OFFICE OF THE AUDITOR GENERAL

Transcription

1 THE REPUBLIC OF UGANDA OFFICE OF THE AUDITOR GENERAL ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30TH JUNE 2009 VOLUME 1 PERFORMANCE REPORT

2 TABLE OF CONTENTS Acroynms 3 Vision, Mission and Core Values 4 Current Status and Recent Development 5 Current Macro Structure of the Office 6 Foreword 7 1. Introduction 9 2. Implementation of the Corporate Plan Implementation of the National Audit Act (NAA) Performance of Audit Activities Human Resource Management and Development Office Assets and Logistics ICT and Audit Development Financial Management and Budget Performance Relationship with Oversight Committees of Parliament International Relations Corporate Social Responsibility Registration of Accountants Appendix I 36 List of OAG offices 14. Appendix II 37 Unaudited OAG Accounts

3 ACRONYMS ACCA Association of Chartered Certified Accountants ADB African Development Bank AFROSAI African Organization of Supreme Audit Institution AFROSAI-E A Sub-Regional Organization of English Speaking AFROSAI AG Auditor General BFP Budget Framework Paper Bns Billions CAATS Computer Assisted Audit Techniques CHOGM Common Wealth Heads of Government Meeting CISA Certified Information Systems Auditor COSASE Committee on State Enterprises, Commissions and Statutory Corporations CPA Certified Public Accountant DFID Department for International Development DPAC District Public Accounts Committee FINMAP Financial Management and Accountability Programme GAO General Accounting Office GoU Government of Uganda HLGs Higher Local Governments ICGFM International Consortium on Government Financial Management ICT Information Communications Technology IDI International Development Initiative IFMS Integrated Financial Management System INTOSAI International Organizational of Supreme Audit Institutions IT Information Technology JICA Japanese International Cooperation Agencies KCC Kampala City Council LGDP Local Government Development Programme LLGs Lower Local Governments LPAC Local Government Public Accounts Committee MAAG Multilateral Audit Advisory Group MCC Millennium College Cooperation MTEF Medium Term Expenditure Framework NAA National Audit Act NAADS National Advisory Agricultural Services NDA National Medical Stores NMS National Medical Stores NSADP North West Smallholder s Agricultural Development Project NSSF National Social Security Fund NUSAF Northern Uganda Social Action Fund OAG Office of the Auditor General PAC Public Accounts Committee PFAA Public Finance and Accountability Act PPDA Public Procurement and Disposal Act RHs Referral Hospitals ROM Result Oriented Management SAI Supreme Audit Institution UNBS Uganda National Bureau of Standards UNRA Uganda National Roads Authority USAID United States Agency for International Development VFM Value for Money 3

4 OFFICE OF THE AUDITOR GENERAL VISION, MISSION AND CORE VALUES VISION: To be an effective and efficient Supreme Audit Institution (SAI) in promoting effective Public Accountability. MISSION: To audit and report to Parliament and thereby make an effective contribution to improving Public Accountability and Value for Money spent. CORE VALUES: In executing its responsibilities, the Office of the Auditor General (OAG) and its staff are committed to live by the office s core values of:- Integrity: Being upright and honest Objectivity: Display impartiality and professional judgement. Professional Competence: To act with diligence, proficiency and team spirit. 4

5 CURRENT STATUS AND RECENT DEVELOPMENTS Brief History The Office of the Auditor General (OAG) began as an office established at Entebbe headed by an Auditor in In 1952 the office was transferred to Kampala at the Treasury Building headed by an Auditor General. In 1962 it became the Supreme Audit Institution (SAI) of Uganda being headed by a Comptroller and Auditor General. Since its inception and establishment to-date, the Office has been headed by an Auditor and six (6) Auditors General the current one being Mr. John F. S. Muwanga. Current Status The office presently has its Headquarters in Kampala at the Treasury Buildings with its three (3) technical audit Directorates of Local Government, Central Government, State Corporations and Value for Money; and the fourth Directorate of Finance and Administration. In addition, the Office (OAG) has ten (10) Regional Audit Branch offices located in the Municipalities of Arua, Fort Portal, Gulu, Jinja, Kampala City Council (KCC), Mbale, Mbarara, Masaka and Soroti. The National Audit Act (NAA) was enacted and operationalized in Besides providing for the financial and human resources autonomy of the OAG, it amplifies the functions of the offices as:- i) to audit and report on the Public Accounts of Uganda and of all Public Offices. ii) to conduct financial, Value for Money and other audits. iii) to audit classified expenditures iv) to audit all Government investments v) to carry out procurement audits and vi) to audit Treasury Memoranda. In the Financial Year 2008/2009 these functions were executed by 348 members of staff; comprised of 235 audit staff, 46 administrative staff; 44 support staff and 23 temporary workers. Recent Developments The National Audit Act (NAA) enacted in 2008 enhanced the operational and professional independence of the Office. As a result, a realistic operational budget for the office was obtained coupled with greater autonomy to recruit staff according to the needs of the Office. This made it possible for the office to undertake a number of developments. The Act increased the scope of audit coverage by permitting the Auditor General to inquire into and examine the expenditure of public monies disbursed to private organisations. Additionally, the Act also made it a requirement to undertake gender and environmental audits. The Treasury Memoranda was also required to be audited. The process to draft Regulations to operationalize the NAA was commenced together with the process to de-link staff of the OAG from the Ministry of Public Service. A new Directorate of Finance and Administration was created and a viable Department of Value for Money (VFM) audit was also established. The construction of a new Audit building to house the Headquarters in Kampala, and Branch office constructions in Mbale, Jinja and Mbarara were planned. The process of restructuring the OAG to have an appropriate structure for the increased audit functions was also commenced. The process to procure a Medical/Health Insurance Scheme to enable all staff of the office access health care services is being designed and is in it s final stages before being tendered. 5

