THE REPUBLIC OF UGANDA

Transcription

1 THE REPUBLIC OF UGANDA OFFICE OF THE AUDITOR GENERAL ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30 TH JUNE 2015 LOCAL AUTHORITIES

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3 Table of Contents PART I INTRODUCTION STATUS OF COMPLETION OF AUDITS KEY AUDIT FINDINGS CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS... 9 PART II DETAILED REPORT OF LOCAL AUTHORITIES ARUA BRANCH ADJUMANI DLG ARUA MC MARACHA DLG MOYO DLG MOYO TC YUMBE DLG ZOMBO DLG FORT-PORTAL BRANCH BUNDIBUGYO DLG KARAGO TC HOIMA DLG HOIMA MC KASESE DLG KAGADI TC MASINDI MC KYEGEGWA DLG KIRYANDONGO DLG BWEYALE TC KYENJOJO TC KATOOKE TC NTOROKO DLG GULU BRANCH APAC DLG...59 iii

4 AGAGO DLG ALEBTONG DLG GULU DLG KOLE DLG KITGUM DLG LAMWO DLG LIRA DLG PADER DLG JINJA BRANCH BUGIRI DLG BUYENDE DLG IGANGA DLG IGANGA MC JINJA DLG KAMULI DLG KAYUNGA DLG KAYUNGA TC LUUKA DLG LUUKA TC MAYUGE DLG NAMUTUMBA DLG NAMAYINGO DLG KAMPALA BRANCH BUVUMA DLG GOMBA DLG LUWERO DLG WOBULENZI TC MPIGI DLG MUKONO DLG MUKONO MC NAKASEKE DLG NAKASONGOLA DLG ENTEBBE MC MASAKA BRANCH KALANGALA DLG KIBOGA DLG KIBOGA TC iv

5 5.6.4 LYANTONDE TC MASAKA DLG MITYANA DLG MITYANA TC MUBENDE DLG RAKAI DLG RAKAI TC SEMBABULE TC BUKOMANSIMBI TC KALUNGU DLG LWENGO DLG LWENGO TC MATEETE TC MBALE BRANCH BUDAKA DLG BUDAKA TC BUDUDA DLG BUDUDA TC BUKWO TC BUSIA DLG BUSIA MC BUTALEJA DLG KWEEN DLG MANAFWA DLG MBALE DLG SIRONKO DLG BUDADIRI TC TORORO DLG TORORO MC LWAKHAKHA TC BULAMBULI DLG BULAMBULI TC BULEGENI TC MBARARA BRANCH BUSHENYI DLG KABALE DLG KATUNA TC v

6 5.8.4 HAMURWA TC KABWOHE-ITENDERO TC KIHIHI TC KIRUHURA DLG KISORO DLG KISORO TC MBARARA DLG NTUNGAMO DLG RWASHAMAIRE TC RUKUNGIRI DLG RUKUNGIRI MC IGORORA TC BUTOGOTA TC SHEEMA DLG BUGONGI TC BUHWEJU DLG RUBAARE TC RUBIRIZI DLG SOROTI BRANCH ABIM DLG ABIM TC BUKEDEA TC KOTIDO DLG KUMI DLG MOROTO DLG NAKAPIRIPIRIT TC SOROTI DLG SOROTI MC NGORA DLG NGORA TC SERERE DLG vi

7 LIST OF ACRONYMS AO BOQs CAO CIID DA DC DEC DLG DLG DPAC DSC GOU HC I HC II HC III HC IV HLG IAS IDP IFRS INTOSAI LC I LC II LC III LC IV LC V LGA LGBFP LGDP Accounting Officer Bills of Quantity Chief Administrative Officer Criminal Investigation & Intelligence Department District Administration District Council District Executive Committee District Local Government District Local Government District Public Accounts Committee District Service Commission Government of Uganda Health Centre I Health Centre II Health Centre III Health Centre IV Higher Local Government International Accounting Standard Internally Displaced People International Financial Reporting Standard International Organization of Supreme Audit Institutions Local Council One Local Council Two Local Council Three Local Council Four Local Council Five Local Government Act Local Government Budget Framework Paper Local Government Development Programme vii

8 LGFAM LGFAR LGMSD LGPAC LLG LST MC MoFPED MoLG MoPS NAA NAADS NDP NSSF OAG OPM PAYE PFAA PHC PPDA PFMA PSC PWDs SAI SC SFG TC TC UGX ULGA UPE URA URF Local Government Financial and Accounting Manual Local Government Financial and Accounting Regulations Local Government Management of Service Delivery Local Government Public Accounts Committee Lower Local Government Local Service Tax Municipal Council Ministry of Finance Planning and Economic Development Ministry of Local Government Ministry of Public Service National Audit Act National Agricultural Advisory Services National Development Plan National Social Security Fund Office of the Auditor General Office of the Prime Minister Pay As You Earn Public Finance and Accountability Act Primary Health Care Public Procurement and Disposal of Public Assets Authority Public Finance Management Act Public Service Commission People with Disabilities Supreme Audit Institution Sub County School Facilitation Grant Town Council Town Clerk Uganda Shillings Uganda Local Governments Association Universal Primary Education Uganda Revenue Authority Uganda Road Fund viii

9 USMID VAT VFM WHT YLP IFMS IPPS Uganda Support to Municipal Infrastructure Development Program Value Added Tax Value For Money Withholding Tax Youth Livelihood Programme Integrated Financial Management Systems Integrated Personel and Payroll System ix

10 Definitions Accountant General Accounting Officer Auditor General Adverse opinion Consolidated fund Disclaimer opinion Doubtful Expenditure Escrow account Means the person designated under Section 3 of the Public Finance Management Act, means a person designated under Section 3 of the Public Finance Management Act, 2015 as Accounting Officer and Section 64(1), 65 (2) (a) and 69(2) of the Local Governments Act 1997 Cap 243 of the Laws of Uganda as amended in respect of Chief Administrative Officer of a District, Town Clerk of an Urban Council and Sub-county Chief and Head teachers respectively. Means the Auditor General appointed under article 163(1) of the Constitution of Uganda 1995, as amended. Means an opinion issued by the Auditor General whereby the financial statements contain material misstatements or errors and there is disagreement with management to the extent that it is concluded that the financial statements do not represent a fair presentation of the financial position of the entity as at the financial year end. Means the consolidated fund of Uganda established under article 153 of the Constitution of Uganda 1995, as amended. Means an opinion issued by the Auditor General whereby the financial statements contain material misstatements based on limitations on scope of the audit work to the extent that there is uncertainty on the fairness and truthfulness of the financial statements and therefore an audit opinion cannot be given because of the gravity of the uncertainty. Means expenditure that has not been confirmed as genuine considering the circumstances under which it was incurred. Means an account established in the custody of a third party to hold revenues which will be disbursed upon the fulfillment of the conditions specified. x

