shown below;

District/Sub county Missing components

Tororo, Katajula sub-county,

Nagongera

Mortars for the rice hullers were stolen

Kapchorwa The rice hullers lacked main gear

switches, tool boxes and foundation

bolts. The site engineers stated that

most of the missing components were

apparently not delivered by the

supplier

Pallisa, Agule Sub-county The milk cooler lacked a Lactometer

while the rice mill lacked a weighing

scale and stitching needle.

Failure to fully install the agro processing equipment and safeguard the project

assets denies the beneficiary communities services which would improve their

livelihood.

289

Management explained that due to the delays in the completion of the shelters,

the Ministry decided to deliver the equipment to the respective beneficiary sub

counties for safe custody as a measure of reducing on the accumulation of the

storage costs charged by the suppliers and during the process some of the

equipment components went missing after delivery to the respective beneficiary

sub counties. However management is working hand in hand with the district,

police and affected sub counties to ensure that all the missing accessories are

replaced so that machine installation can be completed.

I await the outcome of management‟s efforts on this matter.

(iii) Supply of the wrong type of generators

It was noted that some districts were supplied with low capacity generators which

could not operate the Agro processing equipment. The faulty generators were

replaced with higher capacity generators in some districts like Kapchorwa, Sironko

and Pallisa. However, the new generators had not yet been installed, while the

rejected generators had been abandoned at the agro-processing facilities. Refer to

the pictures below;

Rejected generators abandoned at Patete and Agule sub-counties in Pallisa district

The suppliers of the faulty equipment alleged that the equipment was damaged

due to poor storage as deliveries were made before construction of agro

processing shelters. At the time of inspection, the suppliers had issued an

intention to sue the Ministry of Local Government for neglecting payment of

outstanding balance and damages totalling to USD. 1,081,059 (M/s Capital

Venture Ltd USD 529,830 and Ms Charm Ltd USD 551,229

290

Supply of generators with wrong specification and delayed replacement of these

generators denies the community of the benefits of improving the household

livelihood.

Management explained that delivery and installation of new generators at the

respective affected sites has now been done. Management further explained that

it is working hand in hand with the office of the Solicitor General to address the

pending litigation to ensure that there is no financial loss to Government.


(iv) Non-operational Agro–processing facilities at various district

An inspection of Agro–processing facilities revealed that while the facilities had

been completed, some remained non-operational. The Agro processing facilities

affected include those in the districts of Kapchorwa, Sironko, Iganga, Pallisa

districts. The communities are therefore being denied the benefits of the Project

meant to improve household income.

District Sub-

County

Pictorial Facility remarks

Kapchorwa Ngege

Rice huller By June 2014 the Agro

processing facility had

been completed however

the facility was not

operational because the

Local government had not

yet recruited Private

Operator and Farmer

management committee

had not yet been formed.

291

Kapchorwa Kawowo

Coffee

huller, milk

cooler

By June 2014 the Agro







Operator and Farmer



Kapchorwa Kaptanya

Milk cooler By June 2014 the Agro







Operator and Farmer



Sironko Zesui

Maize mill The Agro processing

facility was to be

completed by September

2012.








Operator and Farmer



292

Sironko Buteza

Milk cooler,

maize mill

The Agro processing

facility was to be


2012.








Operator and Farmer



Pallisa Agule

Milk cooler The Agro processing

facility was to be


2013








Operator and Farmer



Pallisa Patete

Rice huller The Agro processing

facility was to be


2013.








Operator and Farmer

293



Iganga Namugalwe

Coffee

huller

The agro processing

facility was to be


2013








Operator and Farmer



Iganga Nakigo

Coffee

huller

The agro processing facility

was to be completed by

September 2013.








Operator and Farmer


had not yet been formed

Management explained that the listed Agro-processing facilities were not

operational mainly due to lack of private operators to run and manage the facilities

on behalf of the respective Sub counties. Management indicated that they are

working closely with the affected Sub counties to expedite the process of

identifying the suitable private operators to operate and manage the facilities

sustainably.


294

(v) Poor storage facilities for Agro processing equipment

It was observed that the agro processing equipment in Kawowo Sub-county,

Kapchorwa district was kept in an open place without any proper safe guards. The

equipment may be damaged or stolen which may result in to a financial loss to the

project.

Management explained that the affected machine had been transferred to a

completed shelter and was currently undergoing installation.


f) Non-operational markets in the districts

Audit inspection revealed that some markets that had been completed were not

operational. For instance the market in Kaptanya Sub-county contracted at

UGX.364,993,230 and Kawowo Sub-county contracted at UGX.392,752,964 in

Kapchorwa District, was completed but there were no locks in place and the

contractor abandoned work before fixing the locks. In Sironko, Tororo and Pallisa

Districts, the unutilized markets were being occupied by idlers. Management

stated that these markets were handed over to the Sub Counties and it was the

responsibility of the Sub-counties to allocate the stalls to the vendors. Refer to the

pictures shown below:

Abandoned market in Kaptanya and Kawowo Sub-counties Kapchorwa District

The community is not benefiting from the project infrastructure.

295

Management explained that the non-operationalization of markets was due to

among others poor location, lack of enforcement of the Market Act by the Local

Governments, political interference in the running of markets, reluctance to pay

market dues by the vendors, inadequate produce/commodities to sell in the

market during the off-season. However the aforementioned issues were being

addressed jointly by the affected Local Governments and positive results were

being realized.


g) Rehabilitation of Community and Access Roads (CAR)

1. Delayed completion of road works UGX.392,009,451

During the financial year 2010/2011, Masaka District Administration awarded a

contract worth UGX.392,009,451 to a local contractor to rehabilitate community

roads under CAIIP-1 batch B. However, the CAIIP-1 project ended before the road

works were completed and at the time of project closure four certificates

amounting to UGX.170,662,000 had been paid. Refer to the schedule of roads

below

b

e

l

o

w

:

Roads Length

Nkuke-Minyinya-Kitoma road

4.8 km

4.8km

Bbuliro-Kitunga road

4.2 km

Kaswa-Kibbe-Butosi road

3.2 km

Manzi-Bukunda road

2.5 km

2.5 km

Biyinja-Kyembazi road

6.0 km

TOTAL 21.3 km

296

The delay in contract performance increases administration costs. It also denies

the community access to good roads meant to improve peoples livelihoods.

Management explained that Masaka District Local Government was notified and

advised several times by the project management to improve on contract

management of this contract or have it terminated. However by the time remedial

action was taken, the donors had closed the window for fresh procurements.

Currently the roads had been opened and were motorable save for the sections

that needed raising the swampy areas. To address the challenge the district used

counterpart funding from Government and force on account. I explained that the

funds advanced to the contractor earlier with no partial works done could be a loss

to government.

I advised management to follow up and ensure that the road works are fully

completed.

2. Lack of routine maintenance of roads by the Districts

Most of the roads in the Districts under CAIIP 1 (Batch A and B) Project were

completed. However, the districts are not maintaining these roads and

consequently some roads have narrowed as a result of growth of grass. During

inspection of Lyantonde and Ssembabule districts, the District Engineers explained

that the districts do not get enough funds to maintain the roads. Refer to the

pictures below:

Districts Remarks

Lyantonde

Buyaga-Keishango-Rwamyongo road

10.5 km

The road was rough due to lack of

maintenance

Ssembabule

297

Lugusulu-Kanjunju road

10.0km contracted to M/S PRIBERA

CIVIL

A section of the road had narrowed due to

overgrown grass.

Due to non-maintenance, the roads may not last to their expected life span.

Management explained that a list of all rehabilitated roads was submitted to the

Uganda Road Fund to harmonize the periodization of the community roads in the

Project Sub-Counties for maintenance. However, management promised to closely

liaise with the Road Fund and the Project Districts to ensure that the rehabilitated

roads are maintained.


h) Status of Project Implementation

3. Project performance against the logical frame work

According to the project five year implementation plan and annual progress

reports, the performance of the project as at 30th June 2014 was noted as below;

Project

Activity

Target as

per

project

Appraisal

document

Achieved

as per

draft

Annual

report

%age

achieved

as per

draft

Annual

report

Amount (UGX) Audit Remarks

Rehabilitation of

CARs

4680Km 4447Km 95%

110,156,252,767

All completed roads have been

dully handed over to the

respective LGs. However there

is lack of routine road

maintenance.

Some roads in Masaka district

contracted had not been

completed.

Rehabilitation of

District Feeder

Roads

520 Km 578 Km 111% 21,244,312,717 All completed roads have been

dully handed over to the

respective LGs. However, there

is lack of routine road

298

Project

Activity

Target as

per

project

Appraisal

document

Achieved

as per

draft

Annual

report

%age

achieved

as per

draft

Annual

report


maintenance.

Construction of

rural markets

78 markets 77

markets

98.70% 10,456,057,439 All markets have been handed

over to the respective LGs.

However some markets are not

being utilized by the beneficiary

communities.

Construction of

APF Shelters

117 123 105% 4,090,876,965 There were 3 uncompleted agro

processing facilities in Tororo

district.

It was also noted that some

agro processing facilities

especially in Eastern Uganda

were not being utilized by the

beneficiary communities.

Supply and

installation of

APF machines

117 123

assorted

APF

machines

105 5,560,049,800 It was noted that some Agro

processing equipment especially

in Eastern Uganda lacked some

essential components which

affected their use for example

milk coolers in Pallisa lacked

Lactometers while in Kapchorwa

and Tororo districts rice mullers

lacked gear switches and

mortars.

Extension of HEP

grid to APF sites

52 Km to

67 APF

sites

5,002,089,182

Supply,

installation and

commissioning of

generators

40 KVA

generators

40 KVA

generators

100% 1,894,002,500 Wrong type generators had

been supplied and later replaced

with new ones however some

areas in Eastern Uganda had

not received the new

generators.

Services and

operations

15,549,356,915 The project had not completed

the following activities;

completion report, RIMS Follow-

up study, financial impact

assessment and environmental

299

Project

Activity

Target as

per

project

Appraisal

document

Achieved

as per

draft

Annual

report

%age

achieved

as per

draft

Annual

report


audit.

Total 173,952,998,285

Management explained that the pending activities include operationalization of the

markets and the agro facilities. Management further explained that since the

project was implemented in Local Governments, it will ensure that all the

completion activities are fully implemented under its supervision.



PROGRAMME – PROJECT I1 (CAIIP I1)

(a) Compliance w

(b) .ith Financing Agreement and Government of Uganda Financial

Regulations

i) Budget Performance-Low Absorption Capacity

The approved Project expenditure estimates for the financial year amounted to

UGX.89,898,531,239. However, only UGX.40,035,310,967 was spent during the

year, representing an absorption capacity of 45%.

Low absorption capacity denies the beneficiary communities services which would

have improved their livelihood. There is also a risk that Management may not

meet project objectives within the agreed project period.

Management explained that 83% of the total budget was earmarked for the

rehabilitation of 1,533 km of Batch B and C community access roads, rehabilitation

of 230.4km of District roads, and the construction of shelters for agro processing

facilities, however implementation was delayed because of procurement

challenges. The procurement processes for the last batch of community access

300

roads were concluded during the year under review and project implementation

has now been rolled over to the financial year 2014/15.

I advised management to ensure that the implementation is carried out as planned

and within the agreed project timelines.

ii) Failure to deduct 6%withholding tax (WHT) from service providers

It was observed that Management did not withhold tax amounting to

UGX.1,792,568,024 on payments for services provided, contrary to Section 120(1)

of the Income Tax Act. Non-deduction of withholding tax from civil works was a

violation of the tax laws which may result into penalties and fines being imposed

on the Project by the tax body.

Management explained that the Project is being financed using Loan funds from

the African Development Bank (ADB) whose bilateral Agreement with Government

precludes the use of the loan funds for the payment of taxes relating to the goods

and services required for the execution of the Project therefore deduction and

subsequent remittance of WHT under this Loan funding constitutes ineligible

expenditure which are grounds for suspension of disbursements of loan funds to

the Project.

I advised management to engage the Ministry of Finance, Planning and Economic

Development to ensure that withholding tax from outstanding payments to eligible

service providers is deducted and remitted to the tax body as required by the

Income Tax law.

iii) General Standards Of Accounting And Internal Control

i) Vacant post of Financial Management Specialist

The project‟s approved organization structure requires the project to employ a

Financial Management Specialist who is responsible for establishing and

maintaining a financial management system which is in line with the GoU

Regulations and Donor Procedures and ensuring that sound internal controls are in

place. However, it was noted that the project operated without a Financial

301

Management Specialist for over a year. Absence of a financial management

specialist may hinder proper and prompt implementation of project activities.

Management explained that the recruitment process for the post was initiated and

the successful candidate was submitted to African Development Bank for approval.

I await the outcome of the management initiation.

iv) Field Inspections

An audit inspection was carried out in September 2013 and the following issues

relating to the implementation of the Project were noted;

(i) Abandonment of Community access road under Batch B

Terms and conditions of Project civil works contracts stipulate that the contractors

should complete the work and correct any defects within six months from the

contract substantial completion date. It was however noted that some road works

had not been completed while other sites had been abandoned. Specifically

during the inspection in Lango region, it was observed that Agwata Atidi-Kachung

road in Agwata Sub County in Dokolo District constructed by Sefkon (u) Ltd had

been abandoned. The road was contracted at a sum of UGX.428,915,399 and as

at 30th June 2014 a sum of UGX.55,759,002 had been paid to the contractor.

There is a risk that extra administrative costs will be incurred as a consequence of

delayed implementation.

Management explained abandonment of site for a continuous period of 28 days is

a substantial breach of contract. When this occurred, management through the

District Local Government took immediate action by terminating the

aforementioned contract. The works have been re-packaged for procurement to a

new contractor and the accrued retention shall be used to meet additional

administrative costs.

I advised management to urgently recruit the new contractor and have the

contractual works concluded.

302

(ii) Delayed completion of contracts for Agro–processing facilities

According to Terms and conditions of Agro Processing facilities contracts, the

contractors were to execute, complete the works and remedy any defect therein,

in conformity with all aspects in the contract within a period of six months from

the date the contract comes in force. During inspection, it was noted that the

Agro-processing shelter at KYAMULIBWA in Masaka district constructed at a cost

of UGX.103,499,045 had been completed, however there was no electricity

connected to the facility hence the facility was not being utilized. Refer to photos

below. At the time of inspection, the transformer had not been installed.

Agro processing facility at Kyamulibwa not functional

Poles with no transformer to supply electricity to the facility

The community is being denied the benefits of the Project meant to improve

household income and livelihood.

Management explained although the construction of the shelter was completed,

the contract for the extension of the grid, supply and installation of the agro-

processing facility and the transformer were still on-going. Management also

explained that supervision and monitoring of on-going works throughout the

beneficiary districts had been intensified to ensure that activities are completed by

December 2014.

303


v) Status of Project Implementation

(i) Project performance against the logical Frame Work

According to the project five year implementation plan and annual progress

reports, the project had not achieved the following targets by the time of audit,

despite the fact that the project is set to close in December 2014:

Component Planned Activity Status as at 30th June

2014

Remarks

Rural

Infrastructure

Improvement

Completion of

pending Batch A contracts

1418.4km (97.5%) out

1454.1Km of Batch A CARs have been

completed.

Civil works on the

remaining 8.2 km in Kapchorwa district still

on-going. 3 non performing

contracts in Katakwi,

Kitgum, Kibale, were

terminated and re-advertised under

Batch C and 1 contract in Pader (Lot 80) with

works on-going under

Batch B.

Complete all

pending works-

642.6km of Batch B and

27.9kms of

district feeder roads

91.4% (1096.75km)

out of 1,198.2km of

Batch B have been completed and handed

over to the respective

district Local Governments

All the 230.4 km of

230.4km of District Feeder roads have

been completed.

All pending civil works

of 101.45km Batch B

CARs are expected to be completed during

the financial year

2014/15.

Complete

construction of 80 agro-shelters,

2 produce stores and

procurement of

contractors for the 15 re-

advertised agro-shelters.

Civil works on the 12

re –advertised lots commenced while the

3 contracts in Dokolo and Pader have been

re-advertised and at

evaluation stage

Pending civil works on

agro-shelters and stores were expected

to be completed during the next

financial year.

Civil works on the re-

advertised agro-shelters commenced

and works are on-going at all sites

304


2014

Remarks

Rehabilitate

about 600km of Batch C CARs

10 contracts of batch

C CARs have been granted a no objection

by the bank and the rest of the contracts

will be considered for

re-advertisement in the next quarter.

Civil works for the

cleared lots were expected to

commence by in the first quarter of

2014/15

Deliver 95 APFS

to the respective

districts

All the 95 assorted

APFs have been

delivered. Overall 30 assorted APFs have

been installed including 5 milk

coolers, 2 coffee hullers, 15 maize mills,

5 grain mills and 3 rice

hullers.

Installation of APFs is

still on going through

out the project area where the APF

shelters have been completed.

Complete works

for the extension

of 54 km of grid

to 57 APFs sites

Progress on works for

extension of 54Km of

Hydro Electric power

grid to 57 APF sites averages at 85% with

completed extension of conductors and

installation of transformers.

Installation of energy

meters and opening of

accounts will be done

in the first quarter of 2014/15

Community

Mobilisation

Follow up

districts on

issues of formation and

training of IMCs,

engagement of private

operators, identification /

formation of farmer‟s

cooperatives and

on issues of security of

tenure for all investments.

Out of the 14 districts

so far visited only 12

(86%) have confirmed formation and

presence of farmers‟

co-operatives for APFs. The remaining

ones are in process. IMCs for Batch A&B

are in place formed

and trained

There is need to

sensitize the districts

about sustainability of the project‟s

investments such as

roads and Agro-processing facilities.

Complete

formation and

training of IMCS for batch C CARs

Formation of IMCs

completed and training

is on-going.

Training was

completed

305


2014

Remarks

Component

Coordination

Carry out

Monitoring and Supervision

The project

participated in one Support Supervision

mission conducted by the Bank towards the

beginning of the

quarter. The mission emphasized the need

to expedite implementation of on-

going civil works to

ensure that they are all completed before

project closure in December 2014

Technical support

supervision, monitoring and

guidance offered to all

districts and lower local governments.

It was noted that

some works had been abandoned and some

agro processing facilities were not in

operation thus there

was need to intensify monitoring and

supervision of project activities in order to

increase their benefit

to the communities.

Management has not fully achieved targets in the loan agreements.

Management explained that although the Project is set for closure at the end of

December 2014, an extension is anticipated for effective completion. Management

further explained that most of the road works had been completed while the

progress on construction of agro-shelters averages 54% of the works and besides

all the 95 assorted Agro-Processing facilities had been delivered and installation

was on-going.

I advised management to intensify the supervision and monitoring and ensure that

the project implementation is fully undertaken within the agreed timelines.

306


PROGRAMME – PROJECT I1 (CAIIP III)

(a) Compliance With Financing Agreement And Government Of Uganda

Financial Regulations

It was noted that management had complied in all material aspects of the

financing and GoU financial regulations except for the matters below;

i) Budget Performance-Low Absorption Capacity


UGX.45, 015,592,384. However, only UGX.2,249,801,651 was spent during the

year, representing an absorption capacity of only 5%.


have improved their livelihood. There is also a risk that Management may not

meet project objectives within the agreed project period.

Management explained that the bulk of the budget was earmarked for

rehabilitation of 1,318.9Km of the first batch of community access roads, selection

of subsequent priority infrastructure, carrying out needs assessments towards

identification and prioritization of agro processing facilities including designs and

carrying out of a project baseline study. However the project performance was

affected by procurement challenges of the community access roads which was the

major cost driver. Management however indicated that a number of contracts

have now been awarded and major civil works will commence in 2014/15.

I advised management to undertake procurements early enough and ensure that

budget implementation is carried out as planned and in agreed time period.

(b) General Standards of Accounting And Internal Controls

i) Spending at source

Project Operations Manual PART two Paragraph 3.1 (sub-sections 111 Flow of


deposited to special account held with Bank of Uganda. However, it was noted

that GoU contribution amounting to UGX.199,728,000 was released by Ministry of

307

Finance, Planning and Economic Development to the project through the Ministry

of Local Government Treasury General Account, where funds were spent on non

project activities contrary to the Project‟s operations manual. Spending Project

funds by the Ministry does not only deny Project Management control over the

funds but also poses a risk of diverting the funds to activities outside the project.






control.

ii) Vacant post of Financial Management Specialist




regulations and Donor procedures and ensuring that sound internal controls are in

place.

It was noted that the project operated without a Financial Management Specialist

for over a year. Absence of a financial management specialist may hinder proper

and prompt implementation of project activities.


the successful candidate was submitted to African Development Bank for approval.

I await the outcome of the recruitment process.

(c) Status of Project Implementation

i) Project performance against the logical frame work

The Project was expected to commence in 2011 and run for 5 years, however,

operations begun in April 2012. A review of the project implementation plan and

308

project progress reports revealed delays in the implementation of activities as

indicated below;

Activity Targets Progress as at 30th June 2014

Rehabilitation of Community

Access Roads

3,060km 3 contracts for lots 22, 62 and 77 in

the districts of Sheema, Luwero and

Busia are ongoing and physical

progress averaged 70% as of 30th June 2014. In addition, civil works

for 43 lots under the re-advertised Batch A CARs commenced in May

2014 and 31 non-responsive lots were retendered

Rehabilitation/Construction of

Markets

68 Markets Rehabilitation of rural markets was

deferred until there is improved

performance of markets under CAIIP-1

Construction of shelters for 78

Agro Processing Facilities

78 shelters Needs Assessment and design of 78

Assorted APFs completed. However

construction had not yet started.

During inspection of beneficiary some districts, it was observed that operational

funds had been received to cater for needs assessment, training and construction

of community access roads among others. However, activities had not yet started.

Delay in implementation of planned activities denies beneficiaries the benefits of

the project, besides, project objectives may not be achieved.

Management explained that measures had been put in place to ensure that all

activities are undertaken in time and these included expediting the procurement of

the remaining batches of roads, design of agro processing facilities and training

staff in contract and environmental management.

I advised to expedite the planned project activities in order to meet project

objectives within the agreed time frame.

309

15.6 MARKETS AND AGRICULTURAL TRADE IMPROVEMENT PROJECT 1

(MATIP 1)

(a) Compliance With Financing Agreement, Government of Uganda

Financial Regulations And Statutory Obligations

i) Under-Performing Loan from Arab Bank for Economic Development

in Africa (BADEA) - US$ 10,000,000

According to the loan agreement signed on 16th July 2009 between Government of

Uganda and the Arab Bank for Economic Development in Africa (BADEA), the loan

amount of USD 10million was for construction of five markets at Kasubi, Busega,

Kansanga (Kampala City), Kimaka (Jinja District) and Nyendo (Masaka District).

The executing Agency was required to acquire land for construction of the markets

in the above mentioned locations before disbursement of funds. The agreement

indicated that the borrower shall pay interest at the rate of one per cent (1%) per

annum on the principal amount of the loan withdrawn and outstanding from time

to time. The loan was declared effective on 21st January 2010 with the last

disbursement expected on 30th March 2013. It was however noted that only

UGX.112,428,671 was disbursed during the year under review.

The funds were spent on consultancy services for developing architectural designs

and supervision of the construction of the five markets. The commitment fees and

interest that has accrued on this loan account since its effective date is estimated

at US$500,000. Under-utilization of the loan may result into a financial loss to

Government. Delays in accessing funds have a negative effect on service delivery

to communities as the period for the construction of the above five markets has

since overlapped the agreed date of last disbursement of 30th March 2013.

Management explained that the performance of the loan was mainly affected by

lack of evidence of ownership of land in Kansanga, Kimaka and Kasubi, a major

condition for the design of the markets of the town councils. However following

the confirmation of availability of land for Nyendo and Busega, detailed designs

were completed and submitted to BADEA and approved. To date, the bids for the

construction of Busega and Masaka markets have been evaluated and sent to

BADEA for approval after which construction will commence for the two markets.

310

I advised management to acquire land in Kansanga, Kimaka and Kasubi as

required to enable the smooth utilization of the loan fund.

ii) Budget Performance-Low Absorption Capacity


UGX.61,349,873,640. However, only UGX.40,449,178,104 was spent during the

year, indicating absorption capacity of 66%.


have improved their livelihood. There is a risk that Management may not meet

project objectives within the agreed project period.

Management explained that the shortfall in absorption capacity was mainly due to

the failure of Government to contribute towards the tax component which affected

the performance. However, communication had been made to Ministry of Finance,

Planning and Economic Development, and the taxes are expected to be cleared in

the 2014/15 financial year.


iii) Counterpart funding

According to the Provisions of the Loan Agreement, GOU is required to contribute

funds towards the implementation of Programme activities. A review of the project

budget revealed that a total of UGX.10,395,482,191 was budgeted as GOU

counterpart funding, however according to the Project‟s records, only

UGX.1,273,934,149 was released for Project activities resulting into a shortfall of

UGX.9,121,548,042 (88%). Failure to provide counterpart funding as budgeted for

is in violation of the project Financing Agreement. Besides, underfunding hinders

the smooth implementation of the project activities.

Management explained that the Ministry was aware of the constraints caused by

inadequate funding and had already communicated to the Ministry of Finance,

Planning and Economic Development to ensure sufficient releases are made in the

financial year 2014/15.

311

I advised management to continue liaising with the Ministry of Finance, Planning

and Economic Development to ensure all budgeted funds are released to allow

smooth implementation of the project activities.

iv) Outstanding VAT on certified works and consultancy

The contract agreements signed between the Line Ministry and the contractors for

civil works for the construction of markets quoted the prices inclusive of Value

Added Tax (VAT). The project had VAT payable and accumulated interest of

UGX.12,767,665,608 at the close of the financial year. It was noted that the

contractors for civil works at the seven sites were threatening to sue Ministry of

Local Government for the unpaid VAT including interest. The delayed payments

may result in to a nugatory expenditure in terms of legal costs to the Project.

Management explained that VAT was not paid to a number of service providers

due to insufficient Government counterpart funding. Management further stated

that supplementary funding was sought to cover the outstanding amounts which

will be catered for in the financial year 2014/2015.

I wait the outcome of management‟s efforts on the matter.

(b) General Standards of Accounting And Internal Control

i) Spending at source

Project Operations Manual PART two Paragraph 3.1 (sub-sections 111 Flow of


deposited to special account held with Bank of Uganda.

A review of the Ministry of Local Government development expenditure records

revealed that GoU contribution amounting to UGX.995,300,408 released by

Ministry of Finance, Planning and Economic Development to the project through

the Ministry of Local Government Treasury General Account, was spent by the

Ministry on behalf of the Project on non project activities which was contrary to

the Project‟s operations manual.

312

Spending Project funds by the Ministry does not only deny Project Management

control over the funds but also poses a risk of diverting the funds to activities

outside the project.






control.

ii) Vacant post of Financial Management Specialist




regulations and Donor procedures and ensuring that sound internal controls are in

place.

However, it was noted that the project operated without a Financial Management

Specialist for over a year. Absence of a financial management specialist may

hinder proper and prompt implementation of project activities.


the successful candidate name was submitted to African Development Bank for

approval.

I await the outcome of the recruitment process.


i) Delayed implementation of project activities

A review of the project implementation plan and progress reports revealed that

the project had not achieved planned targets in the agreed timeframe. The

following activities should have been undertaken by the end of the year under

review;

313

Component Activity Progress as at 30th June 2014

Market

Infrastructure

Development.

Complete and handover all

the remaining 4 markets

namely; Lira, Jinja, Gulu and

Hoima.

Works are still on-going on all the

4 markets.

The Progress of work was

affected by delayed VAT payment

to contractors and civil works

consultants.

Complete designs of Busega

and Nyendo markets under

BADEA loan.

Detailed designs were produced,

reviewed and approved by

relevant authorities, including

urban authorities and the funding

agency (BADEA).

Initiate procurement of

contractors for Nyendo and

Busega markets under the

BADEA loan

Construction of the Busega and

Nyendo markets is currently

under procurement with bid

closure slated for 1st September

2014.

Market

Management and

Trade

Enhancement

Complete the re-location of

vendors back to the

completed markets

The process of resettling vendors

in Mbale and Hoima markets is

still on-going. A total of 1,753

vendors had already resettled in

Mpanga and Wandegeya

markets. Registered vendors are

given first priority in the

allocation process and any other

remaining facilities will be given

out on a competitive basis as per

the laws that govern

Procurement and Disposal of

Public Assets. However there is

need to carry out sensitization of

market vendors in Hoima, Gulu,

Jinja and Lira markets regarding

market facilities management

guidelines in order to enable

sustainability of project

objectives.

Complete the establishment

of the Market and

Management Information

System

The process of establishing the

Market Management and

Information System is still on-

going.

Programme

Management and

Coordination

Undertake monitoring and

supervision

The construction work continues

to be supervised by respective

consultants with oversight

guidance from the Programme

314

Component Activity Progress as at 30th June 2014

Facilitation Team (PFT) of the

Ministry.

Conduct a progress review

workshop

No review workshop was held

during the reporting period.

Delay in implementation of activities denies beneficiaries the benefits of the

project, besides, project objectives may not be achieved due to the delays.

Management explained that the project is in its fourth year of implementation and

is expected to close in 2015. By then, the indicated project milestones will have

been achieved.

Management is advised to expedite the planned project activities in order to meet

project objectives within the agreed time frame.

15.7 DISTRICT LIVELIHOODS SUPPORT PROGRAMME (DLSP) – MINISTRY OF

LOCAL GOVERNMENT (MOLG)

(a) Compliance With Financing Agreement And Government of Uganda


A review of the Programme implementation records revealed that generally there

was compliance with the financing agreement and Government of Uganda

financial regulations, except for the following:

(i) Government of Uganda (GOU) counterpart funding

A sum of UGX.296,008,000 was received as GOU counterpart funding during the

year out of the approved budget estimates of UGX.399,883,115. The receipts were

credited to the Ministry of Local Government (MoLG) General Treasury Account.

The following were noted during the audit;

Non-incorporation of the GOU counterpart funding into the

Consolidated Annual budget of DLSP

According to the Project Financial Guideline 1.32, all budgets are required to be

associated with codes which identify the funding source, budget categories,

315

budget components, sub components, and activities as indicated in the budget

plan chart and analysis. However a review of the Annual work plan and budget for

the programme revealed that GOU counterpart funding budget and work plan was

not incorporated in the project consolidated work plan and budget as required.

Failure to incorporate the GOU funding budget estimates in the Project

consolidated work plan and budget may result into the entity spending funds on

unplanned activities.

Management explained that the Annual Work Plan Budget (AWPB) will be adjusted

to incorporate the GoU Component in the subsequent year, however, the GOU

component had been incorporated in the Ministerial Policy Statement as a starting

point.

I await management implementation on the matter.

Low absorption Capacity

The approved budget for the financial year 2013/2014 was UGX.49,301,833,686.

Although UGX.24,430,141,921 was actually released during the year, only

UGX.23,769,033,103 was spent representing an absorption capacity of only

48.2%. It is worth noting that the Project is in the second last–year of

implementation. Low absorption capacity denies the community services ability to

uplift their livelihoods. Furthermore Project objectives may not be achieved within

the stipulated time frame leading to extra administrative costs.

Management explained that all the funds were committed in contracts and that the

Programme Coordination Unit had put in place mechanisms to complete planned

activities by December 2014.

I advised management to ensure that budget implementation is carried out as

planned before activity closure.

Status of the loan disbursement

A review of the financial statements revealed that out of the total IFAD loan of

USD 52,000,000, Management had only utilized USD 38,951,348 resulting into an

316

estimated unlimited loan balance of USD 13,048,652 (25% of the total loan) yet

the project completion date is set for 31st December 2014. This assertion was

supported by the project Aid memoire dated 7th-31st October,2014 where it was

revealed that pending road works and other activities amounted to USD 12.1m

while un disbursed funds on the IFAD account amounted to USD 12.2m as at that

date. There is a risk that management may not fully utilize the loan by the project

closure date if activities are not completed in time. Administrative costs are also

likely to escalate.

Management explained that all the undisbursed funds were already committed to

on-going road works. Management further explained that although the project

completion scheduled for end of December, 2014, the project will continue

processing payments even after the project completion date provided the

payments relate to works which were performed before the project completion

date.

Management is advised to expedite the implementation of the activities to ensure

that the loan is fully utilized to allow the project achieve its objectives.

(b) General Standards of Accounting And Internal Control

(i) Wasteful expenditure on purchase of „„TOMPRO‟ Accounting

Software

According to the Supervision and Implementation Support Mission report: (16-27

July, 2012), ''TOMPRO'' Accounting Software was procured at USD 50,000 and

installed at both the districts and the Project Coordination Unit in Kampala. The

Accounting software was intended to harmonize the financial, monitoring and

reporting for the project team. The software has modules for system parameters;

financial accounting, reports analysis, budget control, fixed assets management,

credit management, procurement management and disbursement reports.

It was noted that the software had not been put to use at the Project Coordination

Unit (PCU) and the districts despite further recommendation by the IFAD mission

in the Aide memoire (8th-19th July 2013) to fully implement “TROMPO” by 31st July

2013. Therefore the objective of introducing the software to capture transactions

317

at Project Coordination Unit and Programme districts has not been achieved

wasteful expenditure of USD 50,000 to the project.

Management explained that the software could not be used at PCU since data

capture had failed at the district level and it needed reconfiguration which was

expensive and would not yield value for money since the programme was left with

only one year to operate before project closure. Management further explained

that the time was not sufficient to allow the procurement of the consultant to

reconfigure and allow it operate at both PCU and district level.

I advised management to always carry out a study on the use and benefit of such

procurements before undertaking implementation decisions.

(ii) Spending at source

A review of records revealed that GoU contribution amounting to UGX.296,008,000

was released by Ministry of Finance, Planning and Economic Development to the

project through the Ministry of Local Government Treasury General Account,

where funds were spent on behalf of the Project on non-project activities which

was contrary to the Project‟s operations manual. Spending Project funds by the

Ministry denies Project Management control over the funds.




I advised management to ensure strict adherence to controls to allow project

management full control of the project funds.

(iii) Un accounted for advances

The project had outstanding advances of UGX.183,219,506 as at 30th June 2014 as

indicated in the table below.

The delays in accountability affect project implementation and intended objectives

may not be achieved within the stipulated project timelines.

318

District/PCU Outstanding advances as at 30th June,2014

Apac 76,430,000

Bundibugyo 4,728,000

Kamwenge 55,614,834

Luwero 997,000

Busia 15,119,400

PCU 30,330,272

Total 183,219,506

Management explained that they had instituted measures to recover the

outstanding advances in line with the project guidelines.

I await the outcome of Management‟s efforts.

(c) Audit Field Inspections

Field inspection to assess progress on implementation of DLSP activities was

undertaken and the findings were noted:

i) Poor workmanship

Section vii sub sec 1.23.1 General condition of the contract specifies that the

contractor shall construct and install the works in accordance with specifications

and drawings.

During inspection of the rehabilitated roads works in Apac and Oyam districts, it

was noted that although the works had been completed, there was evidence of

poor workmanship on some roads. For example there were no headwalls at the

culvert ends, culverts were not properly installed while some of the headwalls built

were already cracked and lacked wing walls. Details are in the pictures below:

319

Olelpek-AbapirinAbei Border

Road, 22.8km, Batch 2 in

Apac district constructed at a

Contract price UGX.

563,264,970

Silted culverts blocked the road

drainage channel.

The culverts should have been

lifted up.

Alira-Oder Swamp-Abwongo H/C, 12.2 km, Apac district Batch 3 constructed at a cost of UGX. 333,117,310 Cracked headwall along the road.

Arocha market-Tolkoling-owalo trading center 7.2km in Apac district ,Batch 3 constructed at cost of UGX 167,255,691 Head walls were built without wing walls

320

Otwal railway-Ojwii road 12.7km in Oyam district constructed at a contract price of UGX. 344,396,456 Headwalls were built without wing walls.

The poor workmanship affects the lifespan of the roads.

Management explained that the beneficiary districts and contractors had been

notified to correct the defects.


ii) Under scope of work

Clause 36 of the conditions of contract for the rehabilitation of Community Access

Roads (CARs) states that the Bills of Quantities (BOQs) shall contain items for the

construction, installation, testing and commissioning of the work to be done by the

contractor. It is also used to calculate the contract price and the contractor is paid

for the quantity of work done at the rate in the BOQs for each item.

Furthermore for quotations to be made, the bidder is required to inspect the

project sites with a view of establishing the bills of quantities and develop proper

bid quotations. The consultant is required to inspect the site to come up with

standard costing upon which the projection valuation will be based while the

Project Support Officers (District Engineers), and Infrastructure Engineers are

required to carry out comprehensive assessment of requirements of works in order

to come up with accurate bids.

During inspections in Oyam district, it was noted that some projects had design

gaps which could not be covered using the amount quoted. This was because the

contractors made quotation based only on the paper project design provision

resulting into significant mismatches with actual road bottle necks.

321

Engineers stated that some of the BOQ provisions were below the desired

requirements, given the levels of road bottlenecks observed on the road. Some

contractors have requested for contract variations in order to cover the design

gaps. One of the examples is sited below:

The under scope of work led to delayed completion of the project, sub-standard

works and resulted into increased administrative costs. It is also evident that the

contractors, consultants, Project Support Officers and Infrastructure Engineers did

not carry out comprehensive assessment of the requirements of works on the

ground.

Management stated that measures will be taken to improve on the quality of

designs by undertaking due deligence in validating designs. Management further

stated that the bidding process will compel intending bidders to inspect works

prior to bidding.


Camnono road –Teogali TC,

11km: Constructed at a contract

price of UGX.374,616,650 was

poorly designed as the road had low

filling which resulted into big

depression that causes water

lodging during the rainy season.

The district engineers amended the

road design as requested by the

project and quoted a contract

variation of UGX.46,055,863 for

additional works on 8th October

2013, however Project Management

had not yet responded to the

quotation.

322

iii) Delayed completion of road works

During inspection of DLSP Batch C Community Access Roads in Bulisa and Masindi

districts, it was noted that some road works had delayed and lacked signposts

contrary to the agreement. It was also noted that in some cases culverts were

poorly installed, particularly the road works done in Bulisa district. In one instance,

the contractor had abandoned works and another construction company

contracted but this time at a higher cost. Details are in the table below;

Batch3 MASINDI District Management

Response

Rehabilitation of Biraizi-

Kuhuuba road (3.2km)

Inspection team noted

that although the works

had progressed well,

the contractor did not

construct headwalls

around swampy areas.

This leaves the road

surface prone to

erosion.

At the time of

inspection the head

and wing walls were

not yet constructed to

allow for settlement

of the fill material.

Otherwise the head

and wing walls may

crack when there is

substantial settlement

after construction.

This was part of the

snags that the

Monitoring Unit

enlisted to be done.

Katagurukwa-Kibbali

Balyegoma Road (13.6KM)

323


Response

It was noted that

although the works had

progressed well, the

contractor did not

construct headwalls


This left the road

surface prone to

erosion.

The bill boards have

been installed.

Kyagamoyo-Kaikuka-Ntoma

Raod 28.9KM

It was noted that

although the works had

progressed well, the

contractor did not

construct headwalls


This left the road

surface prone to

erosion.

The issue was noted

and brought to the

attention of the

contractor.

BULISA DISTRICT

Wanseko-Murchison falls Park

road-18.6 km rehabilitated

under DLSP Batch 2.

324


Response

This site was

abandoned by the first

contractor M/S PATROV

International Ltd who

started work in April

2012 at

UGX.559,378,600 and

was paid

UGX.196,684,120 after

doing 35% of the

works. It is now

contracted to M/S

PEKASA Enterprises at a

contract cost of

UGX.874,963,793.

There was no signpost

for the works.

The bill boards have

now been installed.

St. Mary‟s Kalengeija Primary

school- Bubwe road-5.2 km

rehabilitated under DLSP

Batch 3.

This site was contracted

to M/S SINAI General

Merchandise and

Supplies Co. Ltd at a

combined cost of

UGX.913,280,340 which

also covers other road

sections with total

distance of 14.3 km. It

was observed on roads

all done by M/S SINAI

that the culverts were

poorly installed creating

steep humps which may

hinder the benefits of

the services to the road

users.

Management has

instructed the

contractor on the

defects.

325


Response

Angolyero-Akollo-Garasoya

road 2.6 km rehabilitated

under DLSP Batch 3.

It was contracted to

M/S SINAI General

Merchandise and

Supplies Co. Ltd at a

combined cost of

UGX.913,280,340 which

also covers other road

sections with total

distance of 14.3 km. It

was observed on all

roads done by M/S

SINAI that the culverts

were poorly installed

creating very steep

humps which may

hinder the benefits of

services to the road

users.

Management has

instructed the

contractor on the

defects.

The delay in contract performance and poor workmanship increase construction

and administration costs and it denies the community access to good roads which

are meant to improve their livelihoods.

I advised management to regularly monitor activities in the districts to ensure

quality and timely completion of road works. Management is further advised to

invoke the penalty clauses within the contract agreements for delayed completion

of works.

(d) Status of Project Implementation

i) Project performance as per logical framework

According to the Project seven year implementation plan and progressive reports,

the project had not achieved some of the following targets despite the fact that

the project closure date was set for 15th December 2014:

326

Activity Targets Progress as at 30th/June/2014

Community infrastructure

Community

Access roads

-Construction of

2,400 Kms of

community access

roads.

-Training 300 road

user committees

- The civil works for the first batch of roads

measuring 313.5 Kms were completed

and the roads are now under routine

maintenance by the districts.

- The construction of the second batch

measuring 640.1 kms has been

completed.

- The construction of the 3rd batch (418.25

km) community access roads is near

completion and about 85% construction

work has been completed.

- The construction of the fourth batch of

community access roads totaling to 766.8

km is in progress and only 55%

construction was has been completed.

COMMUNITY DEVELOPMENT

-Train and facilitate

1,872 community

volunteers

(household

mentors and FAL

instructors)

-Enroll 46,800 FAL

learners

-Train 15,600

farmers in group

organization and

leadership skills.

-Mentor 17,280

poor house holds

- Trained 1,232 Community volunteers (FAL

instructors and house hold mentors) and

empowered them to conduct 572 FAL

classes aimed at mentoring the targeted

17,280 poorer households in all the 13

districts.

- Identified and trained 680 groups in

group dynamics and leadership skills.

- Mentored a cumulative total of 18,172

poorer households to enable them

participate in development initiatives

through identifying and developing their

own path ways out of poverty.

- A total of 24,283 FAL learners were

enrolled to improve their literacy and

numerical skills. Consequently, over

327

Activity Targets Progress as at 30th/June/2014

14,067 FAL learners did proficiency tests

and were able to apply their numerical

and literacy skills. There was a shortfall

about 50% of the planned enrolment.

Agriculture Development And Land Tenure

-Establish 312 on

farm

demonstration.

- 251 on farm demonstrations were

established focusing on different

agronomic practices in management of

Upland rice, bananas, and cassava (Akena

variety). (80%)

District And Sub-County Execution

- Refurbishment of

5 district

headquarters.

2 district headquarters Refurbished (40%).

Management stated the audit observations were appreciated and they were to

ensure that all the remaining activities are completed in time.

I wait the outcome of management‟s efforts towards timely implementation of

project activities.

15.8 MILLENNIUM VILLAGES PROJECT (MVP) PHASE II

(a) Expenditure on project activities

USD 577,239 was expended by the Millennium Villages Phase 11 Project between

22nd May and 31st October 2013 as shown in the table below:

Project Component Amount Spent

(USD)

Increased Agricultural Production and Enhanced Nutrition 48,655

Business Development and Micro-Finance 29,231

Promoting Universal access, Retention and Quality Education 43,874

Strengthening Health Service Delivery Systems for Improving

access to Basic Health Care

223,088

328

Infrastructural Development and Innovation Promotion 32,775

Water for Domestic Consumption, Production and Sanitation. 36,344

Project Implementation Unit Management 163,273

TOTAL 577,239

It was noted from the review of expenditure records that USD 359,393.17 which

represents 62% of the expenditure for the five months period was spent on

wages, salaries and top-up allowances to staff in the seven components and yet

the workplan and budget for the thirteen months period from 22nd May 2013 to

30th June 2014 provided for a total of US $230,000 on the staff costs. This limited

funding to other vital project activities to just 37.5%. This practice could constrain

effective implementation of other project activities in the long run.

Furthermore, the project employs 200 staff to implement activities in 8 villages of

Isingiro district. The organization structure appeared too big for the project

considering that major activities are executed in Ruhiira village, Isingiro district.

Refer to table showing staff numbers and categories below:

Staff categories Total Number

Coordinators 8

Operations 13

Facilitators 17

Technicians and assistants 12

Data staff 13

Radio presenters 3

Community Education worker 11

Medical workers 31

Support staff 27

Community Health workers 65

TOTAL 200

329

The huge number of staff will lead to excessive staff costs and hamper

implementation of planned project activities, since funds are likely to be drawn

from other programmes to cater for staff costs.

Management explained that Millennium Promise Alliance (MPA) was in the process

of streamlining the project personnel to a structure that suites the task although

the existing team which implemented Millennium Villages Project (MVP) Phase I

kick-started Millennium Villages Project Phase II.

I advised Management to expedite the process of streamlining the Project staffing

structure.

(b) Lack of Government of Uganda (GoU) counterpart funding

Article 7.1 of the loan agreement between Government of Uganda and IDB

requires the borrower to promptly fund the Project in accordance with the lender‟s

terms and conditions. Accordingly, Government of Uganda was required to

contribute USD 980,000 to the project over three years in addition to secondment

of health workers and teachers to the Project and other non-monetary support.

However, no funding was received from Government of Uganda for the period

under review.

Failure by Government to meet its funding obligations negatively affects the

project activities.

Management explained that the Project agreement was signed on 22nd May when

the financial year 2012/13 was ending and that a provision for GOU co-funding

was made in the budget for the financial year 2014/15.

Management should follow up the matter with the Ministry of Finance, Planning

and Economic Development to ensure that Government meets its funding

obligation to the project.

(c) Non-compliance with procurement guidelines

Section 7.2 (iv) of the of the loan agreement between the Republic of Uganda and

Islamic development bank (IDB) requires all procurements of civil works,

330

equipment and supplies, computers and related technologies and training

materials whose estimated cost are above ID 25,000 (approximately equivalent to

USD 16,66.26) to be carried out via national competitive bidding.

It was noted that two contracts were awarded through the direct procurement

method contrary to the IDB procurement guidelines. Refer to the table below;

Name of

contractor

Contract Contract

sum

Remarks

Joint Medical Stores

Supply of

Medicine and

medical supplies

48,308,664

No procurement files for

the contract.

Joint Medical Stores owed

the project a balance UGX.1,270,560 from the prior

supplies made but this was not deducted from the final payment.

J & K Technical

Services

Construction of

Staff house at

Ruhiira H/C

67,000,000 Whereas the procurement

documents (evaluation committee

minutes) indicated that 3 companies bidded for the

construction of the Staff house,

there was no evidence of bid documents and bid submission for

the other companies involved in the bidding process.

Non-compliance with procurement procedures denies competition which may lead

to procurement of lower quality services at unfavorable costs.

Management explained during the period under review, the project had not

received funding from either GOU or IDB. Therefore MPA procurement procedures

were consistently applied and not IDB procurement guidelines. Management

further stated that when the project received funds from IDB loan, the

procurement was streamlined with Ministry of Local Government where big items

are centrally purchased using PPDA procedures which cover IDB guidelines.

Management also indicated that the project recruited a procurement specialist to

assist the project in the procurement of goods and services.

I advised Management to follow the procurement guidelines in place.

331

(d) General Standard of Accounting and Internal Controls

It was noted that management had instituted adequate controls to manage project

resources.

(e) Field Inspections

Inspection of the project site in Ruhiira was undertaken. The objective of the

inspection was to assess the extent of implementation of the project, its impact on

the community and compliance with contract agreements. The major findings from

the inspection are below:

i) Lack of Sign Posts

Bills of Quantities provided for a sign post for identification of the sub projects

undertaken by MVP II in the area which the project is located. The bill board is

required to clearly specify the project, the project funders, Sub County, District

and contractor. It was observed that some project investments lacked the

required sign posts.

In absence of sign posts, it becomes difficult to ascertain whether all projects

inspected were actually genuine as there were similar projects being implemented

by Isingiro District Local Government and other Non-Government Organizations

(NGOs).

Management explained that all sign posts for completed and on-going projects will

be installed at the projects sites.


ii) Delayed completion of staff house at Ruhiira Health Centre III

According to the contract agreements for the construction works, the contract

period for works of the staff house at Ruhiira Health Centre III was three months

ending 27th March 2013. It was however observed that construction had stalled for

over a year. Refer to the picture below;

332

Construction of

Ruhira Health

Centre III staff

house by J&K

Technical

Services

Delay in implementation of planned activities could lead to unnecessary extra costs

in form of administration, monitoring and supervision.

Management explained that the construction of the health centre staff house was

under Millennium Village Phase I which could not be completed due to insufficient

funds. However, the project had included the finishing works of the project in the

Annual work plan 2014/2015 of Millennium village phase II in order to complete

the construction of the health centre staff house.


iii) Poor Storage of drugs at Ruhiira Health centre

The drugs at the Health centre were poorly stored and as such I was not able to

differentiate between drugs delivered by the project and those from the district.

Poor storage of drugs may lead to losses as the drugs are exposed to undesirable

conditions.

Management has promised to ensure that there is proper storage of drugs at the

Health centre.


16.0 OFFICE OF THE PRIME MINISTER

333





codes. A review of the Office of the Prime Minister‟s expenditures revealed that

the entity charged wrong expenditure codes to a tune of UGX.5,564,282,629. This

constituted 6% of total expenditure for the Office of the Prime Minister. This

practice undermines the importance of the budgeting process as well as the

intentions of the appropriating authority and leads to misreporting.

Management explained that the Ministry of Finance Planning and Economic

Development (MoFPED) advised them to utilize funds that had been released and

were not performing to cater for emerging priorities that included refugee influx

and drought emergencies.


funds are allocated to each account and budget line codes. Authority should

always be sought before any reallocations are made.

16.2 Advances to Individual Personal Accounts

Non Compliance with Treasury Accounting Instructions

Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs),

provides that all payments should be made by the Accounting Officer directly to

the beneficiaries. Where this is not convenient, an imprest holder should be

appointed by the Accounting Officer with the approval of the Accountant General.

UGX.3.6 billion was advanced to Ministry staff through their personal bank

accounts to undertake direct procurements and other activities.

Although the funds were accounted for, such a practice of depositing huge funds

on personal accounts exposes Government funds to risk of loss, since the entity

does not have any control over such funds deposited on personal accounts.

Management explained that most of the activities undertaken by the office are

field based and involve working with other stakeholders in the Districts who are

334

not usually known at the time the requisitions for funds are made, necessitating it

to advance funds to individuals to execute field based activities. In the meantime,

management has engaged the Permanent Secretary/Secretary to the Treasury,

who has authorized OPM to process an impest warrant through the Accountant

General which decision will hopefully go a long way in addressing the problem.

I advised management to ensure strict adherence with the requirements of the

Treasury Accounting Instructions. Meanwhile management effort to resolve the

issue is awaited.

16.3 Refund to NUSAF 2 for PRDP expenditure

A review of the Ministry‟s expenditures revealed that the entity irregularly paid

funds to a tune of UGX.271,193,000 to NUSAF 2 project account as refunds to the

project for ineligible expenditure under the World Bank portfolio. The funds were

for start up activities and fuel paid to PRDP in 2010. The accounting officer

charged sub-programme 0932-130306 item 224001 (Medical and Agricultural

Supplies) for the refund. These funds were not appropriated in the Appropriation

Act. It was also noted that neither virements warrant nor supplementary funding

was requisitioned and approved for the expenditure. This practice undermines the

importance of the budgeting process, suffocates the approved programmes and

also hampers service delivery. Further, the practice leads to misreporting.

Management explained that at the time, there was no budget provision for

preparatory activities for the design of NUSAF2 (counterpart funding). World Bank

insisted that there should be a commitment on part of Government to meet the

initial preparatory costs.

I advised the Accounting officer to ensure adherence to the financial regulations

and apply for supplementary provisions where unforeseen circumstances arise

which may not be postponed without detriment to public interest.

16.4 Quarterly Staff allowances

The Ministry paid quarterly allowances to Ministers, staff, police officers, home

guards and political assistants for the year under review to a tune of

335

UGX.1,269,305,000. The payments were not provided for in the standing

instructions.

Payment of irregular allowances affects the entity cash flows and results into

diversions of government funds.

Management promised to streamline payment of these allowances.

I await management‟s efforts in streamlining the payment process.

16.5 Gross payment tax

a) Budgeting

Budget estimates provide a basis for the Ministry commitment and represents the

Ministry‟s understanding of the scope and expense of what needs to be done, and

the amount required to settle in taxes. The Ministry budgeted for a total of

UGX.16,413,653,190 to cater for gross tax payments and only UGX.5,100,000,000

was released by Treasury. Out of the release only UGX.3,539,828,278 was spent

reflecting 31% budget release and 69% release utilization. Allocating funds for

activities/expenses whose likelihood of occurrence is remote provides avenues for

diversions as well as large budgetary slacks which provide for future unfair

budgetary variations.

Management explained that the gross tax budget was a non-resource item and not

tied to the ceiling of Vote 003. Due to the withdraw of donor support to OPM, a lot

of anticipated procurements which would have consumed much of the gross tax

were not procured creating a huge variance between the budgeted and the actual

outturn. Management further explained that the gross tax component is also used

to pay taxes on imports donated by Non-Governmental Organizations (NGOs) to

the Sector which in most cases are not known at the time of budgeting.

I advised Management to always ensure that reasonable budgetary estimates are

made.

b) Tax obligations by the Ministry

336

The Office of the Prime Minister entered into several Memoranda of Understanding

with Non-Governmental Organizations and provided for tax settlement on their

behalf within these MoUs for goods acquired by them. As such, the Ministry had to

meet tax obligations on behalf of these NGOs arising out of the agreements made.

The following were observed:

Article 7 of the MOU‟s signed before 2013/14 financial year regarding taxes

and duties was open ended as it did not limit the type of imports, e.g. vehicle

capacities, luxurious goods etc.

It should be noted that upon paying, the Ministry has no control in regard

to the final destination of the goods implying that there is a risk that such

goods may end up in the open market.

This practice exposes the Ministry to the risk of payment for non-beneficial

commodities which may end up on the open market and undermine the tax

planning efforts of Government.

Management explained that the MOU with all NGOs partnering with OPM and

those intending to do so has been reviewed to address the gaps identified. These

include among others the kind of imports that are eligible for tax clearance,

verification of imports in the presence of OPM internal auditors and the NGO

before goods are distributed to intended beneficiaries. In addition it is now a

requirement that the Head of Department or a senior officer appointed by the

Head of Department monitors the utilization of donated items by the beneficiaries

in accordance with the provisions of the MOU. The officer will be required to make

a report to the accounting officer at the end of the distribution detailing the items

received and how they were finally utilized.

I urged management to implement the action points in the process of streamlining

the tax payment process.

16.6 Lack of verifiable database for Kasiimo Project

The Ministry through the department of Luwero Affairs is charged with the

mandate of paying gratuity to non-combatant War (civil) veterans. To expedite the

337

process, the Ministry transfers funds to Centenary Bank equivalent to moneys due

to the veterans verified by the Luwero triangle war debt verification committee.

The Bank then pays individual veterans by crediting bank accounts opened with

them.

During the year, UGX.6,140,000,000 was transferred to the bank for onward

transfer to the beneficiaries. However as mentioned in my previous years report,

neither the committee responsible nor the Office of the Prime Minister has a

comprehensive verifiable database of the combatants who have been paid and

those who are pending six (6) years after the onset of the scheme. The Ministry

has schedules that have been remitted to Centenary bank for payment since

inception of the programme but not all the beneficiaries in the schedules were

paid as reconciliations have proved because of the manual environment. The

Ministry may lose funds given that under the circumstances, cases of duplication

and inclusion of non-entitled beneficiaries cannot be ruled out.

Management explained that the Verification Committee is compiling a complete

data base on those who have not been paid and those who did not get the

verification forms during the first verification exercise. To streamline the process

further, a consultant to develop a computerized web based database has been

procured. This will resolve the manually managed payment process.

I advised management to ensure that a comprehensive database is developed that

should be able to capture all payments to individuals and be reconciled to total

remittances to the bank since project inception. In the meantime, management is

urged to expedite the implementation of the computerized web data base.

16.7 Execution of Unenforceable performance securities on Procurement for

Construction of Education Infrastructure in Karamoja

The Office of the Prime Minister signed contracts with several firms for the

construction of Education Infrastructure in Karamoja District under three lots with

lot 3 being awarded to a Construction company at a contract sum of

UGX.1,073,713,920 to construct semi- detached houses at Moroto High School.

Special Conditions of contract 52.1 and 52.3 required the contractor to execute a

338

performance security of ten percent (10%) contract price in form of a bank

Guarantee.

Contrary to the above requirement, no performance security in form of a bank

guarantee was availed by the contractor. The firm provided a performance

security from Mercantile Credit Bank Ltd which is a credit institution and licensed

to conduct credit institution business (Tier II) and as such is not a Commercial

Bank. Absence of performance security puts the entity at a risk of losing funds in

the event of non-compliance.

Management explained that they had communicated to the contractor to provide

the Performance Security that is consistent with the provision of the contract.

I advised management to always carry out due diligence on securities prior to

contract commitment.

16.8 Dormant Accounts

Guidance from the Accountant General provides that all Government accounts held

with Bank of Uganda are automatically blocked if they are inactive for a period of

six months. Accountant General should advise of any alternative action on these

accounts. It was noted that three project bank accounts held in local currency

were found to be dormant for a period of twenty four (24) month with a total

credit balance of UGX.375,662,268 as at 30th November 2014 as indicated below:

ACCOUNT NUMBER ACCOUNT TITTLE AMOUNT (UGX.)

000030088000009 DFID SUPPORT TO THE NATIONAL

INEGRATED MONITORING AND EVALUATION

STRATEGY

326,397,167

000030088000027 NORTHERN UGANDA DATA CENTRE-GIZ

COMPONENT

46,710,876

000030088000038 PEACE RECOVERY AND DEVELOPMENT PLAN

(PRDP) NORTHERN UG&A

2,554,225

TOTAL 375,662,268

339

Dormant accounts are risky as they provide an avenue for perpetuating illegal

activities through concealment.

Management explained that these accounts were for donor funded programmes

and projects which were suspended following the financial impropriety that

occurred in OPM and other MDAs. Negotiations are on-going between Government

and the Development partners to have these accounts unfrozen and release the

monies to complete the outstanding activities. In the meantime, management has

written to Accountant General to justify the continued existence of these Accounts.

I advised management to continue liaising with the Accountant General to ensure

that the Accounts are maintained in line with financial regulations.


Public Finance and Accountability Regulations 2.10(b) entrusts the Accounting

Officer with ensuring that all total controls such as those contained in the

approved estimates, warrants and others are strictly observed. Budget estimates

are based on outputs to be achieved for the financial year and during

implementation, effort is required to be made to achieve the agreed objectives or

targets of the entity within the availed resources.

Review of the budget performance for the year under review revealed that some

targets were partially or not undertaken despite release of funds to the vote

functions as below;

Vote function

output

Item

description

Planned

outputs/

Qty

Amount

(UGX)

budgeted in

billions

Amount

released

(UGX) in

billions

Actual output/

Quantity

Remarks Mgt response

Project 1235-

ressetlement of

landless persons

and disaster

victims

130275-

purchase of

motor vehicle

-Purchase of

one trailer

-Purchase of

two (2)

tonne tipper

0.83 0.83 Three pickups

were

procured

instead of

trailer and 2

tippers

100% of

funding was

got but no

budgeted

activity/outp

uts were

Procurement

for trailer and

trucks not

done yet there

was increased

demand for

340

Vote function

output

Item

description

Planned

outputs/

Qty

Amount

(UGX)

budgeted in

billions

Amount

released

(UGX) in

billions

Actual output/

Quantity


trucks procured

instead

management

procured

pickups

rather than

tippers and

one trailer

emergency

response

Programme 18-

Disaster

preparedness

and management

130203 IDPS

returned and

resettled

-Construction

of 100 more

permanent

houses for

landslide

victims

-Finishes on

50 of the

first 101

houses

2.0 2.146 Finishes on

50 of the first

-100% of the

funds were

released but

100 more

permanent

houses were

not built

As a result of

global

warming and

climate

change,

disaster

challenges

have increased

and this led to

increased

demand for

relief.

130374-

major bridges

-Construction

of major

bridges

3.0 1.5 -NO bridges

constructed

-Bridges

were not

built despite

release 50%

of the funds

The funds

were non-

resource

which were

managed and

controlled by

MOFPED and

earmarked for

imports.

Programme 06 –

Luwero Rwenzori

Triangle

Output

130302 –

payment of

gratuity and

coordination

of war debts

clearance

-4500 to be

paid

6.133 6.133 -3064 civilian

veterans paid

Despite full

release, 70%

of planned

veterans

were paid

-

Project 0932 –

Post war

recovery and

presidential

pledges

130375 –

pacification

and

development

-Purchase of

vehicles (3)

procured for

Gulu office

-Purchase of

0.810 0.810 -Three double

cabins for

Gulu office

procured

-one vehicle

and tippers

were not

procured

Procurement

for vehicles

was not

finalised and

instead ten

341

Vote function

output

Item

description

Planned

outputs/

Qty

Amount

(UGX)

budgeted in

billions

Amount

released

(UGX) in

billions

Actual output/

Quantity


two tipper

trucks

-purchase of

vehicle for

coordinator

(10) hydra

foam

machines were

procured

Service delivery is hampered and the appropriating authority‟s objectives are not

met.

Management explained that the underperformance on the specified areas was

attributed to other emerging pressures and priorities that cropped up in the course

of the financial year necessitating reallocations and Virement for which authority

was sought from PS/ST.

I advised management to always undertake activities as planned.

16.10 NORTHERN UGANDA SOCIAL ACTION FUND (NUSAF 2)

(a) COMPLIANCE WITH THE MEMORANDUM OF UNDERSTANDING

AND GOU REGULATIONS

i) Unaccounted for Subproject Disbursements UGX. 58,826,655,271

Section 2.2 of NUSAF II Operational Manual requires that at least 80% of previous

disbursements are accounted for before replenishment to a subproject. The policy

also requires that all funds to subprojects should be accounted for within six

months.

It was noted that UGX.58,826,655,271 (25.8%) out UGX.227,844,706,768

disbursed to subprojects remained unaccounted for as at 30th June 2014. Out of

the UGX.58 billion unaccounted for, UGX.41,547,079,004 relates to disbursements

which have been outstanding for over six months. The table below refers;

342

AGE DISBURSED ACCOUNTED

%

ACCOUNTED UNACCOUNTED

% UN-

ACCOUNTED

Above 12

Months 142,994,940,365 124,511,969,492 87.1% 18,482,970,872 12.9%

9-12 Months 24,756,699,087 17,209,507,363 69.5% 7,547,191,724 20.6%

6-9 Months 40,914,262,109 25,397,345,701 62.1% 15,516,916,408 36.5%

Sub-Total (≥

6Mths) 208,665,901,560 167,118,822,557 80.1%

41,547,079,004 19.9%

3-6 Months 5,047,535,125 1,208,680,407 23.9% 3,838,854,718 72.6%

0-3 Months 14,131,270,083 690,548,534 4.9% 13,440,721,549 94.4%

Sub-Total

(0-6Mths) 19,178,805,208 1,899,228,940 9.9%

17,279,576,268 90.1%

Overall

Status 227,844,706,768 169,018,051,497 74.2%

Under the circumstances, I was unable to establish whether the unaccounted for

funds were used for intended purposes. Further, the delays in accounting for

subproject funds affects Project implementation as the activities are not completed

within project timelines.

Management explained that the delay in project accountability is a result of many

factors which include; the Community Infrastructure Rehabilitation (CIR) and

Public Works Program (PWP) which take 4-6 weeks before project implementation,

delays by contractors due to limited capacity to execute contracts on time and

fiduciary requirements that require at least 80% accountability for the previous

disbursement to sub projects and overall outstanding community accountabilities

above 6months in the district to be below UGX.50m. Management further

explained that the District Financial Tracker clean up exercise and Rapid Results

Initiative to clean up subproject accountabilities at the district had been carried

out and as a result unaccounted for funds had gone down.

I advised management to ensure that all project funds are fully accounted and

within the project timelines.

ii) Discrepancy between approved budget estimates by project

funders and the estimates approved by Parliament

343

The approved estimates by Parliament for the year under review were indicated as

UGX.41,648,920,000 while the approved budget by the World Bank amounted to

UGX.169,189,150,568 creating a variance of UGX.127,540,230,568. Management

stated that the variance was as a result of committed funds as at 30th of June

meant to implement the backlog of subprojects. However, according to the

NUSAF-World Bank work plan, the committed funds for the backlog sub project

amounted to only UGX.102,903,898,568 hence creating an outstanding variance of

UGX.24,636,332,000.

There seems to be a mismatch between the work plans and the Appropriation Act.

Management explained that the discrepancy was due to the project

implementation design where projects for Community Infrastructure and Public

works once approved receive only 50% of funds in the first tranche to commence

the implementation and receive the last 50% as second tranche subject to a

satisfactory report and accountability of not less than 80% of the funds released.

Management further indicated that the approved funding that is not released to

subprojects is retained by the project and reflected as committed funds and rolled

over to the subsequent financial year and that the difference observed was

planned to offset the accumulated outstanding 2nd tranche demands of the

community projects which were rolled over.

I advised management to harmonise project annual estimates submitted to

Parliament and those of the World Bank. This will also facilitate smooth

performance measurement.

iii) Low absorption capacity

The Annual work plan and budget for NUSAF II activities stood at

UGX.169,189,150,568. During the year, a total of UGX.91,783,256,891 was

received by the project in addition to the bank balances of UGX.49,084,796,298

meant for subprojects which were rolled over from the prior year.

UGX.104,683,883,524 was utilized during the year representing an absorption

capacity of only 62% of the approved budget, despite the Project being in its fifth

344

year of the six–year implementation plan. This implies that a number of planned

activities are likely not to be implemented.

Non-implementation of planned activities in the stipulated timelines does not only

lead to spillover of activities to the next planning period but may also lead to non-

achievement of the desired outputs, subsequently hampering fulfillment of Project

objectives. This could also lead to extra administrative costs in case of project

extension.

Management explained that the rate of absorption against IDA Credit is 100%

based on planned withdrawals versus actual withdrawals. Management further

explained that the project planned for 10,042 subprojects at the onset of NUSAF2

programme and to date 9619 projects had been funded.

I advised management to carry out adequate planning to enable full

implementation. Management should also ensure that planned activities are

completed before the project closure date (31st August 2015).

(b) General Standard of Accounting and Internal Controls

A review was carried out of the project system of financial management and the

following matters were observed;

i) Failure to insure Project vehicles

Section 4.4 (ix) of the NUSAF2 administrative hand book requires all Project

vehicles to be comprehensively insured with a reputable insurance company in

Uganda. This was not the case as all the project vehicles had not been insured at

the time of audit.

Failure to insure Project vehicles may lead to Project incurring unwarranted costs

in form of replacements and repairs in case any of the programme vehicles got

involved in accidents.

Management explained that the Process for procurement of Non-consultancy

services for insurance of NUSAF2 Vehicles was initiated, proposals received and

evaluated but the process could not proceed further because of Government‟s

345

policy which does not provide for insurance of government vehicles. Management

further explained that NUSAF2 being a main-streamed project had all its vehicles

registered under the ownership of OPM and therefore could not operate in

exception regarding insurance of government vehicles.

I advised management to liaise with the relevant authorities to ensure that the

matter is resolved so as to comply with the guidelines.

(c) General Implementation of Workplan and Activity Component

An Audit inspection of subprojects was carried out to assess the progress of

implementation. The following issues were observed:

Absence of sign posts at the sub-project sites

Bill of Quantities- provided for a sign post for identification of the sub projects

undertaken by NUSAF2 in the area which the project is located. The bill board

should clearly specify the Ministry, the project, the subproject name Sub County,

District and contractor. However, it was observed that all sub-projects in Karamoja

Region (Kaboong and Kotido) and many in areas of Acholi and Lango regions

inspected lacked sign posts for identification with the exception of Dokolo District.

In absence of the sign posts, it becomes difficult to ascertain whether all the

projects inspected were actually the right ones as there were other similar projects

run by Non-Governmental Organizations. There was also a financial loss for the

project as the item was budgeted for in the BOQs but not adhered to by the

contractors.

Management explained that a written communication had been made to all the

districts to prioritize the installation of sign posts at sub project sites.

I await management‟s efforts to ensure that installation of sign posts by the

contractors in all the sub-projects is done for easy sub project identification.

(d) Status of Sub Project Implementation

i) Project performance per annual work plan and Budget 2013/14

346

NUSAF II Project Management planned for implementation of various activities

during the year. A review of the annual work plan vis-à-vis actual implementation

and outputs for the year revealed that while a number of activities had been

completed, some activities were partially implemented. The table below refers:

S/No Activities for

the year

Targets for the

year

Amount

(UGX)

Progress during the year

1. Subprojects

completed

10,042

subprojects

completed

A total of 6,503 subprojects

(HISP-5,047 CIR-1,377 and

PWP-79) are completed out of

the 8,719 funded subprojects

giving a completion rate of

75%.

2. Accountability for

grants mobilized

99% of funds

disbursed

The project disbursed a total

of UGX.227,828,905,089 and

UGX.185,294,319,134 have

been accounted which is

81.3% of disbursed amount.

3. Implementation

support and

guidance offered

to districts

Reaching 55

districts – two

visits per district

65,000,000 One support supervision visit

was conducted reaching 11

districts (7 in Karamoja, 2 in

Elgon, 1 in Teso and 1 in

Lango sub-regions).

4. Training district

staff on

environment and

social safeguards

110 (55 Dist.

Env. Officers and

55 DCDOs)

160,000,000 3 regional trainings were held

in Gulu for participants from

Acholi, Lango and West Nile

districts; Mbale for

participants from Elgon,

Bukedi and Teso districts and

Moroto for participants from

Karamoja districts.

5. Technical support

on environment

and social

safeguards

55 districts 33,229,840 3 technical support visits were

done reaching 42 districts

(76% coverage).

6. Radio talk shows

and broadcasts

5 radio talk

shows per region

20,000,000 1 radio talk show on

commissioning of NUSAF2

subprojects held in Sironko

and 4 radio broadcasts in

Karamoja on NUSAF2 status

updates.

7. Support

supervision and

backstopping of

district staff on

3 visits to 55

districts

20,000,000 Backstopping of 34 districts

done on documentation of

best practices and record

keeping (62%).

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S/No Activities for

the year

Targets for the

year

Amount

(UGX)

Progress during the year

documentation

Delay in implementation of planned activities denies beneficiaries the intended

benefits of the Project. Besides, Project objectives may not be achieved.

Management explained that the decision to extend the project life by one year was

made after the preparation of the 2013/14 work plan and the targets that were

made under the assumption that the project would end in August 2014.

Management further explained that a new road map had been made providing

new targets for the project close in August 2015.

I advised management to expedite the planned Project activities in order to meet

Project objectives within the agreed time frame.

ii) Project Performance as per Logical Framework

According to the Project five year implementation plan and progressive reports

reviewed from management, the Project had in some instances (Public Works

Programme) not progressed well despite the fact that its closure date was set for

August 2015:

Component

Sub Projects Funding

Planned Approved

%

Achieved

against

5 yr

target

Planned

(US$)

Approved

(UGX)

Community

Infrastructure

Rehabilitation

(CIR)

1,915 2,533 132% 57,450,000 182,070,857,306

Household

Income Support

Projects (HISP)

7,236 6,716 93% 36,180,000 72,737,780,326

Public Works

Programme

(PWP)

891 370 42% 17,820,000 11,977,982,373

TOTAL 10,042 9,619 96% 111,450,000 266,786,620,005

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Delays in implementing activities could result into extra administrative costs.

Management explained that the project was set to meet the planned target once

the project is extended for another year.

I wait the outcome of management‟s efforts towards implementation of project

activities within the agreed timelines.

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17.0 MINISTRY OF PUBLIC SERVICE

17.1 Unspent Balances Due to the Consolidated Fund – UGX.262,479,735

The Public Finance and Accountability Act, 2003, requires that any unspent funds

as at the 30th of June that were obtained from the Consolidated Fund (UCF), be

returned to the Fund. It was noted that at the close of the financial year under

review, a balance of UGX.262,479,735 was still on the PSRP project account and

had not been remitted to the UCF account. I was not given an explanation on the

fate of the amount in question, given that the project closed in 2014.

In response, the Accounting Officer stated that these funds could not be remitted

to the UCF account, nor transferred back to the Ministry account as they were

meant to procure IPPS equipment whose procurement process was on-going. I

was however, not presented with documentary evidence to this effect. I advised

the Accounting Officer to always remit unspent balances to the Consolidated Fund

Account or else seek authority of the PS/ST as provided for under the Act.

17.2 Domestic Arrears – UGX.1,187,512,043

A review of the financial statements revealed that the ministry‟s domestic arrears

position increased by 281% from UGX.311,659,924 at the start of the year to

UGX.1,187,512,043 as at 30th June, 2014. This is an indication that the ministry

continues not to fully comply with the commitment control system introduced by

the Ministry of Finance Planning and Economic Development.

The Accounting Officer explained that the bulk of the arrears incurred during the

year (i.e. Ugx.680,700,719) related to validated monthly pension invoices which

remained unpaid on the system as at 30th June 2014, but were settled in July

2014.

I advised the Accounting Officer to always adhere to the commitment control

system of government and only commit her ministry to the extent of availed

funds.

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17.3 Mischarges of Expenditure – UGX.1,721,329,414

The GOU Chart of Accounts defines the nature of expenditure for each item code,

with the intention of facilitating better and consistent classification of financial

transactions and tracking budget performance per item.

It was noted that expenditures totalling to UGX.1,721,329,414 were charged on

items which do not reflect the nature of the expenditure. Such a practice impacts

on the credibility of the financial statements, since the figures reported therein do

not reflect true amounts expended on the affected expenditure items. In addition,

the practice distorts budget performance review on an item by item basis.

I advised the Accounting Officer to avoid such a practice and always ensure strict

budgetary discipline.

17.4 Imprest not Accounted For – UGX.108,336,942

Section 227 to 229 of the Treasury Accounting Instructions (TAI), 2003, provides

for retirement of all imprest by the close of the financial year, failure of which

recovery measures should be instituted against the concerned officers‟ (imprest

holder‟s) emoluments.

During the year under review, the Ministry paid cash imprest totaling to

UGX.260,718,300 of which UGX.108,336,942 had not been accounted for by the

time of concluding the audit. In addition, it was found that, contrary to provisions

of section 226 of the TAIs, there were no Imprest cashbooks maintained

throughout the year. The poor record keeping coupled with delayed accountability

further raise doubts as to whether the funds were properly utilised.

Given the circumstances, I was unable to establish whether the amount in

question was expended for the intended purposes. I advised the Accounting

Officer to follow up this matter and have the concerned staff account for the funds

and to always ensure full compliance with the requirements of the TAIs.

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17.5 Refunds to the PSRP-UPSPEP Project – UGX.66,872,000

Paragraph 156 of the Treasury Accounting Instructions (TAIs), 2003 Part 1,

prohibits expenditure from being charged to an item/sub-item merely because

funds are available under that item/sub-item. In addition, funds available on one

vote may not be transferred to another vote without parliamentary approval.

Contrary to the above requirement, the ministry paid a total of UGX.66,872,000 to

the PSRP-UPSPEP project, being a refund of project funds borrowed by the

ministry during the year. I was not availed with the details of the borrowings

made and the activities involved to ascertain their genuineness, and whether they

related to the financial year under review. I was also not availed the requisite

authority to borrow the project funds.

Although the Accounting Officer indicated that the documentation in question was

available, this had not been availed to me at the time of concluding this report. I

advised the Accounting Officer to always seek for proper authority for such

borrowings with a justification.

17.6 Non Deduction of 6% Withholding Tax - UGX.38,087,253

Section 117-1 of the Income Tax Act (ITA), Cap 340 (as amended), requires a

withholding agent to deduct and remit a withholding tax on payment of

employment income. During the year under review, the ministry made payments

to various service providers for goods and services supplied without deducting 6%

withholding tax totaling to UGX.38,087,253. According to the ITA, failure to remit

the amount withheld constitutes an offence for which the Accounting Officer, as a

withholding agent, is personally liable. In addition, it further exposes the ministry

to the risk of penalties/fines imposed by URA.

The Accounting Officer stated that the anomaly resulted from a failure to activate

the With-holding tax function at the time of setting up the suppliers on the IFMS,

and that a letter had been written to the Accountant General, requesting him to

activate the function of withholding the 6% tax. I advised the Accounting Officer

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to follow up this mater and ensure that in future, withholding tax is always

deducted before making any payments above the threshold prescribed in the Act.

17.7 Unaccounted For Funds For Various Activities – Ugx.193,681,503

Section 212 of the Treasury Accounting Instructions (TAI), 2003 provides for

temporary imprest advanced to staff to be recorded in the General Ledger until

they are accounted for. Thereafter they are expensed to respective expenditure

items.

Examination of payments however revealed that a total of UGX.193,681,503 either

advanced to staff or deposited directly with service providers in respect of

workshops/conferences conducted by the Ministry remained unaccounted for at

the end of the year. There was no supporting documentation availed for audit

examination in respect of the amounts advanced/deposited. Under the

circumstances, I was unable to confirm whether the amount involved was applied

for the intended purposes.

Although the Accounting Officer indicated during my concluding meeting with her,

that the documentation in question was available, this was not availed to me. I

advised the Accounting Officer to ensure full adherence to the TAI and have all

advances accounted for.

17.8 Payments to Foreign Pensioners – UGX.113,324,176

A review of pension records revealed that the ministry pays pension to foreign

pensioners through account number 0196000236505 in Stanbic Bank, and that

during the year, the ministry paid to this account, a sum of UGX.113,324,176.

However, I was not availed with records to establish the authenticity of these

foreign pensions. Although the Accounting Officer indicated that the files in

question would be availed to me, these had not yet been availed by the time of

concluding my report. I advised the Accounting Officer to ensure that all records

pertaining to pension payments are always properly kept and filed, to facilitate

their retrieval in case of need, say for audit purposes. In the meantime, the files in

question ought to be obtained and provided for audit examination.

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17.9 Payment of Pensioners Beyond The Pensionable Period–

Ugx.12,755,933,531

It is a requirement under Section 18(1) of the Pensions Act, Cap 286, that every

pension or other allowance granted under the Act, should cease upon the death of

the person to whom it is granted. For the avoidance of doubt, it is declared that a

pension granted under this section be payable for a period not exceeding in

aggregate, fifteen years from the date of retirement of the deceased pensioner.

Pursuant to the above therefore, all pensioners must furnish the Ministry of Public

service with annual life certificates after the expiry of their 15 year pensionable

periods as proof that they are still alive.

Contrary to above, a total of 19,135 pensioners who had attained the maximum

pensionable period of 15 years were still on the ministry‟s payroll and earning

monthly pension yet they had not furnished the ministry with life certificates. As

such, a total of UGX.12,727,686,849 paid in respect of their monthly pensions

during the year under review could not be justified in the absence of life

certificates. In addition, a total of UGX.28,246,682 was paid to administrators of

estates of pensioners whose cause of retirement was death and had earned

pension beyond the stipulated period of 15 years. Under the circumstances, the

audit could not confirm that the said pensioners were still eligible. There is a risk

that the ministry continues to pay pension to ineligible or non-existent pensioners

and thus occasioning loss to government.

The Accounting Officer explained that according to the Pension Act, Cap 286 all

pensioners who are over 75 years should furnish the Ministry with Life Certificates,

but that the Ministry cannot just delete them off the payroll unless it is confirmed

that they are dead. I advised the Accounting Officer to institute a mechanism that

tracks pensioners so that they do not get paid beyond the lawful pensionable

period. In addition, the ministry should enforce the requirement of pensioners,

specifically those that have attained the maximum pensionable period of fifteen

years, to avail life certificates.

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17.10 Pension Payments To Group Associations – Ugx.956,803,416

A total of UGX.953,803,416 was paid to various pension groups as both gratuity

and monthly pension of group members. However, it was noted that these groups

did not furnish the Ministry with accountability records/evidence of

acknowledgements to show that the funds reached the bona-fide beneficiaries.

There is no evidence that the ministry has a mechanism to track the pensioners

under these groups to ascertain whether the pensioners were still alive and

eligible for pension as there were no life certificates on file for the beneficiaries

under these groups. Absence of the monitoring measures may lead to payment of

non-existent/ineligible pensioners and thus occasioning loss to government.

In response, the Accounting Officer stated that the Ministry has instituted

mechanisms to ensure that each pensioner or beneficiary is unique. However, at

payment, the pay code can be to a group as in the above cases. Where a

pensioner has not been paid, the ministry is always notified, and no complaint to

this effect has ever been received. I advised the Accounting Officer to update all

data in respect of group pensioners and institute a monitoring mechanism to

ensure payments are made to genuine pensioners.

.

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SECURITY SECTOR

18.0 MINISTRY OF DEFENCE

18.1 Outstanding commitments

A review of the Statement of Financial Position revealed outstanding payables of

UGX.81,928,017,200 as at 30th June 2014. Payables worth UGX.57,385,245,362

were disclosed in the statement of financial position as at 30th June 2013, out of

which UGX.26,037,671,862 was paid implying an increase in domestic arrears by

UGX.50,580,443,700 (88%) from the closing position of the previous year. It is

evident that management has continued to incur arrears without establishing

sufficient mechanisms to monitor and control them. There is a risk of loss of

reputation and litigation due to non settlement of creditors.

The Accounting Officer attributed this problem to increased activities, emergencies

widening operations and escalation of food and other essential commodity prices

without corresponding increase in funding.

I advised management to liaise with Ministry of Finance, Planning and Economic

Development for improved funding for the Ministry.

18.2 Borrowings

It was established that at the beginning of the financial year, the Ministry had an

outstanding interest bearing loan worth UGX.136,781,479,167 and no repayment

was done during the year. Further, this loan attracted a fixed interest of

UGX.80,506,679,188 for the period March 2010 to June 2011.

The Accounting Officer explained that this resulted from procurement of classified

equipment‟s undertaken by the Ministry in the financial year 2009/2010 by a

drawdown on foreign reserves of Bank of Uganda. The loan interest has not

attracted any interest since then as per the funding arrangement.

356

I advised the Accounting Officer to engage Ministry of Finance, Planning and

Economic Development to have this amount budgeted for so that the loan can be

cleared.

18.3 Avoidable expenditure

It was established that on 18th December, 2013 the Ministry of Defence entered

into a lump sum agreement/contract with a motor company to supply 109

different types of brand new motor vehicles at an agreed total price of

USD.5,578,094.80 and corresponding spare parts at USD.248,900.20, leading to a

total contract price of USD.5,826,995.00. The terms of payment were 40% deposit

with a signed contract/order confirmation and the balance of 60% upon transfer of

ownership of the vehicles (before delivery). The contract also required the Ministry

to pay by an irrevocable Letter of Credit.

However, instead of opening up an irrevocable Letter of Credit with Bank of

Uganda, the Ministry opened up a Deferred Letter of Credit Facility (LC Facility)

with Stanbic Bank of USD.6,273,438.40 payable in 13 quarterly instalments with a

commission of USD 31,367.19 payable every quarter. This resulted into excess

payment of USD.446,443.40 equivalent to UGX.1,104,947,415. In addition, the

Ministry intends to pay another of 13 quarterly instalments of USD.31,367.19

which will also result into an extra cost of USD.407,773.47 equivalents to

UGX.1,009,239,338.

The Accounting Officer explained that BoU issues irrevocable letters of credit on

deposit of full LC value yet the Ministry did not have the entire contract amount of

US$.5,826,995 to open this type of Letters of Credit.

I advised that management should have consulted with the Accountant General

regarding the Letters of Credit prior to execution.

18.4 Sub-constructed works of NSIS project at Kololo

Engineering Brigade made a payment of UGX.560,000,000 to a local company to

partition the offices and provision of other necessary facilities under the National

357

Security Information system (NSIS) project at Kololo. However, no contract was

availed to enable me evaluate the sub-contracted works. The Accounting Officer

presented copies of the acknowledgement receipts for the money paid without

details of works done. I explained to the Accounting Officer that carrying out

works without a formal agreement may result into shoddy or abandoned works. I

was therefore unable to review the works undertaken for purposes of compliance.

The Accounting Officer explained that the arrangement was entered into in order

to speed up the works.

I urged the Accounting Officer to always ensure that formal agreements are

entered into for all Ministry contracts.

18.5 Un-reconciled Government of Uganda debt with UMEME and Ministry of

Defence

Government of Uganda entered into an agreement with UMEME in which the latter

was required to offset government bills that remained outstanding for a period of

more than 60 days. A review of the available documents indicates that total

Government debt as at 31st January, 2013 amounted to UGX.62,771,404,221, of

which UGX.30,303,286,732 relate to Ministry of Defence. At that date UMEME set

off UGX.31,717,538,490 from the debt leaving a balance of UGX.31,053,885,731

as total outstanding. However, it was not clear of what amount offset relates to

the ministry of Defence.

Furthermore, it was noted that during the year Ministry of Defence did not

reconcile with UMEME to ensure that the amount off set is deducted before

making payment.

The Accounting Officer explained that information on the outstanding debt was

communicated to PS/ST who will ensure that when paying the debt, all offset

amount will be taken into consideration and deducted.

I advised management to liaise with the Ministry of Finance, Planning and

Economic Development to have the position reconciled.

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18.6 Un-reconciled National Water and Sewerage Corporation Bills

UGX.3,102,169,373 was paid to NWSC for water supplied to the Ministry.

However, the Ministry did not have updated ledgers for all the water accounts to

keep track of the bills paid and what was outstanding. The Ministry did not include

any amount outstanding at the end of the year despite the fact that April 2014

bills were the last to be paid in the financial year. Further, no reconciliation was

done at year end to establish what was owed to NWSC. The Ministry therefore

understated the outstanding commitment for the year.

The Accounting Officer explained that water payment ledgers are not up-to-date

due to un-concluded process for verification of water bills of the Ministry. The

verification is underway and expected to be completed in the financial year

2014/15.

I urged the Accounting Officer to follow up the verification process and ensure

that it is completed.

18.7 Intended Sale of Kiseka Hospital

Some time back in 2007, a decision was taken by management of the Ministry of

Defence to have the premises and land comprised of the former Kiseka Hospital

sold. However, to date this property has not been sold off. The property is

dilapidated, abandoned and is losing value as time passes. There is also a risk that

this property could easily be encroached. By the time it is sold, the Ministry may

not get the expected value from the sale.

The Accounting Officer explained that effort was made to have this property sold

off through competitive bidding but the highest bidder was found to be below the

reserve price. A decision was then taken to revalue the property but the highest

bidder sued the Ministry where Court ruled in favour of the Ministry. The ruling

was appealed against and management of the Ministry is still waiting for the

outcome.

359

I advised the Accounting Officer to follow this case and also liaise with Uganda

Land Commission and ensure the safety of the land and property.

18.8 Audit Inspections

a) Inspection of Schools and Colleges

i. Under-funding of Kimaka

The budget of Senior Command and Staff College, Kimaka has remained at the

same level since 2004 at UGX.1,532,905,096 and cannot meet all the

requirements of the college. During the financial year under review, the approved

budget was not adjusted against UGX.2,972,117,000 that was required. As a result

of inadequate funding the college is facing a number of challenges which include:

The lagoon that serves the Senior Command and Staff College was

degenerating and may in the end fail to serve the purpose for which it was set

up.

The place is surrounded by garbage which has reached too close to the fence.

Cattle were found grazing within the fence. A piggery with 46 pigs was

adjacent to the lagoon presumed to belong to someone who is not a member

of Uganda Peoples‟ Defence Forces.

The screen that sieves the spillage into the lagoon together with the three

metallic electrical poles which were meant to provide light have been

removed.

The continued lack of adequate funding will hamper the achievement of planned

activities and the long term objectives of the college.

The Accounting Officer attributed the current situation to budgetary constraints

faced by the Ministry.

I advised the Accounting Officer to liaise with the responsible authorities to ensure

the College is funded to meet the objectives for which it was established.

b) Junior Command and Staff College

Un-surveyed land

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Land measuring about 697.721 acres belonging to the College is not surveyed and

as a result most of the training areas in Bugungu, Buikwe District have been

encroached on by people in the area. The Ministry is at a risk of losing this land to

the encroachers and as such in future it may be difficult to undertake trainings at

the college.

I advised management to have the land surveyed to avoid costs associated with

evictions.

Amber court Market

This market is situated on Kimaka Road on army land which was established in

conjunction with the Jinja Municipality with a specific aim of improving the welfare

of the spouses of soldiers within the Gaddafi Garrison. Correspondences about this

subject are dated as back as July 2002. The available records indicate that the

accruing revenue from the market was to be shared between Municipality and

welfare of solders in the ratios of 60 to 40. It was established that to-date, these

instructions have never been honoured. The records further called for

empowerment of the soldiers‟ spouses to be able to bid and run the market. This

has also been persistently ignored.

At the time of this audit inspection (October, 2014), this market was being

operated by a third party at a monthly rent of UGX.2,330,445. This translates into

UGX.27,965,340 a year and for the last five years, a total of UGX.139,826,700

should have been paid. Because of laxity in the implementation of the

instructions, the soldiers‟ welfare fund has lost UGX.55,184,937 which is

equivalent to 40% of UGX.139,826,700.

I advised the Accounting Officer to follow up the matter to ensure that the army

benefits from the facility.

18.9 Bugema barracks in Mbale

a) Barracks land

This barracks which is the 3rd Division Headquarters, occupies an area of

approximately 600 acres located within Mbale Municipality. It was however noted

that land owned by the barracks is not in the inventory of the Ministry‟s lands.

361

Information available indicates that this barracks has existed since the days of

African Rifles (the first Ugandan Army). There were reports that some people have

started claiming ownership of the same land. The Ministry is at a risk of losing this

land if no action is taken immediately.

I advised the Accounting Officer to follow up the matter with authorities with a

view of resolving land ownership of the facility.

b) UPDF maize mill project at Mbale

The Military Maize Mill at Mbale Industrial area was contracted out to an individual

to manage and run it on behalf of 3rd Infantry Division of the UPDF for a period of

30 months commencing from 1st June 2014, at an agreed total consideration of

UGX.92,910,000. Out of the total consideration, UGX.62, 910,000 was to settle all

the outstanding debts incurred by the milling project and UGX.1,000,000 was to

be paid to the Division on a monthly basis up to the end of the period. The

following issues were however noted:

The individual who hired the mill is one of the long-time suppliers of maize

flour to Ministry of Defence, an indication of conflict of interest.

The outstanding amount of UGX.62,910,000 was not verified by an

independent person at the time when it was forming part of the consideration.

It was also not clear as to whether 3rd Division has mandate to commit the

UPDF assets for that period.

The revenue of UGX.6,000,000 (period of 6 months) was not verified as no

document was availed for verification at the time of inspection.

It was also noted that the individual who hired the mill was the land lord of

the maize mill project, an indication that insider dealing with this supplier was

possible as no advertising was made at the time of soliciting the services of

the contractor.

The agreement signed was never cleared by the Solicitor General as per the

requirement of government agreements.

The Ministry is therefore at a risk of losing the entire maize mill if no follow up is

made on this project.

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I advised management to review the contract in consultation with the Solicitor

General.

18.10 Moroto Barracks

a) Encroached Land

This land which was surveyed during the time when the Uganda Army was

referred to as Uganda Rifles has a number of encroachers. Keeping these

encroachers on Ministry land is in contravention of Commander in Chief directive

which required all people to vacate Ministry land. The latest report on opening of

the boundaries dated 30th July 2014 revealed that some key military installations

are outside the surveyed land and recommended annexure of the same before

scrupulous people take advantage. At the time of this report no action to the

effect had been taken.

Delays in implementing the directives to have all encroachers off the Ministry land

will expose the land to unscrupulous people with intention to own it.

The Accounting Officer explained that Military Land Board was following up the

issue of encroachers of the Ministry/UPDF land. A report on the outcome is

awaited.

b) Generator at Oliver Thambo training school

The standby generator of 250hp at Oliver Thambo is degenerating due to

inadequate maintenance. It was not possible to establish when it was last serviced

because the service card was worn out. Besides, it could not be used during

power blackout because the changeover control panel fixed is for a single phase

yet the generator is of a bigger capacity. At the time of audit inspection, there was

no power and lectures were being conducted on a very small generator of 5hp.

Lack of funding is causing vital assets of the school to degenerate and as such the

Accounting Officer was advised to secure further funding for maintenance of the

assets.

I advised the Accounting Officer to secure funds to service the generator.

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18.11 Motorised infantry workshop-Nakasongola

The motorized infantry workshop under construction at a cost of UGX.1,

507,894,518 appeared abandoned after building it to shell level. The same applied

to the toilet and the septic tank. There was no documentation at the site to assess

whether the work was on schedule. Besides, the contract records were not

provided for review.

18.12 5th Division Acholi Pii

a) Land occupied by the division headquarters

According to records, the land occupied by the Division Headquarters is estimated

at 1,388 hectares for the Acholi Pii (Arum Site) and the Agago Ranch 3,429 acres

formerly belonged to the Office of Prime Minister supposed to accommodate

refugees but has since been converted to Army use. At the time of inspection, the

users (the army) were not aware of the boundaries of the land. It is also believed

that the land is heavily encroached. The Military Land Board asserts that the

formalization of acquisition from Office of the Prime Minister and Pader District is

on-going.

Delay in streamlining ownership credentials increases encumbrances on the land

with the attendant litigation costs as result of encroachment.

The Accounting Officer explained that arrangements for the acquisition of the land

are in advance stages and a final decision is awaited from the Office of the Prime

Minister.

I urged the Accounting Officer to ensure that the process of finalising the

acquisition of the land is expedited.

18.13 Masaka armoured brigade

a) Land Encroachments

With the exception of Masaka armoured brigade land, the army land at Lukaya

and Lake Nabugabo is heavily encroached. Whereas administratively this land

belongs to the Uganda Peoples Defence Air Force as users, the land has been

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encroached on. The encroachment on the land appears to be due to lack of

effective use.

The Accounting Officer explained that the Ministry contested the encroachment

and several meetings have been held between ULC, Lukaya Town Council

Authorities and UPDF to have the matter resolved.

I urged the Accounting Officer to continue pursuing the above action and ensure

that the matter is resolved.

b) Financial loss due to termination of contract

During the audit inspection; a site that was for the flat lets which was abandoned

by a construction company after payment of UGX.474,576,271 had been

completely abandoned and preserved as exhibit. The new flats built by another

construction company were now complete under a completely new contract and

new site.

The choice of a new site and contractor resulted into a financial loss of

UGX.474.5Million which was not reported in the financial statements in accordance

with financial regulations.

I advised the Accounting Officer to undertake due diligence prior to award of

contracts.

18.14 2nd Division Mbarara

a) Encroachment of 2nd division headquarters‟ land

Records obtained from the Military Land Board revealed that the land

accommodating the 2nd Division Headquarters measured 600 acres. The barracks

land has been encroached on and there is no evidence of action taken by

management. Besides, there was nothing on the ground like a copy of the land

title to indicate the extent of the barracks premises.

The Accounting Officer was advised to take interest on the matter and ensure that

the land is secured.

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b) Abandonment of rehabilitation works at School of Military

Intelligence, Muhoti Baracks

An inspection of the contract for rehabilitation of the School of Military Intelligence

revealed that the contactor had only done progress work on nine (9) blocks out of

twenty two (22). At the time of audit inspection, the keys to the nine blocks were

still retained by the contractors and could not therefore be used to alleviate the

acute accommodation problem at the school. Records obtained from the

Engineers‟ Brigade indicated that the contract sum was UGX.2, 274,831,418 and

by the time of this report, UGX.1,901,206,927 had been paid representing a

payment of 83% against a performance of 41% or less. Besides, the contract

period was for 2008-2010 which indicated that it was five years behind schedule.

I advised the Accounting Officer to follow up on the delayed works to ensure

accommodation issues are resolved.

c) Hima Barracks 305 Brigade Headquarters

It was observed that all buildings at the brigade headquarters had developed

cracks while these structures appeared recently renovated. These included the

administration block, hospital and barracks quarters. This may be an indicator that

the design and execution of the contract was not undertaken properly.

I advised management to follow up on the defects noted.

18.15 Mubende Rehabilitation Centre

a) Maize mill

The Chieftaincy entered into a tenancy agreement to operate the maize mill

belonging to Uganda Peoples‟ Defence forces at an annual rent of

UGX.18,000,000. The contract indicates that on signing of the contract (1st May

2014) the tenant had paid the annual rent in advance. However in absence of a

general receipt, bank slip and bank statements, we were unable to certify

ourselves on the authenticity of the payment. Besides, the legal capacity of the

Chieftaincy to contract on behalf of Ministry of Defence was not properly

demonstrated. It was also noted also that the income was not recognised as Non-

366

tax Revenue. There is a risk that the Ministry did not carry out enough due

diligence about this contractor.

