THE REPUBLIC OF UGANDA

Transcription

1 THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT FOR THE FINANCIAL YEAR ENDED 30 TH JUNE 2015 OFFICE OF THE AUDITOR GENERAL UGANDA i

2 TABLE OF CONTENTS LIST OF ACRONYMS... iii REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT FOR THE FINANCIAL YEAR ENDED 30TH JUNE, iv DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT FOR THE FINANCIAL YEAR ENDED 30 TH JUNE, INTRODUCTION BACKGROUND INFORMATION ENTITY FINANCING OBJECTIVES OF THE MINISTRY AUDIT OBJECTIVES PROCEDURES PERFORMED FINDINGS DETAILED FINDINGS... 5 ii

3 LIST OF ACRONYMS Acronym DISO IPPS MoGLSD RDC UGX YLP District Internal Security Officer. Integrated Personnel and Payroll System Ministry of Gender, Labour and Social Development Resident District Commissioner Uganda Shillings Youth Livelihood Programme iii

4 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT FOR THE FINANCIAL YEAR ENDED 30 TH JUNE, 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of Ministry of Gender Labour and Social Development for the year ended 30 th June These financial statements comprise of the Statement of Financial Position, the Statement of Financial Performance, and Cash flow Statement together with other accompanying statements, notes and accounting policies. Management Responsibility 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 the Ministry of Gender, Labour and Social Development. 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 (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. 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 controls 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 not for purposes of expressing an opinion on the effectiveness of the entity s internal control. An iv

5 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 and form part of my Annual Report to Parliament. PART A Opinion In my opinion, the financial statements of the Ministry of Gender, Labour and Social Development 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, Emphasis of Matter Without qualifying my opinion, I draw your attention to the following matter that is disclosed in the financial statements under note 26. Outstanding Payables The Ministry reported payables of UGX.3,726,312,583 of which UGX.3,162,461,669 relates to outstanding workman s compensation. In addition, outstanding withholding tax of UGX.41,658,848 may attract penalties in accordance with the Income Tax Act. Other Matters In addition to the matter raised above, I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements. Staffing Gaps Out of the staff establishment of 742 only 273 positions were filled leaving 469 vacancies. Among the vacancies were key positions of Principal and Senior Officers which may constrain service delivery. v

6 Accumulation of labour disputes at the Industrial Court The case summary statistics revealed that the Industrial Court had accumulated cases comprising; 322 claims, 273 references, 26 appeals, 23 mediations and 36 miscellaneous applications by the end of October Delays in adjudication of labour disputes may result into industrial unrest. John F.S. Muwanga AUDITOR GENERAL 18 th December, 2015 vi

7 PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT FOR THE FINANCIAL YEAR ENDED 30 TH JUNE, 2015 This Section outlines the detailed audit findings, management responses, 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 the Ministry of Gender Labour and Social Development (MoGLSD) to enable me report to Parliament. 2.0 BACKGROUND INFORMATION The Ministry of Gender Labour and Social Development commonly called the Ministry of Gender is a Government Ministry with the responsibility of promotion of employment and productivity, positive cultural values, rights of vulnerable groups and gender responsive development. The Ministry has one of its major tasks as to ensure that all Ugandans enjoy better standards of living, especially the disadvantaged and vulnerable groups. The Ministry came into being by a constitutional requirement of the 1995 Constitution, Chapters 4 and 16 which mandates government to: empower communities to harness their potential through skills development, Labour productivity and cultural growth. The constitution advocates for protection and promotion of fundamental rights of the poor and other vulnerable groups as well as institutions of traditional or cultural leaders. The Ministry is comprised of the Social Development Sector (SDS) that promotes issues of social protection, gender equality, equity, human rights, culture, decent work conditions and empowerment for different groups such as women, children, the unemployed youth, internally displaced persons, the older persons and persons with 1