11 Emphasis of matter Refers to a matter that does not affect the Auditor s Opinion but is of such fundamental importance to users in understanding of the financial statements so as to warrant its inclusion in the Auditor s report immediately after the opinion. Financial year Refers to an accounting period of twelve months. Force on Account Means construction works undertaken by use of a procuring and Disposing Entity s own personnel and equipment. Generally accepted accounting practice Means accounting practices and procedures recognized by the accounting profession in Uganda and approved by the Accountant General as appropriate for reporting financial information relating to Government, a Ministry or department, a fund, an agency or other reporting unit and which are consistent with the Public Finance Managemt Act, 2015 and any other relevant appropriation Act. Grade X Means Pupils who did not sit exams. Grade U Means Children who failed or Un-graded. Government Means the Government of Uganda. Higher Local Governments Refers in the context of this report, Districts, Municipal Councils and Town Councils. Incompletely vouched Means expenditure that is not supported by adequate accountability documents. Internal audit Means a process to measure, evaluate and report to the management of an entity on the efficiency of the system of internal control used to ensure the validity of financial and other information. Internal control Means a set of systems to ensure that financial and other records are reliable, complete and ensure adherence to the entity Management policies, orderly and efficient conduct of the entity, proper recording and safeguarding of assets and resources. Local Government Means a Council referred to in article 180 of the Constitution. Council Nugatory Expenditure Means wasteful expenditure. xi

12 Qualified except for opinion Unqualified opinion Unvouched Expenditure Refers to the audit opinion issued by the Auditor General whereby the material misstatements or errors are not pervasive and except for these misstatements or errors being adjusted for the rest of the financial statements fairly present in all material respects the financial position of the entity. Refers to the audit opinion issued by the Auditor General whereby the financial statements contained no material misstatements or errors. Means funds spent without preparing vouchers or expenditure that is not supported with payment vouchers. xii

13 PART I 1.0 INTRODUCTION I am required by Article 163(3) of the Constitution of the Republic of Uganda 1995, (as amended) Section 13, 16 and 19 of the National Audit Act 2008, Section 87 of the Local Governments Act 1997 as amended and Section 51(4) of the Public Finance Management Act 2015 to audit and report on Local Governments. Under Section 82(4) of the Public Finance Management Act, 2015, I am now required to submit to Parliament by 31 st December annually a report of the Accounts audited by me for the year immediately preceding. I am therefore issuing this report in accordance with the above provisions. Chapter 3 of this Annual Report to Parliament covers financial audits carried out on District Local Governments, Municipal and Town Councils, Lower Local Governments, Schools and Tertiary Institutions. Part 1 of this chapter, I give an overview of the financial audit work carried out, status of completion of the audits, a summary of the audit opinions issued on the financial statements of the entities audited and the major audit findings in Local Governments arising from the results of the audits carried out. Part II gives the other significant audit findings on the Local Government entities audited that need urgent attention. I, therefore, urge all stakeholders to review this report with utmost interest and concern to ensure effective implementation of the recommendations therein and ultimately improve the lives of our people. 2.0 STATUS OF COMPLETION OF AUDITS I am required to audit and report on a total of 1,786 accounts of Local Authorities, Regional Referral Hospitals, Secondary Schools and Tertiary Institutions. I am pleased to report that my office was able to audit and complete 1,168 accounts including all the 1

14 307 Higher Local Governments (HLGs) and 13 Referral Hospitals, 571 Lower Local Governments (Sub-counties) and 277 secondary schools and tertiary institutions. The table below shows the number of entities and the audit completion status: Table 1: Number Of Entities And Audit Completion Status Entities Planned Number of Entities Accounts Audited and Pending Audits Audited Pending Districts Municipal Councils Town Councils Regional Referral Hospitals Sub Counties and Divisions (FY 1, /2014) Secondary Schools/Tertiary Institutions (Year 2013 and 2014) Total 1,786 1, The detailed audit reports of thirteen regional referral hospitals are included in volume 2 of my report. Audit of 1,189 sub-counties for the financial year 2014/2015 remain outstanding due to lack of funds. Similarly, I was only able to audit 277 secondary schools and tertiary institutions out of a population of 1,280 schools and tertiary institutions due to limited funding provided for the audit. 2.1 Audit Opinions The table below shows a summary of the audit opinions of HLG for the financial year under review including a comparison with audit opinions of the previous two years. Table 2: Summary of Audit Opinions for the three financial years Opinion / / /2015 Local Govern ments Perce ntage Local Governm ents Percentage Local Governments Perce ntage Un qualified % % Except (qualified) for % %

15 Disclaimer 7 2.3% % Adverse 0 0% 0 0% 0 0 TOTAL % % From the table above, it is noted that unqualified opinions increased from 37.4% in 2012/2013, 69.38% in 2013/14 to 91% in 2014/15 while qualified opinions decreased from 60% in 2012/13, 29.64% in 2013/14 to 8.7% in 2014/15. The disclaimer and adverse opinions decreased from 2.3% in 2012/13 to 0.98% in 2013/2014 to 0.3% in 2014/2015. The above trends of opinion would suggest an improvement in the financial management and accountability in the Local Governments. The details of audit opinions issued for each entity regarding financial statements of 2014/15 are shown on pages KEY AUDIT FINDINGS A summary of the key findings arising from the audit of Local Governments is highlighted below:- Lack of Consolidated Local Governments Annual Accounts Section 52 (1) (b) of the PFM Act, 2015 requires the Accountant General within three months after the end of the financial year to submit consolidated annual accounts of the Local Governments. However, contrary to the above provision, the Accountant General did not submit the consolidated annual account of the Local Governments for audit. Lack of a consolidated Local Government accounts denies the stakeholders financial information for comparative analysis and decision making. The Accountant General explained that it was not possible to consolidate the accounts due to limited time for developing the templates, guidelines and sensitization of the various Local Government staff that are necessary to implement the change required under the new legislation. 3

16 I advised the Accountant General to initiate measures for the consolidation of Local Government accounts to comply with the law. Overpayment of Salary Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. However, Payroll analysis carried out revealed that a sum of UGX.6,567,322,457 was paid in excess of the approved salary scales to various staff. The Accounting Officers attributed overpayments to challenges encountered during decentralization of salary payments on the Integrated Financial Management system (IFMS) and Integrated Personnel and Payroll System (IPPS) and outright errors during the salary payment process. Many of the Accounting Officers explained that they had initiated the process of recovering the overpaid amounts. I wait for evidence to that effect. Procurement Anomalies 33 Local Governments procured items worth UGX. 11,493,666,328 without following Public Procurement Regulations and Guidelines. The amount is comprised of UGX.310,619,509 which lacked procurement files, UGX.9,937,360,405 where there was breach of procurement procedures, UGX. 1,029,688,268 involving inadequate contract management and UGX.215,998,1468 of unauthorized contract variations. Consequently, it becomes difficult to ascertain whether value for money was achieved. The shortcomings were attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA regulations. There is need for the Accounting Officers to develop capacity building strategies and to engage the Ministry of Public Service to address the understaffing problem. In addition Accounting Officers are encouraged to invoke the relevant sections of the Law for noncompliance. Funds not Accounted for Expenditure amounting to UGX 5,524,074,947 was identified as funds unaccounted for. Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may also lead to falsification of 4