The Accounting Officer explained that management is to review the contract in

consultation with the Solicitor General with a view to addressing the anomalies in

it.

This action is awaited.

19.0 OFFICE OF THE PRESIDENT

19.1 Cumulative outstanding commitments

Office of the President had arrears of UGX.8,816,941,731 at the beginning of

financial year 2012/2013 comprised of domestic arrears of UGX.4,527,940,977 and

pension liabilities of UGX.4,289,000,977. By the end of the financial year

2013/2014 the arrears had accumulated to UGX.24,944,370,718 comprising of

domestic arrears of UGX.11,182,915,772 and pension liabilities of

UGX.13,761,454,946. Accumulation of arrears is in contravention of the

commitment control system and the entity also risks loss of reputation and

litigation due to non settlement of the obligations.

The Accounting Officer explained that outstanding commitments were a result of

insufficient funding of the Security Agencies and that the resultant arrears have

been brought to the attention of Parliament and the Ministry of Finance, Planning

and Economic Development. MoFPED provided UGX.7,240,894,000 in the budget

and a supplementary of UGX.6,335,942,636 to clear the reported arrears under

financial year 2014/2015 which reduced the arrears to UGX.11,367,534,082.

I have advised management to continue following up the matter and ensure that

all the outstanding arrears are cleared.


367

The financial statements submitted by the Office of the President for the financial

year ended 30th June 2014 indicated that UGX.73,619,648,221 was budgeted,

UGX. 73,561,071,202 released and UGX.73,389,672,977 was spent. Despite the

Ministry having received virtually all the budgeted funds, some activities were not

undertaken as shown in table below:

Output

Code

Planned

Activity

Expected outputs Actual outputs Unimplemented

Output:

160104

Economic

Research

and

Information

Policies reviewed to

identify policy

implementation

weakness with the

aim of generating

actionable

recommendations

for policy

development in

Sectors of

energy (Oil and Gas

sector )

Investment

and taxation and

micro finance

Research

conducted on the

implementation

and performance

of the pension

policy and a report

produced and

submitted to

relevant MDAs for

appropriate action.

Research carried

out to assess the

progress in the

development of

the Energy (oil

and gas) sector,

the report is in

draft form.

Research on

Agricultural

Financing on-

going.

Policies reviews

and actionable

recommendations

for Investment,

taxation finance

not done.

Output:

160201

Cabinet

Support and

Policy

Development

60 Agenda

and Minutes issued

to Ministers and

Ministers of State.

248 draft

cabinet submissions

Reviewed for

adequacy.

4,800

extracts of cabinet

decisions issued to

ministers and PS.

56 Agenda and

Minutes of Cabinet

Meetings issued.

166 Draft Cabinet

Submissions

reviewed for

adequacy.

3951 Extracts of

Cabinet Decisions

Issued to Minutes,

Ministers of State

and Permanent

Secretaries.

4 agenda and

Minutes of Cabinet

meetings not

issued.

82 draft cabinet

submissions not

reviewed for

adequacy

849 extracts of

cabinet decisions

not issued to

ministers and PS

368

Management explained that there were changes in work plans regarding policy

reviews while the anticipated Cabinet business did not take place.

I advised management to ensure that all planned activities are undertaken and

that any changes to the workplans are documented and authorised.

19.3 Delays in completion of construction of RDC`S Office in Otuke District

A Local Company was awarded a contract to construct RDCs office in Otuke

District at a contract sum of UGX.605,221,056. The contract start date was set on

21st March, 2012 and the intended completion date was 20th July, 2012. Works

were later extended to 31st December, 2013. Despite the extension, the contract is

still behind schedule. The technical inspection report dated February 2014

observed that the roofing works had been completed but with some defects. Since

the project had delayed, the Ministry should have enforced the liquidated damage

clause which was not done. This implied that there was loss of revenue let alone

the signed agreement was not enforced.

Management explained that an inspection team from the Office of the President

identified defects for rectification by the Contractor before the works could be

handed over.

I await confirmation that the defects were actually rectified and that liquidated

damages due to delay are claimed before handover exercise.

19.4 High Vehicle Maintenance costs

It was noted that most vehicles in the Office of the President had exceeded 5

years since they started running and almost all of them had mileage beyond the

limit of 250,000 kms. Because of this, the maintenance costs of the fleet have

tremendously increased. Whereas at the end of the financial year the office had

outstanding garage bills amounting to UGX.534,000,000, management managed

to clear bills amounting to UGX.397,000,000 leaving a balance of

UGX.137,000,000. The office is still faced with bills amounting to UGX.565,106,000

for the first half of the year alone and this has created a balance of

UGX.702,106,000 due for payment.

369

With this trend, it is likely that at the close of the financial year the office may

have outstanding garage bills over UGX.1,000,000,000 given the projections.

Management explained that replacement of aged vehicles is constrained by the

inadequate budget and the Office has raised the matter of the need for additional

resources with the Ministry of Finance, Planning and Economic Development but

no positive response has been received.

I advised management to continue liaising with Ministry of Finance, Planning and

Economic Development and have the outstanding debt cleared to avoid eventual

litigation from garage owners. Plans should be put in place to address the aging

fleet.

19.5 PPDA Audit observations

a) Procurements not in the entity`s procurement plan

The entity conducted five procurements worth UGX.64,037,000 outside the

procurement plan during the financial year contrary to Regulation 3 (2) and (3) of

the PPDA (Procuring and Disposing Entities) Regulations, 2014. Conducting

procurements outside the plan may lead to domestic arrears.

Management explained that the procurements were undertaken as emergency

requirements which had not been foreseen at the time of consolidating User

Department‟s procurement plans.

I urged the Accounting Officer to always ensure that that the user departments

prepare comprehensive work plans and all intended items should be included on

the procurement plan in accordance with the Regulations.

20.0 STATE HOUSE

20.1 Outstanding commitments incurred during the year

Contrary to the commitment control system which requires the Accounting Officer

to commit the Ministry to the extent of funds available, State House incurred

370

outstanding commitments worth UGX.529,849,725 during the year under review.

This practice is contrary to the financial regulations and could lead to litigation

costs due to non-settlement of outstanding obligations.

Management explained that these were utility bills for the month of June which

were received after the financial year had ended and were settled in the first

quarter of financial year 2014/2015.

I advised management to always settle the utility arrears as and when they fall

due.

20.2 Non reconciliation of Government of Uganda debt with UMEME and

State House

Government of Uganda entered into an agreement with UMEME in which the latter

was required to offset government bills that remained outstanding for a period of

more than 60 days. A review of the available documents indicates that total

Government debt as at 31st January, 2013 amounted to UGX.62,771,404,221, of

which UGX.495,904,662 relate to State House. At that date UMEME set off

UGX.31,717,538,490 from the debt leaving a balance of UGX.31,053,885,731 as

total outstanding. However, it was not clear of what amount offset relates to State

House

Furthermore, it was noted that during the year State House did not reconcile with

UMEME to ensure that the amount off set is deducted before making payment.

Management explained that State House was not informed of the deductions and

as such could not undertake the reconciliation.

I advised management to liaise with the Ministry of Finance, Planning and

Economic Development to have the position reconciled.

371

AGRICULTURE SECTOR

21.0 MINISTRY OF AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES

21.1 Land issues

The Ministry has land located in Kampala, Entebbe and various parts of the

country. An inspection was undertaken with a view to establish ownership and

status of use. The following observations were noted;

a) Land not surveyed and titled

A significant portion of the Ministry land especially up country is not surveyed and

therefore not titled making it vulnerable to encroachment. I noted that some of

the land has been encroached on and the issues have not been resolved so far. I

further noted that most of the land especially the up country land has been idle for

a long time and this could have contributed to this challenge.

I was not availed with documents pertaining to occupancy, utilization and transfer

of ownership. I explained to management that the unclear status makes MAAIF

land and assets more vulnerable to waste, encroachment and grabbing. (Details in

table below).

Current Owner Location Size Title

Status

Extent Of

Encroachment

Nyakashashara Holding

Ground

Kiruhura 287 Hectares/717.5

acres

Surveyed The originals plot

has been

subdivided into

43.2 ha and

leased to a

private individual

while 244 ha is

what remains for

the holding

ground

Nshaara Kiruhura 27.3 Sqm17472a Surveyed 5 Square Miles

encroached

372


Status

Extent Of

Encroachment

Kabagore holding

ground

Kiruhura 4 Hectares/10 acres Surveyed -

Kazo Veterinary Centre Kiruhura 10 Hectares/25 acres Surveyed -

Sanga Kiruhura 2.5 Sqm/1600 acres Partly titled 1.5 Square Miles

encroached

Ruhengyere Kiruhura 21 Sqm/13440 acres Titled Kayonza trading

centre 5-10 acres

Katikara in Nalweyo Kibaale 3 sq m/1280 acres Surveyed, a

bsentee

landlord -

Mame

Sabagabo

area (3

sq.m/276

acres)

Missing

Kasenene Tsetse

control

Hoima 10 Acres Encroached -

South Bururuma Kabale 250 ha/625 acres surveyed -

Mbarara zonal

Agricultural Research &

Development Institute

Mbarara 520 ha/1300 acres NARO in the

process of

resurveying,

titled (Title

with Uganda

Land

Commission

)

32 hectares

encroached

Kirimirire Ibanda 8 ha/ 20 acres Not

surveyed

Approximately

1/3 is

encroached on

Nyabikurungu Coffee

Demonstration

Ibanda 4 ha/10 acres Surveyed -

Coffee Demonstration

Centre/House

Mushunga

Nyarushanje sub

county

4 ha/10 acres Not

surveyed

-

Hoima class 111 Hoima 8 acres according to

MAAIF record

Surveyed -

Ibanda farm class II Hoima Estimated 4 Acres Surveyed -

373


Status

Extent Of

Encroachment

W/S

Kitegana Coffee/Cocoa

nursery

Kagadi 2 ha/ 5 acres Surveyed -

Ibanda workshop class

II

Ibanda town 1.2 ha/3.0 acres Not

surveyed

Approximately

1/10 of it has

been encroached

on

Kagadi TVC Kagadi town 2 ha/5 acres Surveyed -

Kakumiro TVC

&Agricultural farm

Kakumiro 2 ha/5 acres Surveyed Whereas MAAIF

intervened

initially, the sub

county through

ULC &DLB got a

land title 7

demarcated plots

for private

developers

Kitagasa coffee

demonstration/nursery

Hoima 1.6 ha/4 acres Surveyed -

Buseruka house of DAO

near L.Albert

Hoima - Not

surveyed

-

Ijamirembe group farm Masindi 1.546 ha/3.87 acres No evidence

of survey

-

Kigumba sub county Masindi 4 sq miles/2560a surveyed -

Dyanga Tsetse control

Unit on Gulu road

Masindi 201 ha/502.5 acres Surveyed

area is 209

ha, I/SE

0148

-

Pakanyi- Kihonda Masindi 560 ha/1625 acres surveyed -

Kihihi class II

workshop

Kanungu - Difficult to

estimate extent

encroached

Kibimbiri cotton

growing farm

Kanungu 320 ha/800 acres Not

surveyed

-

Kihihi fish pond Kanungu 4 acres Surveyed -

Bugangari Coffee

Demonstration Centre

Rukungiri 1.2 ha/3 acres Surveyed -

374


Status

Extent Of

Encroachment

Ntoroko fisheries house Bundibugyo - Not

surveyed

-

Ntoroko meteorological

Equipment and

Fisheries Officer‟s

Residence

Bundibugyo - Not

surveyed

-

Ruhadagaza fish fry

centre

Bushenyi 5 acres Surveyed -

Kicwamba Fisheries

regional hqtrs

Bushenyi 13.63 ha/34.1 acres Surveyed -

Omunyole Livestock

Market, KisokO

Kisoko, Gwaragwara,

Omunyole

Tororo

Approx. 3 Acres - -

Obukuru Holding

Ground, Kayolo

Tororo, Approx. 3 Acres - -

Nyakanysi-Nsongezi Isingiro - - -

Rwivoro Kisoro 300 acres Not

surveyed

-

Rwerere Kisoro - - -

Kyanika Kisoro - Not titled -

Bunagana Kisoro 100 acres Not

surveyed

-

Birere Mbarara - - -

Nalugamba, Busujju Mubende 4.2 acres Surveyed -

Kakuto Class II W/S Kakuto 2 acres Not

surveyed-

Residential by

private people

Kyotera Class II W/S Kyotera 2 acres Not

surveyed -

Private

developments

National semi arid

resources research

institute

Soroti 1,768 acres Survey

process

currently

going on

There is an issue

of the technology

verification

centres, where

encroachment

has been realized

to a large extent

Kidetok Vet Centre Soroti 0.5 acre

375


Status

Extent Of

Encroachment

Odapakol, Pingire

Agu night stop Kumi - Not titled -

Obotia Holding Ground Kumi 50 Acres Not titled -

Alodi Akism, Kadir Kumi Not titled -

Alamaka Mukura sub

county,

Kumi - Not titled -

Oyinuku Koburu, Ngora

subcounty,

Kumi - Not titled -

Bukedea Livestock

Market

Kumi Approximately 2.5

Acres

Omatenga Kajamaka

parish, Kanyum sub

county

- Not titled -

Akuoro parish, Bukedea

sub county kumi

Kumi - Not titled -

Ogirai parish, Kanyum

sub county, Kumi

Kumi - -

Okunguro

Demonstration Farm

Abilakim, Bukedea

Kumi Approx. 7 Acres

Kumi Boma parish,

Kumi Trading centre

Kumi 6 acres - -

Ngora Nyamongo, Kumi 1 acre - -

Karamoja district farm

show ground

Moroto - - -

Atumkat Moroto 937.5 - -

Kihole Katakwi 177 acres

Kuju Katakwi - - -

Nawaikoke agicultural

workshop

Tororo - - -

Masafu Tororo - - -

Omunyole Livestock

Market

Tororo Approximately 3 a Heavily

encroached

Tororo Class I Tractor

Workshop

Tororo Approximately 3 a

Okukuru Holding Tororo Approximately 3 a Heavily

376


Status

Extent Of

Encroachment

Ground Encroached by

the Ringtho

Family

Kisoro sub county TVC Tororo - - -

Malaba Kwapa road, Tororo 2 acres - -

Osukuru Tororo 100 acres - -

Okille Quarantine

Okille, Kobulubulu,

station/Ranch

Kaberamaido Okille Quarantine

Okille, Kobulubulu,

station/Ranch

Kaberamaid

o

Okille Quarantine

Okille,

Kobulubulu,

station/Ranch

Ikulwe Research

station

Mayuge 214 acres On going 1 acre

Bugiri 3335 acres Registered

under plot

9, block 7

(Bukoli)

95%

Sironko Cattle Holding

Ground Buwalasi

Sironkho

173 Acres (surveyed

by Sironko DLG)

Registered

under

Sironko DLG

Wholly taken

Bugusege Experimental

Station, Budadiri

Sironkho Approx. 20 Acres - -

Nalugugu Tractor

Workshop, Bukisa

Sironkho Approx. 2 Acres - -

Nabbongo Variety Trial

Centre

Sironkho Approx. 50 Acres - --

Bulegeni (ARDC) Sironkho 47.82 Process of

securing a

land title in

the names

on NAORO

is on-going

On the side of

the trading

centre the local

authority

constructed part

of the market on

the land

Nakaloke Holding

Ground, Mbale

Mbale Approx. 13 Acres - -

Kidetok Kasilo,Pingire Soroti 0.5 acres - -

Aswa ranch/Acholi

branch

Pader 62 ha,11 ha Leased

expired

-

377


Status

Extent Of

Encroachment

Agricultural VTC Patongo, Pader - Un-surveyed -

Maruzi Apac 64 sq miles Titled Extent not yet

determined

Management attributed the encroachment to inadequate funding of the survey

process and the lengthy process of acquiring a title. Management indicated that

efforts have been made to survey and secure titles of some of the land that

include plots 16-18 station road Entebbe and Fisheries department land. On idle

land, this was attributed to the reforms whereby government divested, itself from

direct production.

I advised management to pursue the matter further with the relevant Authorities

and have the title and land secured.

b) Land usage changed from MAAIF to entities affiliated to the Ministry

During the review, I noted that some land usage changed from MAAIF to other

entities affiliated to the Ministry under various mandates, however ownership

status remained unchanged. For example Sanga Ranch in Mbarara of size 2.5sq.

Miles currently under the stewardship of an affiliate Organisation - NAGRC was

handed over to NAGRC by the Ministry but ownership remained unchanged as

evidenced by the Ministry giving out 30 acres to Sanga Town Council while 1 sq.

mile was reported grabbed by an individual.

Management explained that some land was handed over to MAAIF statutory

agencies and that the recipient agencies are processing transfer of the titles to

their names.

I advised management to liaise with the responsible stakeholders to facilitate the

survey process and have all its land titles acquired. Management should also

consider handing over ownership of the land to affiliated entities for close

supervision and security.

378

21.2 Under performance

A review of the Ministry‟s performance showed that the Ministry had total

operating revenue of UGX.68,986,685,103 including NTR of UGX.824,106,174

during the year. As at 30th June, 2014 I noted that funds worth

UGX.8,663,443,218 remained un-utilized reflecting under absorption capacity of

12.7%. As a result, a number of activities planned for the year were not

implemented as indicated below:

Vote

Function/out

put

Planned/Perfo

rmance

Indicators

Achieved

Target

Perfor

mance

gap

Review

Comments

Management Responses

010103

(The total

output budget

was 2,601bn

and

2,850bn was

spent under

various

activities of

the output)

Purchase of 20

tractors for

distribution as

grants to

farmers.

16

delivered

4 not

delivere

d (80%)

Management

should explain

the cause of

failure to

deliver the

balance of 4

tractors.

The suppliers attempted to

supply 4 tractors of a

different specification and

this was not acceptable to

the ministry foreseeing a

lengthy process for

clearance by Chief

Mechanical Engineer, the

Solicitor General and

approval by contracts

committee without strong

justification. Administrative

arrangements are being

made to ensure that the

four tractors of the same

make as the 16 are

delivered to MAAIF.

010103

Crop

production

technology

promotion:

22 Irrigation and

water harvesting

demonstrations

made in the

various districts.

9

Installed.

Gulu,

Kitgum,

Pader,

13 not

installed

No reasons

given for the

failure to

install the 13

water

This was due to absence of

Extension Staff in Districts:

The success of this activity

was dependent on the ease

with which MAAIF could get

379

Vote

Function/out

put

Planned/Perfo

rmance

Indicators

Achieved

Target

Perfor

mance

gap

Review

Comments


Lira

,Oyam,

Nebbi,

Buliisa,

Maracha

and

Rubirizi

harvesting

demonstration

s yet the item

was overspent.

the list of selected

beneficiaries from the

Districts. Almost all districts

on average have only two

members of staff in the

District Production

Department who are over

loaded with limited

facilitation to traverse the

sub-counties identifying

suitable candidates. This

affected the critical

processes of project

implementation.

010103

Crop

production

technology

promotion

Establish an

Agricultural

Mechanization

Resource

Centre for

training of

machine

operators,

technical

information

generation,

referral

workshops and

testing/evaluatio

n of agricultural

machinery

Not

implemen

ted.

Not

impleme

nted.

No activity was

done.

Management

should explain

the reasons.

It is true the bills of

quantity for rehabilitation

works were not completed

during the financial year

and the works were not

undertaken.

010105

Food and

35 districts to be

assessed for

25

assessed.

10 not

assesse

Management

should explain

This was due to unforeseen

increase in operational

380

Vote

Function/out

put

Planned/Perfo

rmance

Indicators

Achieved

Target

Perfor

mance

gap

Review

Comments


nutrition

security.

food and

nutrition

security

d the cause of

underperforma

nce

expenses which would not

allow undertaking training

in all the 35 districts.

010109

Control of pest

and diseases

in priority

commodities.

(Total output

Budget was

1,600bn and

1,553bn was

Spent (97.1%)

under various

activities of

the output)

Soil fertility

knowledge

management

enhanced 300

soil testing kits

procured and

distributed to

districts.

Procured

100

200 not

procure

d

Management

should explain

the reasons for

under

performance.

There was change in plan

because the kits are to be

used by trained extension

staff and these had not

been recruited, since the

consumables in the kits

expire, had to procure

those that can be used by

available trained staff. The

rest were carried over to

2014/15, to be procured as

more staff are recruited

and trained to use them.

010204

Promotion of

sustainable

fisheries.

(Total output

Budget:

9,121bn

and 6,824bn

(74.8%) was

spent under

various

activities of

the output)

Fishing capacity

controlled

through

licensing all

fishers on all

water bodies.

Not

reported

on.

All

fishers

not

licensed.

No reasons

given for non-

performance.

It is true that not all fishers

were licensed. Delays in

implementing the new

licensing strategy was

caused by delays in the

procurement of the Fishing

Vessel Identification Plates

(FVIPs); because it was a

new innovation requiring

standardizing the vessel

plates, structure,

numbering and their reflect

ability. These new

innovations hampered the

licensing activities on all

381

Vote

Function/out

put

Planned/Perfo

rmance

Indicators

Achieved

Target

Perfor

mance

gap

Review

Comments


water bodies. However

from September 2014 to

date; 3,809 FVIPs have

been issued out as follows:-

Lake Victoria-2759

Lake Albert-350

Lake Kyoga-450

Lakes

Edward/George-240 Other water bodies-10

010204

Promotion of

sustainable

fisheries.

Fishing capacity

controlled

through direct

support to

districts to fund

licensing

activities.

Not

implemen

ted.

Activity

not

carried

out.

Districts are

not supported

by the Ministry

yet.

It is true that districts are

not yet directly supported

by the Ministry to fund

licensing activities. The

mandate of direct support

to districts awaits clearance

of a MOU by the office of

the Solicitor General. The

Ministry is however

pursuing the

operationalization of the

Fisheries Fund to support

grass root activities.

010204

Promotion of

sustainable

fisheries.

5,000

aquaculture

structures

established.

Only 820

structures

establishe

d.

Perform

ance

gap of

4180

No reasons

given for the

underperforma

nce

The Directorate does not

establish but promotes

establishment and adoption

of cage culture enterprises

in aquaculture.

Achieved were 820 cages

setup in various locations.

Response by private sector

has remained low; however

the PPP law was put in

place in 2014; and the

382

Vote

Function/out

put

Planned/Perfo

rmance

Indicators

Achieved

Target

Perfor

mance

gap

Review

Comments


situation is bound to

change. MAAIF is currently

developing a

comprehensive aquaculture

policy to provide an

enabling environment for

aquaculture development.

Failure to utilize the available funds translates into failure to achieve the targeted

short-term objectives which has a negative effect on the mandate of the Ministry.

I advised management to enforce monitoring and supervision of its operations to

ensure all the planned activities are implemented.

21.3 Procurement issues

a) Un planned procurement

During the review, I noted that procurement worth UGX.59,659,384 for extra

works for Entebbe office premises renovation was not included in the procurement

plan contrary to the PPDA Regulations. I explained to management that unplanned

procurements could lead to diversion of funds as well as wastage of financial

resources.

Management responded that the procurement became emergent due to the

instructions received in the middle of the financial year for the Ministry to shift

from Kampala to Entebbe.

I advised management that emergencies should also be handled in accordance

with specific regulations in the PPDA Act.

383

21.4 Incomplete renovation works

A construction company was contracted to undertake renovation of the Ministry

office premises in Entebbe. The renovation works included; plastering, painting

walls and ceilings, replacement of faulty roofing materials, electrical repairs,

installation of sanitary appliances and others. By the end of the financial year;

payments worth UGX.144,214,834 had been made to the contractor. A

review of bills of quantities (BOQ) and the extent of works carried out so far

indicated that the quality of work performed by the contractor was lacking. I noted

that the contractor mostly painted the buildings other than doing the above listed

jobs. Hanging cables, unrepaired ceiling boards and broken locks were not fixed as

illustrated in some of the photographs below:

Loose absolute telephone cables. Ceiling board not replaced /repaired.

There is a possibility that the contractor was not properly supervised.

I also noted that some offices that were equally in need of renovation such as the

Department of Crop Protection, Project office and stores were not included in the

renovation plan. The pictures below show the state of the buildings not yet

renovated;

Department of Crop Protection block. Below is the project Office surrounded by

squalid shacks in which scrap

stationery is piled

384

Below; MAAIF Stores.

I explained to management that the state of affair reflects a bad image of the

Government Ministry.

Management explained that the exclusion of other buildings like the store and the

Crop Protection block was due to limited funding.

I advised management to prioritise and liaise with ministry of Finance for adequate

funds to enable completion of repair works.

21.5 Delayed Supply of 4 tractors

A Local Company was contracted to supply 20 (4 wheeled) tractors with

implements under mechanization/Labour saving technologies each at a cost of

US$.34,336. The contract was signed on the 17th June 2013 and the delivery date

had been slated for end of March 2014. The tractors were a grant to farmer

groups engaged in the production of strategic commodities. A review of this

procurement revealed the following anomalies:

Records availed showed that at the time of reporting, only 16 tractors had

been delivered, inspected and received at Namalere leaving 4 tractors

385

undelivered with no clear reasons. There was no evidence as to when the

balance of 4 tractors would be supplied and delivered to the beneficiaries.

I also noted that there was equally no information pertaining to the

deliveries of the tractors to the targeted beneficiaries.

It was further noted that the performance security was waived under the

general conditions and Ministry is not covered in case the supplier fails to

supply all the tractors which could end up in prolonged litigation process

denying citizens‟ benefits. The Ministry also risks losing resources in re-

starting up the procurement process.

The Accounting Officer explained that the supplier supplied 16 tractors with

implements in accordance with the contractual specifications and the request to

supply 4 tractors of different specifications was not acceptable and hence it was

likely that the procurement of the 4 tractors will be re-advertised.

I advised the Accounting Officer to revisit the issue and take appropriate action.

21.6 Non Tax Revenue

a) Lack of statistical data

The Ministry has various revenue sources under three major directorates; the

Directorate of Crop Resources, Directorate of Animal Resources and Directorate of

Fisheries Resources. However; I noted that the Ministry does not have statistical

data on its revenue sources and as a result, revenue forecasts are not realistically

made which continues to affect the NTR collections. I explained to management

that lack of reliable data and performance targets makes it difficult for the Ministry

to appraise revenue performance.

I advised the Accounting Officer to allocate the necessary resources to facilitate

the directorate towards the process of data collection in order to make realistic

revenue estimates.

b) Failure to revise the Fisheries rates

386

During the review of NTR collected from fisheries, I noted that the license/permit

rates have never been reviewed ever since they were set under Statutory

Instrument No 33 of 2010. I explained to management that the economy has

since then grown and the volume of fishing activities increased hence application

of the same rates could only lead to loss of revenue to Government which further

translates into under performance in collection of NTR.

Management acknowledged that the rates have never been revised since 2010

when the Fishing rules were formulated and passed. Nonetheless, several aspects

of this law have already been identified for revision. Several internal meetings

have been done as part of the procedures for the review of the 2010 fishing rules

and relevant steps will be taken to operationalize the revisions into law.

I await the outcome of management commitment.

21.7 Neglect of stores

In my previous year‟s report, I reported the issue of the state of MAAIF stores but

no action has since been taken and instead the situation is getting worse. Physical

inspection of stores indicated that they are in a deplorable condition. I further

noted that the stores department operates a manual system which has also not

been updated. I explained to management that failure to update the stock ledgers

regularly could result into failure to detect irregularities like theft of stores.

Management explained that the Ministry undertook a phased approach renovation

of the stores which includes installation of vital facilities. The stores renovation

plan was however interrupted by the directive to revert the Ministry to Entebbe

premises which expanded the renovation requirements. The apparent neglect of

stores is attributed to inadequate funding under maintenance-civil amidst

competing renovation requirements.

I advised management to prioritise the stores section so as to enforce good stores

management practices.

387

21.8 Misuse of Government assets and illegal tenants

As part of the audit; inspection of Wandegeya premises which is a prime land that

accommodates an affiliate Organisation - COCTU offices was carried out. I noted

that part of the premises has been turned into residential quarters, food kiosks,

restaurants and some offices are occupied by unauthorised tenants such as

Kampala Capital City Authority Veterinary Officer and Walimi Fish Farmers

Cooperative Society (WAFICOS).

I noted that there were no tenancy agreements hence no evidence that the

tenants have ever paid rent. Further, COCTU which is an affiliate entity under the

MAAIF sector is in shortage of office accommodation and yet the unauthorised

persons continue to occupy government premises without even paying rent,

including some tenants rearing chicken near the offices an activity that is not

rational near offices. Failure to collect rent from the tenants translates into causing

financial loss and misuse of government assets. The pictures below describe part

of the situation at the Wandegeya premises:

Above shacks structures converted to residential

quarters.

Food kiosks/restaurant without designated

toilet facilities.

388

Food preparation is done from the open spaces within the compound in front of some COCTU

offices.

I also noted that one of the Ministry‟s old vehicles parked at the premises was

burnt from the parking lot under unclear circumstances. As at the time of

reporting (February, 2015), there was no police investigation report in place.

The above situation puts the premises to several risks including insecurity, fire

outbreak and health related issues. I explained to management that there is a risk

that this prime land could easily get grabbed by the current squatters if no

controls are put in place to secure the premises.

Management explained that the Ministry has already taken steps to notify the

illegal occupants to vacate the premises.

The outcome of management action is awaited.

21.9 Department of Crop Production

a) Staffing gaps (10)

During the review, I noted that the Ministry has not yet filled some vital vacancies

under the department of Crop production as provided for within its establishment

as summarised below:

No Position Number of vacant posts

1 Mobile Workshop Mechanic 1

2 Grader Operator 2

3 Drivers 4

4 Turn-Man 3

TOTAL 10

I explained to management that the current staffing gaps could affect the

Department‟s performance hence failure to operate efficiently.

389

Management explained that staffing gaps exist because there were no adequate

funds to fill all the positions. Management however indicated that in the next

financial year, a provision has been made to fill all the vacant positions.


21.11 Plan for Modernization of Agriculture

a) Vacant posts (11)

During the review, I noted that the department lost up to 11 employees who had

literally resigned. Although this department is small; I noted that it is a very crucial

department such that a big number of staff resigning is a cause to worry. Below is

a summary of staff who resigned since 2004:

Numbers Title Date of Resignation

1 Director 2006

2 Director 2012

3 Accountant/Administrator 2004

4 Gender Specialist 2007



7 Office Attendant 2009

8 Driver 2007

9 Driver 2007

10 Driver 2010

11 Research Assistant 2012

I was not availed with any report about the possible causes of resignations. I

explained to management that there is a possibility of failure to implement the

planned activities which could lead to failure to attain the project objectives.

390

I advised management to consider filling the gaps for effective service delivery.

21.11 Loss of a motor cycle UG 2125A-Suzuki.

During the review, I noted that a motor cycle valued at UGX.9,000,000 was stolen

from an officer by unknown people around his home in Kigaga Zone Salama parish

Makindye Division Kampala. I was not availed with appropriate documentation

permitting the officer to use the motor cycle and permission to ride it home. At the

time of reporting (February 2015),the motorcycle had not been recovered. In the

circumstances, it is highly likely that the motorcycle may not be recovered and

besides, the loss was not captured in the financial statements.

Management explained that the case of the stolen motorcycle was reported at

Katwe Police station, arrests were made and the Police are still handling it and

management is still waiting for the conclusion of the case by Police, then a

decision will be taken against the officer.

I outcome of the above action is awaited.

21.12 Motor vehicle UAA 718E-pick up

Motor vehicle UAA 718E –Pick up got involved in an accident in Jinja and was

taken to a Garage in Mengo. During the review, I noted that the vehicle had

stayed in the garage for close to 3 years without being repaired. I further noted

that there was no police report and the circumstances under which it got involved

in the accident and its status before it was taken to the garage could not be

established. There is a possibility of vandalism and further loss of value of the said

car if it is not retrieved out of the garage immediately.

Management explained that the vehicle was inspected by Police and the process of

repairing the vehicle has been initiated pending conclusion. I advised management

to endeavour to repair the vehicle and put it to proper use.

21.13 Delayed establishment of Agriculture Police.

391

A review of the correspondences available revealed that MAAIF has been in the

process of creating an Agriculture Police Force to boost its enforcement effort. I

noted that the process has been rather slow and as at the time of reporting

(February 2015), the deployment had not yet started. I explained to management

that delays in deployment of the police force is likely to increase illegal fishing and

fish trafficking which puts to risk the lives of Fisheries personnel and Beach

Management Unit (BMU) members. Lack of adequate enforcement may also lead

to loss of revenue and gradual depletion of fish stock.

Management explained that the delays in establishment of Agriculture Police were

due to the process and deployment which is beyond MAAIF‟s control. The Ministry

made a follow up and the Police have now been secured awaiting deployment.

I advised management to deploy the police without any further delay.

21.14 Inspection of fish landing sites

As part of the review, inspections of a sample of some fish landing sites was

carried out and below were the findings:

Landing Site Observation/Remarks

Kalangala

In Kalangala,

Mwena, and

Lutoboka fish

landing sites

were inspected

MAAIF‟s Insufficient revenue mobilization strategy

a) Lack of personnel I noted that MAAIF does not have personnel in the districts to

monitor revenue collection despite the re-centralization of

revenue collection. The fishing rules recognize the District

Fisheries Officers and Beach Management Unit (BMU) members

as authorized officers under the rule 26 however; because of

lack of facilitation from MAAIF the officers cannot carry out

enforcement activities.

I explained to management that failure to deploy personnel and

392


build capacity in the districts will continue to affect revenue

collection and thereby impact negatively on the general

performance of the Ministry.

Management explained that MAAIF has no personnel in the

districts but supports District Fisheries Officers (DFOs) and BMU

leaders to mobilize, vet and approve fishermen to acquire

licenses in fishing for all NTR. Management further indicated

that the Ministry is undertaking the following to improve

revenue collection.

Transformation of the Department of Fisheries Resources into now a fully-fledged directorate will have more recruitments

Under the single spine agriculture system provision is on for each district to have a District Fisheries Officer and also at Sub-counties with lake Fisheries Pursuing the operationalization of a Fish Levy Fund for a plough back mechanism to ensure sustainable financing.

I await the outcome of the management planned actions.

b) Failure to license boats

Most fishing boats operating in the water bodies were not

licensed contrary to the Fishing Rules. Whereas the Ministry

developed the concept of Vessel Identification Plates (VIP)

around 2011, the introduction of the same took off at a very

slow pace during the financial year under review. I noted that

the majority of the boats operating in the lakes have not yet

been licensed and issued with certificate of vessel ownership

and vessel identification plates as required under Rule 16 (1-3).

Kalangala district received only 60 plates whereas it has about

393


64 landing sites with approximately 3,000 boats implying that a

balance of 2,940 boats would still not be issued with the plates.

The revenue loss accruing in respect of application fees of

10,000 and fishing license of 100,000 per annum for the 6

years was UGX.1,940,400,000 (UGX.323,400,000 per year) since

MAAIF recentralized revenue collection.

One of the sites visited; Mwena has a fleet of 66 boats and out

of these only 10 boats were licensed (15%) meanwhile

Lutoboka landing site has a fleet of 59 boats out of which only

17 (29%) were licenced. I explained to management that

Failure to license boats causes loss of revenue to Government.

Management explained that Kalangala district has so far

received more than 1,387 FVIPs and the current deployment of

the Agriculture police and Fisheries Inspectors at border posts

will strengthen enforcement compliance to improve licensing of

boats and other NTR obligations.

I advised management to expedite the registration of fishermen,

issuing of licenses and VIPs backed by an effective enforcement

and supervision so as to improve on revenue collection.

c) Use of un authorized fishing gears

I noted that illegal fishermen use prohibited fishing gears

contrary to the Fishing Rule 3 (1)-(3) which leads to depletion of

fish stock given that illegal fishing is carried out at the lake

shores which are the fish breeding grounds. In the entire fish

landing sites visited, it was reported that the catch has reduced

by over 50%. Lack of adequate monitoring and supervision by

the Ministry could accelerate this challenge leading to loss of

revenue to Government and lack of employment to citizens.

394


Management explained that the Ministry has an appropriate

enforcement strategy which it has been using to tackle the use

of unauthorized fishing gears. The expansion of the Regulation

Unit into a Department will go a long way to strengthen the

enforcement strategy in place. The Ministry also has a strategy

to implement cage fish culture/aquaculture development that is

being implemented to boost fish production.

I advised management to roll out an effective enforcement

strategy to curb illegal fishing and promote cage fishing and

aquaculture.

d) Dormant fish landing facilities

Despite the huge investment of up to UGX.2,803,549,835

invested on Mwena Landing Site; the facilities have been

dormant since its completion and hand over in 2007. Refer to

pictures below:

Some of the reasons advanced were that the facility was handed

over to the district for management without operational funds. I

could not establish the clear reasons for failing to utilize the new

structures yet a significant amount of funding was spent on it.

395


The Accounting Officer explained that the districts are managing

the facilities with challenges due to the unforthcoming revenues

from the proposed sources attributed to the general decline in

the stocks of Nile perch and Tilapia fish, the species for which

the landing sites were designed to handle. With the positive

trend in the fish stocks registered last year at 1.2%, coupled

with other fisheries management measures put in place, the

challenges noted in the Audit report shall be overcome and the

fisheries infrastructures will be cost effectively operated.

I advised the Accounting to plan adequately and ensure the

facilities are put to use.

Kashanga

Landing site

At this site the following challenges were noted:

Bad fishing methods brought about by usage of unauthorized

fishing gears. I further noted that some of the BMU members

who are supposed to check illegal fishing methods are

sometimes engaged in fishing of premature fishing themselves

due to the fact that the Ministry has not yet put in place a

rigorous vetting methodology for electing members of the

BMUs.

Inadequate toilet facilities which could lead to sanitation

challenges.

The above challenges have continued to affect the operations of

the fisheries sector translating into poor performance during the

year.

Management explained that regular routine sensitization against

the use of illegal gears has been on-going and with the help of

Agriculture Police and deployed border fisheries inspectors‟

396


compliance surveillance will be intensified. The BMU guidelines

and statute of 2003 is in its final stages of being revised and

BMU leaders will now be vetted before they are elected by the

fishing communities. Promotion of use of suitable sanitary

facilities at fish landing sites is part of the fisheries infrastructure

development which is a continuous process to support

communities.

The outcomes of the above management actions are awaited.

Lambu Lambu landing site had 120 boats on site but only 34 (29%)

were registered. It is estimated that revenue amounting to

UGX.79,200,000 from the boats application fees and license has

not been collected from them for the last 6 years. Lack of

controls such as Issuing Vessel Identification plates affected the

collection of revenue abetting illegal fishing in which premature

fish is targeted.

Other challenges at this site included;

- Landing of fish in un designated places, - Lack of capacity to carry out law enforcement. - Failure to register all the fishermen. I noted that the Ministry embarked on the process of registering the fishermen and created a data bank of about 1,857. Out of these, 358 were approved by MAAIF after they paid a registration fee of 10,000 each. - Lack of personnel for law enforcement and equipment; the fish landing facility was privatized and it is difficult for government to prescribe measures to the private business man.

Management explained that the exercise is in many cases

dodged by the community that find it easier to operate against

the national laws. This is now being addressed through the

current procurement of FVIPs and enforcement equipment and

agriculture police.

397


I advised management to enforce the law in place.

Majanji Inspection of the above landing site revealed that the ice plant

was non-functional due to lack of power and low fish production

yet Government invested up to UGX.3,703,694,777. The landing

site has 35 registered fishermen but none of them had paid the

application fee, the fishing licence and permit translating into

loss of revenue to government. I noted that no revenue has

been collected from this landing site for the last 6 years implying

an estimated revenue loss of UGX.23,100,009 (110,000 x 35 x

6) in application fees of UGX.10,000 each and license fee of

UGX.100,000. The other challenge was un-authorized cross

boarder illegal fishing at the border.

Management explained that the landing site was handed to the

district in July 2012, and is connected to the national grid. The

non-functionality of the structure is largely due to management

issues in the district and lack of fish due to cross border trade. A

senior Fisheries Inspector has been deployed at Busia Boarder

to provide effective monitoring and supervision of the fishing

activities. I advised management to strengthen monitoring and

supervision of the fishing activities.

Kakyanga Kakyanga landing site had 50 registered fishermen from which

no revenue has been collected for the last 6 years implying

revenue loss of about UGX.33,000,000. I noted that all the

boats operating at this landing site are doing so illegally contrary

to the Fishing Rule No 12 of the Statutory Instrument No 33 of

2010. Whereas MAAIF introduced Vessel Identification Plates

(VIP) for the purpose of easy identification of noncomplying

Vessels, such controls have not been embraced at this landing

site. There is a possibility that the Ministry could lose more

revenue in uncollected fees if controls are not strengthened.

398


Management explained that the distribution of FVIPs is ongoing

and will solve the anomaly. I advised management to

strengthen controls so that all boats are licensed before they are

allowed to operate.

21.16 General observation affecting operations of landing sites.

Fish landing facilities in the rest of the water bodies are faced with similar

challenges as stated above. A review of monitoring and evaluation report of the

Ministry for year revealed the following weaknesses:

No Location Cost(U) UGX Status Review comments Management Response

1 Mwena in

Kalangala

2,803,549,8

35

Non-

Operational

No electricity for

operation of the heavy ice plant

machinery

Not connected to the

national grid, but provided with 2

generators

2 Kitobo in

Kalangala

2,545,934,7

18

Operational

but with

challenges

Operational with

power challenges of

running the generator. It is not

cost effective

3 Bwondha in Mayuge

2,711,582,225

Operational but with

challenges.

Being managed by the BMU. The ice

plant is not functional because there are no

cold room facilities. It was not handed over.

The insulated store for ice storage

rooms is provided and the landing site

was handed over to the district.

4 Bugoto in

Mayuge

2,798,302,6

71

Operational No power and

running water but use a generator

which is not cost

effective.

Not connected to the

national grid, a generator is

provided and there

is installed water pump and treatment

system

5 Majanji in Busia 3,703,694,7

77

Operational

but with

challenges.

Fully operational but

it was never handed

over officially. The facility does not have

power.

Handed over to the

district, connected to

the national grid and provided with

standby generator

6 Gorofa Island in Bugiri

3,635,593,299

Not operational.

Not commissioned, not handed over and

no power supply.

Provided with 2 generators, persons

nominated by the

399


district to operate

the installed facilities trained, not

operating due to challenges (power

and management).

7 Namasale in Amolatar

District

3,926,810,760

Operational It is incomplete, i.e. incomplete plumbing

work and there is no

electricity on site. It was not officially

handed over although fishermen are using

it.

Fully completed, provided with a

generator and

managed by the district together with

the BMUs

8 Kiyindi in Buikwe

2,105,834,438

Non Operational

Incomplete power house and there is no

electricity on site.

Connected to the national grid,

provided with a stand by generator.

There are items in

the design to be completed

9 Bukungu in Buyende

1,741,977,155

Non Operational

Construction of the jetty for the boat

landing is not

complete and there is no electricity on site

Not connected to the national grid,

provided with a

generator, jetty completed. There

are items in the design to be

completed

10 Butyaba in Masindi

2,162,380,394

Operational but with

challenges.

It is operational however there is no

water and electricity.

11 Lwampanga in Nakasongola

2,199,538,421

Non Operational

with challenges.

There is no power at the landing site and

no running water. The constructions are

also incomplete

Not connected to the national grid,

provided with a generator, water

treatment system

provided. There are items in the design

to be completed

12 Busia TC- Fish market

Operational Fully operational however, there was

no official hand over.

Officially handed over

13 Tororo

Municipality-

Fish Market

Operational Operational however,

there is no fridge and

cold room, there is no water and electricity

Electricity and water

provided. Fridge and

cold room was not in the scope of the

facilities to be provided

14 Iganga TC-Fish

Market

Non

Operational

Facility was

abandoned due to

Officially handed

over, was connected

400


lack of running water

and electricity. There is also encroachment

on the land.

to electricity and

water but ownership wrangles within the

district is affecting operationalization.

15 Mukono TC Operational Operational however,

there is no water and electricity


was provided.

16 Mityana TC Non

Operational

There is no

electricity, vandalized.

Officially handed to

the district with all facilities fitted.

District is getting ready to use it.

17 Nyendo in

Masaka

Operational Operational however

there is no cold room and electricity.

Electricity was

connected. However, cold room

was not part of the

design.

18 Mbarara

Municipality

Non

Operational

Incomplete- need to

install the breeding machinery

for the fish, need to

install electricity

Officially handed to

the district with all facilities fitted.

electrical repaired by

district.

19 Kabale

Municipality

Operational Operational however

there is no running

water and no cold room

Water was provided,

cold store was not

part of the design.

20 Ishasha Broader market

in Kasese

Demolished and

constructed a

new one

21 Mpondwe

Boarder Market

in Kasese

Demolished

and

constructed a new one

A new structure was

put up by Belgium

Technical Cooperation. There

was no communication

allowing them to

demolish

22 Kagadi TC-

Market

Functional It is operational but

there is no fridge, latrine and never

handed over officially.

Officially handed

over. Fridge and latrine was not in

the scope of the

facilities to be provided.

23 Lira TC-Market Non

functional

Reconstructed

24 Gulu TC-Market Demolished

and constructed a

new one

Incomplete. The

machinery was delivered but not

installed, hatchery

Reconstructed

401


was not installed, fish

ponds and other buildings not

completed.

25 Soroti TC Non Operational

Officially handed to the district with all

facilities fitted

26 Luwero TC Operational Operational however there is no running

water and no cold room. The

administration block was not Constructed

yet it was on the

original plan

Cold room and administration block

was not in the scope of the works

27 Masindi TC Non

Operational

It is operational

however there is no

running water and electricity. There are

no cold room facilities


was provided. Cold

room facilities was not in the scope of

the design.

28 Paidha TC Operational Operational however

there is no cold room

and electricity.

Cold room facilities

was not in the scope

of the design

29 Bushenyi TC-

aquaculture

center

Non

Operational l

Incomplete- need to

install the breeding

machinery for the fish, need to install

electricity.

Installation of the

Hatchery equipment

in progress

30 Kajansi Operational Fully Operational

31 Mbale TC

Non

Operational

The infrastructure

was abandoned when it was incomplete.

The hatchery

machineries were not installed

Process of having it

completed in progress

Sub-total 30,335,198,

693

SUMMARY OF COSTS

Sub –total as shown above 30,335,198,693

Construction of Fish Market stalls in the North East zone.

605,328,438

Construction of Fish Market stalls in Central

zone and extension of fish quality control laboratory at Entebbe.

1,118,625,475

Construction of fish market stalls in the North

East zone.

Rehabilitation and Construction of Fish

Markets stalls in South West.

833,856,897

Total 32,893,009,503

402

Despite the heavy investment put in fisheries sector as summarised above; the

Ministry has not yet put up mechanisms to maximise revenue collection. There is a

risk that the assets could depreciate before they are put to proper use and thereby

fail to meet the intended objectives.

I advised management to put in effort to collect revenues from fisheries and

emphasize law enforcement on water/landing sites operations.

21.17 Inspection of Small Scale Irrigation/water harvesting demonstration sites

MAAIF entered into a framework contract on the 21st November, 2013 for the

establishment of Small Scale irrigation/harvesting demonstration sites. The

objective was to reduce rain dependent Agriculture and to cope with the rainfall

variability due to climate changes.

a) Lira district

The project is located in Adekokwok S/C in Angweta-ngwet Parish.

One of the criteria of locating the demonstration site was existence of water

source however I noted that the site did not have any water source. The

farmer was dependent on rain water since the supply from NWSC was

unreliable and costly. A trial garden of about an acre with tomatoes planted

therein was inspected. I noted that a 5,000 litre water tank was installed, the

garden is connected with perforated plastic pipes for water sprinkling but due

to absence of water, the garden is almost drying up as the water tank had no

water.

A water pump that was supplied was not found on site as the farmer reported

that the same had been borrowed by a nearby farmer since it was basically

idle. I noted that lending equipment supplied to unknown people under the

403

project was not provided for and the possibility that the pump could have been

sold could not be ruled out.

I noted that the site had been faced with drought for the last three months, an

indication of poor choice contrary to the selection criteria. There is a possibility

that the investment may turn out to be wasteful leading to loss of value for

money benefits.

Management explained that rainfall is the principle source of water. The only

viable option at this site was rainwater harvesting and the facility was installed at

the peak of the dry season. Therefore the farmer will only have water in the

reservoir for demonstration of supplementary irrigation after the coming rains. The

names of the beneficiary farmers‟ of the demo sites were given to MAAIF by the

Districts in order of priority, and they were representative of the area in terms of

water scarcity. The technology is intended for farmers in water stressed areas to

take-up rainwater harvesting because it is the cheapest to replicate at the

smallholder farmer level.

I advised management to ensure the project is closely monitored so that the

farmers benefit from the support and the project objectives achieved.

b) Oyam district

I noted that this site was chosen due to the fact that it had already demonstrated

transformative farming methods among the community with a major objective of

improvement of household income. The site did not have a nearby water source

and the pump that was meant for pumping water from surface water was found

idle as shown below;

404

The perforated pipes for sprinkling and water pump supplied under the project

were not yet put to use (still in the store). The reason for this was that the

pump was designed to draw water from the surface sources which is not

available ; instead, the proprietor is using water from a deep well which he

had before the project was initiated, an indication that this investment too has

not added any value to the farmer. The other challenge reported was that the

perforated watering pipes seemed fragile and the farmer prefers to use water

bottles for sprinkling. This showed that some farmers need sensitisation on

handling which is not yet done. A tour of the farm showed a lot of fruits rotting

due to various diseases and failure to access the market.

In spite of the above challenges, there was no evidence that the project was

effectively monitored. There is a possibility that the project objectives will not be

achieved.

Management explained that at the time of site identification and beneficiary

selection the farmer had no water source. However, the farmer is enterprising and

had drilled a production well for home use and the nearby planned poultry unit by

the time the contractor was deployed and after discussions with the farmer an

agreement was reached to retain the surface water pump to extend water to his

Orchard and fodder garden a distance away where water would not reach by

gravity from his system. He pledged to construct a small pond (collection sump)

where the surface pump would lift the water from the primary source further away

to the Orchard.

I advised management to enforce monitoring and sensitization to farmers.

21.18 BUKALASA AGRICULTURAL INSTITUTE

i) Inappropriate College Structure

During the review, I noted that the College structure was designed and approved

in 2003 when the College was administering only two courses/programs (Animal

Production and Management & Crop Production and Management). However,

currently the College offers six programs as follows; Animal Production &

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Management, Crop Production & Management, Human Nutrition & Dietetics, Agri-

Business and Horticulture and Management. I noted that the structure of the

College is inappropriate for its current size and operations which could affect the

delivery of services to various stake holders.

Management explained that Public Service cleared the review of the structures of

training institutions and requested MAAIF to provide the plan and logistical support

for the exercise. MAAIF has already provided a budget for review of structure and

arrangements have been made to finalize the plan and to provide logistics to

enable the Ministry of Public Service undertake a review of the structures.

I await the outcome of management action.

ii. Academics - Admission of students

I noted that the College admits both Government sponsored and private students

and in the two types of admissions, the list of successful students is normally

approved. However, during the review I noted that out of the 485 students

admitted, 93 private students‟ supplementary admission list for all courses

including in-service students who do their studies during holidays was not

approved as shown below:

Course Gov‟t

A-Level

Private

A-Level

Private

F/S

Sub

Total

Private

Supplementary

Total

Animal

Production

25 28 12 65 15 80

Crop Production 25 52 13 90 18 108

Agri-business 10 37 5 52 16 68

Human Nutrition 10 15 5 30 09 39

Horticulture 10 8 4 22 05 27

In-service animal - NA NA 65 15 80

In-service crop - NA NA 68 15 83

Total 80 140 39 392 93 485

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There is a risk that revenue generated from the students whose admission was not

approved by the Council may not be disclosed and could get misappropriated.

In response, management explained that the Universities and Other Tertiary

Institutions Act, 2001 gives the College powers to admit students on Private

Programme through the Admissions Committee made of Heads of Departments

and the Academic Board normally sits to admit all the students that are on Private

Sponsorship. Management has taken steps to regularize the supplementary

admission and minutes.


22.0 NATIONAL AGRICULTURAL ADVISORY SERVICES (NAADS)

22.1 Compliance with the Financing Agreement

Component 3 of the financing agreement focussed on the provision of advisory

services. However, Government changed the implementation of this component to

free input distribution which led to disagreements with the development partners

that resulted in their suspension of funding for the component.

The change in implementation to provision of free inputs to farmers implies that

the expenditure of UGX 84,823,360,000 recorded under component 3 of the

ATAAS project is ineligible for funding by the participating partners and

achievement of the ATAAS project intended objectives for component 3 may have

been compromised.

Management explained that discussions were held with development partners

during the mission of August 2014 and it was agreed that GOU funds should solely

be used to input purchase for distribution to farmers. As such the development

partners agreed to fund other components excluding component 3.

I advised management to ensure that project activities are implemented as agreed

with the development partners to avoid suspension of funding to the project.

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22.2 Monitoring and Evaluation of interventions by NAADS secretariat

NAADS is involved in implementation of strategic government interventions in the

agricultural sector for enhancement of household income. The interventions

include the distribution of farm inputs across the country. To assess the impact of

the intervention and to further focus government efforts on priority areas in the

sector, it is necessary to establish a strong and functioning monitoring and

evaluation function. However, it was noted that the existing monitoring and

evaluation function at NAADS is lacking in aspects such as;

(i) Beneficiaries are not identified and documented before procurement of inputs

which creates the risk of diversion of inputs.

(ii) There is no data base of farmers supported by NAADS to track their progress

and success of the interventions.

The absence of a strong monitoring and evaluation mechanism leads to ad-hoc

implementation of the interventions and this may lead to failure to achieve

intended objectives.

Management explained that NAADS Secretariat provided technology inputs to

beneficiaries to address strategic and special demands usually identified at the top

political and policy leadership level. Management further explained that the

support would therefore normally be provided to clearly defined target groups

known well before procurement and initiation and approval of the procurements of

technology inputs for such support would require evidence of the source of

demand.

I advised management to establish a well-functioning monitoring and evaluation

department to measure performance of government‟s interventions. Further a

well-documented process should be developed to identify beneficiaries prior to

distribution of farm inputs.

22.3 Procurement Management

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In implementing ATAAS project and other programs, NAADS makes various

procurements for supplies and services. However, my review of procurement

procedures and controls revealed the following anomalies;

(i) The procurement plan was not approved by the World Bank contrary to the

provisions of the financing agreement.

(ii) The department does not maintain procurement complaints register where

bidders can register their complaints.

(iii) There is no procurement notice board for publicity.

Failure to ensure approval of the procurement plan by the participating partners

implies non-compliance with the financing agreement provisions which may lead

to the partners‟ refusal of funding procurements under the ATAAS project. Further,

absence of a notice board does not only compromise transparency in the

procurement process but also violates established standard government

procurement procedures.

In these circumstances, procurements are not done in accordance with approved

plan which impacts adversely on the implementation of various activities.

Management explained that the procurement plan was approved by the Board and

submitted to the World Bank which never responded. Management further

informed me that indeed they don‟t have a specific procurement notice Board but

are using a general notice board at NAADS Secretariat on the Ground floor at the

reception area and will put in place a specific notice board for procurement

I advised management to ensure that a procurement plan is prepared and

approved in accordance with the Project financing agreement provisions. Further,

a procurement notice board and a complaints register should be put in place to

ensure transparency and accountability within the process of procurement.

22.4 Framework contracts

A framework contract with an Estates firm was signed on 20th February 2014 to

supply 80 motorised Knapsack Sprayers at a price of UGX 1,850,000 per sprayer.

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However, the call-off order made to the company on 23rd March 2014 was for 250

units. The additional 170units of motorised Knapsack Sprayers were in excess of

the contracted quantity of 80 units and therefore supplied without being subjected

to the procurement rules and regulations.

Management explained that this was due to the tremendous increased demand for

motorised Knapsack Sprayers following a successful demonstration stage of the

efficient technology in the control of pests and diseases of fruit trees crops notably

citrus, mangoes and coffee. As such, more of the knapsacks were urgently

required.

I advised management to ensure full compliance with procurement rules and

regulations to obtain value for money at competitive prices.

22.5 Distribution of farm inputs

During the year, the secretariat incurred UGX 3,953,424,825 on the purchase and

distribution of inputs to farmers that was not supported by lists of beneficiaries or

acknowledgement by the beneficiaries. Further still the distribution of the inputs is

not properly planned because the procurement of the inputs was done before

determination of the beneficiaries.

As a consequence the expenditure on farm inputs was not adequately supported

and there is a risk that some of the inputs did not reach the targeted beneficiaries

implying that the intervention may not achieve the intended objectives.

Although Management explained that all support documents required for payment

as per the financial procedures were attached to the payment vouchers and were

availed and reviewed during the audit process, I was not availed with the required

documentation.

I advised management to properly plan the distribution of the farm inputs by

inspecting the intended beneficiaries to confirm their requirements and readiness

before procurement of inputs is done. Further, management should ensure that

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deliveries are monitored, properly documented and the beneficiaries should

acknowledge receipt of the inputs which acknowledgement should be used to

support the payment.

22.6 Tea Intervention Project

Expenditure amounting to UGX 18,555,353,908 was incurred on the purchase and

distribution of 38,168,367 tea seedlings mainly in the Kigezi region. In the course

of the audit i noted irregularities in the procurement, distribution, delivery and

payment for the tea seedlings as elaborated below;

(i) Suppliers of Tea seedlings

It was observed that contracts for the supply of tea seedlings were made after

supplies had taken place. This was contrary to the established government

procurement laws and regulations which require contracts to be signed after a due

procurement process.

Management explained that this was an innovation after failing with the

conventional procurement process which had revealed that nearly 60% of the

seedlings were lost mainly due to mismatch in funds availability, completion of the

procurement process and the agricultural/growing season and as a result of the

delay most beneficiary farmers would abandon the tea on road sides thus

negating the tea intervention efforts and wastage of funds. As a remedial

measure, the District Authorities together with Kinkizi Development Company who

are implementers of the project devised an innovative approach –the “garden

store approach”. Under this approach farmers who wish to plant tea in a given

season do receive supplies directly from the supplier before completion of the

procurement process and it was found to reduce the mortality rate of the tea

plantlets from nearly 60% to 10% with adequate measures in-built in the

approach to mitigate against risk of paying for undelivered supplies.

I advised management to adhere to the procurement regulations.

(ii) Lead agencies

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The tea intervention in Kigezi area is implemented in collaboration with three lead

agencies. These companies signed Memorandum Understanding (MOUs) with

NAADS to provide services such as mobilizing farmers provide market outlets,

training and field extension services, identify nursery operators, transport and

distribution of plantlets and to facilitate farmers to form cooperatives.

The initial MOUs signed in April 2013 did not provide any payment basis to the

lead agency. Subsequently, an addendum was signed in April 2014 providing a

30% payment to the lead agency on the value of tea seedlings procured and

planted.

During the year payments amounting to UGX 3,659,524,377 were made to the

project lead agencies. Issues of concern with this arrangement are;

The MOU does not clearly justify the 30% payment of the value of tea

plantlets to the lead agency.

Payments to the lead agency are not supported by evidence of extension

services provided.

Management explained that the lead agency‟s responsibilities are stipulated in the

Memorandum of understanding and payment is effected upon meeting the

conditions there in and the lead agency provides periodic reports on activities

carried out on basis of which payments are effected. I advised management to

document activities undertaken to enable proper justification of the payments.

(iii) Distribution/delivery of tea seedlings to farmers

A field inspection was conducted to confirm existence of tea seedlings distributed.

Four (4) farms were inspected and it was noted for the selected sample that tea

was planted on farms but we were not provided with acreage planted except for

one farm. Generally tea seedlings deliveries to the farms as recorded in the

payment records do not appear to match farm acreage planted. For the farm

where acreage was provided, there was a big discrepancy between the tea

seedlings recorded as delivered and the tea plants that can be accommodated on

the farm. The specific cases are noted below;

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A farm for a religious parish

The tea garden was established in March 2012 and has received tea seedlings

from NAADS from start to date. I requested for information on tea seedlings

supplied for the years 2012 and 2013 but this was not availed. For the year 2014

deliveries of 1,836,000 in May 2014 were noted. We were informed at the time of

the audit (11/12/2014) by the farm manager that in September 2014, additional

1,460,000 tea seedlings were delivered to the farm. There was no information

availed on the garden acreage.

An individual‟s Farm

The farm is located in Busengo Parish Nyarubuye Sub-county Kisoro. Acreage

planted is unknown. Planting of tea in the garden started in March 2012. I was

informed that the farm received seedlings in the subsequent tea seasons of

September12, March 2013, September 2013, March 2014 and September 2014.

In May 2014, the farm received 360,000 tea seedlings. Information on tea

seedlings delivered in the other seasons was not availed.

A Farm for Community Based Organisation

The farm is located in Rubuguri and Ntenko parish in Kisoro district. It is adjacent

to Bwindi National park. Farming commenced in 2012 with an initial delivery of

650,000 tea seedlings supplied. I was informed by the chairman of the community

that these seeds were not planted and dried up on the road side. The actual

acreage planted is unknown. A delivery of 1,793,793 tea seedlings was made to

the farm on 20/05/2014 and received by the chairman. The farm has also received

other tea seedlings over the years but information on these deliveries was not

availed.

An individual‟s Farm

The farm called green valley dairy farm is located in Nyamasizi Kabale district. The

total acreage of the farm was not availed. It is recorded that the farm received

3,006,640 tea seedlings on 02/04/2014. I was informed by the farm manager that

he had also received an additional 1,000,000 million tea seedlings in September

2014.

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The procurement processes and procedures in the tea intervention project are not

transparent and contravene procurements rules and regulations. In absence of

clear acreage planted, it was not known how the supplies to particular farms are

determined and there is a risk that some of the recorded deliveries of tea plants

are not actually supplied to the farms/ gardens. Furthermore, I was not certain

that the payments to lead agencies were for actual services rendered.

Management admitted to the need to have records on acreage for tea planted but

observed that tea growing areas in Kigezi sub region require experts to be able to

determine contour acreage as opposed to horizontal acreage on which traditional

land measurement systems are based. As such management promised to engage

the services of an expert and aim to have the process completed by June 2016.

22.7 Commitments through local letters of credit at the year-end

Funds amounting to UGX 13,892,716,461 were transferred to Bank of Uganda as

commitments to open local letters of credit between 19th June and 27th June 2014.

Included in the funds transferred was UGX 137,551,648 as commission for the

letters of credit. It was further observed that 6 months later after the commitment

of the funds for the local purchases, UGX 6,977,959,526 remain unperformed local

letters of credit. This is made of mainly commitment to the suppliers of citrus

seedlings amounting to UGX 3,640,513,000.

The transfer of these funds to Bank of Uganda in form of local letters of credit was

done to retain unutilised funds at the year end and the additional cost of UGX

137,551,648 in form of the local letters of credit commission paid to Bank of

Uganda was considered wasteful. Such avoidable costs reduce funds meant for

service delivery in this case farm input distribution.

Management explained that the funds transferred were for purposes of retaining

unutilised funds which were for the contracts signed at the end of the year but

had not yet performed due to the fact that the funds amounting to UGX. 30 billion

were received in April towards the closure of the financial year and the

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procurement procedures had not been concluded. Management further explained

that some of the supplies depend on the season/weather and being a dry season,

it was advised that some supplies be put on hold for the dry season to end.

I advised management to implement planned activities timely to avoid such year –

end funds retention schemes that result in wastage of resources. Further,

management should not enter into contracts without forecasting and analysing

weather conditions.

22.8 Fixed Assets

It was observed that the fixed asset register is not properly maintained. It lacks

most of the details of assets stipulated in the treasury accounting instructions.

Some assets do not have date of purchase, cost and right location. Further, some

of the motorcycles recorded this year appear twice in the register and one UAA

338F sold during the year was still maintained in the asset register. It was also

noted that the organisation started a disposal process of eight vehicles in 2012

when bids were received but to date, only one vehicle had successfully been

disposed off with the rest still parked at Ministry of Agriculture Offices.

The absence of a comprehensive, accurate and up to date Assets Register implies

that there is a risk that asset losses and misuse may not easily be detected.

Further, failure to timely dispose of assets further diminishes the realisable

amount from the assets because of the continuous waste of these assets that

reduces their value.

Management explained that although some assets in the register lack details,

efforts had been made in subsequent verifications to ensure that gaps of that

nature and others are filled. Management further explained that during their

quarterly financial back stopping to districts, reviewing the maintenance and

updating of asset register of NAADS assets is always done.

I advised management to ensure that there is an updated asset register showing

all details as per the Treasury Accounting instructions.

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22.9 Unaccounted for funds

In the course of the audit I noted the following unaccounted for funds amounting

to UGX 499,008,800.

s/n Description Amount Remarks

1 Advance to PMA 352,000,000 Unaccounted for six months

after advance

Advance to Buginyanya

Zardi

147,008,800 Training workshops for 44

SNCs and 88 AASPs from

Mbale and Sironko Districts

at a cost of UGX.

29,040,000.

Payment to service providers

totalling UGX.17,528,800

paid out on 30th June 2014.

There are no lists of

workshop participants.

Missing payment details

amounting to

UGX.59,749,000 payment

references 395327,477805

and 477814.

Excessive cash drawn on

cheque no 477816

amounting to UGX

40,691,000 for joint training

Workshop with NARO.

Accountability not sufficiently

supported.

In absence of support documents on payments I was unable to confirm that the

funds were used for intended purposes.

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Management explained that it was following up the above accountabilities and

failure to obtain satisfactory accountability would result into instituting recovery

measures.

I advised Management to expeditiously follow up the matter and institute recovery

measures from responsible officers where misuse is confirmed.

22.10 Summary issues from inspection of Districts and sub-counties

A review was carried on the programmes system of accounting and record keeping

including implementation of programme activities. The review was undertaken in

761 sub counties/town councils in the 112 districts spread across the country and

the following matters were observed. Details of the matters are attached in the

management letters appendix to this report.

(a) Unaccounted for Funds – UGX 4,007,686,846

These are funds for which we were not availed accountability documents by the

accounting officers. It includes expenditure for sub counties/town councils which

did not avail their books for audit, missing payment vouchers and supporting

documents and unbanked co-funding receipts. Further details are included in the

District/sub county management letters.

(b) Ineligible Expenditure – UGX 47,296,801

It was observed that some districts/sub counties incurred ineligible expenditure

under the ATAAS project by spending outside the approved annual budget or by

failing to comply with ATAAS project procurement procedures. Further details are

included in the respective district/sub county management letter.

(c) Un-remitted Statutory Deductions – UGX 179,906,634

In almost all the districts/sub counties audited, it was noted that withholding tax,

PAYE and NSSF were either not deducted or where deducted, remittance to URA

and NSSF was usually beyond the stipulated time.

(d) Record Keeping

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I noted instances where the sub counties and districts financial reports amounts

differed from the amounts in the underlying records, the cash books and payment

vouchers implying that these reports are not derived from underlying records.

These are noted in the respective district and sub county management letters.

(e) Fixed assets and financial records

I noted that the fixed assets of NAADS were not properly handed over for safe

custody to the Chief Administrative Officers as per instructions during the

transition period. NAADS‟ Motor vehicles and motorcycles in many districts and sub

counties continued to be used in activities unrelated to NAADS programme. Some

of the former NAADS coordinators were still in possession of financial records like

receipt books, cash books and payment vouchers in their homes at the time of the

audit.

(f) Project implementation Manual (PIM)

Many of the districts and sub counties audited had diverted from the PIM. For

instance the food security component was not fully supported. Funds meant for

this component were in most cases diverted to market oriented component

without approval. More still, the top ceiling of the market oriented farmers support

of UGX.750,000 had been overridden thus supporting fewer farmers than planned.

I advised management to make a follow up on the above matters.

22.11 VEGETABLE OIL DEVELOPMENT PROJECT

(a) Compliance with financing agreement provisions and GOU


A review was carried out on the project compliance with the loan agreement

provisions and GoU financial regulations and it was noted that the project

complied in all material respects with the provisions in the agreement and applied

GoU regulations except in the following matters:

i) Under absorption release of funds

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During the year under review, a total of UGX.12,477,320,546 out of

UGX.35,215,199,674 budgeted for the year was not released to the Project.

UGX12.3bn of the unreleased funds was meant to have been released by the

IFAD. However, it was noted that out of the released funds, UGX.6,240,584,580

remained unutilised at the end of the year. The under absorption capacity of the

available funds translates into underperformance for year. As a result, the

following activities were not implemented as planned:

Delayed delivery of 2 station wagons and motor cycles;

Delayed construction of a fertilizer store in Kalangala and

Uncompleted Environmental impact assessment that delayed trainings and

workshops.

The Accounting Officer explained that the under performance of the work plan was

a result of delayed procurement process and failure to conclude the MoUs with the

implementing districts.

I advised management to expedite the pending processes and have the activities

implemented.

ii) Review of the Operations of KOPGT

Un-utilized recoveries from the farmers

Article 3 (h) of the agreement signed on the 28th April 2006 between OPUL and

KOPGT, provides that it is the Trustee‟s obligation to refund to the Government

the resources of the Scheme repaid by the smallholders and out growers within

one year of receipt, or utilise such resources as may otherwise be agreed upon by

the Government, the Trustee and IFAD.

I noted that loan recoveries worth UGX.3,257,536,892 had accumulated on the

Loan Recovery Account and the Trustee declared the resources to Ministry of

Agriculture but no action has been taken on the utilisation of the funds. I

explained to management that this contravenes the agreement and denies

farmers and the Trustee in general a chance to grow further and enhance

achievement of the project objectives.

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Management explained that GOU and IFAD agreed under Schedule 3 of the

Financing Agreement for the second phase of VODP to have the repayments made

by KOPGT on Bugala Island re-cycled to finance loans for new smallholder oil palm

growers in Kalangala and other areas during the second phase of the project.

Also during the Mid Term Review (MTR), GOU and IFAD agreed that the

recoveries be utilized to finance oil palm activities on the outlying islands and

Buvuma where activities are planned to start in early 2015.

Management actions on the matter are awaited.

Outstanding loans from KOPGT Small holders

At the reporting date, a total of UGX.33,728,757,674 had been disbursed as cash

and input loans to KOPGT farmers for oil palm activities. However, I noted that

UGX.3,257,536,892 only has been recovered from the farmers as loan repayments

to-date leaving the balance of UGX.30,491,220,782 yet to be recovered. I

explained to management that the recovery rate was slow.

Management explained that the loans for oil palm cultivation by smallholder

farmers are supposed to be fully recovered 15 years after planting according to

the oil palm model. Since Oil palm planting in Kalangala started in 2006, the last

loans are anticipated to be fully recovered in 2030. The repayment schedule was

proposed to enable farmers have a reasonable take-home income and also enable

the farmer invest in maintaining the oil palm garden.

I advised management to come up with a payback schedule indicating how much

has been recovered and what is anticipated to be recovered over the remaining

period. This will enable me assess the performance of the loan portfolio.

Untitled land

In 2006, the registered farmers agreed to purchase a plot of land on which the

KOPGT secretariat was to be constructed. The farmers contributed UGX.50,000

each collecting a total of UGX.24,000,000 that was used specifically to buy land in

Kalangala Town Council in 2007. However, as at the time of reporting, I noted

that management had not yet acquired the land title. I also noted that there are

some capital developments currently undergoing on the land. The Secretariat had

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invested UGX.182,283,547 to construct an official building and UGX.1.6bn to

construct fertilizer store. I explained to management that this is risky due to the

uncertainty of the legal rights on the same land.

Management explained that KOPGT Management submitted forms for land transfer

to Masaka Land Registry and the district is in the process of transferring the title

into the name of Kalangala Oil palm Growers Trust (KOPGT).

I advised management to expedite the process of securing the land tittle.


A review of the system of accounting and internal control was carried out and in

all material respects, the internal control system and measures to ensure proper

accountability for the project funds put in place by management was satisfactory.


A review of the status of project implementation revealed the following;

i) Inspection of Oil seeds component hubs

As part of the audit, inspections of the Oil Seeds Component hubs was carried out

and below are the findings:

a) Staffing at Mbale Hub

A review of the operations at Mbale Hub that comprises of 20 districts in Eastern

Uganda indicated that it is currently managed by only one staff yet the hub is too

big. I explained to management that farmers may not get the guidance they need

and in time.

Management explained that the project design document did not provide for extra

staff at hub level however, the concern of low levels of staffing was noted and

raised with IFAD and accordingly, the September 2014 IFAD Support Mission Aide

Memoire recommended recruitment of a hub driver and another staff to manage

the regional office. Further, the Mid Term Review has recommended another

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private service provider for the hub in addition to the two that are already on

ground and it is anticipated that this will enable the farmers to access extension

services they need.

I advised management to expedite the recruitment process.

b) Inspection of oil palm component - Buvuma Palm Oil Project

The Oil Palm Component of the project covers the districts of Kalangala and

Buvuma.

(i) Acquisition and hand over of 4,000 hectares to BIDCO (U) Ltd

(BUL)

According to VODP 2 work plan and budget for the financial year under review,

the project was to consolidate all the acquired land, identify more, survey, process

and hand over 4,000 hectares of this land to BUL for nucleus estate out of the

total planned and agreeable 6,500 hectares of land. I noted that the project has

not handed over the planned hectares of land. This has made the hand over

difficult since. I explained to management that this is likely to affect the progress

of the project.

Management responded that there was delay in land acquisition but the required

6,500ha have now been acquired, which is the amount required by BIDCO. The

delays were a result of unclear land titles, squatters, lengthy valuation, hostile

tenants and conflicts in ownership which are being resolved systematically.

I advised management to expedite the process and have the handover concluded.

(ii) Establishment of Buvuma Oil Palm Growers Trust

According to the VODP 2 work plan and budget for the financial year under

review, the project was supposed to have started the establishment of Buvuma Oil

Palm Growers Trust and the recruitment process of the skeleton staff should have

taken off. However at the time of inspection, it was noted that no such Trust had

been established. I explained to management that failure to establish the Trust as

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agreed makes it difficult for the project to set off, dragging behind all the planned

activities for implementation.

The Accounting Officer explained that according to the Financing Agreement, the

project can only establish Buvuma Oil Palm Growers Trust after BIDCO starts

implementation of nucleus activities in Buvuma. It was indicated that currently,

the project is working with the Buvuma District Local Government in handling oil

palm activities on the Island with emphasis on land acquisition.

I advised management to address all the issues hindering progress of the project

activities for successful implementation of planned activities.

23.0 NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO)

23.1 Mischarge of expenditure-UGX.206,704,980




codes. During examination, it was noted that expenditure worth UGX.206,704,980

was charged on wrong expenditure codes contrary to GOU chart of accounts.

Mischarge leads to misallocation and diversion of resources to non-planned

activities contrary to appropriation by Parliament. The practice also leads to

misrepresentation of facts in the financial statements and undermines the

importance of the budgeting process.

The Accounting Officer explained that they have on several occasions written to

the PS/ST and the Accountant General seeking for a research code to over-come

the budgeting anomaly without any response. The research activities include;

client priority setting and planning, experimental site visits and maintenance,

surveys and other data collection activities; which require much of the budget and

the amount involved cannot be accommodated on the related codes like travel

inland because of restricted budget line allocations.

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I urged the Accounting Officer to continue pursuing the matter with the

Accountant General to have it resolved.


a) Under funded budget

Management budgeted to receive UGX.41,867,739,709 in order to carry out its

activities for the financial year under review. However, only UGX.35,027,197,017

(79.9%) was received leaving a balance of UGX.6,840,542,692 un released as

summarized below:

Funding category Budgeted Released variance

Recurrent releases 27,737,246,147 27,614,680,851 122,565,296

Development releases 6,130,493,562 4,597,870,172 1,532,623,390

Gross tax 8,000,000,000 2,814,645,994 5,185,354,006

Total transfer from

Govt.

41,867,739,709 35,027,197,017 6,840,542,692

The shortfall in releases affected the research works and a number of activities.

These activities included; data collection on farm performance trials, data

collection on pests & diseases, training of rural artisans, assessment of economic

impact of management of fruit flies, nursery activities & field trials monitoring,

data collection on plant bio diversity, monitoring of project activities, field activity

on vector specimens, identification of termite specimens, monitoring, purification

of cultures experiments and data collection on plant bio diversity purification of

cultures and experiments.

The Accounting Officer explained that the bulk of the unreleased funds relate to

gross tax that could not be utilised because of the length of the procurement

process. He further explained that there was underfunding from Government as

the Organization did not receive its 4th quarter release.

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I advised management to pursue the matter of funding with MoFPED with a view

of ensuring that in future all the resources for all the planned activities are

accordingly released to enable implementation.

b) Un-collected NTR - UGX.2,734,758,542

NARO‟s approved NTR budget for year was UGX.5,815,021,500 but I noted that

UGX.3,080,262,958 was realised leaving UGX.2,734,758,542 un collected. This

translates into underperformance of 47% of the budgeted revenue collections.

Compared to the previous year, performance declined by UGX.298,081,719 (9%).

The declining performance could be attributed to poor collection strategies and or

weak revenue collection controls.

The Accounting Officer attributed the under collection to compensation from

UEDCL of over UGX.2bn for land occupied by electricity line sub-station at NARL-

Kawanda Institute which did not materialize due to land wrangles between NARO

and the veterans. However, the matter was reported to the courts of law under

suit no. 434/2014.

I advised management to follow up the matter with a view of having the

compensation settled.

23.3 Un recovered car loan-UGX.22,910,000

Sect. 16.2.3 of the NARO human resource manual requires NAROSEC and PARIs

management to recover any outstanding amount from its members by deducting

such amount from gratuity if it cannot be recovered from the salary. Besides,

according to condition b (5 & 6) of the car loan agreement, a staff is under

obligation to pay the loan whether he/she is in full employment with NARO or not.

However, I noted that NAROSEC terminated the services of its two staff after the

expiry of their employment contracts without recovering the outstanding loans.

The other staff is on a study leave whose loan is not being settled. Details in the

table below:

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Name Designation Terms of service Outstanding

Loan

Last date of

recovery

Staff Principal

Research Officer

Quality

Assurance

Still employed by

NARO but on Study

Leave

6,910,000 30th June,2013

Former staff Senior

Procurement

Officer

Contract terminated

in June 2013

8,000,000 31st

October2013

Former staff Civil Engineer Contract terminated

in June 2013

8,000,000 30th June 2013

Total 22,910,000

I explained to management that failure to recover outstanding loans from the

former staff translates into financial loss to government.

The Accounting Officer explained that the matter of the affected former staff was

brought to the attention of the governing council and have written to them to

have the outstanding amounts settled. The staff on study leave promised to pay in

2 installments and so far US $ 1,200 has been recovered.

I urged management to pursue the affected staff and ensure that their

outstanding loans are recovered.

23.4 Internal Audit Function

a) Operations of Internal Audit

NARO has twenty (20) internal audit staffs and out of these; 4 are based at

Headquarter while the rest are based at the Institutes spread across the country.

During the audit, I noted that the Institutes of ABI –Arua and Mukono ZARDI did

not have internal auditors.

I explained to management that a review of the structure of operations of internal

audit needs to be carried out to ensure the available staff can offer services to the

426

Institutes. Strengthening the internal audit is very essential as it will empower the

unit to handle the ever growing responsibilities at all the Institutes country wide.

The Accounting Officer explained that the internal auditors for ABI and Mukono

ZARDIS resigned from NARO service and the process of replacing them was in

advanced stages. In the meantime, the internal audit staffs at NAROSEC were

reportedly providing internal audit services to these institutes.

I advised management to expedite the recruitment process with a view of

strengthening the internal audit department for effective service delivery.

b) Inadequate staffing –NARL –Kawanda

A review of the Institute‟s internal control environment showed that NARL has one

internal auditor responsible for all internal audit assignments including carrying out

verification of monthly reconciliation statements of over 65 bank accounts. I noted

that during the year, the auditor‟s key role at the institute was to carry out pre-

audits however, there were no internal audit reports, an indication that there was

limited review of the systems and processes at the Institute. I explained to

management that lack of a strong internal audit could result into non-detection of

errors and therefore misstatements of the financial statements.

The Accounting Officer explained that the recruiting process was on-going. I await

the outcome of management‟s commitment.

23.5 Audit Inspections

a) Continued illegal encroachment on MBAZARDI Land

I previously reported that an individual had encroached on MBAZARDI land.

During the year under review, management carried out eviction of some

encroachers on this land. However during inspection, I noted that more land is

being encroached on by the same person earlier evicted. An estimated 31.8 acres

had been encroached on by this person.

It was also noted during the eviction exercise that a staff of NARO was assaulted

by the same encroacher and the case is before the courts of law. However, after a

427

period of more than 5 months, the case has not been put to mention. The

organisation‟s land is at more risk of encroachment.

The Accounting Officer explained that the case is in court suit no. 070 of 2014. I

urged management to pursue the matter and strengthen measures against land

encroachers.

b) Rwebitaba ZARDI

a. Lack of official hand over report of properties

NAROSEC received land and other properties from Kabarole local Government.

Rwebitaba ZARDI then shifted to Kyembogo station as its administration centre.

However, I was not availed with the hand-over report/list of assets to NAROSEC

from Local Government for verification and the land title to confirm ownership.

Furthermore, I noted that the institute has not fenced off its boundaries putting

the assets at more risk as evidenced by a public road passing through the institute

as illustrated in the pictures below:

Office block without a gate/Fence

The public road that passes through the

compound.

I explained to management that this could cause thefts due to open access of the

facility.

The Accounting Officer explained that the hand over is being done in phases and

has not been completed, a complete report is expected after the exercise and will

be availed as soon as it is received.

428

I advised management to ensure that a proper hand over is done and also ensure

that the administration block is fenced off. Acquisition of ownership of the land

should be expedited.

b. Dilapidated properties

The institute buildings where the staffs are accommodated are roofed with

asbestos that was internationally condemned. Furthermore, I noted that some

structures (staff quarters) and a toilet in the compound were very old and

inhabitable and some blocks within the compound were not completed as shown

in the pictures below:

The building with asbestos sheets

One of the public toilets in the compound

Un completed block

Dilapidated structure at staff quarters

I explained to management that the poor state of structures affects the operations

of the institute and reflects a bad image of the organisation.

Management explained that NARO inherited the infrastructure from Kyembogo

Local Government and that some rehabilitations are being done gradually. Once

funds are available, the unroofed blocks will be roofed.

I advised management to plan and have the renovations completed. Meanwhile

the asbestos which is a health hazard to staff should be replaced.

c. Security at the station

429

It was noted that the security at the station is inadequate; there are four

contracted security guards of Reserve Protection Services (RPS) and one locally

employed. Two guards at night and others during the day. I noted that the two

guards deployed at night were not enough to provide the required protection for

the institutes assets and resources that are scattered on approximately 500 acre

piece of land.

Information gathered at the station indicated that the institute experienced thefts

of research materials in the cassava fields and fire out breaks by the outsiders

during the year but the guards could not do much to prevent such occurrences. I

explained to management that those were clear signals that the institute‟s security

is not enough hence putting the assets at high risk of theft and destruction.

Management explained that provision of security to such a wide area including

experimental gardens is a challenge. However costs of recruiting local based

guards to support those deployed by RPS were considered in the budget estimates

of 2015-2016.

I advised management to plan for adequate security and ensure the institute land

is fenced off.

c) MBAZARDI Land encroachment by a Company

Inspection of MBAZARDI land indicated that other encroachers have installed an

illegal structure and a container on the institute land but management has not

taken any action to have them evicted. Below is a picture of the illegal structures:

Discussion with management indicated that the case is now before the courts of

law.

430

Containers and a structure illegally erected on the institute land.

I further noted that there were a number of encroachers on the institute land

along Kasese road. These encroachers have started operating on the institute‟s

land, an indication that there are no strong safeguards set up by management to

stop them. There is a possibility that the entity land could all be grabbed in the

near future thereby affecting the research activities of the organisation.

I advised management to pursue the matter with relevant authorities and ensure

that the government land is recovered from the encroachers. Meanwhile, strong

measures should be put in place to counter any further encroachment.

d) Un compensated land - MBA ZARDI Institute

During the inspection, I noted that the current construction of Mbarara by–pass by

China Railway Seventh group (CRSG) contracted by UNRA affected the activities of

the Institute on approximately 22.670 acres of land on plot 4 & 4a along Kabale

road. It was evident that the water pipes had been destroyed, water troughs had

been affected, EAAPP cassava garden destroyed, trees for animal shades and

pasture for animals destroyed as indicated in the pictures below:

The by-pass that crosses the NARO land

Part of the cassava that remained

undestroyed

431

A review of correspondences available revealed that the Institute was to be

compensated for the development structures and crops destroyed to the tune of

UGX.1,836,545,630 broken down as below;

Item Valued Amount

Land 1,586,900,000

Development 5,786,200

Crops 4,310,000

Sub-total 1,596,996,200

Disturbance allowance 239,549,430

Total 1,836,545,630

However, at the time of reporting (December 2014), no compensation had been

received. I noted that there was lack of adequate follow up of this claim with the

relevant authorities.

The Accounting Officer explained that a follow up with UNRA to have the funds

paid has not yet yielded results. I advised management to pursue the matter

further and have the compensation resolved.

e) Coffee Research Centre (COREC)-Kituza

i) Outstanding fuel arrears-UGX.24m

A review of the institution‟s documents revealed that there were outstanding fuel

arrears worth UGX.24m to an oil company that were consumed during the year.

However, there was no documentation detailing the outstanding fuel bill. Only fuel

statements were availed for review but these lacked the purpose for which the fuel

was consumed. I explained to management that payment of such claims without

supporting documents could lead to misappropriation of funds.

The Accounting Officer explained that the bill was received after the financial year

and its accuracy was being assessed. I advised management to verify the claim

before settlement is made.

432

f) National Forestry Resources Research Institute (NAFORRI)

i) Use of the Guest House

Inspection of the Institute‟s Guest house was carried out as a follow up of the

issues raised in the previous audit. I noted that the 10 bed roomed Guest House

requires renovation as its roof top, some walls and parts of the floor had

developed cracks. In my previous report, I advised management to maintain the

building to avoid further deterioration however, no action has been taken since the

previous audit and the asset continues to deteriorate. This has affected the

collection of revenue to the Institute.

The Accounting Officer explained that NARO engineer was asked to inspect the

guest house and prepare technical reports and BOQs so that the estimates for

renovation are included in the 2015-2016 budget, however the process has

delayed.

I advised management to ensure that the repairs are carried out urgently and the

assets put to use.

ii) Destruction of property at Bulegeni Satellite Station

Bulegeni Satellite station was attacked by a riotous mob of local people on the 27th

February 2014. The Institute property was burnt to ashes that included buildings,

office property, dormitory property, livestock, and crops. It was also indicated that

the attackers stole UGX.1,500,000 (One million five hundred thousand shillings)

which was in the cash box. Two people were reported dead during the incident;

one a security guard hired from RPS to guard the Institute and another person

who had come to graze animals on the Institute land.

Furthermore, I noted that staffs who were residing at Bulegeni also lost their

property which included motor cycle, beddings, utensils, furniture, documents and

clothes. As at the time of inspection (August 2014), it was reported that

management was still compiling the list of the lost property. I noted that

management delayed to compile the list.

433

There was also no evidence that management has taken steps to have the lost

assets valued with a view of quantifying the loss for subsequent reporting to

appropriate authorities and financial statements. The Police report was also not

availed for review.

The Accounting Officer explained that the list of destroyed property was available

and that the government valuer would soon cost the property lost. It was further

explained that the case was in Mbale High court and that the satellite was

earmarked for renovation while Police is keeping guard of the property.

I advised management to quantify the loss in compliance with the regulations for

subsequent action and reporting.

23.6 EAST AFRICA AGRICULTURAL PRODUCTIVITY PROGRAM (EAAPP)

a. Compliance with financing agreement provisions and GOU


A review was carried out on the project compliance with the credit agreement

provisions and GOU financial regulations and it was noted that the project


GoU regulations.

b. General Standard of Accounting and Internal Control

A review of the system of accounting and internal control was carried out and it

was noted that management had instituted controls and measures to ensure

proper accountability for the project resources except in the matter below;

i) Arbitrarily determined labour rates

It was noted that all the Institutes implementing EAAP Project activities do not

have uniform labour rates for similar activities. As a consequence supervisors

were paying differing rates for the same activity in the same period. Examination

of records/payments related to labour revealed that the rates were arbitrarily

determined or were dependent on the bargaining ability of the activity supervisor

434

and labourers. Absence of standard or uniform rates at the institutes may lead to

misuse of project funds. Besides, it makes it difficult to draw a realistic

comprehensive work-plan/budget for a year.

The Accounting Officer explained that a uniform rate policy is being formulated to

have this issue resolved.

I advised the Accounting Officer to expedite the process of formulating the policy

to avoid eventual consequences.

c. Status of Project Implementation

A review of the status of project implementation revealed the following matters;

i) Under absorption of funds

It was noted that the total project budget for the year was US $ 12,633,896

(32.8bn) against the total expenditure of US $ 9,007,795 (UGX.23.4bn). This

resulted into under absorption of US $ 3,626,101 (UGX.9,426,703,017)

representing 51% of the total receipts for the year of UGX.19,199,442,787. As a

result, some of the project activities were partially implemented at the Institutes

as summarized below;

Agency Budget ($) Actual

Expenditure

($)

Variance

($)

% Of

Absor

ption

Pending/Uncompl

eted Activity

NACRRI

CASSAVA

4,905,304 4,078,723.89 826,580 83 Delayed civil works

on office block

construction.

NACRRI

RICE

329,650 312,963.29 16,687 95 Delayed construction

works & Rice

research initiatives

BUGI ZARDI

WHEAT

380,416 235,633.83 144,782 62 Supply of tractors &

implements

NALIRRI 783,930 390,681.76 393,248 50 Installation of

435

Agency Budget ($) Actual

Expenditure

($)

Variance

($)

% Of

Absor

ption

Pending/Uncompl

eted Activity

DAIRY

RESEARCH

livestock unit, water

reservoir.

NARL VAC 767,340 641,370.11 125,970 84 Rehabilitation of

food nutritional lab.

NAGRIC &

DB

1,760,561 1,360,704.49 399,857 77 Embryo transfer lab

nearing completion

and installation of

equipment.

MAAIF

DAPM

251,327 76,648.11 174,679 30 Supply of office

consumables,

support Research on

rice varieties.

PCU 1,006,000 977,482.55 28,517 97 Capacity building in

Procurement.

In view of the expected project closing date of 30th June 2015, I explained to

management that the project is behind schedule which is likely to cause

unnecessary project extension costs. Besides, failure to absorb the available

project funds translates into under-performance that may lead to failure to achieve

the project intended objectives in the scheduled time frame which could affect

agricultural development in the country.

The Accounting Officer explained that the cause of this under absorption arose

from delayed procurements due to the rigorous procurement procedures involved.

However, a no cost project extension of six months has been applied and it is

anticipated that the pending activities will be finalised.

I advised the Accounting officer to ensure all the planned activities are

accomplished as scheduled.

436

23.7 AGRICULTURAL TECHNOLOGY AND AGRIBUSINESS ADVISORY

SERVICES (ATAAS)

(a) Compliance with financing agreement provisions and GOU




complied in all material respects with the provisions in the agreement and

applicable GOU regulations except in the following matters:

i) Mischarge of expenditure

A review of the project expenditures for the year revealed that expenditure to the

tune of UGX.215,925,820 was wrongly charged on budget lines to fund activities

that were not meant to be paid from the affected budget lines. The practice

resulted into misrepresentation of expenditure balances in the financial statements

and a diversion of project funds from the intended activities.

The Accounting Officer explained that since 2012, management has been

requesting for a research code from Treasury to take care of all the research

activities that are provided for in the Project Implementation Manual (PIM) and

not appropriately aligned to the GOU chart of accounts but this request has not

been fruitful.

I advised management to continue following up the matter with the Accountant

General with a view of obtaining research code.

ii) Un-realized GOU Counter-Part funding

A review of the project agreement indicated that out of the total project cost of US

$ 665.5 million, GOU was supposed to finance the major share of the project costs

of US $ 497.3M (US $ 166M applicable to NARO) over a 5 year project period from

22nd June 2010 to 30th June 2015. However, I noted that since project inception to

date, there has not been any contribution from GoU to the project. This

contravenes the signed agreement and fulfillment of obligations. I explained to

management that non fulfillment of the funding obligations affects the

437

implementation of the planned activities and the attainment of the overall project

objectives.

The Accounting Officer expressed commitment to continue in dialogue with the

responsible authorities to have the funds released.





accountability for the project funds put in place by management was satisfactory

except for the following matter:

i) Delayed delivery of Project Vehicles

A motor company was awarded the contract to supply 37 vehicles worth

$1,109,593 in January 2013. However, as at the time of reporting (December,

2014) only 20 units had been delivered leaving a balance of 17 units yet to be

delivered. Delay in delivery has exceeded the delivery deadline of 12 weeks from

contract date as required. There was no evidence that management had started

charging liquidated damages as required. I explained to management that Failure

to charge the liquidated damages amounts to non-adherence to procurement

procedures and may lead to loss of revenue.

The Accounting officer explained that the delay was caused by the late release of

funds to cater for taxes for the 17 pickups. However, the taxes have since been

paid and the registration process is ongoing.

I advised management to expedite the registration process and have the vehicles

delivered.


A review of the status of project implementation revealed the following:

i) Project Socio – economic impact assessment of Research

438

The mandate of NARO is to carry out research and come up with improved

varieties and disseminate the technologies by way of offering demonstration and

advisory services to the farmers, carry out multiplication and distribution of seeds,

implements and others. However, I noted that the socio-economic impact of

research output on the stake holders especially farmers has not been evaluated

and reported on so that it is shared or communicated to the stake holders.

NARO has not adequately documented and publicized the extent to which their

research success has greatly contributed to the improvement of the incomes and

life standards of the general population. There is a possibility that resources are

spent on activities that may not have generated socio-economic benefits to the

stakeholders and the citizens and therefore not realizing value for money benefits.

I advised management to ensure that a socio-economic impact assessment report

is prepared for the benefit of all stakeholders.

ii) Under absorption capacity

It was noted that the Project did not utilize funds worth UGX.26,287,401,192

during the year. This reflects a 71% increase in under-absorption capacity

compared to last year‟s unutilized funds of UGX.15,371,395,463. As a result, a

number of activities were partially implemented as summarized below:

Institute Annual

budget

Total release Budget

balance

%

performance

Uncompleted projects

NACRRI 1,807,190,971 1,516,355,457 290,835,514 84 The rehabilitation of storied

office block and screen house is

still on going. Supply of pick up

motor vehicle not done.

NAFIRRI 890,739,460 785,741,351 104,998,109 88 Staffing gaps still exist. Only 10

technicians available.

NAFORRI 839,671,451 649,780,150 189,891,301 77 The specialized machinery &

equipment for research

activities were not acquired.

The digital and bench meter

was not procured.

NaSARRI 952,481,291 798,733,427 153,747,864 84 The specialized machinery &

equipment for research

439

Institute Annual

budget

Total release Budget

balance

%

performance

Uncompleted projects

activities were not acquired.

Supply of pick up motor vehicle

not done.

NARL 1,734,394,795 1,432,965,648 301,429,147 83 Infrastructure & equipment

were not procured and mobile

applications. Supply of pick up

motor vehicle not done.

ABI ZARDI 475,912,628 404,050,087 71,862,541 85 Construction of screen house.

Still on going

BULINDI 497,151,128 472,635,723 24,515,405 95 Construction of screen house

not completed yet.

NGETTA 523,274,128 427,023,208 96,250,920 82 Construction of screen house on

going. Supply of pick up motor

vehicle not done.

NABUIN 526,052,466 503,398,244 22,654,222 96 The rehabilitation of office block

Still on going.

MBARARA 463,346,128 455,183,515 8,162,613 98 Development of ICT

infrastructure and equipment

not yet fully done.

BUGINYANYA

465,985,628

368,822,170

97,163,458

79 Training and recruitment of

ICT specialists were not done

Construction of screen house

not yet done.

RWEBITABA

485,794,091

461,285,729

24,508,362

95 ICT infrastructure and

equipment not fully developed.

9,661,994,165 8,275,974,709 1,386,019,456

From the table, it is noted that most of the planned civil works involving

renovation of office blocks at all Institutes and building of laboratories were not

carried out during the year as planned. I explained to management that failure to

absorb the available funds may disrupt the achievement of the project objectives

in the scheduled time frame leading to unnecessary project extension costs.

The Accounting Officer explained that there were unnecessary delays in

procurement process but procurement contracts for civil works have now been

awarded.