6 CURRENT MACRO STRUCTURE OF THE OFFICE OF THE AUDITOR GENERAL The Office of the Auditor General (OAG) is headed by the Auditor General (AG) who is the Chief Executive of the Office. The AG is deputized by the Assistant Auditor General (AAG) who is assisted in turn by the Directors of Audit (DAs) who head the Directorates. The Directors are assisted by Assistant Directors of Audit. The current macro-structure of the Office is as depicted below:- Auditor General Assistant Auditor General Director of Audit Local Government Director of Audit Central Government Director of Audit Statutory Corporations/ VFM Director of Audit Finance & Administration Under the current structure, there are four (4) Directorates namely: Directorate of Central Government Audit, Local Government Audit, Statutory Corporations and Value for Money Audit and the Directorate of Finance and Administration. Consultants from the United Kingdom, National Audit Office have been engaged in an Office re-organisational and structuring exercise and thus the present structure is under consideration. 6

7 FOREWORD BY THE AUDITOR GENERAL I am pleased and honoured to submit to Parliament my annual report and opinion on the public accounts of Uganda for the year ended 30 June The Auditor General Mr. John F. S. Muwanga It has also been a great privilege to fulfil my part and role as mandated under Article 163 of the Constitution of Uganda by providing Parliament the requisite attestations on government s handling of public resources entrusted to them, and elaborating upon the stewardship function undertaken by the Executive in managing the public funds with due regard to regularity and propriety. The report is also a celebration of our continued success in a year which marks the first full annual audit to be conducted under the legal framework of the National Audit Act which came into force in October The National Audit Act operationalised the audit independence provisions that were characterized in the Constitution and paved the way for the Office of the Auditor General as the Supreme Audit Institution in Uganda to embark on a new and heightened level of operation. As Parliament s External Auditor and supported by a staff compliment of 350 people, the Office of the Auditor General continued to execute its mission to audit and report to Parliament and thereby make an effective contribution to improving public accountability and value for money spent. As required under section 19 of the National Audit Act, the Office undertook financial and regularity audits and issued opinions on the financial statements. The Office also undertook performance audits of government programs to establish the effectiveness and efficiency to which public funds had been applied in service delivery. I also undertook special assignments which included forensic investigations and special audits which were given to Parliament throughout the year. The ability for Parliament to continue exercising control over the public purse is manifested in its ability to hold government to account. This task was ably undertaken by the parliamentary oversight committees and issues which arose from our audit reports were debated. My current audit for the year ended 30 June 2009 has raised many issues which I am hopeful parliament shall debate and deliberate upon. However, two areas of concern are; (i) (ii) increasing government expenditures which exceed appropriated funds and often lacking appropriate accountability can be viewed as limiting parliament s ability to control the public purse and those expenditures undertaken with disregard to the laws of Uganda notably with regard to abuse of the procurement laws. Article 164 of the Constitution is explicit on the issues of accountability. 7

8 FOREWORD BY THE AUDITOR GENERAL...contd The Office audited and reported on 2,051 MDAs, Local Governments, State Corporations and government entities. Another 2,209 audits are in process of being completed. The Directorate of Audit (Central Government) completed and reported on 219 audits consisting of Ministries, Departments and Agencies (MDAs) (83), Projects (131) and special audits (5). Six special audits are currently work in progress. Of interest to note, is the significant effort undertaken in the comprehensive country wide special engineering audit of the Roads Sector, which has been reported under the Uganda National Roads Authority (UNRA). In addition, the Directorate issued 71 audit warrants for recurrent, development and statutory withdrawals of funds from the consolidated fund account amounting to. 5,638,472,056,063; and, inspected 70 Tertiary Institutions under the Ministry of Education and Sports. The Directorate of Audit (Local Governments) completed and reported on 1,662 accounts comprising of Higher Local Governments (195), Regional Referral Hospitals (11), special audits (15) and Lower Local Governments (1,441). The Directorate of Audit (Statutory Corporations/VFM) completed and reported on 155 accounts. A further audit of (43) accounts are work-in progress. In addition, the Directorate also undertook five (5) special audits that were requested for in the period. The newly established Value for Money (VFM) Audit Department with only 17 staff managed to complete and report on ten (10) VFM audits with ten (10) other studies as work in progress. The Directorate of Finance and Administration that supports and facilitates the performance of the audit function managed and implemented the change processes. It successfully managed the approved 2008/2009 budget and submitted for approval to Parliament a realistic budget of. 27 billion for the financial year 2009/2010, and prepared the financial statements of the office for the financial year 2008/2009. As part of the change management process within the framework of the Corporate Plan, the Directorate also successfully implemented the Training plan, Performance Appraisal Plan, Procurement Plan, as well as managed the assets and other logistics of the office during the year. In conclusion, it has been an eventful year which is still experiencing the effects of the National Audit Act and the changes that must be brought about. Our new staff rules and regulations are under consideration by our Parliamentary oversight committee and the organizational restructuring of our Office (which is being undertaken by the UK National Audit Office) is well advanced. Staff have been tremendously supportive, patient and resilient in facing these changes and I am very grateful for their steadfastness and loyalty. To Parliament and the three parliamentary Oversight Committees, Development Partners, and the Government headed by His Excellency the President, we thank you for the unwavering support, interest and confidence placed in us which has enabled us make it a successful year. I thank thee. John F. S. Muwanga AUDITOR GENERAL 8

9 1.0 INTRODUCTION 1.1 Mandate of the Auditor General The Office of the Auditor General is the Supreme Audit Institution (SAI) provided for in the Constitution of the Republic of Uganda. Under Article 163 (3) of the Constitution, the Office is required to audit and report on the Public Accounts of Uganda and on all Public offices, including the Courts, the Central and Local Government Administrations, Universities and Public Institutions of like nature; any public Corporations or other bodies established by an Act of Parliament; and report to Parliament. 1.2 Functions of the Auditor General Section 13(1), 8(2) of the National Audit Act (NAA) amplifies the mandate and functions of the Auditor General and details these functions to include the audit of classified expenditure, Government investments, Treasury Memoranda, Procurement audits as well as conduct Special Audits. Under Article 163(4) of the Constitution (1995) as amended, the Auditor General is required to submit to Parliament annually by 31st March a report of the accounts audited for the financial year immediately preceding. This report is herewith provided under five (5) volumes:- Volume 1 - Annual Performance Report of the Office of the Auditor General Volume 2 - Audit Report of Central Government Ministries, Departments and Agencies Volume 3 - Audit Report of Local Governments and Referral Hospitals Report of the Auditor General Volume 4 - Audit Report of State Enterprises, Commissions and Statutory Corporations Volume 5 - Value for money Audit Reports In this report of volume 1, the Office of the Auditor General presents the annual performance report which includes the mandate of the Auditor General, the status of Corporate Plan implementation, the status of National Audit Act implementation, future plans and budget performance of the year; the sessions with the oversight committees of Parliament; Relations with International Organizations; Auditor General s role as the registrar of Accountants; and a summary of the major cross cutting issues across Government. 9