17 documents resulting into loss of funds. This was caused by failure of Accounting Officers to enforce accountability controls and lack of Advances Ledger to monitor advances. There is need for Accounting Officers to enforce controls relating to financial management and accountability. Under Collection of Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner. Review of revenue performance revealed significant under collection of Local revenue in 59 Councils amounting to UGX, 23,974,340,977. The shortfall in revenue collection was attributed to failure to carry out revenue enumeration and assessments, non-enforcement of contracts with private revenue collectors, understaffing and incomplete revenue records. There seems to be little effort in ensuring effective collection of Local revenue. I advised the Accounting Officers to sensitize tax payers on the relevant taxes and to develop strategies and enforce lawful measures to enhance revenue collections. Irregular Levy of Development Tax There were instances of irregular imposition of development tax totaling UGX. 409,672,340 on contracts by some Local Governments in a bid to enhance Local revenue collections without approval of the Minister for Local Government contrary to the regulations. There is a risk that such charges could compromise on quality of works and increased costs of service delivery. The Accounting Officers explained that this was an attempt by Councils to raise Local revenue for service delivery. There is need for the Accounting Officers to seek for the appropriate authority prior to levying of the tax. Understaffing Audit revealed that the high levels of vacant posts in Local Government had not significantly improved. The levels ranged from 14 % in Bududa District Local Government to 87% in Luuka Town Council. 5

18 Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the fewer staff avaliable and negatively affects the level of public service delivery to the community. Understaffing was attributed to limited wage bill and a ban on recruitment by the Ministry of Public Service. The Accounting Officers are advised to continue engaging the Ministry of Public Service, the Ministry of Local Government and the Ministry of Finance Planning and Economic Development to address the challenge. Meanwhile Government is advised to address this phenomenon to ensure improvements in service delivery at the Local level. Assets Management Lack of Land Titles Out of 307 Local Governments, 118 entities representing 39% of the Local Governments lacked land titles for the land where Council properties are located. There is a risk that Council land is exposed to encroachment and disputes which later leads to litigation in courts of law araising from land disputes between the Councils and the Communities. The Accounting Officers attributed this to lack of funds to process land titles and the absence of District Land Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds and ensure that the land titles are secured. The District Councils are also advised to ensure that the District Land Boards are constituted. Lack of Information Communication Technology (ICT) Policy Local Governments are making considerable investments in the Information Technology equipment and related software without the necessary human resource and proper procedures to manage the IT resources. I have raised this issue continuously over the last three years. There is a risk of loss of equipment and data maintained therein. Although the regulations require the Accounting Officers to designate an Officer to manage the information and communication technology resources, however the Accounting Officers are experiencing difficulties in identifying the Officers with the 6

19 required competencies. It is recommended that the Ministry of Public Service should review the organization structure of Local Governments to ICT personnel. Financial Reporting Financial Statements for Lower Local Governments In my previous year report, I noted that there was still a problem with presentation of financial statements in the Lower Local Governments. In the financial year under review, the shortcomings were still identified. The anomalies include; Non-adherence to presentation and disclosure requirements as per Local Government Financial and accounting Manual 2007, for example, lack of cash flow statements, schedule of commitments, and others. Misstatement of account balances. Non- preparation of primary books of accounts such as Ledgers, cash books, and vote books. Lack of Board of survey reports Lack of Bank reconciliation statements and certificates of Bank balance. Unbalanced Budgets Lack of other statements, schedules and Notes to the accounts. Missing budget figures in income and expenditure accounts. Non-disclosure of losses. Preparation of Financial statements is a stewardship role in which accountability for application of resources entrusted to Accounting Officers is reported to the stakeholders. Failure to present financial statements properly impairs interpretation and analysis of entity performances. This is attributed to understaffing, lack of training, Low levels of practical experience by clerks and non-adherence to the guidance provided in the Local Governments Financial and Accounting Manual 2007 and other accounting standards. Accounting Officers should liaise with responsible authorities to ensure the staffing gaps are addressed and the necessary training undertaken. 7

20 Lack of Standard Financial Reporting Framework for Schools It was observed that there was no standard financial reporting framework for secondary schools. This was attributed to lack of financial and accounting manual. As a result, there was no uniform classification and coding of account balances, format and presentation of financial statements. Section 29 (2) (b) of Education (Board of Governors) regulations require the board to prepare within three months financial statements in the form approved by the Minister or District Secretary for Education. There is need for the Minister or District Secretary for Education to prescribe the form of the financial statements for the Secondary Schools in consultation with the Accountant General. Utilized Capacity Building Infrastructure Development Funds Under (USMID)Project It was observed that 14 Municipal Councils under the USMID project had not fully utilized funds released to them amounting to UGX.63,141,565,615 comprising of capacity building funds (UGX.6,079,544,830) and infrastructure development funds UGX.57,062,020,785. Failure to utilize the released funds reflects lack of effective implementation of project programs disadvantaging the community who are intended to benefit from the program. Management attributed the low absorption of the capacity Building funds to the failure of the Municipal Councils to procure key retooling equipment for surveying, engineering and environment among others partly due to lack of technical capacity to procure such specialized equipment. In addition the delay to utilise the infrastructure development funds was attributed to failure to attract responsive bidders for the jobs. There is need to enhance the absorption capacity to ensure full utilization of the funds released. 8

21 4.0 CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS The following cross cutting issues arose in the audit of Local Governments, namely:- 1. Revenue Under collection of Local Revenue Irregular levy of Development tax 2. Expenditure Procurement anomalies Funds not accounted for Over payment of salaries 3. Internal control and Governance issues Understaffing Shoddy works/incomplete projects Outstanding commitments Lack of ICT policy 4. Assets management Lack of land titles Receivables Un spent balances Under absorption under USMID The summary of these findings are in the table below and further detailed in table 8 on pages

22 Table 3 Summary of Significant Cross Cutting Issues per OAG Branch Offices OAG REGIONAL OFFICES AUDIT FINDINGS Revenue ARUA FORTPORT GULU JINJA KAMPALA MASAKA SOROTI MBALE MBARARA Total AL Local Revenue Undercollection 414,300,516 2,203,694, ,784,620 13,933,568,408 1,109,032, ,717, ,012, ,849,886 3,567,380,977 23,974,340,977 Irregular levy of 11,722,603 79,540, ,751, ,846,723 19,811, ,672,340 Dev't tax Expenditu re Procuremen t anomalies 1,650,770,174 3,546,240, ,542,697 1,257,893, ,661, ,846,214 3,820,792,667 9,919,000 11,493,666,328 Funds not accounted 128,324, ,312, ,336,515 21,356,000 1,584,962, ,061, ,186,546 1,040,386, ,148,546 5,524,074,947 for Overpayme nt of 45,008, ,202, ,097,809 62,437,379 2,314,711,035 50,971, ,999,798 1,099,759,836 1,567,134,564 6,567,322,457 salaries Unsatisfact ory civil 1,562,460, ,009, ,361,041 97,743,325 2,303,623,818 1,986,961, ,195,275 8,022,354,999 works Internal control and Governan ce issues Understaffi ng 46%to 58% 41% to 77% 20% to 77% 47% to 87% 34%- 70% 40% - 66% % 14%-71% 26%-62% Outstanding commitment 115,352,053 1,571,052, ,900, ,084, ,164, ,072, ,827,279 3,115,454,282 s Lack of ICT 4 entities Policy 5 entities 2 Entities 1 entity 5 Entities 10 Entities Assets managem ent Lack of land 1 entity titles 15 entities 10 entities 19 entities 17 Entities 3 entities 10 entities 9 Entities 34 Entities Receivables 475,932,609 6,365,144,394 4,415,307, ,275,411 70,372, ,970,031 1,970,365, ,337,165 14,602,705,594 Unspent balances 91,477, ,894,036 1,765,395,052 2,750,777,445 49,028,802 Un-utilized Capacity Building and Infrastructu re 4,780,442,890 Developmen 7,119,004,037 21,279,231,573 2,750,777,445 2,689,465,010 5,067,803,137 3,245,456,345 4,528,377,355 11,681,947,823 63,142,505,615 t Funds under (USMID project) Key Matters that require immediate action at almost no cost. Matters that require immediate action at a low cost. Matters that require ,976, ,964,437 5,904,514,170

