OFFICE OF THE AUDITOR GENERAL

Transcription

1 OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA TREASURY OPERATIONS REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF TREASURY OPERATIONS FOR THE YEAR ENDED 30 TH JUNE 2015 DECEMBER, 2015 OFFICE OF THE AUDITOR GENERAL UGANDA

2 TABLE OF CONTENTS ACRONYMS... iii 1.0 INTRODUCTION BACKGROUND INFORMATION ENTITY FINANCING OBJECTIVES OF THE ENTITY AUDIT SCOPE AUDIT PROCEDURES PERFORMED FINDINGS Categorization of findings Absence of Internal Audit Involvement in Treasury Operations Domestic Investments Legal Instrument Guiding Government Long-term Investments Monitoring of Government Investments (Shares in Public Corporations) Lack of an Investment Policy Exclusion of Companies Currently on Concession Non collection of Government Dividends Payments in Respect of Mandamus Government Receivables - on lending None collection of Receivables Receivables from companies that have ceased operations...15 Page 7.7 None disbursement of funds under the loan for the construction of Mutundwe - Entebbe transmission line Prior year audit issues...16 ii

3 LIST OF ACRONYMS ACRONYMS Acronym Description AO Accounting Officer Bn Billion BoU Bank of Uganda FY Financial Year GoU Government of Uganda ISSAIs International Standards of Supreme Audit Institutions MOFPED Ministry of Finance, Planning and Economic Development MOJCA Ministry of Justice and Constitutional Affairs MoUs Memoranda of Understanding OAG Office of the Auditor General PMU Parastatal Monitoring Unit PS/ST Permanent Secretary/Secretary to the Treasury TAI Treasury Accounting Instructions, 2003 UCF Uganda Consolidated Fund UGX Uganda shillings USD United States of America Dollars iii

4 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF TREASURY OPERATIONS FOR THE YEAR ENDED 30 TH JUNE 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of the Treasury Operations for the year ended 30 th June These financial statements comprise of the statement of financial position as at 30 th June 2015, statement of financial performance, statement of changes in equity, cash flow statement together with other accompanying statements, notes and accounting policies. Management Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Treasury Operations. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Public Finance Management Act 2015, and the Financial Reporting Guide, 2008, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Auditor s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda and Sections 13 and 19 of the National Audit Act, 2008, is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing. Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing audit procedures to obtain 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 financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances but 1

5 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. Except as discussed below, I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my 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 and will form part of my Annual Report to Parliament. Opinion In my opinion, the financial statements of the Treasury Operations for the year ended 30 th June 2015 are prepared, in all material respects, in accordance with Section 51 of the Public Finance Management Act, 2015, and the Financial Reporting Guide, Emphasis of matter Without qualifying my opinion, I draw your attention to the following matters, which have been included in the financial statements; Unsustainable Payments in Lieu of Mandamus Orders I noted that payments in respect of mandamus orders by Courts increased from UGX.88 billion in the previous year to UGX.114 billion currently. This increment of about 30% may not be sustainable without negatively impacting on other government programmes. Receivables from Companies that have Ceased Operations Included under receivables is an amount of UGX.8,136,979,176 due from private entities that ceased operations while they owed GoU the amount in question. It is unlikely that GoU will recover the funds from such companies. Management has not made a disclosure in the financial statements to the effect or taken any steps to have the amounts written-off as provided for under the regulations. 2

6 None collection of Receivables - on lending Out of the total outstanding balance of receivables of UGX.906,285,918,049 as at the beginning of the year under review, only UGX.7,643,421,348 was collected in the year under review representing only 0.8% of the previous amount. Low recovery of the receivables denies government of the opportunity to use its funds to finance the budget. John F.S. Muwanga AUDITOR GENERAL KAMPALA 24 th December,

