OFFICE OF THE AUDITOR GENERAL

Transcription

1 OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF UGANDA EMBASSY, BRUSSELS FOR THE YEAR ENDED 30 TH JUNE 2015

2 TABLE OF CONTENTS Page ACRONYMS... iii REPORT AND OPINION OF THE AUDITOR GENERAL TO PARLIAMENT... 4 DETAILED REPORT OF THE AUDITOR GENERAL INTRODUCTION BACKGROUND OBJECTIVES OF THE EMBASSY AUDIT OBJECTIVES AUDIT PROCEDURES PERFORMED AUDIT FINDINGS... 8 ii

3 ACRONYMS ACRONYM A/C Bn GoU MoFA MoFPED NTR MEANING Account Billion Government of Uganda Ministry of Foreign Affairs Ministry of Finance Planning And Economic Development Non Tax Revenue PFMA Public Finance and Management Act, 2015 PV UCF UGX Payment Voucher Uganda Consolidated Fund Uganda Shillings Euro VAT Value Added Tax iii

4 REPORT OF THE AUDITOR GENERALON THE FINANCIAL STATEMENTS OF UGANDA EMBASSY IN BRUSSELS BELGIUM FOR THE FINANCIAL YEAR ENDED 30 TH JUNE 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the accompanying financial statements of Uganda Embassy, Brussels for the year ended 30 th June These financial statements comprise of the Statement of Financial Position as at 30 th June 2015, the Statement of Financial Performance, Statement of Changes in Equity, Statement of Cash Flows for the year then ended and, a summary of significant accounting policies and other explanatory information. Management Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (amended) and Section 45 of the Public Finance Management Act (PFMA) 2015, the Accounting Officer is accountable to Parliament for the funds and resources of the Mission. 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 modified cash basis of accounting 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, 1995 (as amended) 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 (ISA)/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 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 4 P a g e

5 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 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 Unqualified Opinion In my opinion, the financial statements of the Uganda Embassy, Brussels for the year ended 30 th June 2015 are prepared, in all material respects, in accordance with Section 51(1) of the Public Finance Management Act, 2015 and the financial reporting guide, John F.S. Muwanga AUDITOR GENERAL KAMPALA 7 th December, P a g e

6 PART B DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY, BRUSSELS FOR THE YEAR ENDED 30 TH JUNE, 2015 This section outlines the detailed audit findings, management responses and my recommendations in respect thereof INTRODUCTION 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 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 above Embassy to enable me report to Parliament BACKGROUND The Uganda Embassy, Brussels is located at Avenue de Tervuren 317, 1150 Brussels Belgium. It is a multilateral station in charge of Belgium, the Netherlands, Luxemburg, the European Union as well as the International Court of Justice (ICJ) OBJECTIVES OF THE EMBASSY The Embassy has the following objectives:- Increase Uganda s exports to the Belgium market. Increase direct investments from the Countries represented in the areas of infrastructure development, energy, mining, ICT and horticulture. Increase the number of Belgium and Dutch tourists. Cultivate, project and sustain a positive image about Uganda in the EU. Increase the number of semi-skilled and skilled Ugandans accessing employment in the Belgium and the Netherlands. Encourage transfer of agriculture technology. Increase budget aid from EU. Increase trade in areas of processed coffee, tea and fish. 6 P a g e

7 4.0. AUDIT OBJECTIVES The audit was carried out in accordance with International Standards on Auditing (ISA)/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 financial statements were prepared 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 Embassy s funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. Goods and services financed were procured in accordance with the Government of Uganda procurement regulations. d. To evaluate and obtain a sufficient understanding of the internal control structure of the Embassy, assess control risk and identify reportable conditions, including material internal control weaknesses e. The Management of the Embassy complied with the Government of Uganda financial regulations. f. All necessary supporting documents, records and accounts had been kept in respect of all Embassy s activities, and were in agreement with the financial statements presented AUDIT PROCEDURES PERFORMED a. Revenue Obtained schedules of all NTR collected and reconciled the amounts to the Embassy s bank statements and Navision Accounting System. b. Expenditure A sample of the Embassy s 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. 7 P a g e

8 d. Procurement Reviewed the procurement of goods and services under the Embassy during the period under review and reconciled with the approved procurement plan. e. Fixed Assets Management Reviewed the use and management of the Embassy assets during the period audited. f. Embassy s 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. 6.0 FINANCING OF THE EMBASSY The Embassy received transfers from Treasury totaling to UGX.3,148,905,883 to finance its operations for the year. In addition, the Embassy collected Non tax revenues amounting to UGX.240,714,847 and another UGX.237,763 as miscellaneous revenue. By law, all Non-Tax Revenue collections are supposed to be remitted to the Uganda Consolidated fund. 7.0 AUDIT FINDINGS 7.1 Undisclosed Commitments Section 2(b) of schedule 5 of the Public Finance Management Act(PFMA) 2015 requires the Accounting Officer to prepare a statement of outstanding commitments as at the close of the financial year. The statement of outstanding commitments showed only UGX 59,053,146.However documentary review revealed a contract amount of 37, (UGX 139,271,048) in respect of renovation of chancery that was not included in the statement of outstanding commitments as detailed below: Contractor Date of contract Pas vorm woning 30 th June 2015 Contract Renovation of chancery basement Awarded contract Amount (UGX) Awarded Contract Amount (euros) Amount contracted out (euros) Amount contracted out (UGX) 783,670, , , ,271,048 However, I did not obtain explanation for the omission. 8 P a g e