23 4.1 REVENUE Under collection of Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner and the revenue banked intact in Council accounts. However, a review of revenue performance of 138 Councils revealed that under colletion of Local Revenue amounting to UGX. 23,974,340,977. This implies that all planned activities for the year were not implemented. This was attributed to lack of revenue enumeration and assessment and failure to supervise collection of contracted revenue. There is need for the Accounting Officers to carry out revenue assessments, maintain proper revenue records, sensitize the tax payers and strengthen controls relating to collection of revenue. With regard to 571 Lower Local Governments (Sub Counties), an amount of UGX 1,586,709,507 remained uncollected during the period. The shortfall in revenue collection was attributed to; failure to carry out revenue enumeration and assessments, non-enforcement of contracts with private revenue collectors, understaffing and incomplete revenue records. There seems to be little effort in ensuring effective collection of these revenue sources. I advised the Accounting Officers to sensitize tax payers and develop strategies and enforce lawful measures to enhance revenue collection Irregular Levy of Development Tax The Local Governments Act part IV, Other Revenues section 13 (o), requires that any other source of revenue has to be approved by the Minister for Local Government before its assessment and collection. However, Fourteen (14) Councils collected funds amounting to UGX 409,672,340 in form of taxes from contracts funded by conditional grants without the Ministers approval contrary to the law. There is a risk that such charges could compromise on quality of works and increased costs of service delivery. The Accounting Officers explained that this was an attempt by Councils to raise Local 11

24 revenue for service delivery. There is need for the Accounting Officers to seek for the appropriate authority prior to levying of the tax. 4.2 EXPENDITURE Procurement Anomalies The Public Procurement and Disposal of Public Assets (PPDA) Act 2003, and the Local Government PPDA Regulations 2006 require that all public procurement of goods, services and works comply with the procurement law. However, 33 Local Governments procured items and services worth UGX.11,493,666,328 without following Public Procurement Regulations and guidelines as shown in the table below: Table 4 Procurement Anomalies Category Amount (UGX) %age Breach of procurement procedures 9,937,360, % Contract management weaknesses 1,029,688, % Lack of procurement files and records 310,619, % Unauthorised contract variation 215,998, % Total 11,493,666, % In addition the analysis of the 571 audited sub-counties revealed that procurements worth UGX.2,299,303,377 had irregularities related to lack of procurement records and failure to follow the procurement procedures. The shortcomings were attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA regulations. There is need for the Accounting Officers to develop capacity building strategies and to engage the Ministry of Public Service to address the understaffing problem. In addition Accounting Officers are encouraged to invoke the relevant sections of the Law for noncompliance with the regulations Funds not Accounted For Regulation 43 (2) of the Local Government Financial and Accounting Regulations 2007, require Administrative advances to Council employees to be authorized by the Chief 12

25 Executive and accounted for within a month. During the year under review UGX.5,524,074,947 in respect of HLGs comprising of administrative advances, incompletely vouched expenditure, unvouched expenditure and doubtful expenditure remained outstanding as shown in the table below:- Table 5 Funds not accounted for Category Amount (UGX) Percentage Unaccounted for Administrative advances 2,440,991, % Incompletely vouched expenditure 1,765,173,438 32% Missing Vouchers 1,317,910, Total 5,524,074, % In addition, UGX 3,364,681,447 remained outstanding in the 571 Lower Local Governments (Sub Counties) audited as shown below; Table 6: Funds not accounted for in 571 Lower Local Governments Category Amount (UGX) Percentage Incompletely vouched 556,447, % Unaccounted for expenditure 160,909, % Unvouched expenditure 653,359, % Outstanding administrative advances 1,810,370, % Total 3,181,086, % Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may also lead to falsification of documents resulting into loss of funds. This was caused by failure by Accounting Officers to enforce accountability controls and lack of advances ledger to monitor advances. There is need for Accounting Officers to enforce controls relating to financial management and accountability. 13

26 4.2.3 Overpayment of Salary Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. However, Payroll analysis carried out revealed that a sum of UGX 6,567,322,457 was paid in excess of the approved salary scales to various staff. The Accounting Officers attributed overpayments to challenges encountered during decentralization of salary payments on the Integrated Financial Management system (IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during the salary payment process. Many of the Accounting Officers explained that they had initiated the process of recovering the overpaid amounts. I wait for evidence to that effect Unsatisfactory Civil Works Section 14 of the PPDA regulations require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management processes and ensure that implementation of the contract as per the agreed terms. Audit inspection of the works in the roads, water, schools, health centres and other buildings revealed that there were several projects with unsatisfactory construction works amounting to UGX. 8,022,354,999. This implies that value for money may not have been achieved. The Accounting Officers attributed this anomaly to inadequate technical staff, delayed procurement process and inadequate capacity of the Local contractors to execute the works. I advised the Accounting Officers to enhance monitoring and supervision of contracts to avoid such reoccurrences and to source for competent contractors. 4.3 INTERNAL CONTROL AND GOVERNANCE ISSUES Under Staffing The audit revealed high levels of vacant posts in Local Government has not significantly improved. The levels ranged from 14 % in Bududa District Local Government to 87% in Luuka Town Council. 14

27 Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the fewer staff and negatively affects the level of public service delivery to the community. This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public Service. I advised the Accounting Officers to continue engaging the Ministries of Public Service, Local Government and Finance Planning and Economic Development to address the challenge. Meanwhile Government is advised to address this phenomenon to ensure improvements in service delivery at Local level Outstanding Commitments Regulation 11(d) of the Local Government Financial and Accounting Regulations, 2007 requires the Head of Finance to ensure that commitments are not approved unless there is sufficient and committed funds available. However, a number of Higher Local Governments for the year under review failed to adhere to the commitment control system which resulted in committing Councils beyond the available financial resources. Consequently twenty two entities accumulated outstanding commitments amounting to UGX.3,115,454,282. The outstanding commitments can lead to litigation or confiscation of Council assets if not settled timely. The Accounting Officers attributed the anomaly to under collection of Local revenue and shortfall in release of grants from Central Government. I advised the Accounting Officers to adhere to provisions of the commitment control system to eliminate arrears and ensure financial discipline Lack of Information Communication Technology Policy Section 110 of the LGFAR (2007) requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and are applied to enable adequate security and protection over computers and data held on computers or information systems operated by Council. It was 15