10 2.0 IMPLEMENTATION OF THE CORPORATE PLAN 2.1 The Corporate Plan of the Office of the Auditor General The Corporate Plan of the Office of the Auditor General covers a five (5) year period from 1st July, 2006 to 30th June, The six (6) main strategic objectives of the Corporate Plan to be achieved by 2011 and the achievements realized in 2008/2009 are as fol- lows:- 2.2 Achieve Financial and Operational Independence of the Auditor General The implementation of the Act by the OAG commenced in the Financial Year 2008/2009. Most of this corporate objective was achieved. The Staff Regulations as part of the Regulations to operationalize the Act, was drafted. It is awaiting the approval of Parliament. Plans were made to produce the Human Resources manual, the Regulations for the Act and the Financial Regulations for the OAG. 2.3 Improve the Budgeting, Financial Management and Monitoring Systems for the OAG A new Accounting Officer for the Office of the Auditor General, was appointed in November 2008 to manage the financial and other resources of the Office. In the Financial Year 2008/2009 a budget was prepared for the following Financial Year 2009/2010 of and approved by Parliament. The Senior Internal Auditor deployed at the Office of the Auditor General conducted several internal audits and reported on them to advise the Accounting Officer and assist him in managing the risks involved in the use of the resources of the Office. The External audit of the Office is carried out by an audit firm appointed by Parliament. The process to get an audit firm to audit the Office s accounts for the financial years 2005/2006, 2006/2007, 2007/2008 was completed. However, the appointment of the audit firm is still awaited. The process to engage an audit firm to audit OAG accounts for the Financial Year 2008/2009 has not commenced, and is also awaited. The Accountability Sector Working Group also established an audit Committee to follow up on the audit issues raised by the Internal and External Auditors to the OAG. 2.4 Create an Environment that enables the Office of the Auditor General to operate efficiently and Recruit, Retain, and Motivate suitable staff Under this objective the following initiatives were undertaken in the Financial Year 2008/2009:- The process for reviewing the organization structure of the Office was commenced (Consultant is now reviewing the structure). The OAG staff Rules and Regulations were drafted (final copy is with Parliament for approval). A number of change management activities were planned and executed. The arrangements for developing a Human Resources Manual were discussed and agreed on. 10

11 2.0 IMPLEMENTATION OF THE CORPORATE PLAN...contd Adequate funds for the implementation of the reforms were secured in the 2008/2009 budget. The office acquired six (6) new vehicles during the year for its operations at the Uganda Revenue Authority (2), Value for Money audits (1), and the Headquarters (3). A number of staff who obtained higher qualifications were promoted, two (2) staff were received on secondment and thirty (30) support staff were employed on temporary terms. 2.5 Improve Internal and External Communications to raise the Profile of the Office of the Auditor General with Staff and other Stakeholders In the year the Communications Committee of the Office continued to improve the internal communications of the Office through the Intranet, flyers and the quarterly bulletin. The committee also strengthened the Office s relationship with the committees of Parliament and other stakeholders. 2.6 Improve the Quality of Audit work by Developing and Implementing Value for Money Audit Strategy and Setting up Effective Assurance Arrangements In the Financial Year 2008/2009, several activities were planned and executed to achieve this corporate objective with the following achievements:- a) Professional Development and Capacity Building of the staff The Office sponsored its staff to pursue professional accounting qualifications. A total of 6 officers qualified as professional accountants and 80 are still under training to qualify as qualified accountants. The number of professionally qualified staff in the OAG has been increasing over the years as indicated below:- Year Number at the beginning of the year Increment* (Net Adjustment) Number at end of year 2004/ / / / / The increment (Net adjustment) figure caters for staff who have left or joined OAG with full professional qualifications. 11

12 2.0 IMPLEMENTATION OF THE CORPORATE PLAN...contd A total of 215 OAG staff undertook various trainings to build their capacity in performance skills in the auditing of computerized accounting systems (IFMS and CAATs), use of TeamMate audit Software, Procurement audits, Revenue audits, Management Development Programs (MDPs) and Financial audits. b) Information Technology and Audit Development In the year, the Office continued in its efforts of implementing its IT Strategic Plan which focuses on the creation of an appropriate IT governance structure, development of IT audit capacity, use of Automated Audit Tools, use of a new Automated Audits Management System (electronic working papers) and the creation of an office wide ICT infrastructure to enhance communication and improve on business processes. c) Value for Money Audits Article 163 (3) of the Constitution of the Republic of Uganda and section 13 of the National Audit Act 2008, mandate the Office of the Auditor General to conduct Value for Money (VFM) audits in respect of any project involving public funds. In the Financial Year 2008/2009, due to the support the Office of the Auditor General received from the Royal Norwegian Embassy and the African Development Bank (ADB), a number of achievements were made as follows:- The Office completed training 50 of its audit staff into Value for Money auditors, of which 17 have been deployed to the newly formed VFM Audit Unit in the OAG to conduct the VFM audit activities on a sustainable basis. Ten (10) VFM audit reports were produced. Seventeen (17) staff were trained as VFM audit Trainers/Facilitators. They will be used to facilitate the training of more OAG staff in VFM audit techniques. The OAG VFM audit Manual was developed and tested by the VFM Audit Unit of the office with the assistance of the AFROSAI-E Consultants. Fifty (50) of the VFM auditors were trained in two (2) workshops on data analysis techniques for VFM audits. 12