7 PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON TREASURY OPERATIONS FOR THE FINANCIAL YEAR ENDED 30 th JUNE 2015 This Section outlines the detailed audit findings, management response, and my recommendations in respect thereof. 1.0 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 Treasury Operations to enable me report to Parliament. 2.0 BACKGROUND INFORMATION Treasury Operations is a vote run by the Department of Treasury Services in Ministry of Finance, Planning and Economic Development. The Treasury services department acts as a back office in the debt management function. 3.0 ENTITY FINANCING The Department was financed by grants from Central Government totalling to UGX.1,644,752,739,309. The Department also collected UGX.19,943,839,685 in other revenue and UGX.26,000,000,000 in transfers received from other government units, UGX.158,780,623,535 and UGX.365,911,195,001 in Grants from foreign governments and Grants from international organizations respectively bringing total revenue to UGX. 2,214,804,603,470. The central government grants revenue of UGX. 1,644,168,945,249 constituted 78.2% of its approved budget estimates of UGX.2,100,217,674,876. Out of the released amount UGX.1,644,168,945,249 was spent leaving no balance due to the Consolidated Fund. 4.0 OBJECTIVES OF THE ENTITY The main objectives of Treasury Operations are to ensure that; Data in relation to public debt is up to-date and accurately maintained. 4

8 All payments of principal and interest are made when they fall due. A complete stock of Government investments is maintained at the right values. 5.0 AUDIT SCOPE The audit was carried out in accordance with International Standards on Auditing (ISA) 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 financial statements have been prepared in all material respects, in accordance with consistently applied Accounting Policies and fairly present the revenues and expenditures for the period and of the financial position as at the end of the period. b. All department funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. 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 d. The entity Management was in compliance with the Government of Uganda financial regulations. e. All necessary supporting documents, records and accounts have been kept in respect of all department activities, and are in agreement with the financial statements presented. 6.0 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. b. Expenditure The entity payment vouchers were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation. 5

9 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. 7.0 FINDINGS 7.1 Categorization of findings The following system of profiling of the audit findings has been adopted to better prioritise the implementation of audit recommendations; No Category Description 1 High significance 2 Moderate significance 3 Low significance Has a significant / material impact, has a high likelihood of reoccurrence, and in the opinion of the Auditor General, it requires urgent remedial action. It is a matter of high risk or high stakeholder interest. Has a moderate impact, has a likelihood of reoccurrence, and in the opinion of the Auditor General, it requires remedial action. It is a matter of medium risk or moderate stakeholder interest. Has a low impact, has a remote likelihood of reoccurrence, and in the opinion of the Auditor General, may not require much attention, though its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest. Accordingly, the table below contains a categorized summary of the findings that follow in the subsequent paragraphs of the report; Table showing categorized summary of the findings No Finding Significance 7.2 None involvement of Internal Audit in Treasury operations High Lack of Legal Instrument Guiding Government Long-term Investments Moderate Monitoring of Government Investments (Shares in Public Corporations) Moderate Lack of an Investment Policy and Plan Low Exclusion of Companies Currently on Concession Moderate 7.4 Non collection of Government Dividends High 7.5 Payments in respect of Mandamus High None collection of Receivables Moderate Receivables from companies that have ceased operations Moderate 6