28 observed that Local Governments are making considerable investments in the Information Technology equipment and related software without the necessary human resource and proper procedures to manage the IT resources. There is a risk of loss of equipment and data maintained therein. Although the regulations require the Accounting Officers to designate an Officer to manage the Information and Communication Technology resources, however the Accounting Officers are experiencing difficulties in identifying the Officers with the required competencies. It is recommended that the Ministry of Public Service should review the organization structure of Local Governments to cater for ICT personnel. 4.4 ASSETS MANAGEMENT Lack of Land Titles Regulation 9 (j) of the Local Government Financial and Accounting Regulations, 2007 require the Accounting Officers to ensure safe custody of all assets of Council. It was observed that out of 307 Local Governments, 118 entities representing 39% of the Local Governments lacked land titles for the land where Council properties are located. There is a risk that Council land is exposed to encroachment and disputes. The Accounting Officers attributed this to lack of funds to process land titles and absence of District Land Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds and ensure that the land titles are secured. The District Councils are also advised to ensure that the District Land Boards are constituted Receivables Paragraph of the Local Governments Financial and Accounting Manual 2007 states that money owed to Council represents an asset that is idle, as it denies the Council the opportunity of using the money to provide services promptly. Thirty two (32) Local Governments failed to collect outstanding revenue from different sources amounting to UGX.14,602,705,594. This was attributed to laxity on the part of the Accounting Officers to follow up collection of the debts. 16

29 Uncollected revenue adversely affect service delivery and have an additional risk of loss of revenue. I advised the Accounting Officers to develop debt recovery strategies to ensure that all outstanding debts are collected Unspent balances Section 17(2) of the Public Finance and Management Act, 2015 requires a vote that does not expend money that was appropriated to the vote for the financial year at the end of the financial year to repay the money to the consolidated fund. It was however, observed that in thirteen (13) entities UGX 5,904,514,170 in respect of conditional grants remained unexpended at year end and was not returned to the consolidated fund contrary to the law. The Accounting Officers attributed the shortcoming to the late release of funds and promised to repay back the funds to the consolidated fund. I advised the Accounting Officers to ensure that the funds are repaid to the consolidated fund Utilized Capacity Building Infrastructure Development Funds Under (USMID) Project It was observed that 14 Municipal Councils under the USMID project had not fully utilized funds released to them amounting to UGX.63,141,565,615 comprising of capacity building funds (UGX.6,079,544,830) and infrastructure development funds UGX.57,062,020,785. Failure to utilize the released funds reflects lack of effective implementation of project programs disadvantaging the community who are intended to benefit from the program. Management attributed the low absorption of the Capacity Building funds to the failure of the Municipal Councils to procure key retooling equipment for surveying, engineering and environment among others partly due to lack of technical capacity to procure such 17

30 specialized equipment. In addition the delay to utilise the infrastructure development funds was attributed to failure to attract responsive bidders for the jobs. There is need to enhance the absorption capacity to ensure full utilization of the funds released. 4.5 SECONDARY SCHOOLS AND TERTIARY INSTITUTIONS Financial Statements for Secondary Schools, Primary Schools and Health Centres Regulations of the Local Governments Financial and Accounting Regulations 2007 require District Hospitals, Health Units, Secondary Schools and Primary Schools to prepare and submit financial statements to the Chief Executive on regular basis as indicated below; Table 7 Financial Statements for Secondary Schools, Primary Schools and Health Centres Entity Period Chief Executive District Hospitals Monthly and Annually Chief Administrative Officer Health Units Monthly Sub-county Chief and copy Administrative Units Secondary Schools Each academic term and Chief Administrative Officer Calendar year Primary Schools Each Academic term Sub-County Chief The regulations further provide that where a Head Teacher and the In-charge of the Primary Schools and Health centre respectively are unable to prepare the financial statements, assistance may be sought from the sub accountant of the Sub-county. Regulations 70 requires the Chief Executive to submit the accounts prepared in accordance with these regulations to the Auditor General for audit. In my audit reports for the two previous years, I observed that the entities lacked clear guidance on the nature of books of accounts and specific financial statements to be prepared. The primary schools and Heath Centres also lacked the necessary manpower to prepare the books. These issues have not been addressed. 18

31 It is advised that the Ministry of Finance Planning and Economic Development together with Ministry of Local Government issue relevant accounting manuals and guidelines for preparation of financial records and statements in the schools and Health Centres Financial Statements for Lower Local Governments In my audit reports for the two previous years, I noted that there was still a problem with presentation of financial statements in the Lower Local Governments. In the financial year under review, the shortcomings were still identified. The anomalies include; Non-adherence to presentation and disclosure requirements as per Local Government Financial and accounting Manual 2007, for example, lack of cash flow statements, schedule of commitments, and others. Misstatement of account balances. Non- preparation of primary books of accounts such as Ledgers, cash books, and vote books. Lack of Board of survey reports Lack of Bank reconciliation statements and certificates of Bank balance. Unbalanced Budgets Lack of other statements, schedules and Notes to the accounts. Missing budget figures in income and expenditure accounts. Non-disclosure of losses. Preparation of Financial statements is a stewardship role in which accountability for application of resources entrusted to Accounting Officers is reported to the stakeholders. Failure to present financial statements properly impairs interpretation and analysis of entity performances. This is attributed to understaffing, lack of training, Low levels of practical experience by clerks and non-adherence to the guidance provided in the Local Governments Financial and Accounting Manual 2007 and other accounting standards. Accounting Officers should liaise with responsible authorities to ensure the staffing gaps are addressed and the necessary training undertaken. 19

32 4.5.3 Other Irregularities in Management of Schools and Tertiary Institutions The analysis of 100 schools and tertiary Institutions out of the audited population of 277, revealed the following crosscutting issues; 1. Revenue shortfall The analysis revealed revenue shortfall of UGX 3,045,515,542 in respect of 19 entities. The revenue shortfall implies that some planned activities were not implemented. The shortfalls were attributed to Central Government budget cuts, fees defaulters and shortfalls in student s enrollments. There is need for the Accounting Officers to continue liaising with the Ministry of Education and Sports and other stakeholders to enhance revenue mobilization and collection. 2. Funds not accounted for Audit revealed that funds amounting to UGX. 170,243,404 in 58 entities remained un accounted for contrary to the Regulations. In the absence of accountabilities, it becomes difficult to confirm that the funds were utilized for the intended purposes. Delayed accountability of funds may lead to falsification of documents and loss of funds. The delays to present accountabilities are attributed to laxity of the Accounting Officers to enforce the internal controls regarding accountability. There is need for the Accounting Officers to enforce controls relating to financial management and accountability. 3. Noncompliance with PPDA Act and the Regulations Out of the sample of 100 entities, audit observed noncompliance with the PPDA Act and the Regulations in 52 schools and tertiary institutions. The most common problems identified included the following; Lack of consolidated procurement plans Lack of prequalified list of suppliers Failure to maintain procurement records Application of inappropriate procurement methods with less competition with a risk of higher costs. 20