440

I advised management to increase the supervisory role and ensure that the civil

works are concluded within the stipulated period.

iii) Delayed strengthening of Human Resource

Under this project sub component the targeted staff establishment was 995 where

830 has been filled and 165 is still vacant. Of the un filled positions, I noted that

out of the planned 268 scientists, 242 were filled leaving 26 un filled while out of

274 targeted staff technicians, 199 staff were filled leaving 75 gaps. I explained to

management that this affects research work, one of the core activities of the

project.

The Accounting Officer explained that for the last 2 years, NARO wage bill has not

been increased and this has had a direct effect on the staffing levels. This was

not in line with the plan which should have been fully actualized by July 2014.

I advised management to take up the matter with the responsible authorities and

ensure that the staff gaps are filled as planned.

441

ENERGY SECTOR

24.0 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

24.1 Mischarge of expenditure

Paragraph 400 (a) of the Treasury Accounting instructions (TAI), 2003, requires

that all Government transactions shall be recorded in the books of account

applying the Government of Uganda Chart of Accounts as prescribed by the

Accountant General. In addition, Accounting Officers shall ensure that all financial

transactions are properly coded.

Contrary to the above provision, the Ministry, charged UGX.3,038,506,327 on

expenditure codes other than those for which funds had been appropriated.

Mischarging expenditure is a sign of weaknesses in budgetary controls and leads

to misstatement of the financial statements.

Though the practice of mischarging expenditure is declining at the Ministry, further

budgetary discipline is required.

The Accounting Officer explained that additional measures will be put in place to

further streamline the budget implementation process so as to avoid the practice

of mischarging expenditure.

I have advised the Accounting Officer to strengthen supervision of the budget

implementation and where necessary, re-allocation warrants should be sought.

24.2 Non Compliance with the Provisions of the Mining Act

a) Unremitted Royalties

By law, mineral royalties collected by the Ministry are shared between the Central

Government (80%) through the UCF, and other stakeholders who include:

districts, urban councils and individual land owners where mining takes place

(20%) through Bank account No.000170148000002 in the Bank of Uganda.

442

It was noted that UGX.5,659,692,377 was collected as mineral royalties through

URA during financial year 2013/2014 but the 20% share was not distributed to the

other stakeholders. This could have had a negative effect on the implementation

of activities by district and urban councils whose budgets may have factored in the

anticipated royalties.

The Accounting Officer explained that the royalties are collected through URA

which is expected to transfer 80% and 20% of the collections from mineral

royalties to the UCF and; the mineral royalties Sharing Fund Account, respectively.

The latter portion, which was supposed to be distributed to the beneficiaries by

the Ministry was not received on the Fund account.

I advised the Accounting Officer to expedite the distribution of mineral royalties to

the bonafide beneficiaries to enable them execute their planned activities.

b) Failure to Collect Royalties and Surface Rentals from Former

Holders of Exploration Licenses

Section 105 of the Mining Act, 2003 states that, the assessed royalty on any

mineral shall be due within thirty days from the date of assessment, and delay in

payment shall attract an interest on the unpaid royalty at the rate of 2% per

annum above the commercial bank lending rate as established by the Bank of

Uganda.

Section 104 (1) of the same Act states that where the holder of a mineral right

fails to pay any royalty payable by him or her on or before the due date, the

Commissioner shall, by notice served on the holder, prohibit the holder from

disposing of any mineral obtained or mined by him or her from the mining area

concerned, or from any other mining area held by that holder, until all outstanding

royalties have been paid or until an arrangement has been made, acceptable to

the Commissioner, for the payment of the royalties, and the holder shall comply

with the notice.

443

It was however noted that 174 companies whose exploration licenses had expired

had arrears of royalties and surface rent amounting to UGX.850,246,000 not

collected by the Ministry. There was no evidence to show that the Ministry had

made any attempts to collect the debts. Failure to collect the outstanding fees may

result into a loss of revenue to the Government.

The Accounting Officer explained that collection of outstanding debts had not been

done, but the Ministry was planning to collect the debts in accordance with the

provisions of the Act.

I advised the Accounting Officer to take appropriate measures and collect the

outstanding debts, and in future, to ensure that all royalties and surface rent due

are collected in a timely manner.

c) Mining Lease Holders Failing to Submit Audited Financial

Statements

Section 50 (2) (a) and 2 (c) of the Mining Act, 2003 obligates the holder of a

mining lease to maintain and submit monthly to the Commissioner of the DGSM

complete and accurate records of operations relating to his/her lease including a

copy of his or her audited financial report showing the profits or loss for the

financial year, and the state of the financial affairs of the lease within 90 days of

the end of each financial year.

Contrary to the above provision, it was noted that the companies holding the

licences listed in the table below had not submitted the required records and

audited financial statements to the department for the past three years.

Mining Lease No. Compliance with section 50 (2) (a)

Compliance with section 50 (2) (c)

4651 Not Submitted Not Submitted





444

I

n

t

h

e absence of audited financial statements, Management had no information on the

profit or loss made by the lease holders, on which assessment for royalties

payable is based. There is a risk that essential data is deliberately withheld and

therefore the Ministry may not be able to make appropriate decisions regarding

such licences.

Management indicated that it had noted the anomaly and undertook to start

implementing the provisions of the Mining Act.

I advised the Accounting Officer to ensure that the companies submit the required

records and accounts for the DGCM to be able to assess the royalties payable.


Out of the appropriated sum of UGX.1,305,566,104,201 the Ministry received only

UGX.189,656,857,225 resulting into a short fall of UGX.1,115,909,246,976 (85%),

as indicated in the table below;

Budget Revised Budget

(UGX)

Releases (UGX) %

Relea

s

e

Funds not released

(UGX)

% not

released

Recurrent 6,917,210,169 6,278,124,062 91% 639,086,107 11.6













445

Budget Revised Budget

(UGX)

Releases (UGX) %

Relea

s

e

Funds not released

(UGX)

% not

released Development 1,298,648,894,032 183,378,733,163 14% 1,115,270,160,869 90.4

Totals 1,305,566,104,201 189,656,857,225 15% 1,115,909,246,976 85%

A review of the implementation of Ministry projects indicated that due to the

insufficient release, a number of projects were not adequately funded, for

example, Karuma hydro power project received only 3% of the appropriated

amount, Mbarara- Nkenda/Tororo – Lira transmission line, Opuyo-Moroto

interconnection and Kampala – Entebbe Expansion projects received no funding at

all. Non-financing of the projects may lead to failure to fully implement them

within the planned timelines.

In his response, the Accounting Officer explained that the low budget performance

was due to less release of capital development funds which were intended for the

development of large hydropower projects such as Karuma and Isimba, whose

procurement processes had delayed to be completed. He further indicated that the

Ministry would continue to liaise with the Ministry of Finance, Planning and

Economic Development (MoFPED) to ensure that funds are released as planned.

I have advised the Accounting Officer to always implement all planned activities as

intended so as to achieve the set targets and objectives of the Ministry.

24.4 Delayed Compensation of Project Affected Persons for the Oil Refinery

Land

The Government of Uganda through MEMD is undertaking an Oil Refinery Project

in Kabaale, Buseruka Sub - County, Hoima District. Accordingly, a consultant was

engaged to provide consultancy services for the implementation of the

Resettlement Action Plan (RAP) for the project affected persons (PAP) living in the

affected area.

The Chief Government Valuer (CGV) approved the RAP report and cleared 2,708

PAPs for compensation at an estimated cost of UGX.70,915,217,225.12 to pave

way for the construction of the Refinery. However, by the end of the financial year

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2013/14, only 1,836 (68%) PAPs had been compensated with a total of

UGX.32,208,516,443. I explained to the Accounting Officer that delayed

compensation of land owners may delay the commencement of project works.

The Accounting Officer attributed the delays to; PAPs delaying to sign off the

consent forms after valuation and verification, while others initially contested the

valuation rates, and; Delays in the process, for example procuring land to resettle

PAPs who opted for relocation, and renewal of the consultant‟s contract. He

however indicated that all the issues had been addressed and the compensation

exercise was moving on smoothly, and it was expected that the activity would be

concluded by the end of June, 2015.

I await the outcome of Management„s commitment in this regard.

24.5 Staff Matters

a) Failure to Appraise Staff Performance

Section A-m (14)(a) and (C) of the Public Service Standing Orders provides that a

staff performance appraisal report form shall be completed for each pensionable

and non-pensionable officer and a copy submitted to the Responsible Permanent

Secretary.

However, review of a sample of personnel files revealed that 12 officers had not

been appraised for at least two financial years. Failure to appraise staff hinders

assessment of their performance, identification of training gaps and

commendation of good performance, which ultimately renders staff development

difficult.

The Accounting Officer attributed the anomaly to the officers‟ reluctance to

complete the appraisal forms although they had been reminded in several

meetings. He indicated that the officers had been reminded about the same.

I advised the Accounting Officer to ensure that the human resource department

follows up with all the officers and ensure that they are appraised.

b) Irregular Extension of Probation Period

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Section A –d (1), (12) and (13) of the Public Service Standing Orders provides

that, probationary appointment shall last six months, and may be extended only

once for a period not exceeding six months, upon the responsible officer making a

submission to the relevant Appointing Authority for the extension.

It was noted however that 15 staff had been on probation for more than a year

without evidence that their probationary period had been extended. A prolonged

probationary period has the effect of reducing staff morale, and may result into

inefficient performance by the affected staff.

The Accounting Officer attributed the delay to the officers, who had delayed to

complete their appraisal forms. He further explained that a number of submissions

had been made to the Public Service Commission (PSC) seeking confirmation of

officers who had completed their appraisal forms.

I advised Management to appraise all the staff whose probationary period had

expired and take appropriate action in accordance with the Standing Orders.

24.6 Management of Fixed Assets

a) Lack of a Comprehensive Fixed Assets Register

Paragraph 805 of the TAI requires all purchases of plant and tools to be charged

to a plant and tools item in the ledger and a fixed assets register to be maintained

to show the location of plant and tools, furniture and equipment. It was observed

however that the Ministry did not comply with this provision, as explained below:

A review of the Board of Survey Report for the MEMD for the financial year

2013/2014 revealed that although the asset register was in place, it did not

meet all the requirements of the TAI. Some items did not have cost prices and

values such as the buildings of the DGSM and the Petroleum Exploration and

Production Department (PEPD), and land in Moroto. The report further

revealed that the asset register did not indicate the location, cost and/or users

of various assets in the categories of computers, office equipment and

vehicles, but only indicated the department.

The inspection of the DGSM laboratory further revealed that a number of the

laboratory equipment were not included in the asset register and were not

448

part of the Board of Survey Report for the FY 2013/2014. Although an

inventory list of the equipment was provided, it was not possible to ascertain

the cost of the equipment as it was not indicated.

Without a complete asset register for all the Ministry assets and complete

information such as user and location, there is risk of loss of assets without a

trace.

The Accounting Officer indicated that the Ministry had started the process of up-

dating the assets register as required by the TAI. I await the outcome of

Management‟s action.

b) Property Without Certificates of Title

The Ministry lacked certificates of title to its property in Entebbe, plot 21-29

Johnstone road, on which the departments of PEPD and GSMD are housed and for

the land on which the regional offices in Gulu, Kabale, Tororo, Moroto,

Kabarole and Mbarara are situated.

Documents available at the Ministry show that there were individuals who claimed

to have titles of ownership, and a case of land grabbing involving plot 10a located

on Hill Road and plot M26 Kibira Road (Mirza Road) were reported to the Police.

In the absence of land titles, the Ministry faces the risk of losing the land.

Management explained that significant efforts had been made to secure the land

titles of Plot 21-29 Johnstone Road Entebbe, and a request was made to the

Commissioner Land Registration to cancel the forged titles for the pieces of land

that had been grabbed and issue titles to the Ministry.

I advised the Accounting Officer to expedite the process of obtaining the

certificates of ownership/ land titles for the land so as to avert the risk of losing

the land.

c) Assets Handed Over From Exploration Area 4B and 5

449

The provisions of the Production Sharing Agreements (PSAs) require that all

equipment and other assets, whether fixed or movable acquired and owned by the

licensee for use in petroleum operations shall become the property of the

Government upon ceasing operations.

Review of documents showed that in February 2013 and August 2013, two

companies, handed over assets worth USD.1,521,687, (NUL- USD.85,815 and DUL

– USD.1,432,869) to the Government. The following matters were noted;

a) Although the Ministry acknowledged receipt of the assets, the assets were not

added to the fixed assets register, and their physical location could not be

ascertained during the audit.

b) Three pick-up trucks (UAK 724C, UAK 772C and UAK 697C) and a motorcycle

(UDE 115H) handed over to the Government had not been registered with

Government number plates, rendering their ownership uncertain.

I informed Management that there is a risk of misappropriation of the assets.

The Accounting Officer explained that, the items in good condition were

distributed for use in the respective departments, while the obsolete ones were

boarded off and disposed of as per the PPDA procedures.

I advised Management to ensure that all the assets handed over are clearly

marked for identification, registration and entered into the assets register of the

Ministry.

24.7 Funds Not Accounted For

a) Allowances and Workshop Expenses

Paragraph 217 of the TAI requires advances to be accounted for without delay. It

was observed that UGX.98,566,501 paid to staff of the Ministry to undertake

official activities remained unaccounted for by the time of audit. In the absence of

the relevant accountability documents, it was not possible to confirm that the

funds were used for the intended purposes.

I advised the Accounting Officer to ensure that advances are accounted for by the

concerned staff.

450

b) Travel Abroad

UGX.24,323,000 was paid to facilitate officers to travel to Denver, USA to

participate in the Unconventional Resources Technology Conference. However the

expenditure was not adequately supported with invitation letters, back to office

reports and copies of boarding passes for passports.

In the absence of such documentation it was not possible to ascertain that the

trips were beneficial to the Ministry.

I advised the Accounting Officer to ensure that the funds are properly accounted

for.

24.8 ELECTRICITY SECTOR DEVELOPMENT PROJECT – MEMD

a) GoU Counterpart Funding

During the year under review, the Government of Uganda released

UGX.11,530,031,689 (USD.4,612,012.68) in respect of counterpart funding for the

project out of which UGX.11,420,000,000 was expended. Examination of the

expenditure records revealed the following matters;

UGX.7,523,718,204 was reflected on the Integrated Financial Management

System (IFMS) payments file as having been expended on the project

activities. The expenditure for the balance of UGX.3,896,281,796 could not be

traced to payments for the project. In the circumstances, the funds remain

unaccounted for.

Whereas management explained that the said funds were not expended

directly through IFMS but rather transferred to UETCL for implementation of

RAP activities, there was no documentary evidence to this effect.

In my report to parliament for the year ended 30th June 2013 I indicated that

UGX.5,133,052,162 was expended on non project activities and reported

project expenditure was overstated in this regard. No adjustment to the

financial statements has been made.

Additionally out of the UGX.7,523,718,204 spent directly by the Ministry,

UGX.1,650,707,968 was again spent on non project activities. Therefore,

451

cumulatively the project financial statements are misstated to the tune of

UGX.6,783,760,130.

The practice of expending project funds on non-qualifying activities amounts

to diversion of project funds and negatively impacts on the achievement of

the overall project objectives. In addition, the reported expenditure is

overstated in this regard as the diverted funds did not contribute to the

performance of the project.

The counterpart funds released by the Government of Uganda amounting to

UGX.11,530,031,689 (USD.4,612,012.68) for funding for the project activities

were not deposited on the project account. In the circumstances, the funds

are prone to being diverted to other activities and monitoring their utilization is

rendered difficult.

Management in response explained that Treasury had been requested to activate

the project account to facilitate deposit of funds but approval was not granted and

undertook to follow up the matter with Treasury.

I have advised management to;

account for the funds and in future ensure that funds meant for the project

are transferred to and expended through the project account,

restore the diverted funds to the Project Account for utilisation on planned

activities, and adjust the financial statements accordingly, and

ensure that all counterpart funds are deposited on the project account as

required under the project agreement.

b) Under absorption of funds

The project commenced in January 2012 and is expected to close in February

2017. It was noted that there is slow implementation of the project activities. For

example, while USD.614,150.26 remained unutilised during the previous financial

year and was available for utilisation during the current financial year on a number

of activities, it was noted that by 30th June, 2014, only USD.343,192.82 had been

absorbed, leaving a balance of USD.270,957.43. In the circumstances, there is a

452

risk that the overall project objectives may not be achieved. In addition,

management risks funding sanctions from the Development Partners.

Management explained that most of the project activities were at the procurement

stage with all Consultants already engaged to support the procurement of

contractors. Management anticipated that the absorption of the funds would

improve when the major activities of the project commence. I have advised

Management to strengthen its internal capacity to implement the project planned

activities and allow substantial disbursement of funds by the bank.

c) Manual Financial Management System

Section II (B)(4) of the Projects‟ financing Agreement states that the “Recipient

shall, not less than six (6) months after the effective date install or cause to be

installed within the Ministry a computerized accounting and financial management

system satisfactory to the Association”. However, it was noted that the accounts

department has continued to generate accounts manually using excel spread

sheets. I informed management that, this may lead to inaccuracies in financial

reporting.

Management undertook to seek approval from the World Bank to procure an

Accounting package with a view to improving the security and accuracy of the

accounting records. I await management‟s commitment in this regard.

d) Role of Internal Audit Function

According to the PAD, it is very important that internal audit unit conducts a risk

based audit on project internal controls periodically, such that appropriate

corrective actions are taken to address any weaknesses found. It was noted that

no transactional and systems audits had been conducted on the Project activities

by the internal audit. In the circumstances, there is a risk of ineffective internal

controls not being identified for corrective measures to be taken.

Management explained that the Internal Audit Department had been conducting

reviews of project operations and periodically advising management on measures

to improve project operations without formal documentation. However,

management undertook to advise the department to document their findings. I

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have advised the project management to ensure that internal audits are carried

out and reports issued on a regular basis as required in the Project‟s financing

agreement.

24.9 MBARARA-NKENDA & TORORO-LIRA POWER TRANSMISSION LINES

PROJECT – 31ST DECEMBER 2012

a) Delays in acquisition of Rights of Way

It is a requirement under best practices that a Right of Way (ROW) is acquired

under the Resettlement Action plan (RAP) to allow implementation of works

without interferences.

It was however noted that works on a number of locations on the transmission

lines had not started at the time of audit due to delays in obtaining Rights of Way

from the Project Affected Persons. Delays in obtaining Rights of Way impact

negatively on the timely completion of the project.

Management acknowledged the delays which they attributed to delayed approval

of RAP reports by Chief Government Valuer (CGV), disputes with Landowners,

family disputes, absentee landlords, and speculation among landowners. They

further explained that all efforts were being made to address the causes of the

delays for instance through frequent follow-ups with the CGV to expedite the

process of approval.

I have advised the Project Management to devise means of coming to terms with

the project affected persons in order for them to give Rights of Way for the

transmission lines to be erected.

24.10 MBARARA-NKENDA & TORORO-LIRA POWER TRANSMISSION LINES

PROJECT – 31ST DECEMBER 2013

a) Delays in construction of PAP Houses

M/S Lamba Enterprises, the contractor who undertook the construction of houses

for the Project Affected Persons (PAP), failed to complete the construction works

due to financial problems. The last construction works were done in January 2013

454

and as of 31st December 2013, only 3 of the 50 planned houses had been

constructed.

Although management was in the process of procuring another firm to complete

the construction works, this had not been done by the time of the audit. Delays to

construct houses for the affected persons are likely to delay the completion of the

project. The project is also exposed to a risk of loss of the unrecovered money

advanced to the Contractor, (USD.15,193).

Management explained that a new contractor had been procured and a kick-off

meeting held. In addition, UETCL wrote to the PPDA to ban the previous

contractor for abandoning site. It was further stated that out of UGX.474,445,180

advanced to the previous contractor, the outstanding balance of UGX.41 million

was being pursued through legal mechanisms.

I advised the Project management to ensure that the new contractor mobilizes

and starts the construction works to enable completion of the project in time.

Meanwhile, I await the outcome of the legal proceedings aimed at recovering the

balance.

b) Delays in processing PAPs‟ Land Titles

As part of the requirements of the project resettlement and compensation

program, Project Affected Persons (PAP‟s) were required to deposit their land titles

with UETCL in order for the project to curve out land acquired for Transmission

Lines. Whereas the payments had been made to the PAPs, it was noted that most

of the land titles had not yet been returned to them at the time of the audit. In

the circumstances, disputes may arise with the PAP‟s leading to legal actions being

taken against the project.

Management explained that the process of land acquisition and transfers required

authentication, proof of ownership and the involvement of several stakeholders‟

right from the Parish Land Committees (PLCs) to the Land Offices. The team

further stated that UETCL was in possession of the said titles for mutation

purposes. The process of mutation & transfers was affected by the delays in the

land office.

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I advised management to take up the matter with the relevant authorities and

Ministry of Lands with a view to expediting the transfers by the Lands Office.

24.11 INTERCONNECTION OF ELECTRICAL GRIDS OF NILE EQUATORIAL

LAKES COUNTRIES (NELSAP) UGANDA – 31ST DECEMBER, 2012

a) Review of formal Enterprise wide risk management policy,

procedure and plan

During the review of risk management policy and procedures, the following were

observed:

It is not extended to various projects implemented by UETCL

There is no formal reporting structure (Risk committee, Risk department)

whereby the risk related activities are executed by internal audit.

Management was advised to consider making the various projects implemented by

UETCL part of risk management policies and procedures.

Further management was advised to amend the policy and procedures such that

they include appropriate and regular reporting structures.

Management explained that the risk is done internally by the project managers

through the Head of Department who Reports to Management and Board on a

Quarterly basis.

b) Review of Audit Committee Charter:

It was observed that:

The Audit committee charter was not reviewed and formally approved by

audit committee since 2008, though charter requires review, revision and

approval every 3 years.

Management charter has not been reviewed and approved since 2008, though

charter requires review every 5 years.

456

Management explained that the management charter was not yet due for reivw by

the end of the financial year under audit. However, it was scheduled to be

reviewed after 2013.

Management was advised to thoroughly review, revise and approve the audit

committee charter in order to strengthen the monitoring controls required to

address various risks associated with current operations.

c) Delay in implementation of the Resettlement Action Plan (RAP)

In addition to the observation identified, it was also observed that the RAP which

was supposed to have been approved by January 2011, was not yet approved by

the end of 2011.

The delayed approval of the (RAP) within the timelines has subsequently lead to

the late implementation of the RAP.

Management explained that the RAP report approval is an external process

because the approval is vested in the office of the Chief Government Valuer (CGV)

in the Ministry of Lands. The CGV handles all infrastructure projects in the country

and the delays have been noted by various parties. However, the approval was

later achieved and the process of compensation is on-going and currently more

than 79% and 78% are compensated for Bujagali-Tororo and Mbarara-Mirama

respectively.

Management was advised to ensure that RAP is implemented in time as required

by the developments partner‟s guidelines.

d) Delay in handover of sites to the contractor

During the field visits and interviewing the contractors, it was observed that there

is significant delay in handing over the sites to contractors as a result of either

delay in approval of plans or settling the claims of PAP and RAP.

The compensation progress report as on December 31, 2012 is as under;

457

Compensation progress Percentage (%)

LOT A - Mbarara - Mirrama 49%

LOT B - Bujagali - Tororo 48%

Management explained that the delay to hand over sites is due to a number of

factors such as delays to approve the RAP report by CGV, disputes with

landowners, family disputes, processing delays, absente land lords, speculation

which leads to landowners selling to new persons leading to new claimants.

Management was advised to expedite the RAP implementation.

e) Inappropriate handling of source documents

During the review of expenses, it observed that;

i. PAP Compensations

It was noted from the sample of PAP files for verification, many PAP files were

misplaced/disorganized and were not availed in time.

Management explained that it is important to note that the Audit exercise

coincided with an on-going exercise to digitise the RAP processes and records into

the Way Leaves Information Management System. The Exercise required files to

be assembled to the scanning teams at different locations, (Jinja, Lugogo and

Hannington) therefore their timely retrieval when instantly required posed a

challenge.

Management further explained that the process of Land Acquisition and transfers

is not instantaneous. The process requires Authentication, proof of ownership and

the involvement of several stakeholders right from the PLCs to the Land Offices.

Most of the paid land is customary owned and therefore the process of transfer is

handled at a later stage as long as clearance for construction of the transmission

line is achieved. Registration of transfer forms is done after the mutation process

has been completed.

Management was therefore advised to develop a strong control over maintenance

and safeguarding the physical files that is periodical physical verification of number

458

files and accurate records for movements in files.

i. Lack of transfer of ownership to of NELSAP acquired land

From the reviewed samples, it was noted that;

a) PAP land transfer forms were not signed by appropriate authority of UETCL,

yet payments were made in full.

b) PAP land transfer forms have not been registered with land office.

Both the above are contrary to the provision of the Project Implementation

manual, where the land titles are supposed to be obtained before full payment to

the PAP.

Management explained that approval is given to the professional staff whose CVs

are documented in the Bid of the Lead consultant. These are evaluated and

approved accordingly. However, the mentioned staff belonged to a sub consultant

engaged by the main consultant as clerk of works, although they are engineers.

Management was advised to ensure that the process of transfer of title of land into

UETCL names is expedited.

Further management was also advised to keep in mind the disbursement process;

which should be in line with project implementation manual.

Further still it was noted that non compliance with the conditions stated in the

manual, may create a future financial loss to the NELSAP.

ii. Lack of approval of key field engineers

We have not received the evidence of below missing approval for change of

professional field engineers:

Missing documented apporvals Consultant

Edward Byaruhanga AECOM/ RSW

Paul Kasozi AECOM/ RSW

459

Management was advised to make sure that any change in approved staff must be

approved by a consultant.

iii. Project fixed assets monitoring:

It was noted that the projects fixed assets are were not engraved/tagged, labeled

with NELSAP project identification codes and there was no evidence of regular

verifications.

Management explained that the UETCL assets are engraved and managed through

the main Corporate Assets Management arm. However, improvements to add

inscriptions to identify project assets will be implemented.

Management was advised that project assets be tagged/labeled with NELSAP

identification codes and periodic counts should be performed and reviewed for all

assets, with count results reconciled to the fixed asset register by individuals.

iv. Non compliances to withholding tax provisions

As per Section 119 of the Income Tax Act Cap 340, UETCL is liable to deduct

withholding tax @ 15% on each payment made to any resident.

However, UETCL did not remit the deducted WHT @ 15% on payments made to

RSW International (AECOM) to URA by the time of this audit.

Management explained that deduction of WHT for RSW International (Acecom) is

provided for but awaits cash release from the same treasury (MoFPED) so that it

can be paid to URA, the collecting arm of the same Treasury.

Management further explained that for all donor based payments, the taxes are

part of counterpart funding and therefore a GoU obligation.

Management was advised that non-deducted WHT from previous payments should

be deducted from subsequent payments and paid to URA at the earliest. Moreover

in future, it should be fully complaint to the provisions of the income tax act.

24.12 INTERCONNECTION OF ELECTRICAL GRIDS OF NILE EQUATORIAL

LAKES COUNTRIES (NELSAP) UGANDA – 31ST DECEMBER, 2012

460

a) Review of formal Enterprise wide risk management policy,

procedure and plan

During the review of risk management policy and procedures, the following were

observed:

It is not extended to various projects implemented by UETCL

There is no formal reporting structure (Risk committee, Risk department)

whereby the risk related activities are executed by internal audit.

Management explained that risk management in projects is assessed during

feasibility study as well as Environment Assessment/Resettlement Action Plan

(RAP) preparation. In addition, the risks are identified and assessed during the

preparation of the Project Implementation Manual (PIM).

Management explained that the risk is done internally by the project managers

through the Head of Department who Reports to Management and Board on a

Quarterly basis.

Management was advised to consider making the various projects implemented by

UETCL part of risk management policies and procedures.

Further management was advised to amend the policy and procedures such that

they include appropriate and regular reporting structures.

b) Review of Audit Committee Charter:

It was observed that:

The Audit committee charter was not reviewed and formally approved by

audit committee since 2008, though charter requires review, revision and

approval every 3 years.

Management charter has not been reviewed and approved since 2008, though

charter requires review every 5 years.

Management noted the audit comment and said that the Audit Committee Charter

is in the process of being reviewed accordingly.

461

Management further explained that the management charter was not yet due for

review by the end of the financial year under audit. However, it promised that the

Charter was scheduled to be reviewed after 2013.

Management was advised to thoroughly review, revise and approve the audit

committee charter in order to strengthen the monitoring controls required to

address various risks associated with current operations.

c) Delay in implementation of the Resettlement Action Plan (RAP)

In addition to the observation identified, it was also observed that the RAP which

was supposed to have been approved by January 2011, was not yet approved by

the end of 2011.

The delayed approval of the (RAP) within the timelines has subsequently lead to

the late implementation of the RAP.

Management explained that the RAP report approval is an external process

because the approval is vested in the office of the Chief Government Valuer (CGV)

in the Ministry of Lands. The CGV handles all infrastructure projects in the country

and the delays have been noted by various parties. However, the approval was

later achieved and the process of compensation is on-going and currently more

than 79% and 78% are compensated for Bujagali-Tororo and Mbarara-Mirama

respectively.

Management was advised to ensure that RAP is implemented in time as required

by the developments partner‟s guidelines.

d) Field Visits

i. Delay in handover of sites to the contractor

During the field visits and interviewing the contractors, it was observed that there

is significant delay in handing over the sites to contractors as a result of either

delay in approval of plans or settling the claims of PAPs and RAP.

462

The compensation progress report as on December 31, 2012 and 2013 is as

under;

Compensation Progress Percentage (%)

LOT A – Mbarara - Mirrama 49%

LOT B – Bujagali - Tororo 48%

Management noted the audit comment and explained that the delay to hand over

sites is due to a number of factors such as delays to approve the RAP report by

CGV, disputes with landowners, family disputes, processing delays, absente land

lords, speculation which leads to landowners selling to new persons leading to new

claimants.

Management was advised to expedite the RAP implementation.

ii. Inappropriate handling of source documents

During the review of expenses, the following was observed;

a) PAP Compensations

It was noted from the sample of PAP files for verification, many PAP files were

misplaced/disorganized and were not availed in time.

Management explained that it is important to note that the Audit exercise

coincided with an on-going exercise to digitise the RAP processes and records into

the Way Leaves Information Management System. The Exercise required files to

be assembled to the scanning teams at different locations, (Jinja, Lugogo and

Hannington) therefore their timely retrieval when instantly required posed a

challenge.

Management further explained that the process of Land Acquisition and transfers

is not instantaneous. The process requires Authentication, proof of ownership and

the involvement of several stakeholders right from the PLCs to the Land Offices.

Most of the paid land is customary owned and therefore the process of transfer is

handled at a later stage as long as clearance for construction of the transmission

463

line is achieved. Registration of transfer forms is done after the mutation process

has been completed.

Management was therefore advised to develop a strong control over maintenance

and safeguarding the physical files that is periodical physical verification of number

files and accurate records for movements in files.

b) Lack of transfer of ownership to NELSAP acquired land

From the reviewed samples, it was noted that;

PAP land transfer forms were not signed by appropriate authority of UETCL,

yet payments were made in full.

PAP land transfer forms have not been registered with land office.

Both the above are contrary to the provision of the Project Implementation

manual, where the land titles are supposed to be obtained before full payment to

the PAP.

Management explained to the audit team that the process of Land Acquisition and

transfers is not instantaneous. The process requires Authentication, proof of

ownership and the involvement of several stakeholders‟ right from the PLCs to the

Land Offices. Most of the paid land is customary owned and therefore the process

of transfer is handled at a later stage as long as clearance for construction of the

transmission line is achieved.

Registration of transfer forms is done after the mutation process has been

completed.

Management explained further that for titled Land, UETCL is in possession of the

said Titles for mutation. In cases titles are not available, 70% of the funds is paid

so that the PAPs allow construction activity to take place and when titles are

presented, the 30% is cleared. All this is done through memorandums of

understanding between land owners and the company. The process of transfers is

also affected by the delays in the land office such as the recent computerisation

when all land offices in the country closed, and even after opening, the process

has not resumed smoothly.

464

Management was advised to do the following;

To ensure that the process of transfer of title of land into UETCL names is

expedited.

Payment authorities should keep in mind the disbursement process; which

should be in line with project implementation manual.

Non compliances with the procedural manual, may create a future financial

loss to the NELSAP.

c) Lack of approval of key field engineers

We have not received the evidence of below missing approval for change of

professional field engineers:

Missing documented apporvals Consultant

Edward Byaruhanga AECOM/ RSW

Paul Kasozi AECOM/ RSW

Management explained that the approval is given to the Key professional staff

whose CVs are documented in the Bid of the Lead consultant. These are evaluated

and approved accordingly. However, the mentioned staff belonged to a sub

consultant engaged by the main consultant as clerk of works, although they are

engineers.

Management was advised to make sure that any change in approved staff must be

approved by a consultant.

d) NELSAP Physical implementation

During the time of audit, the following was noted;

a) There was a lot of pending work with an estimated delay of about 1 year on

Lot B and 6 months on both Lots A and C.

465

There is a risk that the funding period will expire before full project

implementation and all unclaimed funds will attract a surcharge in form of interest

expense to the Government.

The UETCL management promised that it will strive to expedite the process of

handing over the corridor to the contractor as soon as it acquires the remaining

portions.

b) It was also noted that the earthing resistance of the foundation installation

was not measured after back filling as provided for in the contract.

Management explained that the tower foundation installations were still in work in

Progress and all criteria for finalising them will be met.

Management further explained that the earthing of the foundation installations is a

quality conformity requirement by all known electrical installations. It will be done

after tower erection. After foundation back filling and tower erection, extra

earthing is applied on two tower legs on a diagonal (Lattice tower), It is at this

point that earthing resistance is measured and a comparison made against the

recommended standard. The Project Manager will ensure that the measurements

are done once all erection and leg earthings are complete.

Management was advised to do the following;

Ensure that the earthing resistance of the towers is measured and improved

upon through extra earthing pits before stringing of the conductors can be

done and;

Ensure that in rocky places, soil for backfilling be brought from other areas for

good earthing of the system.

c) It was also noted that the number of supervisors on the consultant‟s team

were not adequate. For example a stretch of LOT A with five Gangs operating

at the same time was being supervised by one consultant engineer and LOT B

which had over three Gangs was also being supervised by one consultant

engineer.

466

It was noted that there may be a risk of not attaining the agreed tower

foundation.

Management explained that earlier in the contract, the Consultant was requested

to submit a proposal for enhanced supervision. This was received, reviewed and

forwarded to the Financier for a no-objection which was declined. However,

UETCL.

Management was advised to consider increasing the number of supervisors for

adequate supervision.

Contractor does not maintain accurate and reliable quantitative records for the

movements, use and balance of stocks.

In the absence of the accurate records, there is a risk of not ensuring that all

inventory items purchased are appropriately used for the project and no frauds

have taken place.

Management was advised to maintain the appropriate stock records and

consultant the consultant should periodically review and verify the physical stock

and directly report to the UETCL management.

No test results to ascertain grade of steel being used.

Management was advised to ensure that a sample for each batch is tested to

ascertain the correctness of the steel used.

No toilet facilities at field active sites.

Management was advised to ensure that waste disposal is well managed by the

contractor at all active sites.

d) Unrecorded liquidated obligations

It was observed that NELSAP follows a modified cash basis of accounting where by

expenses are recorded when paid modified by accruing for un-liquidated

obligations at the reporting period

467

However, we observed that un-presented cheques which was paid to PAPs was

not recorded in the books of NELSAP and still showing under reconciliation of

Stanbic Bank account.

Management was advised to disclose these obligations in their quarterly/yearly

financial reporting to the development partners and other reporting authorities.

e) Project fixed assets monitoring:

It was noted that the projects fixed assets were not engraved/tagged, labelled

with NELSAP project identification codes and there was no evidence of regular

verifications.

Management was advised to label all the project assets with the project NELSAP

identification codes and periodic counts should be performed and reviewed for all

assets.

f) Unremitted withholding tax

It was observed that following amount withheld from suppliers yet not remitted to

the Uganda Revenue Authority:

Supplier Date deducted Amount (US$)

AECOM Jan 2013 97,340

AECOM Feb 2013 97,340

Management was advised that withholding tax deducted on payment should be

promptly remitted to URA to reduce the future penalty.

24.13 ENERGY FUND

a) Lack of Operational Guidelines for the Fund

In my report to parliament for the year ended 30th June, 2013, I pointed out that

the Fund lacks operational guidelines for implementation of its activities and

financial reporting. By close of the current year‟s audit the issue remained

outstanding. Under the circumstances, there is risk of uncoordinated operation of

the Fund resulting into sub-optimal decision making.

468

Management explained that the matter had been communicated to the Accountant

General and that interactions between the Ministry of Energy and Mineral

Development and the Office of the Accountant General were ongoing.

I advised management to expedite the process of developing the guidelines

without further delay.

b) Unauthorized Expenditure

Reg. 4 (2) of the Energy Fund Regulations, 2008 provides that monies shall not be

withdrawn from the Fund unless the withdrawal has been duly authorised for a

specific purpose of the Fund. In addition, section 9 (6) of the Public Finance and

Accountability Act, 2003 provides that no expenditure shall be incurred by a

special Fund except under the authority of a warrant signed by the Minister of

Finance and addressed to the Accounting Officer.

Contrary to the above provisions, UGX.10,432,195,553 was paid out of the Energy

Fund without evidence of the requisite authorisation by the Minister responsible

for Finance. I pointed out a similar scenario in my report for the previous year.

Payment without authority exposes the money in the Fund to the risk of

misappropriation which would undermine the objectives for which the Fund was

established.

Management explained that that it had running contracts whose obligations had to

be met using proceeds of the Energy Fund in anticipation that authority to utilize

the proceeds of the Fund would ultimately be granted by the Minister.

I have advised management to always ensure that all withdrawals from the Fund

are authorised by the Minister as required by law.

c) Direct Payments from the Energy Fund

A sum of UGX.11,218,827,049 was paid out of the Fund directly to Energy Infra

tech Ltd, a service provider providing consultancy services for the supervision of

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construction of Karuma Hydropower project instead of making transfers to the

Hydro power development unit of the Ministry for subsequent disbursement. It

was noted that in the previous year UGX.7, 070,240,250 had been paid out in the

same manner. The practice of making direct payments from the Energy Fund

Account turns it into an ordinary operational account. A similar matter was pointed

out in my report for the previous year.

I informed management that the practice undermines the strategic intent of the

Fund.

Management explained that, a request to the Accountant General to open an

operational account for the Energy Fund had not been cleared by the end of the

financial year. It was further stated that the Hydro power development unit has

since been absorbed into Uganda Electricity Generation Company Limited

(UEGCL).

I advised management to follow up the matter of an operational account with the

Accountant General without further delay.

d) Unimplemented Activities

The Ministry policy statement provided for implementation of the following

activities using the Energy Fund;

S.No Activities Estimated Costs (UGX

Bn)

1 132 KV transmission line from

Kabulasoke to Hoima, including

substations.

70.2

2 132KV transmission line from Lira to

Gulu to Agago, including

substations.

50.7

3 Nyagak 111 hydro power project. 22.425

470

S.No Activities Estimated Costs (UGX

Bn)

4 MW Maziba small power plant. 7.397

Total 150.722

It was however noted that none of the activities was implemented. Non

implementation of the planned activities undermines the intentions of the Fund.

Management explained that the necessary Funds were not released by the Ministry

of Finance.

I advised management to continue liaising with the Ministry of Finance, Planning

and Economic Development together with relevant stakeholders to have the Funds

released.

24.14 STRENGTHENING THE MANAGEMENT OF OIL AND GAS SECTOR IN

UGANDA PROGRAMME (SMOGP)

a) Inconsistencies in the Accounting and budgeting periods

Section 8.0 (3) of the programme document requires that annual financial

statements and budget should be submitted to Norway (Ministry of Foreign

Affairs) within three weeks before the Annual Meeting each year to give complete

and detailed information on the financing of the Programme.

However, it was noted that whereas the Programme follows a calendar year

budget cycle, the financial statements are prepared for the period July to June in

accordance with the Government of Uganda fiscal year. In the circumstances,

analysis of the programme's trends in performance is rendered difficult.

Management explained that quarterly expenditures were made against approved

quarterly budgets for the calendar year as provided for in the annual meeting and

the four (4) quarters that make a financial year were analysed. However,

management indicated that in the event of new programmes, exemptions would

471

be made so that the financial statements follow the Donor period. I have advised

management to align the budget and the GoU financial reporting periods.

472

HEALTH SECTOR

25.0 MINISTRY OF HEALTH


Paragraph 156 of the TAI prohibits transfer of funds available on one item or sub

item of expenditure to another save, on the authority of a virement warrant. It

also prohibits charging expenditure to items merely because funds are available on

a particular item.

However, It was noted that out of the appropriated expenditure of

UGX.45,794,208,890, a total of UGX.2,644,401,389 (5.7%) was charged on codes

other than those for which funds were appropriated. Though there was an 80%

decrease from UGX.13,431,161,682 mischarged in the previous year, there is need

for further measures to stop the practice, as it contravenes budgetary controls and

distorts the intentions of the appropriating authority.

Management indicated that further controls in budget implementation would be

undertaken to reduce the mischarge. I await the results of Management‟s efforts.

25.2 Payables

Included in the payables balance of UGX.10,815,916,944 in note 26 to the

financial statements are long outstanding liabilities in respect of UMEME

(UGX.3.131 billion), NMS (UGX.3.77 billion), JCRC (UGX.1.1billion), UTL

(UGX.127 million) and NWSC (UGX.61 million) which may result in

discontinuation of essential services to the Ministry.

In response, the Accounting Officer stated that he was liaising with MoFPED to

settle the liabilities to enable sustainability of services.

I advised Management to ensure that resources are set aside to settle the

liabilities without further delay.

25.3 Expired Letters of Credit

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The Ministry of Health had expired letters of credit amounting to UGX.696,965,456

in respect of settlement of liabilities with various construction companies at the

end of the financial year. There was however no evidence of renewal of the LCs or

a mechanism of settling the liabilities which may result in litigation.

The Accounting Officer indicated that a request to MoFPED for renewal of the LCs

was not responded to. I advised Management to continue liaising with MoFPED to

ensure that resources are set aside to settle the liabilities without delay.

25.4 Nugatory Expenditure

A local Construction firm was contracted by the Ministry to undertake various

projects between 1997/1998 and 2005/2006 at a total cost of UGX.4,419,818,390.

The projects included;

i. Reconstruction of the Ministry of Health Headquarters;

ii. Rehabilitation of Jinja Hospital;

iii. Rehabilitation of sewerage, water reticulation and plumbing installation for

Entebbe Hospital, and

iv. Construction and equipping of Health Centres in Kamuli and Kisoro Districts.

However, owing to delayed settlement of the contractual sum, interest of

UGX.2,116,126,197 was charged to the Ministry. The expenditure is considered

wasteful, since it would have been avoided if the bills were settled promptly.

Besides, the interest charge continues to accumulate with further delays in

settlement of the bills.

In response, the Accounting Officer explained that the entire contract was being

reviewed by the Internal Audit section of the Ministry, after which a final position

would be communicated to all stakeholders.

I advised the Accounting Officer to expedite the review process and liaise with the

Ministry of Finance, Planning and Economic Development (MoFPED) to settle the

bills without further delay to save public funds from wastage.


474

a) Revenue Performance

Out of the budgeted revenue of UGX.473.99 billion, the Ministry received only

UGX.291.62 billion, resulting into a shortfall of UGX.182.37 billion (39%). It was

noted that the component supported by Development Partners suffered the

biggest shortfall amounting to UGX.171.7 billion (41%) as shown in the table

below;

Particulars GoU (billions) Donor (billions) Total (billions)

Approved budget 57.32 416.67 473.99

Released funds 46.70 244.92 291.62

Shortfall 182.37

% shortfall 38.48

As a result, various planned activities were not implemented such as construction

of the Central vaccine store, District vaccines stores and staff houses in the hard

to reach areas. Failure to construct stores for vaccines and staff houses has the

effect of constraining immunisation programmes and motivation of staff in hard to

reach areas respectively.

In response, the Accounting Officer explained that the funds were carried over to

the FY 2014/2015 and would be applied to the planned activities.

I advised the Accounting Officer to continue liaising with MoFPED and other

stakeholders to ensure that appropriated revenue is realized in a timely manner to

be able to meet the MoH and sector objectives.

b) Low Absorption Capacity for Global Alliance for Vaccines

Initiatives (GAVI)

The Global Alliance for Vaccines Initiatives (GAVI) was launched in 2000 to

improve access to immunisation services for children in Uganda. The Project‟s

main objective is to contribute to strengthening Uganda‟s health system to deliver

the National Minimum Health Care Package (NMHCP), including immunization in

an efficient, equitable and sustainable manner for reduced morbidity and mortality

in Uganda. The first phase of the Project is expected to end in June 2015.

475

A review of the Financial Performance Analysis of the GAVI Project for the period

ended 31st June 2014, revealed that out of the disbursement of

UGX.54,862,533,887, only UGX.1,512,757,372 (2.76%) was expended on Project

activities, leaving a balance of UGX.53,349,776,515.3, as indicated in the table

below;

Grant Rolling Budget Disbursement for

FY 2013/14 (a) Expenditure by 30th June 2014(b)

Variance (c)=(a)-(b)

%Expenditure

Health Systems Strengthening Grant

46,180,800,936 46,180,800,936 223,878,800 45,956,922,136 0.5

Immunisation Support Services one grant

2,046,059,631 860,950,281.3 169,139,020 691,811,261.30

20

Immunisation Support Services Two grant

6,358,853,680 6,358,853,680 605,206,500 5,753,647,180

9.5

Vaccine introduction Grant

3,384,276,000 1,461,928,990 514,533,052 947,395,938

35.2

Total 57,969,990,247 54,862,533,887 1,512,757,372 53,349,776,515.3

Under absorption of funds hinders achievement of immunisation goals.

The Accounting Officer attributed the low absorption capacity for the Global

Alliance for Vaccines Initiative (GAVI) to procurement delays resulting from

administrative reviews of various procurements. He further explained that,

consequently the top Management of MoH together with the GAVI alliance had

resolved to use the delegated procurement method, using international agencies

such as UNICEF, USAID and Catholic Relief Services (CRS).

I advised the Accounting Officer to ensure that procurement systems within the

Ministry are strengthened so as to minimize administrative reviews and gain the

confidence of financiers.

c) Review of the Annual Health Sector Performance Reports

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A review of the annual health sector performance reports for the period 2006 -

2014 revealed that there was stagnation towards achievement of the Sector set

targets and goals as indicated in the table below;

The Health impact indicators against the MDGs and the HSSIP 2010/2011-2014/2015 targets Health Impact Indicator

MDG/HSSIP

2015 target

2006 2011 2012 2013 2014 Audit Remarks

Maternal

mortality ratio (per 100,000 live

births)

131 435 438 438 438 438 Declining/stagna

ted trend

Neonatal mortality rate

(per 1000 live births)

23 29 27 27 27 27 Stagnated trend

Infant mortality

rate (per 1000 live births)


Under 5 mortality

rate (per 1000 live birth)


The low performance ratios were attributed by Management to various factors

including; health service communication breakdowns, lack of blood products,

supplies and consumables, Health staff non-action, staff misguided action, staff

lack of expertise, inadequate Human Resource (HR) numbers and skills at the

health facility level at only 69% of the required positions. It was noted that the

general Government funds allocation to the Health Sector as a percentage of the

total Government budget had averaged about 8% from 2010/2011 to 2013/20141

which is 1.8% short of the HSSIP target of 9.8%.

The Accounting Officer explained that the impact indicators had been measured by

UDHS in 2011 and the following interventions have since been undertaken:

Increasing funding for reproductive health commodities from USD.3.3 million

to USD.6.9 million, thus reducing stock outs;

1 In 2013/2014 the total government budget allocation to the Health Sector increased from

UGX.852,200,000,000 allocated in the previous year was UGX1, 127,480,000,000.

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Setting up regional blood banks at Mbale, Mbarara, Fort Portal, Arua, Gulu and

Soroti Regional Referral Hospitals;

Recruitment of health workers to operate Health Centre (HC) IVs thus

increasing HC IVs offering comprehensive emergency obstetric care from 17 %

- 35%;

Mentoring health workers to carry out emergency obstetric care and other

reproductive health services;

Procuring and distributing of equipment to health facilities;

Using Village Health Teams to mobilize, register and refer mothers and their

babies to health facilities, and;

Carrying out maternal and prenatal death reviews as a quality improvement

tool.

I await the results of Management‟s action in this regard.


a) Administrative Advances

Paragraph 215 (a) of Part I of the TAI, 2003 requires advances to be accounted

for within sixty days of disbursement. It was however noted that

UGX.121,360,800, advanced to various Ministry staff during the financial year for

implementation of official activities, remained outstanding.

In the absence of the necessary accountability documents, it was not possible to

confirm whether the funds were put to intended use.

The Accounting Officer explained that the concerned individuals had been notified

and reminded of the need for timely accountability.

I advised the Accounting Officer to ensure that the outstanding advances are

accounted for by the various beneficiaries or else, the funds are recovered.

b) Advances to Staff Personal Bank Accounts

UGX.15,644,667 advanced to Ministry staff through their personal bank accounts

for purchase of fuel while on official activities remained outstanding. I explained to

478

the Accounting Officer that the practice contravenes paragraph 228 of the TAI,

2003 which exposes the funds to the risk of mismanagement.

In response, the Accounting Officer explained that further consultations with

MoFPED are to be undertaken to enable staff carry out field activities without

paying funds to personal accounts.

I advised the Accounting Officer to consider providing staff with fuel cards for use

during field activities. Meanwhile, the funds should be accounted for or recovered.

25.7 Wasteful Expenditure

The Ministry contracted a hotel for four (4) days from 23rd to 26th September,

2013 to provide hotel services for the Joint Health Review Mission. However, it

was noted that whereas 1,600 participants were paid, only 1,284 attended,

resulting into wasteful expenditure of UGX.27,047,783. In response, the

Accounting Officer stated that the Ministry paid the hotel on the understanding

that all invited guests would attend.

I advised the Accounting Officer to always ensure prior confirmation of

participation by invited guests before booking the services, since the Joint Review

Mission is a regular and planned event.

25.8 Implementation of Procurement Audit Recommendations

Review of the implementation status of the PPDA Authority audit recommendation

for the year 2012/2013 revealed various outstanding matters as indicated in the

table below;

Ser. no. Procurement area. Current status

1. Preparation of solicitation documents Not implemented

2. Signing of all contracts by the Accounting Officer. Not implemented

3. Reporting; Donors funded projects with an estimated

value of UGX 380,000,000 not reported to PPDA

Not implemented

4. Performance of Accounting Officer –

- Take responsibility of the Nugatory expenditure

- Ensure delays in procurement processes are avoided

Not implemented

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Ser. no. Procurement area. Current status

at the various stages and timelines in the bid notice.

5. - Performance of the procurement and disposal Unit

staff for failure to seek contract committee approvals

of some mentioned procurements

Not implemented

6. Performance of user departments – Caution in writing an

officer for usurping the role of the procuring and disposal

unit.

Not implemented

Failure to implement the procurement audit recommendations may result in

recurrence of the anomalies. The Accounting Officer stated that out of the 13

recommendations, 7 had been implemented and plans were underway to

implement the outstanding 6 matters.

I advised the Accounting Officer to ensure that all procurement audit

recommendations are implemented by the Ministry so as to improve its

performance.

25.9 UGANDA GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIA

PROJECT – HEALTH SYSTEMS STRENGTHENING COMPONENT IN THE

MINISTRY OF HEALTH

25.10 Delayed Release of Project Funds

The review of the Portfolio Disbursement Release (PDR) document for the financial

year 2013/2014 revealed that Global Fund released a total grant of USD.2,272,147

on 20th June 2014 through the Principal Recipient - Ministry of Finance

Planning and Economic Development (MoFPED). However, the funds could not

be transferred to the Project account since they had been released towards the

end of the financial year. As a result, the planned activities could not be

implemented during the period thus affecting the project completion timelines and

the attainment of the overall project goals and objectives.

480

The delayed release of funds was attributed to the delayed recruitment of the

Regional Performance Monitoring Teams (RPMTs).

The Accounting Officer explained that the Management of the Fund together with

the Global Fund (GF) Secretariat team had put in place measures to unblock

roadblocks and expedite the implementation of the grant activities.

I have advised the Project management to ensure timely release of funds to

enable implementation of planned activities, thus ensuring attainment of project

objectives.

25.11 Global Fund GoU counterpart funding

A review of the Project work plan and Government of Uganda (GoU) Global Fund

schedule of releases from IFMS system revealed that management had

budgeted for GoU funding of UGX.4,000,000,000, but only UGX.3,277,112,100

(82%) was actually released as co-funding to the Project.

Failure to fully fund the Project stifles the project cash flows thereby constraining

the implementation of the planned activities and the attainment of Project

objectives.

Management explained that they were in negotiations with MoFPED to ensure that

all budgeted counterpart funds are released early in the financial year according to

work plans.

I have advised management to always liaise with MoFPED to plan properly for the

release of funds to ensure proper implementation of all planned project activities.

25.12 Un-updated asset register and Un-engraved assets

The Specific Terms and Conditions, Para 2 of the Project Grant Agreement (Annex

2) require the Principal Recipient to provide an up-to-date, complete asset register

(including, without limitation, the location of the fixed asset, the owner of the

fixed asset, specific fixed asset identifier code or reference). It was however noted

that the fixed asset register for Global Fund was not updated with all the details of

the assets.

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Review of the asset register also revealed that a number of assets which were

distributed up-country such as microscopes, laptop computers, printers, desktop

computers, Laboratory Refrigerators, Drawer filing cabinets, Round conference

tables and standard office chairs had not been engraved. Failure to update the

asset register and to engrave the assets is an indication of weaknesses in the

internal controls which exposes the Project assets to misuse.

Management acknowledged the anomaly and pledged to endeavour to engrave

the assets, and update the fixed asset register.

I have advised the Project Management to ensure that all assets are engraved and

that the asset register is updated with all the details of the assets.

25.13 Un-utilized Funds for Regional Planning and Monitoring Teams

UGX.2,889,664,406 was released for operational funds for the component of

Health Systems Strengthening for the period Jan - June 2014. Audit noted that

UGX.1,783,007,073 was properly utilized and accounted for while the balance of

UGX.1,106,657,333 meant for Regional Performance Monitoring Teams (RPMTs)

was not utilized. This was attributed to the late release of funds to the regional

offices (i.e on 14th May 2014). Management was given a no cost extension up to

December 2014, to implement the activities of RPMTs. However, at the time of

writing this report (March 2015), there were no further details regarding the

matter.

The Accounting Officer explained that the delay to release the implementation

funds for RPMTs was due to the time it took for the host districts to include them

in the district system - because they had to be approved as supplementary funds

by the respective district councils. He further stated that implementation was on-

going and once completed, the funds would be fully accounted for.

I have advised the Accounting Officer to ensure that the implementation of the

RPMTs activities is duly expedited and fully monitored to ensure proper utilization

of the funds.

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25.14 Review of implementation of recommendations

i. Status of conditions precedent and/or other special conditions

It was observed that the Principal Recipient had three conditions precedent and/or

other special conditions to be fulfilled before and after the first disbursement could

be made. While one condition had been met, the other two remained outstanding.

Failure to fulfil these conditions could result into delayed or withholding of further

disbursement.

In their response, the Project Management committed to continuously liaise with

the stakeholders to fully address the work in progress of the issues noted.

I have advised management to expedite the implementation of the outstanding

conditions in order not to frustrate further disbursement of funds.

ii. Follow up of Local Fund Agent (LFA) findings and

recommendations

The Local Fund Agent (LFA) raised a number of issues during the year on the

Grant. While some actions had been taken by Management to address the

recommendations, a number of them remained outstanding and this could affect

grant disbursements.

In their response, Management promised to continuously work towards providing

remedial actions/measures for the above issues.

I have advised the Project Management to ensure that it fully addresses the

outstanding issues raised by the LFA.


PROJECT – MALARIA COMPONENT ROUND 4 – MOH

a) Un-utilised Funds by Sub Sub-Recipients (Districts)

In October 2012, a number of district Global Fund accounts were credited with

funds under the Round 4 (AMFm) Project meant for Project activities with the

understanding that these funds would be spent by 31st December, 2012. Districts

483

which were unable to spend these funds within the given timeline were to refund

the unspent funds to the Ministry of Health. However, by the end of the previous

financial period, 19 districts holding UGX.261,505,730 had not made the refund.

By the time the Grant came to an end on 31st December, 2013, 14 districts still

held UGX.119,652,304 (USD.46,126).These funds had not yet been refunded by

the districts despite a directive from the Permanent Secretary, Ministry of Health to

do so.

These balances are being eroded by the charging of bank charges, besides the

Project‟s objectives are not being enhanced because these funds were not used

for what they had initially been planned for.

Management noted the observation and explained that the recovery of these funds

is being carried out as part of the closure activities for this Grant.

I advised Management to pursue the recovery of these funds and ensure they are

recovered and refunded to the Global Fund since the Project has come to an end.

b) Undistributed Torches and Batteries

In the previous period‟s audit report, I noted that a number of districts had not

been able to distribute the torches and batteries procured under the AMFm

funding round. Following up on this observation, we noted that this condition had

persisted in some districts like Tororo. Also observed that some of these batteries

were now damaged which could have discouraged the intended recipients from

picking them up from the district stores.

Unutilised torches and batteries affect service delivery and could result in financial

loss especially when the batteries expire or get damaged.

Management regrets the holding of torches and batteries at district level, as the

distribution point was supposed to be at the sub-county level, for onward

transmission to the beneficiaries Village Health Teams (VHTs). Management

promised to follow up with the districts to ensure that this anomaly is rectified and

report by the next audit period.

484

I advised Management to ensure that the intended beneficiaries are identified and

given the torches, batteries and nets.

c) Long Outstanding Invoices from the National Medical Stores

The National Medical Stores (NMS) is an autonomous public corporation

established under the National Medical Stores Act, CAP 207 and mandated to

procure, store and distribute pharmaceutical products to health institutions in the

Public Sector in Uganda. The MoH pays NMS a handling fee of 8.5% of the Cost

Insurance Fright (CIF) value of goods and services.

Included in AMFm (Round 4) Project‟s commitments are unpaid amounts to the

NMS totalling up to USD.1,007,758, of this, USD.825,827 (82%) relates to services

and invoices that NMS provided before the reporting period.

Long outstanding invoices could result in errors like the inclusion of invoices which

have already been paid for. In other instances, legal proceedings could be initiated

by the aggrieved third party resulting in financial and/ or reputation loss.

Furthermore, the service provider, NMS may institute punitive conditions for

handling Global Fund Projects‟ deliveries (like asking for 100% payment before

they allow the goods into their stores).

Management noted the observation and explained that this has however changed

and payment to the National Medical Stores is on-going following NMS‟ opening of

an account with the Bank of Uganda, which was a requirement by the GoU.

I advised Management to expeditiously review the NMS invoices received and

settle them timely.

d) Refund of Advance for Consultancy Services

A local firm and its consortium were contracted in 2012 to provide consultancy

services for private sector training in ACT medicines for affordable medicine facility

at a contract sum of USD.867,624. 80% of the contract amount was advanced in

two tranches; 50% of the contract amount (USD.433,812) in September 2012 and

30% of the contract amount (USD 260,287) in June 2013. The terms and

conditions of the Contract Agreement require accountability of the advance

485

payments before the final payment is made. However, contrary to the General

Conditions of the Contract (GCC), the firm did not submit the required

accountability when they submitted the detailed report on the training. Although

the Accounting Officer followed up the matter with the firm there was no response

from the firm.

It was also noted that the Ministry could not effect the final payment of

USD.173,525 because of non-accountability for the advance payments. Instead,

the Ministry of Health has sought the guidance of the Solicitor General to recover

in full the advanced amount of USD.694,099 from the firm.

Without the financial accountability, the Ministry of Health may not be able to

ascertain whether the firm actually carried out the activities which might impede

Project objectives.

Management explained that it will proceed to recover the money from the firm

once the Solicitor General has given guidance on the matter.

I have advised that at the highest levels, the Ministry proactively engages the firm

to ensure that the money is accounted for.

e) Lack of a Fixed Asset Register

The Implementation Letter dated 26th July 2013 from the Global Fund requested

that by no later than 30th June 2013, the Recipient should have provided an up-to-

date and complete asset register. SC3 provides that the PR shall ensure that:

i. The asset register is updated regularly and submitted to the Global Fund on a

semi-annual basis;

ii. An annual verification and fixed assets inspection report shall be submitted on

an annual basis.

The existing fixed asset register does not capture all the information regarding the

assets. Although the PR procured accounting software, Navision, with a fixed asset

register module, the software has not been installed, pending purchase of a server

to host it.

486

With an asset register maintained in MS Excel, errors of omission or commission

may occur without being detected.

Management explained that they were in the final stages of installing and

implementing the upgraded Accounting Software, from Navision 2009 to Navision

Serenic Navigator 2013.

I advised Management to expeditiously complete the installation of Navision so

that they can make use of the asset module.



a) Unaccounted for Funds

Review of the status of the Special Condition Account from Malaria round 7 phase

1 revealed that USD.518,614 remained un-accounted for from the advances paid

out from Phase 1 of the Grant, contrary to Section 5 of the Malaria round 7 PR

Special Conditions (SCs). In an interview with the Focal Coordinator, it was

established that the matter was being investigated by the Police and had not been

resolved. A further delay on the resolution of the matter is likely to jeopardise

Project funding and implementation.

Management explained that they were waiting for the finalization of the Police

investigation and report for appropriate action to be taken.

I have advised the Program Management to proactively follow up with the Police

and ensure that the investigation is concluded and appropriate action taken

against the culprits.

b) Lack of Reconciliations for Purchases Made Under the VPP

Mechanism

The Voluntary Pooled Procurement (VPP) mechanism is a strategic initiative

established as a result of the Global Fund Board decision B5/DP151 aimed at

ensuring a cost-effective and cost-efficient procurement process focusing on the

three key principles of:

487

• Efficient, timely and reliable procurement.

• Stringent quality standards for procured products.

• Attractive pricing for key health products.

Through the VPP mechanism, Principal Recipients (PRs) can procure health

products through the VPP pre-qualified Procurement Services Agents (PSAs):

Step 8 of the 8-step VPP procurement process states that the PSA shall reconcile

the PR‟s account based on updates about procurements and deliveries made and

submit the final invoices to the PR. These invoices bear the price and quantity of

the health products procured. However it was noted that the Program

Management did not receive these invoices to carry out reconciliations.

There is a risk that in case of any errors, they may not be identified and corrected

in time.

The PR noted the observation and undertook to continue to work with the PSAs to

get all the necessary documentation.

I have advised the Program Management to always obtain the final invoices from

the PSA and carry out the necessary reconciliations.

c) Lack of a Fixed Asset Register

The Implementation Letter dated 26th July, 2013 from the Global Fund requested

that by no later than 30th June, 2013, the recipient should have provided an up-to-

date and complete asset register. SC3 states that the PR shall ensure that:

i. The asset register is updated regularly and submitted to the Global Fund on a

semi-annual basis;

ii. An annual verification and fixed assets inspection report is submitted on an

annual basis.

It was noted that the existing fixed asset register does not capture all the

information regarding the assets. Although the PR procured an accounting

software, Navision, with a fixed asset register module, the software has not been

installed pending purchase of a server to host it. With the current asset register

488

maintained in MS Excel, errors of omission or commission may occur without being

detected.

Management explained that they were in the final stages of installing and



I have advised the Program Management to expeditiously complete the installation

of the upgraded Navision so that they can make use of the asset module.

d) Supervising and Monitoring of Sub Sub-Recipients (SSRs)

In the previous year‟s report it was observed that monitoring, supervision and

progress reports were not available to enable assessment. This finding persisted in

the current period. Management inquiries revealed that in November 2013, the

Ministry set up Regional Performance Monitoring Teams (RPMT) to provide direct

assistance to the SR‟s in the field through quarterly stakeholder meetings and

trainings. The RPMTs also help improve the quality of the data prepared by the

SRs before it is shared with other stakeholders. Without progress reports,

weaknesses may not be identified for corrective actions to be taken.

Management noted the observation and explained that the SR periodic reports had

started coming in.

I have advised the Grant Management that, in addition to the critical role played

by the RPMTs, reports should be obtained from all the SRs.



a) Lack of Reconciliations for Purchases Made Under the VPP

Mechanism

The Voluntary Pooled Procurement (VPP) mechanism is a strategic initiative

established as a result of the Global Fund Board decision B5/DP151 aimed at

ensuring a cost-effective and cost-efficient procurement process focusing on the

three key principles:

489

Efficient, timely and reliable procurement

Stringent quality standards for procured products

Attractive pricing for key health products

Through the VPP mechanism, Principal Recipients (PRs) can procure health

products through the VPP prequalified Procurement Services Agents (PSAs):

Step 8 of the 8-step VPP procurement process states that the PSA shall reconcile

the PR‟s account based on updates about procurements and deliveries made and

submit the final invoices to the PR. These invoices bear the price and quantity of

the health products procured. However it was noted that the program

management did not receive these invoices to carryout reconciliations.

There is a risk that in case of any errors, they may not be identified and corrected

in time.

The PR noted the observation and undertook to work with the VPP team to get all

the necessary documentation.

I have advised the Program Management to always obtain the final invoices from

the PSA and carryout the necessary reconciliations.

b) Lack of a Fixed Asset Register

The Implementation Letter dated 26th July, 2013 from the Global Fund requested

that by no later than 30th June, 2013, the recipient should have provided an up-to-

date and complete asset register. SC3 states that the PR shall ensure that:

a. The asset register is updated regularly and submitted to the Global Fund on a

semi-annual basis;

(j) An annual verification and fixed assets inspection report is submitted on an

annual basis.

It was noted that the existing fixed asset register does not capture all the

information regarding the assets. Although the PR procured an accounting

software, Navision, with a fixed asset register module, the software has not been

installed pending purchase of a server to host it. With the current asset register

490

maintained in MS Excel, errors of omission or commission may occur without being

detected.

Management explained that it was in the final stages of installing and



I have advised Management to expeditiously complete the installation of the

upgraded Navision so that they can make use of the asset module

25.18 GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIA PROJECT

– HIV COMPONENT

a) Expired Drugs

An audit inspection carried out in various hospitals and Health Centres revealed

expired drugs that were still being kept in the stores. It was further noted that in

some cases, the expired drugs were kept together with the useful ones thereby

risking contamination and the possibility of dispensing improper drugs to patients .

The table below refer;

Ser. No/

Health

facility

Particulars Expiry date Audit remarks

Dokolo HC IV 251 packets of Atazanavir

+Ritonavir

(300mg/100mg)

capsules

Jan 2015 All the items were still

on shelf of the

time of the

inspection

Dokolo HC IV 1400 pieces of Determine

(HIV test kits).

Jan 2015 -do-

Kyabugumbi

HCIV,

70 bottles of Efavirenz HIV

capsules 50mg for

children

31/Jan/2015 Items were still on the

store shelves.

Kiwoko Hospital 336 strips of 28RHZE tablets

75/150/275/400mg

31/12/2014 The drugs were received

on 19/11/2014,

one month to

expiry.

491

Expired drugs were also found in Lyantonde Hospital and in Lukoki HC IV and

Bwera Hospital in Kasese. It was further noted that registers for expired drugs

were not maintained at various health facilities which hindered proper tracking and

destruction of the drugs. There is a risk of expired drugs being channelled to

private clinics.

In response the Accounting Officer explained that, as part of inventory

management, before medicines and other health commodities are removed from

the shelf, they undergo a systemic review to identify and ascertain the remaining

shelf life to determine those that are to be retained, replenished, or removed for

disposal. He indicated that this was an on-going process in conformity with the

WHO guidelines to guard against medicines falling in un-authorized persons‟

possession. He further indicated that on a monthly basis there was a stock taking

exercise to enable replenishment and removal for disposal of expired drugs. He

also promised to follow up the issue of expired drugs with the respective Health

Centers.

I advised the Accounting Officer to ensure that the managers of the health

facilities together with the district health officers institute proper disposal

measures for the expired drugs.

b) Inadequacies in Stores Records Management

Inspections of stores in the sampled Health Centers revealed various challenges in

stores management which included inadequate records, lack of qualified

personnel, inadequate space and poor record keeping, as indicated in the table

below:

Health Center Observations

Atiak HC IV - The store lacks substantive stores personnel. It was being

manned by a nursing assistant.

Dokolo HC IV - Incomplete ARV & PMTCT medicines order forms and patient

reports.

- Stock cards were not updated a case in point

Tenofovir/Lamivudine/Efaverenz Tabs physical stock was 908

the card reflected 2089 units.

Naguru China - The store lacks store shelves.

492


Friendship

Hospital

- The store is not equipped with firefighting equipment.

Lyantonde Hospital - The hospital has a very small compact store.

- The store has inadequate ventilation (most drugs in the store

require storage below 20 degrees but the store lacks windows

and ventilators.

Kyabugimbi Health IV - The stock cards were not updated hence making it hard to track

drug usage.

- The store lacks adequate space and thus the boxes of HIV and

malaria drugs were lying on the store floor.

- The HMIS form 017, district requisition and issue voucher forms

for the period 2013/2014 were never authorized by the

departmental supervisors or the health unit in-charge as

required by the HMIS regulations.

Bushenyi HC IV - Un-authorized issue and requisition vouchers by the in-charge

(sample of vouchers for the period 10/06/14 to 31/12/14

reviewed indicated that none had been authorized).

- The stores in-charge does not verify the dispensing logs to

confirm stock-outs from the different departments before

replenishments.

- Inadequate storage space hence boxes of medicines were lying

on the floor.

- The store is not fitted with shelves.

Kasese town HC IV - Some items were not posted to stock cards. A case in point

were 13 boxes of stat-pak test kits and 158 tins of nevirapine

200mg.

Kyamuhunga HC III - The expired/spoiled medicines register was not maintained. For

example 2,300 Vactainer tubes and needles had expired but

there was no record in place.

Rukoki Health Center

III

- The unit lacked dispensing logs hence drugs picked from the

stores were not recorded at the dispensing area.

- The HMIS form 17-requisition and issue vouchers were not

authorized by the in-charge. The requisitions were made directly

to the stores in-charge.

- The unit has a small compact store for HIV and malaria drugs

therefore some medical supplies are kept on the floor in a

separate room.

Kiganda HCIV-Mubende

district

- Un-authorized issue and requisition vouchers by the in-charge. A

sample of vouchers, serial numbers 1571802-1571884 and

10781101-1078158 in 2013/14 were un-authorized

- The health facility lacked the expired/spoilt drug registers,

therefore there was no record of the current expired drugs.

- The store space is inadequate.

Kataraka HC IV-

Kabarole

- Unauthorized issue and requisition vouchers by the in-charge.

- The unit lacked dispensing logs which made it difficult to carry

493


district out confirmation of genuine stock outs at the dispensing areas

- The HIV/Malaria drug store was small and compact without

enough shelves. Some drugs were kept in boxes which may

affect their durability.

- Due to inadequate space, expired drugs were kept in the open

at the residence of the in-charge.

Mukono HC IV - The stores recording system was manual and could not

separately record and file Global Fund deliveries from GoU and

other sources.

- Orders made for drugs were general and it could not be

ascertained whether all Global Fund drugs ordered for were

actually delivered.

Mpoma HC II - Mukono

District

- The HC II did not order for drugs delivered and deliveries could

not be verified against orders made since a push system of

delivery was used by NMS.

- Global Fund drugs received at the health facility could not easily

be distinguished from drugs from other sources since general

delivery notes were used by NMS.

Buwenge HC IV - Jinja

District

- Poor filing system. A case in point was the Delivery notes for 95

packets of contrimoxale 120 mg tablets delivered on 27th July

2013. Delivery records were not availed for review and thus

deliveries could not be confirmed.

- Storage space was inadequate for large consignments.

- The health facility had a manual system of store record keeping

and Global Fund drugs could not be identified from drugs from

other sources.

Bulesa HC III - Bugiri

District

- Delivery notes for the months of February and April 2013 were

not availed for review.

- Delivery notes from NMS were general and Global Fund

deliveries could not easily be identified. Thus, comparisons of

orders versus actual deliveries could not easily be done.

Soroti Hospital - The store records system was manual and inadequate to

capture orders for drugs and other essential medical items,

deliveries, distributions and expiries of drugs.

- Although a list of expiry drugs was availed, it lacked values of

expired drugs and due to poor filing system, it could not be

ascertained which drugs were from Global Fund.

Pallisa Hospital - Delivery notes from NMS were general and Global Fund


orders versus actual deliveries in respect to Global Fund could

not easily be done.

- Stores returns/reports as per delivery cycles were not prepared.

Pallisa Town Council HC

III

- Delivery notes from NMS were general and Global Fund


orders versus actual deliveries in respect to Global Fund could

494


not easily be done.

- Stores returns/reports as per delivery cycles were not prepared.

Kamuli Police HC II - The health facility‟s system of record keeping was inadequate as

delivery notes reviewed were note well fastened in file folders.

They were loosely kept in a box and these could easily be

misplaced.

- Global Fund drugs and sundries could not be identified among

those from other sources.

The weaknesses mentioned above hinder delivery of medical services to the grass

root population.

The Accounting Officer explained that the health delivery system was designed to

serve smaller populations in the rural areas which have now expanded together

with the administrative units. As a remedial action, the Health delivery System was

being reviewed with a view to carrying out the necessary expansion.

I advised the Accounting Officer to ensure that standard record keeping forms are

distributed and utilized at the Health Centres. In addition, the Ministry of Health

should liaise with the Health Service Commission and District Service Commission

to improve on staffing in the Health Centres. Expired drugs should be stored

separately from drugs still in use. Besides, efforts should be enhanced to minimize

expiry of drugs.

c) Review of prior year audit issues

Below is the implementation status of the issues raised in the prior year:-

No Finding Recommendation Status of Implementation

1 Non-availability of

records in

relation to

Procurement

of health

products and

Management was

advised to

obtain and

avail the

records

relating to

All health Products and health equipment,

medicines & pharmaceutical

products are procured through

mechanisms called Voluntary Pooled

Procurement (VPP). The VPP agent

is tasked to deliver the above

495

supply

management

costs.

UGX.116,310,

182,000

the

procureme

nt and PSM

costs for

audit

scrutiny.

referred to health and medicine

products after undergoing a

tendering competitive process. All

transactions are made by the Global

fund secretariat on behalf of the PR

with consent/concurrence of the PR.

Audit queries regarding these

procurements have been ironed out

through convening meetings

between the OAG and GF country

mission as well as holding

teleconferences and all information

provided to the audit team.

Matter Addressed

The Procurement process was clearly

narrated during a

teleconferencing and records

submitted.

2 Non-Refund of Un-

utilized funds

from Sub-

Recipients.

UGX.107,872,

000

Management was

advised to

enforce the

requiremen

t of Sub-

Recipients

(SR)

refunding

the un-

utilized

balances to

the

Principal

recipient

(PR)

PR‟s has continued to recover un utilized

funds from SRs. Total of

UGX.107,909,265 has been

additionally refunded within this

current year and the process is still

on going.

All funds were refunded by the SRs.

3 Low Absorption of

Funds (funds

were

awaiting the

presentation

and

verification of

PSM costs

from NMS) –

USD.4,391,17

6

Management was

advised to

liaise with

NMS and

hasten the

process so

that the

funds are

used to

implement

the

planned

Verification of PSM cost from NMS was

carried out by PSM expert in

collaboration with Pharmacy. A

payment of funds totaling

USD.3,149,249.54 was effected to

NMS on 2nd September 2014. The

process of verification of NMS

invoices is continuous. Absorption

rate has reached 97%

496

activities.

4 Ineligible Expenditure

in respect of

individual

consultants‟

fees and

newspaper

adverts –

UGX.214,990,

000

Management to

stop

comminglin

g funds on

the Project

account

and to

include the

counterpart

funds in

the Project

budget

This has since stopped. All funds under

different Grants are spent

independently of other Grants.

Matter addressed

5 Status of Global fund

closed Grants

(HIV/AIDS)

Round I and

II closed but

no closure

procedures

were carried

out.

Management was

advised to

ensure that

the closure

procedures

are

undertaken

This was noted and has seen been effected

as advised. This is illustrated under

closure of the Affordable Medicines

Facility For malaria Grant (AMFm)

Matter addressed

6 Conditions to the grant agreement

i) By not later than

30th June

2012, the

principal

Recipient

(PR) shall

deliver to

the Global

Fund an

operations

Manual

Management was

advised to

expedite

the

Fulfillment

of the

outstanding

conditions

This was done and the approved operations

manual is in place.

Matter addressed

ii) The fixed asset

register is

updated

regularly and

submitted to the

global fund

An annual

verification and

inspection of the

fixed asset

register shall be

conducted and a

report of the

Management was

advised to

expedite

the

Fulfillment

of the

outstanding

conditions.

Currently, the PR maintains and updates the

fixed assets register. Additionally, the

Asset register is annually updated

with the condition of the Assets in the

various locations after the verification

exercise has been carried out.

Issues addressed

497

inspection shall

be submitted to

the GF

iii) The PR represents

and

acknowledg

es that the

regional

performanc

e

monitoring

teams will

be

subsumed

within

MOH. By

not later

than 31st

Dec 2012,

the PR shall

submit to

GF a

transition

plan

acceptable

to GF with

detailed

actions and

timelines of

how the PR

will take

over the

RPMTs

Management was

advised to

expedite

the

Fulfillment

of the

outstanding

conditions

Negotiations are still on-going between MoH,

MoFPED and Min. of Public Services.

Global fund to handle up to June 2015

In response, Management promised to continuously work towards providing

remedial actions/measures for the above issues. They indicated that by the end of

the current financial year, all the matters will have been resolved. I await the

outcome of Management‟s resolve to address the audit recommendations


PROJECT - TUBERCULOSIS COMPONENT

a) Lack of Quarterly Progress Reports

498

In May 2014, the Ministry of Health through the Global Fund component on

Tuberculosis entered into a Memorandum of Understanding (MoU) with Makerere

University School of Public Health to carry out a National Tuberculosis Survey for

three quarters covering April 2014 to December 2014. Consequently, an advance

payment of USD.968,352.32 was made to the University for the activity. It was

noted that although the MoU stipulated that quarterly progress reports would be

submitted to assess the progress of the activity, no reports were produced. This

contravened the provisions of the MoU and could have hindered monitoring of the

results of the survey.

The Accounting Officer acknowledged and regretted the anomaly but added that

Management had communicated to the School of Public Health requesting for

quarterly reports in accordance with the MoU requirements.

I have advised the Accounting Officer to follow up the matter and ensure that

quarterly progress reports are prepared and submitted to enable proper

monitoring of the activity.

b) Un Implemented Activities

The Project Management planned a number of activities to be implemented during

the financial year under review. A review of the Global Fund TB component budget

performance reports revealed that while many of the planned activities were

implemented, a number of others remained outstanding. Management advanced

various reasons for the non-implementation as indicated in the table below:-

Code Activity Budgeted amount

USD

Management response

3.17 Provide

incentiv

es to 45

health

67,500 The activity did not go through the procurement

process because it involves payment of

allowances to incentivize the health

499


USD

Management response

workers

in 5

PMDT

treatme

nt Units

workers working in the Programmatic

Management of Multi-Drug Resistance TB

Treatment units.

The requisition process commenced. However,

MDR health facilities had increased from 5

to 14 at the implementation. It therefore

required approval from GF Secretariat,

Geneva to pay all the 14. This has not

been secured yet.

3.8 Support TB

specime

n

referral

system

for

routine

surveilla

nce of

Drug

resistant

TB

36,468 All the invoices are processed for payment as they

are submitted.

Going forward, we shall advise Posta Uganda to

submit invoices on a bi-monthly basis to

ease processing payments

5.1.1 Support salaries

of

Uganda

Stop TB

Partners

hip

Staff-

4Staff

108,600 The MoU between TASO and the partnership fund

expired in June 2014. The process to get

an MoU between the MoH and USTP

commenced in July 2014 and its now in

the final stages at the Solicitor General‟s

Office.

5.1.3 Facilitate USTB

Monthly

and

quarterl

y

meeting

s

9,232.53 Implementation awaiting an approved MoU

between MoH and USTP which is at the

Solicitor General‟s Office.

5.1.4 Rents and Costs

for

USTP

24,712.48 Implementation awaiting an approved MoU

between MoH and USTP which is at the

Solicitor General‟s office

5.1.5 Insurance costs

for 3

vehicles

6,456.75 The vehicles to be insured were MOH Program

vehicles.

500


USD

Management response

of USTP

5.1.6 Maintenance

costs for

3

vehicles

of USTP

1,485.13 The three vehicles to be maintained were MoH TB

program Cars.

There is a risk that non-implementation of planned activities may hinder the

achievement of the overall objective of the project.

I have advised the Project Management to address the causes of delays in

implementing project planned activities

25.20 EAST AFRICAN PUBLIC HEALTH LABORATORIES NETWORKING PROJECT

(EAPHLNP)

a. Funds not accounted for

Contrary to section 217 of the Treasury Accounting Instructions 2003, which

requires public officers to account for funds advanced to them within a period of

60 days, audit noted that UGX.20,520,000 out of the UGX.95,761,200 advanced to

various staff to undertake various project activities, remained un-accounted for.

Failure by staff to account for advances was attributed to management‟s failure to

enforce accountability procedures. Accordingly, I could not ascertain whether the

money was used for the intended purpose.

I have advised the project management to strengthen and enforce controls related

to accounting for funds and should ensure recovery of the outstanding amounts.

b. Doubtful Expenditure

UGX.10,857,000 was paid out to a local Hotel in January 2014 to provide hotel

services, but the expenditure was doubtful owing to the fact that the supporting

attendance list was a photocopy and had inconsistent dates on the payment

documents. While some documents indicated that the workshop was held for five

days from 23rd to 27th September 2013, the activity report attached to the

payment voucher indicated the activity was undertaken from 8th to 14th September

501

2013 (8 days). In such circumstances, there is a risk of expending funds for

services that were never supplied.

I advised the Accounting Officer to investigate the circumstances surrounding the

event with a view of ensuring that the intended objective was met. I further

advised him to always ensure that original documents are used whilst making

payments.

c. Un-acknowledged Statutory Remittances

i. Non deduction of Tax

A foreign firm was paid USD.116,152 for supply of medical laboratory equipment,

without deducting 15% withholding tax of USD.17,422 (Equivalent2 to

UGX.48,261,156), contrary to section 85(2) of the Income Tax Act, 1997, (as

amended). There is a risk of the project being subjected to penalties and fines

which will occasion loss of funds.

I have advised the Accounting Officer to endeavor to recover the tax and to

ensure that withholding tax is always deducted from suppliers of goods and

services to avoid penalties and fines from URA.

ii. Un-acknowledged remittances to NSSF

UGX.20,244,025 that was purportedly remitted to NSSF in respect of employee

contributions lacked acknowledgement receipts and in the absence of which audit

could not ascertain whether the said funds were actually remitted.

I have advised management to provide the necessary documentation for audit and

to always obtain official acknowledgement receipts for proper documentation and

accountability.

d. Status of Implementation of Project Activities

i. Loan Performance

A review of the loan status revealed that the loan whose closing date is projected

to be 30th March 2016 has had a low disbursement rate. Of the loan amount of

USD.10,100,000, only USD.5,919,345.74 (58.6%) had been disbursed by end of

2 Exchange rate as at 23rd Dec 2014 1USD = 2,770

502

the current financial year. It was also noted that USD.1,414,175.01 remained

unutilized from the funds disbursed for the year under review.

The low disbursement rate coupled with big unutilized balances does not only

affect the project implementation and attainment of the targets set, but may also

be an indication of prior project planning before the loans are disbursed.

The Accounting Officer explained that the bulk of the unexpended funds were in

relation to the Construction of the National TB Reference Laboratory at

USD.2,200,000, Renovation of Mbale & Lacor satellite sites estimated to cost

USD.650,000 and Operational Research, USD.455,100. The activities under

performed due to the delays to complete the Architectural Designs by the

Consultant and other procurement procedures. He further stated that the activities

had since commenced and will be completed within the Project life.

I have advised the project management to expedite the implementation of the

outstanding activities so as to improve on funds absorption and thus disbursement

rates, so as to attain the project objectives.

ii. Delayed Implementation of Project Activities

A review of the five year project work plan revealed that a number of civil works

had delayed, including;

Consultancy Services for design and Supervision for National T.B Reference Lab

and satellite labs (Including a laboratory infrastructure consultant). This was

supposed to be implemented between 2010 and 2013, however the project

progress report of March 2014 indicated that the construction started on

11/03/2014, many months after the intended timeline;

Consultancy Services for design and Supervision for 5 satellite Labs (Including a

laboratory infrastructure consultant). This was also supposed to be

implemented between year 2010 and 2013, but the progress report of March

2014 indicated that the architectural plans of the satellite sites had not yet been

finalized.

The project management team attributed the delays in execution of project

activities to long and slow procurement processes. The failure to timely implement

503

the project activities may hinder attainment of project objectives. The Accounting

Officer acknowledged the delay and explained that work was on course and will be

completed before Project closure.

I have advised the project management to expedite the works so as to ensure that

the implementation is in accordance with the project work plans.

e. Lack of Proper Authorization for use of Motor Vehicles

Best practices in the management of project assets call for proper authorization

before an asset such as a motor vehicle is released for official activities/work. This

strengthens internal controls over the project assets/vehicles. However, for the

year under review it was noted that such internal control measures were not being

implemented by the project.

Absence of formal authorizations may lead to mismanagement of project motor

vehicles and is an indicator of internal control weakness. The Project Management

acknowledged the anomaly and committed to institute authorization measures.

I have advised the Project management to institute asset management

measures for proper accountability of project assets.

f. Inspection of supply and delivery of the Gene X-pert machine

The project procured and distributed equipment for high drug resistant testing in a

number of hospitals including Jinja, Mbale, Lacor, Mbarara, Mulago and the

headquarters on Buganda Road. However, it was noted that, the equipment in

Mbale had failed and was non-functional.

Interview with management revealed that there were a number of samples that

had been stored in the queue pending processing and pressure was mounting as a

result of delayed release of results due to delayed testing. Delayed release of test

results may cause delays it treatment of patients which may be fatal.

Management explained that they were aware of the defects and arrangements

with World Health Organization (WHO) through which the equipment was

procured were underway to rectify the defects. In the short term, the Project was

arranging to procure a spare compartment to be delivered to Mbale site.

504

I have advised the Project Management to liaise with the respective stakeholders

to ensure that the equipment is repaired.

25.21 UGANDA HEALTH SYSTEMS STRENGTHENING PROJECT (UHSSP)

a) Funds not accounted for

i. Preparation of a long term family planning mentorship

UGX.33,532,000 was expended on the preparation of a long term family planning

mentorship activity for health workers in Jinja regional Referral hospital. However,

UGX.8,800,000 paid out to eight (8) purported participants as allowances through

their respective personal bank accounts was not accounted for, contrary to section

217 of the Treasury Accounting Instructions, 2003. In the circumstances, I could

not ascertain whether the expenditure was genuinely used for the intended

purpose.

Management acknowledged the anomaly which was attributed to a Circular from

the Office of the Permanent Secretary and Secretary to Treasury (PS/ST)

instructing Accounting Officers to transfer funds to participants‟ bank accounts.

This had a challenge of individuals who may not attend at all or attend fewer days

than paid for, but pledged to recover the funds through the officer who managed

the training.

I have advised the Accounting Officer to recover the funds from the concerned

officers and in future strengthen and enforce controls related funds accountability.

ii. Advances to staff

Regulation 65(1) of PFAR, 2003, requires all imprest funds to be retired as soon as

the necessity for their use ceases or on the last working day of the financial year,

however, UGX.10,515,333 (equivalent to USD.4,177.14) remained unaccounted

for.

In response, management stated that reminders had been sent to the concerned

officers but to no avail and was thus planning to recover the funds.

I await management‟s action in this regard.

iii. Vehicle Maintenance and Repairs

505

A total of UGX.7,692,154 (equivalent to USD.3,071.49) was incurred on repairs

and servicing of project motor vehicles during the year under review, however,

contrary to best practice, the repairs were not supported with post vehicle

inspection reports. In the absence of inspection reports, it was not possible to

ascertain whether the repairs and maintenance were satisfactorily done. I have

advised management to ensure that motor vehicle repairs and maintenance are

undertaken after pre-inspections have been carried out and post inspection reports

availed before effecting payments.

b) Donor Funding

i. Funds Disbursement

According to the Loan Agreement, the UHSSP project‟s funding is supposed to be

SDR 85.7 million (equivalent to USD.130 million) from the International

Development Association (IDA) of the World Bank and USD.14.4 million from the

Government of Uganda (GoU) over a 5 year period (2011-15). A review of the

project income and expenditure revealed that the cumulative project disbursement

as at 30th June 2014 was USD.70,456,145.82, representing about 54% of the total

expected project funding.

Given the low rate of funds disbursement and activity implementation, it is

doubtful whether the project will meet its intended objectives within the agreed

project period. Project Management acknowledged the low funds absorption given

the life on the Project left. I have advised the project management to strengthen

project implementation so as to increase disbursement of funds for better project

implementation and attainment of set objectives before the end of the project life.

ii. Delayed implementation of project activities

It was noted that a number of project activities that had not been undertaken

despite the project winding up in one year‟s time. The delayed implementation of

the planned activities may lead to failure to achieve the project objectives.

Management in response acknowledged the state of affairs and undertook to

ensure that all activities are executed before project closure. I have advised the

506

project management to expedite the implementation of project activities in order

to achieve the intended objectives.

c) Delivery of Equipment to General Hospitals and Health Centre IVs

Physical inspection of the various health facilities revealed the following anomalies:

i. Failure to replace medical equipment and Hospital Furniture

After the distribution of general, specialized medical equipment and instruments

under health infrastructure component was finalized, the National Committee on

Medical Equipment (NACME) pointed out some medical equipment that did not

meet specifications and had to be replaced; including: defibrillators, Ear Nose and

Throat (ENT) instrument sets, delivery and adult patient beds with mattresses;

bed side lockers, bowl stand, cupboard, instrument, cupboard, steel, lockable,

examination couch (gynaecology), filing cabinets and patient trolleys.

However, a physical inspection carried out in a number of Health facilities including

Iganga Regional Referral Hospital, Budaka HCIV, Kibuku HCIV and Budondo HCIV

revealed that the faulty equipment had not been replaced but were instead

repaired.

Failure to replace the equipment may result in constant breakdown of equipment

resulting in high repair costs. In the long run it may result in failure to achieve

value for money and thus compromising attainment of project objectives.

In response, the Accounting Officer explained that the Supplier had been tasked to

replace the equipment that did not meet the specifications and so far the patient

Trolleys had been replaced for all health facilities and modalities for replacement

of the remaining items were on course. I have advised the Accounting Officer to

ensure that the contractor replaces all the equipment that did not meet the

specifications.

d) Delivery of equipment to a non-operational General Hospital

Whereas management had resolved to deliver the equipment to operational health

facilities and that each delivery coincides with completion of civil works and

handover period, dispatch was made to one of the health facilities in Jinja District -

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Buwenge General Hospital, whose buildings had not been completed. Because the

hospital was non-existent, the equipment was delivered to Buwenge Health Centre

IV. The equipment is being kept at the Centre‟s theatre.

Audit further noted that the works at Buwenge General Hospital have since been

abandoned, with the contractor‟s supervisor last visiting the site in December

2012. Through inquiries, it was also revealed that the abandonment of the site

was due to financial constraints arising from cost under estimation by the

contractor. The delivery of equipment to non-operational health units may result in

loss of funds and the project failing to achieve the intended objectives.

In response, the Project management stated that the Ministry of Health had

instituted a Team to analyse the usage, storage, condition and availability of

trained Staff for the Medical Equipment distributed under the Project and come up

with recommendations. I have advised management to ensure that the equipment

is reallocated to other eligible health facilities, to avoid obsolescence.

e) Non recording of equipment in the facilities‟ records

It was noted that equipment was delivered to health centres as allocated, however

all the health centre IVs that were visited had not recorded the equipment in their

stores books. Records such as stock cards and ledgers for the equipment were not

maintained. This was evident in Soroti General Hospital, Kibuku HC IV, Budaka HC

IV, Mbale Regional referral Hospital, among others. There is risk of loss of

equipment.

In response, the Project Management stated that a letter would be drafted for the

Accounting Officers instructing the health centres to dully record the equipment in

their books. I have advised the project management to enforce the recording of

equipment in the books in all the beneficiary health centres and hospitals so that

assets are safeguarded.

f) Un-used equipment

Most equipment delivered were not in use, for reasons ranging from lack of power

(since some health centres are not connected to the grid), lack of trained

personnel to operate lab and theatre equipment, manuals not issued to users, lack

508

of spare parts or accompanying items like oxygen, items delivered to wrong units,

theatres not operational. These were noted in Budondo HCIV, Buwenge HCIV,

Bugembe HCIV and Kumi HCIV among others. This state of affairs affects service

delivery.

In response, management stated that the Ministry has instituted a team to analyse

usage of medical equipment distributed by the Project and come up with

recommendations. I have advised management to ensure that all facilities

delivered to health centres are put to use so as to improve service delivery to the

populace.

g) Un-fitted equipment in some health facilities

Some health centre theatres were not operational; cases in point were Kumi

Health Centre and Apapai Health Centre, which were still under construction.

There were many incidences of equipment not installed for use, for example at

Princess Diana Health Centre, in Soroti. The new beds had not been fitted since

being delivered six months before.

In Serere Health Centre, there was no storage space and the equipment was being

kept along the corridors and in Iganga equipment like anaesthesia units,

autoclaves, incubators and lab equipment had not been fitted. Also noted were

instances of poor storage of equipment e.g in Budondo HC IV, where equipment

had gathered dust and had starting to rust. In Buwenge Health Centre IV, termites

had destroyed paper boxes in which the equipment had been wrapped.

Management in response stated that the Ministry had instituted a team to analyse

the usage and condition of the medical equipment distributed by the Project and

come up with recommendations. I have advised the project management to

ensure that all equipment is fitted/installed in all the beneficiary health centres so

that they can be utilised for health service delivery in order to realise the project

objectives.

509

26.0 UGANDA BLOOD TRANSFUSION SERVICES


Paragraph 40 of the Treasury Accounting Instructions, 2003, requires all virements

to be approved in advance by the Minister who may choose to delegate such

powers to the Secretary to Treasury. It was noted that UGX.27,880,704 in respect

of various activities was charged wrongly to item codes meant for other activities

resulting in misstatement of amounts expended on the affected item codes. This

implies that the financial statements are misrepresented with regard to the

mischarged amounts and the practice renders the budgeting process redundant.

The Accounting Officer explained that the mischarge of expenditure occurred in

the fourth quarter when the remaining funds of the financial year had already

been received and yet the Treasury Accounting Instructions do not provide for

seeking virement retrospectively once funds are received.

I have advised the Accounting Officer to streamline the budgeting process and to

subsequently ensure that payments are correctly charged on the item codes to

enable proper implementation of the entity‟s programmes.

26.2 Staffing Gaps

A review of UBTS‟ establishment records revealed that out of the establishment of

116 staffing gaps, only 98 were filled, leaving 16 vacancies as shown in the table

below. The four Regional Blood banks of Gulu, Fort portal, Arua and Mbale were

greatly affected by this understaffing. For example; Arua Regional Blood Banks in

particular lacked a Laboratory Technician and Nurse to carry out day to day

operations.

Staffing gaps in the regional blood banks may result in inefficiencies in operations

thus affecting performance and service delivery of the Blood Bank. The table

below refers;

Post Title Salary

Scale

Establishment Filled

Posts

Vacant

Posts

Principal Medical U2 6 5 1

510

Post Title Salary

Scale

Establishment Filled

Posts

Vacant

Posts

Officer

Blood Donor

Recruiter

U4 14

12 2

Donor Clerk U7 18 17 1

Lab Assistant U7 24 22 2

Medical Records

Assistant

U7 11

9 2

Driver U8 40 33 7

Receptionist U8 1 0 1

Total 114 98 16

The Accounting Officer explained that the Health Service Commission was in the

process of recruiting the staff to fill the vacant positions.

I have advised the Accounting Officer to follow up with the Health Service

Commission to ensure that the recruitment process is concluded expeditiously.

26.3 Boarding off Obsolete Assets

Paragraph 705 of the TAI, 2003 requires that where it is considered that

inventories, vehicles, plant, equipment have reached the end of their useful life,

and are beyond economical repair or are unserviceable for any other reason such

items should be recommended for boarding off.

However, an audit inspection carried out at the UBTS yard revealed a number of

old vehicles in a state of disrepair that had not been boarded off. Although the

Transport Officer had brought the matter to the attention of the Accounting

Officer in April 2013 and the Contracts Committee considered it in August 2013,

no action was taken thereafter to have the vehicles disposed off. There is risk of

further deterioration in value of the vehicles.