13 2.0 IMPLEMENTATION OF THE CORPORATE PLAN...contd Participants & Trainers of the AFROSAI-E VFM Training of Trainers Course pose for a group photo with the Auditor General Mr. John F. S. Muwanga (1st Row 3rd from Left) & the Director of Audit Statutory Corporations/ VFM Mr. Francis Masuba (1st Row 6th from Left) 2.7 Promote Increased Accountability, Probity and Transparency in the Management of Public Funds and Resources by Producing Reports that Add Value and make Positive and Practical Recommendations. By carrying out its Constitutional mandate and reporting the audit results to Parliament and by attending the discussion of the Public Accounts Committees on the audit recommendations, the Office of the Auditor General is promoting accountability, probity and transparency in the management of public funds. All the Management Letters on Local Government Audits on 2008/2009 accounts were discussed both at the Headquarters and the Regional Branch Offices to produce reports that add value and make positive recommendations. In addition, to achieve this objective, the Office in the year initiated thematic audits in Local Governments; conducted engineering audits in the road sector under Central Government; ventured into the audit inspections of tertiary institutions; and formulated a strategy for audit of pensions and payroll payment systems (PPPS). To achieve the same objective, the Office in the year also engaged in carrying out audits of backlog accounts in Local Authorities and State Corporations; directly liaised with Accounting Officers and Parliament to assess needs and improve on value addition; undertook systems audits to inform the Executive in decision-making; and made a strong follow-up of CHOGM audits in the PAC. The staff have also been trained in various audit methods and techniques in order to assist in producing quality reports that add value and make positive and practical recommendations. 13

14 3.0 IMPLEMENTATION OF THE NATIONAL AUDIT ACT, (NAA) Implementation of the NAA The NAA was operationalized and put into practice as soon as it was enacted and assented to by the President in the year Continued Existence of the OAG (S.3) NAA The OAG in existence immediately before the commencement of the NAA, has continued in existence as a body corporate subject to the provisions of the Act. All persons who immediately before the commencement of the NAA were employed in the OAG have continued to be employed therein without any break or interruption in their employment (S.46). In accordance with the new terms and conditions of service, all OAG staff up to the level of Principal Officer (U2) shall serve on permanent terms while the Senior officers (U1) and above shall serve on a 5 year contractual term. The Principal Auditor Kampala Branch Mr. Thomas Kununka taking an oath of office assisted by Mrs. Beatrice Wambete, Principal Personnel Officer. 3.3 Staff Recruitment, Promotion and Discipline The future mode of operation with the Public Service Commission in regard to the Provisions of Section 9 (2) of the NAA was determined, finalized and documented. This mode of operation was used to internally promote staff in consultation with Public Service Commission. It was also used in advertising posts externally for the Office. The mode will be used in future in disciplining staff whenever such cases arise. 14

15 4.0 PERFORMANCE ON AUDIT ACTIVITIES 4.1 The Constitutional mandate of the Auditor General is to audit all public accounts of Uganda and make a report on the audits to Parliament. Audit is therefore the main engagement of the Auditor General. For the Financial Year 2008/2009 Parliament approved shs billions to enable the Office to carry out its audit functions more timely, comprehensively, efficiently and effectively. 4.2 Financial Audits In the Financial Year, the Auditor General planned to carry out 4,260 audits of the Public Accounts of Uganda including accounts of Projects and Value for Money (VFM) audits. The Auditor General was able to complete 2,051 of the audits planned leaving work in progress of 2,209 audits. The details are as in the table 1-4 below: Directorate Entities Planned audits In-process Completed Central Government MDA Projects Special Audits Local Government HLGs LLGs 3,589 2,148 1,441 Regional Hospitals Specials Audits State Corporation State Corporations Special audits 5-5 Value for Money VFM audits Total 4,260 2,209 2,051 Table 1-4 The uncompleted audits are backlog audits of accounts of LLGs (2,148); State Corporations (43); VFM audtis (10); Special audits (6), Projects (2) Central Government Audits The Directorate of audit (Central Government), audits Government Ministries, Departments and Agencies (MDAs). In addition, the Directorate is also responsible for the auditing of Treasury Memoranda, issue of Grants of Credit to the Ministry of Finance and Inspection of Tertiary Institutions under the Ministry of Education. During the Financial Year 2008/2009 the Directorate completed 219 audits of accounts of Government MDAs (83), Projects (131) and Special audit investigations 4 as against a total of 225 planned. 15

16 4.0 PERFORMANCE ON AUDIT ACTIVITIES The details are in table 2-4 below: Status of Audits MDAs Projects Special Audits Total Planned Audits Completed Audits In-process NIL Table 2-4 It is worth noting that in the course of the year, the Directorate carried out a comprehensive country wide engineering special audit of the roads under the Public Works Sector which has been reported on under the UNRA audit. Education audit exit meeting chaired by the Auditor General in the OAG Boardroom Audit of Treasury Memoranda The Treasury Memoranda are prepared by the Treasury following the Treasury s review of the Public Accounts Committee (PAC) reports. The National Audit Act (NAA) 2008, provides for the Auditor General to audit the Treasury Memoranda. However, the Treasury was not able to present treasury memoranda in time. The last known Treasury Memoranda prepared was for the 2000/2001 Financial Year. Hence, no Treasury Memoranda was audited by the Office in the 2008/2009 financial year. 16

17 4.0 PERFORMANCE ON AUDIT ACTIVITIES...contd Grants of Credit Issued Article 154 (3) of the Constitution of the Republic of Uganda requires the Auditor General to approve withdrawals of all monies from the consolidated funds. Accordingly, in the year 2008/2009, the Directorate of Central Government audit on behalf of the Auditor General authorized withdrawals of funds from consolidated funds amounting to. 5,638,472,056,063 billion. The details are in the table 3-4 below: Expenditure No. of Warrants Issued Amount () Recruitment 48 2,855,639,732,284 Development 17 1,836,320,860,952 Statutory ,511,462,727 Total 71 5,638,472,056,063 Table Inspection of Tertiary Institutions In the financial year 2008/2009, the Directorate of Audit (Central Government) inspected and reported on 70 Tertiary Institutions in the Education Sector Challenges Although the Directorate of Audit (Central Government) has performed very well, its efforts were constrained by a number of challenges:- Delays in provision of information and other records during audit, providing responses to the Management Letters and delays in providing additional information after the exit meetings by the Accounting Officers. Inadequate office space for the OAG auditors at the auditee premises and at OAG Headquarters. This challenge may be eliminated when OAG finally completes the construction of its Headquarters offices and the Branch offices in Mbale, Jinja and Mbarara. Numerous requests for special audit investigations on the Directorate as compared to the available time, funds, workload and the human resource to carry out the normal or known external audits of MDAs. 17