9 I advised the Accounting officer to ensure that the commitment be disclosed in the financial statements. 7.2 Un spent balances not returned to the Consolidated Fund Section 17 (2) of the Public Finance Management Act 2015 require a vote that does not expend money that was appropriated to the vote for the financial year, to, at the close of the financial year to repay the money to the consolidated fund. It was observed that UGX 1,622,942,289 that was not expended at the close of the financial year had not been returned to the consolidated fund. There is a risk that the funds may be utilized without authority as its appropriation authority expired at the close of the financial year. The Accounting Office explained that the funds had been ear marked for capital development for the renovation of its properties. However, the Permanent Secretary/Secretary to the Treasury had instructed them to return the funds. I urged the Accounting Officer to comply with the Laws and ensure that the funds are returned. 7.3 Renting of Property The Mission incurs an annual expenditure of 117,000(UGX 433,064,970) on renting of property for the home based staff as follows: Land lord Tenant Annual rent ( ) 1 Van keerberghan Deputy Head Of Mission 31,800 2 Monsier sprythe Minister Plenipotenciary 36,000 3 Micheal van der Accounting officer 14,400 4 BVBA -Marc Third secretary 10,800 5 Georgious Dimou Financial attaché 10,800 6 Lithina SA/NV Administrative attaché 13,200 Total 117,000 This amount would be saved annually if efforts are undertaken for the mission to acquire its own residential properties. 9 P a g e

10 The Accounting Officer explained that the relevant authorities were discussing the matter and a decision is awaited. I advised the Accounting Officer to follow up the matter to ensure that the mission acquires its own residential properties. 7.4 Lack of Procurement Files For Purchase of Furniture Regulation 90 of the Public Procurement and Disposal of Public Assets Regulation, 2003 require the procurement and disposal unit to maintain procurement records. However a sum of 13, (UGX49,712,675) that was incurred on purchase of furniture vide payment voucher (PV) 3166/6/15 and 3325/6/15 lacked procurement files and contract agreements rendering their verification difficult. However, I did not obtain explanation for the shortcoming. I advised the Accounting officer to provide the required documentation for verification. 7.5 Payables The statement of financial position reflected an amount of UGX 59,053,146 in respect of payables at the close of the financial year. Included in this amount is UGX 39,332,034 ( 10,626.23) that relates to trade creditors. However there were no unpaid invoices from the trade creditors availed for audit.the financial attaché presented a listing of the vendors / creditors as follows: Vendor /Creditor Amount 1 Brussels Business flats 1,800 2 Chauffage G.lefevre 5,239 3 Mercedes Steenacker 3,500 5 Socalim nv Total 10, The list lacked dates when the payables were incurred and the details of supplies, works or services rendered. 10 P a g e

11 The Accounting Officer claimed that the creditors had actually been paid except the case of 3500 in favor of steenacker. However, no documentary evidence was availed for verification. I advised the Accounting officer to avail the documentary evidence for verification 7.6 Receivables Included in the receivables of UGX 85,481,436 reflected in the statement of financial position is an amount of UGX 32,288,396 ( 10,485.22) allegedly representing rent guarantee (deposits) for recalled officer that is claimable from former landlords as detailed below: Financial year Amount (UGX) Amount (euros) /09 11,675,190 3, /10 8,295,526 2, /11 12,317,680 4, Total 32,288,396 10, However documentary evidence to indicate management effort to claim for refund was not seen. The Accounting Officer claimed that the receivables were cleared but did not provide documentary evidence for audit verification. I advised the Accounting officer to avail the documentary evidence for verification. 7.7 Follow up of the Previous Year Audit Report and s A follow up of previous year audit reports and recommendations was made as follows: No Summary of the finding 1 Budgeting and funding: Budgeted funds are not adequate Management was advised to bring the matter to the concerned stakeholders so as to Management action The ministry of Finance planning and economic development has been engaged and Status of implementation Implemented 11 P a g e

12 2 Unauthorized over expenditure : Actual expenditure on goods and services exceeded the budgeted amounts by UGX 390,437,807 3 NTR Lack of visa issue ledger 4 Irregular payments under foreign travel: The visit of the official from MOWT lacked authority of the PS of MOFA 5 HRM matters: Undisclosed contingent liability Social security not contributed Absence of employment contracts for local staff Lack of performance plans 6 Inspection of government properties: have the budgets improved Proper procedures be followed Visa issue register be opened up Authority in future be sought Compute and disclose the liability in the financial statements Accounting officer to take action Accounting officer to ensure than the performance plans are in place there has been an increment of the budget from UGX 3,287,099,906 to UGX 4,834,260,000 which includes UGX 800,000,000 capital development Proper procedures to be followed Visa register opened up Accounting officer to follow up the procedure in future Request for the funds to cover the outstanding amount under domestic arrears has not been responded to The matter is still being discussed with the lawyers Action has been taken being The visa register has Partial information. partially to be followed up for the future being not being Chancery building The building was in the state of disrepair The Accounting officer to expedite the process of ensuring the building is repaired The renovation of the chancery will be done in phases beginning with being 12 P a g e

13 basement Official residence Require renovation Redevelopment of the plot of land occupied by the former official residence renovations to be followed up and completed The matter to be followed up to avoid forfeiture of the plot Funds for renovation are being awaited The mission was allocated UGX 800,000,000 for capital development which is not enough to cover the renovations of the chancery official residence and the development of the plot. The Permanent Secretary of the Ministry of Foreign affairs has been contacted for guidance being The recommendation being 13 P a g e