The Accounting Officer explained that an adhoc board of survey committee was

constituted to carry out the physical inspection and evaluation of the old vehicles

and obsolete stores for purposes of boarding off. The committee met in June 2014

511

and agreed on activities and the facilitation required for undertaking the physical

inspections. The committee was scheduled to complete this task in quarter three

of the financial year 14/15.

I have advised the Accounting Officer to expedite the process of disposal of

obsolete assets to avoid further loss in value.

26.4 Shortage of Storage Space

It was noted that there was shortage of storage space for inventories at UBTS.

Some inventories were kept in space that was earlier designated as washrooms.

There is a risk of inventories getting spoilt due to poor storage. Pictures below

illustrate.

Inventories blocking the ventilation

space.

Inventories stored in place

earlier designed for toilet use

The Accounting Officer explained that management would continue to liaise with

MoFPED for additional funding to commence the construction of the centralised

medical store at Nakasero Blood Bank Headquarters in the next financial year

(2015/2016).

I await the outcome of management‟s actions towards improving the storage

problem at the Blood Bank.

512

26.5 Status of Implementation of the planned activities

A review of implementation of activities revealed that although the Blood Bank

received 100% of its budgeted funds, a number of activities detailed in the table

below were partially implemented.

Activity Summarized

Status

Cause of Non

Implementation

Expand Blood Transfusion Infrastructure;

Partly

Implemented

Lack of Funding

Furnish and equip the newly constructed

Gulu and Fort Portal Regional blood

banks;

Partly

Implemented

Lack of Funding

Procure four vehicles for blood collection

and continue construction of central

stores at the Headquarters

Partly achieved

Vehicles – Delays in

Procurements

Stores – Inadequate

Funds

Operate an active nationwide quality

assurance program that ensures blood

safety –from vein to vein by; testing all

blood for transfusion –transmissible

infections (TTIs) – HIV; Hepatitis B; C;

and Syphilis in addition to blood

grouping;

Partly achieved A Programme to

Accredit UBTS Blood

Products has been

embarked upon –

Quality Assessment

On-going to identify

quality gaps. Initial

Funding is provided by

Donors (PEPFAR)

Strengthen the organizational capacity of

UBTS to enable efficient and effective

service delivery; through mentoring and

training of UBTS staff

Partly achieved On – going/ continuous

process.

Some CPD Conferences

for staff are funded

513

It was further noted that UBTS had unfunded priorities which included;

Creation of 2 additional blood collection teams.

Procurement of office furniture and equipment for the newly constructed

Regional Blood Bank (RBB).

Construction of a RBB in Moroto.

Accreditation of UBTS, Rent for office space at Arua RBB and;

The shortfall of UGX1.2bn to National Medical Stores to procure adequate

supplies and cover handling charges.

The newly constructed library building lacked furniture. This hindered the

utilization of the facility.

The Accounting Officer explained that management would continue to negotiate

for additional funding from MoFPED so that furniture and fittings are procured for

the newly constructed regional blood banks and the construction of new regional

blood facilities at identified sites, including a centralized Medical Store at Nakasero

Headquarters.

I await the outcome of management‟s actions towards negotiating for more

funding for the identified unfunded priorities.

Non-funding of priorities may lead to failure by UBTS to perform its functions and

eventually not achieving its objectives.

514

26.6 SUPPORTING NATIONAL BLOOD TRANSFUSION SERVICE IN THE

IMPLEMENTATION AND STRENGTHENING OF BLOOD SAFETY

ACTIVITIES IN UGANDA

a) Compliance With The Financing Agreement And Gou Financial

Regulations

It was noted that management had in all material respects complied with the financing

agreement provisions and Government of Uganda financial regulations.

b) General Standard of Accounting And Internal Control

c) Exceeding Budget lines

The cooperative agreement requires the project management to implement activities

within the budget lines that have been provided and approved. Audit however noted

that the expenditure budget line for Fringe benefits had been exceeded during the

budget implementation. This was as a result of inadequate reviews and monitoring of

the actual expenditure against the budget which also led to some activities not being

implemented as planned. The Table below refers.

Expenditure Item

Actual

Expenditure

Budget Variance

USD USD USD

Fringe benefits 37,353.83 27,152 10,201.83

In their response, management atttributed the over expenditure on the fringe benefits

on insufficient allocation at the time of budgeting.

I have advised management to adhere to the approved budget lines during

implementation of project activities.

d) Employee Personnel Files

It is good management practice to have up to date and complete performance

appraisal records for all employees prior to renewal of employment contracts. Audit

515

noted that personnel files of eight (8) PEPFAR project employees lacked authentic or

up to date staff performance evaluations.

This was caused by failure by management to enforce the requirement of periodic

performance evaluation. This leads to inadequate or inappropriate assessment of

employee contribution towards the success of project activities.

I have advised management to ensure that proper and complete performance

appraisals are undertaken for all project employees and that documentary evidence is

maintained on the individual staff files.

e) Late Income Tax (PAYE) remittance

The Income tax Act of the Republic of Uganda requires employers to remit income tax

charged on employees by the 15th day of the following calendar month to which it

relates. Audit however noted that UBTS made late remittances of the Income Tax

(PAYE) returns for the months below;

Month Amount (USD) Deadline Date Date Remitted

October 2012 816.27 15th Nov 2012 6th May 2014

November 2012 795.95 15th Dec 2012 24th Sept 2013

December 2012 795.95 15th Jan 2012 24th Sept 2013

January 2013 795.95 15th Feb 2012 9th Oct 2013

February 2013 800.75 15th Mar 2012 10th Sept 2013

March 2013 821.07 15th Apr 2012 10th Sept 2013

April 2013 821.07 15th May 2012 10th Sept 2013

May 2013 821.07 15th June 2012 31st July 2013

June 2013 821.07 15th July 2012 24th July 2013

Delays in remittances of the statutory obligations could result in fines and penalties

being imposed by the tax Authority. Management explained that the remittances were

made at the time of salary payment and that the obligations were remitted within the

516

statutory deadlines, however there were delays in filing returns and obtaining

acknowledgement receipts.

I have advised management to adhere to statutory deadlines when remitting statutory

deductions and to timely file returns.

27.0 BUTABIKA MENTAL REFERRAL HOSPITAL


Treasury Accounting Instructions require that transactions should be recorded in

the books of account using the Government of Uganda Chart of Accounts as

prescribed by the Accountant General. The detailed explanations for each account

prescribe what expenditures should be charged on the account.

It was noted that out of the total hospital operating expenditure of

UGX.8,718,327,417, UGX.74,863,427 (0.9%) was charged on codes other than

those under which it was appropriated leading to mischarge of expenditure on

these accounts. The financial statements are misrepresented to the extent of the

mischarge.

The Accounting Officer regretted the anomaly and attributed it to under/over

estimation of some items during the budgeting process. However, during the

bidding process, actual costs varied from the estimates leading to deficits and

surplus on some items. It was not possible to obtain authority for a virement from

Permanent Secretary/Secretary to the Treasury, as the funds had already been

released and uploaded on IFMS.

I have advised management to streamline the budgeting process and, ensure that

payments are correctly charged on the item codes to enable proper

implementation of the Hospital‟s programmes.

27.2 Un authorised additional funding above contractual figures

517

Regulation 105(1)(c) of PPDA Regulations, 2003 prohibits procuring and disposing

entities from initiating any procurement proceedings or activities for which funds

are neither available nor adequate, except where the Permanent

Secretary/Secretary to Treasury (PS/ST) has confirmed in writing that the required

funding shall be made available.

Review of the procurement records and the consolidated procurement plan

revealed that the Hospital estimated to buy a dental chair at a cost of UGX.40M

and to fence a football pitch and private wing of the hospital at a cost of

UGX.60M. It was however noted that the cost of the dental chair was

UGX.67,200,000 while that of fencing the football pitch and private wing was

UGX.115,969,990. I was not provided with evidence of confirmation of additional

funding.

In response, the Accounting Officer explained that the purchase of these items

was under budgeted in comparison with the actual contract values, while the

transport equipment – Ambulance, was over budgeted. Given the need to fence

off the football pitch to secure land from encroachment and the high numbers of

both in and out patients demanding for dental services, the savings from the

Ambulance were used to top-up the under budgeted items.

I advised the Accounting Officer to ensure that the Hospital operates within the

accounting warrant or else seek for authority to spend over and above the

budgeted amounts in a timely manner.

27.3 Staffing gaps in Butabika NMRH

Butabika National Mental Hospital staffing was restructured in 1999/2000 as part

of the overall restructuring of Government and the Ministry of Health resulting

into the current establishment of 433 staff of which 346 positions are filled

leaving 87 vacancies. Analysis of the current patient load revealed a need for

filling of the vacancies and further review of the staffing structure given the nature

of patients who require dedication of more time by the medical staff. The table

below refers;

518

S.no Nature of

clinic

Planned

average No of

patients

Current average

No of patients

Increase in

average No of

patients

Period

1. In patients 550 800 250 Daily

2. out-patients

clinic

27,500 40,000 12,500 Annually

3. mental clinic 16,875 27,000 10,125 Annually

Understaffing and inadequate staff establishment may result into deterioration of

delivery of medical services to the patients.

Management indicated that a proposal for a new structure of 762 staff had been

forwarded to the Ministries of Health and of Public Service.

I have advised the Hospital Management to follow up with the line Ministry and

other stake holders to ensure that the staffing requirements of the Hospital are

addressed.

28.0 UGANDA CANCER INSTITUTE


Paragraph 400 (a) of the Treasury Accounting Instructions 2003 stipulates that all

government transactions shall be recorded in the books of account applying the

Government of Uganda chart of Accounts as prescribed by the Accountant

General. The accounting officers shall ensure that all financial instructions are

properly coded.

It was however noted that out of the total payments of UGX.7,141,831,790 for the

financial year, an amount of UGX.656,275,672 was charged on codes other than

those for which the funds were appropriated resulting into unauthorized diversion

of funds. The practice is an indication of breakdown of controls in the budget

implementation process.

519

In response, the Accounting Officer explained that funds were diverted to outreach

activities, patients‟ food, non medical sundries and detergents in order to ensure

continuity of service since the appropriated amounts were inadequate.

I advised the Accounting Officer to always liaise with the Ministry of Finance,

Planning and Economic Development and ensure adequate allocation of funds to

the essential items.

28.2 Nugatory Expenditure

The institute incurred nugatory expenditure of UGX.448,408,158 as follows;

a) Idle charges

Idle Charges amounting to UGX.320,924,000 were paid to M/s Ambitious

Construction Company Limited vide payment voucher number DB02/2/14 and EFT

No. 363329 on 10th February 2014 as a result of delayed handover of the site

because of a disagreement between Uganda Cancer Institute and Mwanamugimu

Nutrition Unit over location of the building. This occurred when the contractor‟s

materials, equipment and labour had already been mobilized and availed at the

site.

The expenditure would have been avoided if proper identification of the site had

been done by the Institute prior to signing of the contract.

In response management stated that the change of construction site was directed

by the Ministry of Health after an appeal by Mwana Mugimu Unit.

I advised the Accounting Officer to always make adequate consultations with all

stakeholders before embarking on projects that may have costly financial

implications.

b) Interest Costs

520

A sum of UGX.127,484,158 was paid to M/s Ambitious Construction Co. Ltd as

interest charges due to delayed payment on interim certificates 1-6 and 6-8 for

construction of the Cancer Ward.

This expenditure could have been avoided if realistic payment terms and

confirmation of availability of funds were made before contracting the firm.

In response, the Accounting Officer explained that the interest accumulated

between the period of closure of the financial year 2012/2013 and the beginning

of financial year 2013/2014 when the funds for the new year had not yet been

realised.

I advised the Accounting to ensure that in future, realistic payment terms are

included in the contract agreements and commitments are made only when funds

are available.

28.3 Expired drugs

An inspection conducted in the Institute‟s drug store revealed that an assortment

of drugs worth UGX.425,825,877 had expired. Expired drugs represent a loss to

the public and further loss may be incurred in the process of their destruction.

The expiry was attributed to long procurement processes and short shelf lives of

some of the drugs.

In response, the Accounting Officer explained that the procurement of medicines

was a function of National Medical Stores (NMS) and some medicines were

supplied in large quantities that could not be consumed rapidly.

The Accounting Officer further explained that National Drug Authority had been

contacted to have the expired medicines incinerated.

I advised the Accounting Officer to streamline liaison with NMS so as to minimize

expiry of drugs.


521

a) Under collection of Non-Tax Revenue (NTR)

Whereas the Institute had estimated to raise UGX.900,000,000 from its Non-Tax

Revenue sources only UGX.580,670,600 was actually raised resulting into under

collection of UGX.319,329,400. It was further noted that all financial transactions

relating to NTR were recorded manually and bank reconciliation statements were

not prepared regularly.

The weaknesses above make the process not only tedious but also prone to

inaccuracy and errors in the revenue collection.

Management attributed the under collection of NTR to failure to operationalize

medicine sales in the private wing. It was further stated that a computerized

system of revenue collection and recording would be procured.

I advised the Accounting Officer to ensure that bank reconciliations are prepared

monthly and reviewed by a senior staff in addition to procuring appropriate

accounting software for revenue collection and recording.

28.5 Non Tax revenue not receipted

Regulation 49(1) of the PFAR 2003 requires a receipt in the prescribed form to be

issued immediately for any public moneys received; and when the payer presents

himself or herself in person, the receipt must be handed to him or her at once.

It was however noted that, direct bank deposits amounting to UGX.45,495,600

lacked acknowledgement receipts.

There is a risk of understatement of revenue collections.

In response, the Accounting officer stated that some institutional clients remitted

funds to the bank directly for their staff and there was delay in reconciling the

payments with actual clients.

I advised the Accounting Officer to ensure the said revenue is receipted to

safeguard the revenue.

28.6 Irregular Amendment of contract

522

Regulation 262 (1) of the Public Procurement and Disposal of Public Assets

Regulations, 2003 defines an amendment to a contract as a change in the terms

and conditions of an awarded contract. Sub-regulation (5) states that no individual

contract amendment shall increase the total contract price by more than fifteen

percent of the original contract price or cumulatively by more than 25%.

It was however noted that the entity amended the contract referenced as

UCI/WRKS/09-10/00081 entered into with M/s Ambitious Construction Co. Ltd for

the Construction of the 5 – Level cancer building at an original contract price of

UGX. 5,783,789,753 to 6-Level Cancer Ward Building with an additional cost of

UGX. 2,197,609,659. The total contract price was thus increased by 37.9% of the

original contract price contrary to the aforementioned regulation. The practice

contravenes regulations and distorts procurement planning. It also disadvantages

other service providers who were not offered opportunity to bid for the entire

works thereby undermining the principle of transparency and competitiveness.

In response, the Accounting Officer explained that guidance was sought from

PPDA and the Solicitor General. However, the retrospective approval sought from

PPDA was rejected.

I advised the Accounting Officer to always follow PPDA regulations in relation to

variations.

28.7 Failure to operationalize the New Cancer ward

It was noted that despite official handover of a new Ward, there was no

observable evidence that the Cancer Institute had put it to use.

Physical inspection revealed overcrowding of patients in the existing wards as

indicated below.

Ward Planned Capacity Current Capacity

Lymphoma Treatment Centre (LTC) 32 Over 50 patients

Solid Tumor Centre (STC) 24 Over 30 patients

Private ward 10 Over 15 patients

523

In response, the Accounting Officer explained that the use of the new ward was

dependent on installation of diagnostic equipments and furnishing which shall be

acquired in a phased manner with effect from 2014/2015 financial year.

I advised the Accounting Officer to liaise with relevant stakeholders and expedite

the process of equipping the new Cancer Ward in order to alleviate the problem of

overcrowding of patients.

28.8 Repair of Motor Vehicles

The Institute carried out repair of vehicles at a total cost of UGX.19,486,696 of

which Motor Vehicle UG 4016M was allegedly repaired at a cost of

UGX.15,470,600. The following anomalies were noted;

There were no pre -inspection reports before the vehicles were referred to the

garage

There were equally no post-inspection reports provided after the alleged

repairs.

Without pre and post repair reports, there was a possibility of inflation of repair

costs.

In response, the Accounting Officer explained that vehicle UG 4016M was grabbed

by security personnel on its way to the Institute after which it was involved in an

accident while still under their care.

I advised the Accounting Officer to ensure the pre-and post inspection reports

from the Ministry of Works together with the police report are submitted for

verification.

524

29.0 UGANDA HEART INSTITUTE

a) Outstanding Payables

Included in the payables under Note 26 was a sum of UGX.207,840,052 for goods

and services, and UGX.197,576,992 for equipment all of which amounted to

UGX.405,417,044. It was noted that the payables accumulated during the year in

contravention of the Commitment Control System. The Institute risks litigation and

a bad reputation over failure to settle obligations in a timely manner.

Management attributed the accumulation of payables to an increase in the

quantities of sundries and equipment required to meet the growing number of

heart patients.

I advised management to always make realistic budgets taking into account the

demographic factors and disease prevalence rates.

b) Short fall in Non-Tax Revenue Collection

Out of the budgeted NTR of UGX.2,850,000,000 only UGX.2,461,193,370 was

received resulting in a shortfall of UGX.388,806,630. As a result, planned activities

such as intensive care admissions were limited. There is a risk of increase in

deaths of patients requiring intensive care who are not adequately cared for.

The Accounting Officer attributed the NTR shortfall to limitation in admissions in th

pravate wing due to inadequate space. Shortfall in NTR negatively impenges on

the effective delivery of Health care services.

I advised management to expedite the process of expanding facilities for

admission of patients.

c) Physical Performance of the Institute

Review of the Institute‟s workplan for 2013/2014 revealed significant variances

between planned and actual physical performance regarding clinical, diagnostic

and surgical services as indicated in the table below:

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Clinical Services

Activity Planned Output Achieved Comments/ Remarks

Outpatient attendances 10,000 13,561 Increased number of patients

General Admissions 1,000 1,372 Increased number of patients

Intensive Care Unit Admissions 180 107 Minimal bed capacity

Coronary Care Unit Admissions 500 495 Increased number of patients

Endoscopy 80 0 Machine break down

Stress Test 260 0 Inadequate Specialist skills

Diagnostic services

Echocardiography (ECHO) 12,000 8,028 Machine failure, (A new machine

bought in the mid-year)

Increased activities

Electrocardiography (ECG) 11,000 6,599 Inadequate number of machines

and increased activities

Holter Monitoring 180 Increased number of patients

Surgical services

Closed Heart and Thoracic

Surgeries

240 174 Most children required

operations, less costly

Open Heart Surgeries 100 37 Very costly to be done yet

required highly skilled

personnel

Cath-Lab Procedures 172 Limited by sundries

Outreache to RRH 14 13 Need for clinics in RRH

Outreache to facilities 10 9 More public awareness needed

Research publications 4 5 Including PhD Thesis

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The increase in patient numbers coupled with inadequate facilities impaired the

effectiveness of service delivery.

Management indicated that a new Heart Institute would be built under the Cardio

Thoracic diseases Project to be funded by the Islamic Developement Bank (IsDB).

This is expected to address the shortage of facilities.

I advised the Accounting Officer to ensure implementation of the project without

delay to enable improvement in service delivery

30.0 MULAGO REFERRAL HOSPITAL COMPLEX


Paragraph 400 (a) of the Treasury Accounting Instructions (TAI), 2003, requires all

transactions to be recorded in the books of account applying the Government of

Uganda chart of Accounts as prescribed by the Accountant General. In addition,

paragraph 156 of TAI, 2003 require expenditure to be charged in accordance with

the appropriation of funds to the items by Parliament. It was however, noted that

UGX.1,756,710,500 out of the total actual expenditure of UGX.47,774,796,289 was

not charged under the correct item codes leading to mischarge of expenditure.

Mischarge of expenditure is an indication of a breakdown in budgetary control and

leads to misrepresentation of information in the financial statements.

I have advised the Accounting Officer to streamline the budget implementation

process to ensure expenditure is charged in accordance with the appropriation by

Parliament.

30.2 Non-Disclosure of Receivables

The Accounting Officer is responsible for the preparation of financial statements in

accordance with the Financial Reporting Guide, 2008, issued by the Accountant

General. Section 2.5.18 (viii) of the Guide - Statement of arrears of revenue,

requires the Hospital to disclose revenue billed but not collected by the end of the

financial year, so as to provide additional information to the users.

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A review of the Private Patients Scheme records revealed that funds totalling

UGX.1,256,811,309 that were receivable by year end were not disclosed in the

financial statements (memorandum statement of Arrears of Revenue).

Also noted was that no efforts were being made to collect the debts. The debtors‟

ageing list was also not availed for audit.

Failure to disclose revenue billed but not collected, exposes the Hospital to a risk of

loss of revenue and the financial statements are misstated to the extent of

undisclosed receivables. The non-disclosure of Revenue is also contrary to the

Financial Reporting Guide, 2008 while absence of the aging list makes it difficult to

follow debts that are overdue.

The Accounting Officer explained that the services were rendered to the clients who

did not pay their dues during the financial year and that in line with the prudence

concept, the recognition of revenue is done when the funds are received and not

when services are rendered. He hastened to add that the Non-Disclosure of

Receivables was to avoid overstatement of assets.

I advised the Accounting Officer to follow the prescribed Reporting Guide, and in

case of any significant departure to seek the Accountant General‟s approval.

30.3 Inadequate Control over the utilisation of Utility Services

Section 8 (2) and (3) (a) of the Public Finance and Accountability Act, 2003 state

that the Accounting Officer shall have control and be personally accountable to

Parliament for the regularity and propriety of the expenditure of money applied by

an expenditure vote and shall ensure that adequate control is exercised over the

incurring of commitments.

The Hospital reported payables of UGX.8,901,380,582 at the end of the financial

year which was a significant increase from UGX.1,704,626,602 reported in the

previous year. The biggest portion of these payables constituted of unpaid utility

bills of UGX.8,539,720,698 (water UGX.4,779,837,982 and Electricity

UGX.3,759,882,716).

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It was noted that other independent institutions such as Makerere University College

of Health Sciences, Infectious Diseases Institute (IDI), Uganda Heart Institute,

Uganda Cancer Institute, Baylor College, Dental School, Makerere University John

Hopkins University (MUJHU), The AIDS Support Organisation (TASO), Makerere

Joint AIDS Programme (MJAP) and others including banks, churches, canteens and

restaurants were connected to the Hospital utility meters and yet there was no

evidence that they contributed to settlement of the bills.

The cause of the anomaly was lack of Memoranda of Understanding (MoU) with

these institutions and independent utilities‟ meters, to enable separate billing by the

utility companies.

The accumulation of utility arrears by the Hospital is reaching unprecedented levels

which may be difficult to settle within the Hospital‟s current budget settings. There

are also risks associated with the disconnections by the utility companies.

I advised the Accounting Officer to make adequate provisions in the budget to pay

the outstanding arrears. I have also advised him to separate the various

independent institutions from the Hospital‟s meters so as to reduce on the hospital‟s

utility bills.

30.4 Un-acknowledged statutory deductions

Section 123(1) of the Income Tax Act CAP 340 of the laws of Uganda, 2000,

requires a withholding tax agent to pay to the commissioner any tax that had been

withheld or that should have been withheld within fifteen days after the end of the

month in which payment subject to withholding tax was made.

A review of the payment records revealed that, UGX.1,867,853,563 comprising of

withholding tax of UGX.1,060,315,674 and Pay As You Earn (PAYE) of

UGX.807,537,889 lacked evidence of receipt by the Uganda Revenue Authority

(URA).

The anomaly was attributed to laxity by management to make follow up on

acknowledgement receipts for the payments made. There is a possibility that the

529

funds may not have been remitted to the tax authority and the Hospital may be

exposed to risk of penalties due to non-compliance with the law.

I advised the Accounting Officer to ensure that the remittances reached URA and

that the acknowledgment receipts are obtained from URA as evidence that the

money reached.

30.5 Staffing Gaps

A review of the approved establishment of the Hospital revealed that out of the

approved posts of 1,477 only 1,290 (88%) were filled leaving 187 (12%) vacancies.

It was also noted that the approved staff establishment was at variance with the

payroll for the month of June 2014 which indicated 1,842 staff were paid.

Inadequate staffing makes it difficult for the Hospital to achieve its strategic

objectives and also affects the quality of service delivery. The rate at which the

vacancies are being filled doesn‟t match the current requirements and developments

at the hospital.

Management explained that during the Financial Year 2013/14, the hospital made

efforts to fill some of the vacancies basing on the available wage bill budget. A total

of 89 positions were filled. The remaining vacancies with an estimated wage

requirement of UGX.1,646,623,656 could not be filled within the medium term

because of the constrained wage budget. The vacancies therefore remain a non-

funded priority.

I advised the Accounting Officer to liaise with the Ministry of Public Service and the

Health Service Commission to consider recruitment of more staff to fill the existing

vacancies to enable the Hospital attain its objectives.

30.6 Inadequately Funded Commitment on Construction of 100 Units of Staff

Houses (2 Flats) at Mulago Hospital

Section 59 (2) of the Public Procurement and Disposal of Public Assets Act, 2003

states that procurements or disposals shall only be initiated or continued on the

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confirmation that funding, in the full amount over the required period is available or

will be made available at the time the contract commitment is made.

Contrary to the above, the Hospital entered into a contract with a Local Construction

firm to construct 100 Units of Staff Houses at a contract sum of

UGX.17,453,287,500 with a commencement date of 24th October 2013 and

completion by 18th October 2015. However, review of the approved budget for the

financial year under review revealed that only UGX.3,000,000,000 was provided for

residential buildings. By the time of the audit, UGX.2,980,809,498 had been paid to

the contractor for the certified works, leaving UGX.14,472,478,002 outstanding

pending subsequent interim payment certificates. There was no evidence to show

that there was commitment for funding of the project over the three years. There is

a risk of failing to settle the interim payment certificates submitted by the

contractor.

There is also a risk of accumulation of domestic arrears contrary to commitment

control policy.

The Accounting Officer explained that management had ring fenced all available

capital budget allocation on Medium Term Expenditure Framework (MTEF) of UGX.5

billion in the two financial years 2014/15 and 2015/16 to this project and also hoped

that Ministry of Finance, Planning and Economic Development (MoFPED) would

agree to increase the MTEF capital budget provision by UGX.4 billion in the two

financial years, so as to have this project completed.

I advised the Accounting Officer to source for adequate funding for the project well

in time, to avoid accumulation of domestic arrears.

30.7 Payment of Advances to Individual Employees Personal Bank Accounts

Paragraphs 227, 228 and 229 of the TAI, 2003, state that all payments should be

made by the Accounting Officer directly to the beneficiaries. Where this is not

convenient an imprest holder shall be appointed by the Accounting Officer with the

approval of the Accountant General. It also requires that the imprest funds must be

accounted for promptly.

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It was noted that UGX.1,099,484,885 was advanced to various staff through their

personal bank accounts to implement a number of activities. Though the funds were

accounted for, the practice is susceptible to abuse and can easily lead to loss of

public funds. This anomaly was attributed to a weak internal control system.

I advised the Accounting Officer to always make payments directly to service

providers procured in accordance with the prescribed regulations. Official advances

should be paid to designated cash agents for ease of accountability.

30.8 Direct Procurements

Section 46 of the PPDA Act 2003, requires all procurement and disposal to be

conducted in a manner that maximizes competition and ensures attainment of value

for money. It was noted that UGX.504,358,000 was paid to various staff to procure

items and provide services instead of using pre-qualified suppliers. Value for money

and benefits of competition might not have been achieved.

This could be attributed to disregard of procurement legislation by management and

inadequate planning by the user departments and the PDU.

I advised the Accounting Officer to always engage prequalified providers in order to

encourage transparency and competition.

30.9 Irregular Procurements

Section 29 of the Public Procurement and Disposal of Public Assets Act, 2003 gives

powers to the Contracts Committee to authorize:-

the choice of a procurement and disposal procedure;

solicitation documents before issue;

award of contracts in accordance with applicable procurement or disposal

procedures as the case may be.

It was noted that contracts worth UGX.128,956,377, were awarded to various

service providers without approval of the procurement method by the Contracts

Committee. In certain cases, evidence of quotations from at least three prequalified

service providers were not available. In one case regarding the contract awarded for

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supply of a warmer machine worth UGX.53,100,000, the Solicitor General‟s approval

was lacking.

Failure to abide by the procurement Laws makes the procurements irregular and

could negatively impact on the quality of goods or services procured.

Management explained that the payments were made to staff in the emergency

situations that required urgent fixing which included; maintenance and repairs of the

Hospital‟s dilapidated structures and machinery like sewage lines and leakages.

I advised the Accounting Officer to ensure that the Contracts Committee is always

involved in all procurements.

30.10 Procurement of Parking Management Services

Sec. 58 of the PPDA Act, 2003 requires a PDE to plan its procurements and disposals

in a rational manner. A review of the procurement of parking management services

at the hospital revealed the following anomalies;

a) The requirement for parking management services was not included in the

Hospital‟s Annual Procurement plan for the financial year 2013/2014 and was

instead treated as an emergency procurement.

b) The contracted firm was required to pay to MNRH a monthly fee of

UGX.31,300,000 for three years effective July 2013, of which the hospital would

reimburse the contractor UGX.5,727,900 per month, to recover costs of park

construction. However, no record of receipts or re-imbursements was provided

for audit review.

c) There was no evidence of monitoring and evaluation of the contract

performance.

Without proper records of revenue and re-imbursements, there is a risk of under

declaration of funds and possible misrepresentation of financial statements.

Management acknowledged the anomaly and explained that it was no longer

necessary to have a provider charging parking fees given the anticipated

renovations funded by ADB. However, because of safety requirements during this

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period when vehicles are parked outside the hospital premises, management opted

to have a provider setting up a parking for safety of the vehicles.

I advised the Accounting Officer to ensure that the Hospital effectively plans for all

procurements to avoid emergency situations in future.

30.11 Inadequate Accounting Software for Private Patients Scheme

Paragraph 219 of the TAI, 2003, requires Accounting Officers to account for all

revenues received in form of Appropriation in Aid, by maintaining a separate ledger

account for each item of revenue in accordance with the chart of accounts.

It was however observed that the quick books software used by the Hospital in the

collection of Non Tax Revenue (UGX.6,997,363,939 during the financial year) did

not code the various transactions in accordance with the GoU chart of accounts.

This led to manual interventions to code the transactions outside the system which

is susceptible to error. The users of the software were not adequately trained to use

the software for the purpose of revenue collection. Meanwhile UGX.1,256,811,309

reported in the financial statements as receivables was not supported with a list of

invoiced patients who had not paid at the year end.

Failure to follow the GoU chart of accounts may result in mischarge of revenue and

thus inaccurate disclosures in the financial statements. The anomaly could have

been caused by inadequate specifications to the vender which led to acquisition of a

system not compatible to the GoU chart of accounts.

Management explained that the Treasury Department at MoFPED was in the process

of acquiring a module to link the system with IFMS for proper management of NTR.

They were meanwhile using quick books for their record keeping purposes.

I advised the Accounting Officer to ensure that the software is upgraded to ensure

that revenue collections are properly coded and limit the human intervention in the

process.

30.12 Non-disposal of unused Hospital Beds

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Regulation 2(1) of the Public Procurement and Disposal of Public Assets (Disposal of

Public Assets) Regulations, 2014 requires an Accounting Officer in each financial

year to cause the public assets of a procuring and disposing entity to be reviewed,

to identify the public assets for disposal in the following financial year.

It was noted that when the hospital acquired 100 new hospital beds and 1000

mattresses, the old beds and mattresses were piled up in the open and exposed to

severe weather conditions, as seen in photographs below;

A review of the Procurement & Disposal plan for the year showed that no provision

had been included either to repair the beds or dispose of them.

Management explained that they were in the process of boarding off the old beds

and mattresses.

I advised the Accounting Officer to either have the beds repaired for further Hospital

use or have them disposed of expeditiously to avoid deterioration in value.

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30.13 Lack of a Strategic Plan

Contrary to best practice, it was noted that the Hospital did not have a strategic plan

to guide management in the operations and implementation of its activities, after

the expiry of the 2008/9-2012/13 version. This means the Hospital operated without

medium and long term plans to guide its management and operations during the

financial year. The budget was therefore not linked to any strategic objectives.

Lack of a strategic plan implies that implementation of activities aimed at achieving

the entity„s mission and long term objectives may not be properly guided. This

practice might expose the allocated resources to waste.

This was attributed to laxity and inadequate planning by management to embark on

the process of developing a new strategic plan in time.

The Accounting Officer explained that a draft of a 30 year Master Plan and a 5 year

strategic and Investment Plan had been developed awaiting final approval by the

Board. I advised the Accounting Officer to expedite the process of approval and

have the strategic plan in place to guide management in their operations.

30.14 Bed Occupancy

Audit also noted that the hospital had about 2,000 beds, with occupancy rate of

119% compared to the planned 90%. The high patient population notwithstanding,

the tendency of many attendants for patients also contributes immensely to the

congestion in the hospital and overstretches the available facilities.

Management acknowledged the fact that the bed occupancy in the hospital was

higher than expected throughout the year and attributed it to the weak referral

systems and limited functional health facilities in Kampala Metropolitan area. They

explained that a plan for decongesting MNRH was designed and would be achieved

through the following strategies;

Construction of other referral hospitals in the Kampala Metropolitan area.

Linking the three hospitals in Kampala to Mulago Hospital through Telemedicine

to allow tele-consultations.

Remodelling and renovation of Mulago Hospital to restrict visitors.

536

Increase in the number of theatres from 7 to 16 and the number of beds in

ICU from 12 to 26, to help increase the number of surgical operations hence

reducing the average length of stay for surgical patients.

Construction of a 320 bed Women‟s hospital was slated to begin in February

2015 to reduce on the congestion in the current facility.

I advised the Accounting Officer to devise measures to control the number of

caretakers, so as not to overstretch the hospital facilities, given the high

maintenance and utility costs.

30.15 Adequacy of Dialysis Machines

It was noted that the Hospital had a total number of twenty one (21) Haemodialysis

Machines, of which four (4) had broken down and needed repairs, while the other

seventeen (17) were functional. Although management explained that seven (7)

more machines were expected, it was noted that the Renal Unit on average received

80 patients daily who required the dialysis services. Each machine has a capacity to

handle three (3) patients each day.

Due to staffing gaps in the unit and in the hospital generally, the unit operated more

or less as an outpatient unit and the machines therefore handled 2 patients per day,

per machine, indicating 34 patients per day leaving out an average of 46

unattended to. Failure by the hospital to offer desired services timely may lead to

loss of lives.

It was also noted that the hospital did not have any Peritoneal Dialysis, machines,

which would serve mainly child patients below the age of 10 years and it was not

clear how such child patients were being attended to.

Management explained that the Hospital had entered into a contract through

National Medical Stores for a supplier to provide sundries and/or consumables

for dialysis to enable attendance to additional sixty (60) patients twice a week.

Management further stated that whereas patients ought to be dialysed three times a

week, this is being done only two times a week because of limited funding.

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I advised the Accounting Officer to liaise with the respective Ministries so as to

acquire optimal number of dialysis machines with the associated staffing levels, for

improved service delivery.

30.16 IMPROVEMENT OF HEALTH SERVICE DELIVERY IN MULAGO HOSPITAL

AND IN THE CITY OF KAMPALA PROJECT (MKCCAP)

a) Funds disbursement

According to the Loan Agreement, the MKCCAP project whose total funding is Unit

of Account (UA) 56 million3 is supposed to run for a period of 5 years (2012 -

2016), with the last (disbursement expected by 31st December 2016). However, a

review of the project income and expenditure revealed that the cumulative project

expenditure as at 30th June 2014 was USD.7,977,440 representing 14% of the

total expected project funding. Given the low rate of funds disbursement and

activity implementation, it is highly doubtful that the project will achieve its

intended objectives within the remaining project period.

Management attributed the delays to the fact that most of the project resources

(about 86%) were allocated to civil works and procurement of hospital equipment

and furniture, and the hospital civil works had to go through elaborate African

Development Bank (ADB) and GoU procurement processes to identify contractors

before funds could be disbursed. Management explained that the disbursement of

funds would soon greatly improve.

I have advised management to hasten the implementation of activities so as to

improve the disbursement of funds and thus attainment of the project objectives

within the remaining project period.

b) Delays in development of Master Plan for Mulago Hospital

A Contract to develop a 30 year master plan for Mulago National Referral Hospital

was awarded to a consultant at a cost of USD.369,900. A payment of USD.73,980

was made during the year.

3 African Development Fund loan of UA 46 million and Nigeria Trust Fund loan of UA 10 million

538

A review of the Aide Memoire of July 2014 showed that the initial contract for the

consultancy expired on 30th November 2013 and a-no-cost extension was granted

up to 30th April 2014. The contractor however, could not produce the final report

by the due date but only submitted a final draft in July 2014. However, by the

time of this report December 2014, not all deliverables of the consultancy had

been concluded. There is a risk that the consultants may not be able to deliver on

all the aspects of the contract.

Management attributed the delays to the consultant and the delayed feedback

from clients because of the many stakeholders that had to be consulted.

Management further explained that the Bank Supervision Mission had advised GoU

to seek for No Objection for the extension of completion time.

I have advised project management to review the progress of the consultant and

ensure that the process is expedited to ensure completion of the task. Meanwhile I

await the action of management as far as seeking for a No Objection is concerned.

c) Failure to meet the Bank‟s conditions

i. Uganda legislation and public policy concerning public private

partnerships

A review of the project documents and the Aide Memoire of July 2014 showed that

the project did not meet a number of the conditions as specified in the Loan

Agreement. These include:-

Submitting a Memorandum by the Ministry of Health (MoH), Mulago Hospital

and Makerere University in form and substance acceptable to the Fund,

clarifying roles and responsibilities of the three institutions by 31st December

2012”.

Submitting to the Fund for review and approval, prior to execution, any

contract that is entered into by the MoH and the selected service provider, for

the management of the Ambulance referral system in the city of Kampala and

provide written confirmation that any contract entered into by MoH for the

purposes of the ambulance referral system in the city of Kampala, is in

539

accordance with the Republic of Uganda‟s legislation and public policy

concerning public private partnerships by 31st July 2013.”

The above conditions which had not been met by the time of audit could result in

withholding of funding for the project and thus lead to stalling of implementation

of the project activities.

Management acknowledged the anomaly and explained that Work on the MOU

had already started and a draft had been prepared. Management added that since

the time of the loan agreement, GoU had realized that it needed to prepare one

MoU between MoH, the 5 Universities with Medical Schools and the respective

teaching hospitals. The above process was on-going and was expected to be

finalized by March 2015. Due the wider stakeholder consultations, the process had

taken longer than expected.

I have advised the project management to address the impediments so that the

Bank‟s condition as of developing legislation and public policy concerning public

private partnerships is met.

d) Status of Implementation of Mission Recommendations

A review of the project documents and the Aide Memoire of 18th-24th July 2014

revealed that the activities below were still pending implementation due to

procurement technicalities.

Issue Recommendation Actions Expected Implementation

time line

Procurement of 10

Ambulances

Review specifications and re-

advertise tenders for Ambulances

By 31st July 2014

Referral and

Ambulance system

Submit proposal and budget

details from IFC to the Bank

31st July 2014

Procurement of the

project vehicle

Submit request for the bank

consideration

Immediately requested for

The failure to act upon the recommendations of the Bank Supervision Mission may

have a negative impact on attainment of the overall project objectives.

540

I have advised management to always implement the recommendations of the

Bank Supervision Mission as agreed for better and smooth project implementation.

e) Land dispute at Kawempe

A review of the Aide Memoire and other project documents indicated that the

project was undertaking construction of a General Referral Hospital in Kawempe

but on a disputed piece of land.

The Accounting officer explained that the Banks Compliance review and Mediation

Unit (CRMU) undertook a fact finding mission in Uganda to meet all the relevant

stakeholders, including KCCA, Minister of Health, the Permanent Secretary MoH,

Solicitor General and the complainants. It was however noted that at the time of

this report (December 2014), the matter had not been fully addressed. The

progress of the works was likely to be interrupted should the complainants opt to

take legal action.

The project management explained that the matter was being handled amicably

with the claimant in order to have it resolved and enable the hospital construction

works to continue. Two meetings attended by key stakeholders had been held

with the claimants. The Ministry of Lands had provided documents from the Land

Registry that clearly showed KCCA as the rightful owner of the Land on which the

hospital was being constructed.

I await the outcome of the on-going actions towards resolving the land dispute.

f) Asset Management

i. Marking/ engraving of Assets

Regulation 101 of the Public Finance and Accountability Regulations 2003 (PFAR)

requires all assets to be appropriately marked or engraved to ensure that they are

easily identifiable as Government assets. It was however noted that the project

owns a number of assets such as furniture, computers and office equipment

valued at UGX.67,450,000 and USD.45,644.05 respectively that have not been

engraved. Failure to engrave the assets exposes them to a risk of loss without

trace.

541

Management acknowledged the anomaly and committed to engrave all project

assets by January 2015.

I await management‟s actions on the commitment of engraving all the project

assets by January 2015.

30.17 SUPPORT TO THE DEVELOPMENT OF A SPECIALIZED MATERNAL AND

NEONATAL HEALTH CARE UNIT IN MULAGO NATIONAL REFERRAL

HOSPITAL (MULAGO III) PROJECT

a) Delay in procurement activities

During a meeting held on 17th July 2014, between the Project Management Unit

(PMU) Mulago National Referral Hospital and the Islamic Development Bank (IsDB)

Project Implementation Assessment and Support (PIAS) Mission, it was agreed

that the procurement of a consultant for the supervision of works, contractor for

civil works were to be completed by December 2014 and the civil works for the

project to commence by January 2015.

By the time of audit (November 2014), the agreed upon activities had not been

implemented and a letter of no objection for the shortlisted service providers had

not been obtained from the Bank. The delay may impact negatively on the project

implementation and attainment of project objectives.

The project management explained that the procurement of the supervision

consultant was underway and the technical evaluation of the bids had been

completed, awaiting a no objection from the Bank and there after financial

proposals would be opened. The contract was expected to be signed by end of

February 2015.

I have advised management to ensure that the project implementation timelines

are adhered to for the attainment of project objectives.

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30.18 UGANDA SANITATION FUND

a) Outstanding Fuel Deposits

Fuel worth UGX.10,162,425 was deposited with M/s. Shell Kumi Petrol Station

during the financial year 2012/2013, however fuel worth UGX.6,698,607 was

consumed, leaving a balance of UGX.3,463,818 worth of fuel unutilized.

It was explained that the operators of the station closed business before the

project could consume all the fuel. Although the dealers acknowledged the debt

and showed willingness to pay the outstanding amount, the District had not

recovered the money by the time of audit.

In his reponse, the Accounting Officer plegded to take necessary steps to

recoverthe funds.I await the action of theAccounting Officer to recover the money.

b) Under-utilization of funds

A review of the financial statements revealed that out of a total of USD.544,338

received by USF during the 15 months period, USD.386,820.20 was utilized

leaving a balance of USD.157, 517.80 unutilized. Failure to utilize funds within the

planned timeframe slows down project implementation and may hinder attainment

of project objectives.

The Accounting Officer attributed the delay to slow rate of the procurement

processes in the Ministry and the delay to recruit project staff. I have advised him

to always ensure that the project activities are carried out according to the project

work schedules.

c) Project Asset Management

a. Non-maintenance of Asset inventory

According to the Grant Support Agreement between the UNOPS and the

Government of Uganda for the Global Sanitation Fund Programme in Uganda

(Annex A - General Condition for the Grant Support Agreement 9.2), the recipient

is expected to maintain records of non-expendable equipment with an acquisition

value of USD.500 or more purchased with project funds. The recipient is expected

543

to submit an inventory of such equipment to UNOPS, indicating descriptions, serial

Nos, date of purchase, original cost, present conditions, location of each item

attached to each yearly progress report.

Similarly,Regulation 101 of the Public Finance and Accountability Regulatios, 2003

requires that a register, in a form prescribed by the Accountant General shall be

maintained for all assets, and all such assets shall also be appropriately marked or

engraved to ensure that they are easily identifiable as Government assets.

However, it was noted that the project assets such as vehicles, computers and

Cameras procured using the project funds were not recorded in the inventory

register. Additionally, assets were not appropriately marked or engraved.This

complicates their identification, management and reporting.The Accounting Officer

explained that the ministry had embarked on the process of engraving the project

assets.

I have advised Project management to maintain an asset inventory and ensure

that all project assets are engraved as required for ease of asset identification,

management and reporting.

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REGIONAL REFERRAL HOSPITALS

31.0 ARUA REGIONAL REFERRAL HOSPITAL

31.1 Unaccounted for funds

a) Unsupported Cash withdraws

Regulation 60(1) of the Public Finance and Accountability Regulations, 2003 states

that all disbursements of public moneys shall be vouched on payment vouchers.

However, a review of the cashbook and the Bank statements of the Operational

account of Hospital revealed that UGX.253,556,250 was withdrawn in cash from

the bank without payment vouchers or any supporting documents rendering the

expenditure incompletely vouched. In the circumstance, the payments are

doubtful.

I advised the Accounting Officer to investigate the matter and ensure recovery.

b) Funds not accounted for

Paragraphs 214(a) and 215(a) of the Treasury Accounting Instructions, 2003

require an Accounting Officer prior to approving an advance to staff to ensure that

the concerned staff has settled any old advances and that the advance must be

accounted for without delay. However, UGX.105,574,390 remained unaccounted

for by the time of audit. Consequently, I was unable to confirm that the funds

were utilized for the intended purposes.

I advised the Accounting Officer to obtain the accountability or else enforce

recovery from the responsible officers.

b. Non-Tax Revenue shortfall


that an Accounting Officer is personally responsible for ensuring that adequate

safeguards exist and are applied for the prompt collection of, and proper

545

accounting for, all Government revenue and other public moneys relating to their

departments.

However, the Hospital budgeted to collect UGX.70,000,000 from Non-Tax Revenue

source. However, only UGX.27,308,825 was realized leading to a shortfall of

UGX.42,691,175, representing 61% of the budgeted Non tax revenue.

Management attributed the poor performance to the renovations that were on-

going at the private wing of the maternity ward.

I advised the Accounting Officer to ensure that all budgeted revenue is collected.

31.2 Understaffing

The hospital has a staff establishment structure of 354 posts. However, out of the

354 approved posts, only 301 posts had been filled leaving 53 posts vacant. It was

observed that some of the vacant posts are the key positions which include Senior

Consultant Surgeon, Senior Consultant Physician, Senior Consultant Paediatrician,

Senior Consultant Obs/Gyn, Principal Dental Surgeon, Nursing officers which are

so fundamental in the operations of the Hospital.

Understaffing undermines service delivery.

Management explained that the hospital operates within the staffing policy of

Government. In liaison with the Ministry of Health and Ministry of Public Service

the hospital developed a recruitment plan, vacant positions were advertised and

interviews to secure staff to fill the vacant positions on replacement basis are

under way.

I advised the Accounting Officer to liaise with Ministry of Public Service and

Ministry of Health to expedite the recruitment exercise to fill the vacant posts.

546

32.0 MBALE REGIONAL REFERRAL HOSPITAL

32.1 Funds not accounted for

a) Unaccounted for Advances

Paragraph 120 of the Treasury Accounting Instructions (TAI) Part 1 requires that

funds be properly accounted for with appropriate documents. However, it was

observed that a sum of UGX.9,319,000 advanced to staff remained unaccounted

for at the time of audit contrary to the regulations. Consequently, I could not

confirm that the funds were utilised for the intended purposes.

The Accounting Officer was advised to obtain the accountabilities or else recovery

be made from the responsible officers.

b) Incompletely Vouched Expenditure

Paragraph 120 of Part I of the TAI, 2003 requires all payment vouchers to be

properly supported with appropriate documents or sub-vouchers before they are

passed for payment. However, it was observed that expenditure amounting to

UGX.14,207,000 lacked the necessary supporting documents, contrary to the

regulations.

I advised the Accounting Officer to ensure that the accountability is obtained and

presented for audit verification.

32.2 Wasteful expenditure

Ms Ambitious Construction Company limited was contracted to construct an

accommodation block for staff under procurement reference number

MRRH/WORKS/09-10-/00034 at a contract price of UGX.3, 885,939,190 in the FY

2009/2010.

However, the hospital failed to pay interim certificates in time which resulted into

the contractor claiming interest payment/penalties for delayed payments of

UGX.146,883,559. By the time of audit UGX.127,700,000 had already been paid

leaving a balance of UGX.19,183,559 as shown below;

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Invoice

Number

Invoice

Date

Description/Pu

rpose

EFT/

Cheque

Number

Distribution

Amount

Supplier

Account

Name

DB13/09/

113

27-Sep-13 Payment of

Interest accrued

from delayed

Payments.

2919322

45,900,000

Ambitious

Construction

Company Ltd

DB13/12/

183

23-Dec-13 Payment of

Interest on

delayed

payment.

98944

81,800,000

Ambitious

Construction

Company Ltd

Total 127,700,000

The Accounting Officer admitted the shortcoming and attributed it to the delay by

Ministry of Finance to release funds on time.

I advised the Accounting Officer to ensure compliance with the commitment

control procedures.

32.3 Outstanding Commitments

Section 198 of Treasury Accounting Instructions Part I Finance, requires all

purchases of goods or services to be subject to the commitment control system

procedures issued by the Accountant General from time to time. Commitment

control system requires that commitments are not made in excess of cash limits

project for the period. By the end of the financial year, the entity had

accumulated outstanding commitments amounting to UGX.266,412,236 these

comprised of the balance brought forward from last 2012/13 of UGX.252,252,984

and commitments incurred during the F/Y under review of UGX.14,159,252.

Failure to settle the outstanding commitments may lead to litigation and penalties.

The Accounting Officer admitted the shortcoming and explained that these

commitments could not be cleared because of insufficient funds. He however

indicated that Ministry of Finance Planning and Economic Development cleared the

hospital to settle the commitments from the current budget.

548

The Accounting Officer is advised to ensure that commitments are made within the

cash limits available in accordance with the regulations.

32.4 Supply of Medical equipment by Crown Health Care

The hospital awarded a contract for supply of medical equipment worth

UGX.163,215,950 to Crown health care under contract MBH/SUPLS/13-14/00044

during the year under review. It was however, observed that some of the items

supplied had defects. The internal auditors inspection report dated 15/5/2014,

recommended return of some of the items on the basis of either being poor

quality and not conforming to the specifications.

The Accounting Officer explained that defective items were replaced and that

there was an internal Audit report confirming the deliveries. However, the report

was not availed for verification.

The matter requires urgent attention.

32.5 Understaffing of PDU

The approved staffing structure requires the procurement and disposal unit (PDU)

to have three staff. However, the department is manned by only one officer. It

was also observed that while the department was expected to be headed by a

senior procurement officer, it is headed by a procurement officer.

Failure to adequately staff the PDU undermines the level of performance of the

unit.

The Accounting Officer explained that the matter had been brought to the

attention of the Ministry of Finance Planning and Economic Development

(MOFPED).

I advised the Accounting Officer to follow up the matter with MOFPED to ensure

that the PDU is adequately staffed.

549

32.6 Service Delivery

a) Dental Clinic/ Department (Masaba Wing)

Para 2.1.1 (D) of the LGMSD program operational manual, sets out health service

delivery packages or minimum standards for proper functioning of health centres.

Inspection of the dental clinic revealed the following shortcomings:

Limited supplies of dental cements (amalgam) one of the major items required

in the clinic.

X-ray board was not functional. It was established that absence of this board

makes it hard for the dentist to read the x-ray for better results.

The available dental chairs were not functioning properly. It was observed

that they could not rotate as expected.

Dental trimmers in the theatre were not in use due to lack of a technical

person to operate them

The X-ray monitor was not functional at the time of inspection.

No protective wall for the x-ray machine making it risky for the operator

The Accounting Officer attributed the failure to use the dental X-ray machine to

absence of a protective wall / shield for the operator and that the X-ray viewing

board does not light properly.

He further explained that the dental chairs were also malfunctioning and required

an expert dental technologist.

I advised the Accounting Officer to liaise with the line Ministry of Health to address

the issue and ensure that the dental clinic is fully operational.

33.0 KABALE REGIONAL REFERRAL HOSPITAL

33.1 Irregular Payment of VAT

Section 19, paragraph (a a) of the Value Added Tax (VAT) Act 2009 (amended)

stipulates that supply of civil works related to health sectors were exempt from

VAT.

550

It was observed that the Hospital paid a total of UGX 7,594,636 as VAT to GESES

Uganda Ltd in respect paving and fencing works of the Nurses hostel which was

VAT exempt. The VAT payment was irregular.

The Accounting Officer explained that he had written a letter to Geses (U) Limited

advising the firm of the intended recovery.

I advised the Accounting Officer to follow up the matter and ensure recovery.

33.2 Un spent balances

Section 19(1) of The Public Finance and Accountability Act, 2003 require that

every appropriation by Parliament of public moneys for the services of a financial

year, shall lapse and cease to have any effect at the close of that year and the

unexpended balance of any moneys withdrawn from the Consolidated Fund shall

be repaid to the Consolidated Fund. However, UGX.462,821,812 in respect of

unspent balances that remained on the Hospital bank accounts at the year-end

was never returned to the consolidated fund.

The Accounting Officer explained that the request to retain the committed funds

had been submitted to the Permanent Secretary/Secretary to Treasury, Ministry of

Finance, Planning and Economic Development but a response had not been

obtained.

I advised the Accounting Officer to follow up the matter with the PS/ST to ensure

that authority for retention is obtained or else the funds should be returned to the

consolidated as required under the law.

33.3 Lack of Hospital Board

Part III section 5 (3) of the Ministry of Health National Hospital Act 2006, require

hospitals to have hospital management boards.

However, it was observed that for the year under review the hospital did not have

a board. Consequently, the strategic and operational decisions lack the requisite

scrutiny and guidance of a board.

551

The Accounting Officer explained that they had communicated the matter to the

Ministry of Health and were still awaiting response.

I advised the Accounting Officer to follow up the matter with the Ministry of Health

and ensure that the hospital management board is appointed.

33.4 Understaffing

The approved staff structure of the hospital had 350 positions. However, out of

the 350 approved positions, only 227 are filled, leaving 123 vacant positions,

representing 35% of the establishment.

Staff shortages undermine service delivery.

The Accounting Officer explained that the matter had been brought to the

attention of relevant authorities.

I advised the Accounting Officer to follow up with the relevant authorities to

ensure that vacant positions are filled.

34.0 LIRA REGIONAL REFERRAL HOSPITAL

34.1 Non-Disclosure of Project balances in the Cash and Cash Equivalents

The cash and cash equivalent of UGX 123,929,499 reported in the statement of

financial positions is understated by the project balances of UGX 107,583,155

which were not disclosed as part of the Cash and Cash equivalents for the year.

The Accounting Officer indicated that they were not guided on the accounting

treatment of project funds. Therefore they needed to consult Ministry of Finance,

Planning and Economic Development in order to adjust the financial statements.

I advised the Accounting Officer to follow up the matter with the Ministry of

Finance, Planning and Economic Development for the necessary guideline.


552

Section 43(2) of the Local Governments Financial and Accounting Regulation, 2007

requires administrative advances to be accounted for within a period of one

month. In addition, paragraph 2.2.1 (6) of the Local Government Financial and

Accounting Manual, 2007 requires the Head of Finance to ensure that all payment

vouchers are supported by relevant documents. However, UGX.106,394,580 paid

to staff and service providers was either unaccounted for or lacked supporting

documents at the time of audit. Consequently, I was unable to confirm that the

funds were utilised for intended purposes.

I advised the Accounting officer to obtain the accountabilities or else recovery be

made from the responsible officers.

34.3 Non Deduction Withholding Tax

Section 124 (1) states that a withholding agent who fails to Withhold Tax is

personally liable to pay to the commissioner the amount of tax which has not been

withheld but the withholding agent is entitled to recover this amount from the

payee.

However, it was observed that UGX 29,094,551 in respect of withholding tax was

not deducted from service providers contrary to Income Tax law.

Non-compliance with the tax law may attract fines and penalties from the tax

body.

I advised the Accounting Officer to comply with the tax law to avoid fines and

penalties.

35.0 GULU REGIONAL REFERRAL HOSPITAL

35.1 Un-vouched Expenditure

Regulation 60(1) of the Pubic Finance and Accountability Regulations 2003,

requires all disbursements of public monies to be properly vouched on payment

vouchers prescribed by the Accountant General. However, expenditure totalling

553

UGX 219,224,118 lacked expenditure vouchers, rendering the authenticity of the

expenditure doubtful.

The Accounting officer explained that the vouchers had been kept in Sustain Office

in Kampala. By the time of writing this report, the vouchers had not been


Management was advised to obtain the accountabilities and present them for

audit verification.

35.2 Stores not Taken on Charge

The Treasury Accounting Instructions (TAIs) 2003 paragraph 203 requires stores

receipts taken on charge to be recorded in the stores ledger.

Management procured stores worth UGX 105,779,182 but the items were not

recorded on the store ledger. In the circumstances I could not confirm that the

items were delivered.

The Accounting officer attributed the anomaly to understaffing.

I advised the Accounting officer to ensure that the stores are recorded in the

ledgers and accountability rendered for audit verification.

35.3 Unutilised Line of Credit

The Ministry of Health of Uganda allocated UGX.949,000,000 for medical supplies

to Gulu Regional Hospital under the credit line allocation for the year 2013/14. It

was further noted that under the Hospital credit line there was unutilised balance

of UGX.374,408,533 leading to a total of UGX.1,323,408,533 funds available for

the year under review.

However, the hospital utilised only UGX.863,279,300 out of UGX.1,053,859,302

worth drugs ordered leaving a balance of UGX.190,580,000 with drugs ordered

not delivered by NMS as shown in the table below:-

Hospital Records

554

Cycle Order Value Per Cycle Delivery Value Per Cycle Variance

Cycle 1 181,285,506.00 124,955,029.38 56,330,477

Cycle 2 156,602,842.00 148,050,035.59 8,552,807

Cycle 3 154,264,205.00 110,334,127.33 43,930,078

Cycle 4 150,051,355.00 124,683,255.66 25,368,100

Cycle 5 150,059,055.00 123,499,302.22 26,559,753

Cycle 6 261,596,341.00 231,757,552.97 29,838,789

TOTAL 1,053,859,302 863,279,300 190,580,004

The Accounting officer explained that National Medical Stores did not fulfill all the

orders made due to non-availability of some drugs, although the hospital made

orders for their entire line of credit.

I advised the Accounting Officer to engage National Medical Stores and the

Ministry of Health to ensure that line of credit is fully supplied.

36.0 MBARARA REGIONAL REFERRAL HOSPITAL

36.1 Goods not Taken on Charge

Paragraph 203 of the Treasury Accounting Instructions, Part II, requires all stores

receipts to be taken on charge in the stores ledger. However, a review of Stores

records revealed that purchases totalling to UGX.10,164,220 were not taken on

charge in stores.

There is a risk that the goods may not have been supplied.

The Accounting Officer explained that the goods were taken on charge, however,

the stores records were not availed for verification.

I advised the Accounting Officer to ensure that all the items presented are

properly recorded in the records of the stores.

36.2 Understaffing

The approved Staff establishment of the hospital had 620 positions. However, out

of the 620 approved positions, only 437 were filled, leaving 183 posts vacant,

555

representing 30% of the establishment. Understaffing negatively affects service

delivery.

The Accounting Officer explained that advertisements for the vacant positions had

been placed in the media and recruitments were under way.

I advised the Accounting Officer to follow up that matter and ensure that the

vacant positions are filled.

36.3 Lack of an Information and Communications Technology Policy

The Public Finance and Accountability Act requires the Chief Executive to

designate an officer to ensure that adequate information and communication

technology policies are established and are applied to enable adequate security

and protection over computers and of data held on computers or information

systems operated by a government department.

However, there were no proper procedures formulated to guide the use of the

equipment.

This could be attributed to the hospital staff structure that does not provide for

information technology personnel. Misuse of computer equipment and loss of vital

data may not be ruled out in the prevailing circumstances.

The Accounting Officer acknowledged the shortcoming and promised to liaise with

the Ministry of Information Communication Technology (ICT) to establish an IT

policy.

I await the outcome of the Accounting Officer‟s commitment.

37.0 FORT PORTAL REGIONAL REFERRAL HOSPITAL

37.1 Understaffing

The approved staffing establishment for the hospital is 421 positions. Out of the

approved 421 positions only 310 were filled, leaving 111 vacant positions,

representing 26% of the establishment, as shown below.

556

Positions Approved Posts

Filled

Posts

Vacant

Posts

%age of

Gap

Doctors 42 12 30 71

Nurses 152 122 30 20

Paramedics 89 61 28 31

Administration 33 17 16 48

Support Staff 105 98 7 7

Total 421 310 111 26


According to the Accounting Officer staffing challenges have persisted for so long

yet the number of patients continue to increase and the hospital is also expanding

in terms of structure and function. It was difficult to attract and retain the critical

cadres at the current terms and conditions of service.

I advised the Accounting Officer to engage the Ministries of Health and Public

Service to ensure that the vacant positions are filled.

37.2 Vehicle Repairs

Section 199 of TAI provides that payment vouchers for the purchase of stores

must be supported with all the relevant documents, including requisitions,

purchase orders, supplier„s invoice, delivery notes and an inspection/goods

received note.

However, repair services totaling UGX.36,420,396 were carried out without

requisitions from user departments, LPOs and Job Completion Certificates. There

is a risk of paying for no work done.

According to the Accounting Officer, the workshop follows a work-plan, routine

maintenance, but also respond to emergency breakdowns. They do not have to

wait for complete breakdown of equipment in order to repair them. There is need

for periodic service of machines and equipment.

557

I advised the Accounting Officer to abide by the laid down repairs procedures.

37.3 Unutilized Equipment

In January 2014 the hospital received Anaesthetic Machines, Datex-Ohmeda

9100C, Autoclaves and Delivery Beds from M/s. SIMED International, the supplier

of ENONC equipment under Uganda Health System Strengthening Project; IDA CR

No. 47420. However, audit inspection revealed that the Anaesthetic machine was

not working because its accessories were not supplied. Similarly, the Autoclaves

and Delivery Beds were also not being used.

According to the Accounting Officer, the Anaesthetic machine was supplied by

Ministry of Health. The anaesthetic machine can be used but require oxygen

under high pressure which can only be obtained by using cylinders which are not

readily available in the HCIVs. However, for further details the Ministry of Health

can be contacted for a better position of choice of the equipment.

I advised the Accounting Officer to liaise with the Ministry of Health for necessary

action to ensure that the equipment‟s are put to use.

38.0 JINJA REGIONAL REFERRAL HOSPITAL

38.1 Service delivery

a) Expired Drugs

The expired drugs are required to be returned to National Medical Stores (NMS)

for destruction.

However, it was observed that some drugs worth UGX.15,884,100 had expired

and had not been returned to NMS for destruction. Besides, the expired drugs

were not properly kept as shown in the photograph below;

558

The expired drugs may be misused.

I advised management to ensure that expired drugs are isolated and disposed off

urgently.

b) Understaffing

The staff structure of the hospital had 417 approved posts. However, out of the

approved posts 364 were filled, leaving 53 vacant which represent about 13% of

the establishment.

Management explained that the hospital requests for recruitment were submitted

to relevant authority and some posts were cleared for filling.

I advised management to follow up the matter with the authorities and ensure

that the vacancies are filled.

c) Department of Obstetrics and Gynaecology

An inspection of the above department revealed the following:-

The department lacks 5 B/P machines and a weighing scale.

Gynaecology ward was in a sorry state, some doors were broken. It lacked

evacuation set, stethoscopes, thermometers, wheel chairs, oxygen heads and

sterilizer/boiler.

The patients‟ toilets lack water.

The building housing the Family Planning/Association of voluntary Surgical

Contraceptives was dilapidated.

Expired Neverapine still in the shelf mixed

with drugs with active drugs.

Expired kaletra oral suspension still

kept in the fridge with other

medicines.

559

Management agreed with the observation.

I advised the Accounting Officer to engage the relevant stakeholders to address

the matter.

38.2 Lack of Land Titles

Treasury Accounting Instruction 2003, Part I 400 (h) requires the particulars of the

fixed assets acquired shall be recorded and kept in a fixed assets register

(Treasury form 89).

It was observed that the hospital did not have land titles for some of its land on

which its properties are located namely plots 31-39, Nile Avenue, Plot 26-32,

Nalufenya road, Plot 34-40 Nalufenya road, Plot 52 Gabula road and Plot 47 Nile

Garden.

Lack of land titles creates a risk of encroachment.

Management explained some of the land plots were under dispute.

I advised the Accounting Officer to ensure that the disputes are resolved and land

titles secured.

38.3 Management of Information and Communication Technology

Review of the IT general and application controls revealed that the hospital has

not formulated an IT policy and there was no evidence of any effective measures

that had been taken to create awareness regarding IT security amongst staff

despite having a number of desk top computers and laptops.

The Hospital has also installed IT systems like Personnel management system,

Health management information system and the procurement information system

but all this systems run without a fully-fledged IT steering committee that among

other functions will incorporate IT issues in the hospital strategic plan and

budgets, and these committee is also vital in instituting internal controls to

safeguard against data usage and loss.

560

The implication is that misuse of computer equipment, loss of vital data and

information and theft may not be ruled out. This could be due to lack of

awareness of computer use.

The Accounting Officer is advised to formulate an IT steering committee and

maintenance policy in order to safe guard IT resources at the Hospital.

Management acknowledged the findings.

The Accounting Office should also liaise with the Ministry of Information

Communication Technology (ICT) to formulate IT policies, to guide in

management of IT resources, and with the Ministry of Public Service with a view

of recruiting an IT staff.

39.0 SOROTI REGIONAL REFERRAL HOSPITAL


Section 215 (a & b) of Treasury accounting instructions requires advances to be

accounted for without delay. However, it was observed that advances totalling to

UGX. 23,466,678 remained unaccounted for at the time of audit.

This was attributed to laxity on the part of the management to enforce controls

regarding accountability. Consequently, it was difficult to ascertain whether the

funds were utilised for the intended purposes.

I advised the Accounting Officer to obtain the accountabilities or recover from the

responsible officer.

39.2 Understaffing

The approved hospital establishment has 344 posts. However, out of the 344

approved posts only 259 posts had been filled leaving 85 vacancies representing

25%.

According to management under staffing was caused by retirement, transfers and

the ban on recruitment by the Ministry of Public Service.


561

I advised the Accounting Officer to liaise with the Ministries of Finance, Planning

and Economic Development and Public Service to address the matter.

39.3 Non Disposal of Expired Drugs

The inspection of the hospital store in November 2014 revealed that several drugs

had expired and had not been disposed.

Expired drugs if not destroyed can end up on the market. The Accounting officer

explained that most of the expired drugs were a cumulative effect over a number

of years from donors and projects.

I advised the Accounting Officer to ensure that the expired drugs are disposed off.

40.0 MASAKA REGIONAL REFERRAL HOSPITAL

40.1 Operation of a dollar account without authority

Regulation 327 of Treasury Accounting Instructions (TAI‟s) 2004, states that no

bank account shall be opened or closed without the prior authority of the

Accountant General. However, management opened and operated a dollar account

under account name CDIC without authority of the Accountant General. There

was no disclosure of the operations of this account in the Hospitals financial

statements. Besides, management did not avail accountability documents for the

transactions on this account for audit verification.

The Accounting Officer explained that the Hospital Director Masaka Referral

Hospital is the chairperson of the steering committee and one of the signatories to

the account. The account is not for the hospital but for Ministry of health although

it benefits from the project which covers the whole country.

I advised the Accounting Officer to obtain the Accountant General‟s authority for

opening the account and ensure that the funds are appropriately accounted for.

40.2 Construction of the maternity and children complex

562

The BOQs provided for iron bars of 4x25 on the outside columns and 4x16 on the

inside columns; it was observed that instead of using 4x25 as per BOQs, 4x16

column bars were used for the section of the outside wall. The difference in

column size as per specifics in the BOQ could affect the substructure and lead to

the collapse of the building as these were not erected and strong enough to hold a

3 storeyed maternity complex as shown below;-

4x16 iron bars on the outside columns that are weak

The Accounting Officer explained that this was caused by the record in the

structural plans which provided for 4x16 iron bars on the outside columns which

were installed, varying from the BOQs which provided for 4x25. The 4x16 columns

appeared weak and may crumble under the weight of 3 storeys. The issue of the

variance of the outside columns between the BOQs and the structural plans

remains a sticky issue as it will affect structure of the building. Since the bars

constitute part of the foundation level for the base beam installations, it is

paramount that they are of a considerable strength and promised to investigate

the variance between the columns sizes, the number of columns to be erected and

have it rectified.

I advised the Accounting Officer to investigate the anomalies and have them

rectified.

40.3 Lack of a Hospital Board

563

Guideline 1.1.1 (e) of the Governance structure guidelines issued by Ministry of

Health January 2013; provides that at a referral hospital, the board shall provide

the oversight role for effective functioning of hospital in order to deliver quality

services.

However, the hospital did not have a board.

It was observed that during the year, these roles were performed by hospital

managers yet they are the implementers of the annual work plans and the hospital

budget. This grossly compromised the quality of services at the hospital.

The Accounting Officer admitted the shortcoming and explained that the old

board‟s term of office expired in December 2013 and a new board had been

appointed.

I advised the Accounting Officer to show proof of the new board appointment and

evidence of the oversight role by the board.

41.0 MUBENDE REGIONAL REFERRAL HOSPITAL

41.1 Lack of Vehicle Log Books

Section 801 of the Treasury Accounting Instructions on Stores provides that

vehicle log books are maintained for each vehicle to show details of dates,

purpose of journey or works performed, the signature of the officer authorising

them, details of fuel, oils, and spares used, dates and nature of servicing and

repairs and lists of tools, spare wheels and other equipment carried on or

associated with the vehicle, launch or equipment.

However, management did not maintain vehicle movement log books contrary to

the regulations. Consequently, it becomes difficult to monitor and control vehicle

movements and fuel.

The Accounting Officer has promised to establish the vehicle movement registers.

I advised the Accounting Officer to establish the vehicle movement log books.

564

42.0 MOROTO REGIONAL REFERRAL HOSPITAL

42.1 Use of Non-Prequalified Suppliers

Regulation 125 (1) (b) of the PPDA Regulations (2003), requires a procuring and

disposing entity to send the solicitation documents to a number of bidders

appropriate for effective competition from among the providers who submitted

pre-qualification submissions or expressions of interest and who meet the

prequalification criteria.

It was however, observed that procurements worth UGX. 31,600,500 were

solicited from non-prequalified suppliers, contrary to the regulations. In the

circumstances the hospital may not have achieved value for money.

The Accounting officer was advised to ensure that only prequalified suppliers are

invited when soliciting for quotations.

42.2 Inspection of Hospital Facilities

a) Wards

Most wards were noted to be in a poor state with lack of enough beds, non

functioning water system and dilapidated structures, among others, as shown

below:

Childrens Ward

Dilapidated Childrens Ward with Patients on floor, no enough beds and

ward congested

Medical Ward

565

Falling ceiling, no running water with a few Drip stands in the ward.

The Accounting Officer explained that the beds appear to be insufficient because

there are too many patients in the hospital.

I advised the Accounting Officer to priortise the renovation and equiping of the

hospital.

b) Hospital Mortuary

The Hospital does not have a functional mortuary. The building that is used as the

mortuary is dilapidated with broken window panes and without any cold storage

facility. According to management, the Hospital Mortuary is planned to be

constructed in the second phase of Uganda Health Services Support Porject/World

Bnak Project.

I advised the Accounting officer to liaise with the Ministry of Health for the release

of project funds to have a functional mortuary.

42.3 Non-Deduction of Taxes

Section 123 of the Income Tax Act, 1997, requires a withholding agent to pay

URA any tax that has or should have been withheld within fifteen days after the

end of the month.

It was observed that 6% Withholding tax of UGX 17,686,200 was not recovered

from a payment a local firm contracted to construct a staff houses.

Non-compliance with the Tax Law may attract fines and penalties from URA. The

Accounting Officer promised to recover the taxes from the subsequent payments

to the contractor.

566

I advised the Accounting Officer to comply with the tax law.

42.4 Fixed Assets Register

Paragraph 801 of Treasury Accounting Instruction 2003 part II-public stores

requires an entity to maintain a Fixed Assets register showing the location of plant

and tools in daily use. However, the hospital purchased fixed assets amounting to

UGX 35,713,000 but were not recorded in the asset register, contrary to the

regulations.

I advised the Accounting Officer to ensure that the fixed assets register is regularly

updated.

42.5 Human Resources

a) UnderStaffing

The approved staff structure of the Hospital has 386 posts. However, out of the

approved 386 posts only 153 were filled leaving 233 positions vacant representing

60% of the establishment. Understaffing undermines service delivery.

This was attributed to the ban on recruitment by Ministry of Public Service and

difficulty to retain staff in the region as it is a hard to reach and staff.

I advised the Accounting Officer to liaise with the Ministries of Health and Public

Service to ensure that the vacant posts are filled.

43.0 HOIMA REGIONAL REFERRAL HOSPITAL

43.1 Funds not Accounted for

Paragraph 217 of Part 1 of the Treasury Accounting Instructions (TAI) 2003

requires advances to be accounted for within 60 days and there after deductions

to be made from the monthly salary of the debtor and no new advance to be given

before accounting for the previous advance.

It was however, observed that UGX 12,520,753 remained unaccounted contrary to

the regulation as shown below;

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Unaccounted for funds

Date Vr No. Particulars Payee Amount remark

3.10.13 3.'1 Refund to the MOH MOH

7,395,755

Funds not

acknowledged

27.2.14 67.2

Repair and servicing of

computers

Computers and

beyond Africa

5,125,000 No job cards

12,520,755

Delays in submission of accountability may lead to falsification of documents.

Consequently, I could not ascertain whether the funds were used for the intended

purposes.

I advised the Accounting Officer to ensure that funds are accounted for or else

recovery be made in accordance with Section 217 of Treasury Accounting

Instructions.


Paragraph 156 of Treasury Accounting Instructions provide that funds available

under one item or sub item of expenditure may not be transferable to another

item without the authority of a virement. UGX.35,875,900 paid for various

services were charged on items which do not reflect the nature of the expenditure.

This was done to disguise expenditure as per the approved estimates.

Management took note of the anomaly and promised to desist from this practice in

the future.

I await to see the outcome of management promise.

43.3 Under Staffing

The hospital has an approved structure of 401 staff, however only 209 (55%)

were filled; leaving a staffing gap of 192 representing 45% of the establishment.

The staff shortage includes critical staffs like consultants, medical officers,

surgeons, gynaecologist, radiographers, nurses and Laboratory Technicians were

568

inadequate. This man power shortage hampers delivery of service to the

community.

The Accounting Officer admitted the shortcomings and explained that there is

need for the Central Government to ensure that key critical staff are recruited in

order for the hospital to be able to deliver on its mandate.

I advised the Accounting Officer to liaise with Ministry of Health to address the

matter.

44.0 CHINA-UGANDA FRIENDSHIP HOSPITAL NAGURU

44.1 Transfers from Treasury General Account

A review of the bank statements for the referral hospital revealed that funds

totaling to UGX.1,500,129,768 were transferred from the Treasury General

Account to a Sub Treasury Single Account as indicated below;

NO Date. Document No. From Amount (UGX).

1. 18/10/13 9911FN132910118 Q336TSA Naguru Referral Hospital 1,057,785,926

2. 30/01/14 991SIS03132940077 00376 Naguru Referral Hospital 86,833,440

3. 10/06/14 991SIS0132940077 00376 Naguru Referral Hospital 290,724,060

4. 16/06/14 991SIS0132940077 00376 Naguru Referral Naguru 64,786,342

Total 1,500,129,768

I was not availed with documentation on how the funds were eventually spent. In

the circumstances, it was not possible to ascertain the purpose for which the

money was used.

Although the Accounting Officer indicated that management was taking measures

to provide the documents, these were not availed by the time of writing this

report.

I advised the Accounting Officer to avail the necessary accountability or enforce

recovery of the above funds.

569

44.2 Revenue performance

The Hospital had an appropriated budget of UGX.9,548,296,000 for the year under

review but received only UGX.7,187,921,785 resulting into a shortfall of

UGX.2,498,998,215 (26%). As a result, the following activities were not

implemented:

Medical waste management to handle organic medical waste,

Construction of incinerator,

Hospital expansion by an additional floor,

Oxygen supply to essential units of the Hospital,

Provision of food to patients and staff motivation through allowances.

Failure to implement planned activities impedes the Hospital from achieving its

objective. There is also a risk that the initial government intentions of improving

the referral system in Kampala and decongesting Mulago Hospital Complex may

not be achieved in the short run.

I advised the Accounting Officer to liaise with the Ministry of Finance Planning and

Economic Development and other stakeholders, to ensure that the Hospital‟s

budget is always fully funded to enable it achieve its objectives and the

government intentions of improving the referral system in Kampala.

44.3 Purchase of Land for Staff Houses

During the year under review, UGX.993,000,000 was paid to an individual for

measuring 0.776 hectares, and Block 230 plot 1471 measuring 0.034 hectares

under procurement reference number CUFH/SUPLS/13-14/00016. The following

anomalies were observed:

While the purchase was meant for block 230, plot 1472 and part of plot 1471,

the contract signed with the vendor and the certificate of title showed the land

details as to be for block 230, plot 1473 and part of plot 1472. Plot 1473 had

not been valued by the Chief Government Valuer and therefore the price for it

had no basis. This could cause unnecessary land wrangles.

570

The certificates of title had not been transferred into the names of the Hospital

by the time of audit. The transfer of ownership had been halted by the

Principal Registrar, Wakiso district, pending clarification on the Hospital names

since the Hospital interchangeably uses the names of China Uganda Friendship

Hospital and Naguru Referral Hospital.

The Accounting Officer explained that the differences in plot numbers were not

attributed to Naguru as an entity but to Wakiso lands office as they indicated that

the initial plots were “re-numbered due to double plotting”. This was not in any

way likely to cause any confusion in future. He also indicated that management

was making all efforts to transfer the titles in the Hospital names following

clarification in the Hospital‟s name by the Permanent Secretary, Ministry of Health.

I advised the Accounting Officer to obtain clarification regarding the details on the

land title and also expedite the transfer process.

44.4 Construction of a Drug Store

The Hospital procured a local construction firm to construct a three level office

structure and a drug store at a contract sum of UGX.769,240,009. During the year

under review, a total of UGX.223,077,200 was paid to the firm on Voucher number

NR310/06/2014, vide EFT 1239859, however the following anomalies were noted:

Non Public bid opening

There was no public bid opening contrary to Regulation 62 (1) of the PPDA

Regulations 2014 (Rules and Methods for Procurement of Supplies, Works and

Services) which requires bids submitted under the open bidding method or the

restricted bidding method to be opened at a public bid opening session.

Raising a bid advertisement before contracts committee approval

A bid Advertisement was raised on 3rd January 2014 before the Contracts

Committee approved the procurement method, Bid document and Advert which

was done on 17th March 2014. This contravenes regulation 12 of the PPDA (PDE)

regulations 2014.

571

Lack of approval of plan by KCCA

The plan for the offices and stores was not approved by the Area Planning

Authority (KCCA). It was noted that the Directorate of physical planning in KCCA

gave a notice of deferment of development permission sighting among other

reasons the encroachment by the drug store on the planned road reserve and the

confusion relating to the developer‟s name. This has stalled construction which

may lead to escalation of construction costs and delayed completion.

In response, the Accounting Officer explained that, Plans for the drug store were

submitted to KCCA as required by law. However, KCCA deferred the development

permission for the Project. Efforts were made to address all the concerns raised.

I advised the Accounting Officer to follow up with KCCA and ensure that the

development plans are approved. In future, bid documents should always be

approved by the Contracts Committee before an advertisement is placed.

44.5 Medical waste Treatment Machine

A review of the hospital medical waste disposal process revealed that the hospital

has a medical waste treatment machine bought locally at UGX.250m for

incinerating solid medical waste materials. The hospital however does not have

the capability to handle medical waste like placentas and is locally disposing off

such waste.

Whereas the hospital is commended for acquiring the medical waste treatment

plant, the absence of a placenta pit, makes it difficult to handle and dispose the

non solid waste matter. The Accounting Officer explained that the recommendable

manner could not be achieved because the Hospital was financially constrained as

this activity was among the unfunded priorities.

I advised the Accounting Officer to put in place maintenance procedures for the

equipment to ensure its sustainable use and to also institute other necessary

measures for disposal of other waste matter.

44.6 Demurrage Charges

572

A review of the documents revealed that during the year funds totaling

UGX.20,700,916 were paid to a clearing firm for clearing medical equipment

donated by the Republic of China. However, it was noted that 40%

(UGX.8,054,900) of the payment was wasteful as it was paid as demurrage for

delay in clearing the equipment.

The Accounting Officer attributed the delay to absence of the TIN for the Hospital

at the time and explained that the Hospital had before delivery of the said

equipment initiated the process of acquiring a TIN online, which process was

delayed due to uncertainty of ownership of the Hospital by URA.

I advised the Accounting Officer to put in place mechanisms of expediting specific

processes whose delays could lead to such wasteful expenditure.

573

EDUCATION SECTOR

45.0 MINISTRY OF EDUCATION AND SPORTS


Paragraph 156 of the TAIs prohibits the transfer of funds available on one item or

sub-item of expenditure to another, save on the authority of a virement warrant.

It also prohibits charging expenditure to an item/sub-item merely because funds

are available under that item/sub-item.

On the contrary, it was noted that out of the total expenditure of

UGX.97,566,221,002 (excluding transfers to other organisations),

UGX.4,395239,994 (4%) was charged on expenditure codes meant for other

activities possibly because funds were available on these item codes.

Mischarge of expenditure is a weakness in budgetary controls and results into

misrepresentation of balances in the financial statements.

Management explained that funds were not released as budgeted, warranting the

accounting officer to use the available limited resources to deliver services.

I advised the Accounting Officer to ensure that transactions are correctly charged

on the right expenditure item codes or else seek reallocations before loading the

releases on the system.

45.2 Unreconciled Position of Payables

A schedule of payables obtained from from the MoFPED (Treasury) indicated that

the Ministry had submitted payables of UGX.20,412,601,005 as at 30th June, 2014.

This position differed from that reported in the financial statements of

UGX.1,608,017,001 by UGX.18,804,584,004. The conflicting positions pose a risk

of settling bills that are not supported with underlying transactions.

574

The Accounting Officer explained that a fresh verification by Internal Audit had

been instituted to establish the true position of the payables. I await the outcome

of Management‟s action in this regard.

45.3 Under-Funding of Examination Boards

During the year, Uganda Allied Health Examination Board (UAHEB), Uganda

Business and Technical Examinations Board (UBTEB) had a and Uganda Nurses

and Midwives Examinations Board (UNMEB) revenue budget of

UGX.20,674,619,576 expected from Government. However, the Board received

only UGX.16,655,471,933, resulting into a shortfall of UGX.4,019,147,643. This

could have greatly affected the performance of the boards. The Table below

refers:

Board Budgeted Revenue from

Government (UGX)

Received (UGX) Shortfall (UGX)

UAHEB 3,990,255,000 2,509,379,167 1,480,875,833

UBTEB 9,000,000,000 6,901,365,226 2,098,634,774

UNMEB 7,684,364,576 7,244,727,540 439,637,036

Total 20,674,619,576 16,655,471,933 4,019,147,643

Management attributed the shortfall to stagnant non-wage allocations within the

sector ceiling, which could not allow allocation of additional funding to the boards.

I advised the Accounting Officer to liaise with MoFPED to ensure that the boards

are adequately funded to facilitate implementation of their planned activities.

45.4 Redundant Teachers SACCO Fund

During the year, the Government offered UGX.25bn to the teachers‟ SACCO fund

to be contributed in 5 years with the objective of enabling teachers access

affordable credit financing. A total of UGX.4,317,423,564 was released to Micro

Finance Support Centre during the year under review. However, by the time of

writing this report, the funds had not yet been accessed by the beneficiary

teachers. Besides, the fund management had become a source of conflict between

UNATU and the Ministry. In the circumstances, the objectives of funding the

teachers SACCO may not be achieved.

575

Management attributed the delay in operationalization of the fund to the long

procurement process of a fund manager, and the process of developing the

necessary guidelines. Management further indicated a fund manager was

eventually procured and the process of disbursements was underway.

I advised Management to ensure operationalization of the fund so that the

intended objectives are achieved.


a) Advances to Schools, Colleges and Technical Institutions

Funds amounting to UGX.559,122,789 were advanced to various primary schools

for construction activities during the year under review. However, it was noted

that the Ministry neither received accountability returns nor progress reports for

the funds. In the circumstances, there is a risk that the funds were not utilized as

intended.

The Accounting Officer indicated that reminder letters had been sent to the Head

Teachers of the affected schools demanding for accountability of the funds.

I advised the Accounting Officer to ensure that funds advanced to schools for

various activities are accounted for in a timely manner. In the alternative the funds

are recoverable.

b) Other Advances

UGX.314,636,968 was advanced to various institutions and individuals outside the

Ministry to undertake various activities such as teachers training and subventions.

However, contrary to paragraph 217 of the Treasury Accounting Instructions,

there were no accountabilities to show utilization of the funds. In the

circumstances, I was unable to ascertain whether the funds were utilized for the

intended purposes.

I advised the Accounting Officer to ensure that all the funds are accounted for by

the respective beneficiaries to give assurance that the money was used for the

576

intended purposes.


Out of the budgeted revenue of UGX.197,562,361,139 only UGX.186,558,729,377

was received resulting into a shortfall of UGX.11,003,631,762 (6%). As a result a

number of activities were not implemented which hinders the Ministry from

achieving its objectives. The table below shows the activities that were not

implemented;

Output Name Description of

Performance Planned outputs Status and

reason for

variations

Pre primary and

Primary

education

Instructional

materials for

primary schools

The department planned

to complete procurement

of P5 -P7

textbooks as rolled over contracts for the

2,378,829 pupils books

and 325,000 teachers' guides for P5 and P7

Reprint curricula for P1

and P2;

Pay for consultancy of

Needs assessment for SNE;

Procure hearing Aids for

assessed learners of SNE;

Procure instructional

materials for PTCs; Conduct prequalification

workshop for P1 and P2 instructional materials

The evaluation of

bids for P1

and P2 was a spill-over activity from

FY 2012/13. -Final payment for

the supply

and delivery for P5-P7 textbooks in

favor of M/S Longhorn

Publishers combined the two

final tranches (60%

upon presentation of shipping

documents; 20% upon

Verification of

deliveries.) -Funds for the

procurement of assorted textbooks

to support implementation of

revised PTE

curriculum were processed but not

paid. Therefore, the Procurement

process and

monitoring requisition could

not be

577

Output Name Description of Performance

Planned outputs Status and reason for

variations

accomplished by the end of the

Financial Year.

Secondary School Education

Instructional materials for

Secondary schools

Books and periodicals

procured; Computer and ICT

services

provided; 4th cycle of 50 schools

under Digital Science

Cyber handled;

Text books for science

and mathematics for the

UPOLET government and PPP schools procured;

Computer laboratory of

Bukoyo SS; Iganga equipped with 80

Computers.

Under the APL project by the

end of Q4, the supplier had not yet

delivered the

science kits to the beneficiary schools


Monitoring and Supervision of

Secondary

Schools

425 site meetings

attended at 56 institutions to, monitoring

of 43

institutions by ADB IV;

Funds were transferred to item

70201 to offset a

funding shortfall

Secondary

School Education

USE Tuition

Support

East African essay

competitions

carried out

- The East Africa

Essay competition in Secondary

schools was not facilitated because

money was

transferred to offset a funding shortfall.

-Funds were defrayed from

training of

secondary teachers to follow up trained

teachers.


Provision of furniture and

equipment to secondary

schools

Furniture supplied to 100

beneficiary schools in

Phase III Under world bank

project.

The process is being financed by

donor funds.

Quality and

Standards

Inspection

(Primary Secondary

BTVET) and monitoring of

Inspection of 1,900

secondary

schools, 500 BTVET

Institutions 10 NTCs, 20

PTCs

-The targeted

number of 8 vehicles was not

tenable because of price variations at

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Output Name Description of Performance

Planned outputs Status and reason for

variations

construction works in PTCs

the time of procurement.

-Activities for the relocation of

Shimoni project did

not proceed due to contractual

problems which are being sorted out.

Management explained that the Ministry of Finance, Planning and Economic

Development (MoFPED) only released 94% of the appropriated budget which

consequently affected the performance of MoES.

I advised Management to always liaise with the MoFPED to ensure that all

appropriated funds are released.

45.7 Government of Uganda Payroll Validation Exercise

I appointed Ernst & Young to undertake a payroll audit and to validate and

capture the biometric details of all Government of Uganda Employees.

In a press release dated 4th April, 2014, I reiterated that employees who failed to

present themselves for validation and have their biometric data captured face the

risk of being deleted from the Government payroll.

However, it was noted that 37 staff of MoES never presented themselves for

validation. There is a risk of being deleted from the Government payroll, if at all

the affected employees do exist. Management explained that by the time of Audit

some staff had not been validated but since then, they have been validated

however verification could not confirm management response.

I advised the Accounting Officer to ensure that the affected employees are

validated or deleted from the payroll as appropriate.

579

45.8 Unreconciled UMEME Arrears

In his communication to various accounting officers dated 7th October, 2014 (Ref.

ISS 49/137/01, the PS/ST indicated that UGX.26.193 billion due to Uganda

Electricity Distribution Company (UETCL) had been withheld by UMEME on account

of Non-payment of bills in the MoES by Government of Uganda for the period June

2013 to June 2014. Previously another UGX 18.34 billion had been withheld in a

similar manner for the previous period

In the case of the MoES, the letter indicated that UGX.20,187,950 was outstanding

as at 30th June 2014. However, the list of payables indicated that the outstanding

UMEME bill was UGX.1,513,523,108 as at 30th June, 2014.

Although the Accounting Officer was requested to confirm and reconcile with

UMEME the arrears position, there was no evidence that this was done. There is a

risk that the Ministry continues to settle bills that had already been offset from

payments to UEDCL. .

Management explained that the ministry had not paid any arrears on outstanding

UMEME bills cause they had not received any cash limits for it and that

management was in contact with MoFPED to provide the ministry with

information regarding funds withheld owed by government to UMEME.

I have advised the Accounting Officer to reconcile UMEME bills with the Ministry

balances to avoid multiple settlement of the same bills.

45.9 Consultancy Services for Undertaking Assessment of Learners with

Disabilities/Special Needs-Hearing Aid Assistive Devices-MOES/12-

13/SRVCS/0233/C0737

a) Delayed Procurement Process

It was noted that the Ministry planned to procure consultancy services to

undertake Assessment of Learners with Disabilities/Special Needs in the Financial

year 2012/13. Significant delays were however noted in this procurement from the

580

time it was initiated up to the time of contract signing as shown in the table

below:

Activity Date when action was taken

Procurement Requisition was raised by the user department

on PP Form

25th October, 2012

Confirmation of funding was approved by US/FA at Estimated

Cost of UGX. 200,000,000.

20th February,2013

An Advert run on in the Daily Monitor included a Schedule of activities which stated that implementation start date was

22nd July, 2013

10th May, 2013

Contract Agreement Signing at Contract Price of UGX.413,082,200

1st November, 2013

Delays in the procurement process greatly affect procurement planning and lead

to delayed service delivery.

The Accounting Officer attributed the delay to major staff transfers in the PDU

during the year under review which impacted negatively on performance.

I advised Management to ensure that procurements are always initiated and

implemented in the planned time period.

45.10 Supply of Textbooks and Instructional Materials (MOES/Supplies/11-

12/0013)

a) Delayed Delivery of Instructional Materials by Contractors

Regulation 260 (1) (b) of the PPDA Regulations, (2003) requires a contract

manager to ensure that the service provider performs the contract in accordance

with the terms and conditions specified in the contract. During the year under

review, the Ministry engaged various private firms to supply and deliver

instructional materials to various schools in the country. However, delays were

noted in the execution of the contracts well beyond the agreed 120 days. Besides,

there was no documentary proof that the liquidated damages clause was evoked.

Contractor and contract

details

Contract

sum (UGX)

Contract

date

Expected

date of discharge

(120 days)

Actual

date of discharge

Varianc

e

M/S Longhorn publishers.(supply of p.5,p6&

p.7 text books)

7,057,673,400 30/5/2013 30/9/2013 16/10/2014 381 days

581

Contractor and contract details

Contract sum

(UGX)

Contract date

Expected date of

discharge

(120 days)

Actual date of

discharge

Variance

M/S East Africa Educational

publishers. (supply ofP.5 Swahili text books)

519,135,760 30/5/2013 30/9/2013 13/10/2014 378 days.

M/S St.Bernard

publishers.(supply of p.5 math text books)

500,916,000 30/5/2013 30/9/2013 23/5/2014 223 days.

M/S Fountain Publishers.

(Supply of p.5, p.6 & p.7 text books).

2,588,953,878 30/5/2013 30/9/2013 03/02/2014 123 days

M/S M.K Publishers Ltd,

(supply of p.5,p.6 & p.7 text books)

3,433,484,300 31/5/2013 30/9/2013 14/04/2014 194 days.

In the circumstances, the objectives of the procurement were undermined. I

explained to Management that there could be change of curriculum before

utilization of the said books. The delays could also affect the intended beneficiaries

especially the candidate classes.

The Accounting Officer attributed the anomaly to delays in issuing of clearance

certificates to contractors for mass printing.

I advised Management to always ensure that terms and conditions of a contract

are complied with to ensure effective and efficient service delivery.

b) Lack of Contract Management Records

Regulation 259(1) of the PPDA Regulations, (2003) requires the Accounting Officer

to appoint a contract manager for each contract/procurement, who will inter alia

draw a contract management plan and keep a record of performance of the

contract. However, it was noted that no contract management plan for the

procurement of instructional materials was drawn, and contract management

records such as progress reports, field reports, copies of payments made, among

others, were not maintained on file.

I explained to Management that absence of contract management records makes

it difficult to confirm whether supervision and monitoring of the contract was

carried out in accordance with the specified terms of the agreement.

582

Management explained that the contract manager had limited human resource

capacity to effectively implement the Regulation and promised to build capacity in

contract management.

I advised Management to always ensure compliance with the Regulations in this

regard.

45.11 MUNI UNIVERSITY

a) Budget Performance

Whereas the University budgeted to receive revenue amounting to

UGX.5,000,000,000 from government grants, only UGX.4,459,251,381 was

received through the MoES, thereby registering a shortfall of UGX.540,748,619

(10.8%). The shortfall constrained Management in implementing planned capital

development projects at the University.

Management explained that MoES received 94% of its appropriated budget which

consequently affected the performance.

I advised Management to always liaise with the Ministries of MoFPED and MoES to

ensure all budgeted funds are released.

b) Implementation of Unapproved Strategic Plan

It was noted that the Management of the University has been implementing a 5-

year draft Strategic Plan covering the period 2010/11 to 2014/15. Lack of an

approved strategic plan may lead to implementation of activities that are not

strategic to the University.

Management explained that the draft Strategic Plan was submitted to the Council

for consideration.

I advised Management to follow up the matter and ensure that the Strategic Plan

is approved to give proper direction to the University when it is still at its formative

stage.

583

c) Land Ownership

The University owns various pieces of land totaling to 3,690.3746 acres. All the

land was donated by the local communities and agreements of offer are in place,

except for 0.4446 acres along post office Road. By the time of writing this report,

only one title for the land measuring 2973.13 acres had been secured, with the

rest of the pieces of land without ownership titles. There is a risk of the university

losing the land to encroachers. The table below refers;

Location Sub- county District Land size Status

Muni Oluko Arua 130.054 acres Lease process ongoing

Paroketo Pakwach Nebbi 147.166 acres Lease process ongoing

Bidibidi Romogi Yumbe 439.58 acres Lease process ongoing

Madiokello Okollo Arua 2973.13 acres Land title obtained

Along Post

Office rd,

Arua

Municipality

Arua 0.4446 acres Process of opening

boundaries

3,690.3746

Management explained that most of the leases were in the final stages of

processing, and the parcel of the land along post office road in Arua Municipality

had just been donated. The process of re-opening the boundary had also begun.

I advised Management to liaise with the relevant authorities and expedite the

transfer processes.

45.12 SUPPORT TO THE POST-PRIMARY EDUCATION TRAINING EXPANSION

AND IMPROVEMENT (EDUCATION IV) PROJECT

a) Compliance With Financing Agreement Provisions And Gou


i. Government of Uganda Counterpart Funding

The African Development Fund Project Appraisal Document required the

Government of Uganda to contribute 10% of the total project cost and partially

584

finance the categories of expenditure for works (10%), services (10%) and

operating costs (80%), all to the tune of UA 5,780,000 (Approx. USD 9.36 Million).