33 Lack of procurement officers Consequently, value for money may not have been achieved from the procurements executed. These irregularities were attributed to lack of procurement Officers in the school staff structure. The guidelines 4.1 and 4.2 of PPDA (Schools) define the structure through which public procurement activiites are carried out in schools. It requires that Schools with a budget not exceeding UGX.45 million shall employ one procurement officer and schools with budget exceeding UGX.45 million shall employ two procurement officers. However, the Accounting Officers explained that the approved structure of the schools lacks the position of the procurement officer. There is need for the Accounting Officers to engage the Ministry of Public Service, Ministry of Local Governmnent and Ministry of Education and Sports in consultation with the PPDA so that procurement officers are provided for in the school structure. 4. Noncompliance with the Income Tax Obligations The analysis revealed that Taxes totaling to UGX 160,117,688 were not deducted in the form of Pay As You Earn (PAYE) and Withholding Tax (WHT) in 15 schools. Noncompliance with the tax law attracts fines and penalties from the tax body. This was attributed to lack of awareness of the Income Tax law. There is a need by the Accounting Officers to engage URA for sensitization on tax obligations to achieve tax compliance. 5. Assets Management Lack of Land Titles It was observed that 33 schools representing 34% of the sampled schools and Tertiary Institutions lacked land titles for the land where their properties are located. This was attributed to the reluctance by the founding bodies to surrender ownership of land and lack of funding to process land titles. This creates a risk of encroachment and land disputes. There is need for the accounting officers to engage the founder bodies and also prioritize funds allocation to secure the land titles. 21

34 Lack of Fixed Assets Register The analysis revealed that 11 schools representing 11% of the sampled schools did not maintain fixed assets registers. In the absence of fixed assets registers the verification of the fixed assets is rendered difficult. This anormaly was attributed to management laxity in ensuring that the details of the fixed assets owned by the entity are properly recorded. The Accounting Officers are advised to ensure that the Assets Registers are established. Understaffing The audit revealed high levels of vacant posts in 17 Schools. The levels ranged from 16% at Kasese Senior Secondary School to 88% in Uganda Technical College Kyema. Understaffing hampers service delivery and may lead to poor academic performance. The understaffing was attributed to the recruitment ban by the Ministry of Public and the wage bill ceiling. Accounting Officers should engage the Ministry of Education, Ministry of Public Service and the Education Service Commission to ensure that the vacant posts are filled. Governance Audit observed that board meetings were not regularly convened to discuss strategic matters affecting the institutions as required by the Regulations. In some instances, the tenure of the boards had expired. The failure to convene the meetings regularly was attributed to lack of funding. The Ministry of Education was also cited for delaying to renew or appoint Board members. There is need for Accounting Officers to prioritize and fund Board meetings and also follow up with the Ministry of Education to ensure that Board members are appointed timely. 6. Lack of Standard Financial Reporting Framework It was observed that there was no standard financial reporting framework for secondary schools. This was attributed to lack of financial and accounting manual. As a result, there was no uniform classification and coding of account balances, format and presentation of financial statements. Section 29 (2) of Education (Board of Governors) regulations require the board to prepare within three months financial statements in the form approved by the Minister or district secretary for Education. 22

35 There is need for the Minister or District Secretary for Education to prescribe the format of the financial statements for the Secondary Schools in consultation with the Accountant General. Inspection of the Schools and Tertiary Institutions Infrastructure Audit inspection revealed inadequate classrooms, inadequate staff accommodation, condemned structures with asbestos sheets, and lack of sick bays, inadequate computer equipment, lack of laboratories and lack of lightening conductors. These inadequacies impact adversely on the academic performance of the institutions. This was attributed to lack of funds for infrastructure development. There is need for Accounting Officers to liaise with the Ministry of Education and Ministry of Finance for the requisite funding. 23

36 Table 8 Details of Significant Crossing Cutting Issues per OAG Branch Offices Revenue Expenditure Internal control & Governance Asset management S.nos Entity Local Revenue Undercollection Irregular Procurement levy of Dev't anomalies tax Breach of Procurement Procedures Funds not accounted Unaccounte Incompletel Un-vouched d for y vouched expenditure Administrati expenditure ve advances Overpay ment of salaries unstafactory civil works Understaffing Lack of ICT policy Lack of Land Title Unspent balance Un utilised Capacity Building and Infrastructure Others Development Fund under USMID Type of Opinion Other SIGNIFICANT ISSUES Arua Branch 1 Adjumani DLG 10,609, Unqualified Para Adjumani TC 86,523, Unqualified 3 Arua DLG ,607, % x Unqualified 4 Arua MC % 4,780,442,890 Unqualified Koboko DLG 0 1,640,160, ,559,057 24,000,000 62% x Unqualified 6 Koboko TC Unqualified 7 Maracha DLG ,810,000 11,856,589 37,602,440 25% Unqualified Maracha TC % Unqualified 9 Moyo DLG 0 11,722, ,815,000 25,044, ,381,000 Unqualified Moyo TC Unqualified Nebbi DLG 76,931, ,873, % Unqualified 12 Nebbi TC 61,012, Unqualified 13 Paidha TC Unqualified 14 Pakwach TC Unqualified 15 Yumbe DLG 103,310, , ,233,040 x 2,021,502 Unqualified Yumbe TC 86,523, Unqualified 17 Zombo DLG ,894, ,436,259 x 89,456,000 Para Unqualified Zombo TC ,916, % x Unqualified TOTALS 414,300,516 1,650,770,174 45,815,000 67,537,750 45,008,211 1,562,460,312 91,477,502 4,780,442,890 24