10 No Finding Significance 7.7 None disbursement of funds under the loan for the construction Moderate Mutundwe-Entebbe transmission line 7.8 Status of Prior Year Audit Issues low 7.2 Absence of Internal Audit Involvement in Treasury Operations Section 48 (1) of the Public Finance Management Act (PFMA) 2015 requires every vote to have an internal auditor. In particular, section 48 (2)(a)-(c) requires the internal auditor to appraise the available internal controls, improve risk management process and provide assurance on the value for money in the administration and operations of the programs of in a vote. I noted that this function was not operational in the year under review, for the Treasury Operations Vote. There were no internal audit annual work plans and no quarterly reports on the integrity of the internal controls and financial management practices in the Treasury Operations. I also noted that no audit work was done on the consolidation process. I explained to management that this presents a risk of weak internal controls because the oversight function by the internal audit is not visible. Management acknowledged the observation and explained that following the enactment of Public Finance Management Act, 2015, a risk based audit plan was prepared and a team has been assigned to undertake Treasury Audit, going forward. I have advised management to expedite the functionality of internal audit to improve on the efficiency of Treasury Operations. 7.3 Domestic Investments I reviewed and analyzed the schedule of domestic investments contained in Treasury Operations Financial Statements for the year ended 30 th June, 2015 and made the following observations; Legal Instrument Guiding Government Long-term Investments I noted that there is no legal instrument in place which authorizes the government to make long term investments. The Public Finance and Accountability Act, 2003, which was repealed by the Public Finance Management Act, 2015, provided for investments with a bank at call or subject to notice not exceeding twelve months. I noted that the Public Enterprises Reform and Divestiture (PERD) Act, 1993, provides for the divesture 7

11 and management of Government Parastatals in which the government is authorized to hold interest and shareholding. These companies are managed by the Privatisation unit within the Ministry of Finance, Planning and Economic Development. Furthermore, I observed that there exists companies which are not provided for in the PERD Act, but the government has invested money in them, through the purchase of shares as exemplified below; Table showing companies in which are not covered by the PERD Act No. Name of Company 1 Amber House 2 Posta Uganda 3 Micro Finance Support Centre Uganda LTD 4 Pride Micro Finance 5 Munyonyo Common Wealth Resort 6 Phoenix logistics 7 LAP textiles Limited 8 J & M Airport Road Hotel 9 Bujagali Energy 10 Good Africa Coffee Under the circumstances, there is no legislation guiding the decisions of Government in these investments, which may put such investments to a risk of loss. Management acknowledged the observation and explainend that eforts will be made to have an Act in place to govern government s long term investments. I have advised government to expedite the compilation of such an enabling law to guide all its long term investments Monitoring of Government Investments (Shares in Public Corporations) According to the Treasury Operations (TOP) Financial Statements for the year ended 30 th June 2015, the TOP vote is mandated to effectively and efficiently manage investments. I however observed that there appears to be no management framework in place for the management and evaluation of the performance of the different investments by government. Audit noted that whereas the GoU has made several investments, there is no specific office or department responsible for the portfolio of investments. I explained to management that in the absence of a clear framework and oversight to manage the investments, these companies will continually fail to meet investment objectives thereby causing wastage to Government. 8

12 In addition, I noted that there is no comprehensive database for all government investment or central place holding information on investments. As a result, information (share certificates, Audited Financial statements, Register, etc.) relating to these investments could not easily be traced for review. Relatedly, I reviewed the Consolidated Summary Statement of Financial Performance of Public Corporations and State Enterprises for the financial year ended 30 th June, 2015 and observed that information relating to the following entities was not reflected due to lack of information; Table showing entities not included in the Consolidated Summary Statement of Financial Performance of Public Corporations and State Enterprises SN Entity 1 Uganda Posts Limited 2 Uganda Electricity Distribution Company Ltd 3 Uganda Electricity Generation Company Ltd 4 National Housing and Construction Company Ltd 5 Uganda Railways Corporation (URC) 6 Amber House Ltd 7 National Enterprises Corporation (NEC) 8 New Vision Printing and Publishing Company Ltd 9 Uganda Telecom Limited 10 Uganda Livestock Industries 11 Mandela National Stadium Ltd During the audit, it was explained that the Audited Financial Statements and the share certificates for most corporations were not available. The absence of a shareholders certificate makes it difficult to lay claim on the company as this is evidence of proprietorship of the shares. Government is therefore not in position to prove its ownership in these companies. This implies that UGX.1,928,989,607,673 reflected in the financial statements against Shares in public corporations, has no credible source. Management acknowledged the observation and explained that MoFPED is undergoing a restructuring aimed at improving service delivery among other things. The proposed structure proposes an office responsible for all Government Assets which will streamline these issues. In addition the Accountant General maintains a register and share certificates but at the time of audit there was fault on the safe where they are kept and copies were not provided. 9