However, with 92% of the project time elapsed as at 30 June 2014, the GoU

contribution stood at UA 4,170,776, equivalent to USD 6.76 Million (72% of the

agreed amount). There is a risk that the project will close without the government

making its full contribution to the project. This can also lead to accumulation of

unpaid bills thereby affecting completion of all agreed and planned activities.

The Accounting Officer explained that the pace at which the counterpart funds

were released to the Ministry on a quarterly did not match the rate at which the

contractors‟ requests for interim payment certificates came in. I have advised the

Accounting officer to liaise with the Ministry of Finance Planning and Economic

Development to ensure that GOU obligations are met to enable the

implementation of the agreed activities.

ii) Slow Progress in Project Implementation

Review of the project implementation records showed clusters I, II and III were

due to have been completed in September 2013. However, it was noted that some

of the cluster I, II and III activities were still outstanding. Also noted was that the

works under cluster IV whose contracts were signed in September 2013 and

expected to be completed in September 2014 were behind schedule.

Delays in the completion of works would call for unnecessary variations and

increase in contract administrative costs in terms of inspection. In addition, the

specific activities may be affected if they are still incomplete at the time the

project ends.

The Accounting officer explained that time contract extensions had been site-

specific and they did not result into a change in contract price variations hence no

additional cost. Out of the 68 targeted beneficiary institutions under the Project,

44 (65%) had been completed and 17 (25%) had attained a rate of completion of

75-95% and above. Management further indicated that measures had been put in

place to address civil works challenges and intensify site supervision and

monitoring.

585

I await the outcome of management‟s intervention in this regard.

iii) Recruitment of Teachers for Seed Schools

Under the project 12 new seed secondary schools are to be constructed and be

fully furnished and equipped. It was noted that out of the 12 schools, 4 schools

namely; Mella SSS, Atutur SSS, Kanara SSS and Wakyato had been completed,

handed over by the contractors and students enrolled. However, no teachers were

posted to these schools to teach the enrolled students. It was further noted that

the schools were operating with the support of a few community volunteer

teachers who were not on government payroll. Lack of committed and facilitated

teachers may compromise the project objective of accessing equitable and quality

education.

Management explained that the Executing Agency had made attempts to deploy

Teachers to the new seed secondary Schools but the majority had not reported for

duty citing relocation challenges arising from location of the seed secondary

schools. They stated that a formal request for approval of recruitment of teachers

for the seed schools had been sent to the Ministry of Public Service.

I await the outcome of management‟s action in this regard.

b) General Standards of Accounting And Internal Control

It was noted that management had in all material respects, put in place a

satisfactory internal control system and measures to ensure proper accountability

for all project funds.

45.13 UNIVERSAL POST PRIMARY EDUCATION AND TRAINING PROJECT

a) Compliance With Financing Agreement Provisions And Gou


It was noted that management had in all material respects complied with the

covenants contained in the Financing Agreement and the Government of Uganda

Financial Regulations except for the following matters:

586

i) Funds not accounted for

The Treasury Accounting Instructions, paragraph 181 and the Public Finance and

Accountability Act Reg. 63(4) require all vouchers to contain full particulars of each

service or goods procured and such supporting documents as may be required to

enable checking without reference to any other documents.

Furthermore, Guideline 4.18 of the School Based Procurement and Implementation

Manual for Civil Works 2012 requires the accountability returns to be submitted to

the Ministry of Education and Sports (MoES) within one month after utilization of

funds.

A sum of UGX.225,472,952,772 was advanced to schools for UPPET activities

under phase 1 and phase 2. However at the time of audit, only

UGX.215,464,635,286 had either been accounted for after utilisation or refunded

by various schools leaving an outstanding balance of UGX.10,008,317,486.

The funds were advanced between May 2011 and December 2013 as summarized

in the table below:

No of

s

c

h

o

o

l

s

Advanced

(UGX)

Accounted

(UGX)

Refunded

(UGX)

Total Accounted

for and refunded

(UGX)

Total

Outstanding

Balance (UGX)

Phase

1

215 59,523,373,232 49,872,017,510

6,233,577,706

56,105,595,216 3,417,778,016

Phase

2

422 165,949,579,540

155,889,800,45

2

3,469,239,618

159,359,040,070 6,590,539,470

Total 637 225,472,952,772 205,761,817,962 9,702,817,324 215,464,635,286 10,008,317,486

Failure to account for the funds in a timely manner could lead to their misuse by

the respective schools.

Management explained that they had intensified financial accountability

requirements and the status continued to change as more accountability returns

587

were being submitted by the schools. In addition management had requested the

PS/ST to consider attaching accounts of schools with big outstanding balances.

I have advised the Accounting Officer to follow up the long outstanding

accountabilities and ensure that the respective schools comply with the

accountability requirements.

iii) Terminated contracts without recovery of Performance Securities

Section 232 (5) & (6) of the PPDA Regulations state that where a provider is

required to provide a performance security, a bid security from that provider shall

not be released until a satisfactory performance security is received by a procuring

and disposing entity. A performance security shall not be released by a procuring

entity until all the provider's obligations have been fulfilled.

A number of firms were engaged to undertake civil works at 35 schools for an

aggregate contract sum of UGX.9,099,561,449. At the time of audit, a sum of

UGX.3,894,801,294 had been paid to the contractors in respect of certified works.

However, the contractors failed to execute the contracts to completion culminating

into termination. At the time of termination most of the performance securities had

expired and as such they could not be cashed. This could lead to loss of funds

where particular contractors fail to perform their contracts.

Management explained that during the project implementation, a number of

challenges arose such as inflation, delayed release of funds to schools, low

quotations; and these resulted into slow progress and un-recorded time

extensions. Whereas the schools were advised to terminate non-performing

contracts, delays in termination resulted into expiry of performance securities

making it impossible to cash them.

I have advised management to always ensure proper contract management and to

consider legal action against the errant contractors.

iv) Refund of ineligible Expenditure to IDA 4570-UG USD 1,124,755

588

Funds amounting to UGX.2,868,124,565 (USD.1,124,755) was validated as

ineligible contrary to the loan agreement according to the validation exercise of

accountability reports. Consequently the PS/ST by way of a virement effected a

refund of UGX.2,958,105,650 equivalent of USD.1,124,755 to IDA Bank in New

York.

I explained to the Accounting officer that there is a risk that project activities were

not implemented as planned and management risks funding sanctions from the

Bank due to noncompliance with the loan agreement. The virement in the current

budget to refund the money implies that the planned activities in the current

budget could not be implemented.

Management explained that the ineligible expenditure was caused by individual

head teachers who chose to spend project funds outside the guidelines. These

head teachers were interdicted and some were being investigated by CIID and as

a result, some of the head teachers were paying back and the names of the errant

ones had been submitted to MoFPED to tag the funds on their retirement benefits.

I have advised the Accounting officer to ensure full recovery of the outstanding

ineligible expenditure from the errant head teachers. Future programmes of same

nature should also include detailed sensitisation of head teachers on the

procedures of implementation and utilisation of programme funds.

v) Government obligation arising from Delayed procurement process

The construction of 44 Schools (19 new and 25 for completion) were turned down

by the World Bank on the basis that the computations contained errors and they

were late as there was insufficient time to correct the errors and sign the contracts

to get the work completed by Project closure date of 31st July 2014. The amount

spent on the 25 incomplete Schools was UGX.1,454,214,518 and the estimated

cost up to completion is UGX 15,727,562,518 which gives rise to immediate

government obligation to implement the construction of the incomplete schools.

Management explained this was brought about by failure by the schools to

account for disbursed funds and that Government has committed to provide

resources to complete the unfinished activities in the financial year 2015/16.

589

I have advised the Accounting officer to pursue the matter urgently so as to avoid

further deterioration of the unfinished structures.

vi) Cancelled Schools

A total of 48 schools were cancelled during the IDA Implementation Supervision

Mission of the UPPET/APL1 project in April 2014 on grounds of having outstanding

issues with their financial records with possible interdiction of some head teachers

who were also still reluctant to terminate contractors contrary to technical advice

provided. It was noted that work resumed on six of them and two had been

completed as detailed in the table below:

School Status

Jubilee SS On Going

Nyakinoni SS On going

Puranga SS Completed

St Kizito SS Nakibano On Going

Nyabiteete SS Completed

Kiyeyi High School On going

The remaining 42 Schools were still un-attended to after a total of

UGX.6,140,261,629 was incurred on them. It was also noted that no measures had

been put in place to safeguard the developments which may result into their

destruction and therefore loss of the money spent so far. There is also the risk

that the intended project targets may not have been met.

The Accounting officer indicated that the cancelled schools were to be budgeted

for and constructed in the FY 2015/16 using GoU funds. I await the outcome of

management action.

b) Project implementation status

By June 30, 2014, USD.140,924,633.55 (94.04%) of the credit had been disbursed

and later the project closed on 31st July 2014. However, the status report showed

that some project component activities had not been completed and by the time

590

of Audit (November 2014), the following components had not achieved 100%

status of implementation. There is a risk that with the project closure, the

components may not be implemented fully.

Project

Component

Purpose (Sub components) Status (Nov 2014)

Increasing

equitable

access to

lower

secondary

schools

On-going construction of

Classrooms

87%

Improving

quality for

lower

secondary

education

Revised Curriculum framework for

lower secondary

95%

Supply of lockable metallic

bookshelves

90%

Management attributed the delay in project implementation to strict adherence to

procurement processes and preliminary activities such as need to adequately

prepare and train the different categories of actors involved in the project

implementation.

I have advised management to ensure steps are taken so as to ensure attainment

of the intended project objectives.

i) Incomplete and Delayed supply of School Furniture

By the close of June 30, 2014, 131 out of the 573 completed schools did not have

furniture of which 122 schools‟ furniture had been centrally procured. It was noted

that 30% of the centrally procured furniture contract were to be executed by 31st

July, 2014. This implies that 94 schools will not have furniture, (85 of the 122

schools will not be furnished from the project, and additional 9 complete schools

whose bills of quantities did not include furniture supply but were identified at

completion).

Although Management explained that Furniture for 122 schools has been delivered

to the central stores in the Ministry and is yet to be distributed to the beneficiary

schools, I was unable to verify the delivery to the central stores.

591

iii) Delayed Delivery of Procured Motor Vehicles

On 29th November. 2013, the Ministry signed a contract with M/S Toyota U Ltd to

supply 2 motor vehicles - Toyota Land cruiser (station wagon) at a cost of

USD.241,654,000.

Examination of payments revealed that the Ministry paid a total of

UGX.397,093,223 in 2 instalments vide Invoice No. UPPET124 of 30th April, 2014

(UGX.199,649,223) and Invoice No. R 730/Jun (UGX.197,444,000). However, by

the time of writing this report in December 2014, the vehicles had not yet been

delivered to the Ministry (project closed on 31st July 2014).

I explained to management that Delayed delivery defeats the purpose for which

the vehicles were required. Full payment for the vehicles amounted to pre-

financing the supplier.

The Accounting Officer explained that the vehicles were with the supplier and

were to be delivered to the Ministry. I have advised management to follow up with

the supplier and have the vehicles delivered.

46.0 MAKERERE UNIVERSITY


Paragraph 156 of the TAI provides that funds available under one item or sub-item

of expenditure may not be transferred to another item or sub-item save on the

authority of a virement warrant, nor may expenditure be charged to an item/sub

item merely because funds are available under that item/sub-item.

It was noted that UGX.969,917,237 was wrongly charged on item codes meant for

other activities other than those for which the expenditure was incurred.

Mischarge of expenditure is an indication of weaknesses in budgetary controls and

results into misrepresentation of balances in the financial statements to the extent

of the mischarged expenditure.

592

I advised the Accounting Officer to strengthen controls over budget execution to

avoid mischarge of expenditure codes.

b) Payment for Extra Load Allowance

During the year under review, the University spent a total of UGX.308,857,850 as

allowances for the extra lectures taught and work done during the weekends and

evenings. However, the basis of computation of individual payments, including

information relating to the total number of hours lectured above the standard

hours by each lecturer and rates were not availed to support the payments.

There was also no evidence of monitoring and supervision of teaching staff, who

taught outside the normal working hours. In the circumstances, the authenticity of

the payments could not be ascertained.

Management explained that at the time of the audit, some staff had not been

confirmed in the University service but this was later rectified. However, the

relevant supporting documents were not availed during the verification exercise.

I advised the Accounting Officer to:

ensure that payments for extra load allowances are properly supported with

evidence of having carried out the extra load activities.

ensure that the appointments are approved by the Appointments Board as

required.

formulate and institute a proper mechanism of monitoring and ensuring that

payment for extra load activities are undertaken.

c) Delayed and Non Deduction of NSSF Contribution

Section 11(1) of the National Social Security Fund Act, Cap 222 of the Laws of

Uganda, 2000 requires that every contributing employer shall, for every month

during which he or she pays wages to an eligible employee, pay to the fund,

within fifteen days following the last day of the month for which the relevant

wages are paid, a standard contribution of 15 percent calculated on the total

wages paid during that month to that employee. However, it was noted that the

University remitted UGX.1,256,828,654 to NSSF more than 15 days after the due

dates.

593

Also noted was that the University did not make deductions amounting to

UGX.338,830,110 as 5% employee contribution from staff salaries. This could

lead to loss of staff earnings in form of interest,in additionto exposing the

University to the risk of penalties by NSSF. The reported payables in the financial

statements are misstated in this regard.

Management explained that the affected staff had not yet been allocated NSSF

numbers which were later given and the University was in the process of remitting

the money to NSSF.

I advised the Accounting Officer to ensure that the deduction in respect of NSSF is

always effected and remitted in a timely manner.

d) Pension Liabilities

The University had outstanding pension liabilities of UGX.30,406,365,541 at the

close of the financial year. The following observations were made:

a) Unremitted DAP Arrears contributions

The University runs its own Retirement Scheme, Deposit Administration Plan

(DAP)where the staff contribute 5% deducted from their individual salaries while

the University contributes 10%.Included in the balance of pension liabilities is a

sum of UGX.10,632,082,369 in respect of deductions and contributions that

Management had not been deposited on the DAP Account by close of the year. In

the circumstances, the fund‟s ability to grow to cater for members‟ interest

earnings is limited and its sustainability is curtailed.

The Accounting Officer attributed the state of affairs of the DAP to underfunding of

the University which leads to payment of net accounts and leaving the

contributions to DAP as payables.

I advised Management to ensure timely remittance of contributions in accordance

with the provisions of the Fund to ensure its sustainability.

594

b) Unremitted NSSF Contribution Arrears

Section 11(1) of the NSSF Act, requires every contributing employer every month

during which he or she pays wages to an eligible employee to pay to the fund,

within fifteen days a standard contribution of 10 percent calculated on the total

wages paid during that month to that employee. On the contrary, it was noted

that the University did not remit UGX.601,706,641 for financial years ending June

2007 and June 2008 to the Fund. Non-remittance of contributions to the Fund

impacts on the staff savings inform of interest and could also attract penalties

from the Fund.

The Accounting Officer attributed the non-compliance to underfunding of the

University but indicated that they had started remitting the outstanding balances.

I advised the Accounting officer to engage the key stakeholders and ensure that all

the outstanding balances are remitted to NSSF to enable members earn interest

on their contributions and also avoid possible penalties.

e) Accumulation of Payables

Contrary to the Commitment Control Policy of Government, there was an increase

of UGX.14,412,306,708 (126%) in the reported payables from

UGX.11,409,981,432 (FY 2012/2013) to UGX.25,822,288,140 in FY 2013/2014.

There is a risk that the University may not be able to settle the creditors given the

current level of funding. It was also irregular for the University to continue to

accumulate domestic arrears without adequate funds to settle them.

The Accounting Officer explained that payables accumulated due to underfunding

of the University but efforts were being made to ensure that they are settled.

I advised the Accounting officer to adhere to the Government‟s Commitment

Control Policy and ensure that the outstanding payables are settled.

f) Unauthorized Over Expenditure

Paragraph 152 of the TAIs Part I, 2004 and section 17 of the Public Finance and

Accountability Act (PFAA), 2003 requires that expenditure not provided for in the

approved estimates of any financial year may not be incurred without the authority

595

of a Supplementary Estimates Warrant, a Virement Warrant or a Contingencies

Fund Advance Warrant. It was noted that the University incurred excess

expenditure of UGX.4,037,303,551 on the two items shown below without the

necessary approval.

Expenditure

Item

Budget Actual Expenditure Variance

Other operating

expenses

14,561,400,379 17,114,067,918 2,555,667,539

Domestic Arrears 780,000,000 2,261,636,012 1,481,636,012

TOTAL 15,341,400,379 19,375,703,930 4,037,303,551

I explained to the Accounting Officer that this practice suffocates other planned

activities whose budgeted funds are diverted.

The Accounting Officer attributed the anomaly to increased prices for students‟

food, unfavourable exchange rates for invoices that were quoted in foreign

currency and pressure to pay the domestic arrears as some creditors threatened

the University with court action.

I advised Management to ensure proper budgeting for all expenditure items to

avoid diverting funds meant for other activities. Furthermore, the Accounting

officer should always seek relevant authority prior for spending over and above

the budget.

g) Revenue Shortfall

Out of the budgeted Internally Generated Revenue of UGX.122,590,439,007 for

the year under review, the University collected UGX.103,076,996,162, resulting

into a shortfall of UGX.19,513,442,845 (16%). Failure to collect budgeted revenue

hindered the University from achieving its planned activities and also accumulating

domestic arrears.

In response, Management attributed the shortfall to the University tuition policy at

the time which gave room for students to pay 60% of fees and the 40% was

carried forward to subsequent years. It however indicated that the University had

taken corrective action and the current policy on tuition is such that all students

must pay100% tuition before sitting for the semester examinations.

596

I advised Management to enforce the fees collection policy to avoid accumulating

receivables which may eventually become uncollectable.

h) Management of Receivables

During the year, Receivables increased from UGX.630,545,566 to

UGX.4,914,675,690, indicating an increase of UGX.4,284,130,124 (680%). A

review of the supporting schedules revealed that a significant proportion of the

debts was in respect of tuition fees (UGX.3,706,164,617) not collected during the

year under review. There was laxity in enforcement of debt collection as there

were students who sat exams without settling the tuition fees contrary to the

University policy.

I explained to Management that accumulation of receivables hinders availability of

cash to finance University operations. There is also a risk that the debts may

eventually become uncollectable.

Management explained that a new unit called Makerere University Revenue

Services Unit had been created and mandated to ensure that fees collection is

enhanced. I advised Management to ensure enforcement of the fees collection

policy.

i) Staffing Gaps

A review of the University staff establishment revealed discrepancies between the

establishment structure and the filled positions. Out of the 2,780 approved

positions, only 1,484 (53.4%) positions were filled leaving 1,296 (46.6%)

vacancies.

I explained to the Accounting Officer that understaffing leads to work overload on

the existing staff and limits the ability of the University to effectively deliver and

achieve its mandate. There is also a risk that optimum teaching is not achieved,

which may affect the University products (students).

597

Management explained that the University had tried to uplift the staffing levels to

an optimal level, but the University Council could not handle the wage bill since it

caters for only 42% of the total wage bill annually.

I advised the Accounting Officer together with the University Governing Organs to

liaise with other stakeholders and address the matter of understaffing by recruiting

more staff to ensure effective service delivery.

j) Government of Uganda Payroll Validation Exercise

The Auditor General appointed Ernst & Young to undertake a payroll audit and to

validate and capture the biometric details of all Government of Uganda

Employees. It was noted that 95 members of MUK staff did not turn up for the

exercise. There is a risk of these employees being deleted from the Government

Payroll if at all they exist.

The Accounting Officer explained that the University was in touch with the Ministry

of Public Service to ensure that the affected staff are validated. It also indicated

that, 22 of the queried staff could not be traced and had been deleted from the

payroll, and the University Security Department was spearheading efforts to trace

and recover the money from the affected staff.

I advised the Accounting Officer to ensure that the traceable employees are

validated. I also await the outcome of the action being taken with regard to the 22

employees.

k) Non-Deduction of Taxes

Section 120 of the Income Tax Act, 1997, requires a withholding agent to pay

withholding tax to Uganda Revenue Authority (URA) within fifteen days after the

end of the month in which the payment for goods and services in excess of UGX.1

million was made. However, UGX.457,214,062 was paid to various suppliers

without deducting withholding tax at 6% and remitting it to URA. Failure to deduct

and remit taxes may attract fines and penalties from URA.

Whereas Management indicated that taxes had been deducted and remitted to

URA, no details of payment were availed for examination.

598

I advised Management to recover the un-deducted taxes from the respective

suppliers for onward remittance to URA in accordance with the Act.

l) Incompletely Vouched Expenditure

Paragraph 181 of the TAI requires all vouchers to contain full particulars of each

service or good and be accompanied by such supporting documents as may be

required so as to enable them to be checked without reference to any other

documents. However, UGX.76,742,813 paid in respect of various activities

including teaching and internship workshops and placements lacked the relevant

supporting documents like attendance registers and minutes.

In the absence of supporting documents, I was unable to confirm that the

expenditure was correctly incurred.

Whereas Management indicated that the supporting documents were available,

they were not provided for audit examination.

I advised the Accounting Officer to ensure that all expenditure incurred is

appropriately vouched and accounted for.

m) Under Utilization of the Integrated Tertiary System for Revenue

Collection

The University procured a computerized integrated tertiary software system (ITS)

in 2004 as a major part of the University‟s wide initiative to improveFinancial and

Human Resource management, and maintenance of Academic Records. The

system is constituted of three Modules, the ARIS (Academic Register Information

System), the FINIS (Financial Information System) and the HURIS (Human

Resource Information System).

It was noted that despite the expected benefits, all three modules were notfully

operationalized to reap the benefits of automation.

The following table summarizes the module components that are functional and

those that are not.

599

MODULES FUNCTIONAL MODULES NON FUNCTIONAL

ARIS

Registration Application and Admission Time table

Study Records Graduation

FINIS

Revenue Collection Assets ,Budgeting Procurement, Sundry

Debtors, Student debtors Code structure and General Ledger

Payroll, Cash Book

HURIS Non functional

This implies that the University is not deriving value for money from the

procurement and installation of the ITS.

Management explained that the system was acquired under donor funding but

later the University was meant to take it up. Due to the financial constraints the

University was faced with, it failed to maintain all the modules as earlier planned.

However, the Ministry of Finance, planning and Economic Development (MoFPED)

is introducing the Centralised Educational Management and Accounting System

(CEMAS) which is expected to replace all the modules with new ones.

I await the outcome of Government‟s intervention in this regard.

n) Failure by the System to Generate Reports

A review of the ITS revealed that the system was notable to generate a number of

reports which are considered important at Management level and for audit

purposes. Examples of reports that the system could not generate include the

following:

S/N Detail

1. Transaction of bank statement

2. Cost center Report for Revenue collections

3. Revenue & Expenditure Statement report

4. Report for Student Biographical Information

Failure by the ITS to generate certain reports implies that the system is not being

used by the University Management to make important decisions.

600

Management acknowledged the challenge but indicated that the Ministry of

Education and Sports (MoES) and MoFPED were planning to implement the

CEMAS, an IT platform for all Public Universities. I wait the outcome of

Government intervention in this regard.

o) Land Ownership

Review of documents of ownership of land belonging to the University revealed

the University owns various pieces of land in different locations with unspecified

acreage. While some of it is registered in the name of Makerere University Council,

other pieces of land are not. It was noted that in most cases there was delayed

renewal of lease agreements and land encroachment on University land by various

individuals claiming ownership of the land. Without evidence of ownership, it was

difficult to confirm that the land actually belongs to the University. There is a risk

of the University losing the land if not transferred into its name or having the

expired leases renewed. The table below refers;

Location Plot No. Acres Audit comment

Action taken

Kasangati 2.97 No lease agreement

The land is clearly fenced off and there is no illegal settlement. Boundaries have been opened and the process of obtaining the

lease title on-going.

Katalemwa F-N, BC, CD-CZ,DE-DL

43 No title Katalemwa covers total acreage of 82 and the University has 31 acres of land titled.

The boundary opening for this land was done

A formal land search at the Ministry of Lands, Housing and Urban Development was done.

Investigation of encroachment was being handled by the Police Land Protection Unit.

Makerere North

77, 88,103-119, 156-159,350,364

20 No title Boundary mark stone pillars were installed and a land search commenced for these plots before

further action could be taken.

Buyana 350 No title An instruction was issued to Surveyors on a frame work contract to process the title and work wason-going.

Lira Municipality

7-9 1.49 Expired lease The process of renewing the lease title was in the final stages, all necessary fees were paid and alease agreement signed and forwarded to the External

601

Location Plot No. Acres Audit comment

Action taken

Lawyers for final execution.

Katanga 1-47 31.73 Alterations made on the land title.

The land ownership dispute in Court and awaiting final ruling on this case.

Makerere North

239 1.08 Title is under the names of Amos KaluleSempa

The transfer forms for this land were obtained and a search issued to the land office to ascertain ownership before further action could be taken.

Makindye 14, 45, 57 14 Land encroachers

A court injunction was issued against the encroachers for trespass on the land and the matter was in court.

A caveat had been registered on

the land and the court hearing was due in February 2015.

Management explained that in order to address the land issues which were

inherited from past years, the University had engaged a surveyor to handle

cadastral issues and a law firm for legal issues, both on framework contract basis.

I await the outcome of Management‟s actions on the matter.

p) Lack of Staff Performance Plans

Staff performance appraisal is part of the performance management system that is

used as a management tool for establishing the extent to which set targets within

the overall goals of the organization have been achieved. It also helps identify

performance gaps and development of training needs of individual employees.

However, a review of the staff personal files revealed that they lacked annual

performance plans which would have been the basis for appraisal at the end of

the appraisal period. I explained to Management that there is a risk that staff

performance was not being properly planned, monitored and measured through a

staff performance management and appraisal system. This can lead to non-

performing staff being rewarded at the expense of those who are performing.

Management explained that the University was reviewing its Human Resource

Manual, and among the areas under review was performance management.

602

I advised the Accounting Officer, together with the Human Resource Department

to ensure that the University has a proper mechanism for staff performance

management and appraisal.

q) Operations of Makerere University Guest House

a) NSSF Remittances

Section 11(i) of the NSSF Act, Cap 222 of the Laws of Uganda, 2000requires every

contributing employer to pay to the fund, within 15 days next following the last

day of the month for which the relevant wages were paid, a standard contribution

of 15% calculated on the total wages paid during that month to that employee.

It was noted that whereas the Guest House was deducting NSSF contributions at a

rate of 5% from staff, there was no evidence to show that deductions amounting

to UGX.49,789,874 were remitted to NSSF together with the 10% employers‟

contribution.

Besides, most of the employees lacked NSSF Numbers and no effort had been

made by Management to have this matter addressed. Failure to remit NSSF

contributions exposes the Guest House and the University as a whole to penalties

and fines by the Fund.

Whereas Management indicated in their response that all arrears had been

subsequently cleared, I was not availed with evidence to this effect.

I advised Management to have all employees registered with NSSF and their

contributions (arrears and future) remitted to avoid penalties by the Fund.

b) Unremitted PAYE

Section 123 (1) of the Income Tax Act requires a withholding agent to pay to the

Commissioner any tax that has been withheld or that should have been withheld

within fifteen days after the end of the month in which the payment subject to

withholding tax was made by the agent.

603

However, it was noted that UGX.43,131,990 in respect of PAYE deductions from

staff salaries was not remitted to the tax body. This omission attracts penalties in

form of interest which the Guest House may have to pay.

Whereas Management indicated in their response that all arrears had been

subsequently cleared, I was not availed with evidence to this effect.

I advised the Accounting Officer to have all the money that was deducted from

employees as PAYE remitted to URA and also to ensure that all future deductions

are remitted in the stipulated statutory period to avoid possible penalties.

c) Failure to Disclose VAT

The Value Added Tax (VAT) Act, Cap 349 of the Laws of Uganda, 2000 requires

that all persons registered for VAT levy it on all transactions which are vatable and

that a VAT return is filed every month.

However, it was noted that Management of the Guest House did not furnish its

VAT returns to URA and yet the issued invoices were inclusive of VAT.

The Guest House Management‟s failure to declare VAT charged on supplies could

lead to penalties by the tax authority.

I advised the Accounting Officer to ensure that the Guest House Management

submits the required returns to URA.

r) Outstanding Debtors

It was noted that despite the fact that the Guest house is struggling to remain a

going concern, it had accumulated debtors to the tune of UGX.227,802,294 as at

30th June, 2014.

A review of the list of debtors revealed that the University departments were

among the biggest debtors for the services provided by the Guest House, to the

tune of UGX.133,042,055.

604

Whereas Management indicated that the debts had since been cleared, I was not

availed with evidence to this effect.

I advised the University Accounting Officer to ensure that the debts owed by the

various departments are settled to enable the Guest House settle its own

obligations.

s) Profit and Loss Account of the University Bakery

It was noted that the bakery has been making losses for the last two consecutive

financial years. The prior year loss was UGX.24,003,919, while a loss of

UGX.36,633,600 was incurred in the year ended 30th June, 2014. I explained to

the Accounting Officer that those are indications of the bakery becoming a non-

going concern.

Management attributed the huge losses to increasedcosts of production for the

Bakery and the fixed price of selling bread to the Halls. They further indicated that

the Bakery had been taken over by Makerere University Holdings Company which

is expected to turn it into a viable commercial unit. I await the outcome of

Management‟s intervention in this regard.

t) ECONOMIC POLICY RESEARCH CENTRE -MUK

a) Unacknowledged receipt of funds

A sum of UGX 62,020,000 was paid to enumerators to undertake research during

the year under review. However, it was noted that receipt of the funds was not

acknowledged by the beneficiaries. This practice leads to gaps in the

accountability process of the money involved which can result into

misappropriation of the funds.

Management explained that the funds were paid to 84 enumerators through their

Bank accounts whose details were provided and confirmed by the beneficiaries.

The payments to bank are always followed with notification to pay and these

payments are clearly indicated on the Bank statement.

605

I have advised management to ensure that payees acknowledge receipt of funds

received.

b) Adjustments made through journal vouchers

Best practice requires that any adjustments made in the accounts be supported by

properly authorized adjustment vouchers. It was noted that three journal entries

totaling to UGX.16,749,605 passed in the accounting system to correct book

keeping errors were not approved by management. There is a risk of intentional

misrepresentation of transactions on account balances going undetected.

Management acknowledged the anomaly and undertook to take action in future. I

await management‟s commitment in this regard.

u) NORWEGIAN PROGRAMME FOR CAPACITY DEVELOPMENT IN HIGHER

EDUCATION AND RESEARCH FOR DEVELOPMENT (NORHED) FUNDED

PROJECTS - MUK

a) Delayed Project implementation

It was observed that the implementation of projects was delayed especially the

signing of partnership contracts for collaboration to enhance capacity building

programs at the Universities. Consequently, a balance of USD.1,240,793

remained unutilized for the 7 month period ended 30th June 2014. The delay in

project implementation may affect the enrolment of new students under the

program in Higher Education Institutions.

In their response, management acknowledged the state of affairs which it

attributed to the following factors:-

delayed disbursement of funds by the donor

Inadequate descriptive financial information of the first disbursements which

did not synchronize with project details hence delaying access to the funds.

Some programme partners had not opened their respective accounts, making

it difficult for Makerere University to disburse institutional funds on individual

accounts.

606

NORHED was a unique programme involving not only many programmes, but

many distant partners, with different financial management systems, therefore

there was initial problem to study these systems and harmonize the different

procedures.

South Sudan became politically insecure making it insecure for staff to conduct

business with the Universities there.

A bigger proportion of the balances held on the A/C is for Tuition and Stipends

of the Ph.D. and Masters Students whose process of identification took longer

than anticipated especially from the partner institutions of University of Juba,

South Sudan and University of Agder, Ethiopia.

Delays in the procurement processes for items such as Computers and other

specialized scientific equipment.

Management undertook to provide the necessary support to all projects with

implementation of programme activities with a view to harmonizing and increasing

efficiency in budget performance. I await management‟s commitment in this

regard.

b) Funds not properly accounted for

i) Incompletely Vouched Expenditure

A sum of USD 12,247 was expended in respect of various project activities.

However, it was noted that the payment vouchers lacked appropriate supporting

documents like receipts, air ticket bookings, transfer slips, and schedule of

beneficiaries. Delayed accountability may lead to falsification of documents.

Management explained that at the time of Audit, some receipts and other

accountabilities were separately filed. In addition, the doctoral students to whom

funds had been advanced to procure laptops were still in Oslo, Norway. However,

management undertook to provide the accountability documents as soon as they

are available.

I have advised management to always ensure that payment vouchers are

supported with the necessary accountability documents.

607

v) MAKERERE UNIVERSITY: ADAPTATION OF SMALL SCALE BIOGAS

DIGESTERS FOR USE IN RURAL HOUSEHOLDS IN SUB SAHARAN AFRICA

PROJECT FOR THE 16 MONTHS PERIOD ENDED 31ST MARCH 2014

a) Compliance With Financing Agreement Provisions and

Government of Uganda Financial Regulations

It was noted that management had in all material respects complied with the

financing agreement provisions and Government of Uganda financial regulations

except for the following matters:

i. Funds not accounted for

A sum of Euros 137,326.624 advanced to 9 partners to carry out project activities

lacked relevant supporting documents contrary to Articles 2.1, 16.2 & 16.3 (Annex

II) of the Grant Contract. Unsupported expenditure may result into misuse of the

project funds thereby hindering implementation of the project.

Management explained that the funds disbursed to all partners were based on the

submitted funding requests and bank information that served as supporting

documents. Management undertook to ensure that other supporting documents

are obtained and kept by the Lead Applicant.

I have advised management to ensure that in future, all partners submit periodic

accountability returns in respect of the funds disbursed to them.

ii. Irregular Expenditure

Comparison of the approved budget and the actual expenditure for the financial

year under review revealed that the expenditure exceeded the budget on a

number of items by a total of Euros 10,758.54 without the relevant authority.

Activities whose funds were encroached upon may not be fully implemented.

Management acknowledged the anomaly which they attributed to posting of

figures to wrong budget lines. However, management undertook to ensure that

partner institutions correctly post report figures in the appropriate budget lines.


608

iii. Unauthenticated Bank Documents from Partners

During the first year of payment, it was noted that most of the bank statements

submitted by partners apart from Cameroon were not authenticated by their

respective bankers thereby rendering them doubtful.

Management in response acknowledged the anomaly and undertook to

communicate the same to all partner institutions.

b) General Standards of Accounting and Internal Control

It was noted that management‟s control structure environment, accounting system

and policies and control procedures were generally adequate to ensure prudent

use of, and accountability for all project expenditure except in the following

instances:

i. Unabsorbed Funds

During the year under review, a sum of Euros 61,311.06 was disbursed to several

Project Partners to undertake various activities. However, the funds remained

unutilized by end of the period under review. There is a risk of delayed completion

of project activities and/or diversion of funds which may result in funding

sanctions.

Management attributed the state of affairs to low burn rates for some partners

due to a delay in project start time yet some partners‟ activities depended on

others‟ output. I have advised management to ensure that all funds are absorbed

in accordance with the workplan.

c) Status of Project Implementation

During the year under review a total of Euros 258,161.37 was disbursed to various

African Union Commission Project partners implementing the project. Field

inspections were carried out in a selected number of beneficiary homes in Uganda

in the Districts of; Luwero, Kiboga, Mpigi and Buikwe among others to review the

status of project implementation and the following anomaly was noted:

i. Project Monitoring Costs

609

A review of the project documents revealed that no provision was made for the

principal investigator or an independent person to undertake monitoring and

inspections of project implementation. Without proper monitoring and inspection,

there is a risk that any deviation may not be detected and corrected in a timely

manner.

Management explained that this matter was communicated to African Union

Commission to permit budget reallocation to include monitoring costs. I await

the outcome of management‟s action in this regard.

46.1 SUPPORT TO RESEARCH ACTIVITIES AT MAKERERE UNIVERSITY

FUNDED BY THE SWEDISH INTERNATIONAL DEVELOPMENT

COOPERATION AGENCY (SIDA)

I. COMPLIANCE WITH FINANCING AGREEMENT PROVISIONS AND

GoU FINANCIAL REGULATIONS

It was noted that the Project complied in all material respects with the Financing

Agreement provisions and Government of Uganda Regulations except for the

following matter:

I.1 Unauthorized over expenditures

A number of budget lines were overspent to the tune of UGX.2,483,197,182 (Refer

to table below) without the necessary approval in the form of

virement/reallocation warrants. In the circumstances, the expenditures are

deemed ineligible.

Management attributed the anomaly non revision of budget allocations since 2010

and consequently, allowing researchers to continue with their activities without

sufficient funding on the items so long as the central account still had funds.

610

Expenditure Item Budget

(Ugx)

Actual

(Ugx)

Over

(Ugx)

Travel abroad 876,643,694 1,226,395,691 349,751,997

Machinery &

Equipment

477,274,593 589,605,277 112,330,684

Scholarships-

fieldwork

1,094,481,724 1,644,799,380 550,317,656

Scholarships-

unforeseen

31,570,754 152,785,205 121,214,451

Scholarships-

subsistence

2,011,125,531 3,360,707,925 1,349,582,394

Total 4,491,096,296 6,974,293,478 2,483,197,182

I have advised the project management to always revise their budgets in

accordance with the level of activities to be undertaken.

I.2 Irregular procurement of goods

It was noted that procurement of goods worth USD.56,106(UGX.147,839,310) for

E-Resources from M/S International Network for the Availability of Scientific

Publications(INAP) was not approved by the Solicitor General as required by the

PPDA Act 2003. In the circumstances there is a risk of being party to unfavourable

contractual obligations.

611

Management in response indicated that the transfer of USD 56,106 was a

subscription fee for E-resource, a research site negotiated between the University

and the supplier through an agreement which is reviewed every three years.

I have advised management to always seek approval of the Solicitor General for all

procurements in excess of UGX.50 million as required under the PPDA Act.

II. GENERAL STANDARDS OF ACCOUNTING AND INTERNAL CONTROL

II.1 Project funds not accounted for

A sum of UGX.567,731,120 that was spent on various project activities during the

financial year lacked appropriate supporting accountability documentscontrary to

the Project operational guidelines. In the absence of such documentation, I could

not ascertain the correctness of the expenditure.

Management attributed the delayed accountabilities to circumstances beyond the

control of some researchers such as conditions that had to be fulfilled before they

could proceed with other funded activities on a given research. I have advised

management to always ensure that project funds are promptly and properly

accounted for.

II.2 Inappropriate application of Exchange Rates

The application of exchange rates during the year under review was inconsistent

with generally accepted accounting practice. The project used exchange rates at

the dates when remittances were received from the SIDA and such rates would

remain operational until the subsequent remittance. In the circumstances, there is

a risk of misrepresentation of the operating results of the project as they may not

have been translated into the functional currency (UGX) at the correct rates.

Management in response explained that it was viable to use set rates at given

periods to avoid frequent fluctuations which worsen at the time of the

transaction.I have advised management to ensure that rates applicable on the

date of transactions are used.

II.3 Mischarge of expenditure

Procurement of computers worth USD.13,100(UGX.34,518,500) from a local firm

was wrongly classified under Scholarships subsistence budget line thereby

distorting the operating results of the Project.

612

Management explained that the equipment was charged on scholarship because

all moneys received on exchange gains and interest earned is accumulated under

scholarships as it is received unexpectedly. However I have advised the project

management to always budgetand spend such windfall gains in accordance with

the existing budget provisions.

III. STATUS OF PRIOR YEAR AUDIT RECOMMENDATIONS

I reviewed the implementation of the previous year audit recommendations and

the following table summarises the status of those still outstanding.

Observation Status

Inadequate management of fixed assets

(incompletefixed assets register, some assets

not engraved and lack of a maintenance

schedule for assets like heavy duty Photocopier

and Lab testing Machines which have

manufacturers‟ recommendation of usage and

service)

Partially addressed

I have advised management to address all the audit issues and recommendations

made in the previous reports as they are intended to enhance efficiency of

operations, accuracy of financial reporting and compliance with the applicable

legislation

47.0 MAKERERE UNIVERSITY BUSINESS SCHOOL

a) Outstanding Payables

Section 1.1.5 of the School Accounting Manual 2012 requires settlement of

outstanding dues within 30 days from the date of receipt of invoice. However, a

review of payables revealed that a balance of UGX.5,081,938,136 remained

outstanding at the close of the year under review. By the time of writing this

report, a total of UGX.3,562,439,292 had been settled leaving a balance of

UGX.1,519,498,844 unsettled. This is contrary to the commitment control system

613

which prohibits entities from entering into commitments unless funds are

available.

Management explained that the School largely depends on NTR which is normally

received between mid-May and June when students are to sit their final exams. I

have advised management to comply with the commitment control system.

b) Unauthorised Excess Expenditure

Section 2.5.1 of the MUBS Finance and Accounting Manual 2012 requires

management to effect re-allocations between expenditure line items, within the

same vote, only after approval by the Secretary to Treasury in accordance with the

Public Finance and Accounting Regulations, 2003.

During the year under review, the School sought for a virement /reallocation of

funds amounting to UGX.3,592,572,343 to enable the School cater for additional

staff recruitment and the need to enhance the welfare of science staff. It was

noted that although the request was granted by the PS/ST, the school still

incurred UGX.1,936,187,681 over and above the approved estimates on various

expenditure line items without the necessary approval. Incurring expenditure

without the requisite approval of any amendments to the budget was irregular.

Management in response attributed the anomaly to some challenges faced with

respect to four items namely employee costs, professional services, travel and

transport, and maintenance of grounds and buildings.

I have advised management to always follow the prescribed procedures prior to

incurring excess expenditure.

c) Unapproved ICT Policy

Section 40(2)(b) of the Universities and Other Tertiary Institutions Act, 2001

outlines the formulation of the general policy of the Public University (School) as

one of the responsibilities of the University Council.

614

The purpose of an Information and Communications Technology (ICT) Policy is to

streamline the management of an Organization‟s ICT activities with regard to

acquisition, utilization, development and sustainability. However, it was noted that

the Draft ICT Policy was never approved by the School Governing Council although

management had been using it since 2010. The lack of Council‟s approval makes it

difficult to enforce the provisions in the Policy.

Management explained that the draft policy was being reviewed and expected to

be submitted to Council for approval by the end of financial year 2014/2015.


d) Student Records

Section 9.4.4 (f) of the School‟s Human Resource Manual 2009 states that it is the

responsibility of the School Registrar to liaise with the School Bursar to maintain

and update the students‟ database including registration and examination records.

On the contrary, management did not maintain a comprehensive record of

students during the year under review. The records lacked vital information such

as nationality and sponsorship (Private or Government). In the circumstances,

proper management of student affairs is rendered difficult. Additionally, there is a

risk of misstating the revenue collected from privately sponsored students.

Management explained that the School maintained a comprehensive record in the

form of a nominal role. I have advised the Accounting Officer to ensure that a

student database is maintained as required under the Manual.

e) Transfer of Staff Loan Recoveries

The School operates a loan account with Bank of Africa- Jinja road, Kampala out of

which low-interest loans are extended to staff and recoveries deposited back on

the same account. During the year under review, a total of UGX.1,179,009,120

was recovered from staff loans. However, it was noted that recoveries for the

months of May and June 2014 amounting to UGX.222,832,405 had not been

deposited on the designated loan account. I explained to management that this

negatively impacts on the would-be interest income accruing from the loans.

615

Management explained that the delay to deposit the money on the loans account

was caused by challenges in cash inflows.

I have advised management to ensure timely transfer of loan recoveries to the

designated account to enable other staff also benefit from the loan scheme.

f) Contract not cleared by the Solicitor General

Regulation 225 (2) (f) of PPDA Regulations, 2003 stipulates that a contract

document, purchase order, letter of bid acceptance or other communication in any

form conveying acceptance of a bid that binds a procuring and disposing entity to

a contract with the provider, shall not be issued prior to approval by all relevant

agencies, including the Attorney General.

Management hired office space at MTAC at a contract sum of UGX.152,707,104

without approval of the contract by Solicitor General which was attributed to

inadequate Government valuer‟s report:

Failure to have the contract cleared by the Solicitor General exposes the School to

a risk of financial loss in the event that there are disagreements with MTAC.

I have advised management to get clearance from the Solicitor General‟s Office

and heed the legal advice provided.

Management explained that although the contract had delayed to be cleared by

the Solicitor General, they relied on the relationship already established with MTAC

supported by an earlier contract cleared by the Solicitor General. They further

explained that any further delays to pay would have resulted into MTAC

terminating the relationship.

48.0 UGANDA MANAGEMENT INSTITUTE

a) Accumulation of Payables

Payables increased from UGX.2,630,011,183 to UGX.6,831,472,117 representing

160% increment from the previous financial year. Accumulation of payables

exposes the Institute to a risk of litigations and the attendant costs.

616

Besides, there was no payables management policy to enable the Institute monitor

and pay its creditors.

Management acknowledged the lack of payables management policy and

undertook to take measures to reduce the risk exposure.

A Payables Management Policy should also be instituted to enable timely

settlement of obligations.

b) Receivables

The Institute Debt Management policy requires all trade debtors to be allowed a

grace period of 30 days from the date of the invoice. It was noted however that

receivables increased from UGX.5,607,228,689 to UGX.7,642,135,737 representing

an increase of 36.29%. Included in these receivables is „other accounts receivable‟

comprising mainly student debtors of UGX.7,332,342,516 of which

UGX.3,577,080,183 relates to the period 2010-2012 and UGX.818,900,355 to

earlier periods.

I informed management that an inadequate cash position undermines settlement

of liabilities as they fall due. The accumulation of the receivables is attributed to

laxity of management in enforcing the debt management policy of the Institute.

The analysis below refers;

Analysis of Debtors

Bal b/f F/Y 2010/11 F/Y 2011/12 F/Y 2012/13 F/Y 2013/14 TOTAL

818,920,355.79 1,048,794,675.36 734,006,846.04 1,793,630,660.93 3,246,783,199.52 7,642,135,737.64

Management undertook to enforce the debt collection policy more consistently. I

have advised the Accounting Officer to consistently enforce the debt management

policy, so as to improve the cash position and subsequently settle the Institute‟s

payables.

c) Delayed contract Execution

617

The Institute engaged an international construction firm in March 2012 to

construct a new Classroom and Office Block, at a contract sum of UGX.

21,324,058,054. The completion date of the works was September 2013. However

by the time of the audit, in February 2014, the works had stalled at structural

level. It was also noted that the performance security had expired. Without

renewal of the performance security, there is a risk of financial loss in the event of

failure to execute the contract to its completion.

Management attributed the delayed execution of works to cash flow challenges

and indicated that the construction would be completed using funds from AfDB

under the HEST project. I advised the Accounting Officer to ensure that adequate

funds are provided to complete the works. The performance Security should also

be renewed.

d) Rehabilitation of the Hostel

A local construction firm was awarded a contract for rehabilitation of a hostel at

UGX.2,543,323,798 (including a variation of UGX.163,931,252). By the time of the

audit, UGX.1,589,061,770 had been paid representing 67% of the value of work

done. Whereas the completion date was October 2013, inspections carried out in

November 2014 revealed that the works were incomplete and had since stalled.

Delay to execute the rehabilitation works to completion may lead to escalation of

c

o

s

t

s

Left: Three completed blocks Right: Three hostel blocks which stalled

Management explained that the works stalled because of cash flow challenges and

that construction would resume when funds are collected from the debtors.

I advised the Accounting Officer to enforce debt collection strategies and finalize

the construction as envisaged.

618

e) Understaffing at the Institute

The Uganda Management Institute has an approved establishment structure of

219 posts, out of which only 182 (83%) were filled leaving 37 vacancies. The most

affected departments were the Quality Assurance, Procurement, Planning, M&E,

Projects and Monitoring, SDL and IT, Research center, which lacked Heads of

Department and staff.

Failure to fill all approved posts impacts negatively on the effective delivery of

services by the Institute. Management undertook to fill the vacant positions in

phases and in accordance with the existing recruitment Plan.

I await the outcome of management undertaking.

49.0 MBARARA UNIVERSITY OF SCIENCE AND TECHNOLOGY

a) Unauthorized Excess Expenditure

The University incurred excess expenditure of UGX.680,036,286 over and above

the appropriated amount on Research, Consultancy, Publication and

Administration and support services without relevant authority.

Management attributed the anomaly to excess revenue collections and inability to

obtain authority to spend during the year under review. In the circumstances, the

intentions of the appropriating authority are undermined.

I have advised management to always seek the necessary approval prior to

incurring expenditure in excess of the approved amounts.

b) Outstanding Commitments

The University reported in its financial statements payables UGX.5,404,564,479 as

at 30th June 2014. Included in the reported balance is UGX 4,442,293,176 in

respect of salary arrears due to non-teaching staff, out of which UGX

4,185,159,868 had been settled by the time of audit. Also noted was that the

payables included NSSF arrears of UGX.245,306,319 and a long-outstanding

obligation of UGX.420,000,000 due to the former owners of the University Inn.

619

I explained to management that accumulation of domestic arrears contravenes the

Government Policy on commitment control and may attract litigation from long

outstanding creditors. The NSSF obligation could attract fines and penalties as

well.

Management explained that requests had been made to MoFPED to provide funds

to settle the obligation. I have advised management to ensure that the

outstanding obligations are settled to avoid possible litigations and their attendant

costs.

c) Management of Receivables

Management reported a receivables balance of UGX.698,323,077 in the statement

of financial position as at 30th June 2014. A sum of UGX.478,105,350 had been

collected by the time of audit, thereby leaving a balance of UGX.220,217,727. A

review of the supporting schedule revealed that the debts were owed by sponsors

of private students. Also noted was that some students sat exams without settling

tuition fees contrary to the existing University policy. This is an indication of laxity

on the part of the University administration to enforce debt collection policy.

Accumulation of receivables hinders availability of funds for University operations.

Management explained that the University had introduced mechanisms for

tracking defaulters which was expected to mitigate the problem. I await the

outcome of management‟s intervention in this regard.

d) Budget Performance

The University received a total of UGX.22,656,019,762 during the year under

review, against an annual appropriated budget of UGX.21,817,082,000

representing a percentage performance of 103.8%. However, it was noted that

whereas the University realized revenue over and above the bulk of the

appropriated funds during the year, some key planned activities were not

implemented as detailed in the table below:

620

KEY OUTPUT PLANNED OUTPUT ACTUAL VARIANCE

Research Consultancy and

Publication

Conduct 35 Research studies, make 16

Publications, Hold 4 public lectures 8

Research workshops and 1 research

Dissemination

Conference

Conducted 28 research studies,

made 7 publications, held 3 public

lectures,11 research workshops and 1

research

dissemination conference

7 Research studies not held,9 Publications not

made,1 public lecture not held

Purchase of

Office and ICT Equipment

including software

Networking of 1 level

of science block,40 desk top computers

for laboratories,2 wireless outdoor

points, Network equipment, website

camera

Procured 40 Desktop

computers for laboratories,1CISCO

Switch for ICS, Wall network cabinet for

FoM, completed networking of 4TH

floor science block

The procurement

process for network fiber switches,

bandwidth optimization tool and

server was at evaluation stage.

Failure to implement planned activities undermines the University objectives.

Management attributed the state of affairs to the long procurement process that

was still in progress by the end of the year under review. I have advised the

accounting officer to always ensure that procurement processes are properly

planned and undertaken early enough to enable management implement planned

activities.

e) Investment in Shares

During the audit, it was noted that management invested in bank of Baroda with

5000 shares equivalent to UGX.3,000,000 in 2002. However, contrary to Treasury

Accounting Instructions, the following anomalies were noted:

The University did not have an investment policy in place.

There was no due diligence report showing the viability of the investment.

There was no revaluation carried out at the end of the financial year since

2002, this leaves the investment presented at the nominal value in the

financial statements hence misrepresenting the value of the investment to

date.

Management does not maintain any investment ledgers that are meant to

indicate the nominal amount of investment, income received, actual cash paid

representing the capital invested and duration of the investment.

621

In the absence of the above, I could not confirm the justification of the

investment.

Management in response explained that the shares were bought as one of the

initiatives of income generation for the University. I have advised management to

formulate policy guidelines on investment proposals.

f) Incomplete Fixed Assets Register

It was noted that the University did not maintain an updated fixed assets register.

I explained to the management that failure to maintain the register renders the

monitoring and tracking of the University assets difficult.

Management in response attributed the anomaly to posting of values, to a number

of assets. However, an adhoc Valuation Committee had been established to come

up with asset values whose work is yet to be completed. I await the outcome of

management action in this regard.

g) Outstanding Advances

A sum of UGX.17,407,000 advanced to various staff for official activities remained

outstanding contrary to paragraph 217 of the Treasury Accounting Instructions

2003, which requires accountabilities to be submitted within 60 days from the date

of payment. Delayed accountability may result into falsification of accountability

documents.

Management explained that the concerned staff had been advised to submit the

accountabilities for verification. I have advised management to ensure that

advances are accounted for or else recovered.

622

50.0 KYAMBOGO UNIVERSITY

a) FINANCIAL STATEMENTS

i. Misstatements in the Financial Statements

A review of the financial statements presented for audit revealed the following

misstatements;

The statement of financial performance reflects total expenditure of

UGX.66,995,757,620 which excludes accrued expenditure of

UGX.4,619,832,348, as shown in the statement of outstanding commitments

as at 30th June 2014.

Whereas the Appropriation Statements reflect total expenditure of

UGX.66,995,757,620, the statement of Expenditure reconciliation reflects total

expenditure per appropriation account as UGX.64,528,959,341, leading to an

unexplained variance of UGX.2,466,798,279.

The receivables figure of UGX.4,983,181,359 includes a total of

UGX.4,716,181,435 related to outstanding students‟ fees. However this figure

is not supported and analysed by management to indicate the details of the

debtors such as students‟ name, programme/year of study and the respective

faculties where such amount is due. Besides the bulk of this amount (i.e.

UGX.3,343,584,532) is not allocated to any specific faculty, but is shown as

due from „Revenue collection stanbic‟ with no proper justification.

The above errors imply that the financial statements are misstated. Although the

Accounting Officer committed to having them corrected, this had not been done

by the time of concluding this report in March 2015.

ii. Lack of budget provisions for domestic arrears - UGX.959,827,755

A total of UGX.959,827,755 was paid to suppliers in respect of unpaid invoices

relating to previous years. However, a review of the University records revealed

that although the University budgeted for settlement of domestic arrears, these

particular arrears had not been reflected in the financial statements for the

preceding year and accordingly, had not been budgeted for in the year under

623

review. Under the circumstances, I could not confirm whether the arrears and the

corresponding payments were genuine transactions. Payments for unbudgeted

expenses, tantamount to unauthorized expenditure and also leads to diversion of

funds meant for other planned activities.

The Accounting Officer explained that the University paid the above amount of

domestic arrears without adequate budget provision in the FY 2013/14, but also

indicated that going forward, the University shall endeavor to minimize arrears,

and when they occur, will be adequately budgeted for in the subsequent financial

year.

I have advised the Accounting Officer to always ensure that only budgeted for

expenditures are incurred by the University, or else use the options available

under the Budget Act, 2001, to request for a supplementary estimate to cater for

such unplanned expenditures.

iii. Failure to adhere to the Commitment Control System

Contrary to the commitment control system which requires Accounting Officers to

commit the entity to the extent of funds availability, a review of the statement of

financial position revealed that the entity has continued to incur domestic arrears.

It was noted that the University payables increased by 49% from

UGX.2,549,415,022 as at 30th June 2013 to UGX.4,983,181,359 as at 30th June

2014. Failure to adhere to the commitment control system leads to delays in

settlement of supplier invoices, which can lead to loss of goodwill as well as

imposition of interest charges on outstanding amounts.

In his response, the Accounting Officer explained that the increment in the

payables figure was mainly due to the salary arrears arising from the failure by the

Ministry of Finance, Planning and Economic Development (MOFPED) to remit on

time UGX.2,860,377,118 for staff salaries and gratuity for the month of June,

2014.

I advised the Accounting Officer to always adhere to the regulations and ensure

that commitments are only allowed to the extent of the available funds.

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iv. Management of Receivables

The University reported receivables and prepayments of UGX.1,695,217,227 by

the close of the year. Of this amount, UGX.1,428,217,303 relates to student‟s fees

while UGX.266,999,924 relates to other debtors. The University has a policy which

requires full settlement of fees before students are allowed to sit for exams. Strict

implementation of the policy would mean that no debtors would arise from unpaid

fees. The presence of significant balances of unpaid fees is an indication of laxity

on the part of management to implement the University policy. This increases the

risk of non-payment of fees by students, thus denying the University the much

required funding.

In his response the Accounting Officer explained that the fees arrears related to

State House. Statehouse requested the University to allow the sponsored students

to sit their examination before paying fees pledging to pay later. It was further

noted during scrutiny of correspondences between State House and the University

on the matter, that State House owed the University UGX.1,298,349,081 and by

30th January, 2015, it had paid a sum of UGX.1,251,270,988 leaving a balance of

UGX.47,078,093 outstanding. Considering the above development, receivables

amounting to UGX.129,868,222 relate to other students other than those

sponsored by State House. I advised the Accounting Officer to consider fully

implementing the set policies of the University regarding payment of University

dues.

b) REVENUE

i. Failure to collect Revenue from staff rentals – UGX.180,966,472

For the period under review, the University let out 120 units of its houses to staff

for accommodation at a monthly rental fee agreed upon in the individual contracts

with staff, which was recovered at source from staffs‟ monthly salaries. It was

noted however that the University had outstanding rental dues totaling to

UGX.180,966,472 as at 30th June 2014.

The Accounting Officer explained that the failure to effect rental deductions was

due to a problem of payroll management during the FY 2013/14 when Ministry of

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Public service was shifting to IPPS. He explained that for the period from July to

September, 2013, deductions were made by MoPS, whereas from October, 2013

to April, 2014 no deductions were made due to the transition process from Legacy

to IPPS. However, although he indicated that the amount has since been

recovered, I was not provided with sufficient documentation to confirm recovery

of the amount involved apart from a schedule indicating indebtedness by staff. I

have advised the Accounting officer to recover the amounts due from staff and

provide proper accountability.

ii. Failure to collect outstanding rental fees from private businesses - UGX.42,457,276

The University hired out spaces to private businesses and the National Council for

Higher Education (NCHE) from which it collects rent. At the close of the year, it

was noted that unpaid rental fees had accumulated to UGX.42,457,276 over the

years. There is no evidence that the University has taken adequate steps to

recover the outstanding rental dues. Further noted was that this amount was not

included in the receivables balance as at 30th June 2014, implying that the

receivables balance was misstated.

The Accounting Officer acknowledged that the University did not fully collect the

rent due, but was making progress towards recovery of the outstanding amounts.

I have advised the Accounting Officer to institute mechanisms to recover all

outstanding rental dues and in future, consider putting in place strong controls to

prevent accumulation of unpaid rental dues. In addition, the amount in question

needs to be reflected in its books of accounts.

iii. Unpaid Hall Fees - UGX.62,560,000

Privately sponsored students housed in the University halls are required to pay

UGX.920,000 per annum (UGX.460,000 per semester) as accommodation fees.

The fee is payable to halls of residence A/c No:9030005812444 in Stanbic

bank, which is the sole recipient of hall accommodation payments.

A comparison of the nominal roll sheets for all privately sponsored students

accommodated in the University‟s halls, with the Halls of residence account bank

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statement, revealed that 68 students appeared on the nominal sheets but had no

corresponding payments on the halls of residence account bank statement. This

translated into a possible loss of UGX.62,560,000 to the University in uncollected

revenue.

The Accounting Officer explained that many students normally reside in the halls

of residence in one semester and leave in the next at will. He requested to

reconcile the figures and report back. However, by the time of writing this report

(in March 2015), I had not yet received any feedback in regard to this matter.

I have advised the Accounting Officer and the University Bursar to expedite the

reconciliation and ensure that the amounts due are fully recovered from the

students and properly accounted for.

iv. Non collection of rent from businesses operating illegally in the

University

In my special audit report to Parliament of October 2014, I noted that a number of

businesses were operating illegally within the University. By January, 2015 a

number of these businesses had neither been regularized nor discontinued from

operating within the University. In addition, several of these private businesses

were operating without valid contracts and were not paying rent for the spaces

occupied, and for the utilities, such as water and electricity consumed.

The Accounting Officer explained that the University through the Chief

Government Valuer, appointed a technical committee which identified and

assessed all small businesses in the University. A report was prepared and

submitted to the contracts committee to guide the tendering process. The

contracts committee completed the award process and contracts are to be signed

soon. In addition, he appointed an implementation committee which among other

things is to ensure that the recommendations of the technical adhoc committee

are implemented.

I advised the Accounting Officer to expedite the process of contract signing by all

business operating within the University. In the meantime, I await the outcome of

management‟s commitment.

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v. Banks operating in the University premises without paying rent and/or valid contracts

Kyambogo University has got three banks operating within the University premises

namely; Stanbic Bank, Eco Bank and Crane Bank. The University invited and

contracted Eco Bank and Crane Bank for provision of banking services. Audit

review established the following;

Although the banks modified University premises, I was not availed evidence

of authorization by the University. Besides, it was not clear as to what was the

cost of such modifications, as well as who was to bear the associated costs.

The tenancy agreement with Stanbic bank expired on the 31st September

2007 and has since not been renewed.

The contracts between the University, Eco Bank and Crane Bank did not have

special conditions of service attached and they were open ended with no

contractual period.

There is no record of payment of rent by these banks for the use of University

premises with the exception of Stanbic bank which last paid rent in the FY

2012/2013.

In the absence of valid tenancy agreements and comprehensive contracts, I was

unable to ascertain the actual rent due from Eco Bank and Crane Bank and the

minimum service standards expected by the University.

In his response the Accounting Officer stated that University procured two Banks

(ECO Bank and Crane Bank) to provide the University with banking services

through a procurement process. The cost of renovation was to be met by each of

the said banks. The University recently contracted valuers to value the said

premises for the purpose of contracting and that the report had just been

received. The legal section was drawing up tenancy agreements between the

University and the banks. He further explained that the contracts will address the

issue of special conditions of contract, their comprehensiveness and the recovery

of arrears of rent due to the University from the date of commencement of

operations at the University.

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I have advised the Accounting Officer to expedite the process of securing

comprehensive contracts and tenancy agreements with the banks and ensure

recovery of arrears of rent.

i. Revenue from the University Farm: Outstanding credit sales to

departments – UGX.15,571,150

The University owns a dairy farm as one of its income generating ventures. By the

time of the audit, the farm had 87 heads of cattle and 27 pigs. The farm generates

revenue from credit sales of milk, mainly to University departments who pay into

the University farm account. An analysis of the records availed revealed that for

the period under review, the farm made total credit sales of UGX.24,029,650 to

various departments. However only UGX.8,458,500 was received from the

departments leaving a balance of UGX.15,571,150 unpaid.

In his response the Accounting Officer indicated that the actual recoveries were

UGX.12,113,700 and not UGX.8,458,500. However, scrutiny of the additional

payments revealed that they were made during the period from July, 2014 to

January, 2015 and there was no evidence to show that they were related to the

amounts in question. Failure to effect the full remittances implies that the farm

may be denied of revenue to implement all its planned activities.

I have advised the Accounting Officer to follow up this matter and ensure that the

departments clear their indebtedness to the University farm.

c) EXPENDITURE

i. Unauthorized Over Expenditure – UGX.5,135,749,119

Contrary to Section 17 of the PFAA, 2003, as well as, the University and other

Tertiary Institutions Act, 2001, an analysis of budget estimates and the actual

expenditure of the University for the financial year under review revealed that the

budget lines on Teaching and Training, Research, consultancy, and outreach

students‟ welfare were overspent by UGX.5,135,749,119. I was not availed any

evidence of authorization by way of approved reallocation or virement warrants,

as is required by the PFAA.

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Overspending on one budget item suffocates the implementation of other planned

activities. Notable among them was the planned renovation of buildings where

actual expenditure was a meagre 25% of the approved budget. This explains why

many of the University buildings are in a sorry state. Besides, the practice of over

spending on certain budget lines undermines the intentions of the University

Council on specific University objectives.

The Accounting Officer explained that the over expenditure was due to under

budgeting in regard to this important sector of the University. I have advised the

Accounting Officer to always ensure adherence to budgetary discipline and where

circumstances do not permit, to always seek Council approval before incurring

such expenditures.

ii. Mischarge of expenditure – UGX. 978,727,963

The University uses the Government of Uganda Chart of accounts, which defines

the nature of expenditure for each item code. The Chart of accounts is intended to

facilitate better and consistent classification of financial transactions and also track

budget performance per item in line with the approved budget. During budgeting,

funds are tagged to particular activities and outputs using account codes and are

appropriated accordingly.

Contrary to the above, in the financial year under review, it was noted that

Expenditure totaling to UGX.978,727,963 was wrongly charged on budget lines to

fund activities that had not been provided for under those budget lines. This

practice undermines the importance of budgeting process, as well as the

intentions of the appropriating authority to instil budget discipline. The practice

further leads to misleading reporting and affects the credibility of the financial

statement figures, since they do not reflect the true amounts expended on the

respective items. It also undermines the budgeting process and it is a violation of

the principle of proper accountability as stipulated in the TAI and gives avenues

for diversion of funds.

The Accounting Officer explained that items were wrongly classified and they were

to be re-classified in the final accounts. However, I was not provided with

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evidence of re-classification of the items in question. I advised management to

ensure adherence to approved budget provisions unless proper authority for

reallocation is obtained from Council.

iii. Unexplained deductions - UGX.239,465,087

A review of bank statements, bank reconciliation and cash books of Faculty of Arts

account No:9030005812975 and School of Management account

No:903005705044, revealed that Stanbic bank made deductions unknown to the

University management totaling to UGX.239,465,087 with unclear descriptions

including: ATM cash withdrawals, Fee-Coin Deposit, among others. When

contacted, the University accounts staff explained that the deductions were

unknown to them and that the Accounting Officer had written to the bank seeking

for details and explanations. However, there was no documentary evidence to that

effect and by the end of the audit, the issue had not yet been resolved between

the banks and the University.

I have advised the Accounting Officer to closely follow up these transactions with

the banks and ensure that the amounts irregularly deducted are recovered from

the banks.

Payment of Allowances

The Uganda Public Service Standing Orders, 2010 Section (E-a) defines an

allowance as a payment in cash additional to salary, that is payable to an officer to

facilitate the proper execution of an assignment or duty. The allowance should be

regulated and properly explainable. For the period under review the University

paid a number of allowances to its staff, some of which had no justification and/or

were not provided for in the Terms and Conditions of Service for Members of Staff

of Kyambogo University. The details are discussed in the following paragraphs;

a) Extra Load Allowance - UGX.40,145,000

According to Section 27 (b) of the Terms and Conditions of Service for Members of

Staff of Kyambogo University, the normal working hours for full time staff is

8.00AM to 5.00PM. Section 16 (3) of the same Terms and Conditions states that,

“Extra load allowance” shall be paid to full time staff who are authorized and carry

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out extra duties in addition to their official normal duties and/or work outside the

normal hours.

For the period under review, the University paid a sum of UGX.40,145,000 to full

time staff as extra load allowance. Scrutiny of the payment vouchers, teaching

timetables and signed attendance sheets revealed that these payments majorly

applied to day assignments for which the staff earned a salary, thus not

warranting the payments. Such payments are irregular as they translate into a

double benefit to such employees since allowances will be paid for hours already

covered by their contractual obligation.

The Accounting Officer explained that the University Council made an exception

for academic staff who teach in excess of the normal teaching load during the

normal working hours. However, I found this explanation not satisfactory, given

that a staff cannot justifiably be expected to have excess load during the normal

working hours.

I advised the Accounting Officer to correct the anomaly and consider recovering

the funds that have been paid out irregularly.

b) Doubtful Payment of Teaching Allowance - UGX.17,957,500

Teaching allowance is paid to Lecturers and Tutorial Assistants for lecturing

students basing on the number of lectures and tutorials undertaken, respectively.

The number of lectures is stipulated in the time table at the beginning of each

semester. The time table provides the basis for payment of teaching allowance.

This is further supported by the Lecturers‟ appointment letters which requires

them to sign an attendance register in the departmental office, which must be

counter signed by the head of department confirming that the lecturer conducted

the lecture.

However, contrary to the above set procedures, the University paid a sum of

UGX.17,957,500 as teaching allowance to Lecturers and Tutorial assistants for

lectures that did not appear on the timetable and were not signed for in the

attendance register and confirmed by the head of department. Under the

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circumstances, it is likely that the allowances were paid for lectures which were

not conducted. In the absence of proper supporting documentation, I could not

confirm that the expenditure was properly incurred by the University.

Further scrutiny of the payment of lectures‟ teaching allowances, revealed that

lecturers claimed payments using wrong payment rates. Lecturers‟ contracts with

the University stipulates the rates per contract hour of; UGX.45,000 for evening

lectures, UGX.25,000 for day lectures, UGX.20,000 for tutorials, and UGX.55,000

for masters programs. These rates form the basis for the lecturer‟s claims. It was

however noted that some lecturers claimed teaching allowances using evening

program rates yet the lectures were conducted during the day resulting into an

over payment of UGX.43,260,000.

The Accounting Officer promised to look into the matter and recover the amount

from the concerned lecturers. I advised the Accounting Officer to correct the

anomaly and consider recovering the funds that have been paid out irregularly

from the affected staff members.

i. Un-presented Payment Vouchers – UGX.504,161,513

Regulation 60 of the PFAR, 2003 requires all disbursements of public monies to be

properly vouched on payment vouchers prescribed by the Accountant General.

However, contrary to the requirements of the Public Finance Act, 2003 and the

National Audit Act, 2008, payment vouchers and supporting documents for

transactions totaling to UGX.504,161,513 were not presented for audit. In the

absence of the payment vouchers together with their supporting documentation, I

cannot provide assurance as to whether the funds were rightfully expended.

The Accounting Officer explained that most of payment vouchers had been mixed

up in other documents due to big volumes of files and promised to avail them. By

the end of my audit exercise, payment vouchers to the tune of UGX.504,161,513,

were still missing. I advised the Accounting Officer to always ensure that all

expenditure vouchers are properly filed as required by the financial regulations.

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ii. Advances not accounted for - UGX.66,335,791

Section 217 of the Treasury Accounting Instructions requires accountabilities for

the amount advanced to be submitted within 60 days. However, for the period

under review, a total of UGX.66,335,791 advanced to several staff remained

unaccounted for at the time of concluding the audit. The Accounting Officer

explained that a number of accountability submissions faced filing problems after

being verified by the internal audit department and that any staff who will not

have accounted for the funds advanced will have the money recovered from their

salaries. I await the outcome of this management commitment.

iii. Statutory Deductions

a) Non remittance of taxes to URA - UGX.382,901,835

Section 119 of the Income Tax Act, Cap 340, as amended, requires an agent to

withhold on the gross amount a payment at the rate provided in the third schedule

of the Act and remit it to URA by the 15th day of the next month from which it was

deducted. I noted that PAYE totaling to UGX.382,901,835 was deducted from

lecturers‟ allowances in the Faculty of Sciences and was not remitted to URA. Non

remittance of withholding tax deductions is a violation of the tax law and may lead

to imposition of penalties on the University by URA. Besides, this amount is not

reflected in the University payables. This implies that the payables position is

understated.

I advised the Accounting Officer to always adhere to the requirements under the

Act. In addition, the outstanding amount needs to be recognized in the books of

account.

b) Un-deducted NSSF – UGX.315,232,550

According to Section 11(1) of the NSSF Act, Cap 222 and Solicitor General

Guidance to the University on payment of NSSF, dated 24th April 2013, every

contributing employer shall, for every month during which he/she pays wages to

an eligible employee, pay to the fund, within fifteen days a standard contribution

of 15% calculated on the total wages paid during that month to that employee.

On the contrary, it was noted that the University did not deduct NSSF amounting

to UGX.315,232,550 from a reviewed sample of payments of allowances for part

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time teaching and course work marking, from the faculty of arts and Sciences.

Non remittance of NSSF deductions is a violation of the law and may lead to

imposition of penalties on the University by NSSF. In addition, it denies employees

of their future benefits.

In his response the Accounting Officer stated that the University sought legal

advice from the Solicitor General in respect of deduction and payment of NSSF on

allowances, with an objective of ensuring that the University pays the correct

NSSF. Subsequently, the University signed a deed of settlement of the NSSF

arrears. The instalment payment of the above arrears as per the deed of

settlement ends in May 2015. However, the above amount has not been included

in the University payables.

I advised the Accounting Officer to always adhere to the NSSF Act and also ensure

that the amounts in question are deducted from the staff concerned and

accordingly remitted to NSSF, without further delay. In addition, the outstanding

amount needs to be reflected in the University‟s books of accounts.

c) Undetailed Procurement work plan

According to PPDA Regulations 70 and 97(a), a combined work plan for the

procuring and disposing entity shall include a detailed breakdown of activities of

works, services or supplies to be procured. It was noted that the consolidated

procurement work plan of the University for the FY 2013/14 was not detailed. The

items planned to be procured were generalized and the plan did not indicate the

specific procurement needs of the various units of the University. The failure to

prepare a detailed procurement plan contravened the PPDA Act, 2003.

The Accounting Officer explained that the Procurement Plan for 2013/14 was not

adequately detailed and pledged to continuously improve and comply with the Act.

I await the outcome of this commitment.

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d) PROJECT ACCOUNTS

a) Child To Child Project

The University received a total of UGX.96,146,599 for empowering children with

disabilities. It was noted that UGX.95,995,000 was spent under the project with

UGX.45,807,000 withdrawn on the same day (2/07/2013) in three equal

instalments and another UGX.50,188,000 was also withdrawn on the same day

(25/07/2013), again in three instalments for running workshops in various schools.

During a review of the accountabilities submitted, it was found that the

accountabilities appeared doubtful. They contained numerous inconsistencies and

some of the expenditure was found ineligible. There is a risk that these funds may

not have been properly utilised. In the absence of proper accounting records and

accountabilities, I cannot confirm whether the funds were used for the intended

purpose. I have advised the Accounting Officer to institute further investigations

into these transactions with an aim of ruling out possible misuse.

e) HUMAN RESOURCE MANAGEMENT

a) Staffing gaps

A review of the approved University staff establishment revealed that out of the

approved 1,550 posts, only 830 (54 %) were filled leaving 720 (46 %) posts

vacant. A further review of the structure revealed that the category of academic

staff was the most affected. Out of 530 required academic staff, only 270 posts

were filled. This implies that the University does not have the requisite number of

teaching staff, despite the fact that teaching is its core activity. Most affected

positions were those above lecturer position, implying that the university is facing

challenges of supervising academic work at a senior level which impacts negatively

on the university‟s research initiatives. Inadequate staffing undermines the

achievement of strategic objectives and affects the level and quality of service

delivery at the University.

The Accounting Officer explained that he had so far engaged several stakeholders

to address this matter without a positive response yet. I have advised the

University management to continue liaising with the relevant authorities to ensure

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that this challenge is brought to their attention and addressed with the urgency it

deserves.

f) MANAGEMENT OF ASSETS

i. LAND

a) Failure to record land in the Fixed Assets Register

Regulation 101 of the Public Finance and Accountability Regulations and the

Treasury Accounting Instruction, 2003, Part 11 Public Stores (Paragraphs 804-806)

require maintenance of an assets register for all assets in a form prescribed by the

Accountant General to ensure that the assets are easily identifiable. The Register

should show the asset code, description, and serial number, date of acquisition,

value, condition, and location.

Scrutiny of the University assets register however revealed that, land comprised in

FRV 461 Folio 13 also known as plot M902 situated at Kampala-Kyambogo

measuring 137.51 Hectares and various pieces of land in Kyagwe comprised in

Block 87 plots: 150, 30, 146, 123, 113, and 151 situated at Namasiga-Mukono

were not registered in the Assets register. Absence of a complete fixed asset

register is a critical internal control weakness that exposes the University land to a

risk of loss.

The Accounting Officer explained that this was an omission and that the register

was to be updated accordingly. However, at the time of concluding the audit, the

register had not yet been updated. I have advised the Accounting Officer to

update the fixed asset register to include all university assets.

b) Failure to transfer land titles into the names of Kyambogo

University

Kyambogo University was established by Instrument No.37 of 2003 as a result of a

merger of three institutions; Teachers Education Kyambogo (ITEK), Uganda

polytechnic Kyambogo (UPK) and the National Institute of Special Education

(UNISE). Consequently, the three institutions ceased to exist. It was however

noted that the University land in Namasiga has never been transferred into the

names of Kyambogo University, but was still in the names of a non-existent

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institution (i.e. Institute of Teachers Education). Failure to transfer University land

into its names exposes the land to a risk of being encroached or even grabbed by

unscrupulous individuals.

The Accounting Officer explained that the process of transferring the Land at

Namasiga into the names of the University had started. I have advised the

Accounting Officer to expedite this action accordingly.

c) Unabated Land Encroachment

Inspection of the University land during audit revealed that encroachment on the

University Land was rampant. The encroachers have constructed permanent

houses, established agricultural farmlands with perennial crops, while others are

engaged in fabrication and selling of charcoal stoves along Mackay road,

Kyambogo Road, Kigobe Road, junior staff quarters and near UNISE. Failure to

evict the encroachers may lead to loss of University land and/or the University

may suffer high costs of compensating the encroachers if not evicted earlier.

The pictures below illustrate the level of encroachment on the University land

along Mackay,Kigobe and Kyambogo roads.

Encroached sections of the University land

In his response the Accounting Officer stated that the land encroachers settled on

Kyambogo many years ago and that it was not easy to remove them without a

due process of the law. However, the University employed land valuers under the

guidance and instructions of the Chief Government Valuer. The valuation process

has just been concluded and the University is to embark on the process of

compensating and removing the said people from the University land.

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I have advised the Accounting Officer to ensure that all University property and

land in particular is properly safeguarded from illegal encroachment.

d) Un-demarcated University Land

The University fenced off most of its land to protect it from encroachment and

grabbing. However during inspection, it was revealed that along Mackay road, the

land above Kyambogo primary school staff quarters was not fenced as shown in

the photographs below;

Un-demarcated University land along Mackay road

Management stated that they were considering swapping the land in issue with

Buganda Kingdom because of its proximity with the kingdom palace. However,

audit noted that the land was being taken over by encroachers.

I have advised the Accounting Officer to fence off the land and legitimately

expedite the process of the land swap if considered appropriate by the University

Board.

g) STATUS OF HALLS OF RESIDENCE AND INSTITUTIONAL HOUSES

The Universities and Other Tertiary Institutions Act, 2006, requires the University

Council within a period of three months before the end of each financial year, to

submit to the Minister for approval, the income and expenditure estimates of the

Public University for the next ensuing year. These annual estimates should include

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among others charges for the maintenance of the buildings and other assets of

the University.

It was noted however that for the period under review, the University did not

budget for renovations and repairs of halls of residences and as a result the status

of the halls of residence and houses was appalling. During inspection of Mandela,

Kulubya, Africa, Nanziri and Pearl halls of residences, the following was observed:-

a. Dilapidated East end Kitchen (Mandela Hall)

It was noted that the status of the Kitchen at the East end dining hall was

appalling and needs immediate renovation. It is not safe and hygienic to serve its

purpose as a dinning and Kitchen for the students in its current status as indicated

in the photographs below;

Dilapidated Kitchen at the East end Dinning hall

The Accounting Officer explained that the University has been repairing a number

of its buildings including some of the Halls of Residence. However, due to limited

resources, the renovation process is done in phases. In the financial year under

review, the University renovated West end kitchen, which was in a worse

condition. In the next financial year, maintenance work on the dining, hall, stores

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and kitchen will be put before the University Council for consideration. In the

meantime, minor maintenance work on the said buildings is being done.

I have advised the Accounting Officer to appropriately prioritize and budget for

renovation of University buildings.

b. Non-functioning CCTV cameras

The University installed CCTV cameras to improve the security at the East end

Kitchen and Mandela Hall. However, it was observed that management has failed

to utilize and operate the CCTV cameras. As a result, the purpose of their

installations was not being served. In his response, the Accounting Officer

explained that the non-functionality was a temporary problem and that the

process of repairing them was ongoing.

I have advised the Accounting Officer to expedite this process and ensure that the

CCTV cameras are functional at all times.

c. Failure to install proper burglar proofing at the East End Dining stores

The burglar proofing at the food stores in the East End dining hall was not

satisfactory to protect the University property from theft. As a result, it was

explained during inspection, that burglary was becoming rampart at these stores.

This was aggravated by the fact that the CCTV cameras installed were not

functional.

The Accounting Officer explained that the University was in the process of making

repairs on these structures. However, due to limited resources the process was

moving on slowly.

d. Broken water pipes and dilapidated Lavatory facilities in Halls of residences

Inspection of the lavatory facilities in Mandela, Kulubya, Nanziri and Pearl halls of

residences revealed that the plumbing system in the bathrooms and lavatories had

broken down and as a result, there was uncontrolled water flow in some of the

bathrooms. The state of hygiene was poor and some of the laundry rooms had

been turned into dumping rooms for unwanted materials as shown in the

photographs below;

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Dilapidated Lavatory facilities in Mandela, Nanziri and Pearl halls

The Accounting Officer explained that the broken water pipes had been repaired.

The dilapidated lavatory facilities require a big budget and will be renovated

accordingly when a new budget is provided.

I advised the Accounting Officer to ensure that renovation works are prioritized

and budgted for accordingly.

h) MOTOR VEHICLES

Failure to dispose grounded vehicles

Regulation 295 (1) of the PPDA requires an Accounting Officer to carry out regular

annual reviews of assets for purposes of identifying those which are obsolete and

those that should be disposed. Good practice also requires that the assets that are

no longer of economic value to the organization be disposed and the profits or

losses that accrue from such sales subsequently disclosed in the financial

statements. Furthermore, a procuring and disposing entity may use a board of

survey to identify assets to be disposed off, on a periodic basis.

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During inspection of the University, it was revealed that a number of University

vehicles had been abandoned at; Kyambogo University police station, security

office, UNISE and other parking lots, and had not been boarded off. The vehicles

were in a bad state and were deteriorating in value. Examination of the Assets

register revealed that the vehicles were recorded as those belonging to Kyambogo

University though most of them had Ministry of Education number plates.

There is a risk of further deterioration in the value of the assets if no immediate

action is taken to board off and dispose the vehicles. In his response, the

Accounting Officer stated that the vehicles in bad condition belong to the MoES,

and that he had written to the ministry to obtain authority to either dispose them

off or to have them taken by MoES.

I have advised the Accounting Officer to follow up this matter with MoES until an

amicable solution is obtained. Details in the photographs below;

Pictures showing some of the grounded motor vehicles

Some of the University vehicles not included in the asset register, but grounded and

parked for over 2 years

Kyambogo University vehicles, some with Ministry of Education registration numbers,

grounded and parked for over two years recommended for disposal in the BOS 2013/14, but have not been disposed off by management.

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i) SPECIAL INVESTIGATION INTO THE AFFAIRS OF KYAMBOGO

UNIVERSITY

I instituted an investigation into the affairs of Kyambogo University in January

2014 following a Parliamentary resolution and a letter from the University

Secretary (Accounting Officer). In addition, I received several allegations from

whistle blowers which included mismanagement of funds, fraud in the collection

and utilization of fees, asset mismanagement and human resource

mismanagement.

The investigation focused on the period from July 2009 to June 2012 and was

conducted with specific terms of reference. However, earlier and later periods

were included in instances where this provided clarity. Below are the highlights of

the key findings;

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1. Observations on general governance of the University

My investigation revealed that the University Council lacks a charter

governing the activities of the Council and only has guidelines for Council

meetings. This creates uncertainty in so far as the operations of the

University Council are concerned.

I observed that the University lacks salient policies on recruitment and

promotion of staff, research and projects, financial management among

others and only relies on Council decisions that are passed from time to

time.

I observed that the University is currently grossly understaffed. The

University is currently operating under an establishment approved by the

University Council in 2004, which was made at a time during which it had a

population of 8,000 students compared to the current total of over 23,000. I

observed that of the 2,351 positions in the said establishment for both

teaching and non-teaching staff, only 1,102 are filled. This in effect means

that the university is operating at a 47% capacity.

The Academic Registrar was negligent in so far as she failed to detect and

stop the irregular admission of 10,486 students, during the period under

review, who did not apply for admission.

2. General observations on the Human Resource Management

Contrary to the National Social Security Fund Act, the University failed to

remit NSSF contributions for staff totaling to UGX.1,119,515,189 and as a

result, also attracted a penalty of UGX.3,021,399,729.

There was irregular recruitment of support staff and part time lecturers

without being interviewed and being appointed by the Appointments Board.

According to the Public Service Standing Orders, the University Terms and

Conditions of Service of Staff, all academic, administrative and support staff

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of the University shall be appointed by the Appointments Board on terms

and conditions that may be determined by the University Council.

A total of UGX.653,963,329 was paid as headship allowance yet it is not an

approved allowance. An additional UGX.688,352,000 was also paid to non-

academic staff as extra load allowance without the necessary board

approval.

A total of UGX.48,564,124 was also paid to top management as domestic

allowance despite the fact that this allowance was abolished by Public

Service in 1995 and is also not provided for in the University Terms and

Conditions of Service. A further UGX.81,166,251 was also paid to the top

management in form of salary increment contrary to their employment

contracts.

UGX.373,364,544 was paid to staff after they had reached the retirement

age of 60 according to the Terms and Conditions of Service

I established that several members of staff that were arrested for criminal

offences were never suspended and continued to receive their full salaries,

contrary to the Public Service Standing Orders and the Terms and Conditions

of service.

3. Observations on revenue and expenditure

A total of 10,486 students were admitted by the University without applying

and consequently UGX.532,825,000 was not collected as application fees

during the period under review. This was a loss to the University.

The University has huge debtors as a result of admitting students who are

sponsored by other government agencies. For example a total of

UGX.2,615,298,661 for the academic years 2009/10 to 2013/14 remains

outstanding. I have received written assurances that this particular debt will

be settled.

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The University lacked cash books and a students‟ ledger which should have

contained a comprehensive list of all students admitted into the university as

well as details of how they have cleared all their fees.

I noted several internal weaknesses in the fees banking process and receipt

issuance by the bursar‟s office. I observed that the entire process was

manual in nature with the use of manual receipt books and in several

instances the amounts recorded in the receipts was more than the amounts

deposited per the bank statement.

I noted a discrepancy in revenue accountability of UGX.8,928,814,082 as

only a total of UGX.71,913,461,494 was recorded as collected compared to

UGX.80,842,275,576 that should have been collected as per the number of

students that sat for examinations.

An analysis of the receipted revenue and bankings for the year 2010/11

revealed an amount of UGX.4,343,299,348 that was receipted by the desk

officers in the various faculties which is not supported by corresponding

bankings onto the University bank accounts.

The University does not have a complete tenancy Register and as such

cannot easily track all the tenants and their respective payments. It also

lacks clear guidelines for determining the amount of rent payable by the

tenants.

In the period between 01st January 2010 and 24th March 2014, the University

spent a total of UGX.3,720,720,373 on fuel. I observed that the university

lacks a policy to regulate the distribution and use of fuel. A total of 295 total-

plus fuel cards had been issued to staff. A total of UGX.83,328,998 was

consumed from fuel stations outside the Kampala area especially on

weekends.

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4. General observations on Asset Management

There has been laxity and negligence on the part of management in failing

to curtail the massive encroachment and illegal activity on the University

land in Kyambogo by unknown persons.

I also noted several irregularities in so far as the management of the

University farm in Nakagere, Mukono is concerned. Only 7 out of 187 acres

of this land is being utilized by the University thereby leaving the rest of the

land susceptible to encroachment by squatters who have erected permanent

structures on the land. The University could stand to lose part of the land.

The University farms lack animal registers. In fact some of the animals are

not tagged for identification purposes and so are prone to theft

I found that there were several irregularities and control weaknesses in the

management of the University mechanical and production workshop. This

could be attributed to lack of clear guidelines and policies, lack of proper

documentation and record keeping making it difficult to verify the revenues

received from the workshop.

There was poor maintenance of the University staff houses as most of them

are in a state of disrepair despite the fact that the University has always

budgeted for their repair and several Council resolutions have been passed

to that effect.

The University lacks tenancy agreements with some of the occupants of its

houses contrary to the Public Standing Orders. Those that had been issued

had provisions that were unlawful as they were contrary to the Housing

Policy (basically state the specific policy) which required the tenancies to be

held for a term of not more than three years. The agreements were to run

for 10 years.

I discovered several irregularities in the management of the cricket oval. I

noted that Uganda Cricket Association (UCA) had erected structures and let

out the premises to a third party contrary to the initial MOU that was signed

648

between UCA and the former UPK. I further established that there is

currently no binding MOU between KYU and UCA regarding the usage of the

cricket oval.

Inspections of the University vehicles revealed that 13 of them are

grounded. They are in a deplorable state, were being vandalized and

therefore need to be disposed off.

I tested for the completeness of the asset register by tracing the vehicles log

books in the motor vehicle register. I noted that there were 14 vehicles

whose registration books were in the custody of the University Secretary but

the same were not recorded in the vehicle register. I sought to verify the

existence of the said vehicles but the transport officer failed to avail the

same for physical inspection.

Whereas the University had annual budgetary provisions for insurance of its

motor vehicles, for the financial years 2010/2011, 2011/2012 and 2012/2013

respectively, only six (6) vehicles had been insured and 40 had their

insurance cover expired.

General Recommendations

The following general recommendations have been proposed:-

a. Governance

The University Council is advised to formulate a charter that will guide and

govern its operational modalities.

The University Council is further advised to ensure that policies on

recruitment and promotion of staff, financial management, research and

projects among others are developed, approved and complied with in the

day to day operations of the university.

The current University structure needs to be reviewed to allow for an

optimum level of staffing that can adequately manage the current student

levels and other University responsibilities.

The Academic Registrar is advised to always follow the laid down admission

procedures while admitting any student.

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b. Human Resource Management

The University Bursar is advised to always ensure that statutory deductions

on staff pay such as contributions to the National Social Security Fund are

always effected and remitted promptly as required by the law.

The Director Human Resource is advised to always ensure that recruitment

of staff is done in accordance with the law and laid down procedures.

Allowances that are not provided for in the University Terms and Conditions

of Service of Staff and the Public Service Standing Orders should not be paid

by the University.

c. Revenue and Financial Management

The University Bursar is advised to exercise close supervision to staff in his

office that are charged with revenue collection, safe custody of accountable

stationary and also ensure regular reconciliation of financial records.

The University Bursar is further advised to always ensure proper

maintenance and recording of all books of accounts such as cash books,

student ledgers among others as per the Generally Accepted Accounting

Principles.

The University Management is advised to always ensure that all fees payable

by students during the admission process such as applications fees under

the private sponsorship scheme are collected and accounted for.

The University Management should institute stringent and robust debt

collection mechanisms in order to ensure prompt payment of fees by the

various student sponsors.

The Accounting Officer is advised to establish a mechanism through which all

audit findings contained in the annual audit reports are to be followed up

and actioned upon.

d. Asset Management

The University Accounting Officer is advised to ensure that all University

Assets are recorded in an Assets Register which ought to be periodically

650

updated to reflect an up-to-date status of the assets owned by the

University.

The University Accounting Officer is further advised to ensure that all

University land is secured and all activity on the said land is authorized and

monitored by the University Authorities.

The University management is also advised to develop guidelines that will

govern the running and management of all University workshops and ensure

adherence to the same.

51.0 BUSITEMA UNIVERSITY

a) Receivables

Included in the receivables are student debtors that increased from

UGX.333,193,785 to UGX.426,591,128 implying an increment of UGX.93,397,343

(28%). The increment may be attributed to laxity in enforcing the fees collection

policy. Accumulation of student debts may result into bad debts.

Management explained that the University has a debtor‟s policy which requires

students to clear their tuition and functional fees to zero balance before the

examination date and that efforts would be made to fully implement the policy.

I advised management to strengthen mechanisms of enforcing collection of debts.

b) Payables

Payables increased from UGX.192,279,917 to UGX.313,777,260 indicating an

increase of 63%. Included in the payables is a sum of UGX.114,774,856 payable

to National Social Security fund (NSSF), UGX.27,758,768 (withholding tax) and

UGX.9,135,284 (PAYE) payable to Uganda Revenue Authority (URA).

The University is exposed to the risk of penalties and fines from NSSF and URA.

Management stated that arrangements to settle the obligations were underway.

I advised management to ensure settlement of obligations in a timely manner to

avoid penalties and fines.

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c) Land ownership

The University owns various pieces of land at different campuses totalling to

2,840.77 acres. While some of it is registered in the names of Busitema University

Council other pieces of land are not. Without evidence of ownership, it was

difficult to confirm whether the land actually belongs to the University. There is a

risk of loss of the land if it is not transferred appropriately.

In response management stated that the process of titling the land is underway.

The table below refers;

LOCATION AREA ( Acres)

STATUS OWNERSHIP

Busitema campus

1,309.658 530 hectares titled Busitema University Council

Namasagali 187 50.2 acres titled.

Namasagali University &Namasagali College.

Pallisa 27.804 11.252 hectares titled Busitema University Council

Nagongera 584.775 228.62 Hectares. titled Busitema University Council

Arapai 679.54 275 Hectares. titled Uganda Land Commission.

Mbale 52 0 Title not availed, therefore could not confirm ownership.

TOTAL 2,840.777

d) Non -implementation of planned activities

Comparison of the University‟s budget and Policy Statement for the year with

milestones attained revealed that the following planned activities and acquisitions

were not achieved;

The table below refers;

S/No. Item Estimated Cost (UGX)

1 Rehabilitation works at Mbale Campus. 100m

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S/No. Item Estimated Cost (UGX)

2 Procurement of Identification Unit. 30m

3 Procurement of Conference Table for Council Hall.

28m

4 To Establish LAN (Local Area Network) in 2 campuses.

100M

5 Preparation of the quarterly progress and NTR reports and submission to the MoFPED and MoES respectively.

No estimates

6 Development of a consolidated Human Resource Policy.

No estimates

7 Procurement of 50 computers. Only 21 computers were purchased.

No estimates

8 Conducting a Training Needs Assessment exercise. No estimates

9 Planting trees around the boundaries of the University land at all campuses.

No estimates

Management attributed the shortfalls in the performance to inadequate funding.

I advised management to continue liaising with the Ministries of Finance, Planning

and Economic Development (MoFPED) and of Education and Sports (MoES) so as

to attain necessary funding for implementation of planned activities.

In addition all planned activities should be properly costed for ease of analysis of

the funding gaps.

e) Lack of Revenue collection procedures for Guest Houses

The University owns guest houses at Busitema University campus, Arapai Campus

and Namasagali Campus. However, the University lacks proper revenue collection,

recording and reporting procedures for the guest houses. In the circumstances

there is a risk of loss of revenue.

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Management stated that arrangements are underway to put in place revenue

management mechanisms. I advised the Accounting Officer to strategize the

revenue management without further delay.

f) Inconsistencies in the recruitment regulations

Regulation 2.5.4 of the University Terms and Conditions of service require that the

Accounting officer makes part-term appointments for non-academic staff on

recommendation of the recipient Unit. On the contrary regulation 11(d) of the

recruitment and promotion policy requires appointments of non-Academic staff to

be made by the Vice chancellor on recommendation of the recipient Unit.

I explained to management that vesting of recruitment powers in different centres

may result into conflicting recruitments. Management stated that the regulations

and policy would be harmonized.

I await management action on the matter.

52.0 GULU UNIVERSITY

a) Doubtful Payment for Extra Load Allowance

In my previous report to Parliament, I qualified my audit opinion on the basis of

doubtful payments for extra load allowance, amounting to UGX.728,758,584. In

the report, I indicated that the basis of computation for the payments, including

information relating to the total number of hours lectured above the standard

hours by each lecturer rates and evidence of occurrence were not availed to

support the payments.

Management has indicated that controls surrounding the payment of extra load

allowances have been strengthened. However, I was still not availed with evidence

to satisfy myself that the payments were authentic.

b) Un-discharged Statutory Obligation

Section 14(1) of the National Social Security Fund, 1985 requires that every

contributing employer shall, for every month during which he or she pays wages

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to an eligible employees, pay to the Fund, within fifteen days, next following the

last day of the month for which the relevant wages are paid, a standard

contribution of 15 percent calculated on the total wages paid during that month to

the employee.

However, contrary to the above requirement NSSF arrears stood at

UGX.577,709,906 as at 30th June 2014. Included in this figure is UGX.283,146,154

for the period July 2009 to June 2010, with interest of UGX.105,306,471. I

explained to management that there was a possibility of litigation and this could

put the University assets at risk.

Management explained that when staff salaries were enhanced, the employer‟s

contribution (10%) was not catered for and this contributed to the accumulation of

NSSF arrears. They further indicated that, a request for settlement of domestic

arrears which include NSSF obligations had been submitted to the MoFPED for

consideration.


c) Management of Receivables

Receivables relating to student debtors increased by UGX.266,567,004 from

UGX.2,098,511,984 to UGX.2,365,078,988 reported in 2012/13 and 2013/14

financial years respectively. There is laxity in enforcement of fees collection which

affects the implementation of planned activities.