37 Entity REVENUE PROCUREMENT ANOMALIES FUNDS NOT ACCOUNTED FOR INTERNAL CONTROL AND GOVERNANC Assets management Local Revenue Under-collection Irregular levy of Dev't tax Breach of Procurement Procedures Inadequate contracts management Unauthorised contracts variations Incompletely vouched expenditure Unaccounted for Missing Vouchers Payroll Administrative advances Unsatifactory Civil works Payables Understa ffing % Managem ent of ICT Lack of land titles Receivables Unspent balances LOW ABSORPTION OF USMID FONDS Other issues Opinion other siginificant issues FORT PORTAL Buliisa District 25,294,915 2,433,760,448 10,500,000 19,705,820 18,000,000 59% X 86,406,128 Unquallified Buliisa Town Council X Qualified Bundibugyo District 445,286, ,450, ,338, ,375, ,623,483 Unquallified Bundibugyo Town Council 11,591,985 X Unquallified Butunduzi Town Council 1,934,518 Unquallified Bweyale Town Council X Unquallified Fort Portal Municipal C 1,370,375,848 15,489,480 40% X 777,379,086 Unquallified Fort Portal Regional RH Hima Town Council 4,081,600 Unquallified Hoima District 13,132,000 18,820,850 6,500, ,417,000 50% Unquallified Hoima Municipal Council 18,454,400 26,084,928 61% X X 6,341,624,951 Unquallified Hoima Regional RH Kabarole District 608,104,970 X Unquallified Kagadi Town Council 21,547,814 5,350,500 Unquallified Kakumiro Town Council 77% Unquallified Kamwenge District 2,730, ,821 27% X X Unquallified Kamwenge Town Council 55,162,338 2,360,000 73% Unquallified Kanara Town Council 57% Unquallified Karago Town Council 64% X X Unquallified Karugutu Town Council 87,672,401 65% Unquallified Kasese District 38,448,323 5,000, ,437,300 26% 167,284,497 Unquallified Kasese Municipal C 22,840,000 21,890,103 Unquallified Katooke Town Council 1,047,500 13,563,401 46% X Unquallified Katwe Kabatoro TC 69,315, ,351,881 Unquallified Kibaale District 39% Unquallified Kibaale Town Council 44,617,580 1,166,200 55% X Unquallified Kibiito Town Council 3,212,000 66% Unquallified Kibuku Town Council 3,410,000 Unquallified Kigorobya Town Council 60% Unquallified Kigumba Town Council 55% X Unquallified Kijura Town Council 68% Unquallified Kiko Town Council 12,923,264 55% Unquallified Kiryandongo District 9,839,000 7,009,394 34,444,192 Unquallified Kiryandongo Town Council 60% Unquallified Kyarusozi Town Council 52% X Unquallified Kyegegwa District 15,797,199 18,657,100 2,324,023 24% Unquallified Kyegegwa Town Council 3,285,628 Unquallified Kyenjojo District 12,735,000 14,583,900 17% Unquallified Kyenjojo Town Council 39% Unquallified Masindi District 71,256,267 41% X Unquallified Masindi Municipal C 141,324,048 30,000, ,474,068 3,290,000 X Unquallified Mpodwe Lhubiriha TC 26% Unquallified Muhoro Town Council 11,657,387 59% Unquallified Ntoroko District 34,000,000 49% X Unquallified Nyahuka Town Council 72,473,072 X 288,894,036 Unquallified Rubona Town Council Rwebisengo Town Council 1,250,000 Unquallified Rwimi Town Council 75% X Unquallified TOTAL - FORTPORTAL 2,203,694,151 79,540,437 3,119,768, ,474, ,998,146 51,794, ,318, ,199, ,202, ,009, ,352, ,932, ,894,036 7,119,004, Unquallified Unquallified Unquallified

38 Entity Under collection local revenue Revenue Irregular levy of Development tax Procurement anomalies Breach of Inadequate Lack of Procuremen contracts Procuremen t manageme t files Procedures nt Unauthoris ed contracts variations Funds not accounted for Incompletel Unaccounted for Un-vouched y vouched Administrative Missing expenditure expenditure advances Vouchers Overpayment of salaries Understaffi ng Assest Management Unspent balances Lack of land Receivables 8 Under absorption of funds under USMID Types of Opinion OTHER SIGNIFICANT 1 ADUKU TC 67 X Unqualified 2 AGAGO DLG 62,693,485 25,449, Unqualified AGAGO TC X Unqualified 4 ALEBTONG DLG 57 X Unqualified ALEBTONG TC 77 X Unqualified 6 AMOLATAR DLG 27,224,132 39,929,500 3,531, Unqualified 7 AMOLATAR TC 77 Unqualified 8 AMURU DLG 50,029,306 83,166, ,942,346 Qualified 9 AMURU TC Unqualified 10 AMURU TC Unqualified 11 ANAKA TC Unqualified 12 APAC DLG 85,520, ,679 1,765,395,052 Qualified APAC TC 77 Unqualified 14 AYER TC X Unqualified 15 DOKOLO DLG 14,186,821 22,979,000 Unqualified 16 DOKOLO TC Unqualified 17 GULU DLG 330,564, ,883,447 Unqualified GULU MC 18,867, ,365,144,394 14,505,711,262 Unqualified 19 GULU RRH Unqualified 20 KALONG TC 50 X Unqualified 21 KITGUM DLG Unqualified KITGUM TC Unqualified 23 KOLE DLG X Unqualified LAMWO DLG 72,381,163 37,218,100 Unqualified LAMWO TC X Unqualified 26 LIRA DLG 32,955,855 Unqualified LIRA MC 6,773,520,311 Unqualified 28 LIRA RRH Unqualified 29 NAMASALE TC Unqualified 30 NWOYA DLG 37,975, Unqualified 31 OTUKE DLG 25,381, X Unqualified 32 OTUKE TC 69 Unqualified 33 OYAM TC Unqualified 34 PADER DLG 35,236,426 67,849,000 32,334,357 Qualified PADER TC Unqualified 36 PADIBE TC 17,220,254 X Unqualified 37 PATONGO TC Unqualified TOTAL 347,784, ,751, ,336, ,647,130 6,365,144,394 1,765,395,052 21,279,231,573 26

39 Entity Inadequate Lack of Breach of contracts Procuremen Procuremen managemen t files t Procedures t Unauth orised contrac ts variatio ns Unvouche d expendi ture Incomplete ly vouched expenditur e Unaccounted for Administrativ e advances Missing Vouche rs Lack of land titles Receivables Unspent balances Low absorption of funds under USMID project BUGEMBE TC 137,886,844 4,017, % X Unqualifed BUGIRI DLG 490, 392,030 BUGIRI TC 119,645,710 47% 13,301,500 Unqualifed BUSEMBATIA TC 13,535,480 X Unqualifed BUYENDE DLG BUWENGE TC X Unqualifed BUYENDE TC 18,969,463 46% 5,658,463 X Unqualifed JINJA DLG Local Revenue Undercollection Revenue Expenditure Internal Control & Governance Irregular levy of Dev't tax Procurement anomalies Unsatisfactory Civil Works Funds not accounted for Salary Overpaymen Understaffing ts. Out standing Lack of ICT commitment Policy s Assest Management JINJA MC 1,846,307, ,181,449 X 2,707,996,392 2,750,777,445 2,750,777,445 Unqualifed other SIGNIFICANT ISSUES OPINION Unqualifed Unqualifed Unqualifed IGANGA DLG Unqualifed IGANGA MC 37,380,748 13,733,000 47% 452,957,716 X Unqualifed JINJA DLG Unqualifed KAKIRA TC 47% X 37,298, Unqualifed KALIRO DLG X Unqualifed KALRO TC 262,332,542 58,340,453 Unqualifed KAMULI DLG Unqualifed KAMULI TC 33%) 25,994,540 X 56,754, Unqualifed KAYUNGA DLG 50,214,828 Unqualifed KAYUNGA TC 14,417,402 X Unqualifed LUGAZI TC 417,568,212 X 374, 832, Unqualifed LUUKA DLG 252,703, ,078,436 2,841,000 X Unqualifed LUUKA TC 131,685,444 87% X Unqualifed MAYUGE DLG 8,971,108,256 7,684,723 X Unqualifed MAYUGE TC 61, 555,274 4,782,000 X 16,157,164 Unqualifed NAMAYINGO DLG 4,537,004 Unqualifed NAMAYINGO TC X Unqualifed NAMUTUMBA DLG 25,072,231 27% X Unqualifed NAMUTUMBA TC 71.70% X 9,657,800 NJERU TC 1,775,360,924 47% 243,307,220 1,140,969, Unqualifed