18 4.0 PERFORMANCE ON AUDIT ACTIVITIES...contd Local Government Audits The Directorate of Audit (Local Governments) carries out financial audits of all the Local Authorities, including Regional Referral Hospitals. In the Financial Year 2008/2009 the Directorate planned to audit 195 Higher Local Governments (HLGs); eleven (11) Regional Referral Hospitals; 3,589 Lower Local Governments (LLGs) and 17 Special audits amounting to 3,795 audits. During the year the Directorate was able to audit and or report on 1,662 audits comprising 195 HLGs; 1,441 LLGs; 11 Regional Referral Hospitals and 15 special audits as detailed in the table 4-4 below: Audit Entity Year Planned Number No. of completed No. of audits in of Audits Audits progress HLGs 2008/ NIL Regional Referral 2008/ NIL Hospitals LLGs 2008/ / / / Special audits 2008/ Total 3,812 1,662 2,150 Table 4-4 The Assistant Auditor General Mrs. Keto Nyapendi Kayemba (1st Row 2nd from Left) & the Director of Audit Local Government Mr. Aloysius Mayanja (1st Row 1st from Left) pose for photo with Gulu Branch Staff 18

19 4.0 PERFORMANCE ON AUDIT ACTIVITIES...contd Challenges Though the Directorate performed very well, this was amidst the several challenges it faced in carrying out its audit activities. The challenges include:- Late submission of financial statements and accounting records for audit by the Chief Administrative Officers (CAOs) and the Town Clerks. Late submission of responses to the Management Letters by the Accounting Officers of Local Governments. Frequent absence of Local Authorities Management staff of the Local Authorities during audits. Use of outdated Local Government Accounting manual that has not been updated for preparation of financial statements in accord with emerging accounting standards. Difficulties to access remote audit entities in some parts of the country State Corporation Audit The Directorate of Audit (State Corporations) conducts audits on State Corporations, Public Enterprises and Statutory Commissions. The entities have different accounting dates for example:- Year ending 30th June Year ending 30th September Year ending 31st October Year ending 31st December During the financial year 2008/2009 the Directorate audited 156 accounts of State Corporations, Public Enterprises and Statutory Commission out of a total of 197 accounts of the entities. In addition, the Directorate carried out 5 Special audits. This was a tremendous improvement in the performance by the Directorate over the previous year. 19

20 4.0 PERFORMANCE ON AUDIT ACTIVITIES...contd The Director of Audit Statutory Corporations Mr. Francis Masuba (1st Row 2nd from Left ) poses for a group photo with directorate staff after a meeting. 4.2 Value for Money Value for money (VFM) audit is an audit of economy, efficiency, and effectiveness with which audited bodies use their resources in carrying out their responsibilities. In the year (2008/2009) the Directorate carried out and completed ten (10) VFM audits, namely:- i) Procurement and Distribution of Drugs by the National Medical Stores (NMS). ii) Regulations and Enforcement of Standards by the Uganda National Bureau of Standards (UNBS) iii) Procurement and Distribution of Relief Food Items in the Office of the Prime Minister - Department of Disaster Preparedness and Refugees in Uganda. iv) Northern Uganda Social Action Fund (NUSAF) Project. v) Provision of Basic Necessities to Prisoners, by Uganda Prisons Services (UPS) vi) Solid Waste Management in Kampala, by Kampala City Council (KCC). 20

21 4.0 PERFORMANCE ON AUDIT ACTIVITIES...contd vii) Management of Foreign Debts: A case study on Eight Debt Funded Projects by Ministry of Finance, Planning and Economic Development (MoFPED) viii) Inspection of Schools by the Ministry of Education and Sports. ix) Management of Pensions by the Ministry of Public Service. x) Processing of Passports by the Ministry of Internal Affairs. Uganda Prisons Services audit exit meeting at Crusader House boardroom Challenges Inspite of the tremendous achievement, the VFM Audit Department faces serious challenges in executing its VFM audit responsibility. For instance: i) it has low staffing levels not commensurate with the demand for VFM audit reports by OAG stakeholders; ii) iii) iv) VFM audits take long and are costly to complete as they are not set to be submitted by a certain date; auditees delay to respond in time thus delaying the whole VFM audit process; VFM audit staff need additional continuous training to sharpen their skills to produce quality audit reports. 21

22 5.0 HUMAN REOURCE MANAGEMENT AND DEVELOPMENT 5.1 Change Management Following the enactment of the National Audit Act, 2008, there was need to sensitize all OAG staff on the changes, new roles and responsibilities of the office. To that effect, three workshops were conducted in the financial year 2008/2009 at which leading management consultants were engaged to give motivational speeches to the staff at all levels. Such change management initiatives are to continue. 5.2 Restructuring of the office Under the Corporate Plan objective 3, it had been anticipated that the current OAG structure would be reviewed in order to create an environment that enables the office to operate efficiently, recruit, retain and motivate suitable staff. However, the procurement process for the Consultancy under FINMAP stalled on technical grounds. As a result, with funding from DFID, the office procured the service of the National Audit Office of the UK to conduct the restructuring exercise. The initial work of fact-finding and data verification has commenced. Subsequent to the delayed completion of the restructuring exercise, new critical posts were created to boost the capacity of the office to meet the dire demands of operationalising the National Audit Act, 2008 and effective implementation of the corporate plan. The posts are: Director Finance & Administration (Scale U1SE), Senior Personnel Officer (Scale U3), Senior Planner (Scale U3), Senior Procurement Officer (Scale U3), Senior Principal Administrative Officer (Scale U1E), Senior Public Relations Officer (Scale U3), Senior Administrative Officer (Scale U3), Assistant Secretary (Scale U4), Principal Stores Assistant (Scale U5), and Senior Legal Officer (Scale U3). Some members of staff have been assigned the duties in acting capacity pending the recruitment process to be effected. 22 OAG Staff attending a workshop at Speke Resort Munyonyo to discuss staff Rules & Regulations