Management undertook to enforce the policy on fees management which requires

students to pay all tuition fees and other University dues within 8 weeks after

commencement of the semester. I await management‟s commitment in this

regard.

d) Ownership of Land

The University owns five pieces of land, all totaling to 812.452 acres. However, the

University lacks certificates of title to show ownership. Without evidence of

ownership, it was not possible to confirm whether the land actually belongs to the

University. I explained to the accounting officer that there was a risk of the

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University losing land to encroachers and other developers, if not transferred into

the University‟s name.

Management indicated that a lease offer had been granted for the 100 acres at

Latoro in Nwoya District and all efforts were being made to secure all the

University land.

I advised management to follow up the matter with the concerned authorities and

have all the University land secured and certificates of title transferred into the

University‟s names.

e) Direct Procurements

Regulation 94 (1)(a) of the Public Procurement and Disposal of public assets states

that a contracts committee or a holder of delegated authority shall approve the

choice of a procurement method prior to commencement of the procurement

process. On the contrary, goods and services worth UGX.34,444,000 were

procured by way of advancing funds to university staff and other non-prequalified

firms for purposes of purchasing various items directly. I explained to the

accounting officer that the use of such unconventional methods in acquisition of

goods and services lacked transparency and may not have achieved value for

money.

Management explained that the University had approved framework contracts for

regularly required items to limit advances. I advised the Accounting Officer to

streamline the procurement of the routinely purchased items to avoid possible

misuse of advances.

f) Understaffing in Internal Audit Department

It was noted that Internal Audit Department is understaffed and is currently

headed by a Senior Auditor. In the absence of a substantive Chief internal

auditor, the department‟s capacity to deliver on its mandate is not effective, given

the size and nature of the operations of the University.

656

Management explained that their submission to the Ministry of Public Service

authorization, to recruit both academic and non-academic staff especially for key

positions had not been responded to.

I advised management to follow up the submission made to Ministry of Public

Service and ensure that all key positions are filled to avoid operational

inefficiencies. The internal audit function should be appropriately staffed.

g) Absence of Fraud Control Policy

Best practice and good corporate governance require that organizations should

institute policies and procedures to detect, control and minimize occurrence of

fraudulent actions. It was noted that the University did not have any fraud control

policies and procedures to guide staff in the event that they encounter fraudulent

activities in the day-to-day operations within the University. In absence of such

procedures, it is difficult to mitigate occurrence of fraud and may create a

conducive environment for staff to commit fraud.

Management explained that the Audit Committee of Council in its meeting of 14th

October 2014 tasked management to table a fraud control policy at its next sitting

in February 2015. I await the outcome of this process.

h) Grounded Motor Vehicles

Regulation 2(1) of the Public Procurement and Disposal of Public Assets (Disposal

of Public Asset) Regulations, 2014 requires that the Accounting Officer shall, in

each financial year, cause the public assets of a PDE to be reviewed to identify the

public assets to be disposed of in the following financial year.

Audit noted that a number of motor vehicles belonging to the University had been

grounded for a long time without reviewing them for purposes of disposing them.

There is a risk that the vehicles are deteriorating further and therefore reducing

scrap value.

Management explained that the assets were recommended for boarding off by the

Board of Survey and approved by University Council and that the disposal process

was in progress.

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I have advised the Accounting Officer to expedite the disposal process and in

future ensure that annual reviews are undertaken to identify any assets for

disposal in the next financial year as required by the PPDA – Disposal Regulations.

658

GENDER AND LABOUR SECTOR

53.0 MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT

a) Payables

Audit of Financial Statements for the period under review revealed that the

Ministry had liabilities of UGX.4,771,858,282, broken down as follows:

No Item Amount

1 Trade Creditors 220,000

2 Sundry Creditors 4,730,824,170

3 Withholding Tax Payable 40,814,112

Total 4,771,858,282

The sundry creditors arose out of outstanding claims for workman‟s compensation,

dating back to 2003/2004 financial year. Meanwhile, the withholding tax liabilities

may attract penalties from Uganda Revenue Authority as provided for in the

Income Tax Act, 1997 (as amended). The delay in paying renders the claims

redundant.

In response, management stated that requests to MoFPED for funds to settle the

liabilities had not been responded to positively.

I advised the Accounting Officer to continue liaising with the MoFPED and other

stakeholders to ensure prioritization of funding for the items to avoid litigations

and other costs that may arise.

b) Mischarge of Expenditure

Paragraph 400 (a) of the Treasury Accounting Instructions (TAI), 2003 states that

all government transactions shall be recorded in the books of account applying the

Government of Uganda Chart of Accounts as prescribed by the Accountant

General. In addition, Accounting Officers shall ensure that all financial transactions

are properly coded. It was noted that out of the total actual expenditure of

UGX.27,871,419,382, a total of UGX. 66,982,475 were mischarged. The practice

is a sign of a breakdown in controls over the budget implementation process.

659

Management explained that more adherences to the charge codes in line with the

Chart of Accounts is now being emphasized.

I have advised the Accounting Officer to streamline the budgeting process so that

available funds are properly allocated to the planned activities.

c) Advances not accounted for

A sum of UGX.25,000,000 advanced to three Districts for purchase of toolkits for

PCY activities lacked accountability contrary to TAI and MoU which requires

accountability within 60 days. The table below refers:

Document

No

Date Details Amount Paid

(UGX)

1139107 4/10/2013 Payment to CAO - Arua district to

purchase toolkits for Youth

trained

16,000,000

1216325 4/12/2013 Payment to CAO Gulu for

purchase of tool kits for training

and coordination of PCY project

4,000,000

1216321 4/12/2013 Payment to CAO Lira for



5,000,000

Total 25,000,000

In the circumstances, I could not confirm whether the funds were used for the

intended purposes.

In response, management explained that letters reminding the respective Chief

Administrative Officers had been dispatched.

I advised the Accounting Officer to ensure submission of accountability or recovery

of the funds.

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d) Staffing Gaps

I noted that the Ministry was grossly understaffed. Out of 609 posts in the

approved structure, only 276 were filled leaving 333 posts unfilled. Among unfilled

posts were; the Director Social Protection and Director Labour Employment

(Occupational Safety & Health), which are key posts in the management structure

of the Ministry.

Management indicated that submissions were made to the Ministry of Public

Service and Public Service Commission to ensure that the staffing challenge is

addressed.

I advised management to follow up the matter and fill the positions in a phased

manner beginning with the critical ones.

e) Non-Disposal of Obsolete Assets

Section 295 (5) of the PPDA Regulations, 2003 requires a procuring and disposing

entity through the board of survey to identify assets for disposal on a periodic

basis. A review of the Ministry‟s Asset register revealed a number of old and

obsolete assets due for boarding off and these included; motor vehicles, desktop

computers, laptops, furniture, tyres and books among others. I also noted that the

recommendations of the Board of Survey for disposal in the Financial Year

2011/2012 were not implemented.

Management indicated that it is in the process of updating a Disposal Plan and will

dispose of obsolete items in FY 2014/15.

I advised the Accounting Officer that failure to timely dispose of these assets

results in further physical deterioration and diminution in value. I await results of

management actions.

f) Lack of Performance Appraisals for some Staffs

Sec. A-m (14) of The Uganda Public Service Standing Orders, 2010 states that “A



Secretary.

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It was however noted that 25 staff out of a sample of 45 staff of the Ministry were

not appraised during the year under audit. The Accounting Officer explained that

strict guidelines and deadlines have been put in place for those that do not

comply.

I await results of management actions in this regard.

g) Repayments into the Revolving Fund

According to the YLP Programme Document dated December 2013, the revolving

nature ensures sustainability through the cash and kind refunds and re-

disbursement. This is further amplified in Part 4.0 of the YLP Project Funds Access

Criteria document which requires YLP to be administered as interest-free

Revolving Funds to ensure sustainability of the Programme.

I observed that out of 27 districts that had received the funds, only 6 had opened

the special collection accounts.

Management indicated that the outstanding 21 districts had been reminded.

I advised the Accounting Officer to ensure that the remaining Districts comply with

the regulatory requirements for YLP.

h) General Challenges faced in the Implementation of Youth Livelihood

Programme:

58.h.1.1.1.1 Determination of the age of the group members

According to YLP Project Funds Access Criteria part 2.2 (i) (Beneficiary Selection

Criteria) paragraph and program document chapter 2 section 2.4, all intended

beneficiary Youths should be persons within the age bracket of 18-30 and

evidence was to be provided through birth certificates, immunization cards,

passports, baptism cards, marriage certificates, National Identity Cards or

community knowledge of the youth.

During the period under review, audit noted that birth certificates for beneficiaries

on a number of project files were missing, rendering confirmation of the

qualification by age difficult.

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Management indicated that a number of potential beneficiaries did not have

documentary evidence for their ages. The Selection Committees relied on the

judgement and decision of the community members under the leadership of LC I

Chairpersons as provided in the Programme Guidelines.

I advised the management to use the National identity cards in determining age of

beneficiaries in the successive following phases of the programme.

58.h.1.1.1.2 Inadequate monitoring of the projects

It was noted that the Districts were not closely monitoring the activities of the

approved youth projects due to inadequate staffing. For example, there were no

monitoring reports for the 16 districts inspected out of the 27 pilot districts. The

respective CAOs and the District Focal Point Persons indicated that there is low

human resource capacity as opposed to the number of approved projects to allow

closer monitoring to take place.

Management explained that the low staffing levels especially of Extension Staff in

the Local Governments still remains a challenge. Furthermore, the Accounting

Officer indicated that the Chief Administrative Officers have been advised to

rationalize the deployment of the available staff to ensure that the youth groups

financed under YLP receive technical support.

I await results of management actions on this matter.

58.h.1.1.1.3 Lack of sign posts for respective Projects

It was observed that a majority of the YIG Projects that were inspected did not

have sign posts. Those that had sign posts did not have YLP identity. It was

therefore not possible to easily identify them with YLP funding.

In response, management stated that all the new projects are being advised to

provide for the signposts in their budgets. Furthermore, YLP has concluded the

Geographical Information System (GIS) mapping for all the projects financed

under Phase-I as a strategy of enhancing accountability, transparency and to avert

a possibility of using one project site for multiple accountabilities to various

663

agencies or persons. In the meantime, I await the results of management effort in

this regard.

58.h.1.1.1.4 Inadequate training of the 3 committees in a group

The YLP Programme Document requires each YIG to have at least 3 committees

namely; Youth Project Management Committee (YPMC), Youth Procurement

Committee (YPC) and Social Accountability Committee (SAC).

Audit revealed that the trainings received by the members of these committees

were so general and did not address the specific roles that each committee is

supposed to play in a group. Furthermore, the trainings were conducted under

limited time frame.

Management explained that any gaps identified during monitoring visits are

documented and addressed as part of the routine continuous support to the

groups.

I advised management to ensure that trainings to the committee members are

conducted to enable them appreciate their roles on the committees so as to avert

conflicts and failure of groups‟ businesses.

58.h.1.1.1.5 Record Keeping

It is good practice for any type of business/project to keep proper books of

account, management records among others. I noted that most of the groups

visited did not maintain/keep such records including minutes and procurement

details.

Management indicated that the varied literacy levels of the beneficiaries supported

under YLP affects record keeping. However, the Sub-county Community

Development Officers (CDOs) have been advised to provide support to weak

groups on regular basis as part of their overall mandate in community mobilization

and development.

I await the results of management efforts in this regard.

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53.1 EXPANDING SOCIAL PROTECTION PROGRAMME 2011/2012

a) Lack of National Social Protection Policy

It was noted during audit that the program still lacked an approved policy,

contrary to the recommendation contained in Expanding Social Protection (ESP)

Quarterly report of July to September 2011, requiring an approved policy

framework to be in place within the financial year 2011/12. In the circumstances,

there is no formal framework to guide the activities of Social Protection in the

country. There is also a risk of having social disharmony between the societies

that have benefited and those that have not.

Management explained that at the inception of the programme, the design

foresaw the development of a Social Protection “framework” which would have

simply defined the scope of social protection services in Uganda. However, during

the course of the programme, management realized that a full National Social

Protection Policy was required along with a comprehensive costed plan of

Interventions (PPI) to cover social assistance, social insurance and social care

services. Management further stated that according to the revised log-frame, the

policy and PPI are due to be finalised by December 2014.

I have advised management to engage the stakeholders involved and expedite the

discussions to have the policy finalised and approved.

b) Co-funding

Section 2 of the Joint Financing Arrangement requires the Government of Uganda

(through the MoGLSD) to provide an agreed level of funding to the programme. It

was however noted that GoU, which had committed to provide USD.20,030 (about

UGX. 70,105,000), did not fulfill its obligation in the period under review. This

could have hampered the implementation of the planned activities and may affect

the overall attainment of the programme objectives.

Management explained that they were continuing to engage the Ministry of

Finance, Planning and Economic Development to fulfill the government obligations

towards the programme.

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I have advised management to continue with the engagement of the Ministry of

Finance Planning and Economic Development so as to ensure that Government

fulfills its commitment towards the programme for better implementation.

c) Un-accounted for Funds

UGX.227,301,091 (equivalent to USD.49,778.45) was transferred to ESP

operational account in the MoGLSD, to facilitate older persons day celebrations

and orientation of Members of Parliament. Audit noted that a total of

UGX.106,618,500 was utilized for the celebrations and orientation of MPs, leaving

a balance of UGX.120,682,591 unaccounted for.

Although management explained that the balance was retained in the MoGLSD

ESP operations account for other ESP activities, no documentary evidence was

availed to confirm this and how it was utilised.

I have advised management to ensure


a) Co-funding



was however noted in the year under review that GoU allocated only

UGX.40,000,000 million as opposed to the FY 2012/13 counterpart commitment of

UGX.500,500,000. This could have hampered the implementation of some planned

activities and may affect the overall attainment of the programme objectives.

I advised management to engage Ministry of Finance Planning and Economic

Development so as to ensure that Government fulfils its commitment towards the

programme for better implementation.

b) Doubtful contract award

Regulation 90 (g, h & i) of the Public Procurement and Disposal of Public Assets,

2013, stipulates the procurement records that should be maintained by a

procurement and disposal unit. However it was noted that a total of

UGX.191,666,376 was paid to Property Development Company Ltd for rent, but

procurement documents were not maintained, contrary to the requirements of the

regulations. In the circumstances, audit could not ascertain whether the

procurement was fairly competed for and that there was value for money.

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I advised management to ensure that all procurement records are in future

maintenance for all procurements undertaken on behalf of the programme.

c) Un-vouched Expenditure

Audit noted that out of a total of UGX.135,369,238 transferred to Kyenjojo District

to fund SAGE activities in the months of January and June 2013, a total of

UGX.116,152,804 was spent without preparing payment vouchers. The

authenticity of the expenditures relating to all the missing vouchers could not be

ascertained.

I advised management to ensure that the funds are accounted for.

d) Mischarged expenditure items

A total of UGX.11,976,000 was charged wrongly on expenditure items other than

those under which it was supposed to have been spent, contrary to the

requirements of section 3.1 of the overview of the financial management of SAGE.

Failure to comply with the requirements portrays a breakdown of controls in the

budget implementation process and it affects the implementation of some planned

activities.

I advised management to streamline the budgeting process and ensure that


implementation of the programme.

e) Un Accounted for Funds

Funds totaling UGX.56,178,500 advanced to various officers in Katakwi district to

implement programme activities remained un-accounted by the time of writing this

report. In the absence of the necessary accountability, audit could not confirm

whether the funds were put to intended use.

I advised management to recover the funds from the officers

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a) Irregular payments to Deceased Persons

The Social Assistance Grants for Empowerment (SAGE) comprise two sub-

components namely; Senior Citizen‟s Grant (SCG) and Vulnerable Families Support

Grant (VFSG).

Chapter six (6) of the Implementation Guidelines for SAGE, SCG and VFSG provide

that „In the event of the death of an older person, households benefitting from the

SCG will cease to be eligible immediately‟. An older person refers to one who has

attained the age of sixty five (65) years and above. In addition, the third

paragraph of chapter 6.1 of the same guidelines states that „The death of a

registered beneficiary of the SCG will result in termination of payments. Death of a

beneficiary must be reported by the next of kin to the Village Chairperson as soon

as possible and an SCG Beneficiary Death Notification Form (Annex X) should also

be completed by the next of kin with the support of the village chairperson‟.

A review of the SCG component, beneficiary payrolls and files in 14 Districts

inspected revealed that names of deceased beneficiaries were neither reported as

required nor deleted from payrolls after they had passed on. In the circumstances,

payments totalling UGX.36,950,000 made in respect of deceased persons were

made irregularly.

In response, management explained that a team of staff had been constituted to

work on improving the system of capturing information on deaths.

I advised management to strengthen mechanisms for timely reporting of deaths

under the SCG component so as to ensure the programme meets its intended

objective of assisting Senior Citizens

b) Suspected SAGE Fraud in Kole District

Review of an investigation report prepared by a contracted Auditor revealed

suspected fraud on beneficiary payments for the month of December 2013 in Kole

District amounting to UGX.132,268,500. The suspected fraud was attributed to

lack of a documented policy over SIM card management and collusion between

the MTN Mobile Money Agent and SAGE staff.

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In response, management stated that disciplinary hearing with SAGE staff had

been held and efforts were being made to have criminal prosecution of the staff

together with the MTN Mobile Money Agent. In addition, training on SAGE Policy

on fraud, complaints and whistle blowing would be undertaken for all SAGE and

local government staff.

I await results of management actions.

c) Lack of Procurement Plan

Regulation 6 (2) of the PPDA Regulations, 2003 requires an entity to prepare a

consolidated procurement plan. However, Expanding Social Protection Programme

(ESPP) carried out procurements without a procurement plan. It was observed

that departmental procurement work-plans were also not prepared. There is

possibility of sub-optimal procurement.

Management indicated that the procurement activities for different programmes

have now been integrated into programme work plan for the implementation in

the next period.

I await the results of management action.

d) Governance Weaknesses

1.d.1 Lack of approved Human Resource Manual

A human resources manual, guides staff recruitment, appointments and is a vital

tool in management of staff of any organization. It was however noted that

the Programme lacks a human resources manual. There is a risk that the

Programme‟s human resource operations are not well guided.

It was also noted that a draft manual has now been developed and is awaiting

approval by the Programme Steering Committee.

I advised management to expedite approval of the manual to enable proper

management of staff.

1.d.2 Lack of Internal Audit Function

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The internal audit function helps to regularly conduct reviews on entity risk

management, monitor and provide assurance on internal controls. It was however

noted that ESPP operated without an internal audit function during the period

under review. There is a risk of weaknesses in internal control remaining

undetected over long periods.

Management stated that a proposal to establish the function will be tabled before

the Steering Committee for approval.

I await management action in this regard.

1.d.3 Lack of approved Finance and Procedures Manual

The Finance and procedures manual helps guide management of finances in an

organization. Audit however noted that ESPP did not have an approved accounting

and financial procedures manual.

Management indicated that a draft manual was in place and it would be updated

before approval by the Steering Committee.

I advised management to expedite the process.

e) Inadequate Management of Inventories

Paragraph 203 of the Treasury Accounting Instruction, 2003 requires all stores

receipts to be posted in the ledger as soon as they have been examined in

accordance with the receiving procedure. All issues of inventories will be posted in

the stores ledger daily but if on any occasion, daily posting of vouchers proves

impracticable, the vouchers will be posted with the least possible delay, and the

circumstances will be notified by the Storekeeper to the Head of his Department

or Accounting Officer.

During audit, it was noted that all procured items were not taken on charge and

were not issued using bin cards and issue vouchers. Weaknesses in the inventory

management may result in loss/misappropriation of programme assets.

Management indicated that the purchases are normally made in small and

irregular quantities which did not require detailed recording.

I advised the Accounting Officer to ensure proper record keeping of stores in

compliance with the accounting instructions.

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f) Incomplete Transition Plan

According to part 9.1 of the ESPP 2010 - 2014 Programme Document, capacity

was to be progressively built in government over the first 3 years so that full

responsibility for funds and management of the ESPP can be handed over to the

Government of Uganda. During the course of the 3 year existence of ESPP, certain

budgets and other areas of the programme were to be transferred to GoU. It was

however noted that the transition plan, in terms of capacity building, had not been

achieved as envisaged, even after contracting an Institutional Development

Specialist in the first quarter of 2011/2012 to operationalize the plan. This was

attributed to the freezing of the donor funding in December 2012, where money

initially channelled through the Chief Administrative Officers for this purpose was

stopped and the management agent was introduced. There is a risk that the

programme may collapse after the current arrangements cease.

Management indicated that consultations are underway to have new transition

arrangements in place.

I advised management to ensure that the transition work plan is implemented and

re-aligned with the current level of implementation to ensure that the programme

is able to operate sustainably.

g) Long distances travelled by beneficiaries to Mobile Money Pay

Points

To effectively deliver payments, an extensive and reliable distribution network is

required to reduce the cost of access for recipients. Through interviews with some

of the beneficiaries during audit inspection, it was noted that many of them had to

travel on average four (4) kilometres to pay points to access payments. In some

extreme cases, such as Nebbi, Kole, Amudat and Napak districts, some

beneficiaries travelled distances as far as seven (7) kilometres to pay points. This

was partly attributed to weak signal strength of the Mobile Money service provider

(MTN Uganda) at some places.

The resultant effect of the above is that beneficiaries incur high transportation

costs, which erodes the value of the grant transferred and the overall benefits to

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the beneficiaries. The attainment of the initial objective of improving the

livelihoods of the beneficiaries is therefore undermined.

Management indicated that the payment service provider (MTN) would be

engaged to improve on signal strengths.

I await results of management action.

h) Replacement of lost SIM cards

Interviews conducted with the OPG beneficiaries in the Districts revealed instances

of loss of SIM cards by the beneficiaries. It was further noted that it took up to

two months or more for lost SIM cards to be replaced. Failure to replace lost SIM

cards in a timely manner hinders accessibility to the payments thereby impairing

achievement of the programme objectives.

Management explained that the replacement process for the lost cards takes long

due to the fact that the service provider imports the cards.

I advised management to liaise with MTN with a view of ensuring that the time

taken to replace lost SIM cards is reduced, so as to ensure uninterrupted monthly

payments to beneficiaries.

i) Selection criteria for Vulnerable Families Support Grant (VFSG)

According to the programme document, Social Assistance Grants for

Empowerment enrols people who are in vulnerable families. Vulnerable families

are defined as those which have majority of orphans, do not have any bread

earner and are living in poverty conditions.

Interviews conducted with some beneficiaries and Community Development

Officers in Kiboga and Kyenjojo Town Councils revealed that some of the selected

beneficiaries did not meet the criteria as defined in the ESPP selection criteria. This

practice denies the genuine vulnerable families the opportunity to benefit from the

VFSG program.

Management explained that the VFSG programme was a pilot study alongside the

SCG to identify the best method of targeting the families. Going forward VFSG

method will be phased out and an alternative method developed. I advised

management to put in place rigorous beneficiary selection procedures and carry

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out post selection reviews to ensure that rightful persons benefit from the

programme

WATER AND ENVIRONMENT SECTOR

54.0 MINISTRY OF WATER AND ENVIROMENT

a) Mischarge of expenditure


Country and this appropriation is implemented through the budget in which funds


codes.

A review of the Ministry‟s expenditure revealed that the entity charged

UGX.1,545,058,115 a decline of 84% from previous year‟s amount of

UGX.9,438,526,861 on expenditure codes other than those for which funds had

been appropriated. There was no evidence of authority under which the

mischarges were allowed while executing the budget.

Though the practice of mischarging the expenditure is on the decline at the

Ministry, further budgetary discipline is required.

The accounting officer explained that additional measures would be put in place to

further streamline the budget implementation process, so as to avoid the practice

of mischarging expenditure.

I advised the Accounting Officer to strengthen supervision of the budget

implementation and where it is inevitable re-allocation warrants should be sought

from the Ministry of Finance, Planning and Economic Development before release

of funds.

b) Payables

The Ministry had domestic arrears and other payables amounting to

UGX.3,019,492,303 at the close of the financial year as presented in note 26 to

the financial statements. Included in this amount were long outstanding debts

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such as; PAYE (UGX.1,348,649,448), contributions to international organizations

(UGX.291,740,137), and UMEME (UGX.41,900,648).

It was noted that Tax liabilities attract fines in accordance with the Income Tax

Act, 1997 (As amended). Failure to contribute to international organizations may

result into forfeiture of corresponding rights and benefits. There is also a risk of

disconnection of electricity to the Ministry by UMEME.

Management attributed the outstanding payables to failure by the Ministry of

Finance, Planning and Economic Development (MoFPED) to release necessary

funds for their settlement.

I advised management to continue liaising with MoFPED to ensure that resources

are set aside to settle these payables.

c) Nugatory expenditure

The Ministry paid UGX.1,120,908,971 to A Construction company being interest

charges on delayed payments for the contract of reconstruction of water supply

and sanitation facilities in Sironko, Soroti and Kaberamaido districts under contract

No DWD/WORKS/04-05/00140. It was further noted that UGX.223,694,883

relating to the interest was paid in error. Payment of interest charges is

considered wasteful expenditure as it could have been avoided with proper project

planning.

Management attributed the nugatory costs to delayed release of advance payment

to the contractor, unscheduled public holidays, scope changes and additional

work. It was also stated that efforts to recover UGX.223,694,883 relating to

interest paid to the contractor in error were underway.

I advised the Accounting Officer to always ensure timely settlement of obligations

to save public funds from wastage. Meanwhile, I await evidence of recovery of

interest paid in error.

d) Administrative advances

Paragraph 217 of Treasury Accounting Instructions requires that administrative

advances be accounted for within 60 days from the date of payment or else be

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deducted from the monthly salary of the official. Contrary to the above

requirement however, UGX 90,073,333 advanced to staff for official activities

lacked supporting documents. In addition, review of accountability documents

submitted by the Ministry staff revealed improper accountability for

UGX.112,817,000 thereby bringing the total sum of outstanding funds to

UGX.202,890,333. Failure to ensure proper accountability and/or enforce recovery

may result into loss of public funds. Though the Accounting Officer indicated that

supporting documents were available, the outstanding sum was not supported.

I advised the Accounting Officer to ensure proper accountability or recovery of the

funds from the concerned staff.

e) Delays in the procurement evaluation process

According to the Ministry‟s approved procurement plan, procurement of works

service should take a maximum of 38 days from the date of bid opening to the

date of evaluation. I however observed that procurement of consultancy services

funded under the donor component lasted up to 91 days. The table below refers;

Subject Of Procurement Provider Contract Value Start date No of

Days


Feasibility Studies, Detailed

Designs and Construction

Supervision of Water Supply

Systems Under Lot3: for

Namulonge-Kiwenda-Busiika

and Kiwoko, Butalanga and

Rehabilitation of Katuugo and

Improvement of Kakooge and

Migeera Water Supply

Systems.

MS M&E

Associates

Ltd

UGX.1,213,300,000 25-Nov-13 91


Feasibility Studies and

Detailed Designs Under Lot2:

for Busaana

Kayunga,Kabembe-Kalagi-

Naggalama and Kakunyu-

Kiyindi and Construction

Supervision for Rehabilitation

MS Seureca

Consulting EA

In

Association

With Warner

Consultants

€ 512,288 25-Nov-13 91

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of Buvuma

The Accounting Officer attributed the delays to the time that was taken to seek for

no objection from the donor. Delayed procurement of service providers affects

timely delivery of services to the population.

I have advised the accounting officer to ensure that procurement planning takes

into account donor requirements so as to attain timely delivery of services to the

population.

f) FARM INCOME ENHANCEMENT & FOREST CONSERVATION PROJECT

Under absorption of project funds

The Government of Uganda obtained funding from the African Development Bank

(ADB) Group and the NDF to support the FIEFOC Project which was designed to

support the Government of Uganda‟s (GoU‟s) Plan for Modernisation of Agriculture

(PMA) aimed at increasing incomes and improving the quality of life of poor

subsistence farmers and their households through market-oriented agricultural

production. The financing requirements provide for a refund of any funds not

absorbed.

It was noted that by 30th June 2014, UGX.911,108,559 and UGX.337,799,685 from

the African Development Bank and the Nordic Development Fund respectively had

not been absorbed and therefore the amounts were refunded.

As a result, planned activities such as; capacity building of farmer based

organizations for efficient management of Doho, Mubuku and Agoro irrigation

schemes and establishment of contour hedgerows on 10,000 km of slopes were

not undertaken.

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The accounting officer attributed the under absorption to delay of civil works while

the irrigation component was under the Ministry of Agriculture, Animal Industry

and Fisheries.

I advised the Project Management to ensure that in future, bottlenecks to project

implementation should be timely resolved so as to ensure timely and proper

implementation and thus improved funds absorption.

54.1 BRIDGING SUPPORT TO CLIMATE CHANGE UNIT PROJECT

a) Project Bank Account

Best practice requires each project to have a separate bank account for ease of

tracking and accounting for any project transactions at any particular time. Audit

noted that there was no separate bank account maintained for the project making

it difficult to track inflow and outflow of the project funds. There is also a risk of

project funds being utilized on activities of other projects and vice versa.

Management attributed the anomaly to the communication from Ministry of

Finance Planning and Economic Development of minimizing the opening of

Government accounts but hastened to add that an application had been lodged

with the Accountant General‟s Office to obtain clearance to open a separate

account for the project.

I have advised management to hasten the opening of a separate bank account for

the project.

b) Implementation of activities

Accordance to the approved project agreement and approved work plan, Bridging

support project was to run for a period of two years, up to the end of the year

2013. Consequently, 75% of the activities ought to have been implemented by the

year end (i.e. 30th June 2013).

Audit noted that by the end of the financial year, most activities had not been

implemented. For example the activities under the climate change coordination

mainstreaming and capacity enhancement at national and district level had not

been implemented. This may affect the attainment of the overall project

objectives.

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I have advised management to ensure that project implementation is carried out

as planned so as to meet set objectives

54.2 CLIMATE CHANGE INITIATIVE PROJECT

a) Non-Compliance with the terms of the standard project agreement

During the year, the Government of Uganda (GoU) contributed UGX.787,260,833

to the project. However the funds were not banked on a Climate Change Unit

Account, contrary to the requirements of Section 14.1 of the Standard Project

Agreement. This was a violation of the Standing Agreement. In the circumstances,

management of the project cannot be able to control the expenditure of the funds.

Management explained that the funds for the project were maintained on a

different account and managed by the Ministry of Water and Environment.

This matter was reported in my previous report (30th June 2013) and although

management had explained that it was an oversight that would be corrected, no

action was taken.

I have advised management to liaise with the Ministry of Water and Environment

so as to ensure that the Standing Agreement provision pertaining to banking in a

project account is complied with.

b) Delay in accounting for funds

UGX.32,151,743, which was advanced for the National Conference on Climate

Change Policy on 7th August 2012 was accounted for on 27th February 2013,

together with a refund of UGX.3,208,243 on the same day (a delay of 205 days).

The financial monitoring and internal control is thus inadequate.

Management acknowledged the anomaly but attributed the delay to the busy

schedule of the concerned officers who had engagements of developing the

National Climate Change Policy.

I have advised management to ensure that project staff timely account for funds

advanced to them to enable effective financial monitoring.

c) Local Service Tax

Section 80 (1b) of the Local Governments Act states that a local service tax is to

be levied on all persons in gainful employment or who are practicing any

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profession or on business persons and commercial farmers producing on a large

scale.

A review of the project monthly payrolls revealed that the local service tax was not

withheld for onward remittance to Local Councils.

Defaulting on local service tax exposes the project to risks of penalties.

Management regretted the anomaly and pledged, with effect from January 2015

to deduct Local Service Tax fees from all the Climate Change Department‟s staff

salaries and remit to the respective Local Councils, as per the requirements of the

Act.


54.3 JOINT WATER SANITATION SECTOR PROGRAMME SUPPORT (JWSSPS)-

AfDB FUNDED COMPONENT

a) SECTOR PROGRAM SUPPORT-COMPONENT

a. Under absorption of donor funds

Sector program support budgeted and received UGX.4,240,000,000 from AfDB but

audit noted that only 50% (UGX.2,115,000,000) of the funds released were

utilised. Failure to absorb all the released funds does not only affect performance

but may also affect future cash flows.

Management attributed under absorption to the delay in finalizing the joint

financing agreement for the Joint Water and Environment Sector Support

Programme (JWESSP) and delays in opening of the fund and operational bank

accounts.

I have advised the program coordinator to closely monitor the performance of the

activities experiencing slow progress in implementation and ensure that corrective

actions are undertaken to bring those activities back on course.

b) RURAL WATER AND SANITATION SUPPLY-COMPONENT

i. Budget performance

The component budgeted for revenue of UGX.36.818 billion to implement agreed

activities but only UGX.19.171 billion was released resulting in a variance of

UGX.17.647 billion. Failure to release all the budgeted funds constrained the

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implementation of the core component activities hence greatly affecting the

component performance. Management attributed this to the delay in finalizing the

Joint financing agreement for the JWESSP.

I have advised the Accounting Officer to always conclude the signing of project

funding agreements well in advance and allow for adequate time to enable smooth

release of funds allocated in each financial year.

ii. Accounting for Staff Advance

The project management advanced UGX.22,485,000 to an employee on Voucher

No.13-0509 to undertake a training of Iganga district local government staff in

appropriate sanitation promotion approaches. Review of the accountability

revealed some anomalies as indicated below;

JPF operations manual requires a log book to be maintained for every vehicle

and to be filled by a driver for each trip, which should be counter signed by the

officer. Furthermore, JPF manual requires drivers to submit monthly vehicle

reports showing summary of mileage covered and technical performance of the

vehicles. Contrary to these requirements, it was noted the activity holder fuelled

vehicles registration Nos. UG 1739S and UG 1733S with fuel worth

UGX.729,200 from various fuel stations without adhering to the mentioned

requirements. Although management in its response stated that the log books

were available, however, they were not provided for verification.

The activity holder paid Canaan Resort Hotel Ltd and Shelter Guest House

UGX.4,000,000 and UGX.10,675,000 respectively for hotel services, however,

withholding tax of UGX.880,500 was not deducted. Management in its response

pledged to recover the tax from the activity holder. I await the outcome of

management‟s action in this regard.

I have advised the Accounting Officer to ensure that vehicle movements are

adequately documented in log books to enhance management of vehicle fleet.

g) WATER AND SANIATION DEVELOPMENT FACILTY-CENTRAL REGION

i. Absorption of donor funds

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Review of the budget performance for the facility revealed AfDB committed to

finance agreed facility activities with a total of UGX.26,361,540,000 and this

money was duly transferred from JPF operations account to the facility in the year

under review. However, audit noted that only UGX.24,374,999,000 was absorbed

leaving a balance of UGX.1,986,541,000 un-utilized.

This was caused by delays in the approval and implementation of some

construction works in rural growth centres which negatively affected the overall

performance of the facility.

I have advised the facility manager to enhance monitoring, supervision of

procurement processes and construction works to avoid unnecessary delays.

ii. Procurement from Non Prequalified Service Providers

Regulation 94(1) (a) of the public procurement and disposal of public assets, 2003

stipulates that a contracts committee or a holder of delegated authority shall

approve the choice of a procurement method prior to commencement of the

procurement process.

However, review of payment vouchers revealed that UGX.520,649,524 was paid to

un-prequalified firms for hotel services without proper justification or contracts

committee approval. This practice undermines the purpose of prequalifying firms

and it is likely that the facility did not obtained value for money from the

expenditure incurred.

Management explained that the facility operates in Rural Growth Centres where

there are no pre-qualified service providers to offer the required Hotel Services

and thus uses the “National Shopping Procurement Method” as provided for in the

funding agreement between AfDB and GoU. A review of the funding agreement

however showed that the purported procurement method is not providing for.

I have advised the Accounting Officer to prevail over the procurement officer and

ensure that procurement procedures are adhered to when incurring public funds.

iii. Fuel Management

Public Procurement and Disposal of Public Assets Authority gave the Facility

authority to procure fuel advantage card facilities from M/s Shell (U) Ltd and M/s

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Total (U) Ltd. The two service providers were selected due to their geographical

spread. A review of fuel payment vouchers however revealed that the facility‟s

management disregarded the authority and deposited UGX.140,000,000 with Shell

Nansana as opposed to M/s Shell (U) Ltd and M/s Total (U) Ltd. Failure to adhere

to the authority granted by PPDA does not only undermine its mandate but also

makes management‟s actions suspect.

Management in its response explained that the funds were deposited with Shell

Nansana, because it‟s located near the Facility. Management further explained that

it was an interim measure undertaken when the previous credit card system by

Standard Chartered Bank was terminated.

I have advised the Accounting Officer to always carry out transactions in

accordance with the authority granted by PPDA, and in case of need for

divergence, to seek for PPDA approval.

iv. Consultancy services for feasibility studies, design review and

detailed engineering design for lot 1: Kiganda, Kakumiro, Kagadi

and Kiboga

Water and Sanitation Development Facility signed a contract No. MWE/SRVCS/11-

12/1292/1 dated 10th October 2012 with COWI (U) Ltd for consultancy services for

feasibility studies, design review and detailed engineering design for lot 1:

Kiganda, Kakumiro, Kagadi and Kiboga at a contract price of UGX.176,077,984.

The project commenced on 1st November 2012 with expected completion date of

30th June 2013. It was however, noted that contrary to Paragraph 18.1 of the

general conditions to the contract agreement, requiring the contractor to complete

the feasibility studies of the 4 schemes within 8 months (1st Nov 2012 to 30th June

2013); the contractor delayed to complete the project by 5 months (completed in

November 2013).

Failure to timely complete feasibility studies delayed the implementation of the

water schemes in the above mentioned towns, hence affecting service delivery.

Management attributed the delay to the failure to identify adequate water

resources in the towns of Kiboga, Kagandi and Kakumiro.

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I have advised the facility manager to always expedite test drills to allow sufficient

time for the consultants to finalize detailed designs within the agreed contract

period.

v. Consultancy services for feasibility studies and detailed designs

for Busaana Kayunga, Kabembe-Kalagi-Naggalama and Kakunyu-

Kiyindi and feasibility studies, detailed designs and construction

supervision for rehabilitation of Buvuma

WSDF- Central contracted Seureca Consulting Engineers in Association with

Seureca EA Ltd and Warner Consultants on 13th May 2014 to carry out feasibility

studies and detailed designs for Busaana Kayunga, Kabembe-Kalagi-Naggalama

and Kakunyu-Kiyindi and feasibility studies, detailed designs and construction

supervision for rehabilitation of Buvuma at a contract price of Euros.512,288.

I noted that contrary to regulation of 239(2) of PPDA, which requires a procuring

and disposing entity to pay a service provider for the actual cost of the works, as

evidenced by receipts and other appropriate documentation, management paid

Euros.53,324 for reimbursable expenditure to the consultant under certificate 1

without adequate supporting documents.

Management in its response indicated that communication had been made to the

consultant to submit supporting documentation for the re-imbursable expenditure

for certificate one.

I await the outcome of management‟s action in this regard; else the Accounting

Officer will have to deduct the funds from the subsequent certificates of the

consultant.

54.4 JOINT WATER AND SANITATION SECTOR PROGRAMME SUPPORT

(JWSSPS) – SOUTH WESTERN

a) COMPLIANCE WITH THE PROGRAMME FINANCING AGREEMENT

AND THE GOU FINANCIAL REGULATIONS

Compliance review was undertaken on the programme operations, however there

was no material breach of compliance issues that came to my attention during the

audit that would warrant reporting.

683

b) GENERAL STANDARD OF ACCOUNTING AND INTERNAL CONTROL

i. Inefficient Accounting System

WSDF-SWB is required by the Joint funding partnership operations manual to

process financial transactions and maintain books of accounts using a Computer

Financial Management System (CFMS).

It was observed that there was poor connectivity between the central server at

Luzira and the facility office at Mbarara. As a result officers had to travel to

headquarters in Kampala to enter data in the system and process transactions.

The poor connectivity does not only defeat the purpose for which the system was

installed but has also caused delays in the processing financial transactions,

increased operational costs and can affect the branch performance of the project.

Management explained that a new web-based system had been adopted and that

the IT department was working on its connectivity. I await the outcome of

management‟s action in this regard.

ii. Unbudgeted for expenditure

Paragraph 152 of the Treasury Accounting Instructions (TAI), 2003 requires that,

expenditure not provided for in the approved estimates of the current financial

year may not be incurred without the authority of a supplementary estimates

warrant, a virement warrant or a contingencies fund advance warrant.

It was however observed that the facility paid out UGX.234,239,258 to URA as

withholding tax and PAYE arrears relating to the previous financial years yet the

expenditure had not been provided for in the approved estimates for the period

under review. In the circumstances, management is constrained in implementing

the planned activities. Management explained that the amount was deducted in

the previous FY but was not remitted to URA due to lack of funds. I have advised

management to always seek approval from the sector working group for any

expenditure outside the approved budget.

iii. Management of the Facility Assets

Grounded Facility Vehicles and Motorcycles

684

Section 6.3 of the Joint Partnership Fund, Phase 2 operations manual, requires the

facility to efficiently and effectively manage the vehicles and assets under its

control in order to maximize the future economic benefits. This required

management putting in place an organized system of planned preventive

maintenance that provides for scheduled maintenance before an asset breaks

down.

It was noted that seven motor vehicles and two motorcycles belonging to the

facility broke down and had been grounded and needed boarding off. However,

the boarding off process had not been initiated. The failure to timely board off the

grounded assets is bound to result in further loss of realisable value.

Management acknowledged the anomaly and explained that the assets had

become costly to maintain. I have advised the facility management to liaise with

the Ministry‟s Accounting Officer and commence the disposal process of grounded

vehicles and motorcycles.

Ownership of plot of land on Mbarara - Kabale road

It was observed that WSDF-SWB occupies Plot Number one on Mbarara - Kabale

road, which lacked a land title. In the circumstances, the facility is exposed to a

risk of forfeiture of the piece of land in the event that the Municipal Authorities

decide to re-allocate the land to other developers.

Management explained that it was in the process of obtaining the land title and

that the surveying process had been concluded and deed plans secured. The

conclusion of the matter was still pending offer by the District Land Board. I await

the outcome of the process initiated by the facility management.

iv. Construction of Kyempene Town Water Supply and Sanitation

Scheme in Ntungamo District

Ministry of Water and Environment, Directorate of Water Development, Water and

Sanitation Development Facility-South Western Branch signed a contract with a

685

construction firm in August 2013 for the construction of Kyempene Water Supply

and Sanitation Scheme in Ntungamo District at a cost of UGX.1,582,646,835.

Paragraph 104(2) of the PPDA regulations, 2003 requires the procuring and

disposing entity to ensure that engineers‟ estimates are realistic and are based on

up-to-date information. It was noted that the project was designed with estimated

cost of UGX.1,369,003,298. However the submissions to the Contracts Committee,

had an amount UGX.1,586,684,122, which lacked details of how the estimates

increased from the original amount of UGX.1.369 billion.

Although management explained that there were supporting documents to justify

the increment, these documents were not availed for examination. I have advised

the Accounting Officer to investigate the cause of the increment in the engineers‟

estimates in the above matter and to ensure that any changes in estimates are

always properly documented.

54.5 KAMPALA WATER – LAKE VICTORIA WATER AND SANITATION PROJECT

a) Low budget utilization rate

Our review of Article 3, 3.2 of the financing agreement between KfW and the

Government of Uganda, revealed that KfW has a right to refuse to make

disbursements towards the project after 31st December 2017.

A comparison between the planned and the actual funds utilization for the financial

year 2012/2013 showed that the project was behind schedule in implementation

of some activities. A low absorption capacity rate could lead to the project not

meeting its set objectives in the Common Partnership Terms Agreement (CPTA), in

the stipulated time frame. Table below refers;

Description Budget for the

year ended 30

June 2013-

Euros

Actual utilization

for the year

ended 30 June

2013-Euros

Budget

utilization as a

percentage

Direct

disbursements

made 3,934,049 2,065,282 52%

686

Total Uses of Funds 7,134,049 4,205,489 59%

Management acknowledged the slow progress of the project but attributed it to

the delays in attaining the initial/prerequisite conditions for disbursement like the

development and approval of the operating manual, development of the

implementation/works packaging strategy and its consequent approval.

I advised the project management to hasten the implementation of various project

activities in order to meet the set project targets and objectives.

54.6 JOINT WATER AND SANITATION SECTOR PROGRAMME SUPPORT

(JWSSPS)- WATER AND SANITATION WATER DEVELOPMENT FACILIY

EAST

a) Compliance with Project Agreement, Government Regulations and

Operations Guidelines and Internal Controls

i. Information System Security and Disaster Preparedness

Audit noted that the project lacked an external hard drive for backing up sensitive

finance and procurement information. Also noted was that all the IBF grant

information was saved on the hard drives of the computers which are kept at the

office premises, hence the project risks losing all project information in case of

computer damage, fire outbreaks, theft or computer crash. Furthermore, there

was no risk management plan (disaster preparedness) to ensure early risk

identified and to sufficiently manage risks in all the project activities.

Management regretted the oversight and promised to initiate the process of

acquiring external hard drives and start the process of risk identification as a

prelude to establishment of a risk management plan.

I advised management to hasten the;

Acquisition of hard drives for the accounts and procurement department to

enable regular data back-up which should be kept offsite to facilitate

information restoration in case of damage or loss of the computers.

687

Creation of risk awareness so that potential risks at the facility are ably

identified, assessed and mitigation measures put in place.

ii. Internal Audit Function

It is expected that quarterly internal audit reviews are undertaken for the facility.

Audit however was availed only one report, implying that for the other three (3)

quarters, no internal audit review was undertaken, signifying a weak internal

review function thus increasing risk of non-compliance with policies and

agreement provisions. The project‟s internal control systems are weakened under

the circumstances. Management in its response acknowledged lack of an audit

function in the facility to complement the Ministry‟s internal audit.

I advised the facility management to lobby for the creation of an Internal Auditor

position so as to strengthen the control environment at the facility.

iii. Human Resource Capacity Development

The project injects a lot of funds for implementation of activities and yet there

were non-finance personnel involved in the implementation. Audit noted that the

said personnel were neither conversant with financial management nor trained.

There was therefore a training gap. Management acknowledged the shortcoming

and stated that it was arranging to have the non-finance project staff trained in

financial management.

I advised management, in consultation with the relevant stakeholders, to hasten

to arrange the training so that project funds are well managed during project

implementation.

iv. Accounting Controls

Audit noted that same cheques were being used to settle several payments. Cases

in point were cheque numbers 763 and 777, which were used to pay out funds for

10 and 12 payment vouchers respectively, hence complicating filing based on

cheque numbers.

688

Secondly, there were instances of delayed implementation of activities after the

funds had been advanced to staff. For example funds released on 25th April 2014

for surveying the additional distribution line of Kaliro Town Water Supply System,

were utilised in the period 2nd to 9th June 2014. The funds are susceptible to

misuse and/or teaming and lading.

Management acknowledged the anomaly and promised to use one cheque for

each payment or to provide a comprehensive schedule of payments in instances

where one cheque has been used to pay various payments.

I advised management to ensure that;

Cheques are used for each individual payment relating to specific planned

activity to facilitate record filing and review by management.

Funds are requisitioned by the implementing staff after the necessary

preparations have been undertaken for the execution of the project activity.

v. Use and Management of Vehicle

At the time of the audit, it was noted that the vehicle journey log book system was

in place, however, the one for Vehicle No. UG 1894S was not counter signed by

the officers who made the trips, implying non-compliance with the Operation

manual requirement under section E.4 Vehicle operations and management (E.4.4

Vehicle records). Management regretted the omission of the procedural

requirement but indicated that the signing of the vehicle log books was always

done by both drivers and officers.

I have advised management to ensure that the procedural requirement is adhered

to so as to facilitate tracking and ease the general management of vehicles.

b) General Standard of Construction Works and accountability

i. Poor Quality Ecosan Toilet Construction Works

During the inspection of the sampled Construction Works for 2013/14, audit noted

satisfactory quality of works by the contractors, with the exception of works done

by a local engineering firm at a cost of UGX.43,641,000, on institutional toilets at

689

Kibuku Primary School, where low quality materials were used for doors and

roofing. The structure had no ring beam, the finishing and works on the walkway

stairs were poorly done. Also noted was lack of facial boards, the poor quality

timber used for roofing, none galvanised low gauge iron sheets and the peeling off

of rough cast towards the roof. Picture refers.

Picture showing the poor quality works of the Institutional Ecosan

Toilet (FY 2013/14) at Kibuku Primary School in Kibuku Town

Council

Audit noted that the contracted firm signed a contract agreement in January 2014

to construct eight (8) Institutional Ecosan Toilets at an overall cost of

UGX.349,128,010; and works in seven (7) of the sites was in initial stages. Given

the poor quality work noted in Kibuku Primary School, there was a likelihood of the

contractor replicating the same in the other 7 sites.

Management stated that the contractor had been notified of the defects and

corrective action is being taken.

I have advised management to ensure that the construction works are closely

supervised by the WSDF-E contract manager to ensure implementation of quality

works in all the facility sites.

ii. Inappropriate and Insufficient Expenditure Accountabilities

690

Audit noted that UGX.19,417,500 relating to software was unaccounted by the

project staff, contrary to the Operation manual section E.1.4, requiring staff

advances to be accounted for and retired within 60 days. Further noted were

inadequacies in the activity reports, payment sheets and attendance lists that had

been attached as part of the accountabilities.

Management in its response stated that the concerned officers had been engaged

to account for the funds and that the accountabilities were in place. On the issue

of inadequacies in the accountability documents, management undertook to

address the anomalies in the subsequent period.

I advised management to;

Ensure adequate follow-up on the officers who do not timely furnish the

necessary accountabilities after the implementation of facility activities.

Develop a formal system of communicating to staff who delay to account for

funds advanced within the stipulated 30 days period and administrative

sanctions taken on the non-responsive officers.

Avoid advancing more funds to staff who have not accounted for previous

funds.

Ensure completeness and clarity of accountability documents for ease of audit

trail and for proper stewardship.

54.7 LAKE VICTORIA ENVIRONMENT MANAGEMENT PROJECT II

a) Project Implementing Partners

The management of LVEMP signed memoranda of understanding (MoUs) with two

Ministries of Agriculture Animal Industries and Fisheries [MAAIF], Works and

Transport) in August 2011, 9 districts (Mubende, Masaka, Kalangala, Namayingo,

Mityana, Gomba, Rakai, Mpigi and Kalungu) in April 2012, and 4 other

organizations (National Water and Sewerage Corporation, NARO-Kawanda,

Makerere University and NaFIRRI) in August 2011 to implement specific project

activities.

Documents relating to the Implementing Partners (IPs) however revealed that all

the signed MoUs did not specify the amount of money each entity was supposed

691

to receive and the timing of remittances. From July 2012 to April 2014, the two

ministries and the four other organizations had not received any project funding

and the districts on the other hand took 24 months (ie April 2012 to April 2014) to

receive funding. This was a prolonged delay for a project whose initial

implementation period was from 29th Oct 2009 to 30th June 2013. As a result of

such delays the project was extended for two years up to 30th June 2015.

Management attributed the delays to the long lead time from signing of MoUs to

disbursement of funds, as a number of processes had to be completed before

disbursement.

Article II and III of the signed MoUs requires the IPs to prepare work plans and

submit to the National Coordination Office for approval. Although the work plans

were prepared and submitted, audit was not provided with the minutes for the

meetings in which they were approved. I therefore cannot rule out the use of non-

approved work plans. Although management indicated during exit meeting that

the documents were available, they were not provided for verification.

A review of work plans and remittances to the IPs revealed disparities ranging

from IPs getting more funds than had been planned, while some that had not

been planned for received funding. Management did not provide evidence to

confirm that the work plans were amended.

Although management attributed the variances to the fact that funds for the

subprojects were budgeted under the respective implementing partner overseeing

the implementation of subprojects in the districts, no documentary evidence was

availed in support of that explanation.

I have advised the project coordinator to develop a new implementation plan, fast

track it and closely monitor its implementation so as to be able to meet the new

deadline of 30th June 2015.

b) Low absorption of funds by the Implementing Partners (IPs)

The project, which started on 29th Oct 2009 was supposed to close on 30th June

2013, however due to the delayed implementation of the agreed activities the

project was extended for two more years from 1st July 2013 to 30th June 2015.

692

Despite the extension, low absorption of funds by IPs was noted, which casts

doubt on whether all the planned activities would have been implemented by the

end of the extended period. A total of UGX.3,880,599,296 was released to the IPs

but only UGX.439,868,485 (11%) had been utilized by the end of the financial

year, leaving a balance of UGX.3,533,295,929 (89%) un-utilized. Table refers. I

further noted that by the time of audit (September 2014), all the un-spent

balances had not been accounted for.

Agency Voucher No. /

Disbursement

date

Amount

Disbursed

Amount

Spent

Unspent

balance at

30/06/2014

%

Perform

ance

Ministry of

Works

875/February 14 80,000,000 0 80,000,000 0%

Ministry of

Agriculture

876/February 14 404,800,000 158,100,754 246,699,246 39%

NARO –

Kawanda

877/February 14 127,100,000 12,735,231 114,364,769 10%

NWSC 878/February 14 69,900,000 0 162,465,118 0%

Makerere

University

879/February 14 87,300,000 86,449,350 850,650 99%

NaFIRRI 944/April 14 304,000,000 182,583,150 121,416,850 60%

Local

Governments

May –June 14 2,807,499,296

0 2,807,499,296

0%

Total 3,880,599,296 439,868,485 3,533,295,929

As a result of low absorption, most of the planned activities for the year under

review were not implemented and is likely to result in another request for project

extension. Consequently, this lowers Uganda‟s chances of benefitting from the

second project phase (APL3 (FY13-FY18), which is already overdue.

Management attributed the delay in disbursement of funds to the delay by the

Districts to open up LVEMP designated bank accounts and also the delay by some

implementing partners to submit progress reports and accountabilities.

I have advised the Project Coordinator to enhance planning, monitoring and

reporting systems with the view of ensuring that all planned activities are carried

out within the stipulated time frames.

693

c) Unaccounted for funds

i. Personal Advances

UGX.30,758,200 paid out for various activities remained unaccounted for, contrary

to Chapter 1V section 217 of the Treasury Accounting Instructions (TAI) 2003,

which requires public officers to account for funds advanced to them within 60

days. This was caused by the laxity of management to adequately enforce the

internal controls relating to accountability of advances.

I have advised management to recover the funds from the concerned officers.

ii. Project counterpart fund Account

Section 4.1.2(IV) of the Financial Management Manual (FMM) required the project

to operate a separate account in Bank of Uganda for the purposes of receiving and

managing the government‟s counterpart funds. Contrary to this, it was noted that

the project used one operational account for both donor and counterpart funding,

resulting in co-mingling of funds.

This may result in the use of donor funds to pay for disallowed expenses, improper

accountability and misstatement of financial statements. This arose due to laxity of

the project management. Management acknowledged the anomaly and promised

to take corrective action by ensuring that a separate account is opened.

I await management‟s action on this matter.

d) Human Resource Management

i. Annual Leave

Section C-a (2) and section C-b (1 & 5) of the Uganda Public Service Standing

Orders, Jan 2010, stipulate that annual leave is a right applicable to public officers

employed on full time basis and when due, should be obligatory. A review of the

employee personal files revealed that some officers had not taken leave, right

from time of recruitment. This was attributed to management‟s failure to prepare

a leave roaster and to encourage officers to go on leave. Although management in

its response stated that a leave roster was in place, it was however not provided

for audit verification.

694

I have advised management to always prepare annual leave roasters and to

encourage officers go for leave.

ii. Incomplete Personal Files

A review of staff personal files revealed lack of academic papers and appraisal

forms, contrary to section (P-d) sub sections 4 and 5 of the Uganda Public Service

Standing Orders, Jan 2010, requiring all documents which affect the official record

of a public officer to be properly kept.

This is an indication of poor record keeping by the human resources department

(HRD). In the absence of these records, the competences/abilities and

performance gaps cannot be determined and thus the appraisal of the HR is made

cumbersome.

Although management attributed the anomaly to the centralization of the main

staff files at the Ministry‟s Headquarter, by the time of this report, the files had not

been updated.

I advised management to always update public officer‟s personal files for proper

human resource management.

e) Motor Vehicle Records

A review of the asset‟s register revealed that the project owned a number of

vehicles however, contrary to paragraph 818 of the TAI, Part 2 (public stores), it

did not maintain log books or operating records for eleven motor vehicles. In the

circumstances, it was not possible to ascertain whether the vehicles were properly

maintained and/or carrying out project activities.

Management explained that the vehicles in question were being used by the

implementing partners and promised to urge them to maintain logbooks.

I advised the project management to always maintain log books or operating

records to ease the management of the vehicle fleet.

695

54.8 JOINT PARTHNERSHIP FUND

a) Accounts receivable

Review of note 4.8 revealed that a total amount of UGX.120,438,000 relating to

sundry debtors had been outstanding since the previous year without any efforts

at recovery. Included in the amount is UGX.52,188,892 relating to withholding tax

paid in error, which URA advised the project in 2011 to deduct from subsequent

remittances, an offer the Ministry has not adequately taken advantage of. There

is a risk of loss of funds under sundry debtors.

The accounting officer indicated that instructions had been given to the accounts

department to follow up the matter.

I wait for the outcome of management action in this regard. Meanwhile,

management is advised to take up the offer of offsetting WHT remittances from

subsequent payments to URA.

b) Under absorption of component funds

The JPF components received a total funding of UGX 17,365,514,880 however

only UGX 10,818,999,000 was utilized resulting into under absorption of UGX

6,546,515,880. The table below refers:

Component Amount received Expenditure Variance % variance

Rural water 11,100,000,000 12,420,206,000 -1,320,206,000 -11.9

Water for production 3,170,350,000 2,914,000 3,167,436,000 99.9

Water resource management

2,463,000,000 4,543,280,000 -2,080,280,000 -84.5

Regulation unit 500,000,000 542,522,000 -42,522,000 -8.5

Climate change 1,000,000,000 305,901,000 694,099,000 69.4

696

Component Amount received Expenditure Variance % variance

Sector programme

support and PMS

6,955,000,000 4,750,000,000 2,205,000,000 31.7

Urban water supply

and sanitation

component

3,900,000,002 1,931,485,000 1,968,515,002 50.5

Water management zones

3,791,508,880 1,786,806,000 2,004,702,880 52.9

Water and sanitation

development facility-

North

11,560,000,000 8,644,370,000 2,915,630,000 25.2

Improved hygiene and

sanitation

1,600,006,000 307,361,000 1,292,645,000 80.8

Environment and natural

resources

414,000,000 80,462,000 333,538,000 80.6

Total 17,365,514,880 10,818,999,000 6,546,515,880 37.7

Management attributed low absorption of funds to the delayed signing of JPF

phase II agreement and operationalization of the new accounts for phase II that

only became possible 6 months after the start of the Financial Year.

Non-implementation of planned activities is likely to hinder the project from

achieving its overall objective of “providing sustainable safe water supply and

sanitation facilities based on management responsibility and ownership by the

users within reach of 77% by the year 2015 with 90% effective use and

functionality of services”.

I advised the Accounting Officer to institute adequate measures that will ensure

timely implementation of planned project activities to avoid future extensions.

c) Un-authorized excess expenditure

Section 4.6 of the JPF III operational manual permits the project management to

make budget variations of up to a maximum 20% (plus or minus) on every

component‟s expenditure budget line items.

Audit however noted that under Rural Water component, a total amount of UGX.

1,320,206,000 was spent in excess of the budgeted line items amount of

697

UGX.11,100,000,000. Included in the amount of excess expenditure among others

was UGX.414,172,440 (92.04%) spent above the initial budget of 450,000,000

under procurement of vehicles budget line item.

On the other had a total sum of UGX 2,080,280,000 (99.9%) was incurred above

the line item budget allocation of UGX.2,463,000,000 under Regulation Unit

component without obtaining necessary approvals.

In the management‟s response the Accounting Officer attributed spending above

the approved budget to changes in the market price, failure to realize

Government‟s contribution and need to give extra training and capacity building

support to the newly created districts. The Accounting Officer further explained

that the anticipated mid-year budget revision to re-align component budgets/work

plans did not take place as planned.

Incurring funds over and above the approved budget without obtaining necessary

authorisation does not only contravene budgetary controls but also impacts

negatively on the implementation of activities from which funds were re-allocated.

I advised the Accounting Officer to always operate within the budget allocations

and where it is unavoidable seek for the necessary approvals for budget

variations.

d) Construction of structure & protective house at Jinja pier

Regulation 4 of the PPDA (Force Account Mechanism), 2014, requires the

procuring and disposing entity to use procurement rules and methods in the PPDA

Act, 2003 when procuring equipment and supplies required while undertaking

works using the force account mechanism.

Contrary to the above requirement audit noted that supplies worth

UGX.16,629,500 were procured under force on account arrangement for the

construction of structure & protective house for telemetry hydrological station at

Jinja pier without following force on account procurement procedures. As a result

withholding tax amounting to UGX.997,770 was not deducted from the suppliers

as required by income Tax Act, 2012 (As amended) .

The Accounting Officer explained that materials procured were obtained from the

informal sector which would have been hard to get through the normal

procurement process. This explanation however was not satisfactory as

698

accountability receipts attached show that the materials were procured from hard

ware shops.

I advised the Accounting Officer to remit the taxes involved to Uganda Revenue

Authority and ensure strict adherence to the force on account regulations in

subsequent transactions of similar nature.

e) Non deduction of WHT from Payment of Contractors

Section 119 (1) of the Income Tax Act, 2011 requires any government entity

paying for the supply of goods or services exceeding one million shillings, to

deduct 6% of the amount paid, as withholding tax and remit it to the tax

authority. Contrary to this requirement, UGX.18,566,648 was not withheld from

the payments amounting to UGX.309,44,125 made to various suppliers as shown

below:

Vr No Payee Details Memo Amount WHT

deduc

tible

V16/03 Sumadhura

Tech. Ltd

Construction Certificate No.6

for Adjumani TC

217,679,396 13,060,764

V36/03 Palm Construction

Ltd

Construction Certificate No.6-

Paidha TC.

91,764,729 5,505,884

Total 309,444,125 18,566,648

The facility management attributed the anomaly to the fact that the contractors

presented premature withholding tax exemptions on which the decision not to

deduct the tax was based. However, failure to make the deductions may result in

penalties being levied by the tax body.

I have advised the accounting officer to recover the money from the subsequent

payments to the contractors.

f) Unsupported payables

A sum of UGX.6,793,000 was reported as accounts payable in the statement of

financial position however, the amount was not supported with schedules or

699

claims to justify its authenticity. Unsupported balances may result into payment

for bills without authorised underlying transactions.

In response the Accounting Officer indicated that documents were available

however, they were not submitted for audit verification.

I advised the accounting officer to ensure that adequate documentation

supporting the above figure is submitted for verification.

54.9 NYABYEYA FORESTRY COLLEGE

1. Budget short fall

Out of the appropriated grant of UGX.842,455,000 only UGX.719,973,455 was

released by the Treasury resulting in a shortfall of UGX.122,481,545. As a result

the College was unable to undertake planned activities such as, construction of a

lecture block and renovation of old College buildings.

The accounting officer indicated that recurrent funds for the fourth quarter were

not released and there was no explanation to that effect.

I advised management to follow up the matter with Ministry of Water and

Environment (MWE) and Ministry of Finance, Planning and Economic Development

(MoFPED) to ensure releases are in tandem with appropriated amounts.

2. Extra Budgetary funding

UGX.401,012,695 brought forward from the previous year and UGX.82,203,500

received from African Network for Agroforestry and Natural Resources Education

(ANAFE) were not supported with necessary appropriation and supplementary

estimates respectively. Unauthorised extra budgetary funding contravenes

budgetary controls and undermines the responsibility of the appropriating

authority.

Management indicated that it was an oversight to spend without appropriation and

that ANAFE funds were received unexpectedly when the budgeting process was

already complete.

I advised management to always ensure that extra funds are properly

appropriated by relevant authority.

700

3. Unauthorised reallocation

Review of the budget revealed that UGX.277,973,324 was spent over and above

certain budget line items without obtaining the necessary approval as shown in

the table below.

Expenditure

item

Budget (UGX) Actual (UGX) Variance (UGX) Variance

(%)

Students welfare 238,000,000 271,296,037 33,296,037 14

Allowances 175,000,000 289,150,300 114,150,300 65.2

Vehicle operation &

maintenance

55,000,000 118,300,575 63,300,575 115.1

Staff welfare 25,500,000 38,733,500 13,233,500 51.9

Consumables 60,000,000 87,708,330 27,708,330 46.2

Other goods and

services

93,930,105 118,769,527 24,839,422 26.4

Bank charges 5,500,000 6,945,160 1,445,160 26.3

652,930,105 930,903,429 277,973,324

The un-authorized expenditure was due to management‟s failure to seek for re-

allocation from the finance committee. This practise does not only undermine the

principles of budgeting but also renders the expenditure unauthorized.

Management promised to streamline the budget preparation and implementation

processes.

I have advised the Accounting Officer to ensure that budget procedures and

controls are adhered to.

4. Governance Matters

4.1 College Governing Council

Section 77 (1) of the Universities and Other Tertiary Institutions Act, 2001,

requires any Public Tertiary Institution to establish a Governing Council. Audit

however noted that the College has since July 2011 operated without a Governing

701

Council. Operating without a Governing body is irregular and effects the effective

operation of the College.

The Accounting Officer explained that the names of proposed members of the

Governing Council were forwarded to the Permanent Secretary MWE in September

2014 and the College awaits his response.

I have advised the Accounting Officer to continue pursuing the matter with the

Permanent Secretary of the MWE so that the process of establishing a Governing

Council for the College is concluded without further delay.

4.2 Absence of a Strategic Plan

Nyabyeya Forestry College is mandated to offer practical oriented technical

forestry training by offering diploma and certificate courses. To effectively carry

out its functions; good practice requires that the college prepares a strategic plan

which identifies key objectives, resource mobilisation, coordination of activities and

application of resources among others. However, it was noted that the College has

continued to operate without a strategic plan.

In response, the Accounting Officer explained that the College lacks adequate

financial resources to prepare a strategic plan but further indicated that

management is in close contact with the MWE to ensure that funds are provided

for this activity in the subsequent budget period.

I have advised the Accounting Officer to expedite the consultations and consider

using internally generated revenue to kick-start the process.

4.3 Internal Audit Function


that in order to discharge his or her responsibilities, an Accounting Officer should

maintain an effective internal audit function throughout the Ministry, department

or agency or other reporting unit of the Government for which he or she is

responsible.

Audit however noted that, in the year under review, the College lacked an internal

audit function. As a result, management was not provided with oversight over the

accounting, financial and operational Controls.

702

Management indicated that it would liaise with MWE‟s Internal Audit Department

for provision of internal oversight role to the College.

I await the outcome of management‟s liaison with MWE.

5. Staffing Gaps

Out of the College establishment of one hundred seven (107) staff, only 20

positions (19%) were filled, leaving 87 vacancies (81%). Notable among the

unfilled positions were the posts of Senior Lecturers, Lecturers and Assistant

Lecturers.

It is evident that with this level of staffing, the students‟ training needs may not be

satisfactorily met, which impedes on the attainment of the College‟s set objectives.

The Accounting Officer explained that qualified staff keep leaving the College due

to low remuneration and that the staff shortage was reported to MWE.

I advised management to liaise with relevant stakeholders to improve the working

environment of the staff.

6. Failure to bank Revenue

Paragraph 339 of the Treasury Accounting Instructions, 2003 requires all

government revenue collected to be banked intact on the same day of collection

or the day following that of collection or the next banking day. Contrary to the

above, audit noted that the College failed to bank UGX.34,019,872 internally

collected from the Sawmill and Guest House. This exposes the funds to risk of

misappropriation.

The accounting officer attributed the anomaly to emergencies that come up when

one of the principal signatories is not at the duty station. Management further

indicated that they have initiated the imprest system.

I advised management to operationalize the accountable imprest system so as to

meet the College cash requirement in a transparent manner and ensure that

revenue collected is banked intact.

7. Non-submission of monthly Procurement Reports to PPDAA

703

Paragraph 20 (1) of PPDA regulations, 2014 requires a procuring and disposing

entity to submit to the Authority, by the fifteenth day of the following month, a

report on the procurement activities undertaken by the procuring and disposing

entity in the month. On contrary, procurements worth UGX.777,354,347

undertaken by management during the year were not reported to PPDA.

In response, management indicated that the institution lacked substantive

procurement staff and only a procurement assistant (Trainee) had been recruited

to perform procurement activities.

I advised management to liaise with MWE to ensure that the College recruits a

procurement officer who will be charged with the duty of ensuring that

procurement reports are prepared monthly and submitted to PPDA

54.10 WATER MANAGEMENT AND DEVELOPMENT PROJECT

a) Low funds absorption

During the year under review the project received USD.3,660,353 for the

implementation of the planned activities, however only USD.690,457.85 (18.9%)

was utilized (absorbed) leaving a balance of USD.2,969,895.15 (81.1%) unutilized.

This implies that the activities for which the funds were provided were not fully

implemented and this distorts the project implementation schedule and may result

in requests for project extension, which is not only costly but also affects future

rating of the country‟s similar projects by the World Bank.

Management acknowledged that there was unrealistic (over-ambitious) budgeting

for the first year of implementation which did not adequately take into account the

actual duration of the respective procurements for supply of goods, and

consultancy services. Therefore, the under-expenditures arose because most of

the planned procurements were still not finalized during the year.

I have advised management to revisit project implementation strategies to ensure

that funded activities are implemented on time, and all unspent funds for the year

under review are absorbed in the subsequent period.

704

b) Excess Expenditure

The Ministry of water and Environment prepared and submitted the project work

plan for the financial year under review to World Bank and was duly approved.

Best practice requires management to implement the agreed work plan activities

in accordance with the activity ceilings.

Review of the project work plan however, revealed that management budgeted to

spend USD.353,992 on certain specific activities but instead spent

USD.570,573.83, hence creating an excess expenditure of USD.216,581.83

(61.2%). No evidence for approval of the excess expenditure was provided. There

is a risk of the funders demanding for a refund of money spent over and above

the budgets.

Management explained that over expenditure on the specific budget lines was as a

result of under estimating the amounts that would be spent on contracts for goods

and services at the time the work plan was made, in October 2013. However, the

contracts for the goods and services to which the expenditures relate were signed

in February 2014 after getting the World Bank “No Objections.”

I have advised management to obtain retrospective approval of the excess

expenditure from the funders to avoid future penalties.

c) Late Submission of Financial Statements

Water Management and Development Project is managed following GoU financial

management and accounting procedures. Paragraph 441 of the Treasury

Accounting Instruction, 2003 requires the Accounting Officer to submit the

financial statements within 3 months after the end of the financial year, to the

Minister and the Auditor General, with a copy to the Accountant General.

The project management however did not submit the financial statements, within

the stipulated time, as the financial statements were submitted on 4th December

2014 (5 months after the statutory deadline).

I have advised the Accounting Officer to ensure that financial statements are

prepared and submitted in time for audit and for other purposes.

705

54.11 SECOND NATIONAL COMMUNICATION PROJECT

a) Under absorption of funds

Out of the budget of USD 317,600, for the Second National Communication

Project for the period January 2013 to June 2014 only USD.144,423.04 was

utilised by 30th June 2014 resulting into under absorption of USD.173,178. It was

further noted that USD.168,408.54 was withheld by donors pending submission

and approval of the first draft report on climate change adaptation. Among the

activities that were not fully implemented were: strengthening of the National

capacities on climate change, training of staff adaptation of international practices,

establishment of a website and collection of baseline data.

Management attributed partial implementation of agreed activities to delayed

approval of the draft climate change report by the funders, a requirement

necessary for execution of the remaining activities. Management further indicated

that UNEP remitted the remaining funds in July 2014 and January 2015 to

implement the remaining activities.

There is a risk that untimely implementation of the project activities may affect

future project funding arrangements.

I advised the accounting officer to expedite the implementation of the pending

activities and in future ensure that adequate monitoring mechanisms are put in

place to allow timely completion of agreed project activities.

55.0 MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES

a) Mischarges-UGX.592,962,823



706


codes. A review of the Ministry of Trade, Industry and Cooperatives expenditures

revealed that the entity charged wrong expenditure codes to a tune of

UGX.592,962,823. This constituted 4% of total expenditure for the Ministry. This

practice undermines the importance of the budgeting process as well as the

intentions of the appropriating authority and leads to financial misreporting.


funds are allocated to each account. Authority should be sought for any

reallocations.

b) Irregular payment of monthly consolidated allowances -

UGX.483,678,941

It was observed that the Ministry paid UGX.483,678,941 to staff as entitled

monthly allowances in form of night subsistence allowance ranging from two to

three days and lunch for the various categories of staff. This allowance paid in

form of night subsistence was paid irregularly because it was not supported with

any administrative circulars/standing order instructions approving it from Ministry

of Public Service.

Management explained that the payments were a composition of field trip

allowances based on departmental work plans tagged to activities that the Ministry

undertook during the year. I explained to management that staffs in U8 are office

support cadres and are not field based. I also explained that there are no standard

field days undertaken monthly by staff. Where the need arises, subsistence

allowances are requisitioned and paid separately.

I advised management to liaise with the Ministry of Public Service to have the

monthly allowance regularized or work within the regulations and pay for

approved allowances such as mileage.

c) Unaccounted for Funds

A review of the expenditure records for the Ministry revealed that funds worth

UGX.51,338,990 were spent on various activities but lacked accountability

707

documents such as bills, evidence of travels, minutes of meetings, attendance

lists, boarding passes and activity reports. Details are as below;


1 Advances to personal accounts 8,194,000

2 Travel abroad 26,400,000

3 Temporary advances 16,744,990

Total 51,338,990

In this regard, I was unable to confirm whether the amount involved was applied

for the intended purposes.

I advised management to enforce recovery measures from responsible officers.

d) Unsupported utility payments

It was noted that several transactions worth UGX.163,771,216 made with utility

organizations and other service providers were not supported with adequate

documentation to evidence the accuracy and completeness of the amounts paid to

the companies i.e. consumption statements and receipts.

Management explained that they had requested the service providers to avail the

documentation.

I await management‟s efforts on the matter failure of which recovery measures

should be instituted.

e) Contributions to International Organizations

a) Transfers to World Trade Organisation-UGX.172,765,620

Government of Uganda is a member and participates in the proceedings of World

Trade Organisation Ministerial Conferences which requires the country to make an

annual contribution to the World Trade Organisation budget. A statement of

708

account for the Ministry indicated that Swiss Francs 40,803 was outstanding for

the year 2012 while Swiss francs 43,010 was outstanding for the year 2013.

During the year, the Ministry made a payment of UGX.172,765,620 as annual

contribution to WTO which was acknowledged with a receipt of Swiss francs

20,000 leaving a balance of Swiss francs 63,811 outstanding as at October 2013.

However some issues were noted as below;

Delays in remittance of the Contribution (two years) impacts negatively on the

image of the nation.

The contribution for the year 2014 was not paid by the time of audit.

Management explained that they indeed acknowledge the negative impact of the

delays in remittance and attributed the problem to Ministry of Finance, Planning

and Economic Development (MoFPED) inability to release funds on the budget

line.

I advised management to liaise with the MoFPED and ensure that the contributions

are prioritised and paid.

b) Contributions to the regular COMESA budget

The Ministry paid a total of UGX.2,536,957,800 USD.975,754 to settle arrears of

contributions for 2012 and 2013. However the following issues were observed;

Out of the arrears paid, there is a component of interest on arrears of COMESA

Dollars 1,281.30 COMESA Dollars accumulated as at 2nd May, 2013. The

interest component incurred could have been avoided had the management

complied with Section 166(6) of COMESA. This is considered as nugatory

payment.

Delays in remittance of the Contribution (two years) impacts negatively on the

image of the nation.

The contribution for the year 2014 was not paid by the time of writing this

report.

Management explained that though the funds had been budgeted for, it was

treated by MoFPED as unfunded priority and the funds were released under a

supplementary budget and by then it had incurred interest. Management further

709

explained that funds for the year 2014 were being processed through a

supplementary budget that was before Parliament at the time of writing this

report.

I advised management to liaise with the MoFPED and ensure that the contributions

are prioritised for the Ministry releases to avoid nugatory payments in form of

interest.

f) Review of procurements

A sample of procurements undertaken by the entity were reviewed and the

following were noted;

a) Un implemented activities in the procurement plan

A review of the procurement plan and the procurements undertaken revealed that

nine procurements worth UGX.1,866,080,000 were not undertaken during the year

as planned. Failure to undertake all the planned procurements could have affected

the operations of the Ministry. The needs of the user departments were not met

since the procurements were not fulfilled.

Management explained that procurements that were not undertaken due to failure

by the MoFPED to release funds for their implementation.

I advised management to liaise with the MoFPED and ensure that budgeted funds

are promptly released and utilized as planned.

b) Un supported procurement

Section 56(1) of PPDA Act 2003 requires a PDE to maintain detailed records of all

proceedings, preserve and safe guard all relevant documents it issues and

receives.

During the year, a sum of UGX.45,900,000 was spent on procurement of air

ticketing services, however the procurement file with full documentation

confirming that the procurement procedures and regulations were followed in

obtaining the services was not provided for review. This casts doubt as to whether

the PPDA regulations were adhered to.

710

I advised Management to avail the file for confirmation of adherence to

regulations.

g) Inspections of stores management

An inspection of the stores revealed that the store is not ventilated or air-

conditioned to make it environmentally usable. Exposure of the store keeper to

such conditions is not only a health risk but may also affect his efficiency. Further,

damage or deterioration of the inventories due to dumpiness may not be ruled

out.

Management explained that the Ministry has a very small storeroom which is

poorly ventilated but that the storekeeper had been allocated accommodation in a

safe working environment as his alternative office.

I advised management to consider relocating the stores to a more conducive

environment.

h) DISTRICT COMMERCIAL OFFICERS SERVICES SUPPORT (DICOSS) – 31ST

DECEMBER 13

a) Compliance with Financing Agreement Provisions and GoU





GoU regulations except in the following matter:

i. Unapproved addendum

The project was approved on 7th June, 2011 and was to expire on 31st December

2013. Any extension of the duration of the project was subject to the beneficiary

writing a request with supporting justifications to UNOPS at least three (3) months

before the memorandum ends for Enhanced Integrated Framework (EIF) board

approval. The project management through an addendum No.1 to DICOSS

memorandum of implementation dated 4th April 2013 sought for an amendment

711

extending the contractual period. This period has since expired and the project

has continued to operate without the requisite approval.

Management explained that Government had contracted UNOPS on the financing

of the project and an amendment had been sought to extend the operational

period to December 2014.

I urged management to expedite the approval process and have the activities

implemented on time.

b) General Standard of Accounting and Internal Control

i. Unaccounted for procurements for Districts

A total of USD.654,630 was transferred to UNDP account for the procurement and

delivery of furniture and equipment by 31st August 2012. The procurement

included 81 office desks, 81 chairs, 208 chairs for round tables, 52 book shelves,

26 safes, 26 round tables, 300 notice boards, 79 desk computers, 28 laptops, 26

printers, 26 scanners, 26 photocopiers, 25 mobile phones, 1 pick-up double cabin,

51 motor cycles and 79 UPSs.

However, it was noted that the procurement file together with the accountability in

form of delivery notes, invoices, and receipts were not submitted to the project

management. In addition, information on the balances of funds as stipulated in

the Memorandum was not availed. I was therefore unable to verify whether all the

items were procured for the funds advanced.

Management explained that the donors preferred this particular procurement to be

handled by UNDP.

I advised management to liaise with UNDP with a view of retrieving the

accountabilities for audit verification.

ii. Refurbishment and repair of District Commercial Offices

According to the records availed, the funders were to refurbish and repair District

Commercial Offices in the 23 districts country wide out of the 25 implementing

districts. This expenditure was valued at USD 104,043. According to the records,

712

the procurement of contractors was the responsibility of the respective districts

and work was to start at the end of December 2012. At the close of 2013, USD

106,185 had been paid out to various contractors. This resulted in unexplained

overpayment of USD 2,142. I was also not availed the procurement files to

ascertain how the procurement was undertaken and the extent of refurbishing and

repair of the district offices.

Management explained that procurement of contractors was a responsibility of

Districts and hence the documentation in lieu of the procurements remained with

the Districts.

I advised management to liaise with the beneficiary Districts and have the original

documents submitted to provide me an assurance that the refurbishment and

repairs were actually undertaken.


i. Low absorption of project funds

According to the Memorandum of Understanding, a total of US $ 2,232,311 should

have been received by 31st December 2013 however only US $ 873,540 was

received leaving a balance of US $ 1,358,772. Various activities remained

unimplemented as a result implying that only 39% of the projected funds were

absorbed. For instance, funding of the items listed below was not realised at all:

Activity Amount Budgeted (UGX)

Funding of District work plans 625,000,000

Radio programs 165,000,000

Insurance 49,000,000

Compensation and motivation

allowance

243,000,000

The failure to fund the activities as planned hinders the project from achieving its

intended objectives.

713

Management explained that the low absorption was occasioned by delay in

recruitment of project implementation team and delayed procurements.

I urged management of the project to fast track the activities to enable

achievement of project objectives.

i) SECOND TRADE CAPACITY ENHANCEMENT (TRACE) PROJECT 31ST DEC

2013

a) Compliance with Financing Agreement Provisions and GoU





GoU regulations.


A review of the system of accounting and internal control was carried out. It was

noted that management had put in place measures to ensure proper

accountability for the project funds.


A review of the status of project implementation revealed the following;

i. Project performance

During the year under review, the project budgeted for USD 302,809 and received

only USD 100,000 towards the close of the financial year (October 2013) resulting

into a shortfall of USD 202,209. As at the end of the financial year, USD 63,769

had been spent leaving a balance of USD 36,231 on the account. As a result,

some activities that had been planned were not undertaken. These include among

others procurement of equipment, conducting professional services and

communication and publicity of entity activities to the stakeholders. The intended

objectives may not be realized within the project life time.

714

Management explained that three quarters of the period was operated under no

cost extension and the funds were received in the last quarter. This affected the

absorption capacity.

I urged management of the project to always liaise with the development partners

to ensure that funds are released timely to enable early implementation of the

project activities.

j) QUALITY INFRASTRUCTURE AND STANDARDS PROGRAM (QUISP)

a) Revenue performance

UGX.9,737,388,600 was budgeted to undertake project activities but only

UGX.3,136,178,649 (23%) was received from the development partners leaving a

funding gap of UGX.6,601,209,951. Of the funds received UGX.2,207,960,878 was

spent leaving a balance of UGX.928,217,771 on the project account in the Bank of

Uganda. Failure to realise the total funds budgeted for implies that almost all the

planned activities of the project could not be undertaken. This may result in non-

attainment of the project objectives.

Management explained that the work plan for the financial year was negatively

affected because of the funding suspension from the development partners. The

development partners only released funds for activities that did not require

lengthy procurements and the balance will be disbursed after signing contracts

with service providers.

I urged management to liaise with the development partners and have all the

budgeted funds released and ensure that all funds released are utilised as

planned.

b) Unpaid Creditors

It was observed that a sum of UGX.332,401,737 remained unpaid for works and

services rendered to the project. Failure to clear debts is likely to result into

unforeseen litigations and waste of government funds.

715

Management explained that the PDU office is in the process of arranging for the

payments once the office is satisfied that works were properly undertaken and

delivered.

I advised management to expedite the payment process and have the creditors

cleared.

c) Non-remittance of WHT

It was noted that funds worth UGX.18,823,505 were deducted in form of WHT but

were not remitted to the tax body as required by the law. Non remittance of

statutory deductions may result in payment of penalties which could have been

avoided.

I advised management to remit the outstanding statutory deductions without

delay.

d) Funds not fully utilized as per work plan

UGX.712,198,500 was disbursed by QUISP to UNBS to facilitate the

implementation of various planned activities such as assistance of SMEs in

implementing standards, awareness and publicity, development of harmonization

of standards, training on Technical Barriers to Trade (TBT) on line notification and

for the facilitation of the UNBS 27th meeting of the National TBT/SPS. However,

part of the funds totalling UGX.257,179,644 representing 36% of the total funds

released were not utilized.

Failure to absorb the limited funds available may lead to failure to implement the

activities for which they are meant which results in non-attainment of project

activities.

Management explained that because of the delayed approval of the work plan,

funds were availed to UNBS in April, 2014 which was so short a time to implement

the activities. The planned activities were carried forward in the revised work plan

from July to December, 2014 to ensure that all the activities are implemented and

the funds utilized. The Ministry will further discuss with UNBS management to

ensure adequate manpower is provided to implement QUISP activities.

716

I advised management to liaise with the development partners to ensure that

funds are released are fully utilized as planned.

56.0 MINISTRY OF TOURISM WILDLIFE AND ANTIQUITIES

a) Mischarge of expenditure




codes. During the year, management of the Ministry of Tourism, Wildlife and

Antiquities charged wrong expenditure codes to a tune of UGX.115,112,418. This

constituted 1.5% of total expenditure for the Ministry. This practice undermines

the importance of the budgeting process as well as the intentions of the

appropriating authority and leads to misleading reporting.

Management explained that these funds were balances of savings made on rent,

consultancies and subscriptions and they could not be technically re-allocated for

funding the emerging needs.


funds are allocated to each account and budget line codes should be in

accordance with the Government of Uganda chart of accounts for uniformity in

reporting and understanding by users of the statements. Authority should be

sought for any reallocations.

b) Grounded old vehicles

The Ministry has two old vehicles that are no longer in use and have been

grounded for sometime. The vehicles are at a risk of being vandalized as detailed

below;

Vehicle no Type

UG 0190T Nissan Terrano

717

UG 0299T Mitsubishi Pajero

Management explained that the vehicles are adequately secured at Uganda

Museum and the process to have them boarded off is in progress. Management

further explained that vehicle no. UG 0299T has already been inspected by the

chief mechanical engineer and the other is yet to be inspected.

I advised management to expedite the disposal process to have value for money

obtained before total loss in value of the vehicles.

c) Lack of land titles

The Ministry is in charge of a number of museums and historical sites. It was

however noted that the historical sites and museums listed below had no land

titles:

Name Location Size Structures Status

Kapir Ngora 12 acres

Rock art paintings,

foot prints land surveyed

Kakoro Rock

paintings Pallisa 15 acres Rock art paintings land surveyed

Karamoja

Museums Moroto 6 acres Museum building no title

Soroti

Museum Soroti 4 acres

Administration

block land surveyed

Sir Samuel

Fort, Patiko Gulu 10 acres

Monuments,

dilapidated office

and shade no title

Katasiha Fort Hoima 1/2 acres monuments no title

Bigo by a

Mugenyi Ssembabule

334.4

hectares

Monumental Trench

System land surveyed

Ntusi Female

mounds Ssembabule

0.23

hectares

Archaeological

Female mound land surveyed

Ntusi male Ssembabule 0.16 Archaeological male land surveyed

718

Name Location Size Structures Status

mounds hectares mound

Ntusi basin Ssembabule

10.51

hectares

Archaeological

basin and mounds land surveyed

Barlonyo Lira 1/2 acres Monuments land surveyed

Lokudi Gulu 23 acres Monuments land surveyed

Pabbo Camp Amuru 0.75 acres Huts land surveyed

Kabale

Museum Kabale 1 acre

Museum, cultural

village and craft

shop land surveyed

Dufile Moyo 12 acres Monuments no title

Bweyogerere

Capital site Mbarara 5 acres Empty no title

There is a risk that the land may be encroached on by the neighbouring

communities.

Management explained that despite limitation of resources, the program of

acquisition of land titles by the department of museums and monuments is on-

going to ensure that all heritage sites are properly preserved. I advised

management to liaise with Ministry of Finance to fund this activity to enable the

acquisition process concluded.

d) Inadequate staffing

An analysis of the staff establishment and the staff for the Ministry indicated a

staffing gap of 43. Included among these are one position for Director and 5

positions at Assistant Commissioner level. The vacant positions are likely to limit

the ability of the Ministry to effectively deliver on its mandate.

Management explained that due to wage bill limitations, only 7 of the 43 posts

have been cleared for filling by Ministry of Public Service. Management further

explained that they had gone ahead and written to Permanent Secretary/Secretary

719

to the Treasury to consider an increment in the Ministry‟s wage bill so as to fill the

critical positions.

I advised management to keep following up on the matter with Finance and Public

Service and have the situation resolved.

e) Budget performance-Funding gap

The Ministry budgeted to receive UGX.13,612,395,000 for the period under review

but only received UGX.12,309,697,806 resulting into an underfunding of

UGX.1,302,697,194. Included in the underfunding is a sum of UGX.1,050,000,000

for non-resource gross tax and UGX.252,697,000 for taxes on capital purchase

and activities under hotel establishment classification respectively.

A review of the performance report revealed the following issues:

i. Budgeting

Budget estimates though not accurate enough provide a basis for the Ministry

commitment and represents the Ministry‟s understanding of the scope and

expense of what needs to be done. The Ministry budgeted for a total of

UGX.1,300,000,000 for gross tax but only UGX.250,000,000 was released by

Treasury out of which a sum of UGX.147,430,768 was spent reflecting 19%

budget release and 59% release utilization. Allocating funds for activities/expenses

whose likelihood of occurrence is remote provides avenues for diversions as well

as large budgetary slacks which provide for future unfair budgetary variations.

Management explained that the released amount was sufficient for taxes on

capital purchases.

I advised Management to always ensure that reasonable budgetary estimates are

provided.

ii. Unimplemented activities

A review of the budget performance revealed that activities in the table below

were not implemented:

720

Activity/ indicator Planned Actual output

Classification of accommodation

establishments. 200 63

Regional & international meetings. 9 6

Non implementation of planned activities may affect the Ministry in achieving its

short-term and long-term objectives and performance of its mandate.

Management explained that the above unimplemented activities were due to

Ministry of Finance release adjustments which were necessitated by the need to fit

within the revenue performance of Government.

I advised management to continuously liaise with the Ministry of Finance, Planning

and Economic Development for funding and ensure that all activities are

undertaken as planned.

721

LAND SECTOR

57.0 MINISTRY OF LANDS, HOUSING AND URBAN DEVELOPMENT

a) Mischarge of expenditure - UGX.543,519,621

Expenditure worth UGX.543,519,621 was inappropriately charged on budget lines

to fund activities that were not planned without authority. I explained to

management that mischarge of expenditure translates into misrepresentation of

expenditure balances in the financial statements and it also undermines the

purpose for which the funds were appropriated by Parliament.

Management explained that mischarges arose out of necessity because the budget

did not support critical expenditure like payment of entitlements. This called for

sourcing for funds across the board thereby creating imbalances in the budget and

hence the mischarges. However this situation has now been addressed in the

Ministry budget proposal for the year 2014/15.


funds are allocated to significant account areas and should there be need for

reallocation, authority for the virement should be sought.

b) Funding gap

A review of the budgeted revenue against the actual revenue realized for year

revealed that management had budgeted to receive UGX.17,277,762,153

however; UGX.15,256,559,842 (88.3%) was received, leading to a shortfall of

UGX.2,021,202,311 representing 11.7% of the expected release. I noted that due

to the budget shortfall, some planned activities were not performed and others

were partially undertaken as summarized in the table below:

722

S/N Activities to be achieved Target Status of implementation

No. implemented

%age of implementation

Under Land Administration

And Management

1. Dissemination of national land policy and

implementation guidelines

40 districts Not achieved 0%

2. Registration of land transactions

300,000 transactions

37,878 Registered

13%

Physical Planning And

Urban Development

3. Dissemination of national

housing policy and

guidelines

25 Not achieved 0%

Government Land

Administration.

4. Processing of lease applications

600 leases 309 processed and issued out

52%

Management explained that this was a long standing problem. The Ministry does

not influence Ministry of Finance, Planning and Economic Development (MoFPED)

on release of funds to the Ministry.

I advised management to continue pursuing the matter with the MoFPED to

ensure all the budgeted funds are always released to accomplish the planned

activities.

c) Irregular payment of transport and lunch allowances

Expenditure worth UGX.283,314,333 was paid out to staff during the year as

transport and lunch allowance. However, the basis upon which the allowances

were paid and how the rates were determined could not be ascertained. Besides,

there was no authority from Public Service to allow such payments. In the

circumstances, I could not confirm the regularity of these payments.

Management explained that the allowances were paid as a motivation for the

Ministry staff that are required to work beyond normal working hours.

I advised management to make sure these allowances to staff are regularised by

Ministry of Public Service.

723

d) Staffing gaps- 496 Vacant Posts

Out of 839 approved staffing positions for the Ministry, only 343 (40.9 %)

positions had been filled as at the end of the financial year leaving 486 (59.1%)

unfilled. This position was over the half way mark. With this current staffing gaps,

performance of the Ministry may be affected and may result into failure to achieve

the entity‟s mandate.

Management explained that the filling of vacancies has been done in a phased

manner starting with the six (6) operational Ministry Zonal Offices; however that

notwithstanding all vacancies cannot be filled at once due to limitations of the

budget. The Ministry has so far submitted 109 vacant posts to the Public Service

Commission for filling which include some of the vital posts.

I await the outcome of management efforts.

e) Un-serviceable stores due for disposal

During the review; I noted that some items were kept in store and others kept at

the parking yard without any record or order of arrangement as evidenced by the

photographs below:

Interview with management and inspection of the stores showed that some items

had become unserviceable and are due for disposal as illustrated below;

Items Quantity

1 Computer sets 4

2 Photocopying Machines 3

3 Steel Filing Cabinets 4

724

Items Quantity

4 Swing chairs 3

5 Telephone switchboard 1

6 Used Vehicle Tires of different sizes 40

7 Wooden Chairs 8

I noted that the unserviceable stores had no records and items have overstayed

and continue to lose value. There is a risk that the items in the stores could easily

disappear through theft or negligence without detection.

Management explained that a Board of Survey has been constituted that will guide

the disposal of all unserviceable stores in the Ministry by the close of the financial

year.

I await the outcome of management‟s action.

f) Vehicles due for boarding off

A physical inspection carried out on the Ministry assets revealed that there were

12 vehicles grounded in the Ministry Parking yard as listed below;

Vehicle Registration Number Make.

1 UG 0010L Toyota Land Cruiser

2 UG 0019L JEEPGRAND CHEROKEE

3 UG 0020L JEEPGRAND CHEROKEE

4 UG 0053L NISSAN HARD BODY

5 UG 0025L TOYOTA HILUX

6 UG 0073L ITSUBISH

7 UG 0079L FORD RANGER


9 UG 0022L NISSAN HARD BODY


11 UG 0007L TOYOTA LAND CRUISER

12 UG 0072L NISSAN PATROL

The vehicles seemed to have been packed for a long time in the Ministry parking

yard as reflected in the pictures below:

725

Some two pickups ready for disposal packed in the Ministry parking yard.

UG 0019L JEEPGRAND Cherokee

Interview with management revealed that the vehicles became uneconomical to

run because of constant repairs due to old age. Further analysis showed the

following anomalies:

Although the transport officer had written to the responsible officers

recommending the vehicles for boarding off; no action had been taken by

management.

The vehicles were parked in the Ministry parking yard which has continuously

congested the already limited parking space.

Management explained that a Board of Survey has been constituted that will guide

the disposal of all old vehicles in the Ministry by the close of the financial year

2014/15.

I advised management to expedite the disposal process and have the vehicles

disposed off to avoid any eventual deterioration of value due to weather and other

factors.

g) Ministry Zonal Offices

A review of the Ministry staff establishment revealed that the Ministry is supposed

to have 21 zonal offices throughout the country and these were planned to start in

June 2012. However, inspection of the zonal offices carried out in January 2015

revealed that only 6 Zonal offices were established and are operational. These

were Kampala (KCCA building), Wakiso, Mukono, Jinja, Masaka and Mbarara Zonal

offices. Below is a summary of inspection findings:

726

a) Congested offices and corridors

According to the Principal Lands officer in charge of Wakiso zonal office, the Zonal

office had 45 staff members occupying 11 offices. Physical inspection revealed

that the offices were very congested and some staff did not have chairs to use.

The most affected section was the strong room with 5 staff members who had

only one table with two chairs placed in the corridor to the strong room.

According to the hand over report dated 18/08/2014 by the outgoing Principal

Lands Officer, the entire first floor of the building was supposed to be occupied by

the Ministry Zonal Office but it was noted that most of the offices of the first floor

were still occupied by the District staff. I explained to management that the

current state reflects a bad image of the Ministry. Moreover; the congested offices

hinder the smooth progress of work and could seriously affect individual

performance and the Ministry at large.