13 I have advised the Accounting Officer to expedite putting in place a framework to manage and monitor all government investments with a view of improving government performance in this area and avoiding unforeseeable losses Lack of an Investment Policy It was also observed that the Government does not have in place an investment policy, to clearly guide the processes of identification and evaluation of possible investment projects. This exposes government to a risk of entering into less profitable investments which can result into losses to government. Management acknowledged the observation and explained that Vision 2040 and the National Development Plan (NDP) provide the overall investment framework for Government and that all Investments are channeled through the national budget. In accordance with Section 13 (6) of the PFMA 2015, the investments undertaken through the budget must be consistent with the NDP. I have advised management to establish a clear investment policy to guide and direct the Government investments in the areas identified in the NDP Exclusion of Companies Currently on Concession I also observed that companies wholly owned by the GoU currently under concession were not included in the record of government investments. I also noted that there was no clear classification of how these companies are treated in the Consolidated GoU accounts. The under listed companies are some of the companies in which the GoU has concessionary shares, but have not been included on the schedule of government investments; List of companies currently under concession No. Concession Company 1 Dairy Corporation Limited 2 Uganda Seeds Limited 3 Uganda Livestock s Industries Limited In addition, I was not availed with evidence and a register of Intellectual Property owned by the GoU. Intellectual properties such as Fresh Dairy are government owned and need to be maintained on the register by the Accountant General and recognized in the government accounts. 10

14 I have advised Management to identify all Government Investment under concessionary arrangements and ensure that they are accounted for in the accounts of government. 7.4 Non collection of Government Dividends According to the Summary Statement of Financial Performance of Public Corporations and State Enterprises for the financial year ended 30 th June 2015; Housing Finance Bank Limited made a dividend declaration of UGX.2,554,043,092 implying that GoU s share was UGX.1,256,589, However, this amount was not received by GoU and was not recognized in the receivables balance for both the TOP and Consolidated Financial statements. The failure to remit dividends deprives the government of revenue on investments which is a violation of its rights as a shareholder in the company. In the circumstances, it is highly likely that GoU is losing revenues through un-collected dividends and that the receivables balance is under stated by UGX.1,256,589, and any other uncollected receivables. Management acknowledged the observation and appreciated the need for enhanced monitoring to compliment the efforts of PMU. It was further explained that the Accountant General has accordingly established mechanisms for timely remittance of Dividends once declared and that communication has already been sent to Housing Finance to confirm and remit any dividends declared. I have advised the Accounting Officer to expedite the mechanism of ensuring that Government dividends once declared are collected and properly accounted for. In addition, all those companies with outstanding dividends should immediately be contacted for recovery. 7.5 Payments in Respect of Mandamus During the period under review, I noted that UGX.114,037,786,253 was paid out from Treasury Operations to various beneficiaries in respect of court awards and compensations. However the following matters were noted; a) Accounting treatment of Mandamus payments A review of the consolidated financial statements indicated that only payments made in the year were captured in the accounts. However, I noted that these court orders have 11