23 5.0 HUMAN REOURCE MANAGEMENT AND DEVELOPMENT...contd 5.3 Delinkage from Public Service The process of delinking all OAG staff from the mainstream Public Service commenced. In accordance with the Pensions Act (Cap 286), the OAG was declared Other Public Service by Ministry of Public Service/Pension Authority under Establishment Notice No.1 of In addition, the OAG Staff Rules and Regulations were finalized and submitted to Parliament for approval in accordance with Section 42 (1). Arrangements are under way to develop the Human Resource Policy Manual. The office also started paying enhanced staff salaries with effect from 4th October, 2008 as provided for in the Budget Circular 2008/09. Further still, all OAG staff members were registered by NSSF and the Office effectively remitted the contributions, in accordance with the NSSF Act. Despite the achievements stated above, there are some challenges: i) the Statutory Instrument giving effect to the provisions of the National Audit Act, 2008 as provided for under Section 42 of the Act, has not been prepared; ii) the delayed approval of the Staff Rules and Regulations by Parliament, which has made it hard to issue new appointment letters to OAG staff, and therefore continued dependency of the Office on the mainstream Public Service Regulations. 5.4 Staff Training and Capacity Building The office had planned to build the capacity of 200 members of staff. The plan targeted 50 training sessions in financial audit methodologies, IT audit, TeamMate, Fraud/Forensic audit, VFM audit, and Environmental audit. The plan also included continuation of sponsoring 100 members of staff that were pursuing professional courses in order to enhance professionalism and the quality of output generated by the Office. All the targets were met and 9 officers successfully completed their respective professional courses in ACCA, CPA and CISA. In addition, 3 officers attained Masters Degrees while 15 others completed under-graduate studies in their career disciplines. 23

24 5.0 HUMAN REOURCE MANAGEMENT AND DEVELOPMENT...contd OAG Records Officers attending Induction Training at Crusader House 5.5 Staff Performance Appraisal In a bid to continue implementing Results Oriented Management (ROM), the Office had planned to conduct 15 staff sensitization workshops. The Assistant Auditor General issued an Administrative Notice guiding staff on the development of individual performance plans and a performance assessment calendar was issued for the compliance of all members of staff, including the top management. All the planned staff sensitization workshops on ROM and Performance Appraisal were organized for all OAG staff both in Kampala and the regional branch offices. However, the efforts to implement ROM have continued to suffer due to inadequate manpower to provide continued support and monitoring of staff performance, especially in the regional branch offices. Efforts will continue to be made to sensitize the staff on the importance of staff performance appraisal and the positive developments accruing from ROM. 5.6 Recruitment of staff The form of consultation between the office and Public Service Commission in the recruitment, promotion and discipline of staff was documented following a consultative process. 24

25 5.0 HUMAN REOURCE MANAGEMENT AND DEVELOPMENT...contd For the first time ever, following the enactment of the National Audit Act, 2008, the OAG ran an internal advertisement and a number of staff were promoted to various posts while some Examiners of Accounts were appointed as Auditors on attainment of higher qualifications to fill the positions of 6 Senior Principal Auditors, 7 Principal Auditors, 15 Senior Auditors, and 24 Auditors. As a result of the continued capacity building efforts, a good number of members of staff at all levels have acquired professional qualifications and other higher qualifications in the respective career disciplines. Keeping these highly qualified and enthusiastic employees at lower posts is likely to generate dissatisfaction, poor job performance and high labour turnover in the long run. Already, during the year the office lost 7 members of staff who transferred their services to other offices where they got openings for promotion. 5.7 Staff Medical Scheme The Office continues to support 27 staff with their spouses who live with HIV/AIDs as well as those with life-threatening illness like hypertension, cancer and diabetes. The procurement process to secure a comprehensive reputable health insurance service provider for the staff was commenced in the year 2008/ Records and Information Management The OAG recognizes the Records and Information Management Function as its life blood. Deliberate efforts have been directed towards maintaining a sustainable Records and Information Management System to support better service delivery, quality and timely reporting as well as evidence-based decision-making. A number of activities were undertaken in the records and information management resource unit during the year 2008/2009. Five Records staff members have undergone training at the Uganda Management Institute in a bid to improve their professional calibre. Two officers also acquired training in electronic documents and records management systems. Efforts are underway to automate a number of documentation and records management processes. The Office is developing a comprehensive records management policy that will cover all records regardless of the medium. The resource centre has been replenished with additional journals, reports and other recent publications, totaling to 181, so as to enhance the reading culture and facilitate the research endeavours of the OAG staff at all levels. However, there are challenges to be overcome. There is acute shortage of storage space for semi-current records that are critical to supporting deliberations of the Public Accounts Committees (PAC). Officers have continued to suffer congestion in their respective offices to accommodate the increasing volume of paper records. Proliferation of paper documents has remained a big challenge although the management continues to encourage staff to minimize paper work by making use of available IT facilities. A number of areas that will need to be addressed include: improvement of information security; vital records protection and disaster management planning; developing knowledge management strategies that are in line with international standards and global best practice; keeping abreast with the challenges of implementing an electronic records and document management system; and automating the OAG records management processes in accordance with the AFROSAI-E benchmarks. 25

26 6.0 OFFICE ASSETS AND LOGISTICS 6.1 Office Accommodation The Office of the Auditor General (Headquarters) is currently partly housed at the Treasury Building, 1st Floor of the Embassy Building and in rented premises at Crusader House, in Kampala. The Regional Branch offices of Arua, Gulu, Soroti, Fortportal and Masaka are housed in OAG premises while the regional branch offices of Kampala, Kampala City Council, Jinja, Mbarara and Mbale are either housed in rented premises or other Government Institutional buildings. However, the Government of Uganda with support of the Development Partners made a provision for the construction of the Audit House (OAG Headquarters) and 3 regional offices in Mbale, Mbarara and Jinja. The architectural designs for OAG Headquarters in Kampala and two regional branch offices of Mbale and Jinja were near completion for the tendering processes for construction to commence in March It was hoped that construction would commence by January The architectural design for Mbarara Regional office would commence as soon as land is availed to the office. Mbarara District Local Government promised to allocate land for this purpose. 6.2 Transport Equipment During the year 2008/09, the office acquired four (4) station wagon vehicles from GoU resources, two (2) station wagon vehicles from the Anti-Corruption Threshold (MCC) and one (1) station wagon vehicle from JICA bringing the total to 7 vehicles acquired in this period. These vehicles were deployed to the various Directorates to facilitate field operations. By 31st March 2009, the office had a total fleet of 33 vehicles and 62 motor cycles. 6.3 Assets Management The Assets Register was updated by the Accountant General s Office and was handed over to the Office of the Auditor General for continuous update on acquisition and disposal of assets. Under JICA, the office acquired furniture and 34 computers for the training room. 26 An artistic impression of the proposed Mbale Regional Branch Office