Management explained that Wakiso zonal office is the largest of the zonal offices

with a total of 160,000 titles hence the heavy human traffic. Works are underway

to control unauthorized access by land agents as an initial measure by creating

access control systems. Management further explained that in the long run, the

Ministry is considering creating another Ministry Zonal Office out of Wakiso either

in Entebbe or Kira to further decongest Wakiso.

The outcome of management‟s effort is awaited.

h) Ownership of Buildings

Century house plot 13/15 Kampala and survey and mapping plot 1-3A, 3B, 3C

Entebbe were the only buildings captured in the assets register. It was observed

that both office buildings were too old, over 50 years and maintenance was not

being done periodically to control wear and tear. It was also observed that

acquisition date of the buildings was not captured in the fixed assets register and

this made it difficult for the audit team to assess the value of the buildings. The

ownership was also not ascertained.

727

Management indicated that some officers were assigned to handle the issues

mentioned. The buildings have not been adequately maintained over a period

of time due to lack of a budget. However the Ministry through USMID project has

commenced on an initiative to renovate part of the buildings in a phased manner.

The outcome of management initiatives is awaited.

i) Zonal offices

a) Arua zonal office

a. Procurement of office furniture

Public procurement and Disposal of assets Act 2003 Section 58, requires that

entities plan its procurements in a rational manner and this is done to guide the

Government expenditure so that the entity acquires what it needs at the right time

given resource constraints Government is faced with.

It was observed that the furniture procured for all zonal offices was done without

plan and were therefore not reconciled to the time line of implementing

operationalization of zonal offices. As a result, the furniture got damaged through

use by the district staff.

I advised management to contact the district offices to make good of the damaged

furniture.

(k) Maintenance of the building

Although this is still a new structure, I noticed that maintenance was not being

done. The strong room was heavily infected by termites that had built ant hills as

a result; some of the files were found with some getting damaged by termites.

Poor maintenance of the building results into quick deterioration. I recommended

that management should direct the District to make routine maintenance as a

condition of occupying the building.

b) Lira Zonal Building

a. Building maintenance

728

The inspection of the building revealed that the building is inadequately

maintained as stated below:

The once white paint is now dirty in most parts of the building both inside and

outside;

The cob webs are a common site inside and outside the building.

The building has water born toilets however; most of these toilets are now out

of use resulting from poor usage. They require major plumbing work.

The compound was found bushy;

The building is also at risk in case of fire outbreak. The fire extinguisher in the

building has service which expired on 1/10/2010.

I advised management to consider renovating and improving the zonal building.

j) LEVERAGING MUNICIPAL INFRASTRUCTURE IMPROVEMENT

INVESTMENT (LMIII) PROJECT – 2012/2013

a) General Standards of Accounting and Internal Control



accountability for the Grant funds put in place by management was satisfactory.

b) Compliance with Financing Agreement Provisions and GoU


A review was carried out on the project compliance with the grant agreement



GOU regulations except in the following matter:

i) Delayed submission of Project Expenditure Report and accounts

It was noted that management did not submit the project expenditure report and

accounts in time to allow me review the report and the accounts yet the Grant

agreement became effective way back in July 2012. Management submitted the

expenditure report one (1) year later after the end of the financial year. Further,

the accounts were submitted 2 years later. The delay affected the audit of the

729

project for the 2012/13 implying that the report could not be prepared and availed

to the various stakeholders at the required time.

I advised management to ensure that the expenditure report is submitted in time

to facilitate timely reporting on the Project financial performance.


i) Delays in concluding the Consultancy on Environmental Impact

assessment and Resettlement Framework

On the 17th January 2011, the Ministry entered into an agreement with a

consulting company to carry out environmental impact assessment and

resettlement framework in the fourteen (14) Municipalities country wide at a price

of US $ 104,621. According to the special conditions of contract, the

commencement date was supposed to be 7 days after the date of the contract

becoming effective and the time period was supposed to be 45 days for the

environmental and social impact assessment and 35 days for the resettlement

frame work while two additional weeks were to cater for the approval of the final

report.

It was noted that the contract for provision of consultancy services was signed in

January 2011 while the grant agreement was signed in July 2012; 18 months

before the LMIII grant agreement came into existence. The final consultancy

report had not been concluded at the time of reporting. I explained to

management that without a report, I could not establish whether the funds were

put to proper use and whether the report will be useful to the users at the end of

the exercise.

Management explained that the World Bank provided US $ 85,000 to pay a

consultant to come up with the Environment & Social Management Framework

under a different management. The consultant quoted US $ 104,000 and informed

the Bank management about the financing gap. The Ministry of Finance was

accordingly required to make a formal request for additional funds however the

Ministry delayed and the Grant closed before the Consultant was fully paid.

Management further explained that when the LMIII Grant came on board, the

730

Consultant‟s balance was included in the LMIII work plan which was okayed by the

funders since it well fit in the LMIII Grant objectives.

I advised management to follow up on the report and ensure that the contents are

still useful and applicable to the users.

k) LEVERAGING MUNICIPAL INFRASTRUCTURE IMPROVEMENT

INVESTMENT (LMIII) PROJECT – 2013/2014




accountability for the Grant funds put in place by management was satisfactory

except in the following matter;

i. Delays to disburse funds to the Municipal Councils

During the financial year under review, UGX.317,186,100 was remitted to nine

Municipal Councils as indicated in the table below:

Municipality. Voucher Number Amount

Entebbe MC 001052014 35,242,900

Fort Portal MC 002052014 35,242,900

Gulu MC 003052014 35,242,900

Hoima MC 004052014 35,242,900

Lira MC 005052014 35,242,900

Masaka MC 006052014 35,242,900

Moroto MC 007052014 35,242,900

Soroti MC 008052014 35,242,900

Tororo MC 009052014 35,242,900

Total Funds sent 317,186,100

I noted that funds to finance the activities of the Municipal Development Forum

(MDF) for the financial year were remitted on 20th May 2014, one month and 10

days to the end of the financial year although the funders released the second

installment early on the 4th October, 2013. Delays by project management to

disburse funds to Municipal Councils on time impacted negatively on the

731

implementation of the planned activities in municipalities. There is a risk that the

project may be extended leading to extra administrative costs.

Management explained that the delays were occasioned by the delay in concluding

with the work plans by the Municipalities but committed that in future,

disbursement of the project funds to the project beneficiaries will be timely.

Management was advised to always remit the project funds to avoid another

project extension.

b) Compliance with Financing Agreement Provisions and GoU Financial

Regulations

A review was carried out on the project compliance with the grant agreement



GOU regulations.


Inspection of the Municipal Councils.

Inspection of the nine Municipal Councils that benefited from the grant was carried

out and the following were observed;

i. Failure to utilize the disbursed funds

Whereas UGX.317,186,100 was remitted to nine selected Municipal Councils at the

time of inspection, eight (8) of the nine (9) municipalities had not utilized the

funds except Gulu Municipal Council which had utilized just UGX.2,058,500 of the

total funds remitted. The funds utilization status has been summarized in the table

below;

Table: Funds utilization status

Municipality Amount sent Utilized Unutilized

Amount % age of

funds

utilized.

Amount. % age of

funds

unutilized

Entebbe MC 35,242,900 00 00 35,242,900 100%

732

Municipality Amount sent Utilized Unutilized

Amount % age of

funds

utilized.

Amount. % age of

funds

unutilized

Fort Portal MC 35,242,900 00 00 35,242,900 100%

Gulu MC 35,242,900 2,058,500 5.8 33,184,400 94.2

Hoima MC 35,242,900 00 00 35,242,900 100%

Lira MC 35,242,900 00 00 35,242,900 100%

Masaka MC 35,242,900 00 00 35,242,900 100%

Moroto MC 35,242,900 00 00 35,242,900 100%

Soroti MC 35,242,900 00 00 35,242,900 100%

Tororo MC 35,242,900 00 00 35,242,900 100%

Total 317,186,100 315,127,600

Management explained that the Municipal Council funds were sent to their

respective General Funds Account towards the close of the financial year, a period

that was considered to be too short to utilize the funds. It was further indicated

that the funds were sent without guidelines on how to utilize them. I explained to

management that delayed utilization of funds denies citizens timely benefits of the

Grant which could frustrate the purpose for which the grant was accepted.

I advised management to ensure guidelines for the utilization of funds to the

municipal councils are issued immediately to avoid further delays.

ii. Memorandum of Understanding between LMIII Project &

Municipal Councils

During the review, it was noted that the disbursement of funds to other Agencies

(municipal councils) was not supported by a memorandum of understanding

(MOU) between the Municipal Councils and the Project management. I explained

to management that without the MoU, it may not be easy to enforce binding

obligations on both parties a situation that could pose challenges on effective

implementation of the project activities. Besides, funds could easily get diverted

into non project activities.

In response, management explained that after the Municipalities signing the

Project Participation Agreement under the USMID Program, it was anticipated that

this would suffice because; the intercalations between the Municipal Councils and

733

the MDF‟s were clearly pointed out in the Program Operational Manual to which all

parties are bound.

I advised management to ensure that the MoUs are in place that defines the

obligations of each party for successful implementation of the project activities.

l) TRANSFORMING SETTLEMENTS OF THE URBAN POORIN UGANDA

(TSUPU)

a) Compliance with the Financing Agreement and Government of

Uganda Provisions

A review was carried out on the project compliance with the Grant agreement



GOU regulations.



noted that management had instituted adequate controls to manage project

resources except for the following matters;

i. Delayed adoption of National Urban policy (NUP)

A contract for provision of consultancy services to finalize the development of

National Urban Policy was awarded to a consulting firm in October 2012 at a

contract price of USD.442,633. The consultant was required to specifically come

up with:-

15 year strategic Urban Development Plan

Creation of an Urban Indicators Data base and

Preparation of the Information, Education and Communications (IEC)

strategy).

At the time of reporting, the consultant had received all the contract amount.

According to the National Consultant Workshop held in May 2014, the stakeholders

were satisfied with the consultant deliverables. However, it was noted that the

734

policy had not yet been submitted to cabinet for approval and adoption.

Implementation of the Policy is delayed.

Management explained that the NUP draft policy is currently before an editor to

remove the editorial mistakes before submitting to cabinet.

I advised management to expedite the process to ensure the policy is submitted to

Cabinet for approval.

ii. Inspections of Project activities in Municipal Councils

During the year, TSUPU project was implemented in five Municipal Councils of

Kabale, Mbarara, Jinja, Arua and Mbale where funds worth UGX.2,162,487,369

were remitted. As part of the audit, inspection was carried in all the five Municipal

Councils to establish the extent of implementation of project activities. The

following were observed:

KABALE MUNICIPAL COUNCIL

i. Unutilized funds-UGX.413,159,381

During the financial year, the Council received UGX.413,159,381 from the Ministry

for TSUPU activities. The funds were disbursed in two instalment of

UGX.234,787,170 and UGX.178,372,211 on 23/09/2013 and 20/06/2014

respectively.

At the time of inspection (September 2014) all the funds were still held on the

Municipal account. These funds had therefore not been put to use in implementing

planned activities.

Management explained that the delay to utilise the funds arose from late

disbursement of funds from the development partners.

I advised management to always liaise with the financiers for timely release of

funds.

JINJA MUNICIPAL COUNCIL

i. Unutilized funds -UGX.4,481,863

735

Jinja Municipal Council received UGX.491,511,798 for implementation of TSUPU

activities. As at 30th June 2014 UGX.4,481,863 was still held on the Municipal

account. Non utilization of all funds received implies that the intended project

activities were not fully implemented.

Management explained that these funds still on the account were retention for the

CUF projects to cater for the defect period.

I advised management to avoid comingling of TSUPU project funds with other

project funds as this is likely to cause diversions.

MBARARA MUNICIPAL COUNCIL

i. Unutilized funds – UGX.15,553,957

During inspection, it was discovered that the Municipal Council had

UGX.15,553,957 unutilized at the close of the financial year on TSUPU Bank

Account in Crane Bank.

Management explained that the Ministry had formally written to the Town Clerk to

respond to the issue.

I advised management to ensure adequate follow up on the matter to enable

proper accountability.

ARUA MUNICIPAL COUNCIL

i. Delayed release of TSUPU funds from General Fund Bank A/C

The Ministry remitted UGX.423,162,659 to Arua Municipal Council for TSUPU

activities for the financial Year 2013/2014. The funds were remitted in two

instalments of UGX.234,787,170 and UGX.188,375,489. However, I noted that the

last instalment of UGX.188,375,489 was not transferred from the General Funds

Account until 19/07/2014. Delayed release of project funds affected the project

performance during the financial year.

I advised management to ensure that project funds are remitted in time to allow

project implementation of planned activities.

736

57.1 UGANDA SUPPORT TO MUNICIPAL INFRASTRUCTURE DEVELOPMENT

PROGRAM (USMID) PROJECT

1.1 Compliance with the Financing Agreement and Government of

Uganda Provisions




GOU regulations fairly except in the following;

1.1.1 Unutilised funds at Project Headquarters

The project received all the budgeted funds expected (UGX.66,542,389,583) but

only UGX.51,874,220,299 (78%) was spent leaving UGX.14,668,169,284 (22%) un

utilized as summarized in the table below:

Expenditure

budget line

allocation

Allocated

funds

Spent

amount

Unutilized

funds

Unutilized

funds as

%age to the

allocated

funds

1 Municipal

Developm

ent Grant

41,826,946,37

7

41,826,946,37

7

Nil 0

2 Municipal

Capacity

Building

6,139,735,248 6,139,735,248 Nil 0

3 MLHUD Capacity

Building

Grant

13,381,200,82

9

3,907,538,673 9,473,662,156 71%

737

4 IFMS Installation

in 12

Municipalit

ies

5,194,507,129 Nil 5,194,507,129 100%

Grand Total 66,542,389,583 51,874,220,299 14,668,169,284 22%

All the funds due to Municipal Councils of UGX.41,826,946,377 and

UGX.6,139,735,248 for Municipal Development Grant (Infrastructure development)

and Municipal Capacity Building respectively, were remitted to the Municipal

Councils. However, it was noted that management did not deliver as expected

under MOLHUD capacity building grant and installation of IFMS.

Failure to implement all the planned activities for year implies underperformance

and could result into failure to attain the project intended objectives in the

scheduled period.

Management explained that generally there was time constraint and the project

had to start late. The loan became effective in September 2014 and initial

disbursement started thereafter.

On procurement of IFMS implementation firm, management procured a service

provider and installation of IFMS in the 12 municipal councils are in the final

stages.

With regard to capacity development programme, management had entered into

agreements with contractors to supply vehicles, furniture and equipment.

I advised management to expedite the procurement processes and have the

implementation kick-started.

738

1.2 General Standard of Accounting and Internal Control


observed that management had instituted adequate controls to manage project

resources except for the matter below:

1.2.1 Training Abroad

The project spent US $ 8,814 and UGX.16,930,780 on training of six officers in

South Africa and India.

The following anomalies were noted:

The project had no training guidelines to guide the project staff on training.

Training was therefore done haphazardly.

All the individuals trained were MoLHUD officials and not project staff. It was

not clear under what project budget item the Ministry officials were trained.

The project funds were therefore diverted.

There was no evidence of training needs assessment carried out to confirm

that the individual‟s needs were assessed as necessary and beneficial to both

the individuals trained and the project. There is a possibility that Project funds

could have been spent on non-beneficial trainings.

I advised management to endeavor to put in place a training policy that will guide

the project management and staff in training so as to benefit from the project.

Management should also account for the funds not supported.

1.3 Status of project implementation

A review of the status of project implementation revealed the following:

1.3.1 Unutilized funds remitted to Municipal Councils

An inspection carried in August 2014 of some of the Municipal Councils revealed

the following:

1.3.2 Unutilized funds for capacity building-UGX.4,723,244,616

The project head office remitted a total of UGX.6,139,752,416 to 14 Municipal

Councils. However, it was noted that as at the close of the financial year

739

2013/2014, only UGX.1,416,507,800 (23%) had been utilized implying that

UGX.4,723,244,616 (77%) remained unspent as indicated in the table below:

Municipal Amount released Amount spent

%age spent to the

amount

released

Un spent

bal.

%age of un spent to

the amount

released

Arua 438,553,744 61,977,050 14% 376,576,694 86%

Entebbe 438,553,744 18,835,250 4% 419,718,494 96%

Fort Portal 438,553,744 24,293,244 6% 414,260,500 94%

Gulu 438,553,744 24,665,015 6% 413,888,729 94%

Hoima 438,553,744 209,805,895 48% 228,747,849 52%

Jinja 438,553,744 39,921,493 9% 398,632,251 91%

Kabale 438,553,744 95,716,701 22% 342,837,043 78%

Lira 438,553,744 75,237,743 17% 363,316,001 83%

Masaka 438,553,744 260,814,754 59% 177,738,990 41%

Mbale 438,553,744 29,980,300 7% 408,573,444 93%

Mbarara 438,553,744 134,622,798 31% 303,930,946 69%

Moroto 438,553,744 248,104,708 57% 190,449,036 43%

Soroti 438,553,744 59,462,688 14% 379,091,056 86%

Tororo 438,553,744 133,070,161 30% 305,483,583 70%

Total 6,139,752,416 1,416,507,800 23% 4,723,244,61

6 77%

At the time of inspection, the Municipal council‟s management had not come up

with the capacity building implementation reports. Further, the annual report for

the first year of program implementation by the project headquarters did not

provide details of the Municipal Council capacity building implementation status.

Underutilization of capacity building funds (some below 10%) affects

implementation of planned activities and ultimate attainment of overall project

objectives.

Management explained that the Municipalities received the funds barely 4 months

and had not fully completed the procurement process for consultants and supplies.

740

The Municipal Council also needed support from the Ministry to ensure that quality

tools were procured. Further, the Municipal Councils had started on the process of

coming up with capacity building plans and the reports will be produced

accordingly.

I urged management to support the municipal councils and ensure that the

procurements are done on time and activities implemented.

1.3.3 Un-utilised fund for Infrastructure Development

The project head office remitted a total of UGX.41,826,946,392 to 14 Municipal

Councils as budgeted. During inspection, it was noted that at the close of the

financial year, a total of UGX35,018,760,442 (84%) remained unspent as per the

details in the table below:

Municipal Bank Amount sent Closing Balance

1 Arua Orient Bank 2,598,140,991 8,765,460

2 Entebbe Bank of Baroda 2,689,196,081 2,724,879,781

3 Fort Portal Housing Finance

Bank 1,660,797,443 1,691,167,821

4 Gulu Bank of Africa 8,162,894,235 8,162,755,481

5 Hoima Crane Bank 3,511,992,326 3,521,915,938

6 Jinja Crane Bank 3,193,079,981 3,202,039,427

7 Kabale Bank of Baroda 1,535,126,450 1,532,367,451

8 Lira Bank of Africa 4,967,344,540 4,967,190,552

9 Masaka Crane Bank 3,041,414,632 3,045,632,403

10 Mbale Crane Bank 2,911,814,550 851,962,587

11 Mbarara Crane Bank 2,687,417,388 2,698,862,531

12 Moroto Crane Bank 446,244,780 475,868,980

13 Soroti Crane Bank 2,482,947,571 1,240,434,155

14 Tororo Crane Bank 1,938,535,424 894,917,875

TOTAL 41,826,946,392 35,018,760,442

741

By the close of the financial year, municipalities in cluster 2 (Mbale, Soroti and

Tororo) had just signed contracts for works and at the time of inspection; contract

execution was ongoing.

I could not rule out lack of commitment by municipalities on the implementation of

project activities which may hinder the achievement of project objectives.

Management explained that 10 Municipal Councils signed contract agreements at

the end of the financial year and in the course of the first quarter of 2014/15

financial year. The other 4 Municipal Councils are still in negotiation stage.

Management however promised to fully utilize the funds in the subsequent year.

I urged management to liaise further with management of the municipalities to

ensure that infrastructure development activities are successfully implemented

57.2 DEVELOPMENT OF NATIONAL URBAN SOLID WASTE MANAGEMENT

STRATEGY - 2012/2013



noted that in all material respects, management had put in place adequate

controls to ensure proper accountability for the Grant funds.



A review was carried out on the project compliance with the Grant agreement



GOU regulations except for the following matters;

i. Delayed submission of Financial Statements

It was noted that management submitted financial statements one (1) year later

after the end of the financial year contrary to sect.2.04 (c) of article II of the

742

Grant agreement. Failure to submit the financial statements limited my ability to

undertake the audit and report within the prescribed timeline. Furthermore, this

impacts negatively on the decision making process of stakeholders.

I advised management to prepare accounts in time to enable the audit and timely

reporting on the Project financial statements.

ii. Lack of Project work plan

It was noted that the project management did not prepare a project work plan to

guide in the utilization of the grant funds despite a total budget of USD.547,000. I

explained to management that a work plan guides the project in achieving its

intended objectives. Without the work-plan, ineligible expenditures could occur

and make it difficult to assess performance.

I advised management to ensure that a work plan is put in place and all

expenditures of the project is in accordance to the plan.

iii. Lack of interim unaudited financial reports

Sect. 2.04 (b) of the project document provides that the recipient shall ensure

interim unaudited financial reports are prepared and furnished to the World Bank

not later than forty five (45) days after the end of each calendar quarter. During

the review, I noted that management did not produce the interim financial

reports. I explained to management that failure to provide Interim Financial

Reports hinders the assessment of financial stewardship and performance of the

project.

I advised management to ensure that the interim un-audited financial reports are

in place to guide the financial stewardship and performance of the project.

57.3 DEVELOPMENT OF NATIONAL URBAN SOLID WASTE MANAGEMENT

STRATEGY - 2013/2014



noted that in all material respects, management had put in place adequate

743

controls to ensure proper accountability for the Grant funds put in place by

management was satisfactory.



A review was carried out to the project compliance with the Grant agreement



GoU regulations except for the following matters:-

i. Lack of project work plan

It was noted that the project management did not prepare a project work plan to

guide in the utilization of the grant funds despite a total budget of US$.547,000. I

explained to management that a work plan guides the project in achieving its

intended objectives. Without the work-plan ineligible, expenditures are likely to

occur. This issue was raised in 2012/13 report to Parliament.

I advised management to ensure that a work plan is put in place and all

expenditures of the project is in accordance to the plan.

ii. Lack of interim unaudited financial reports

Sect. 2.04 (b) of the project document states that the recipient shall ensure

interim unaudited financial reports are prepared and furnished to the World Bank

not later than forty five (45) days after the end of each calendar quarter. During

the review, I noted that management did not produce the interim financial

reports. I explained to management that failure to provide Interim Financial

Reports hinders the assessment of financial stewardship and performance of the

project. This issue had earlier been raised in 2012/13 report to Parliament.

I advised management to ensure that the interim unaudited financial reports are in

place to guide the financial stewardship and performance of the project.

iii. Operating beyond the agreed project closing date

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Sect. 3.03 of the grant agreement indicated that the project closing date was 31st

December 2013 but operations of the project continued beyond 31/03/2014 when

the last payments were made. I noted that the extension was not granted by the

IDA. Further, the last tranche was not received. I explained to management that

failure to officially close the project in compliance with the project closing

guidelines is against the financial agreement provisions and project operations

guidelines.

Management explained that there was a delay in seeking for an extension.

Management was supposed to undertake study tours, exchange visits,

benchmarking best practices and training of officers but the activities were not

undertaken because the last tranche was not received. The balance of the

Consultancy fees had to be partly settled by World Bank having exhausted all the

funds on the Project account.

I advised management to always operate within the agreed period or seek

extension in time in case there is need.


i. Development of the National Urban Solid Waste Management

Strategy - Status of implementation

One of the major objectives of the project was to develop a Solid Waste

Management Strategy to ensure a cleaner and less polluted environment and have

it disseminated to different stakeholders. At the time of reporting, the strategy had

not been submitted to cabinet for adoption although a consultant contracted to

develop the policy had been paid all his dues amounting to US$377,600 for the

services rendered. I explained to management that in case of any suggested

changes, there is a risk that the consultant may not revisit the strategy and have

the changes effected.

Management explained that the policy was validated at a national stakeholder‟s

workshop in May 2014 and the delegates adopted it with some few amendments.

Management took it up to harmonize positions relating to the Ministerial mandate

745

of Water, Environment, Health and NEMA. It was indicated that there were issues

that the Ministers in charge of Health, Water and Environment had to agree on

and when finalized, the relevant Minister will table it to Cabinet for adoption and

to Parliament for final approval.

I advised management to expedite the approval process and have the strategy

implemented by stakeholders.

INFORMATION AND COMMUNICATION SECTOR

58.0 MINISTRY OF INFORMATION AND COMMUNICATIONS

TECHNOLOGY


The Parliament appropriates funds in accordance with the needs of the country

and this appropriation is implemented through the budget in which funds are

tagged to particular activities and outputs using account codes and MTEF codes. A

review of the Ministry‟s expenditures revealed that the entity charged wrong

expenditure codes to a tune of UGX.193,053,197. This constituted 4% of total

expenditure for the year of UGX.4,960,480,667.

Mischarges undermine the importance of the budgeting process as well as the

intentions of the appropriating authority and lead to misreporting.

Management explained that the mischarge of expenditure was a result of

insufficient budgetary allocations and severe cuts in respect of items referred to as

consumptive items by the MOFPED.

I advised the Accounting Officer to streamline the budgeting process to ensure

that sufficient funds are allocated to each account. Furthermore, authority should

be sought for any reallocations.

746

b) Outstanding Payables

A comparison of the payables balances for the financial year 2012/13 and 2013/14

revealed a significant increase in domestic arrears of UGX.356,261,608 (39.6%)

from UGX.900,856,821 in the financial year 2012/13 to UGX.1,257,118,429 during

the year under review. I explained to management that the entity risks litigation

and payment of nugatory expenditure arising out of litigation costs.

Management responded that the increase in payables was as a result of rent

arrears of UGX.350,732,722 which remained unpaid for the period ending 30th

June, 2014. The Ministry had budgeted UGX.516,000,000 exclusive of Value

Added Tax (VAT) for rent for the period because the Landlord M/s NSSF had not

earlier indicated that they are VAT registered. Management further explained that,

later in the year, the Landlord submitted a claim for VAT which increased the rent

amount beyond the budgeted funds.

I advised management to liaise with Ministry of Finance Planning and Economic

development and ensure that the rental arrears are cleared.

c) Un-approved Corporate Strategic Plan

The strategic plan is an important tool in steering any organization towards its

vision, mission and its overall mandate. Annual activities undertaken by any

organization should be derived from the strategic plan. However, it was noted that

the Ministry does not have an approved strategic plan in place. Delays in having a

strategic plan approved may adversely impact on the Ministry in the achievement

of its objectives.

Management explained that the Ministry‟s draft Strategic and Investment Plan

(ICT-SIP) was submitted to the Ministry of Finance Planning and Economic

Development for a certificate of financial implications so as to enable the Minister

of ICT submit it to Cabinet for approval.

I await the outcome of management‟s efforts in having an approved strategic plan

in place.

747

d) Staffing Gaps

A review of the Ministry‟s organizational structure revealed that out of the

available 93 posts, 76 posts were filled leaving 17 positions vacant. Some of the

vacant positions include vital positions below;

Vacant Position Vacancies Scale

Principal Information Scientist 01 U2U

Principal Communications Officer 01 U2 U

Senior Systems Analyst 01 U3SC

Senior Information Technology

Officer 01 U3SC

Information Technology Officer 01 U4SC

Information Scientist 01 U4SC

Staffing gaps affect the performance and overall achievement of organizational

goals and objectives.

Management explained that the recruitment of staff is constrained by the budget

ceiling. Management further explained that the Ministry is faced with the challenge

of uncompetitive salaries in the labour market thus there is a high staff turnover

in technical ICT positions yet the Ministry may not be able to attract suitable

applicants due to lack of competitive wage offers.

I advised management to continue liaising with Ministry of Public service with a

view of ensuring that the vacant posts are filled and possibilities of staff retention.

e) Budget Performance

Review of the budget performance for the year revealed that one targeted key

activity was not undertaken despite release of funds worth UGX.32,162,000 to the

entity to perform. The activity was in respect of start up activities for construction

of the Ministry of ICT.

748

Management explained that the Ministry budgeted for UGX.32,162,000 for

surveying the land for the Technology Park. However because the land had not

yet been fully secured from the Uganda Investment Authority this activity could

not be undertaken.

I advised management to follow up the matter with UIA to secure the land.

749

PUBLIC ADMINISTRATION SECTOR

59.0 MINISTRY OF FOREIGN AFFAIRS

a) Receivables

Included in the statement of financial position and Note 21 of the financial

statements for the period under review are receivables totalling to

UGX.3,343,141729 an equivalent of USD.1,464,363.81. These receivables relate to

the money advanced to Imperial Royale Hotel Ltd for the provision of conference

facilities and room accommodation during the CHOGM in 2007.

However, details show that the hotel was not ready for occupation between 26th

October, 2007 and 18th November, 2007 when CHOGM activities took place.

Although this matter has been referred to the Courts of Law, the outcome cannot

be predicted. There is a risk that Government may lose this money which has

been outstanding for more than 7 years.

The Accounting Officer explained that the court hearing of this case commenced

on 12th August 2014 and after several adjournments.

I advised management to follow up the matter and also provide an update of the

current status.

b) Retrospective approval of contracts

Contract agreements in the sum of UGX.965,470,474 were signed and activities

undertaken before award of contracts by the Contracts Committee contrary to

Regulation 225 (2) of the PPDA Regulations, 2003 and Regulation 7(1) of the

PPDA Regulations, 2014.

The practice negates the role of the Contracts Committee in the procurement

process and exposes the Ministry to the risk of contracting sub-standard

contractors.

The Accounting Officer explained that these were emergency procurements arising

from directives given at short notice to host International summits. The contracts

Committee was informed of the procurements afterwards.

750

I advised the Accounting Officer to consider using framework contracts for

repetitive services and ensure the Contracts Committee performs its duties in

accordance with the Regulations.

c) Failure to submit progress Reports on Waivers and Deviations Given by

PPDA

During the course of the financial year, the Ministry hosted a number of summits

which included the AMISOM Summit, Tripartite Summit, ICGLR summit and IGAD

summit among others. Due to the perceived time constraint the Ministry sought

and was given permission to use emergency procurement method.

However, though the Ministry was required to submit progress reports to the PPDA

within 10 (ten) working days after contract award and signing as per referance to

corresponces PPDA/M11/000 for the Tripartite Summit, PPDA /M07/000 for the

Amisom summit, PPDA/M11/000 for the ICGLR Summit, there was no evidence

that management submitted the progress reports to the Authority.

The Accounting Officer explained that the progress reports on waivers and

deviations were usually presented in the monthly procurement reports to the

Authority. Evidence to this effect was not availed.

I advised management to ensure that the required reports are always submitted

for review.

d) Donation to a Foundation

A total of UGX.746,659,035 was disbursed to a Foundation A/C no 1000043346052

in February 2014 on the basis of a letter by the Ministry‟s Accounting Officer.

However, the donation had not been budgeted for during the period under

review. The payment also lacked an acknowledgement receipt from the

beneficairy. Unauthorised reallocation of funds distorts the intentions of the

appropriating authority and contravenes budgetary controls.

The Accounting Officer explained that the PS/ST gave authority to re-prioritize

contributions to International Organisations so as to accommodate this donation.

751

I advised the Accounting Officer to always ensure that additional funding

requirements are properly planned through reallocations and supplementaries to

avoid distortions in the budget implementation.

e) Accomodation for ICGLR

The contract for provision of hotel services during the ICGLR which took place

from 3rd to 5th September, 2013 was awarded to Munyonyo Comonwealth Resort

Limited at a sum of UGX.594,142,019. However the Hotel was paid

UGX.682,708,283 VAT inclusive.

A reveiw of the procurement file revealed the following matters:

There was an over expenditure on the contract sum of UGX.594,142,019 by

UGX.88,566,264. It was further observed that the extra costs were not

approved by the Contracts Commitee as a variation to the original contract

contrary to Regulation 262 (3&5) of the PPDA Regulations, 2003.

A record of bid opening dated 1/8/13 was not witnessed by a member of the

Contracts Commitee. In addition, whereas the price quoted and approved by

the Evaluation Commitee was UGX.333,729,487, the contract sum was UGX.

UGX.594,142,019 and this eventually rose to UGX.682,708,283. No

explanation for the variances was provided.

The contract number on the contract agreement for non consultancy services

was changed to read MOFA/SRVCS/13-14/00091 instead of MOFA/SRVCS/13-

14/00051 by hand. There was no explanation for this change.

The attendance list of participants was not availed for verification and

confirmation of room occupancy.

In response the Accounting Officer explained that the extra expenditure of

UGX.88,566,264 arose as a result of the additional guests and facilities which were

not budgeted for.

I advised the Accounting officer to investigate the causes of the variances, provide

neccessay supporting documents and ensure that emergency procurements meet

the criteria for such procurements.

752

60.0 EAST AFRICAN COMMUNITY AFFAIRS

a) Irregular tenure of Office in acting capacity

Paragraph 9 of Section (A-C) of the Uganda Public Service Standing Orders

requires that an appointment on acting basis is expected to last not more than six

months and is subject to direction by the Appointing Authority. The Section further

provides that any extensions shall not exceed twelve months in total.

A review of personnel files revealed that two officers had been in Acting Positions

for a period exceeding twelve months contrary to the provisions in the standing

orders. Keeping officers in acting positions for a period longer than the period

provided for in the standing orders is irregular.

Management explained that the post of Commissioner Political and Legal Affairs

had been internally advertised by the Public Service Commission while the

Ministry had continually requested the Ministry of Public Service to deploy a Senior

Office Supervisor without success.

I have advised the Accounting Officer to let the officers revert to their substantive

positions in accordance with the standing orders as the outcome of the

recruitment process is awaited.

b) Irregular probationary period of service

Examination of personnel files revealed that an Office Attendant at the Ministry

had been on probation since first appointment in 2008 contrary to section (A-d)

(1) of the public service Standing Orders. There was no evidence of performance

appraisal on the personnel files nor efforts made to confirm the Officer. This may

negatively affect computation of the officer‟s terminal benefits.

Management ackowledged the anomaly and indicated that a submission

recommending the confirmation of the Officer had been made to Public Service

Commission. I await the outcome of management‟s action in this regard.

753

SOCIAL DEVELOPMENT SECTOR

61.0 MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT

a) Payables

Audit of Financial Statements for the period under review revealed that the

Ministry had liabilities of UGX.4,771,858,282, broken down as follows

No Item Amount

1 Trade Creditors 220,000

2 Sundry Creditors 4,730,824,170

3 Withholding Tax Payable 40,814,112

Total 4,771,858,282

The sundry creditors arose out of outstanding claims for workman‟s compensation,

dating back to 2003/2004 financial year. Meanwhile, the withholding tax liabilities

may attract penalties from Uganda Revenue Authority as provided for in the

Income Tax Act, 1997 (as amended). The delay in paying renders the claims

redundant.

In response, management stated that requests to MoFPED for funds to settle the

liabilities had not been responded to positively.

I advised the Accounting Officer to continue liaising with the MoFPED and other

stakeholders to ensure prioritization of funding for the items to avoid litigations

and other costs that may arise.


Paragraph 400 (a) of the Treasury Accounting Instructions (TAI), 2003 states that

all government transactions shall be recorded in the books of account applying the

Government of Uganda Chart of Accounts as prescribed by the Accountant

General. In addition, Accounting Officers shall ensure that all financial transactions

are properly coded. It was noted that out of the total actual expenditure of

UGX.27,871,419,382, a total of UGX. 66,982,475 were mischarged. The practice is

a sign of a breakdown in controls over the budget implementation process.

754

Management explained that more adherences to the charge codes in line with the

Chart of Accounts is now being emphasized.

I have advised the Accounting Officer to streamline the budgeting process so that

available funds are properly allocated to the planned activities.

7.3 Advances not accounted for

A sum of UGX.25,000,000 advanced to three Districts for purchase of toolkits for

PCY activities lacked accountability contrary to TAI and MoU which requires

accountability within 60 days. The table below refers:

Document

No

Date Details Amount Paid

(UGX)

1139107 4/10/2013 Payment to CAO - Arua district to

purchase toolkits for Youth

trained

16,000,000

1216325 4/12/2013 Payment to CAO Gulu for



4,000,000

1216321 4/12/2013 Payment to CAO Lira for



5,000,000

Total 25,000,000

In the circumstances, I could not confirm whether the funds were used for the

intended purposes.

In response, management explained that letters reminding the respective Chief

Administrative Officers had been dispatched.

I advised the Accounting Officer to ensure submission of accountability or recovery

of the funds.

7.4 Staffing Gaps

I noted that the Ministry was grossly understaffed. Out of 609 posts in the

approved structure, only 276 were filled leaving 333 posts unfilled. Among unfilled

755

posts were; the Director Social Protection and Director Labour Employment

(Occupational Safety & Health), which are key posts in the management structure

of the Ministry.

Management indicated that submissions were made to the Ministry of Public

Service and Public Service Commission to ensure that the staffing challenge is

addressed.

I advised management to follow up the matter and fill the positions in a phased

manner beginning with the critical ones.

7.5 Non-Disposal of Obsolete Assets

Section 295 (5) of the PPDA Regulations, 2003 requires a procuring and disposing

entity through the board of survey to identify assets for disposal on a periodic

basis. A review of the Ministry‟s Asset register revealed a number of old and

obsolete assets due for boarding off and these included; motor vehicles, desktop

computers, laptops, furniture, tyres and books among others. I also noted that the

recommendations of the Board of Survey for disposal in the Financial Year

2011/2012 were not implemented.

Management indicated that it is in the process of updating a Disposal Plan and will

dispose of obsolete items in FY 2014/15.

I advised the Accounting Officer that failure to timely dispose of these assets

results in further physical deterioration and diminution in value. I await results of

management actions.

7.6 Lack of Performance Appraisals for some Staffs

Sec. A-m (14) of The Uganda Public Service Standing Orders, 2010 states that “A



Secretary.

It was however noted that 25 staff out of a sample of 45 staff of the Ministry were

not appraised during the year under audit. The Accounting Officer explained that

strict guidelines and deadlines have been put in place for those that do not

comply.

I await results of management actions in this regard.

756

7.7 Repayments into the Revolving Fund

According to the YLP Programme Document dated December 2013, the revolving

nature ensure sustainability through the cash and kind refunds and re-

disbursement. This is further amplified in Part 4.0 of the YLP Project Funds Access

Criteria document which requires YLP to be administered as interest-free

Revolving Funds to ensure sustainability of the Programme.

I observed that out of 27 districts that had received the funds, only 6 had opened

the special collection accounts.

Management indicated that the outstanding 21 districts had been reminded.

I advised the Accounting Officer to ensure that the remaining Districts comply with

the regulatory requirements for YLP.

7.8 General Challenges faced in the Implementation of Youth Livelihood

Programme:

7.8.1 Determination of the age of the group members

According to YLP Project Funds Access Criteria part 2.2 (i) (Beneficiary Selection

Criteria) paragraph and program document chapter 2 section 2.4, all intended

beneficiary Youths should be persons within the age bracket of 18-30 and

evidence was to be provided through birth certificates, immunization cards,

passports, baptism cards, marriage certificates, National Identity Cards or

community knowledge of the youth.

During the period under review, audit noted that birth certificates for beneficiaries

on a number of project files were missing, rendering confirmation of the

qualification by age difficult.

Management indicated that a number of potential beneficiaries did not have

documentary evidence for their ages. The Selection Committees relied on the

judgement and decision of the community members under the leadership of LC I

Chairpersons as provided in the Programme Guidelines.

I advised the management to use the National identity cards in determining age of

beneficiaries in the successive following phases of the programme.

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7.8.2 Inadequate monitoring of the projects

It was noted that the Districts were not closely monitoring the activities of the

approved youth projects due to inadequate staffing. For example, there were no

monitoring reports for the 16 districts inspected out of the 27 pilot districts. The

respective CAOs and the District Focal Point Persons indicated that there is low

human resource capacity as opposed to the number of approved projects to allow

closer monitoring to take place.

Management explained that the low staffing levels especially of Extension Staff in

the Local Governments still remains a challenge. Furthermore, the Accounting

Officer indicated that the Chief Administrative Officers have been advised to

rationalize the deployment of the available staff to ensure that the youth groups

financed under YLP receive technical support.

I await results of management actions on this matter.

7.8.3 Lack of sign posts for respective Projects

It was observed that a majority of the YIG Projects that were inspected did not

have sign posts. Those that had sign posts did not have YLP identity. It was

therefore not possible to easily identify them with YLP funding.

In response, management stated that all the new projects are being advised to

provide for the signposts in their budgets. Furthermore, YLP has concluded the

Geographical Information System (GIS) mapping for all the projects financed

under Phase-I as a strategy of enhancing accountability, transparency and to avert

a possibility of using one project site for multiple accountabilities to various

agencies or persons. In the meantime, I await the results of management effort in

this regard.

7.8.4 Inadequate training of the 3 committees in a group

The YLP Programme Document requires each YIG to have at least 3 committees

namely; Youth Project Management Committee (YPMC), Youth Procurement

Committee (YPC) and Social Accountability Committee (SAC).

Audit revealed that the trainings received by the members of these committees

were so general and did not address the specific roles that each committee is

758

supposed to play in a group. Furthermore, the trainings were conducted under

limited time frame.

Management explained that any gaps identified during monitoring visits are

documented and addressed as part of the routine continuous support to the

groups.

I advised management to ensure that trainings to the committee members are

conducted to enable them appreciate their roles on the committees so as to avert

conflicts and failure of groups‟ businesses.

7.8.5 Record Keeping

It is good practice for any type of business/project to keep proper books of

account, management records among others. I noted that most of the groups

visited did not maintain/keep such records including minutes and procurement

details.

Management indicated that the varied literacy levels of the beneficiaries supported

under YLP affects record keeping. However, the Sub-county Community

Development Officers (CDOs) have been advised to provide support to weak

groups on regular basis as part of their overall mandate in community mobilization

and development.

I await the results of management efforts in this regard.

b) EXPANDING SOCIAL PROTECTION PROGRAMME 2011/2012

f) Lack of National Social Protection Policy

It was noted during audit that the program still lacked an approved policy,

contrary to the recommendation contained in Expanding Social Protection (ESP)

Quarterly report of July to September 2011, requiring an approved policy

framework to be in place within the financial year 2011/12. In the circumstances,

there is no formal framework to guide the activities of Social Protection in the

country. There is also a risk of having social disharmony between the societies

that have benefited and those that have not.

Management explained that at the inception of the programme, the design

foresaw the development of a Social Protection “framework” which would have

simply defined the scope of social protection services in Uganda. However, during

759

the course of the programme, management realized that a full National Social

Protection Policy was required along with a comprehensive costed plan of

Interventions (PPI) to cover social assistance, social insurance and social care

services. Management further stated that according to the revised log-frame, the

policy and PPI are due to be finalised by December 2014.

I have advised management to engage the stakeholders involved and expedite the

discussions to have the policy finalised and approved.

g) Co-funding



was however noted that GoU, which had committed to provide USD.20,030 (about

UGX. 70,105,000), did not fulfill its obligation in the period under review. This

could have hampered the implementation of the planned activities and may affect

the overall attainment of the programme objectives.

Management explained that they were continuing to engage the Ministry of

Finance, Planning and Economic Development to fulfill the government obligations

towards the programme.

I have advised management to continue with the engagement of the Ministry of

Finance Planning and Economic Development so as to ensure that Government

fulfills its commitment towards the programme for better implementation.

h) Un-accounted for Funds

UGX.227,301,091 (equivalent to USD.49,778.45) was transferred to ESP

operational account in the MoGLSD, to facilitate older persons day celebrations

and orientation of Members of Parliament. Audit noted that a total of

UGX.106,618,500 was utilized for the celebrations and orientation of MPs, leaving

a balance of UGX.120,682,591 unaccounted for.

Although management explained that the balance was retained in the MoGLSD

ESP operations account for other ESP activities, no documentary evidence was

availed to confirm this and how it was utilised.

I have advised management to ensure

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c) EXPANDING SOCIAL PROTECTION PROGRAMME 2012/2013

i. Co-funding



was however noted in the year under review that GoU allocated only

UGX.40,000,000 million as opposed to the FY 2012/13 counterpart commitment of

UGX.500,500,000. This could have hampered the implementation of some planned

activities and may affect the overall attainment of the programme objectives.

I advised management to engage Ministry of Finance Planning and Economic

Development so as to ensure that Government fulfils its commitment towards the

programme for better implementation.

ii. Doubtful contract award

Regulation 90 (g, h & i) of the Public Procurement and Disposal of Public Assets,

2013, stipulates the procurement records that should be maintained by a

procurement and disposal unit. However it was noted that a total of

UGX.191,666,376 was paid to Property Development Company Ltd for rent, but

procurement documents were not maintained, contrary to the requirements of the

regulations. In the circumstances, audit could not ascertain whether the

procurement was fairly competed for and that there was value for money.

I advised management to ensure that all procurement records are in future

maintenance for all procurements undertaken on behalf of the programme.

iii. Un-vouched Expenditure

Audit noted that out of a total of UGX.135,369,238 transferred to Kyenjojo District

to fund SAGE activities in the months of January and June 2013, a total of

UGX.116,152,804 was spent without preparing payment vouchers. The

authenticity of the expenditures relating to all the missing vouchers could not be

ascertained.

I advised management to ensure that the funds are accounted for.

iv. Mischarged expenditure items

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A total of UGX.11,976,000 was charged wrongly on expenditure items other than

those under which it was supposed to have been spent, contrary to the

requirements of section 3.1 of the overview of the financial management of SAGE.

Failure to comply with the requirements portrays a breakdown of controls in the

budget implementation process and it affects the implementation of some planned

activities.

I advised management to streamline the budgeting process and ensure that


implementation of the programme.

v. Un Accounted for Funds

Funds totaling UGX.56,178,500 advanced to various officers in Katakwi district to

implement programme activities remained un-accounted by the time of writing this

report. In the absence of the necessary accountability, audit could not confirm

whether the funds were put to intended use.

I advised management to recover the funds from the officers.

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MISSIONS

62.0 UGANDA EMBASSY, ABU DHABI

a) Wasteful Expenditure

The Embassy incurred costs totaling AED 2,900 (approximately UGX.2,048,822) as

bank charges for failure to maintain a minimum bank balances on the account.

This expenditure is considered wasteful as it would have been avoided by

maintaining the minimum balance.

Though the Accounting Officer explained that he had communicated to the bank

to stop the monthly deductions on non-maintenance of a minimum balance since

this was an operational account and not a savings account, there was no action

taken by the Bank. As a result the Embassy opened a new bank account that

allows minimal bank balance with the authority of the Accountant General.

I have advised Management to recover the money from the bank.

63.0 UGANDA HIGH COMMISSION, ABUJA

a) Non Tax Revenue (NTR) Collections

Regulation 46 of Public Finance and Accountability Regulations states, in all cases,

the gross amount of moneys received shall be accounted for and any charges

against the revenue received shall require appropriate authority as expenditure

incurred by the Government and shall appear as a charge on public funds in the

books of accounts, duly supported by proper voucher.

It was noted that for the period between November 2013 and June 2014, the

mission collected and banked NTR of NGN 26,888,703.75 and USD 42,315,

however only NTR of NGN 14,637,890 was transferred to the consolidated fund

leaving a balance of NGN 12,430,412= unaccounted for contrary regulations. It

was also noted that the mission borrowed NGN 9,033,408.5 and USD 41,776.78 at

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source to cater for various commitments but did not provide evidence of refund as

shown in the table 1 below.

Period Amount (NGN) Borrowed (NGN)

Repayment (NGN)

Amount transferred to

BoU (NGN)

October 1,457,395 0 0

November 804,475 0 0

December 1,328,035 2,922,227 0

January 4,029,283 522,625 0

February 6,298,647.47 0 0

March 2,169,304.66 1,272,735 6,889,588

April 1,428,927 2,414,082.5 0

May 5,362,763.98 256,450 0

June 2,508,670 1,645,289 7,748,302

Closing balance

1,501,202.64 0 0

TOTAL 26,888,703.75 9,033,408.5 14,637,890

Extracted from bank statements for NTR account November 2013 to June 2014

Furthermore there were no records for NTR cash collections to reconcile with

actual banking‟s to confirm that all NTR collected was banked intact in accordance

with the requirements of the public finance and accountability Act

I have advised The Accounting officer to remit the outstanding NTR balances to

the consolidated fund as required by the regulations and also provide the

necessary supporting documentation for NTR cash for verification.

b) Payments made outside Navision

The Accountant General introduced the Navision accounting system in the mission

to strengthen the internal controls systems and improve financial reporting.

It was noted that during the month of March 2014, payments totaling to NGN

437,330 (Details in table 2) were made outside the Navision system contrary to

the Treasury directives. Payments made outside the Navision financial system

render the accuracy and reliability of the financial statements uncertain as such

amounts not captured in the ledgers have an effect of understating the

expenditure reflected in the system generated financial statements.

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Table 2: Payments made outside the system

Voucher Amount Payee

PV-1781 16,000 Amb. Maurice Kagina Kiwanuka

PV-1782 14,000 Amb. Maurice Kagina Kiwanuka

PV-1783 19,200 Joseph Koufionou

PV-1784 55,000 Sundry persons

PV-1785/3 5,000 Abuja electricity distribution company

PV-1786/3 30,000 Katherine Sati

PV-1787/3 14,100 Sundry persons

PV-1788/3 9000 Katherine Sati

PV-1789/3 50,000 Isaac Onali

PV-1790/3 68,000 KKONTech

PV-1791/3 11,050 Goodness International


30,000 Musa Gimba

PV-1794/3 6,000 Jide Sholotan


PV-1796/3 2,980 Cash account

Total 437,330

In his response the Accounting Officer acknowledged this anomaly and attributed

it to a system failure in February 2014 which lasted for a period of one and a half

months. I advised the Accounting Officer to have that the necessary adjustments

effected in the accounting system to ensure accurate and reliable financial

reporting of mission expenditures.

c) Unauthorized Over expenditure

A review of financial statements revealed that the Mission incurred

UGX.232,895,267 in excess of the approved budget of UGX. 1,017,000,072.

However, there was no evidence to show that the necessary approval in the form

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of virements/reallocation warrants was granted by the Permanent

Secretary/Secretary to the Treasury contrary to section 17 of the Public Finance

and Accountability Act, 2003. Under the circumstances, the expenditure is

considered not a proper charge to government funds.

I advised the Accounting Officer to always adhere to the approved budget and

where necessary liaise with treasury for supplementary appropriation in

accordance with the public finance and accountability Act 2003.

d) Non Compliance with the PPDA Act regulations

The PPDA Act and regulations require every Procurement and disposal unit to

amongst other requirements;

Prepare and submit to PPDA an Annual procurement plan based on the annual

approved budget for that respective financial year;

Prepare and submit to PPDA quarterly procurement and disposal reports;

Produce a list of prequalified goods and service providers for the next three

years.

Contrary to the above requirements the mission did not prepare an annual

procurement plan and quarterly procurement and disposal reports nor a list of

prequalified service providers.

I advised the Accounting Officer to comply with the PPDA regulations and observe

the above requirements.

e) Progress report on implementation of the Mission Charter

The mission was issued a Charter covering a three year period 2011/12 to

2013/2014 setting out key outputs, performance targets and performance

indicators; however I was not availed with quarterly progress reports on the

implementation of the Mission charter. In the absence of progress reports, it was

difficult to establish the extent to which the mission achieved its set objectives

I advised the Accounting Officer to prepare and submit quarterly progress reports

on implementation of the Mission Charter to enable its performance to be

assessed.

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f) Office Imprest

During the year it was observed that the mission on a regular basis drew various

amounts of dollars from the operational account which was then converted to

Naira for office imprest.

Examination of returns revealed that N 2,441,620 and USD 36,990 was drawn

as petty cash for the period.

Treasury Accounting Instructions Chapter IV, Payments 227 requires that there

should be an imprest holder duly appointed by the Accounting Officer and

approved by the Accountant General. However, there was no evidence to that

effect.

Treasury Accounting Instructions Chapter IV, Payments 214 requires that before

replenishing an imprest, the previous one should be properly accounted for and

retired. It was noted that all imprest advances drawn as petty cash were not

supported with requisitions prepared by the beneficiaries which meant that the

basis for the advances could not be substantiated and in other instances petty

cash was paid as refunds for activities that had not been sanctioned by the

Accounting Officer.

In his response the Accounting Officer acknowledged this anomaly and attributed

it to the operating environment in Nigeria where most suppliers and service

providers of routine office consumables only accept cash as a medium of

exchange.

The Accounting Officer was advised to have imprest holders properly appointed in

accordance with the Treasury Accounting Instructions and also ensure that for any

petty cash payment effected; the user department should express the need

through properly approved requisitions.

g) Project Account and Chancery land

In the Permanent Secretary‟s letter to the Uganda High Commission – Abuja dated

28th February 2014; four (4) officers from Inter-ministerial Property Management

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Committee were sent to Abuja to carry out technical study on the mission land

earmarked for the construction of a Chancery. The 3 officers were to be facilitated

from the funds which remained on the project account. However, there were no

clear terms of reference for this exercise and the technical report which was the

major deliverable from the exercise was not availed for audit to support this

payment. It was also noted that UGX 145,695,932 spent on this exercise was not

from the mission‟s approved budget has since been capitalized under Consumption

of property, plant and equipment in the financial statements without any

justification.

I advised the Accounting Officer to avail the technical report for verification and

also provide a justification why this payment was capitalized in the financial

statements yet it was extra budgetary.

h) Payment of electricity for staff

According to the Uganda Public service Standing Orders 2010 governing housing

of officers in the foreign service (H - e) para 9(a) , every public officer at the

mission shall be responsible for the cost of lighting and water consumed in any

house allocated to him or her.. It was however observed that the mission was

reimbursing staff 80% of the bills incurred by them contrary to the instructions. A

total of N51,120= was paid as per details in table 3 below:

Table 3: reimbursment made for staff electricity bills

Voucher Payee Description

Amount

(NGN)

pv1179 Agnes Achen being refund of 80% electricity bills 14,400

pv1237 John Nuamanya being refund of 80% electricity bills 3,600

pv 1487 Kalinaki Hadijah being refund of 80% electricity bills 6,400

pv1518 john Nuamanya being refund of 80% electricity bills 3,600





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Voucher Payee Description

Amount

(NGN)

51,120

I advised the Accounting officer to recover the amounts paid and in future ensure

compliance with the requirement of the standing orders.

64.0 UGANDA, EMBASSY ADDIS ABABA

a) Exchange Rate Table in Navision not updated daily

It is a requirement for all embassies to update exchange rates daily in the exchange

rate table in Navision. The rates are obtainable from the Bank of Uganda (BoU)

website. A review of the Embassy‟s Navision system however revealed that the

exchange rates were not updated on a daily basis. The anomaly was attributed to

the intermittent internet connectivity at the Embassy. This casts doubt on the

authenticity of the foreign exchange gain reported of UGX.4,927,333 in the financial

statements of the Embassy.

The Accounting Officer acknowledged the anomaly and stated that the matter had

been rectified as the exchange rates were now being updated daily before

transactions on the system are undertaken. The Accounting Officer however

hastened to add that there was still a challenge of the BoU exchange rates being

updated on the system 2 or 3 days late.

I have advised the Accounting Officer to ensure that the exchange rates are updated

on a daily basis, as required and to follow up the issue of delayed updates of the

exchange rates on the system with the Navision Support Group at the Ministry of

Finance, Planning and Economic Development (MoFPED).

b) Unauthorized Over Expenditure

Regulation 37(b) of Public Finance and Accountability Regulations, 2003, requires

the Accounting Officer to ensure that the provision for services as authorized by

accounting warrants are not exceeded, and is held personally and pecuniary

responsible for any excess expenditure that is incurred without proper authority.

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A review of expenditure of the Embassy revealed that there was over expenditures

on various expenditure budget line items amounting to Birr 1,068,046

(UGX.142,915,235) without seeking appropriate authority in form of reallocations or

virement warrants. This contravenes the intentions of budgeting.

The Accounting Officer attributed the occurrence to shortfalls on some budget items

for which authority to make reallocations within the same accounting warrant was

sought but had not been responded to.

I have advised the Accounting Officer to always ensure that payments are only

made when authority for reallocations has been granted.

c) Unfunded Priorities

The Addis Ababa Embassy is strategic and handles both bilateral and multilateral

matters which require adequate funding. The capital budget and the Peace and

Security budget for the year under review were not funded. Consequently the

Embassy was not able to:

Replace the ageing automobiles in the vehicle fleet. The vehicles for the Head

of Mission, Deputy Head of Mission and the staff utility van were more than five

(5) years old and often broke down. This constrained mobility at the Embassy

and consequently the ability to effectively facilitate high level official delegations

visiting Addis Ababa regularly to attend meetings at African Union, United

Nations Economic Commission for Africa (UNECA) and IGAD.

Renovate the official residence in Mugenagna that was purchased by the

Government of Uganda in 2012. The structure was old and required renovation

but the available funds were insufficient. There is a risk of the authorities

demolishing the structure.

Facilitate an extra officer to deal with the Peace and Security matters where

Uganda is serving in the Peace and Security Council for the period 2013 - 2015.

This curtails the implementation of peace and security activities.

Management explained that they had requested the responsible authorities severally

to address the issues but to no avail. They also stated that though they had

budgeted for the activities in the year, funding was not obtained.

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I have advised the Embassy management to continue liaising with the responsible

authorities with a view to ensuring that the unfunded priorities are considered in the

subsequent financial periods.

d) Failure to acquire Plot of Land in Lebu

In 2005, Uganda was allocated a plot of land in Lebu by the Ethiopian Government,

which land was to be paid for and developed. Audit noted that although the

Embassy had been budgeting for this activity, no funds had been released to enable

it conclude the purchase and start on the construction. It is worth noting that most

of the other countries that had also been allocated land had developed theirs. There

is a risk of the said land being withdrawn and reallocated to other interested

developers.

In view of the terror threat in the region, coupled with Uganda‟s involvement in

peace and security initiatives, the Chancery may become a terror target given the

current location in a poorly lit area, off Bole Road.

Management explained that they had engaged the relevant authorities and in the

Financial Year (FY) 2014/15, some money was released towards the purchase of the

land leaving a funding gap of UGX.417 million which the Ministry of Foreign Affairs

(MoFA) had promised to secure and allocate to the Embassy during the financial

year 2015/16. Once the land is fully paid for, plans then will be developed for the

construction to commence.

I have advised management to continue engaging the relevant authorities so that

funds are secured for the purchase and eventual development of the land to house

the Chancery.

e) Unpaid Education Allowances

In June 2011, the Ministry of Public Service communicated to the Ministry of Foreign

Affairs concerning the standardization of the Education Allowance to USD.2,000 per

child per year for Group B Missions, which includes Addis Ababa. The allowance is

payable for a maximum of four biological or legally adopted children between the

ages of 4 and 18.

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Audit however noted that the Education Allowance was not being paid to the

Foreign Service Officers deployed at the Addis Ababa Embassy ever since it was

approved in 2011 and this has the effect of demotivating staff.

Management stated that it had already engaged MoFA and MoFPED in this regard

and hastened to add that for the FY 2014/15, a supplementary was provided to

cover this item. Consequently for the FY 2015/16, the Embassy budgeted for the

allowance and is hopeful that the entitlement shall be honoured.

I await the implementation of management‟s proposals.

65.0 ANKARA EMBASSY

a) Representation Car

The commentary to the financial statements indicated that the Embassy did not

have a representation car for the Head of Mission. Lack of such a suitable

representation vehicle portrays a negative image for the country. Management

explained that the car had been budgeted for purchase in the Financial Year

2015/16.

I advised management to liaise with MoFA and MoFPED to ensure that necessary

resources are put aside to acquire the vehicle.

b) Local Staff

Section (A-a) (10) (f) of the Public Service Standing Orders states that “The power

to appoint, confirm, discipline and remove officers from office in the public service

is vested in the Head of a Mission, subject to delegation in writing, in the case of

locally recruited staff for the Embassy.

During the year under review, a sum of TL.79,828 was paid in respect of social

contributions for local staff. However, appointment contracts for the staff were not

availed for verification. In the circumstances, I could not ascertain the

genuineness of this expenditure.

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Whereas management acknowledged the expenditure, the necessary

documentation was not availed at the time of writing this report.

I have advised Management to avail copies of appointment contracts and appraisal

forms for staff to enable verification of the payments.

66.0 UGANDA, EMBASSY BEIJING

a) Outstanding commitments from prior years

It was observed that the consulate had outstanding commitments amounting to

UGX.398,313,217 at the end of the financial year under review. The commitments

were in respect of utilities and rent in the Mission. Long outstanding commitments

could result into halting of provision for services due to non payment.

Management explained that they had budgeted for and included the outstanding

rent arrears in the Mission budget proposals submitted to the Ministry of Finance,

Planning and Economic Development for the financial year 2014/15. However,

funding to the outstanding commitment was not provided in the Missions

approved budget for FY 2014/15. Nevertheless, management has requested

MoFPED for a supplementary in order to offset the overdue settlement and is

awaiting further guidance.

I advised management to ensure that the outstanding commitments are prioritized

for settlement.

b) Idle motor vehicle

It was observed that mission purchased a motor vehicle (Van) in the year 1996.

However over time the use of the vehicle had been outlawed due to its inability to

comply with the emission standards in China. As such the vehicle remained un-

used for over a year.

There is a risk that the vehicle would deteriorate further attracting eventually

lesser value.

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Management explained that the motor vehicle in question was uninsurable and

declared unfit for usage in China and therefore attracts no value; except as a

scrap. I advised Management to consider commencing on the disposal process for

the vehicle to avoid further loss.

c) Staffing at the Mission

The mission is categorized as 1+3 for purposes of the structure at the mission.

However currently the mission is staffed at 1+5, which is beyond the approved

structure. The current staffing position implies that the mission is overstaffed and

may not access adequate resources to manage the existing staff.

Management explained that they had engaged with Ministry of Foreign Affairs and

had made recommendations and sought approval from the Ministry to upgrade the

Mission to category A for reasons of the growing volume of engagements with

China and enhancing the Missions capacity to effectively cover the whole of China

and the four other countries (North Korea, Vietnam, Cambodia and Laos) to which

it is also accredited. The response of the Ministry is being awaited.

I advised management to further follow up with the Ministries of Foreign Affairs

and that of Finance, Planning and Economic Development to review the structure

so that corresponding resources are provided.

67.0 UGANDA EMBASSY, BERLIN

a) Unauthorized Over expenditure

A review of financial statements revealed that the Embassy incurred 21,874,544 in

excess of the approved budget of UGX. 2,536,000,000. However, there was no

documentary proof to the effect that the necessary approval in the form of

virements/reallocation warrants was granted contrary to section 17 of the Public

Finance and Accountability Act, 2003. Under the circumstances, the expenditure is

considered not to be a proper charge to government funds.

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Management acknowledged the anomaly and indicated that they will liaise with

treasury to regularize this expenditure . I have advised management to always

ensure that approval is obtained prior to spending.

b) Mission Charter

It was noted that the Berlin mission charter was issued to H.E. the Ambassador in

February 2014 by the Minister of Foreign Affairs; however the following

inconsistencies were noted

The charter mentions only 2 countries which is Germany and Austria. The fate

of other countries that have hitherto been under the jurisdiction of the Berlin

mission which include the Czech Republic, Poland, Hungary, The Holy See

(Vatican), Slovakia, Bulgaria, Romania plus UN Organizations in

Bonn(Germany) and Austria is not known.

Although all the Letters of Credence for the countries and bodies mentioned

above were signed by HE the President in August 2013, the Current

Ambassador has only presented Credentials to Germany, The Holy See

(Vatican) and the International Atomic Energy Agency (IAEA) in Vienna.

These conflicting objectives undermine the embassy‟s efforts of fulfilling its

mandate. Delays or failure to present Letters of Credence to the respective

countries denies Uganda formal representation.

Management explained that upon realizing the omission of most countries in the

mission charter the issue was reported to the concerned authorities and is being

looked into. Management attributed the non-presentation of letters of credence to

insufficient funding.

I have advised management to liaise with the Ministry of Foreign Affairs to

harmonize the Mission charter so that it‟s consistent with the strategic objectives

of the embassy. Efforts should also be made for presentation of outstanding

letters of credence to the related countries in order to foster the embassies

operations in those jurisdictions.

c) Over Expenditure on Telephone Expenses

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Section (H-e) regulation 14 of the Public Service Standing Orders, 2010 states that

“All calls at residences, official or otherwise, of Heads of Mission should not exceed

USD 500 per month”. However examination of the payment vouchers revealed

that a total of USD 6,870 (5,056 Euro) (details in appendix 1) was spent over and

above the stipulated limit contrary to public service standing orders. This implies

that funds were diverted from some budget lines to finance the expenditure and

this negatively impacted on the implementation of some of the planned activities.

Management in response undertook to comply henceforth. I await the outcome of

management‟s commitment in this regard.

d) Overpayment of Foreign Service Allowances

Section (E-e The Public Service Standing Orders 2010) states that, each Foreign

service Officer is entitled to a Foreign Service Allowance. The rates payable to

each Foreign Service officer are clearly spelt out in the Permanent Secretary‟s

communication of reference COM 95/100/01 dated 16th June 2011.

However examination of the payment vouchers revealed that some officers were

paid Foreign Service allowance at a rate higher than the rate stipulated in the

permanent secretary‟s communication hence causing unauthorized Foreign Service

allowance totaling USD 40,784.1, this is considered irregular and hence

recoverable.

Management explained that this anomaly arose because of the standardization of

the exchange rate between a Euro and Dollar.

I have advised management to recover the unauthorized amounts paid in respect

of Foreign Service allowance and in future ensure that payments are based on the

dollar equivalent at the time of payment.

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68.0 UGANDA EMBASSY BRUSSELS

a) Budgeting and funding

The Ugandan Embassy in Brussels covers Belgium, the Netherlands, Luxemburg,

as well as the European Union and the International Court of Justice (ICJ). For the

financial year 2013/14, a sum of UGX.3,278,099,906, was released to implement

planned activities in the above areas as per the approved budget.

However, during discussions with Her Excellency the Ambassador, it was noted

that due to many special assignments handled by the Mission, this ultimately leads

to more frequent travels abroad, which eventually implies that the budgeted funds

are always not adequate.

I advised management to bring this matter to the concerned stakeholders,

including the ministries of Foreign Affairs as well as that of Finance, Planning and

Economic Development, so as to have their budget amounts improved upon.

b) Unauthorised Over Expenditure – UGX.390,437,807

Regulations 39 and 40 of the Public Finance and Accountability Regulations, 2003,

require the Accounting Officers to adhere to the budgetary allocation per vote or

obtain prior permission before an over expenditure is incurred.

Contrary to the above, a review of the financial statements for the year under

review revealed that actual expenditure on goods and services exceeded the

budgeted amount by UGX.390,437,807. There was no evidence provided to show

that authorization for the over expenditure was sought from, and granted as

provided for by the regulations. Further noted was that, a sum of

UGX.150,514,718 was diverted from capital development budget to cater for travel

expenses, which had not been budgeted for under the recurrent budget at the

beginning of the financial year. The act may have hampered the implementation

of capital development activities.

The Accounting Officer stated that the above was due to unforeseen/unplanned

need for foreign travels for which the Embassy had no control over, and that in

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future, the proper procedure would be followed by first seeking authority from the

Permanent Secretary/Secretary to Treasury.

c) Non Tax Revenue (NTR) reconciliation:

Lack of a Visa Issue Ledger

A review of Visa stationery was carried out to determine the accuracy of the

reported NTR of UGX.283,680,935 collected during the year. Whereas the total

NTR collections reconciled with used visa counterfoils, the review revealed that no

Visa issue ledger exists to record the movement of the visa stationery, which

comprise of Single entry, Multiple, Gratis and Transit visa stickers, and Emergency

Travel documents. The only records availed were in respect of receipts of Visas

during the year. Under the circumstances, I could therefore not determine the

opening stock balances of visa stationery at the start of the financial year as well

as the closing balances. Although a board of survey was constituted at the close of

the year, there was no report submitted to confirm the closing balances of visa

stationery as at 30th June 2014. There is a risk of un-accounted for revenue arising

from issuance of unrecorded visa stationery.

In his response, the Accounting Officer regretted this anomaly and indicated that a

Visa Issue Register has been opened effective 2014/15 financial year.

d) Irregular payments under Foreign Travel

The Embassy sought the services of an Architect from the Ministry of Works and

Transport to assess the status of embassy buildings on an understanding that it

could cater for travel and other allowances for the officer abroad. I noted that,

during his first visit, the officers‟ stay was extended for a further seven (7) days,

which was not authorized by the Permanent Secretary, Ministry of Foreign Affairs.

Similarly, the same officer was again invited on a second visit to finalize the work

and as a result the embassy further catered for the officer‟s stay for another three

(3) days, including transport refund on train ticket and an additional allowance for

two (2) days while travelling from Copenhagen, Denmark.

A review of expenditure documents in respect of the above visits revealed that a

sum of Euros.4,469.18 (UGX.15,038,567) was irregularly paid to the officer from

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the Ministry of works and Transport, since the visits lacked clearance from the

Accounting officer of the Ministry of Foreign Affairs in Kampala. Details of the

payments are indicated in the table below;

Voucher

number

Purpose Amount

in Euros

Comments

PV1707/12/13 Extra per diem for 7 days 2,135.59 Extension not authorized by

MoFA

PV2381/06/14 2 days per diem and train

ticket to Brussels from

Paris

709.17 Travel to Brussels not

authorized

PV2335/06/14 3 days per diem in

Brussels from Paris

1,624.42 Travel to Brussels not

authorized

TOTAL 4,469.18

In his response, the Accounting officer regretted that authority for the stay and

subsequent visit by the Ministry of Works official was not obtained, and stated that

in future, authority would first be sought before extending the stay or inviting

technical officials from MDAs.

e) Human Resource Management matters

A review of staff records and interviews held with management revealed the

following;

a. Undisclosed contingent liability

An interview with the Head of Mission revealed that one of the Embassy drivers

had reached his retirement age of 65 years (May 2014) towards the end of the

financial year under review. According to the Belgian laws, the driver is entitled to

a gratuity covering his entire service period to the Embassy, which amounts to

thirty two (32) years. This amount is payable by the Belgian Social Security Fund,

to which, according to the Accounting Officer, is equivalent to the employee‟s

monthly salary payable throughout the employment period.

However, I noted that the Embassy had only made contributions for the last seven

years, implying that the driver is entitled to gratuity for only seven years. This is a

contingent liability which should be recognized and settled by the Embassy to

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avoid being sued by the driver, as well as payment of a heavy fine to the Social

Security Fund for the period defaulted.

Management explained that it decided to retain the driver as it handles the matter

with the Social security fund through the Embassy lawyers, so as to mitigate the

heavy fines associated with the circumstance. The Accounting officer stated that

he had written to the relevant authorities requesting for funds to cover the

outstanding amounts under domestic arrears. I have advised that this action be

expedited, to avoid further exposure by the Mission and to also compute and

recognise this contingent liability in the financial statements.

b. Absence of employment contracts for local staff

An interview with the Accounting Officer revealed that Belgian laws provide for a

person to be employed on contract for one year, renewable once, or a non-

renewable contract running for two years.

An interview with the local staff revealed that none of the five local staff (including

the retired driver) had an employment contract. This implies that they are illegally

employed and being paid, with a possibility that some have exceeded the

contractible periods.

In addition, it was noted that, according to Belgian laws, a driver is contracted to

drive a particular type of car, which should be stated in the contract. However, to

the contrary, one driver was switched from driving the official car to a utility van,

which necessitated a new contract. This was not duly implemented, exposing the

Embassy to the risk of a law suit, as the driver has already notified of his

intentions to sue.

The Accounting officer stated that they were discussing with the lawyers on how

to resolve the issues raised. I have advised the Accounting Officer to always

ensure that all efforts are made to abide by the local laws so as to avoid

imposition of penalties and fines.

c. Lack of performance plans at the start of the appraisal period

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Management of staff performance requires the appraisees to agree with their

supervisors at the start of the period, the activities, key performance indicators,

and outputs/target for the appraisal period. The agreed outputs together with the

activities constitute staff performance plans, which should form the basis of

appraising staff at the end of the appraisal period.

However, it was noted that staff at the Embassy did not have performance plans

agreed with the supervisors at the beginning of the period. As a result, there were

cases of appraisees not agreeing with the performance appraisal results at the end

of the financial year. Lack of performance plans with clear outputs/targets limits

the full attainment of the objectives of performance appraisals at the end of the

period.

In response, the Accounting officer stated that management was following up on

the performance plans to ensure that they are discussed and appraisals submitted

at the end of the financial year. I await the outcome of this management

commitment.

f) Inspection of Government properties

The Uganda Government owns three mission properties in Brussels which consist

of the Chancery, official residence and a vacant plot on 35 Clos Des Lauriers

Woluwe St Pierre, which formerly housed the official residence that was later

demolished due to continued non maintenance. Physical inspection of the embassy

properties revealed the following;

a. Chancery building

During inspection of the chancery building, situated at Avenue de Tervuren 317 in

Brussels, it was revealed that the building had not had major renovations of recent

and as a result, it was in a state of disrepair requiring substantial provision of

money to have it renovated. There was complete lack of routine and periodic

maintenance activities required because of the weather conditions. The structure

continued to deteriorate with water leakages from the roof destroying the walls

and ceiling, the basement floors were in a sorry state and inhabitable, some walls

in the building had developed mould which is considered to be toxic and a health

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hazard, while most of the walls and the ceiling had developed major cracks putting

the lives of the users at great risk.

Given the current state of the building, it is not insured, exposing Government to a

risk of potential loss should it get seriously damaged, say by fire. Management

explained that an assessment of the status of the buildings had been undertaken

and recommendations made by the property management team from Ministry of

Foreign Affairs. Accordingly, a sum of UGX.450 million was released during the

year, out of a budget of UGX.1.18billion to start the renovation works. However by

the time of inspection, no major renovations were noted on the plots, except on

the current official residence.

The Accounting Officer concurred that the building was not insured because of its

state, and commencement of renovations had been delayed by the procurement

process, but is expected to start soon. I advised the Accounting Officer to expedite

this process so as to have the renovations undertaken.

b. Official residence

An audit inspection of the Official residence revealed that some renovations had

been undertaken mainly on the heating, electric system and paintwork. There

were notable defects on the building with mortar peeling off the walls on the

outside and heat insulation. The heating system, though improved, still had

defects like poor insulation, leading to substantial heat loss during winter. There

are also faulty plumbing systems in the bath rooms. There is a risk that the facility

may deteriorate further if no major renovations are undertaken.

In his response, the Accounting officer stated that the renovations of the official

residence was on going, and funds to pay for them were being awaited.

c. Redevelopment of plot of land formerly occupied by official

residence

Following the demolition of the former official residence at 35 Clos Des Lauriers

Woluwe St. Pierre, the asset (plot) was stripped of its diplomatic immunity, which

was granted to the current residence occupied by the Ambassador. Consequently,

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the City Authorities have asked the Embassy to redevelop the plot as soon as

possible. There is a risk that if the redevelopment is not undertaken within the

time frame given, the plot which is located in a very prime area, will be forfeited,

as its current state has made the neighbouring properties lose value.

The Accounting officer stated that Ministry of works officials inspected the plot and

proposed construction of two houses, and accordingly management submitted the

construction estimates to the Ministry of Foreign Affairs for appropriate action, and

budgeted for them in the financial year 2015/16. I advised that this matter be

followed up to avoid the risk of forfeiture of the plot in question.

69.0 UGANDA HIGH COMMISSION, BUJUMBURA

a) Unacknowledged Remittances

Included in the statement of financial performance for period ending 30th June

2014 is a transfer to treasury amounting to UGX.13,833,381. However, the

transfer was not supported with acknowledgement receipts from Accountant

General. The Accounting Officer explained that a bank statement was available to

support the transaction.

I advised the Accounting Officer that the Bank statement is not adequate since it

lists down various transfers. The acknowledgement receipt corresponding to the

transfer should be availed for verification.

b) Failure to translate transactions

Included in the statement of financial position are receivables amounting to

UGX.3,966,456. However, the details/ schedules for the receivables were not

translated into English as required by Section (P-b) (7) of the Public Service

Standing. Though the Accounting Officer explained that the receivables were tax

refunds from Burundi Revenue Authority, verification could not be done since the

language used was French.

I advised the Accounting Officer to submit details in the reporting currency for

verification.

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c) Arrears of Revenue

Included in the statement of arrears of revenue is a total of UGX.3,994,965 being

arrears of revenue as at 30th June 2014. However, there was no evidence to show

that management made efforts to recover the arrears. Accumulation of revenue

arrears may result into bad debts. The Accounting Officer explained that the

arrears of revenue were tax refund claims made to Burundi Revenue Authority and

the claims would be followed up.

I await management‟s action on this matter.

d) Refund of Medical Expenses

A total of BIF.3,361,296 (UGX.6,344,068) was refunded to various officials of the

Embassy in respect of medical bills because management did not register with a

health insurance scheme contrary to sections (M-a) (14) and (F-a) (3) of the

public service standing orders. This practice is bound to be abused because it is

difficult to verify the correctness of receipts obtained from the various health units.

Though the Accounting officer explained that the medical services in Burundi are

in a poor state, this was not brought to the attention of the Permanent Secretary

Ministry of Foreign Affairs as provided in the standing orders.

I advised management to liaise with the Permanent Secretary Ministry of Foreign

Affairs and the Director General of Health Services in Uganda for an appropriate

remedy.

e) Irregular Power Refunds

Section (H-e) (9) of the public service standing orders requires every public officer

at the Embassy to be responsible for the cost of lighting and water consumed in

any house allocated to him or her. However, BIF.534,000 (UGX.1,007,865) was

incurred on electricity bills for residences of staff of the Embassy making this

expenditure irregular and therefore recoverable.

The Accounting Officer stated that Burundi was situated in or near the subtropical

dry forest biome with a pronounced dry season and long periods of drought that

necessitated incurring costs of cooling for officers.

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I advised management to liaise with MoFA and MoFPED to consider regularizing

the expenditure.

f) Vehicle Maintenance

The Embassy spent BIF.7,284,164.81 (UGX.13,748,041) in respect of vehicle

maintenance and equipment repair. However, the payment vouchers were not

supported with documents such as requisitions, purchase orders, receipts, pre

and post maintenance reports and quotations from at least three garages. The

prequalified list of suppliers and minutes of the contract committee were also

missing. Unsupported expenditure could lead to misappropriation of funds.

The Accounting Officer explained that public procurement processes were under

developed in the country and transactions were basically cash basis.

I advised management to ensure internal procurement processes are adhered to,

and all the relevant supporting documents are submitted for verification.

70.0 UGANDA EMBASSY, CAIRO

a) Budget Performance - Recurrent

The activities and operations of the Mission are financed through budget support

by Government of Uganda. In the financial year under review, the mission

received a sum of UGX.1,321,748,000 against an approved budget of

UGX.1,321,749,000, which constituted 99.9% budget performance level. However,

comparing this performance with previous year, the mission‟s budget declined by

UGX.52 Million in recurrent budget support as indicated in the table below;

Analysis of budget performance-Recurrent

Financial Year Initial Budget

(UGX)

Revised

Budget

(UGX)

Actual

Release

(UGX)

Budget

performance

(%)

FY 2012/13 1,662,518,484 1,373,748,679 1,373,748,679 100%

FY 2013/14 1,321,749,000 1,321,749,000 1,321,748,000 99.9%

Variance 51,999,679 52,000,679

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With the increased responsibilities of the mission as described in its Mission

Charter, the reduction in its budget may negatively affect its capacity to effectively

deliver its mandate.

I advised the Accounting Officer to liaise with the responsible authorities, to

ensure that the identified priorities in the Mission Charter are adequately funded

during the budgeting process.

b) Budget Performance-Capital development

In the FY 2013/14, a sum of UGX.250 Million was budgeted and released to the

Mission to cater for capital development expenditure. However, I noted that out of

the funds released, only UGX.140,133,583 was spent on renovation of the

Chancery. The balance of UGX.109,866,417 remained unspent at year end. I was

not availed any evidence to show that authority was granted to the Mission by the

PS/ST to retain the unspent funds as is required under the TAI, 2003.

The Accounting officer explained that the Mission received a directive from the

Ministry of Foreign Affairs, to stop the ongoing works at the residence until further

notice and this was at the beginning of a new financial year, when funds had

already been committed to the said activity. However, Management will ensure

that it seeks authority to retain unutilized funds at the close of every financial

year. I advised the Accounting Officer to ensure that authority to retain unutilized

funds at the close of the year is always sought and obtained as required by the

TAIs.

c) Non-Tax Revenue

The Mission collects its NTR from administrative fees and miscellaneous revenue,

which mainly includes proceeds from the issuance of Visas, and travel documents.

In the financial year under review, a total of UGX.115,291,861 was collected.

However, scrutiny of NTR transactions revealed the following irregularities;

a. Unbudgeted NTR

Paragraph 2(c) of the third schedule of the Public Finance and Accountability Act

2003, requires the Accounting Officers to submit to the Accountant General a

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statement of revenue received during the year, showing the amount contained in

the estimates of revenue for each source of revenue, the amount actually

collected, with explanation for any variation between the revenues collected and

estimated.

Contrary to the above provision, the mission did not provide an estimate of

revenue to be collected under NTR in its annual budget for the year under review.

As a result, management could not assess and monitor its revenue performance,

and submit accurate revenue returns to the Accountant General. This poses a high

risk of misuse of such funds.

The Accounting Officer explained that the mission collects Non tax revenue only in

the form of Visa fees, Endorsements and Emergency travel documents. These are

variable fees and very hard to estimate, however, the mission would seek further

guidance on the issue from the concerned departments. I advised the Accounting

Officer to start budgeting for NTR as per the provisions of the Public Finance and

Accountability Act, 2003 to enable the Mission assess and monitor NTR

performance.

b. Non remittance of NTR to the Consolidated Fund

Paragraphs 98 – 102 of the TAI, 2003 specify how Accounting Officers should

account for revenue collected. Included in the specifications is the requirement to

transfer money to BoU on an account designated by the Accountant General from

which such revenue is periodically transferred to the Uganda Consolidated Fund

(UCF) Account. On Transfer of the revenue to the UCF, both the Accountant

General and the Accounting Officer are notified by BoU.

I noted that at the closure of the financial year under review, the Accounting

Officer did not transfer all the collected revenue to the UCF as required by TAIs,

hence leading to the creation of unnecessary arrears of revenue, which stood at

UGX.93,194,267. The failure by the Accounting Officer to remit monies to the UCF

denies government of the revenue required to implement its programmes, thus

affecting service delivery. In addition, it increases the risk of misuse of the funds if

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strict adherence to regulations prohibiting utilization of funds at source is not

observed.

The Accounting Officer attributed this anomaly to the political situation in the

country and the fact that the Central Bank put restrictions and a limit to the

foreign exchange out flow. I advised the Accounting Officer to liaise with the

PS/Ministry of Foreign Affairs and the PS/ST to find out a solution to this

challenge.

d) Irregular Payment of Staff rent - USD.66,500

Examination of payment vouchers revealed that staff were directly paid monies in

respect of their rent totaling to USD.66,500 (Approximately UGX.186,200,000)

instead of the amounts being paid to the landlords. In addition, the monies were

being paid to staff in cash, thus increasing a risk of misuse by staff through

fraudulent activities, such as paying for less expensive and unbefitting

accommodation, and irregularly saving on the balance of the amount claimed. I

further noted that some staff were paid for rent periods that did not fall in the

respective financial years being charged without declaring the source of the funds

in the budgets.

Scrutiny of the lease agreements further revealed the following irregularities;

The lease agreements were drawn in English by the Mission staff and not

translated in Arabic (official language of the host country), thus standing a risk

of limited legal enforcement, especially in a foreign country.

Some lease agreements had no dates of expiry indicated, thus leaving them

open for unspecified periods. Although they contained a provision of automatic

renewal in case the occupant continued using the premises, it is important that

the start and end dates be specified in the agreements.

The lease agreements required landlords to furnish the client with a

list/inventory of household items, but in most of the agreements reviewed the

lists were not provided.

Some agreements lacked the telephone contacts of the landlords, although this

was specifically provided for.

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Given the above mentioned irregularities in the agreements and the method of

cash payment to the landlords, the rent transactions are susceptible to abuse.

The Accounting Officer explained that;

In the near future the mission shall ensure that contracts are drawn up by a

law firm and also translated to Arabic. Regarding the lease period, they had

assumed that in the absence of notification from either party, the rent for the

next period becomes automatic as stated in the agreement.

The Mission always recommends that all officers rent fully furnished apartments

to avoid purchasing of house hold items by the Mission hence all inventory for

the officer‟s apartments are available in their respective places of residence. We

shall get a copy and attach it on the new agreements accordingly.

Telephone contacts for the various landlords will be added to each agreement.

I advised the Mission Management as follows;

The Accounting Officer should desist from paying cash to landlords and all

payments to landlords should be by bank.

The Head of Mission should ensure that legally binding lease agreements

are drawn by a reputable law firm in the country to avoid undesirable

circumstances that may occur in future.

e) Payment of Child Education Allowances

Section E-e (Foreign Services Allowances) Paragraph 12-20 of the Public Service

Standing Orders, 2010 (Revised), prescribe the preconditions for the payment of

Child Education Allowance to mission staff. In particular, Paragraph 19 provides

for the payment of education allowance directly to the school and reimbursement

from the officer for his/her personal share should be made at source.

Furthermore, Paragraph 20 of the same Standing Orders provides for each

application for an education allowance to be approved by the Responsible Officer

and must be accompanied by a certification by the Head of Mission confirming;

The circumstances provided by the officer are correct;

The period of education to be carried;

The date of birth of the child; and

The evidence of child parenthood/adoption.

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During the period under review, child education allowance totaling USD.14,000

(Approximately UGX.39,200,000) was paid to staff of the mission. However it was

noted that the allowances were paid to the individuals (Mission staff) without

evidence on staff personal files of approval of the prescribed conditions by the

HoM, and there were no receipts from the schools acknowledging payment of the

amounts.

In the absence of certification by the HoM and the relevant supporting

documentation, the possibility that allowances were not paid for the intended

purposes cannot be ruled out.

The Accounting Officer explained that Payment of child education allowance was

standardized by the Ministry of Public Service and it was advised that for all

officers who have children between the ages of 4 and 18 must be paid a uniform

amount of money (i.e. Us$.2,000) per child every year irrespective of how much

the officer is actually paying.

I noted that although the circular standardized the amount to be paid per child

every year, it remained silent on the provisions in the Public Service Standing

Orders that prescribe how child allowance should be paid and accounted for. I

advised the Accounting Officer to liaise with PS/MoFA and PS/MoPS to ensure that

the circular directives are harmonized with the Public Service standing orders.

f) Staff Insurance and Medical Refunds

Section M-a (Medical Attention) Para.14 of the Public Service Standing Orders,

2010 (Revised) requires a Foreign Service officer to be fully covered by a medical

insurance. I noted, in accordance with the above provision, that the mission was

paying for medical insurance to a few staff and had incurred a sum of EGP.6,845

(Approximately UGX.2,590,000) in the period under review.

However, I further noted that the mission was spending heavily on staff medical

refunds and as a result, a sum of EGP.120,489 (Approximately UGX.45,590,360),

which was almost eighteen times more than what was paid in staff medical

insurance scheme. Those payments were found irregular, given the fact that the

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staff were supposed to send their medical claims to the insurance companies for

settlement. Notable incidents included the following;

The treatment of one staff, who is said to be terminally ill, is drawing a

significant proportion of staff medical refunds. Given the officer‟s current

health condition, the mission cannot continuously sustain payment of his

medical bills without suffocating the payment of other financial obligations.

The treatment of HoM, when he was involved in a motor accident in Kampala,

has also exerted financial pressure on the mission budget. A sum of

USD.6,000 had been spent on his treatment and was still undergoing

treatment at the time of the audit (November, 2014). An outstanding claim for

medical bills incurred in Kampala of UGX.5,427,160 had not been settled by

the Accounting Officer as directed by the PS/Ministry of Foreign Affairs.

The treatment of Administrative Attaché also significantly drained the mission

resources.

The above cases and many others, cannot be sustained by the mission‟s meager

resources, hence the urgent need for a comprehensive insurance scheme for all

mission staff.

The Accounting Officer explained that the above matter was being looked into but

it has been difficult to find an insurance company with 100% comprehensive

coverage. She further explained that she had written to different insurance

companies and was still looking around to make sure this issue is resolved

notwithstanding the ailments that are not covered. I advised the Accounting

Officer to take up the matter with the relevant authorities to ensure that a

sustainable solution is reached.

g) Repair of Vehicles

A sum of EGP.139,082 (Approximately UGX.52,625,621) was spent on repair of

the two utility vehicles and one representation car in the year under review.

However, the following anomalies were noted;

Although there used to be a sound vehicle repair system, it has currently

broken down, whereby drivers do not report vehicle repair requirements in

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writing; vehicles are not inspected before and after repairs; and garages are

being paid in cash other than by cheques or bank transfers.

The representation vehicle has been involved in a series of accidents more

than the other two vehicles since its acquisition in 2005. However the major

accident, which cost the Embassy heavily, occurred at Cairo International

Airport whereby a substantial amount of EGP.84,370 (Approximately

UGX.31,923,783) was paid to a repairing firm. Although the vehicle was

comprehensively insured, the insurance company refunded the Embassy only

EGP.32,978 (39.1% of the cost incurred), due to the fact that the car was

improperly handled by the driver right after the accident. According to the

insurance company, the driver tried to drive the car immediately after the

accident instead of putting it on a car carrier, thus causing more significant

damage than what was caused by the accident itself. Through negligence, the

driver occasioned a financial loss of EGP.51,392 (Approximately

UGX.19,445,621) to government.

Although the payments were supported by receipts, invoices and other

supporting documents, I could not fully rely on them because of the

weaknesses in the vehicle management system.

The Accounting Officer explained that the Mission was in the process of putting up

a tightly controlled fleet management system as recommended. I advised the

Accounting Officer to restore the vehicle management system to oversee vehicle

repairs, fuelling and movements. In addition, all vehicle repair bills should be paid

through the bank.

h) Management of Imprest

Paragraph 20 of the TAIs requires Imprest holders to be appointed by the

Accounting Officers on specific approval by the Accountant General. Paragraph 23

of TAIs further specifies that all appointments of Imprest holders must be notified

to the Accountant General, Auditor-General and the officer to whom the Imprest

Holder is to account. Para 24.of TAIs require that in fixing the amount of the

imprest, Accounting Officers appointing Imprest holders will have regard to the

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facilities available to them for the safe keeping of money, and will not authorize

the holding of sums larger than those for which suitable accommodation is

available.

I noted that the Accounts Assistant also doubled as the Mission‟s Imprest holder,

but contrary to the above provisions in the TAIs, he was not duly appointed. I

further noted that large amounts of money would be drawn ranging between

UGX.1 million to UGX.50 million as imprest and there was no imprest limit set by

the Accounting Officer. I further noted that although the Accounts Assistant

properly maintained the imprest cash book and accounted for the imprest

advances, some ineligible expenses, such as: vehicle repairs (notably EGP.84,370,

which was paid to a garage when the representation vehicle was involved in an

accident); staff medical claims and telephone expenses-international VOIP that

would be charged from the Mission‟s operation account, were charged on imprest.

In his response, the Accounting Officer acknowledged the anomaly and indicated

that an imprest holder would be appointed going forward. I advised the

Accounting Officer to expedite this action and also ensure that imprest

management is in accordance with the provisions under the Treasury Accounting

Instructions, 2003.

i) Procurement

a. Absence of a Procurement Plan

Regulation No.96, sections (1) to (3) of the PPDA Regulations, 2003 requires a

user department to prepare and submit to the PDU a multi-annual rolling work

plan for procurements based on approved budget. The procurement plan should

enhance financial predictability, accounting and control over procurement budgets.

In addition, the plan should facilitate the entity to plan, organize, forecast and

schedule its procurement activities.

A review of the mission‟s procurement files and records showed that the mission

did not have a comprehensive procurement plan in a format prescribed by the

above regulation. Although the Accounting Officer explained that the Mission had

a procurement Plan, the plan availed was a listing of the items to be procured with

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no details such estimated amounts, procurement method and timing. In addition,

there was no evidence to indicate that the mission prepared and filed procurement

returns with PPDA Authority.

I advised the Accounting Officer to ensure that procurement plans are always

prepared in accordance with the PPDA regulations, to effectively guide the

mission‟s procurement activities. In addition, procurement returns should be

prepared and filed with PPDA authority.

b. Absence of Evaluation Committee

Regulation No.169, Section (1) of the PPDA Regulations, 2003, requires an

evaluation to be conducted by an Evaluation Committee (EC). Section (2) of the

same regulation requires the Procurement and Disposal Unit (PDU) to recommend

the membership of the EC to the Contracts Committee (CC) for approval.

According to Section (3) of the Regulation, the number of members will depend on

the value and complexity of the procurement requirements, but shall not be less

than three. Section (4) further requires that the members should be of an

appropriate level of seniority and experience depending on the value and

complexity of the procurement.

A review of the procurement files for the mission revealed that all awards by the

Contracts Committee (CC), were not backed by recommendations of an evaluation

committee contrary to PPDA regulations. In some instances, the CC would

irregularly constitute itself into an Evaluation Committee in the same meetings of

tender award, thus adapting the name “Evaluation/Contracts Committee”.

However, during discussions with the mission staff, it was noted that with the

appointment of the CC, the other remaining staff (i.e. HoM, A/O and Accounts

Staff) by nature of their duties, would automatically not qualify to serve as

members of the EC. I noted the leanness of the Mission staff structure and found

out that it hinders the separation of the EC from CC. The absence of a technical

evaluation committee not only contravened the PPDA regulations, but also

resulted into various irregularities being committed by the CC as discussed in the

subsequent paragraphs.

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The Accounting Officer explained that the Mission will seek guidance from relevant

authorities regarding the above aspect and also conduct training for staff involved.

I await the outcome of this management commitment.

c. Botched Renovation of the Official Residence

Two companies were invited to tender for renovation works at the official

residence. However the following anomalies were noted;

No evidence was availed to indicate that the works were advertised and

request for bids sent to bidders. The method of direct procurement as

explained by management, was not appropriate given the nature of the

contract and the procurement threshold prescribed by PPDA regulations.

The two companies each quoted for works in different currencies. It was

noted that without an evaluation report, the CC went ahead to award the

contract to one of the companies.

The scope and magnitude of renovation works were not first ascertained by

the Mission and as a result, each bidder visited the official residence to

determine for themselves what the works would entail. This implied that there

could not be an effective comparison of the two bids since there was no

common stand on the scope of works.

Due to the threat to sue by the other company which lost the tender, and the

decision by H.E the Ambassador to stop the contractor, the CC on its sitting

on 8th July, 2014, under minute 1/07/2014, decided to defer the renovation

works. However, there is no evidence on the procurement file indicating that

the decision was duly communicated to the company that had been awarded

the contract.

In its effort to rectify the situation, management requested for the works to

be assessed and sought assistance from government engineers from the

Ministry of Works and Transport (MoW&T), who were facilitated by the

embassy to the tune of EGP.13,500 (UGX.5,108,108) in air tickets. However,

at the time of the audit (November, 2014), the Engineers had not provided

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the Mission with an assessment report and as a result the procurement

process had stalled.

Government had released a sum of UGX.250,000,000 for capital development,

but as at closure of the financial year, only UGX.109,866,417 had remained

unapplied. There is a risk that the funds may continue being applied on other

mission activities if the tender process is not expedited.

The Accounting Officer explained that the Mission will send a reminder to the

officials from Ministry of Works to furnish management with a proper works

assessment report to allow the procurement process to commence. I advised the

Accounting Officer to expedite this action, and ensure that proper procurement

procedures are observed in accordance with the PPDA regulations.

d. Procurement of Office Laptops

Three firms were sourced by the mission through direct physical contact, to supply

four office laptops. The following anomalies were noted;

Although the CC opted for the direct method of procurement, there is no

evidence that the technical specifications, such as: storage memory,

processing speed, monitor size, etc, had been specified, to allow for easy

comparison during evaluation. Although the awarded firm had quoted lower

than others, the comparison was not done on standard technical

specifications.

There was no technical evaluation report on file to back the decision of the

CC, despite the complex nature of the procurement.

According to the quotation from one of the firms, it indicated that it was

authored on the 17th June, 2014. Comparing this date with the date of CC

sitting on 18th June, 2014, it was revealed that the procurement was hurriedly

concluded, thus posing a risk that the mission may not have obtained value

for money in the procurement due to the opted procurement method.

The Accounting Officer explained as follows;

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The late award of the tender was as a result of administrative issues in terms

of interference in the work of the contracts committee. The committee was

not independent hence the delay.

As long as there is no interference in the activities of the contracts committee

all future procurements will be concluded according to the plans set in the

PPDA regulations.