8 disabilities. The Ministry is the lead agency for this sector and is charged with the development and implementation of the Social Development Investment Plan (SDIP) with the mandate to empower communities to harness their potential through cultural growth, skills development and Labour productivity for sustainable and gender responsive development. The Ministry s Vision is to ensure a better standard of living, equity and social cohesion while its Mission is Promotion of gender equality, social protection and transformation of communities. The Ministry is located at Plot 2, Simbamanyo House, George Street, Kampala. 3.0 ENTITY FINANCING The Ministry of Gender Labour and Social development, was financed by Grants from Central Government to the tune of UGX.64,208,606,502. Non-tax revenue of UGX.1,210,566,070 was also collected, bringing the total revenue to UGX.65,419,172,572. The total grants revenue of UGX.64,208,606,502 constituted 97.4 % of its approved revised budget estimates of UGX.65,896,368, OBJECTIVES OF THE MINISTRY. The objectives of the Ministry are to:- Empower communities to appreciate access, participate in, manage and demand accountability in public and community based initiatives. Protect vulnerable persons from deprivation and livelihood risks. Create an enabling environment for increasing employment opportunities and productivity for improved livelihoods and social security for all, especially the poor and vulnerable. Ensure that issues of inequality and exclusion in access to services across all sectors and at all levels are addressed; and Improve performance of Social Development Institutions to coordinate and implement the Social Development Investment Plan at various levels. 5.0 AUDIT OBJECTIVES The audit was carried out in accordance with International Standards on Auditing 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:- 2

9 a. Whether the financial statements have been 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. Whether all funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. Whether goods and services financed have been procured in accordance with the Government of Uganda Procurement regulations. d. Whether management put in place sufficient internal controls and the internal controls operated as intended throughout the year. e. Whether the management was in compliance with the Government of Uganda financial regulations. f. Whether all necessary supporting documents, records and accounts have been kept in respect of all activities, and are in agreement with the financial statements presented. 6.0 PROCEDURES PERFORMED The following audit procedures were undertaken:- (a) Revenue Obtained schedules of all revenues collected and reconciled the amounts to the cashbooks and bank statements. (b) Expenditure The 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) Procurement Reviewed the procurement of goods and services by the Ministry during the period under review and reconciled with the approved procurement plan. (e) Fixed Asset Management Reviewed the use and management of the Ministry assets during the period under audit. 3

10 (f) 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 audit findings. The following system of grading of the audit findings has been adopted to better prioritise the implementation of audit recommendations. In the OAG, risks are classified as follows: Category Description 1 High 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. 2 Moderate significance 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. 3 Low significance 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 remedy may add value to the entity. It is a matter of low risk or low stakeholder interest. 7.2 Summary of audit finding The following table shows the summary of audit findings. No. Title of Finding Grading 1 Staffing gaps 469 High 2 Non-payment of Workman s compensation within the stipulated High time 3 Accumulation of labour disputes at the Industrial Court High 4 Status of land and buildings for institutions under the Ministry High 5 Payroll management weaknesses Low 6 Inadequate monitoring High 7 Non-recovery of funds due High 8 Potential Loss of funds High 9 Follow up of prior year outstanding observations 9.1 Payables UGX.3,725,578,013 Moderate 4

11 9.2 Mischarge of Expenditure UGX.66,982,475 Low 9.3 Staffing gaps 333 vacancies High 9.4 Non-disposal of obsolete assets Low 9.5 Repayments into the YLP Revolving Fund High 9.6 Determination of the age of the group members Low 9.7 Inadequate monitoring of the projects High 9.8 Lack of sign posts for the respective projects Low 9.9 Inadequate training of the 3 committees in a group High 9.10 Record keeping Moderate 8.0 DETAILED FINDINGS 8.1 Payables The Ministry reported outstanding payables of UGX.3,726,312,583 at the close of the year under review. Included in the payables is a sum of UGX.3,162,461,669 which ought to be provided for in accordance with the workman s compensation Act. This matter was also raised in my previous report and remains outstanding. In addition a sum of UGX.41,658,848 relates to withholding tax and may attract penalties. Management indicated that liaison is on-going with the Ministry responsible for finance to provide funding for workman s compensation. I advised management to ensure funds are set aside to settle the liabilities in accordance with the existing laws. 8.2 Under-staffing. The Ministry s establishment structure provided a for total staff strength of 742 posts comprising 418 for the headquarters and 324 for its institutional bodies. However, examination of the Ministerial Policy Statement for Financial Year 2015/2016 indicated that the Ministry had total staff strength of only 273 comprising; Headquarters (180) and Institutional Bodies (93) as of April 2015 resulting into a total shortage of 469 staff categorized as; Headquarters (238) and Institutional Bodies (231). Some of the vacant positions are at the level of Commissioners, Principal and senior Officers which are of strategic importance to the Ministry. 5