27 7.0 INFORMATION COMMUNICATIONS TECHNOLOGY AUDIT DEVELOPMENT 7.1 For over six years now, the Office has been implementing the Information Technology Strategic Plan which focuses on creation of appropriate IT governance structure, development of IT audit capacity, use of automated audit tools, use of a new automated Audit Management Systems (TeamMate) and the creation of office wide IT infrastructure to enhance communication and improve the business processes of the Office. 7.2 Information Communications Technology Infrastructure In the year 2008/2009 the office acquired 67 laptops from JICA which were distributed to all the Directorates of the OAG. JICA also revamped the OAG Training Centre with new furniture and 18 desktops to make it fully functional. All the desktops have access to IFMS and have TeamMate and IDEA application software installed in them. ICT and IT audit training are now regularly and frequently undertaken with the facilities at the centre. Two additional projectors for training and cameras for field audits were procured for the centre. Since 2007/2008, the OAG website continues to be work in progress with constant updates. The website features all the latest audit reports published. It is currently undergoing its second update. The Intranet continues to be an important communications tool in the Office with regular updates of our office activities on the net. The Auditor General Mr. John F.S. Muwanga launching the OAG Intranet during the staff workshop at Speke Resort Munyonyo. On his Right is the Director of Audit Central Government/ IT and on his Left is the IT Manager Mr. Fabian Tonda 27

28 7.0 INFORMATION COMMUNICATIONS TECHNOLOGY AUDIT DEVELOPMENT...contd Gulu branch was successfully added to the OAG network bringing the number of branches connected to seven (7). Regular maintenance visits to all our audit branch offices were undertaken by our IT maintenance team visiting each branch on quarterly basis. However, the efficient operation of OAG-ICT has been hampered by several challenges which are sometimes out of the Office s control. There has been unreliable service provided to the OAG network connectivity. Maintaining optimum link speed in our branches and Headquarters office has provided a challenge in the IT operations of the Office. Embassy and Crusader House have been heavily affected so have been Soroti and Arua offices. Our future measures to ameliorate these challenges shall include upgrading the network at the Embassy House and Crusader House; upgrading the Data centre to provide better services; acquiring further consignment of laptops to have 1:1 staff laptop ratio; and renewal of the OAG TeamMate and Win IDEA licences. 8.0 FINANCIAL MANAGEMENT AND BUDGET PERFORMANCE 8.1 Timely and comprehensive ministerial policy statement for 2008/09 of the OAG was presented to Parliament and approved with the required funding amounting to bn shillings. The office was able to accomplish its operational and audit activities enumerated below by 30th June Budget Performance As stated earlier in the preceding paragraph, a budget of bn was approved by Parliament for the financial year 2008/2009 to assist not only with the implementation of audit programs but also to increase human resource skills in various specialized audit areas as well as provide the required facilitation for administration and operations of the Office. However, due to staff gaps and bureaucratically slow recruitment processes, only billion (95%) of the resources were actually received from the Treasury. On the other hand, the donors fulfilled all (100%) their promised development funding which was fully utilized in audit training programs and other memorandum requirements. 28

29 8.0 FINANCIAL MANAGEMENT AND BUDGET PERFORMANCE...contd A summary of the Budget, Actual Releases and MTEF Projections is in the table 1-8 below: Budget Type Approved Budget 2008/09 (Bns) Actual Outturn 2008/09 (Bns) Approved 2009/10 (Bns) MTEF Allocation 2010/11 (Bns) MTEF Allocation 2011/12 (Bns) Recurrent GoU Devt Donor Devt Total Table 1-8: A total of 1,763 audits were carried out using the above funds, 92 Officers trained in the areas of Value for Money, Information Systems Audit (120), Professional Training (86) as well as on job training (228). The Office Logistics and infrastructure was expanded by acquiring additional vehicles (6), and furniture. 8.3 Internal controls, Internal Audit and Risk Management The Office of the Auditor General has a section of internal audit, which verifies the effectiveness of internal controls and advises on risk management. The Office continues to improve on internal control systems in a bid to ensure proper adherence to the financial management policies and procedures. The section is currently staffed with one officer who produced 4 quarterly reports and two ad-hoc reports during the financial year 2008/09. However, one officer is not adequate to meet the control needs of the office and as a result, a plan has been finalized to recruit an additional officer in the financial year 2009/10. 29

30 8.0 FINANCIAL MANAGEMENT AND BUDGET PERFORMANCE...contd 8.4 Procurement A procurement plan for 2008/09 was prepared and executed fully in the year with the approval of PPDA. A new Contracts Committee was appointed and was at hand to ensure that the office received value for money in its procurements. A new plan for 2009/10 was also completed and approved by PPDA. The unit (with One Officer) was able to meet the minimum office procurement requirements amidst difficulties due to understaffing capacity gaps as well as complying fully with the procurement law requirements. A plan is also in advanced stages to recruit one more staff to the unit at Principal Internal Auditor Level. 8.5 Asset Management An asset register was installed in 2007/08 and has been posted up-to-date with the details of all the office assets including vehicles, furniture, motorcycles, buildings, etc in the year 2008/2009. The system is updated on any asset acquisition, transfer and disposal basis. The assets are fully engraved in their respective categories including both donated and GoU assets. An assets register list is printed quarterly for management purposes and an annual report is normally attached to the financial statements for a given financial year. 8.6 Financial Reporting and Audit The results for the financial year 2008/09 were summarized in the financial statements prepared as at 30th June 2009 and submitted by the Office as per the required statutory date of 30th September (See appendix II - Unaudited financial statements of the OAG). FINMAP has completed the procurement process of an auditor awaiting Parliamentary approval to audit OAG accounts for the financial years from 2005/06 to 2007/08. The audit will commence anytime after Parliament gives its approval. 30