15 been enforced on government over a period of time, and were not recognized as payables at the time, yet there had been evidence that government had a future obligation to settle. Under the circumstances, the amount of outstanding payables in this regard may be much more than what has been disclosed as there is no clear system to record and manage such payments. Management acknowledged the observation and explained that there is need to establish a procedure to record these cases, as disclosure could have implications to Government. I have advised the accounting officer to expedite this action to enable a proper system of recording and managing all mandamus payments. b) Payments categorized as Mandamus without evidence I observed that payments totalling to UGX.53,381,086,654 made by the ministry as mandamus were not supported by a writ of mandamus served on the PS/ST. A review of the documentation availed indicated that the claims upon which the payments were made, were supported by other documents other than writ of mandamus. Accordingly, these payments could have been paid from the Ministry of Justice and Constitutional Affairs where they were budgeted for as per their mandate, since they do not constitute a direct charge to the Consolidated Fund. In his response, the PS/ST explained that he had obtained a legal opinion from the Hon. Attorney General indicating that it was lawful for the Secretary to Treasury to make such payments from Treasury Operations. I have again advised government to ensure that in order to avoid distortions within the established payment frameworks, there is need to regularise this matter accordingly. c) Unsustainable Payment of Mandamus I also noted that payments in respect of mandamus increased from UGX.88 billion in the previous year to UGX.114 billion currently. This increment of about 30% may not be sustainable without negatively impacting on other government programmes. For instance, the annual payments are more than the budget estimates of majority of government entities. 12

16 Management acknowledged the observation and explained that the Ministry is aware of the unsustainability of mandamus payments and is making efforts aimed at having this matter contained, through; Increasing the budget of MoJCA particularly facilitation of State Attorneys. In FY 2015/16, a provision of Ushs.10bn has been provided aimed at improving representation in courts of law. In the Budget Call Circular for FY 2016/17 dated 9 th September 2015, all Court Awards & Compensation payments are to be decentralized to ensure that all Accounting Officers are fully accountable for their Actions. I await the outcome of these efforts by government. d) Absence of Reconciliation of Amounts paid by MOFPED and MOJCA The Ministry of Justice and Constitutional Affairs (MOJCA) has the responsibility to represent government in cases before any courts of law and other legal bodies. The Ministry is also responsible for the payment of claimants who have succeeded against government in courts of law and where issues of compensation arise. During the current audit, a review of the schedule of liabilities maintained by MOJCA and the one availed to audit, revealed that the balances maintained by the two ministries are at variance as indicated in the table below; Table showing Inconsistent balances between MOJCA and MoFPED File Name File No. Judgment Amount - UGX Balance MOJCA - UGX Balance at MOFPED - UGX A.K P.M Lutaaya MA 294/ ,400, ,481, ,541,096 Bakeine Amos 1022/01 21,294,000,000 12,805,814,800 10,555,263,988 Bwambale Yovan MA 187/ ,150,673,250 33,692,766,920 29,857,596,640 & 913 others Capt. Samuel CS/547/07 534,828, ,728,204 1,500,000,000 Nsubuga Finishing Touches CS 144/ ,179,000 1,150,757,653 1,061,145,403 Intex Construction MA 632/ ,603,119,194 45,643,512,713 35,430,170,271 Ltd Kasozi Lawrence & CS 669/2002 1,664,096,608 2,752,926,085 2,554,733, thers Margaret Kasujja CS 106/2002 9,222,000,000 10,951,162,500 10,096,740,360 Okello Remizo CS 31/2014 7,566,350,000 7,566,350,000 8,096,350,000 Vambeco Enterprises Ltd CS 492/2012 1,445,473,262 2,887,332,841 2,800,000,000 TOTAL 101,604,119, ,310,833, ,346,540,932 13