12 I explained to management that staff shortages have the effect of constraining service delivery. Management indicated that the Ministry was continuing to engage with the Ministries of Public Service and Finance, Planning and Economic Development to obtain sufficient wage provisions to cater for additional staff recruitment. I await the results of management action in this regard. 8.3 Non-payment of Workman s compensation within the stipulated time Section 26(1) of the Worker s Compensation Act requires the employer to pay workman s compensation to the district labour officer who would pay the compensation to the worker or other person or persons entitled to receive it not later than two weeks after receipt of the claim. This implies that compensation should be paid either within two months after the date the accident occurred or within four months after the date the symptoms of the occupational disease became apparent if no reference to Court is made. However, audit noted that compensation in the sum of UGX.3,162,461,669 had not been settled. I explained to management that in the circumstances, the entitled persons were denied their rightful claims and this may result into litigation. Management stated that the Ministry of Finance, Planning and Economic Development had not been able to provide funds for settlement of the claims despite the numerous requests. I advised the Accounting Officer to continue the liaison with the Ministry responsible for Finance and ensure funds are set aside to settle the liability. 8.4 Accumulation of labour disputes at the Industrial Court The Industrial Court was established under the Labour Disputes (Arbitration and Settlement) Act, 2006 Cap 224, Laws of Uganda to arbitrate labour disputes referred to it under the Act, adjudicate questions of Law arising from references to it by any other law and to dispose of the labour disputes without undue delay. However, review of the case summary statistics revealed that the cases before the court by the end of October 2015 had accumulated to; 322 claims, 273 references, 26 appeals, 23 6

13 mediations and 36 miscellaneous applications. The accumulation of the cases was attributed to understaffing and underfunding of the Court. I explained to management that delays in adjudication of labour disputes may result into industrial unrest. Management stated that engagements are continuing with the Ministry of Public Service and the Public Service Commission to handle staffing gaps at the Industrial Court. I await the results of management action in this regard. 8.5 Audit Inspection of a sample of institutions under the Ministry Physical inspection of Naguru Reception Centre, and Naguru and Fort-Portal Remand Homes was carried out to assess their suitability for rehabilitation of the affected children. The following observations were made; Institution Fort Portal Remand Home Observations Out of 17 staff only 9 were in post. Lack of fuel to take children to the court. The children lack proper clothing and wear tattered uniforms. Some buildings are still roofed with asbestos that were declared unfit for habitation. Broken windows and louvers for the dormitory thereby exposing the children to vagaries of nature. Naguru Home Remand The septic tank was constructed at a level above those of manholes and the sewerage cannot therefore flow properly. Incomplete fixing of tiles in the boys dormitory and bathrooms. Window fasteners were not installed. Incomplete Civil works on the dormitory. Ventilator nets and facial board in the BOQs were not installed. Two vehicles broken down were parked in the yard and seem to be depreciating in value rapidly. Lack of fuel to take children to court. Naguru Center reception The buildings housing the office, residence, staffroom and the boys dormitory were leaking. Cracked floor and walls of the boys dormitory due to 7

14 apparent poor workmanship. Ministry Vehicle no.ug 0438Y that was involved in an accident was towed to the Centre compound and abandoned. The newly fixed locks in the house of the in charge were not working. The water bone toilet was not in use due to lack of water. The walk way between the dormitory and the residential house was not worked on. Lack of transport for resettlement of children. Inadequate staff accommodation. In addition, review of the status of assets in other Ministry institutions revealed various weaknesses including; Lack of land titles. Dilapidated infrastructure and Encroachment of land. Management stated that Naguru Remand Home, Naguru Reception Centre and Kampiringisa National Rehabilitation Centre had been renovated while renovation of Ruti Rehabilitation Centre was ongoing. It further explained that the Ministry has continued to lobby the Ministry of Finance, Planning and Economic Development for funds to facilitate the renovation and rehabilitation of all Ministry Institutions, and that titling of land for Institutions under the Ministry was an on-going process and that the Ministry of Lands, Housing and Urban Development had allocated a staff to the Ministry to support the acquisition of the land titles. I advised the Accounting Officer to fast track the acquisition of land titles and to liaise with relevant authorities to secure funding for rehabilitation, equipment, staffing and operationalization of all the institutions. This will enable the children to harness their potential through skills development, Labour productivity and cultural growth. 8.6 Payroll management weaknesses The review of salary payments for the previous financial year revealed that some former staff continued to receive salaries after resigning from service or reaching the mandatory retirement age. The individuals involved were 8 in number and the sum totalled to UGX.12,097,911. 8