31 9.0 RELATIONSHIP WITH OVERSIGHT COMMITTEES OF PARLIAMENT The Constitution of Uganda Article 164 (3) mandates the Parliament of Uganda to perform the oversight function over the public funds and requires the Executive arm of Government to account for the Public Resources entrusted to the Executive for provision of public services. The oversight function of Parliament over the public funds in practice is executed through three accountability Committees of Parliament which include: the Public Accounts Committee (PAC) for Central Government Ministries, Departments and Agencies; the Local Government Public Accounts Committee (LGPAC) for Local Governments; and the Committee on Statutory Authorities, Commissions and State Enterprises (COSASE). The Auditor General is expected to provide technical guidance to the three (3) Committees of Parliament as well as to the District Public Accounts Committees (DPACs) for each District. In the Financial Year 2008/2009, the Auditor General reported to the Speaker of Parliament and participated actively in the Committee discussions. The number of committee discussions and meetings the Office of the Auditor General attended in Parliament is depicted in the table 1-9 below. Committee Number of meetings Reports Handled PAC 117 MDAs LGPAC 12 LGs COSASE 17 SCs Total 146 Table

32 10.0 INTERNATIONAL RELATIONS 10.1 The Office of the Auditor General (OAG) is a member of several International Organizations in whose activities the office actively participates. The Office does receive delegations from other International Organizations that are interested in learning and sharing experiences with the OAG. In addition, the officers of the Office (OAG) also make international visits to other relevant organizations outside Uganda to learn from and share experiences with them International Consortium on Government Financial Management (ICGFM) The ICGFM works globally with Governments, Organizations and individuals who are interested in developments in public financial management. The Consortium brings together diverse Governmental Entities, Organizations and individuals who include financial management practitioners in at levels of Government. The Office of the Auditor General, currently, is one of the six organizational members of the Consortium who serve on its Governing Board. In the Financial Year 2008/2009 the Office sent four (4) Senior Officers to participate in the Conference activities of the Consortium United Nations Independent Audit Advisory Committee (UN-IAAC) The Independent Audit Advisory Committee of the United Nations (UN-IAAC) is a subsidiary body of the General Assembly of the United Nations (UN) established to serve in an expert advisory capacity to assist the General Assembly of the UN in fulfilling its oversight responsibilities. The committee is mandated to advise:- i) the General Assembly on the scope, results and effectiveness of audit and other oversight functions; ii) iii) on measures to ensure management s compliance with audit and other oversight recommendations, and on various risk management and accounting disclosure issues. The Auditor General of Uganda was appointed and is a member of the UN Independent Audit Advisory Committee. In his capacity as a member of the UN-IAAC, the Auditor General attended all the meetings of the Committee in the Financial Year 2008/

33 10.0 INTERNATIONAL RELATIONS...contd 10.4 World Bank Multilateral Advisory Group The World Bank Group has established a Multilateral Audit Advisory Group (MAAG) that is specifically tasked with advising the Audit Committee of the World Bank (WB) on audit requests from the Supreme Audit Institution (SAI) or other National Audit Offices. The Advice given (by MAAG) includes assessing compliance of the SAIs with the agreed terms of references for the audit; assessing adherence to the agreed group rules, and providing objective comments on the resulting audit reports. The Auditor General of Uganda is a member of this Multilateral Audit Advisory Group (MAAG) of the World Bank. The Auditor General is assisted by Mrs. Keto Kayemba on the MAAG committee INTOSAI and IDI INTOSAI in full means the International Organizations of Supreme Audit Institution. It is an organization or Association of Supreme Audit Institutions (SAIs) of countries which are members of the United Nations (UN). IDI, which in full means, International Development Initiative is the training arm of the INTOSAI through which members of INTOSAI share knowledge, skills and information through training. The Office of the Auditor General subscribes to and is a permanent member of INTOSAI. During the Financial Year 2008/2009 the OAG was represented and actively participated in the programmes and activities of INTOSAI through conferences, workshops, training events and correspondences. The activities and programmes enabled the OAG to share knowledge, information and experiences with other National Audit Offices (SAIs) globally The CommonWealth Auditors General Conference The Commonwealth Auditors General Conference is an association and conference organized once every three (3) years by the Countries who belong to the Commonwealth of Nations. The Office of the Auditor General of Uganda is a member of and subscribes to the Commonwealth Auditors General Conference. The office last participated in the Bermuda Conference in July of the financial year 2008/

34 10.0 INTERNATIONAL RELATIONS...contd 10.7 AFROSAI and AFROSAI-E AFROSAI means African Organization of Supreme Audit Institutions. It is a continent wide organization of Supreme Audit Institutions (SAIs) of Africa and a Regional African continental member of the INTOSAI. Through participating in the programmes and events of AFROSAI, member SAIs share knowledge, information and experiences on public sector audit issues. The office of the Auditor General subscribes to and is a member of AFROSAI. During the financial year 2008/2009 the office participated actively in exchanging knowledge, skills, information and experiences within the framework of AFROSAI through conferences, workshops, training events and surveying correspondences. AFROSAI-E is a sub-regional organization of English Speaking AFROSAI members. Its Secretariat is in Pretoria, South Africa. The Office of the Auditor General subscribes to and is an effective member of AFROSAI-E. In the financial year 2008/2009 the office actively and extensively participated in several activities of AFROSAI-E through meetings, conferences, workshops, training events and self-assessment visits to share knowledge, information, skills and experiences. AFROSAI-E was contracted to train 50 OAG staff in VFM audit techniques. The Consultancy was successfully completed in the 2008/2009 Financial Year International Delegations Since the visible increment in quality and quantity of performance of the Office of the Auditor General in the eyes of the external stakeholders; and the successful adoption of efficient and effective audit tools and methods in auditing Computerized Accounting and Financial Management System, such as the IFMS, the office started receiving a stream of International Delegations wishing to share experiences and broaden their knowledge with the National Audit Office (SAI) of Uganda. 34 The Controller & Auditor General of the Revolutionary Republic of Zanzibar Madam Fatma Mohammed Said (5th from Right) poses for a photo with OAG staff in Jinja.