I advised the Accounting Officer to ensure that future procurements are concluded

according to the procurement plan and in accordance with the PPDA regulations.

e. Redesigning of the Chancery Reception

Three firms were invited for redesigning of the chancery reception and the

contract was awarded to one of the firms for USD.10,000. It was noted that the

redesign of the chancery reception has improved the general appearance of the

Embassy. However, the following anomalies were noted;

There was no evidence on the procurement file to indicate that the evaluation

committee report was prepared before the award by the CC.

One firm quoted in a different currency and there is no evidence to show that

the CC committee made a currency conversion to enable equitable

comparison.

There was no evidence on file to indicate that specifications for the works

were prepared and communicated to all firms.

The work of the redesign of the reception was so technical, thus needed a

fully constituted technical evaluation committee.

The procurement method used was beyond the PPDA permitted threshold of

such works.

No designs were obtained from the other two companies apart from the one

that won the tender.

The Accounting Officer acknowledged the above anomalies and indicated that all

mission procurements will in future be conducted in accordance with the PPDA

regulations. I await the outcome of this commitment by the Accounting Officer.

797

j) Mission Charter and Performance Reporting

The Embassy prepared a mission charter to facilitate its service delivery by

focusing on three thematic areas: Economic/Commercial diplomacy;

Regional/International peace and security; and the well-being of Ugandans. In

order to further streamline its focus on the thematic areas, the Embassy

developed eight (8) strategic objectives, with clearly defined key outputs,

performance indicators, and performance targets, as indicated in paragraph 3.0

above.

In his letter referenced MFA/X/16 of 16th April, 2014, the Hon. Minister of Foreign

Affairs, further gave guidance to the HoM to give priority attention to the following

specific actions and report on them on a quarterly basis;

a) Engage Egypt to be supportive of various peace building

initiatives/processes on interest to Uganda and Great Lakes Region;

b) Lobby Egypt‟s understanding and appreciation of Uganda‟s position on

various important issues, particularly the Nile and regional geo-politics;

c) Facilitate promotion of at least USD.200M worth of Uganda exports to

Egypt annually;

d) Lobby for inward transfer of at least USD.300M worth of investment from

Egypt per year;

e) Facilitate attraction of at least 150,000 tourists from Egypt per year;

f) Handle at least 600,000 requests for Consular services annually;

g) Identify and facilitate of appropriate technology from Egypt;

h) Engage Ugandan Diaspora in Egypt to actively contribute to development

at home; and

i) Identify and facilitate acquisition, development and maintenance of at least

one Government property in Cairo annually.

A review of the 3rd quarter performance report of the FY 2013/14 submitted to

PS/Ministry of Foreign Affairs on 6th May, 2014, indicated promising results and

achievements by the mission. Notable achievements included;

Increased coordination of mission activities, including allocation of duties to

staff;

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Followed the geo-politics in the countries of accreditation;

Coordinated UPDF and Police trainings in Egypt

Issued 225 visas; and

Received company profiles of firms interested in renewable sources of energy,

gas supply and oil refinery.

I did not review the 4th quarter report as it was not availed to me. However,

comparing the mission charter strategic objectives, key outputs, performance

indicators and targets, with the mission quarterly performance report, the

following areas of improvement are suggested;

Staff activity reports should be prepared in line with their allocated duties,

which should also be linked to the strategic objectives of the mission charter.

The quarterly performance report by the HoM should be linked to staff activity

reports.

The Quarterly performance report should, to a large extent, focus on the key

outputs, performance indicators and targets.

The Accounting Officer has committed to ensure that the Staff activity and

quarterly performance reports are improved and adjusted accordingly.

k) Cash payments of staff salaries

Paragraph 268 of the TAIs and Section B-a 9 of the Public Service Standing

Orders, 2010 (Revised), provide for payment of staff salaries into the individual

bank accounts of staff. I noted that in most occasions, staff salaries were being

paid in cash by the Accounts Assistant, after drawing lump sum amounts from the

bank. Such a practice exposes the mission to a risk of loss, given the risks

associated with cash. Besides, some officers had financial obligations (loan

repayments) with their banks. This implies that payment of salaries in cash may

hinder the recovery efforts by banks, which may in turn cause diplomatic

embarrassments.

The Accounting Officer explained that the payment method was adopted due to

the fact that only two officers hold bank accounts. Since the revolution in the

country, the Egyptian fiscal policies tremendously changed. For example, it takes a

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lot of scrutiny just to cash the mission cheques. However, officers without bank

accounts have been advised to follow up with the various banks in order to get

bank accounts. She further explained that management would make all efforts to

minimize cash transactions. I advised the Accounting Officer to ensure that this

practice is stopped henceforth and that all salary payments are made through the

bank.

l) Staff Performance

Management of staff performance requires the appraisees to agree with their

supervisors on the activities, key performance indicators, and outputs/targets for

the appraisal period. The agreed outputs together with the activities constitute

staff performance plans, which should form the basis for appraisal of staff at the

end of the appraisal period.

However, there was no evidence on staff personal files, to indicate that the staff

prepared and discussed performance plans with their supervisors at the beginning

of the appraisal period, and that they were appraised at the end of the year. The

absence of performance plans, with clear outputs/targets, limits the effective

supervision and monitoring of staff activities, which eventually frustrates the

objectives of performance appraisals at the end of the period. In addition, this

affects the attainment of the objectives in the Mission Charter.

Further noted was that staff activity reports were not specific and did not, on

many occasions, contain measurable outputs or targets. They were so narrative

and could not be aligned back to the objectives of the Mission Charter. I advised

the HoM to ensure that staff performance plans, with measurable targets which

link to the objectives of the Mission Charter, are drawn at the beginning of the

appraisal period to form the basis of staff appraisal at the end of such periods.

m) Physical Inspection of Mission Properties

a. Chancery Building

The first phase of the renovation of the chancery building had just been completed

at the time of audit. The contractors for both the general renovation and redesign

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of the chancery reception appear to have exhibited good workmanship skills.

Below are some of the photographs taken during inspection;

Photographs taken during inspection of the chancery building

Photograph Remarks

Photograph showing the front view of the newly redesigned chancery reception

Photograph showing the behind view of the newly redesigned chancery reception.

The photograph showing the recently renovated staff boardroom with new furniture.

b. Official Residence

The general condition of the official residence was generally appalling. The

residence is comprised of a storeyed building with servant quarters on the roof

top. The following conditions were observed;

The paint on the walls was peeling off;

The roof top was leaking whenever it rains;

The kitchen facilities including the cookers, fridges require urgent attention;

801

Electrical switches and sockets were found broken and the wires were

exposed, posing safety risk to the occupants; and

Water heaters were not functioning.

The Accounting Officer explained that the Mission was awaiting the MoW&T

engineers to finalize the assessment report in order to embark on the renovation

works.

I advised the Accounting Officer to liaise with the PS/Ministry of Foreign Affairs to

ensure that the MoW&T engineers finalize the assessment report, to enable the

commencement of the procurement process for the renovation works without

further delay.

n) Financial Statements

a. Staff Arrears and Other Commitments

A review of the financial statements (Statement of outstanding commitments)

revealed that, of the total outstanding commitments as at the beginning of the

year under review amounting to UGX.158,679,788, the Mission was only able to

pay UGX.2,644,082 during the year, leaving a balance of UGX.156,035,706

outstanding for more than a year. It is apparent that the Mission‟s efforts towards

settlement of outstanding arrears are minimal. Also noted was that a significant

portion of the outstanding commitments is staff social benefits of

UGX.106,912,112, which accrued due to failure by the mission to pay the „„13th

month‟‟ for the local staff. There is an increased risk of the mission being taken to

courts of law if the obligations are not settled and this may tarnish the diplomatic

image of the country.

The Accounting Officer explained that the matter was brought to the attention of

the Permanent Secretaries in the Ministries of Foreign Affairs and that of Finance

Planning and Economic Development. However, although these arrears have been

budgeted for in the past financial years, the funds in question have not been

availed to the Mission. I advised the Accounting Officer to continue following up

this matter until the obligations are settled.

b. Prepaid Rent

802

It was noted that rental payments totaling to USD.9,000 were made in respect of

periods straddling in the ensuing financial year, but were not recognized as

prepayments in the financial statements as prescribed in the accounting policies

Details as per table below;

Prepaid Rent not disclosed in the financial statements

DATE PVR.NO. CHQ.NO. DESCRIPTION AMOUNT (USD)

15/06/2014 PV-2479 CH.1177 Rents for (July-sept14) 4,500.00

15/06/2014 PV-2480 CH.1178 Rents for (July-sept14) 4,500.00

Total 9,000.00

Although the Accounting Officer explained that adjustments to recognize prepaid

rent would be effected in the financial statements, by the time of concluding this

audit, this had not been effected.

I advised the Accounts Assistant to recognize the amount of prepaid rent in

accordance with the prescription in the basis of preparation of accounts.

71.0 UGANDA HIGH COMMISSION, CANBERRA

a) Unspent Balances

Section 19 (1) of the Public Finance and Accountability Act(PFAA), 2003 require

unspent balances at the end of the financial year to be returned to the Uganda

Consolidated Fund (UCF). A review of the statement of financial position for the

year under review revealed unspent balances of UGX 107,200,862.60 at the year

end. Included in this amount was UGX 43,544,449.10 that remained unexpended

on the expenditure account which was not returned to the consolidated fund as

required. The authority for retention was not availed for audit.

The balance of UGX 63,656,334.20 related to Not Tax Revenue (NTR) that had not

been remitted to the treasury. It was explained that it was remitted on 3rd of July

2014 but the acknowledgement receipt from the Accountant General was not


803

The Accounting Officer explained that the balance on expenditure account was

retained to finance bank standing orders and to cater for a new officer posted to

the mission but had not arrived. Regarding the lack of acknowledgement receipt

of the NTR remitted to the treasury, the Accounting Officer explained that the

mission had sent a reminder to the Accountant General‟s Office.

The Accounting officer was advised to seek authority for retention. Meanwhile the

acknowledgement receipt from the Accountant General for the remitted NTR

should be obtained and should be presented for audit verification.

b) Excess Expenditure

The statement of appropriation account (based on nature of expenditure for

services voted) revealed excess expenditure as follows:

Nature of expenditure

Initial budget (UGX)

Revised Budget(UGX)

Actual (UGX) Excess expenditure (UGX)

1 Employee costs

844,410,903.10 807,555,125.00 844,410,903.10 36,855,778.00

2 Goods and services consumed

838,338,427.70 838,338,427.70 842,643,386.60 4,304,958.90

Total 1,682,749,330.80 1,645,893,552.80 1,687,054,289.70 41,160,736.90

The Accounting Officer explained that excess expenditure was occasioned by

insufficient budget allocations on the items namely, medical expenses, electricity

and gas, computer supplies and welfare and entertainment.

The Accounting Officer was advised to seek authority from the Secretary to the

treasury whenever such shortfalls in the budget occur so that the necessary

budgetary revisions are undertaken.

c) Procurement of Goods

The statement of appropriation of account reported a sum of UGX 842,643,386.60

incurred on goods and services. Included in the sum was UGX 62,567,529.34

(AUD 25,424.55) incurred on procuring assets for the mission as shown below:-

804

Month Purpose Cheque Amount

(AUD)

1 July 2013 Furniture 2776 5,584.00

2 October 2013 Various Assets 2875 4,823.85

3 do 2858 939.00

4 do 2846 480.00

5 April 2014 do 3073 7,122.70

6 May 2014 do 3129 5,000.00

7 do 3110 1,475.00

Total 25,424.55

However, procurement files were lacking. Hence it was not possible to confirm

that proper procurement procedures were complied with. The Accounting officer

explained that the anomaly arose due to absence of the required procurement

structures and as such procurement files could not be maintained. She further

explained that the mission had only two home based staff and therefore it was

difficult to constitute the contract committee and procurement and disposal unit

under the circumstances.

However, the Accounting Officer had written to the Permanent Secretary/Secretary

to the Treasury regarding the matter.

Management was advised to ensure that the requisite Procurements structures are

instituted, staff trained and procurement files kept.

d) Renting of Property

It was observed that the mission does not own any residential property

.Accordingly the chancery, the official residence and other residences for staff are

rented at an annual cost of AUD equivalent to AUD 208,882.80 (UGX

514,039,999.50). Details are as follows:

Rented property Rent per

month(AUD)

Annual rent

(AUD)

1 Official residence 7000.00 84,000.00

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Rented property Rent per

month(AUD)

Annual rent

(AUD)

2 chancery 3,823.81 45,885.72

3 Accounting Officer 2715.77 32,589.24

4 Posted foreign service

officer

1,868.45 estimated 22,421.40

5 Administrative attaché‟ 1998.81 23,985.72

Total 17,406.84 208,882.08

This cost would be saved in the long run if an attempt to acquire own property is

undertaken.

The Accounting Officer explained that the Head of Mission was following up the

matter with the Ministry of Foreign Affairs initially to provide funds for purchase of

land being offered by the Australian Government and thereafter source for funds

for putting up the chancery and official residence.

The Head of Mission was urged to follow up the matter and source for the

requisite funding.

e) Foreign Service Allowance

It was noted that the Foreign Service allowance (FSA) paid to the home based

staff to cater for their cost of living has never been reviewed by the ministry of

foreign affairs and public service for a long time. The FSA has now been eroded by

the expensive market prices in the economy. As a result management explained

that it is becoming increasingly difficult for the staff to live an affordable life. This

impacts on staff morale and hence productivity.

It was observed that management is engaging the MOFA to review the grading of

the mission so that it is placed in the appropriate category A for purposes of

enhancing the FSA to match the price index.

Management should continue engaging the relevant authorities for the possibility

of appropriately regarding the mission.

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f) Review of the Inventory

A review of the inventory of the chancery in the board of survey and verification

on a test check basis revealed old furniture and other stores that require

replacement. During discussions the Accounting officer explained that capital

development funds to enable replacement of the items have started flowing in

although minimal. The old items would require boarding off.

The Accounting Officer explained that a board of survey had been formed to carry

out the boarding off exercise in the month of October 2014. Management was

urged to ensure that the boarding off exercise takes place in accordance with the

Public procurement and disposal of assets regulations.

g) Under Staffing

According to the Ministry of foreign affairs categorization of missions, Canberra

mission is categorized as 1 +2 mission whose structure should have one Head of

mission and two Foreign Service officers.

It was observed that the mission has the Head of mission and one Foreign Service

officer occasioning one vacancy. The Accounting officer explained that the arrival

of the officer to fill the vacancy that had been delayed due to entry visa issues.

Management was advised to follow up the matter with the Ministry of Foreign

Affairs so that the vacancy is filled.

72.0 UGANDA EMBASSY, COPENHAGEN

a) Performance Report

The Accounting Officer under section 14 of PFA is supposed to carry out regular

review of embassy operations and establish whether the operations are being

carried out as planned for the year. The end of year performance report was not


In the absence of the performance report, it was difficult to establish whether the

mission activities had been implemented as planned.

807

In addition, it was difficult to link the mission, financial performance to the

planned activities and outcomes.

The Accounting Officer explained that the at the time of audit, the Embassy had

only complied separate activity reports from Q1-Q4 respectively that have been

integrated into a comprehensive performance report in line with the Copenhagen

Mission Charter 2014.

I advised the Accounting Officer to ensure that performance reports are regularly

conducted and presented for audit verification.

b) Lack of a Procurement Plan

Section 6 of the PPDA 2007 guidelines for mission refers that entities shall prepare

annual procurement plans based on the approval budgets and work plans in

accordance with PPDA regulations and submit them to the Authority before the

end of the first quarter of the financial year.

The procurement plan is supposed to allow the mission to enjoy economies of

scale and to reduce procurement costs.

It was observed that the procurement plan was not submitted to PPDA contrary to

the regulations.

The Accounting Officer admitted the shortcoming and explained that whereas

Form PP 20 is used to support expenditure on procured goods and services, the

Mission requires a proper management plan in line with the PPDA regulations.

Accordingly, the mission will be merging digital online shopping to conform with

PPDA regulations

I advised the Accounting Officer to ensure that procurement plans are prepared

and submitted to the Authority in accordance with the regulations.

c) Assets Management

Section 14(c) of the PFA 2003 required the accounting officer to ensure that

property and resources are properly managed and safeguarded.

808

It was observed that all the fixed assets owned by the mission had not been

labelled with any unique identification mark. This implies that the items may not

be easily identified in case of loss.

The Accounting Officer explained that steps have been taken to engrave all the

Embassy assets both at the Chancery and residential quarters.

73.0 UGANDA HIGH COMMISSION, DAR ES SALAAM

a) Irregular Procurements

Paragraph 2 of the Public Procurement and Disposal of Assets guidelines for

Uganda Missions abroad requires the Missions to pre-qualify providers who shall

be maintained on the list for three years. It was observed that the Mission did

not have a list of prequalified service providers. Consequently, procurements

worth TUGX.116,645,135 were undertaken in contravention of the PPDA

regulations as shown below:-

Service Provider Category of Service Amount (TUGX)

Viliproma Investment Ltd Fuel, oil and lubricants 29,374,868

Security Group (T) Ltd Security of chancery and residences

60,433,100

Aichi Supplies Stationery 4,133,400

Meridianna Africa Airline Ai tickets 8,488,767

Naska Lubricant Service Vehicle repairs and maintenance

9,215,000

TOTAL 116,645,135

The Accounting Officer explained that the Mission used per-qualified service

providers of other diplomatic missions in Dar es Salaam.

I advised the Accounting Officer to comply with the PPDA law.

809

b) Understaffing

The Uganda Public Service standing orders (A - a) 15 (a & f) states that the

Responsible Permanent Secretary shall determine the terms and conditions of service

and the structures of the Public Service in consultation with the Secretary to the

Treasury. Accordingly the mission had 15 approved posts and only 11 posts were

filled leaving 4 vacant posts.

Inadequate staffing adversely affects service delivery.

The Accounting Officer explained that the Head of Mission has engaged the

Ministry on the issue and recently an Officer was posted to the Mission. The

Mission still awaits replacement of former Head of Mission by appointing

authority.

I advised the Accounting Officer to follow up the matter with the relevant

authorities to ensure that the vacancies are filled.

c) Inspections

An inspection was carried on the mission properties located in the Diplomatic

Enclave of Dar as Salaam revealed the following shortcomings;

Official Residence Plot 65/12 Yasser Arafat Road

The building is dilapidated and

requires renovations of the roof

and the external walls.

810

The fence of the wall has a huge

crack that requires immediate

attention.

Other Residence

Plot 10 Kaunda Drive, WARD: Msasani, Street Oyesterbay House no 328

This residence is dilapidated and

requires major rehabilitation.

.

I advised the Accounting Officer to ensure renovation of the properties.

74.0 UGANDA HIGH COMMISSION, WASHINGTON

a) Outstanding Advances

Included in the outstanding advances is a sum of USD 40,000 that was

contributed to the Uganda North American Association in 2010 and 2012, and USD

55,000 that was incurred on transfer of two Foreign Service officers in 2006. Long

outstanding advances represent idle assets and may not be recoverable.

Management explained that the expenditure was incurred on behalf of the Ministry

of Foreign Affairs and the refunds were therefore expected.

I have advised the Accounting officer to liaise with the Ministry of Foreign Affairs

and the Treasury to either have the amounts refunded or written off in accordance

with financial regulations.

b) Dilapidated state of Buildings

Inspection of the Mission buildings namely: 5909, 16th St., NW and 5911, 16th St.

NW revealed water leakages in the foundation and in the ceiling. The air-

conditioning facility for the later was also noted to be mal-functioning. Owing to

811

the usual extreme weather conditions in the Washington area, there is risk of

rapid deterioration of the buildings and a harsh working environment for staff.

Management indicated that requests made to the Ministry of Finance, Planning

and Economic Development for capital funds to carry out renovations had not

been responded to.

I have advised the Mission to involve the Ministry of Foreign Affairs in seeking the

necessary resources for renovation of the properties and air-conditioning.

c) Irregular payment of Mileage Allowances

Section (E-e) of the Public Service Standing Orders, 2010 outlines the different

categories of allowances to which Foreign Service officers are entitled. This is

further amplified by Circular Standing Instruction No.4 of 2008, which clearly

indicates revised standard rates of allowances payable to all public officers.

It was noted that whereas mileage allowance does not fall under the above

section, a sum of USD 5,520 was paid to various officials of the mission in this

respect. This was therefore not a proper charge on public funds.

Management explained that this was a decision of the Finance committee arising

from the use of personal vehicles by staff and that the practice shall be halted

with immediate effect.

I advised the Accounting Officer to seek authority from the Ministry of Foreign

Affairs and the Ministry of Public Service before payment of undesignated

allowances.

d) Non-remittance of social Security and Medical Insurance for local staff

The mission employs a number of locally based staff who are entitled to a monthly

salary in addition to medical insurance and contributions to a Social Security Fund.

Examination of payment vouchers revealed that medical insurance and Social

Security Contributions were paid to staff personal accounts instead of remitting to

the relevant authorities. This practice is irregular because the social contributions

constitute their terminal benefits after the end of their employment contracts.

There is also a risk that the staff may not remit their contributions to the

812

regulatory agencies contrary to the law and this may attract penalties and related

fines against the Embassy.

I advised management to ensure deductions are remitted directly to the

concerned regulatory agencies.

e) Mission Charter

The mission charter provided to the Embassy by the Ministry of Foreign Affairs

comprises broad goals achievable over a period of time. The charter was not

broken down into targets, performance indicators and key result areas for each

year.

In the circumstances, it is difficult to assess the annual performance of the

Embassy in achieving its broad goals.

The Accounting Officer explained that the mission would liaise with the Ministry of

Foreign Affairs and break down the objectives into specific targets and

performance indicators by January 2015.

I await the results of this liaison.

75.0 THE PERMANENT MISSION OF THE REPUBLIC OF UGANDA TO THE

UNITED NATIONS AND OTHER INTERNATIONAL ORGANIZATIONS

IN GENEVA

a) Contingent Liabilities reported in the Financial Statements;

The Mission provided for Contingent Liabilities of UGX.811,269,801 representing

provisions for two pending court cases of unpaid rent plus repair costs and a claim

by a dismissed local staff. The following were noted with regard to the cases;

a) Documents indicated that the contract with the landlord was never terminated

since the Mission‟s relationship had ceased in 2007 when the home based

staff left the house and it was allocated to the local staff who started paying

the rent by herself. There was no justification for this anomaly.

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b) Documents further indicated that the head of Chancery at the time allegedly

received CHF.7,800 from the local staff purportedly to pay the landlord the

equivalent of three months‟ rent as security deposit. This was never done

since the tenancy agreement between the Mission and the land lord was not

terminated and the security deposit initially paid was neither claimed by the

Mission nor used by the landlord for any necessary repairs. There were no

details to show that the money received by the Head of Mission was recorded

in the Mission books of account. There is a possibility that this money was put

to personal use by the recipient.

c) The locally based staff, who was later dismissed from her engagement with

the Mission later left the house without paying five months‟ rent of Cf.14,330

with a number of spoilt items that needed repairs. The security deposit which

the Mission had deposited was deemed by the landlord as insufficient to cover

the repair costs which required an additional amount of CF.7,981. The

additional attendant court costs have not been determined given that the

Mission has been sued by the landlord.

d) The staff in the above observation was hastily dismissed, but delegations from

Uganda continued to work with her as a staff of the Mission. As a result, the

Mission has been sued by this staff for unpaid salaries and general damages

totalling to CHF.251,839.77.

In the above circumstances, the officers appear to have acted outside the normal

Public Service practices. The likely payments to the landlord, the staff and the

attendant legal costs, in addition to suffering reputational risk by the Mission,

could have been avoided had the officers acted within the limits of the Uganda

Public Service Standing Orders.

Meanwhile the GoU through the Ministries of Foreign Affairs and Justice and

Constitutional Affairs had not assigned a legal counsel to represent Government in

court in Switzerland which poses a risk of the cases being determined without any

submissions from the GOU side.

814

The Accounting Officer explained that the Mission had communicated to the

Ministry of Foreign Affairs and copied to the former Head of Mission drawing his

attention to the matter. He also stated that he had communicated to the Ministry

of Justice and Constitutional Affairs requesting it to assign a legal officer to handle

the cases.

I have advised that;

the former Head of Mission refunds CHF.7,800 he is alleged to have obtained

from the Local staff and also be held accountable for the outcome of the case

regarding the allocation of the house to an ineligible staff in unclear

circumstances.

Government through the Ministries of Foreign Affairs and; Justice and

Constitutional Affairs takes up the matter and assigns legal representatives to

handle the cases in Switzerland.

b) Lack of segregation of duties

It was noted that the Mission is using a staff employed as a receptionist

/Secretary/translator to at the same time manage the finance affairs of the

Mission, prepare and sign the Financial Statements as the Mission Accountant. In

addition to not being qualified for the Accountant‟s job, the officer was found to be

handling a number of other tasks. Performing many tasks including the

Accountant‟s role may eventually render the staff ineffective.

Management took note of the matter and explained that they had written to the

Accountant General requesting for a qualified accountant to be posted to the

Mission.


c) Procurements and disposals

a) Roles of different parties in the procurement process

Procurements regulations require that different roles in the procurement cycle be

segregated to enhance transparency in the procurement process. It was however

noted that the Mission‟s Contract Committee was performing conflicting functions

during the procurement process. For example, identification of the need,

815

Evaluations/negotiations, approvals and communication of the Contracts

Committee‟s decision to the best evaluated bidders, were all undertaken by the

member(s) of the Contracts Committee. This is not only irregular but could lead to

undertaking procurements where the independence of the Contracts committee

members may be eroded.

I have advised the Accounting Officer that notwithstanding the limitations of the

Mission in terms of staff numbers, efforts should be made to segregate the roles

of the Contracts Committee from other roles in the procurement process in order

to preserve the Committee‟s independence.

b) Non disposal of Assets:

Review of the list of the Assets owned by the Mission revealed a number of old

equipment that had been in use for a number of years, most of them for over ten

years. Although the list indicated that many of them were still in a good state,

others were indicated as either old (procured as far back as 1996), broken, not

good or incomplete. These include furniture and fittings and, other household

equipment for both the residences and the Chancery. The list had two old vehicles

that were bought in 2005 and 2006 but whose costs of maintenance and repair

were high compared to others owned by the Mission. A negative image is

portrayed about the country by use of old equipment, furniture and other fittings.

Management explained that the Mission got funds for replacing the furniture and

fittings in the staff residences in the FY 2014/15 budget and had submitted a

budget to have the Deputy Permanent Representative‟s (DPR) car replaced in the

FY 2015/16.

I have advised the Accounting Officer to constitute a board of survey to inspect

the assets and recommend those that should be disposed of.

d) Non-disclosure of Security deposits in the Financial Statements

During the year, the Mission entered into a tenancy agreement with a new

Landlord for the residence of the Deputy Permanent Representative and paid

CHF13,500 as security deposit. It was however noted that this deposit was

816

expensed instead of treating it as a receivable in the financial statements.

Similarly, all the previous deposits (whose details could not be established) had

been expensed at the time of payment and they are equally not reported in the

financial statements. The interests earned from the banks were also not reported.

There is a risk that these deposits and their related interest earned could be

misused when the tenancy agreements end. I have advised the Accounting Officer

to ensure that the security deposits are appropriately disclosed in the financial

statements and that they are only expensed when the tenancy agreements end

and the money is to be used by the Landlords to renovate/repair their houses.

e) Payment of Rent for two properties for the Deputy Permanent

Representative

It was noted that the Mission procured rental services of a house located at de la

Majonne 2, 1293 Bellevue in September 2013 when the beneficiary was still

occupying another house at Rue de Ferney Grand Sacornex. While CHF.29,400

(4,900 X 6 months) was paid for the new house at de la Majonne 2, 1293

Bellevue, another CHF.25,800 (4,300 X 6 Months) was also paid for the premises

at Rue de Ferney Grand Sacornex. This was attributed to the stringent legal

regime governing tenancy in Switzerland. The double payment amounts to

wasteful expenditure as the second house was not occupied until February 2014

and could have been avoided if there was proper planning and the funds could

have been used to finance other priorities of the Mission.

The Accounting Officer explained that Management took note and had put in place

a proper plan for procuring accommodation for the staff. I have advised the

management of the Mission to ensure that there is proper planning for

procurement of accommodation to avoid overlapping payments for the same

officers.

f) Staff matters

a) Lack of performance plans

It was noted that there are no performance plans for the staff against which

performance should be measured at the time of appraisal. This is contrary to the

817

current Public Service Appraisal system which requires identification of key

activities and Key Performance Indicators at the start of the appraisal period,

management of the staff performance during the appraisal period and an appraisal

based on the performance at the end of the period.

Lack of performance plans therefore makes it difficult to manage staff

performance and carry out objective appraisals in accordance with the current

Public Service requirements.

I have advised the Management of the Mission to ensure that each staff of the

mission has an approved performance plan at the start of every appraisal period to

enable and ease staff performance management.

b) Non appraisal of staff

It was also noted that most of the Mission staff had not been appraised for the

preceding appraisal period. This does not only limit management from monitoring

staff performance and staff competencies but also makes it difficult to help staff

develop as their areas of improvement are not timely identified.

I have advised management to ensure that the Mission staff are appraised at the

end of each appraisal period to help the Mission monitor staff performance and

also help them to develop.

g) Payments

a) Insufficient description of payment details on the payment

vouchers

Paragraph 181 of the Treasury Accounting Instructions (TAIs) requires that all

vouchers will contain full particulars of each service or goods and will be

accompanied by such supporting documents as may be required so as to enable

them to be checked without reference to any other documents. It was however

noted that the payment vouchers for 2013/14 did not have description/details of

the payments. Given that all documents attached are in French, it made it difficult

to understand why certain payments, especially the non-routine payments, were

being made.

818

I have advised Accounting Officer to ensure that the payment vouchers contain full

description of payments to allow for understanding of the payments by other

stakeholders.

b) Double payments for insurance

The Accounting Officer is expected to design and implement internal controls to

assist him/her detect and minimise any errors of omission or commission. Review

of the payment files and the expenditure records revealed that the Mission made

double payments for three staff insurance amounting to CHF 5,016.

The circumstances under which the second payment was made for the same

period were not properly explained. There is a risk that the Mission could lose

huge amounts of money through such schemes where double payments can be

effected without being detected by internal mechanisms.

Although management stated that they had taken note of the matter and

promised to submit a report on the matter, this had not been done by the time of

writing this report.

I have advised the Mission Management to investigate the circumstances under

which the double payments were effected and institute recovery measures. I have

also advised them that the internal controls/mechanisms should be strengthened

to ensure that such double payments do not reoccur.

c) Compilation and settlement of outstanding bills

It is good practice to compile all unpaid bills and plan to settle them as and when

funds are available. This practice enables proper management of the budget and

planning cash flows. It was noted that the outstanding bills are not compiled and

approved for inclusion in the financial statements at the end of the financial year.

Instead the practice is that the officers stay with their individual claims/bills and

submit them later during the following financial year to be considered and paid by

819

the Accounting Officer. The practice is irregular, prone to abuse as it can be used

to sneak in fictitious bills and, distorts implementation of the planned activities.

The Accounting Officer was advised to ensure that all outstanding bills/claims at

the year-end are approved, compiled and planned for payment in the following

year. Bills submitted outside this arrangement should not be considered for

payment.

76.0 UGANDA PERMANENT MISSION TO THE UNITED NATIONS, NEW

YORK

a) Failure to revise Budget

Examination of the statement of appropriation Account based on the nature of

expenditure for services voted revealed excess expenditure of UGX.321,435,728

on the consumption of property, plant and equipment. Though management

indicated that the excess expenditure had been authorized by the Permanent

Secretary/Secretary to Treasury, the budget was not revised and uploaded

accordingly.

Management is advised to liaise with the Treasury to ensure that the revised

budget is uploaded in the system for proper presentation of financial statements.

b) Outstanding receivables

Included in the receivables is a sum of USD.37,825.87 attributed to a foreign

mission. Long outstanding receivables represent idle assets which impair the

Mission‟s non-tax revenue collections.

The Accounting Officer explained that the debtor had been reminded of the

obligations and a commitment letter for settlement of debt was subsequently

obtained.

In addition, the mission had instituted a late payment charge of 5% on the

monthly instalments to discourage late payments.

I await results of the action taken by the Accounting Officer.

820

c) Staffing Structure

Whereas the Mission is approved staffing structure is 1+3, the actual staffing is

1+8. The structure comprises the Permanent Representative to the United Nations

and his/her officers. It was pointed out that the funding of the Mission was not in

tandem with the increased staffing. The Accounting Officer further indicated that

the required level of staffing is 1+10 in view of the workload at the United

Nations.

In my report for the previous year I advised that close liaison with the Ministries of

Foreign Affairs, Public Service and Finance, planning and Economic Development

should be undertaken to rationalize the staffing position. Evidence of the results of

the liaison was not availed for review. Respective stakeholders are urged to

expedite resolution of the matter to enhance performance of the Mission.

d) Motor vehicle management

The Public Service standing orders require proper management of government

vehicles including use of vehicle movement logbooks to ensure monitoring of

utilization and fuel usage. The practice also ensures that the vehicles are used for

authorized official purposes and that they can be accounted for at any one time.

It was however, noted that the Mission last used log books for the vehicles in

2011. Though management explained that vehicle movement guidelines have

been put in place, it is noted that these are general procedures that do not serve

the purpose of monitoring efficient utilization of the vehicles.

The Accounting Officer indicated that use of log books shall be instituted with

effect from January, 2015.

I await evidence of the action taken.

77.0 UGANDA CONSULATE, GUANGZHOU, CHINA

a) Mission Charter

821

It was observed that the consulate operated without a Charter. Ideally the ministry

would formulate a foreign policy through which missions were to contribute by

way of well defined charters. In absence on one it became difficult to measure

performance of the consulate and as such there was a risk of implementing

uncoordinated activities that might not have achieved the objectives of the foreign

policy.

Management explained that the Consulate and the Ministry of Foreign Affairs were

engaged in the discussion and formulation of the Mission Charter which was only

finalized and sent to the Consulate in April 2014, and accordingly the Consulate

prepared a detailed work/activity plan and is being used in the current financial

year.

I await management action to implement the Charter in the subsequent year.

78.0 UGANDA EMBASSY JUBA

a) Improper payments

A total of USD.15,439 paid to individuals was supported with accountabilities from

recipients other than the contracted parties contrary to Regulation 254 (1) (2) of

the PPDA Regulations, 2003. Payments to unauthorized recipients may result into

loss of public funds. Though the management stated that the relevant

authorization had been obtained from the contracted parties, there was no

evidence to this effect.

I advised management to obtain and submit evidence of authorization for review.

In future all payments should be made to the contracted party.

b) Procurement shortcomings

In accordance with section 97 of the PPDA Act, 2003, the authority issued

guideline referenced 1/2007 to missions for use in their procurement activities.

However, the following weaknesses were noted at the Embassy in the

procurement function;

822

Lack of designated procurement set up in terms of staff.

Absence of procurement plan.

Lack of contracts committee and evaluation committee.

Unauthorized direct procurements worth USD.13,049.

Absence of key procurement documents such as LPOs, delivery notes, goods

received notes, inspection reports, job cards and acknowledgement receipts

for payments.

Unplanned and unsupported procurements expose public funds to abuse.

Management indicated that the shortcomings would be addressed in the next

financial year with the help of the PPDAA.

I advised management to seek technical guidance from the PPDAA on the setting

up of a functional procurement system, so as to operationalize and integrate the

relevant regulations in their procurements.

c) Mischarge of Expenditure

A total of USD.10,165 was charged on codes other than those under which it was

appropriated leading to mischarge of expenditure contrary to paragraph 400 (a) of

the TAI 2003.

The practice indicates abuse of budgetary controls and leads to misrepresentation

in the financial statements. Management explained that the Embassy had faced

inadequate funding since 2011 when it was elevated from a consulate to Embassy.

I advised management to always liaise with MoFPED to ensure adequate funds are

allocated to the budget items. In the event of need to reallocate funds, necessary

authority should be sought from the Treasury prior to release of funds.

d) Transfers received from other Government Units

A total of UGX.479,166,667 was indicated in the Cash Flow Statement as Transfers

received from other government units. However, Note 5 of the financial

823

statements, which records transfers received from other government units

indicated a nil balance. Management in response indicated that an adjustment

would be made, which however was not done.

I advised management to adjust Note 5 of the financial statements in this regard.

e) Over Expenditure without authority from the Accountant General

Comparison between Approved budget and Actual Expenditure revealed that

management of the Embassy over spent by UGX.1,282,122,285 on two line items

namely employee cost and Goods and Services Consumed without authority from

the Accountant General as per details below.

Item Budgeted (UGX) Actual (UGX) Variance (UGX)

Employee Costs 531,000,000 757,576,224 226,576,224

Goods And Services 734,500,000 1,790,046,061 1,055,546,061

Total 1,265,500,000 2,547,622,285 1,282,122,285

Management explained that expenditure was incurred in anticipation of

supplementary funding warrant which was however not provided.

I advised management that excess expenditure should only be incurred after

authorization by Treasury. In the circumstances there is need for evidence of the

supplementary warrant.

79.0 UGANDA EMBASSY, KHARTOUM

a) Cash and Cash Equivalents

Included in the statement of financial position is cash and cash equivalents totaling

UGX.183,248,063 which comprises the following;

Item Amount (UGX)

Cash at Bank 51,305,881

824

Item Amount (UGX)

Cash in transit 80,935,889

Cash at hand 51,006,293

Total 183,248,063

However, I could not confirm the accuracy of this figure (UGX.183,248,063)

because cash at Bank was not supported with the certificate of bank balances and

the bank reconciliation statement for the month of June 2014. In addition, cash in

transit and the cash at hand were not supported with electronic transfer document

and board of survey report respectively.

I advised the Accounting Officer to submit the missing documents for verification.

80.0 UGANDA HIGH COMMISSION, KIGALI

a) Failure to reconcile receipts in the General Ledger (GL) and the Bank

A review of the process of posting of the visa receipts into the system revealed

that monthly collections were posted lump sum instead of being entered

individually. I was therefore unable to reconcile the individual collections to the

bank. It was further noted that the Visa fees collections and TMPS deposits on

bank 3 (USD Account) and bank 5 (Local Account) respectively could not reconcile

with manual collection ledgers prepared at the High Commission by USD 900.00 in

bank 3 and FRW 103,900 in bank 5.

Management attributed this to posting of receipts to cash in transit instead of

posting to the bank directly. Management further explained that they had sought

assistance from the Navision Support Team to guide the Consular Officer on how

to post individual collections to enable a smoother reconciliation.

I advised management to always post the individual collections to the bank to

enable reconciliation.

b) Non approvals of payments within Navision

825

According to the commission cash books generated by the system, payments

worth USD 152,191 and FRW 43,970,383 from a local and dollar accounts were

not approved by the Accounting Officer even when there was evidence that these

payments were actually manually approved before payment was effected.

Management could not explain this anomaly and referred this matter to Navision

experts at Treasury for further consultation.

I advised management to continue liaising with Navision Support Team at

Treasury and have the system issue resolved once and for all.

c) Construction of the proposed chancery at Kacyiru Kigali

i. Irregular use of VAT refunds

According to one of the (PS/ST) communication dated 11th December 2013, the

High commission in Kigali was authorized to utilize VAT refund amounting to USD

101,332 on project activities. The Accounting Officer was also requested to

provide a revised implementation schedule showing details of the remaining

activities and the cost to end of the project.

At the time of audit, USD 290,172.53 had been refunded indicating that USD

188,836.53 was utilized without the requisite approval by the Permanent

Secretary/Secretary to the Treasury. I was also unable to confirm whether the

activities on which these funds were spent on had been budgeted for. A revised

implementation schedule showing details of the remaining activities and the cost

to end of the project was not provided at the time of writing this report.

Management explained that the refund had been utilised in line with Project

activities. These included air travel and allowances for the Construction

Management Team related to the regular Site Chancery meetings between the

Client (Uganda High Commission, the Contractor and the Consultant), Contracts

Committee meeting costs related to the various procurement procedures for

furniture and security equipment. Management promised to submit a full report

on the implementation schedule of VAT refund to the PS/ST once the Chancery

construction is completed.

826

I advised management to ensure that approvals are sought prior to utilizing the

VAT funds.

d) Irregularities in the payments to a Supervisor

In June 2009, a supervising company was contracted by Government to undertake

consultancy services and supervision of the proposed construction of the

Chancellery building at Kacyiru-Kigali at a contract price of UGX.448,400,000 (VAT

inclusive). At the time of audit, UGX.369,930,000 (USD 155,644.23) had been paid

leaving a balance of UGX.78,470,000. According to special conditions of the

contract (page 23), payments should have been effected as per the following

schedule;

Table 1: Payment schedule as per the special conditions

Activity to be carried out

Comments Fees UGX

Provision of inception report

20% Paid against payment request No. 1 and No 2. Ref MoFA 01 dated 13/11/2010

89,680,000

Feasibility Design 15% Paid against payment request No. 1 and No 2. Ref MoFA 01 dated 13/11/2010

67,260,000

Scheme Design 15% Paid against payment request No. 3. Ref MoFA 01 dated 31/05/2011

67,260,000

Final Design and Tender documents

15% Paid against payment request No. 3. Ref MoFA 01 dated 31/05/2011

67,260,000

Construction supervision

30% Determined at the date of commencement of construction on 28/03/2013. They had supervised for 7 months as at 4/12/2013 and billed for 7 months. UGX 78,470,000 has been paid based on the assessment.

78,470,000

End of defects liability period

5% 0

Total payment 369,930,000

The following were noted;

827

i. Non adherence to special conditions in the agreement

According to GCC 8.1 of the special conditions of the agreement the period within

which the services may have commenced is June 2010. GCC 18.1 also stipulated

that the period within which the services shall have been completed following

commencement of the services is 2 years. The above conditions imply that the

contract should have expired in 2012. It was however noted that even after the

expired contract, the firm went ahead and billed UGX.78,470,000, being

construction supervision for the 7 months period supervised (from the date of

commencement of construction on 28/03/2013 to 4/12/2013) without an

addendum/revised contract terms. At the time of writing this report, the bill had

been settled. Ideally, the supervision costs should have been settled after

finalization of the construction.

Management explained the procurement process for an addendum to the contract

had commenced in consultation with the parent Ministry of Foreign Affairs.

Management effort on the matter is awaited.

ii. Failure to Claim for the Tax Refunds

No taxes were claimed from payments to the firm worth UGX.148,353,991 thus a

loss of government funds.

Management explained that the withholding tax of 6% would be recovered from

the firm at the time of effecting the final payment due to them.

I advised management to always deduct taxes considering that embassies are

exempted from paying taxes.

iii. Failure to trace one of the payments to the firm worth USD 68,288

in the system

USD 68,288 paid to the firm being engineering and feasibility design was not

posted as a payment in the Navision system. I could not establish how the funds

were paid. I explained to management that if this problem is not resolved, double

payment cannot be ruled out on future transactions.

828

Management explained that they had sought an explanation from the Navision

Support Unit regarding the anomaly as to why the payment is not reflected in the

system.

I advised management to investigate this anomaly with Navision experts and have

it resolve.

e) Performance of the Mission

i. Incomplete Mission Charter

At the time of writing this report, the mission charter was in a draft form. The

Charter outlines the road map that the Mission intends to follow in the future to

enable the achievement of its mandate. In the absence of the approved mission

charter, there is a risk that the Mission activities are not in tandem with the

Uganda Government Foreign Policy. In addition, it becomes difficult to review the

performance of the Mission with regard to its strategic goals.

Management explained that in conjunction with the line department of the Ministry

of Foreign Affairs, SMART targets had been drawn up in January 2015 reflecting

more achievable performance targets. They stated that the draft Mission Charter

is pending approval and signature of the Honorable Minister of Foreign Affairs.

I advised management to expedite the approval process and have the charter in

place.

81.0 UGANDA EMBASSY, KINSHASA

a) Non Tax Revenue

a. Unbudgeted Non -Tax Revenue (NTR) – UGX.53,562,240

Paragraph 2(c) of the third schedule of the Public Finance and Accountability Act

2003, requires the Accounting Officer to submit to the Accountant General a

statement of revenue received during the year, showing the amount contained in

the estimates of revenue for each source of revenue, the amount actually

collected, with an explanation for any variation between the revenues collected

and estimated.

829

A review of the Embassy financial statements for the year ended 30th June, 2014

(Statement of appropriation account) revealed that the mission collected NTR

totaling to UGX.53,562,240 from Passport and Visa entry fees. However, the

amount had not been budgeted for by the mission as indicated by the zero

amounts in the approved budget column of the Statement of appropriation

account. This rendered it impossible to assess the revenue performance of the

mission in respect of the NTR and may potentially provide an avenue for misuse of

NTR collected.

Although management explained that the Mission budgeted for UGX.41,000,000 as

indicated in the work plan (Performance Form A) submitted to Permanent

Secretary/Secretary to Treasury, the Work Plan could not be accepted as a

substitute for the approved budget. I have advised the Accounting Officer to

ensure that all NTR sources are always included in the Mission budget submitted

for approval.

b. Usage of Visa stickers

An analysis of the usage of visa stickers during the year was undertaken during

the audit. The comparison of the number of visa stickers issued by the mission

and those received from headquarters, showed that there appears to have been

an over requisition of visa stickers as shown in the table below;

Table showing analysis of Usage of Travel Documents during the year

Visa Stickers Single Entry Multiple

Entry

Gratis Emergency

Document

s

Balance b/f 287 0 230 0

Received during the year 1,000 1,450 550 100

Available in the year 1,287 1,450 770 100

Used during the year 357 24 136 4

Cancelled visas 16 3 1 0

Balance 914 1,423 643 96

830

The Mission appears not to have properly analyzed its annual visa requirements,

thus posing a risk of misuse of a significant number of unutilized visa stickers at

year end. I have advised management to always ensure that realistic estimates

are always made.

c. Poorly maintained visa records

A review of visa records revealed that they were poorly maintained as summarized

below:-

For instance, a gratis visa number 16263 issued on 25th April 2014 reflected a

sum of USD.15 whereas it should be issued free.

There were cases of cancelled visas, whose cancellation dates appeared

earlier than their issue dates, while some visas appeared to have been issued

on two different dates.

Some visas posted several cancellations and re-issuances while most of them

lacked details of applicants, passport numbers and nationality.

It was observed that there was lack of regular reconciliation of revenue

collections and visa stickers.

Under the circumstances, there is a risk of miss postings and/or understatement of

nontax revenue collection for the year. The Accounting officer attributed the

mistakes to the officer who acted in the absence of the Visa Clerk, but that these

were rectified, hence the numerous cancellations noted.

b) Unauthorized Expenditure - UGX.22,758,031

The Public Finance and Accountability Regulations 2003 (Regulation 39 & 40)

require that Accounting Officers adhere to the budgetary allocation per vote or

obtain prior permission before an over expenditure is incurred.

However, a review of the financial statements for the year revealed that actual

expenditure on employee costs and, goods and services during the period under

review exceeded the budget for the two line items by UGX.22,758,031. There was

no evidence on file to indicate that authority to overspend was sought from the

Accountant General, besides the source of extra funding was not indicated to me.

The details are as indicate in the table below:-

831

Item Budgeted - Ugx Actual - Ugx Variance - Ugx

Employee Costs 959,328,000 963,833,422 4,505,412

Goods & Services 727,398,000 745,650,609 18,252,609

Total 1,686,726,000 1,709,484,031 22,758,031

The Accounting Officer explained that this was due to increased feeding and

repatriation expenses in respect of released Ugandans in the absence of

alternative means of action. However, the over expenditure on items still exists

and remains unauthorized.

The Accounting Officer added that high bank charges and budget shortfall due to

exchange rate also contributed to this, and that the Mission had requested for a

supplementary funding which was not provided.

c) Doubtful Refund of Medical Expenses - UGX.15,841,267

Foreign services Standing Order M-a 14 provides that officers serving with a

mission should register with a local National Health Insurance Scheme.

However, there is no evidence that management solicited the services of any

medical service provider and consequently, medical refunds totaling USD.6,094.60

(Ugx.15,841,267.158) were made to various mission staff, based on claims that

could not be verified due to lack of supporting documents, such as receipts. In the

absence of contracted service provider(s) and supporting documents, I could not

confirm the correctness and genuineness of the medical refunds.

The Accounting Officer explained that there is no National Health Insurance

Scheme in DRC or a credible medical Insurance provider in DRC, and consequently

the Mission opted for reimbursement of monies spent on medical services by the

various officers, and the Mission had subsequently procured the services of one

provider for the Local staff. He added that the Mission has finally contracted an

Insurance company during the financial year 2014/15.

The Accounting Officer‟s response that all the claims were accompanied by

payment receipts could not be substantiated as the documentation availed did not

reflect the payment receipts.

832

d) Unspent Balances at the closure of the Financial Year –

UGX.761,106,632

Section 54 of the PFAA, 2003 provides that unspent balances at the end of the

financial year should be returned to the Uganda Consolidated Fund within 60 days.

However, Note 20 to the balance sheet revealed that a balance of

UGX.761,106,632, was reflected as cash and cash equivalent at the end of the

financial year and verified as follows:-

Revenue account UGX.16,725,811

Expenditure account UGX.633,725,258

Cash at hand UGX.110,655,563

According to the Accounting Officer, these were committed funds in respect of the

renovation of the chancery building at Tombalbaye Street, which was ongoing, till

the end of October, 2014.

However, there was no authority from the PS/ST allowing the embassy to withhold

the unspent balances as explained by the Accounting Officer. In addition, there is

a high risk of holding big volumes of cash at hand, given the inherit risk associated

with cash, which is highly susceptible to misappropriation.

The Accounting officer explained in his response that keeping large sums of cash

at hand was unavoidable, given the fluid security situation in DR Congo, and that

the UN had accordingly advised foreign nationals to be on high alert and have

adequate cash at all times.

e) Unsupported Payments for Education Allowances

Section E-e para. 19 of the Public Service standing orders 2010 provides that

education allowance be paid direct to the school and reimbursement from the

officer for their personal share be made at source. Para 20 of the same standing

orders provides for each application for an education allowance to be approved

by the Responsible Officer, accompanied by a certification by the Head of Mission

in respect of the children‟s details.

833

During the period under review, education allowance totaling USD.17,500.00

(Approximately UGX.45,412,500) was paid to staff of the mission. However it was

noted that the allowances were paid to the individuals (Mission staff); the period

of education to be covered was not stated; and there were no receipts from the

schools.

In the absence of the relevant supporting documentation, the possibility that

allowances were not paid for the intended purposes cannot be ruled out.

The Accounting Officer explained that the education allowance paid was for the

year 2013 and to the two officers who had eligible children whose details were

attached. However, whereas details in respect of children were verified, details of

school acknowledgment and period of coverage were not indicated.

f) Non submission of Quarterly Reports on Procurements and Disposals

Section 3.1 of the guidelines for procurements and disposals by missions abroad

provides for missions to submit quarterly reports on procurement and disposal to

the Authority by the 15th day of the following month using PP Forms 200 and 202

on the micro procurements and DPA Form 201 on disposals. Copies of minutes of

the Contracts Committee should also be attached to the quarterly reports.

However, it was noted that management did not comply with the above provision.

Failure to prepare and submit the above reports hinders the PPDA from

performing its regulatory work over the mission‟s procurements and disposals.

The Accounting Officer explained that the monthly returns had always been

submitted promptly and consistently and that the mission was finalizing its annual

procurement & disposal report for submission. However there was no evidence

availed to support the explanation of the Accounting Officer.

g) Inspection of Mission Properties

An audit inspection of the mission properties on 15th August 2014 revealed that

Uganda has two properties in Kinshasa, which included a residence currently

hosting the chancery at Avenue De L‟ouganda, Q/Petit Pont, commune de la

Gombe, and the former chancery at 17 Avenue Tombalbaye.

834

Plot 17 Avenue Tombalbaye

This was the former chancery built in the 1970s. It is a storeyed building

comprising four apartments and an office space. The building was vandalized

during an attack by the security forces of the Democratic Republic of Congo at the

helm of the severe relationship between the DRC and Uganda in 1997. The

structure is dilapidated with a leaking roof, shattered floor, and services, such as:

electricity, water, and fire-fighting and warning system are all broken down

requiring a major overhaul.

At the time of inspection, the property was undergoing renovation and

refurbishment, at an estimated cost of USD.1,438,333, inclusive of tax. The works

were expected to last 12 months from 8th October, 2013 to 7th October 2014, but

this date was revised to 31st December 2014. A total of USD.453,653.47 had been

paid to the contractors as summarized in the table below:

Description Activities Cost in USD Percentage

FY2012/13 Procurement Process 48,506.06 11%

FY 2013/ 2014

Advance payment paid 247,,988.40 55%

Contractor s bills 80,809.98 18%

Administrative costs 76,349.03 16%

TOTAL COST TO 30 JUNE 2014 453,653.47 100%

Inspection of the building revealed that works were at wall plate level, which

represented a 60% progress, according to the project report dated 15th May 2014,

and payment progress stood at 22.9%. Given the reported progress, there is a

high possibility that the project will not be completed within the estimated time.

Property at Avenue De L‟ouganda-Gombe

The premise currently accommodates the Chancery, but is supposed to be the

official residence of the Ambassador. The Ambassador is currently being

accommodated in rented premises. It is proposed that, with the completion of

renovations, the chancery will relocate to its former premises, which will also

accommodate the mission staff, and the Ambassador relocates to his official

residence.

835

However this may expose the mission to the following risks as the premises are in

a commercial area:-

It is dangerous and risky for all staff to be under one roof in case of a terrorist

attack or accident.

Mixing office and staff residences may infringe on staff privacy.

In response, the Accounting officer explained that management had proposed to

the Ministry that the Mission stays at its current location, secures land for

construction of official residence elsewhere and rent out part of the premises at

Avenue Tombalbaye, to generate revenue.

h) Un-Disclosed Outstanding Debt Obligation – UGX.5,957,614

A review of the financial statements revealed payables of UGX.131,225,090 as at

30th June 2014. These are gratuity arrears in respect of the former mission staff.

Further review of documents revealed that a local workers‟ social security fund

organization (INSS) and a local professional workers body (RPS) were demanding

a sum of USD.2,291.39 (UGX.5,957,614) being workers‟ contributions as indicated

in the table below:-

GRATUITY OF FORMER STAFF-INSS

NAME INSS-3.5% RPS-10% NET AMOUNT DUE

Mukendi Mbuyi 153.33 428.26 14,513.90

Mbikayi Katshimuena 102.52 282.66 9,77.07

Senkunja James 109.35 301.51 6,577.00

Ditina Matondo 84.80 233.61 5,614.39

Bofoyo Eyenga 49.21 135.67 4,804.86

Muhunda Mudiwa 30.74 84.76 3,524.81

Bantoka Mafuta 35.57 98.08 2.33.31

Moboti Jean 24.23 66.81 1,877.15

Michel 18.17 50.11 1,461.65

TOTAL 609.92 1,681.47 USD 50.486.14

N.B: 2,595* USD.50,486.14= UGX.131,225,090

The failure to provide for the omitted staff contributions and their eventual

settlement exposes the mission to the risk of litigation by the workers‟

organizations.

The Accounting officer explained that the staff gratuity had been erroneously

computed, omitting the above obligations, hence their omission from the Balance

836

sheet. He added that the deductions of USD.1,681.47 due to RPS cannot be

remitted as the union ceased to exist, and that USD.609.92 due to INSS will be

budgeted for in 2015/16.

82.0 UGANDA HIGH COMMISSION, LONDON

a) Utilization of NTR at Source

Paragraph 94 of Part I, of the Treasury Accounting Instructions, 2003, prohibits

collectors of revenue from utilising cash collected for any purpose whatsoever unless

otherwise authorised in writing by the Accountant General. The High Commission

utilized at source GBP 141,547.06 (UGX.627,335,154) out of the Non-Tax Revenue

(NTR) collection to renovate the Official Residence and to rent an apartment (GBP

30,266.43) for the High Commissioner for a period of five months, during

renovations.

The utilization of NTR at source lacked the requisite authority and was therefore

irregular.

Management stated that urgent renovations were required at the Official Residence

of which funds had been requested from the Ministry of Finance, Planning and

Economic Development (MoFPED) without success.

I advised the Accounting Officer to always seek authority before spending NTR at

source.

b) Unauthorized Over Expenditure

Regulation 37(b) of Public Finance and Accountability Regulations, 2003, requires

Accounting Officers to ensure that the provision for services as authorized by

accounting warrants are not exceeded, and they are held personally responsible

for any excess expenditure that is incurred without proper authority.

A review of expenditure of the High Commission revealed that there was over

expenditure of GBP.104,024.91 (UGX.461,037,361) on various budget line items

without seeking appropriate authority in form of reallocations or virements. The

practice undermines the intentions of the appropriating authority.

837

Management indicated that requests for reallocation of funds to MoFPED were not

responded to.

I advised the Accounting Officer to always ensure that the operations of the High

Commission are within the accounting warrant or else authority to spend over the

budget is sought before release of funds.

c) Assets of the High Commission

The High Commission possesses buildings namely the Chancery, Official Residence

and 189 Wardour Street, whose conditions were as follows;

a) Chancery – Uganda House

The Uganda House, 58-59 Trafalgar Square WC2N 5DX was renovated prior to

inspection. The building is occupied by the Chancery and partly let out to other

tenants. The inspection of the Chancery revealed the following;

Although the Chancery was in a habitable state, it required furnishing of the

reception area which lacked furniture.

The Chancery requires security locking systems, given the terror threats

around the world.

I have advised management to plan and budget for furnishing of the reception

and installation of security systems at the Chancery.

b) Official Residence

The Official Residence, at 30 Ingram Avenue, whose roof had been repaired

during the financial year, was in a fair condition, relatively habitable although the

following issues were noted during inspection:

The carpet was in poor condition following the previous water leakages into the

house.

The residence lacked security systems like Closed-Circuit Television (CCTV)

cameras to improve on security around the residence.

The furnishing at the residence was old and inadequate especially at the

kitchen area.

The water, drainage and heating systems were not functioning properly.

838

Through interaction with the staff at the High Commission, it was observed that

the renovations were being carried out in phases without taking into account the

interconnection of various systems of the structure. This resulted in deterioration

of the renovated parts requiring repeat repairs in the same areas within a short

time. The status of the building portrays negatively the image of the High

Commission and the country at large.

Management explained that they had already notified the property committee in

the Ministry of Foreign Affairs of the required works and repairs.

I have advised management of the High Commission, to continue engaging the

relevant Ministries and plan for the holistic renovation of the Official residence as

opposed to piecemeal works.

c) Property at 189 Wardour Street

The High Commission owns a commercial property at 189 Wardour Street, housing

two tenants. A review of the tenancy documents indicated that the High

Commission earns rent of GBP.70,000 per annum, payable in quarterly instalments

of GBP.17,500. The High Commission was scheduled to undertake a tenancy

review in March 2014, however by the time of audit (October 2014), it had not

been undertaken. The High Commission is likely to be charging lower rates in

comparison with the market rates.

Management explained that the rent review process, was already underway and all

parties had been notified. The process was expected to be concluded by end of

March 2015.

I have advised management to expedite the tenancy review process so as to

ensure improved NTR collections for the High Commission.

83.0 UGANDA EMBASSY, MOSCOW

a) Receivables

Included in the reported receivables of UGX.166,819,839 is UGX.46,827,823

(Euros 13,608.72) that was advanced to UPDF students during the year under

839

review. It was noted that the students‟ money had been remitted to a separate

bank account operated by the Defence attaché. A refund was not made to the

Embassy‟s Account to enable it execute the planned activities by the end of the

financial year. As a result, the money was regarded as unspent balances and

returnable to the Consolidated Fund. Meanwhile payables of UGX.8.6million

remained outstanding.

The payables would have been cleared by 30th June, 2014 if the UPDF students

had been paid using the funds meant for them.

The Accounting Officer explained that the funds were remitted by the Ministry of

Defence to the Defence Attaché‟s account to urgently facilitate the students‟ travel

back to Uganda after graduation. She attributed the anomaly to the Defence

Attaché‟s failure to transfer the funds to the Embassy‟s account on time.

I advised Management to ensure proper planning for the students‟ facilitation to

avoid similar scenarios in future.

b) Unplanned Procurements

Paragraph 6 of the Procurement Guidelines for Missions, 2008 requires missions to

prepare annual procurement plans based on the approved budgets and work plans

in accordance with PPDA Regulation 96 of the PPDA Regulations and submit them

to the Authority before the end of the first quarter of the Financial Year.

On the contrary, RUB. 746,686.25 (Approx. UGX. 55,553,457) was paid for

procurement of assorted items during the financial year without a procurement

plan. Adhoc procurement activities expose the Embassy to the risk of acquisition

of non-priority items.

Management indicated that the Embassy used a procurement guide for the year

under review. However, due to the unique market environment in Russia, it was

rather difficult to attach prices to the items in advance.

I advised Management to always prepare procurement plans in accordance with

the budget.

840

c) Failure to Translate Documents

It was noted that a number of key supporting documents availed for verification

had not been translated from Russian to the English language contrary to Section

(P-b) (7) of the Public Service Standing Orders which states that “If an officer

receives documents written in a language other than English and it is necessary to

refer such documents to other departments or officers, he or she should arrange

for the documents to be translated by a designated translator or professional and

for such translations to be available to other interested departments and officers”.

This therefore rendered understanding of the expenditure and the supporting

documents difficult.

Management acknowledged the language challenge, and indicated that the

Embassy recruited a translator who doubles as a front desk officer but he is

overwhelmed with the volume of translation work.

I advised management to ensure that key supporting documents are always

translated into English.

84.0 UGANDA HIGH COMMISSION, NAIROBI

a) Lack of audited accounts for Uganda House

Clauses 2(k) and 9 (f) of the 3-year Property Management Contract with a local

property management agent requires the maintenance of proper books of

accounts and the audit thereof for Uganda House Ltd. However, audited Financial

Statements for the period to 30th June 2014 were not available for review at the

time of audit of the High Commission. In the circumstances, there is a risk of

under declaration of rental income by the property manager.

Management explained that the High Commission was in the process of procuring

an audit firm to carry out the audit of Uganda House Ltd.

I have advised management to ensure that the terms and conditions of the

Management Contract are enforced.

841

b) Old Utility Van

The Mission owns a 2006-Model Mercedes Benz Utility Van which was acquired in

2010. At the time of audit inspection, the vehicle had been in use for over 5 years

and had an Odometer reading of 327,083 Km.

Using the vehicle for more than five years and beyond the recommended 200,000

Km does not only make it uneconomical to maintain, but also exposes the Mission

to reputational risk.

Management in reponse explained that purchase of the van was provided for in

the budget for the financial year 2014/15 as part of capital development, but the

funds were not provided.

I have advised management to take up the matter with the Line Ministry with a

view to replacing the Van.

c) Outstanding Staff Advances

The reported receivables of UGX.44,644,765 represent funds advanced to staff in

the financial statements as far back as 2009/10 financial year. However, the funds

had not been recovered by the time of audit. There is a risk that the money may

never be recovered.

Management indicated that they had communicated to the concerned officers with

a view to recovering the funds.

I have advised the Accounting Officer to recover the advances from the officials‟

salaries and allowances.

d) Non-submission of Quarterly Procurement Reports to PPDA

Paragraph 3.1 of the Mission Procurement Guidelines, 2008 require Missions to

submit quarterly reports on procurement and disposal to the PPDAA by the 15th

day of each month for the previous month on macro procurements, the micro

procurements and disposals using appropriate forms with copies of minutes of the

Contracts Committee attached thereto. However, no reports were submitted to the

842

PPDAA during the year under review. In the circumstances, the Authority is denied

vital information necessary for the proper planning of periodic compliance

inspections.

Management in response acknowledged the anomaly and undertook to comply

with the PPDA laws and guidelines by submitting the reports as required.


85.0 UGANDA HIGH COMMISSION, NEW DELHI

a) Advances

Through a review of the financial statements- Note 21: Receivables, it was noted

that UGX 2,409,158 related to staff advances- in the form of their share of utilities

bills. This amount however should have been retired by the end of the financial

year as is the case for all advances given.

Management acknowledged this weakness and indicated that the staff advances

were cleared in the next financial year (2014/15).

I await evidence of the action taken by management

b) Procurements

A procurement plan was not prepared. In addition, all the procurements during the

year under review were not requisitioned on a PP Form 20. In the absence of a

procurement plan, there is a risk of making unplanned and procurements not

based on the needs of the Embassy.

In addition, management did not prepare quarterly reports on procurement and

disposal as is required by the PPDA guidelines.

Management acknowledged these observations and promised to prepare the

reports regularly as required by the PPDA Regulations.

I await evidence of the action taken by management.

843

c) Contracts Committee

Although the Mission had a Contracts Committee and had requested the PS/ST as

is required of the Public Procurement and Disposal of Public Assets (PPDA)

Regulations to formally appoint this committee, there was no evidence that the

proposed committee had been formally approved by the PS/ST. In addition, the

contracts committee was also doubling as the evaluation committee which is

contrary to the procurement regulations.

I advised the Mission to follow up with the PS/ST regarding formal approval of the

Contracts Committee and segregate the contracts committee from the evaluation

committee.

d) Fixed asset register

The Mission does not maintain a comprehensive fixed assets register. Fixed asset

register should show item, date of purchase, value, location, condition,

identification number and status for ease of identification and decision making.

Although the register maintained included some details like date of purchase,

quantity, description, amount, it was not regularly filled. The absence of a

comprehensive fixed assets register exposes the Embassy‟s assets to the risk of

their loss without detection.

Management acknowledged these weaknesses and promised to have the ledger

properly maintained.


86.0 UGANDA HIGH COMMISSION, OTTAWA

a) Performance Report

The Accounting Officer under section 14 of PFA is supposed to carry out regular

review of embassy operations and establish whether the operations are being

carried out as planned for the year. The end of year performance report was not


844

In the absence of the performance report, it was difficult to establish whether the

mission activities had been implemented as planned.

In addition, it was difficult to link the mission, financial performance to the

planned activities and outcomes.

The Accounting Officer regretted the failure to avail the end of year performance

report for audit verification but promised to ensure that the performance reports

are in future prepared in a timely manner and presented for audit verification.

I advised the Accounting Officer to ensure that performance reports are regularly

produced and presented for audit verification.

b) Official Residence

It was observed that work for the renovation and improved security at the official

residence had not yet commenced despite the promise from the accounting Officer

that civil works would commence during the year under review. This is an

indication that the Mission activities may not have been under taken on schedule

and according to work plans.

The Accounting Officer explained that the pre-renovation works did commence

with the technical team undertaking necessary analysis/ measurements and

preparing a report specifying the specific courses of action to guide the official

renovation project. In accordance with the Canadian regulation, Peterson Group

Inc. Consulting Engineers firm was contracted to undertake the detailed study to

determine the presence of designated substances such as asbestos containing

materials like lead paints which are harmful to human and the study report

revealed presence of designated substances which are hazardous to humans. In

addition, the land at 235 Mariposa Avenue was surveyed and the report submitted

to the Ministry of Foreign Affairs to facilitate the preparation of the draft

architectural drawings.

The draft architectural drawings prepared by Government of Uganda Technical

Team were subsequently submitted to a Canadian Architectural firm for review in

compliance with the Canadian building guidelines that require all architectural

845

designs prepared by non-Canadian Architects to be endorsed by Canadian

Architects before submission to relevant authorities for approval. This firm has

advised Mission that the “working budget for renovation is Canadian Dollars CAD$

2.2 million and CAD$ 3.0 Millions for construction of a new building including

landscaping, fencing, hard surface, pool and pool house”. This working budget

estimate leaves a funding shortage of more than Canadian Dollars CAD$ 1.8

Million for renovation and CAD $ 2.7 million for construction of a new building for

the official residence.

After analyzing Canadian laws and historical changes I construction industry , the

three levels of laws that govern environment and standards of structures in

Rockcliff Village Park as well as the structural state of the Official Residence,

LineBox Studio recommended that demolition and reconstruction of the residence

was more viable. The cost of demolition and construction of a new building is

almost the same as that of renovation. Renovation could end up being even more

costly because of the unknown conditions that may be discovered after renovation

has started. Should renovation be chosen as the preferred option, there are high

chances of ending up with an increment in the funds spent and loss of opportunity

to build a residence where government shall save costs in the long term.

Given the preliminary technical advise on the cost-benefits analysis implications by

the firm, the Mission is liasing with Ministries of Foreign Affairs and that of

Finance, Planning and Economic Development with a strong recommendation that

it is in our strategic interest to demolish and redevelop the current official

residence building to minimize on spending additional resources for renovation in

the long-term.

The matter requires urgent attention.

87.0 UGANDA EMBASSY, PARIS

a) Inadequate Funding for the Embassy activities

The Uganda Embassy in Paris is accredited to France, Spain, Portugal as well as

Permanent Mission to UNESCO, OECD, and BIE. It was also observed that on a

846

number of occasions, the Embassy received state guests who had to be catered

for in terms of transport as well as facilitating the Embassy staff to perform extra

activities during such visits. Review of the budget ceilings and releases to the

Embassy revealed that over the past five years, a total of UGX.14.146 billion had

been released to the Embassy (average of UGX 2.8 billion per year). This is

against the management of the Embassy regarded as adequate to cover all

planned activities at UGX.20,722,200,967 over the same period. The following

were noted;

i. Inadequate Budget Provisions

The Embassy annual budget ceilings were observed to be grossly inadequate

compared to the planned activities. For example, the level of funding during

the financial year only allowed the embassy to partially cover routine payments

without adequate provisions to facilitate the officers to implement planned

activities especially those that involved traveling to other countries. During the

financial year, the routine payments which include allowances, salaries,

medical insurance, utilities and rent consumed UGX.2.567 billion (90%) out of

the UGX.2.853 billion received by the Embassy. This may lead to ineffective

representation of the country by the Embassy in the three countries and other

organisations.

ii. Unpaid Salaries

Salaries for the month of June 2014 were not paid until the release of first quarter

of 2014/15 financial year was received. This continued to affect the subsequent

payments because at the time of audit in mid-September 2014, there was no

money to pay September salaries and Foreign Service allowances.

Non-payment of salaries on time may affect the staff performance due to the high

cost of leaving experienced in France.

iii. Unfunded Priorities

A number of priorities remained unfunded:

Renovation of the chancery;

Procurement of representation car;

Replacement of the utility car;

Furnishing the official residence;

847

Security installations at the chancery.

Inadequate provision of funding to the Embassy to finance priorities affects the

achievement of Embassy objectives. Security installations at the chancery were of

great concern given the location of the Chancery and the current worldwide terror

threats. Review of payment records also revealed that there were frequent

disconnections of communication (Wi-Fi, TV, and phones) due to non-payment

which inconveniences the users.

The Accounting Officer explained that the Embassy had received funds for

replacement of the vehicles and budgets for other priorities had been submitted

for consideration during the following financial year.

I have advised management to liaise with the Ministry of Finance and provide

adequate funds to finance the Embassy‟s priorities and to facilitate officers to

effectively perform their duties in all the accredited countries and organisations.

b) Routine Payments not supported with schedules

The Embassy makes routine payments in respect of salaries, rent, insurances and

medical expenses. It was noted that contrary to the provisions of paragraph 181

of the TAI which requires all payment vouchers to be accompanied by supporting

documents, the payment vouchers for all routine payments made during the year

lacked the required supporting documents, such as approved schedules and

payrolls. There is a risk of duplicating the payments.

The Accounting Officer explained that the Embassy had started on preparation of

payment schedules that are approved by the Finance Committee before any

payments are effected.

I have advised the Accounting Officer to ensure that payment vouchers for routine

payments are always fully supported with the necessary supporting documents.

c) Approval of Contracts Committee composition

Section 27 (2) of the PPDA Act, 2003 states that the members of the Contracts

Committee shall be nominated by the Accounting Officer and approved by the

848

Secretary to the Treasury. However, it was noted that the term of old Committee

had expired and communication for constitution of a new committee made in July

2014.

At the time of audit, the approval by the Secretary to the Treasury had not been

granted but the proposed members were conducting procurement business. This

was irregular and the decisions of these members could be challenged.

The Accounting Officer explained that management would continue to follow up

with the PS/ST for approval of the committee.

I await the outcome of the Accounting Officer‟s action.

d) Non-remittance of Non-Tax Revenue (NTR)

It was noted that the Embassy collected a total of UGX.269,280,450 in form of

Non-tax Revenue during the financial year. However audit of the same revealed

that contrary to the Government Standing Policy that requires all NTR to be

remitted to the Uganda consolidated fund account, there were no transfers to the

UCF. Although in some cases the Embassy management wrote requesting to use

the funds, citing pressures of inadequate releases and effects of loss on poundage,

there were no responses.

There are associated risks of not remitting the money such as spending the money

by the Embassy.

I advised the Accounting Officer to follow up with the PS/ST and ensure that

request to utilise NTR at source is properly authorised.

e) Staff Matters

a) Absence of ideal staff structure for the Embassy

The Embassy is accredited to three countries of France, Spain and Portugal and as

well as Permanent Mission to UNESCO, OECD and BIE. Effective representation in

these countries and organisations requires a number of staff to be deployed at the

Embassy. However, it was noted that the current structure of 1 + 3 officers,

849

Accountant and Administrative Attaché is not adequate to allow effective

representation.

There is a risk that the Country may not be well represented in the three countries

and the three organizations under the jurisdiction of the Embassy.

The Accounting Officer explained that consultations were on going with the

Ministry of Foreign Affairs to improve the staffing levels of the Embassy but that

this was limited by the budget constraint. I await the outcome of the consultations

with the Ministry.

b) Lack of staff performance plans and appraisal

The Public Service Standing Orders paragraph 12 of section A-M states that the

performance appraisal system shall involve:

a) Performance planning

b) Continuous performance monitoring

c) Performance assessment/evaluation and

d) Performance improvement.

However, it was noted that;

There were no performance plans for the Embassy staff for the year under

review.

There was no evidence of staff performance monitoring, and

Review of staff personnel files at the Embassy revealed that the staff were not

being appraised/assessed annually.

Appraisals that are conducted long after the required dates and not linked to the

annual performance of staff cannot be used for staff performance improvement.

I have advised the Head of Mission to ensure that staff performance management

is undertaken for all staff of the Embassy.

f) Status of Government assets

a) State of the Chancery

An audit inspection revealed that the Chancery building has neither had routine

and periodic maintenance, or major renovations in the recent past. As a result, it

850

was in a poor state requiring substantial provision of funds to have it repaired.

Periodic and routine maintenance activities are required because of the weather

conditions which affect buildings, absence of which leads to faster deterioration of

the structure and facilities.

There is a risk that continued lack of routine and periodic maintenance activities

coupled with delayed renovations will make the building inhabitable and be

condemned by city authorities.

The Accounting Officer acknowledged the poor condition of the chancery and

explained that, a request to utilise the rental income paid by the Tanzanian

Embassy to renovate and prepare the premises for a new tenant had been made.

I have advised management to provide for adequate funds in the Embassy‟s

budget for maintenance and renovations and to follow up their request to utilise

the rental income for urgent interventions on the building.

b) Lack of Furniture and fittings for the official Residence

The Public Service Standing Orders, under Section 11-e, provides for provision of a

fully furnished Official Residence for the Head Mission. It was however noted that

the rented official residence was not furnished contrary to the requirements of the

Public Service Standing Orders. Instead the Ambassador had provided herself with

most of the household requirements (furniture, fittings and other equipment) but

with visible lack of others or use of old ones.

The Accounting Officer stated that they were going to follow-up the matter with

relevant authorities and ensure that the furnishing of the official residence is done.

I have advised management to budget for the required furnishings and ensure

that the follow up is done.

88.0 UGANDA HIGH COMMISSION, PRETORIA

a) Rent

851

The mission incurs a monthly rent of R 43,200 ($ 43,200) for renting

accommodation for the home based staff as follows:

Landlord Accommodation rented for Amount per month

1 Catherine Susanne Administrative attaché R 7400

2 Broadways Accounting officer R 11,500

3 Dream works Financial attaché R 8600

4 Ditto Third secretary R 9200

5 Ron mark Second secretary R6500

Total R 43,200

This translates into an annual rent 0f R 518,400 ($51,840) equivalent to UGX

126,577,728 would have been saved if efforts are undertaken to acquire own

residential properties.

In a written response the Accounting Officer explained that the Mission has

engaged the Ministry of Foreign Affairs (MOFA)on the issue.

I have advised management to follow up the matter with the Ministry of Foreign

Affairs to ensure that the mission acquire its own residences for its staff.

b) The Chancery

a) Condition of the Building

Documentary review file regarding the chancery revealed that it was acquired on

25th January 2001 at R, 1,424,000 equivalent to UGX 347,698,080. However since

that time its maintenance has been minimal due to lack of sufficient funds in the

annual budget allocations.

Its condition requires repair and renovation to save it from further deterioration.

For example some of the floor and roof tiles are getting off and the interior wall

require painting.

In a written response the Accounting Officer stated that the Ministry of Foreign

Affairs was aware of the condition of the chancery and has indicated that funds

will be availed in the financial year 2015/16 for its renovation.

852

I urged the Accounting officer to follow up the matter with the Ministry Of Foreign

Affairs so that the requisite funds are provided for in the budget.

b) Security

Although the chancery has electric steel gates at the staff and visitors entrances

and the building fitted with an alarm system there are no CCTV cameras, provision

of access control readers and other devices that enhance security. There is a risk

that sophisticated security threats may not be adequately prevented and handled.

It was observed that the mission has raised the matter with Ministry of foreign

affairs to be allocated funds so that the security at the mission can be

strengthened.

In a written response the Accounting Officer promised to follow up the matter with

the Ministry Of Foreign Affairs and Ministry Of Finance, planning and Economic

Development.

I urged the Accounting officer to follow up the matter with Ministry of foreign

Affairs (MOFA) and Ministry of finance planning and economic development

(MOFPED) for financial support so that the chancery is adequately secured.

c) Renovation of the Official Residence

There is a commitment to pay for renovation works going on at the official

residence amounting to R 7,261,116.92(UGX 1,772,946,918) and consultancy fees

of R 508,098 (UGX 124,062,289) that will fall due in September when the works

are expected to be completed. So far R 2,241,163.67(UGX 547,224,933) has been

paid leaving a balance of R5, 448,391.25(UGX 1,330,333,692). According to the

site meeting held on 20 August 2014 the contractor is committed to complete on

the scheduled date of 18 September 2014.

It was observed that the mission has only R 3,071,235.99(UGX 749,903,692)

available which is not enough to clear the obligation when it falls due. Unless

853

funds of R 2,378,155.26(UGX 580,674,170) are provided this may result in a

domestic arrear.

According to the Accounting officer the renovated residence will also require

furniture befitting it, rebuilding of the perimeter wall and strengthening of security

which have not been provided for.

In addition, reply the Accounting Officer explained that the Mission was following

up the matter with the Ministry Of Foreign Affairs and the Ministry Of Finance,

Planning and Economic Development.

I urged the Accounting officer to follow up the matter accordingly.

89.0 UGANDA EMBASSY, ROME

a) Over Release of Funds by EURO 39,562.96

EURO 39,562.96 was credited on the embassy operational account on 18/09/2013

and was drawn 18 days later (03/10/2013) without the knowledge of either the

Accounting Officer or Head of Mission, the substantive signatories to the account.

The source and the purpose for which the funds were released could not be

disclosed at the time of writing this report.

Management explained that when this anomaly was discovered, the Accounting

Officer notified the Head of Mission as well as the Accountant General seeking

guidance on the purpose of the funds. As due diligence was on-going, the funds

were removed from the Embassy account and made available to the account of

the agriculture attaché without the knowledge of the accounting officer or the

Head of Mission.

I advised management to establish the source of the funds and how these funds

were eventually utilized.

b) Navision System Issues

The procedure under the Navision system requires that before any payment is

made in Navision, the Accountant posts the invoice details of a vendor and

854

payment details for the Accounting Officer initial approval. The Accountant then

pays the invoice either by cash or bank. The payment is then resent to the

Accounting Officer for final approval. At this level the payment is posted to the

General Ledger from which the cash book is generated. A review of the cash book

generated from the system revealed the following anomalies;

a) Lack of Vendor/payee details

The cash book generated from the system lacked a vendor/payee yet these details

are posted at the time of entry of the document. This gap hindered the audit

process as it required me to drill the particular payment within the system one at

ago.

Management explained that the system cashbook in Navision was limited in detail

and could not show certain entries. Management promised that in the upcoming

Navision training at the Ministry of Finance, the Mission will raise this anomaly and

many more related to Navision. I await the outcome of management effort.

b) Non approvals of payments within Navision

According to the cash book generated by the system, 61 payments worth EURO

31,026.66 were indicated as having not been approved by the Accounting Officer

even when there was evidence that these payments were actually approved

before payment was effected. Management could not explain this anomaly and

promised to liaise with Navision support team at Treasury.

I advised management to continue liaising with Treasury and have the system

issue resolved once and for all.

c) Legal fees

a) Former Accounts Assistant

A former Accounts Assistant who misappropriated petty cash of EURO 5,185 and

unbanked NTR funds of EURO 2,456 all totaling EURO 7,641 (refer to the report to

Parliament for the year ended 30th June 2011) was terminated and the officer

proceeded to court for wrongful dismissal. In 2012, the court ruled in the

Embassy‟s favour and ordered that the funds earlier misappropriated be refunded.

855

In 2013, the officer took the embassy to court again this time for unpaid

retirement package (Severance package) and the court awarded her EURO

9,527.47. This was based on the fact that once a local staff has been terminated,

Severance package has to be paid regardless of the reason of termination. The

embassy legal officer claimed EURO 4,700.00 as legal fees. At the time of audit,

this case was yet to be resolved. A follow up of the misappropriated funds is also

awaited.

b) Former Cook for the Ambassador

A former cook of the Ambassadors official residence was hired in February 2010

and services terminated shortly on grounds that she had not been cleared by

security from Kampala. The former cook sued the Embassy for non-payment of

severance pay and INPS for the entire period of her service. At the time of writing

this report, this case had not been resolved.

c) Accident vehicle

It was further noted that one of the embassy car attached to the Agricultural

Attaché while being driven by a temporary driver (not an official driver) was

involved in an accident. At the time of the accident, this car lacked a 3rd party

insurance and therefore should not have been on the road. The insurance had

expired 3 months prior to the accident. At the time of inspection, the embassy had

been sued for involvement in the accident and failure to pay 3rd party insurance of

EURO 712. EURO 400 had been paid to the embassy lawyer as legal fees to

handle the case whose outcome had not been established at the time of writing

this report.

Management explained that in all the above instances, Ministry of Finance and that

of Foreign Affairs have been notified of the cases. Management promised to follow

up on all the legal matters to conclusion.

Management follow up on the legal matters is awaited.

d) Embassy space

856

An inspection of the embassy offices and ambassador‟s residence revealed that

there was limited space and or store to accommodate a number of procurements

undertaken during the year. The corridor to the accounting office and the

Agriculture Attaché office serves as a store (see picture below), similarly, the

Accounting Officers office served as a store to stationary and other promotional

items. There was no board room to facilitate a number of meetings with business

community. There was a small reception that could only accommodate two visitors

at a time. In the process, the corridor was used to accommodate the extra

visitors. There was also no car packing space for the embassy cars as the embassy

staffs were competing with the local population for packing space on the street.

An inspection of the ambassador‟s residence further revealed that the procured

items worth EURO 3,015.50 mostly furniture for the ambassador‟s office (Sofa set,

Meeting table and chairs, functions chairs etc.) were being stored at the

ambassador‟s residence garage (see the picture below); Since the assets are not

being secured in an ideal environment, the risk of loss of value is evident.

Corridor serving as a store

Accounting officers office serving as a stationary store

Furniture stored at ambassador‟s

residence

Furniture stored at ambassador‟s

residence

857

Management explained that the Embassy identified suitable premises for the

Chancery in August 2014 but was informed that there were no funds to effect the

move. Management promised to continue to engage Ministry of Finance with a

view of securing funding for this purpose.

I advised management to continue liaising with Ministry of Finance, Planning and

Economic Development with a view of securing a good working environment

befitting the status of an embassy.

e) INPS Arrears

INPS is a social contribution paid by the embassy on behalf of the non-diplomatic

staff. EURO 62,824.81 was appropriated and released to cater for this

contribution. During the year under review, a sum of EURO 62,686 was paid to the

INPS office to cater for the above expenditure. At the time of inspection, INPS for

the month of May and June 2014 worth EURO 7,982 (UGX 28,735,200) had not

been paid and were still outstanding. Management risks paying fines and penalties

if the outstanding INPS is not cleared on time.

Management explained that the two (2) months arrears will be paid in Q2 of

2014/15 financial year.

I advised management to ensure that the arrears are paid to the INPS office to

avoid eventual penalties.

f) Ambiguous targets

I noted that almost all the targets set in the mission charter appeared ambiguous

and could therefore not be achieved. See the comments in the table below:

Comments

1 Promote at least US$ 50m worth of

Uganda exports to Italy

This target cannot be achieved

because a number of exhibitions

intended to be carried out could

not be achieved because of the

limited budget.

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Comments

2 Lobby Italy‟s annual inward investment

of at least US$ 100m

Statistics at Ministry of Trade

indicate that very few investors

were attracted from Italy. A lot

more has to be done to achieve

this target.

3 Facilitate attraction of at least 30,000

tourists from Italy.

Only 504 Visas were issued by

the embassy during the year

under review.

4 Lobby for at least US$ 20m worth of

budget support from Italy.

Interactions with investors were

therefore limited because of the

resources.

5 Lobby for at least 20 Rome scholarships

for Uganda students annually.

Can only be achieved if inland

travel, fuel and allowances are

up graded.

6 Handle at least 50,000 requests for

consular services annually

Management could not explain

how this target can be achieved.

7 Identify and facilitate acquisition,

development and maintenance of at

least one Government property in

Rome annually.

This target is likely not to be

achieved considering the capital

development budget of only

UGX 150,000,000 only during

the year under review.

I also noted that the Ministry responsible in setting the targets did not consult the

mission on the set targets. Besides, the activities of the 9 (nine) countries and 3

(three) Organizations accredited to the embassy were not included in the mission

charter. The excluded countries and Organizations include; Malta, Greece, Serbia

and Montenegro, Macedonia, Croatia, Cyprus, Slovenia, Albania, Bosnia and

Herzegovina FAO, WFP and IFAD.

Management took note of the challenges involved in attracting inward investment,

promoting exports and lobbying for budget support and many others with limited

funds. Management however promised to continue engaging Ministry of Finance,

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Planning and Economic Development to enhance the ceiling of the Mission.

Management also indicated that with only EURO 30,000 remaining (after

deducting rent, FSA, Salaries for local staff, INPS (NSSF)), it is almost difficult to

achieve the above set targets.

I advised management to liaise further with the responsible Ministry and have

achievable targets revised in consultation with the mission management.

90.0 UGANDA EMBASSY TOKYO

a) Mission Charter

The Mission Charter shows the strategic direction of the Embassy. At the time of

inspection in October 2014, the approved charter availed was dated 16th Apr

2014. The charter for the part of the period under audit that is July 2013 to April

2014 was not seen. It was also noted that although the charter had key outputs,

performance indicators, and targets and required the Embassy to make quarterly

progress reports, the quarterly reports availed did not include a measure of the

extent of achievement of the output targets as indicated in the charter though

they indicated the activities the Embassy had undertaken in the respective

quarters.

In the absence of progress being reported in line with the measurable targets, it

may not be possible to monitor and assess progress on the strategic objectives of

the embassy.

I have advised management to report in line with the mission charter and indicate

extent of achievement of the strategic objectives so as to aid in monitoring the

performance of the charter.

b) Unspent Balances

Regulations require that all unspent balances should be returned to the Uganda

Consolidated Fund (UCF) at the end of the financial year. Through a review of the

financial statements, it was noted from the Statement of Financial Position, that

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the Mission had an unspent balances of UGX. 604,281,310. Of this, UGX

590,002,808 had been remitted back to the Treasury on 30th June 2014, but still

recognized in the financial statements as part of Cash in Transit. I was not provide

with evidence of the remittance done by the Embassy.

I have advised management to accordingly adjust the financial statements upon

confirmation of the remittance.

c) Collection & Accounting of Non Tax Revenue

During the year, the embassy received JPY 6,660,812 (equivalent of UGX

169,140,355) as NTR. It was noted that the embassy receives this money in cash

and in many cases, there were delays in banking it. For example, although there

were NTR transactions between 11th Dec 2013 and 31st Jan 2014, there were no

bankings made in this period. The bankings also made in some cases were in

portions. With this practice, the likelihood that the NTR is used at source and later

reimbursed (teeming and lading) cannot be ruled out and this may lead to

misappropriation of embassy funds.

Management explained that to ensure proper accountability, the Accounting

Officer reconciles the actual NTR with the NTR on the system before banking and

in some cases because the Accounting Officer is attending to other Embassy

matters, the reconciliation and banking had been delayed.

I advised management to put in place checks and balances to ensure the NTR is

banked intact and immediately as required.

d) Procurements

A procurement plan was not prepared. In addition, all the procurements during the

year under review were not requisitioned on a PP Form 20. In the absence of a

procurement plan, there is a risk of making unplanned and procurements not

based on the needs of the Embassy.

In addition, management did not prepare quarterly reports on procurement and

disposal as is required by the PPDA guidelines.

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Management acknowledged these observations and promised to prepare the

reports regularly as required by the PPDA Regulations.


e) Fixed asset register and stores ledgers

The Embassy does not maintain a comprehensive fixed assets register and a

stores/inventory records/ledger. Fixed asset register should show item, date of

purchase, value, location, condition, identification number and status for ease of

identification and decision making. Although the register maintained included some

details like date of purchase, quantity, description, amount, it was not regularly

filled. The absence of a comprehensive fixed assets register exposes the Embassy‟s

assets to the risk of their loss without detection.

Management acknowledged these weaknesses and promised to have the ledger

properly maintained.


91.0 UGANDA EMBASSY, TRIPOLI

a) Rent

A total of EUR.113,586 paid to various land lords as rent for residences and

chancery lacked copies of the tenancy agreement from land lords contrary to

section (H-b) (1) of the public service standing orders. Though the Accounting

Officer stated that the tenancy agreements for all the properties rented apart from

the official Residence/Chancery in Tripoli were availed for verification, audit

revealed that the attachments were merely rent payment forms but not tenancy

agreements.

There is a possibility that such expenditure could have been incurred without

following proper procedures.

I advised management to avail the tenancy agreements for verification.

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b) Transfers to Treasury

A total of UGX.15,778,349 was indicated in the Statement of Financial

Performance as a transfer to Treasury during the period. However, Note 18 to the

Financial Statements indicated UGX.8,494,854 as a transfer to Treasury resulting

into a variance of UGX.7,283,495, which was not explained. There is a risk of

overstating the excess of revenue over expenditure and the net worth of the

Embassy for the year under review.

I advised the Accounting Officer to explain the variance and adjust the financial

statements accordingly.

c) Lack of Segregation of duties

A best practice requires separation of key duties as a measure of effective internal

controls. It was however noted that for any Embassy activity that took place, the

requisition for funds was always made by the Ambassador to the Accounting

Officer. The practice impairs checks and balances within the Embassy and may

result into anomalies remaining undetected over a long period. Also noted was

non-availability of accountability reports for allowances totaling EUR.32,431

contrary to paragraph 181 of Treasury accounting instructions.

Though the Accounting Officer submitted the reports for verification, the reports

availed were not signed rendering their authenticity doubtful.

I advised management to ensure Key functions of the Embassy are performed by

different staff to ensure checks and balances in the system. Properly signed

accountability reports should be availed for verification.

92.0 UGANDA HIGH COMMISSION, TEHRAN

a) Lack of a list of prequalified suppliers

Paragraph 2.1 of the PPDA guidelines for Uganda Missions abroad requires the

Accounting Officer to prequalify service providers for three years.

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However, the Mission did not have a list of pre-qualified service providers and

procurements worth Rail 320,843,000 (UGX.32,084,300) were direct

procurements from non-prequalified service providers as shown in the table

below;

Documents reference No

Date Payee Details Amount (IRR)

Remarks

PV -641 11/07/2013 Bridget Safari Co.

Servicing Fire Extinguisher

5,200,000 No Quotation from service providers, or written permission from accounting officer or contracts committee

PV -630 07/07/2013 Sadaf Supermarket

Consumables 11,285,000 No Quotation from service provider, or written permission from accounting officer or contracts committee

PV -709 07/07/2013 Sadaf Supermarket

Consumables 12,024,000 No Quotation from service provider, or written permission from accounting officer but there is a loose minute

PV -707 27/08/2013 Donyaye Stationary

Purchase of stationary

11,050,000 No Quotation from service provider, or written permission from accounting officer but there is a loose minute

PV -659 22/08/2013 Naeeb Restaurant

Food for Ambassadors and their drivers

23,000,000 No Quotation from service provider, or written permission from accounting officer, Payment voucher names is different from cheque names, payment cheque has the names Mr. Alavi Ali which can lead to payment of wrong person

PV -776 29/10/2013 Naeeb Restaurant

Food for African Diplomatic Ladies Group

12,140,000 No Quotation from service provider, or written permission from accounting officer, Payment voucher names is different from cheque names, payment cheque has the names Mr. Alavi Ali which can lead to payment of wrong person

PV -756 30/09/2013 Iran Sport Spare tyre for utility Car ( Santafei)

14,000,000 No quotations from the service providers and no permission from the contracts committee to undertake the procurement

PV -800 04/12/2013 Dey Computers

Making DVD's on investments

5,400,000 No quotations from the service providers so as to assess the cheapest supplier

PV -797 03/12/2013 Dey Computers

Making DVD's on investments for seminar

4,400,000 No quotations from the service providers so as to assess the cheapest supplier

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Documents reference No

Date Payee Details Amount (IRR)

Remarks

PV -850 25/12/2013 Chalak Parvaz co.

Air ticket for Brian and Cissy for A/O conference

56,993,000 No evidence of prequalification or a request of quotations from various service providers. This therefore puts the embassy at a risk of over payment for a service

PV -849 25/12/2013 Chalak Parvaz co.

Air ticket for Brian and Ambassador on New A/c issues

165,351,000 No evidence of prequalification of service provider or a request of quotations from various service providers. This therefore puts the embassy at a risk of over payment for a service

320,843,000

The Accounting Officer explained that initiative has been taken to advertise and

prequalify the firms for the mission.

I advised the Accounting Officer to comply with the guidelines and ensure that a list

of prequalified service providers is in place.

93.0 UGANDA EMBASSY IN RIYADH

a) Refund of Medical Expenses

SAR.24,351.86 (approx. UGX.16,729,728) was refunded to various officials of the

Embassy in respect of medical bills, while M/S Tuwinaya Health and Rasan Medical

Clinic were paid SAR.8,555.21 (approx. UGX.5,877,429) for treatment of staff

contrary to Section M-a (14) of the Public Service Standing Orders which requires a

Foreign Service Officer serving in an Embassy abroad to be covered by full medical

insurance. This practice is bound to be abused because it is difficult to verify the

correctness of some of the receipts submitted when requesting for refunds and

accounting for advances.

Though the Accounting Officer explained that the insurance policies did not provide

full coverage for treatment, the list of services not covered by the policies was not

availed for verification.

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I advised Management to liaise with the Permanent Secretary MoFA and the

Director General of Health Services to provide an appropriate solution to the

matter.

b) Payment of Bonus

Allowances paid to Foreign Service Officers are regulated by section E of the Public

Service Standing Orders. Bonus payments are not part of the said allowances. It

was however noted that SAR 2,200 (approx. UGX.1,511,400) was paid to various

staff as bonus in respect of the Eid Il fitr holidays during the financial year

2013/2014, contrary to the Standing Orders.

In response, the Accounting Officer stated that it is a custom in Saudi Arabia to pay

the bonus.

I advised the Accounting Officer that such payments ought to be authorised under

the Government of Uganda regulations if deemed necessary. Otherwise, I consider

them irregular.

94.0 UGANDA EMBASSY IN MOGADISHU

a) Lack of Mission Charter

The Ministry of Foreign Affairs is required to provide every Embassy with a charter

spelling out its goals, objectives and activities to enable the Embassy set annual

goals and also design strategies to achieve them. However, it was noted that the

Embassy operated without a charter. The performance of the Embassy and its staff

could not be assessed objectively without key performance indicators. Besides,

there is a risk of implementation of uncoordinated activities.

The Accounting Officer explained that a draft copy of the Embassy charter was

submitted to the Ministry of Foreign Affairs for review and subsequent approval.

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I advised management to follow up the matter and have the charter approved, and

disseminated to all concerned staff for implementation.

b) Poor Filing of Documents

It was noted that the payment vouchers submitted for audit were not sequentially

numbered and filed, making it difficult to match the payments to the source

documents contrary to paragraph 419 of the TAIs.

The Accounting Officer acknowledged the anomaly and explained that ,this was

partly attributed to the operating environment which has limited amenities and

new staff.

The Accounting Officer is advised to always number and file payment vouchers

sequentially for ease of accountability.

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