17 I have however, not obtained a clear explanation as to why the two balances are not reconciling considering that they arise from the same awards of court. Further still, there was no evidence of reconciliation of the liability schedule from the two institutions. In the absence of reconciled amounts, there is a risk of over payment of claimants by either institution. For example, some claims are shown as outstanding at MOJCA yet they are fully paid at MoFPED. There was also an instance of overpayment at MOJCA not shown at MoFPED. The table below illustrates the above scenarios; Table Showing amounts pending in the MOJCA schedule of liabilities which have been extinguished through full payment by MOFPED File Name File No. Judgement Total payments Balance - UGX Amount - UGX to date - UGX Kakyomya Farm MA 2,133,944,150 1,069,114,430 1,064,829,720 and Tea Estate 0017/2012 Rwanyarare James 95/01 2,959,561,000 3,264,954,125 (1,748,898,375) In their response, management explained that MoFPED regularly holds meetings with MOJCA and updates on mandamus payments made. Management further explained that MoFPED has already raised the issue of discrepancy in numbers to the Solicitor General and is still waiting for a response. I have advised the accounting officer to ensure that the system of managing payments between the two institutions is streamlined. 7.6 Government Receivables - on lending I reviewed the Statement of Financial Position for Treasury Operation as at 30 th June 2015 and noted a closing balance of UGX.1,107,248,383,012 of receivables, which increased by UGX.200,962,464,963 from UGX.906,285,918,049. Further scrutiny of the receivables revealed the following; None collection of Receivables Out of the total outstanding balance as at 30 th June, 2014 of UGX.906,285,918,049, only UGX.7,643,421,348 was collected in the year under review representing only 0.8% of the previous amount. This may imply that there is a low commitment to recover Government outstanding receivables. Low recovery of the receivables denies government of the opportunity to use its funds to finance the budget. 14

18 Management acknowledged the observation and explained that recovery of the on-lent portion is quite a challenge but management has instituted a number of measures to ensure that these loans are recovered and that it has written to some of the entities demanding for payment. It was also explained that the management has handed over a schedule to solicitor General to use legal means to recover non-performing loans. I have advised management to expedite the use of such stronger mechanisms to recover all outstanding receivables Receivables from companies that have ceased operations Audit also noted that among the private entities that owe GoU money, there were companies that had ceased operations and owed Government UGX.8,136,979,176 as indicated in the table below; Table showing ceased companies that owed money to government Company Amount owed - UGX Central Purchasing Company Limited 5,326,322,326 Sembule Steel Mills Limited 385,862,329 UPET 2,424,794,521 Total 8,136,979,176 It is highly likely that GoU may never recover the funds from such companies hence implying that the reported receivables balance may be overstated in the financial statements. In addition, management has neither made any disclosure in the financial statements to the effect nor taken steps to have the amounts written-off. Management acknowledged the observation and explained that a letter was to be written to the Attorney General for advice on the way forward. I have advised government to assess the performance of the receivables with a view of initiating write-off procedures, for all those not expected to be recovered in accordance with the provisions under the regulations. 7.7 None disbursement of funds under the loan for the construction of Mutundwe - Entebbe transmission line I reviewed the GOU loan portfolio and noted that the Government of Uganda entered into an agreement with KFW of Germany for a loan amounting to UGX.55,521,150,000. The loan was intended to finance the construction of a 132 KV Double Circuit Mutundwe-Entebbe Transmission line. I observed however that by the time of audit 15

19 (December, 2015), no funds had been disbursed on this loan. It was noted that GOU incurred UGX.131,792,313 in Commitment Fees and Late Interest fees. This implies that by the time the agreement was entered into, GOU was not ready to embark on the project, thus rendering the expenses incurred wasteful. During the audit, I was not given an explanation as to why the loan disbursements have delayed. Management acknowledged the observation and promised to follow-up on the implementation of the project. I have advised the accounting officer to always ensure that the loans are applied as per agreed schedules in the agreements. In addition, an explanation ought to be provided as to why disbursements have delayed and what are the future plans for the Loan in question. 7.8 Prior year audit issues A review of the issues raised in the previous audit reports revealed that a number of audit recommendations made had not yet been addressed by management, as explained below; Table showing status of prior year audit issues No Issue Status 1 Un supported budget movement no documentation to support the upward revision of 2 Payments in respect of Mandamus Orders - unreconciled balances Issues not resolved Issues not yet resolved 3 Domestic investment - entities with unchanged net worth for Issue not yet resolved the financial years ending 30 th June, 2013 and 30 th June, Un-recognized Investment of USD.250,000 in a local private Issue not yet resolved airline 5 Poor performance of some loans Issues not yet resolved I have advised he Accounting Officer to ensure that the above matters are addressed so as to enhance efficiency and effective operation of the Treasury Operations. 16