15 The irregular payments are recoverable. The Accounting Officer attributed the anomaly to delayed approval of resignations by the Ministry of Public Service and IPPS failure because ordinarily when an officer clocks 60 years, he or she is automatically deleted from the system. He further said that the funds paid to staff after clocking 60 years shall be recovered from their pension. I advised management to ensure ledgers are maintained for the affected staff and have the funds recovered appropriately. 8.7 Inspection of Youth Interest Groups (YIGs) projects under the Youth Livelihood Programme (YLP) Inadequate monitoring Programme Guidelines require that there should be regular follow-up visits to offer technical support and advisory services to the groups by subject matter specialists. However, audit noted that the Sub County Chiefs/Town Clerks and the Community Development Officers who are the focal persons in the implementation of the Programme do not carry out the monitoring in some cases. In all the 98 projects visited, there was no evidence of progressive reporting and monitoring of the programmes. This was reportedly caused by inadequate funding for monitoring activities which is capped at 10% Non-recovery of revolving funds Section 6(1) of the Youth Livelihood Programme (YLP) document 2013 requires all project funds disbursed to each Youth Interest Group (YIG) to be treated as a revolving fund to be repaid in accordance with the project financing agreements between the District Local Government and the beneficiary Youth Interest Group witnessed by the area resident state Attorney. The agreements are accompanied by repayment schedules. However review of a sample of districts revealed that by November 2015, a repayment of only UGX.2,500,000 had been made by one group out of UGX. 237,911,900 advanced to groups in Kaborole district where recovery was expected to start from August 2014 leaving UGX.235,411,900 outstanding. 9

16 Management stated that although the financing agreements for this district were signed in August 2014, actual disbursement of funds in the groups bank accounts took up to 2 months due to delays in opening bank accounts and challenges of IFMS transmission of funds that resulted into delayed start of projects and hence commencement of repayment. This led into revision of the repayment schedules. I advised management to ensure adequate and timely sensitization of group members about management arrangements and prompt disbursement of funds to enable the revolving fund benefit more youths Potential Loss of funds Field inspection of funded projects in 8 districts and Kampala Capital City Authority revealed that UGX.234,352,300 extended to various groups for various projects may not be recoverable because the projects collapsed or changed the nature of operations. Management explained that the Ministry was taking actions to enhance the quality of the implementation of the projects and recovery of the revolving fund. In addition, stakeholder meetings would be conducted in all districts aimed at assessing the performance of all projects with a view of establishing challenges and mitigation measures in each case. Meanwhile the problematic cases were being handled by the offices of the RDC, Police and DISO in line with the rewards and sanctions provisions under the Programme. I advised Management to ensure adequate training and sensitization of the youths before extending funding to them and to enforce the recovery provisions in the Programme Guidelines so that the Programme is rolled out to all youth. 9.0 Follow up of prior year outstanding observations Review of the implementation of the previous year s audit recommendation revealed the following status; No. Issue Status 1 Payables UGX.4,771,858,282 Reduced by UGX.1,048,214,269 to UGX.3,725,578,013. However, payables of UGX.734,570 were created during the year resulting into a closing balance of UGX.3,726,312,583 10

17 2 Mischarge of Expenditure UGX.66,982,475 3 Advances not accounted for UGX.25,000,000 Recurrence of the matter not noticed during audit of 2014/15. Accounted for 4 Staffing gaps 333 vacancies Still exist due to lack of funds. However, 8 key positions had been filled and interviews 9 senior positions had been conducted. 5 Non-disposal of obsolete assets Not implemented. 6 Lack of performance appraisals for some Addressed staff 7 Repayments into the YLP Revolving Fund A total of only UGX.584,410,777 out of UGX.12,131,055,034 disbursed under phase 1 had been recovered. 8 Determination of the age of the group members Still a challenge 9 Inadequate monitoring of the projects Not addressed 10 Lack of sign posts for the respective Not addressed projects 11 Inadequate training of the 3 committees Not addressed in a group 12 Record keeping Not addressed I advised Management to endeavor to implement all recommendations in respect of the above issues as they are intended to enhance efficiency of operations, accuracy of financial reporting and compliance with the applicable legislation. 11

18 FINANCIAL STATEMENTS 12