40 Entity Lack of Procurement files Procurement anomalies Breach of Procurement Procedures Inadequate contracts management Unauth orised contrac ts variatio ns Un-vouched expenditure Funds not accounted for Incompletely vouched expenditure Unaccounted for Administrative advances Missing Vouche rs Local Revenue Undercollection Irregular levy of Dev't tax Under Lack staffin of g land titles Assest Managem Manag ement of ICT Over payment of salaries Unspent balances Low absorption o unsatisfactory Civil Works Receivables outstanding commitments Other SIGNIFICANT ISSUES OPINION BUIKWE TC 6,588, ,648,062 Unqualified BUVUMA DLG 41 X 120,318, Unqualified BUVUMA TC 53 Unqualified ENTEBBE M C 185,328,120 1,072,191, ,689,465, ,688, Unqualified KANONI TC 36,155,159 9,968, X 22,144,000 Unqualified KIRA TCl ,346,000 Unqualified LUWERO TC 46 X 40,767,289 Unqualified MASULITA TC X X Unqualified MIGYEERA TC 12,758, X X 17,289,977 Unqualified MPIGI TC 68 X Unqualified NAKASEKE DLG X 16,482, Unqualified NAKASEKE TC 48 Unqualified NAKASONGOLA DLG 56,590,627 5,219, Unqualified NAMAYUMBA TC 7,525, X Unqualified NKOKONJERU T C 60 X Unqualified SEMUTO TC 70 25,734,080 Unqualified WAKISO TC 25,735,800 7,000, Unqualified WOBULENZI TC Unqualified LUWERO DLG 442,358,600 X 201,403, Unqualified MUKONO DLG 86,171,050 50,613,941 49,028, Unqualified WAKISO DLG 801,756,780 45,200,000 X 2,276,126,315 Qualified BUIKWE DLG X 22,101, ,357,766 Unqualified BOMBO TC 49 X Unqualified BUTAMBALA DLG 47 Unqualified GOMBA DLG 46,692,000 70,357, X Qualified GOMBE TC 58 Unqualified KAKIRI TC 4,081,350 2,743, Unqualified KAKOOGE TC 45 X Unqualified KIWOKO TC 59 X 12,947,750 Unqualified MPIGI DLG 170,820, Unqualified MUKONO M C 48,753, ,098, ,833, Unqualified Nakaseke-Butalangu TC 53 X Unqualified NAKASONGOLA DLG 44,272, Unqualified NAKASONGOLA TC 42,305,176 Unqualified NANSANA TC 49 Unqualified NGOMA TC 52 6,931,250 Unqualified 56,590, ,603, ,699,170 48,753, ,188, ,292,561 1,109,032,426 2,314,711,035 49,028,802 2,689,465, ,361, ,275, ,900,885 28

41 Entity Revenue Local Revenue Under-collection Irregular levy of Dev't tax lack of Breach of Procuremen Procurement t files Procedures Procurement anomalies Inadequate contracts management Unauthoris ed contracts variations Expenditure Funds not accounted for Incompletel Unaccounted for Un-vouched y vouched Administrative expenditure expenditure advances Missing Vouchers unsatisfact ory Civil Works Over payment of salaries Internal Control and Governance issues understaffing Outstanding commitments Lack of Lack of ICT po land titles Receivables Unspent balances Assets management Management ICT of Un-utilized capacity building funds Un-Itilised Municipal Opinion Infrastruture Development funds Other SIGNIFICANT ISSUES Bukomansimbi DLG 49,987,100 2,405,000 4,781,554 47% 18,552,807 Unqualiofied Bukomansimbi TC 8,497,500 36% 6,811,750 Qualified BukomeroTC 13,939,999 Unqualified Butemba TC 5,870,000 Unqualified Kalangala DLG 154,797,939 Unqualified Kalangala TC 30,621,965 Unqualified Kalisizo TC 10,892,747 Unqualified Kalungu DLG 112,845,086 66% Unqualified Kalungu TC 58% Unqualified Kiboga DLG 96,586,599 Unqualified Kiboga TC 29,072,850 36,231,042 Unqualified Kyankwanzi DLG Kyazanga TC 20,153,150 1,917,919 Unqualified Kyotera TC 3,299,500 34,141,950 Unqualified Lukaya TC Lwengo DLG 196,049,907 40% Qualified Lwengo TC Unqualified Lyantonde DLG 13,900,000 20,299,700 19% Unqualified Lyantonde TC Unqualified Masaka DLG 19,969,080 6,701,833 Unqualified Masaka MC 12,268, % 438,553,614 4,641,850,452 Qualified Mateete TC 14,007,000 27,275,000 1,135,000 66% Qualified Mityana DLG 10,420,000 7,971,500 94,949,931 Unqualified Qualified Mityana TC 47,045,886 54% Except for Mubende DLG 72,427,966 3,160,000 69,219,325 55% Unqualified Mubende TC 57,497,515 XX Unqualified Ntwetwe TC Rakai DLG 27,389,000 39,487,993 Unqualified Rakai TC 17,393,273 12,047,400 4,295,000 93,770,156 Qualified Sembabule DLG 149,891,005 XX Unqualified Sembabule TC 13,727,384 33,709,250 Qualified TOTALS 785,717, ,661, ,864,472 97,743,325 50,971, ,084,644 70,372, ,553,614 4,641,850,452 Unqualified Unqualified Unqualified 29

42 Entity Unsatisfactory Civil Revenue Procurement anomalies Funds not accounted for Overpayment of salaries Internal Control and Governance issues Assets management Works S/N S/N Entity Local Revenue Irregular levy of Under-collection Dev't tax Lack of Procure Breach of Procurement ment Procedures files Inadequate contracts management Unauth Unvouche Incompletely orised contrac d vouched ts expendi expenditure variatio ture ns Unaccounted for Administrative advances Missing Vouchers Understaffin g Outstanding Commitments Lack of ICT policy Lack of land titles Receivables Unspent balances Low absorption of funds under USMID project Other Significant Issues OPINION 1 Binyiny T.C. Unqualified 2 Budadiri TC x Unqualified 3 Budaka DLG 18,124,000 3,082,000 47% x Unqualified 4 Budaka TC 30,777, Qualified 5 Bududa DLG 69,632,147 42,481,410 5,746,800 14% X Qualified 6 Bududa TC 14,400, Unqualified 7 Bukwo DLG 669,167, Unqualified 8 Bukwo T.C. 4,858,076 2,204,000 x Unqualified 9 Bulambuli DLG 41,327,000 5,937,000 32,654,439 29% x Unqualified 10 Bulambuli TC 4,346,722 2,065,000 x x Unqualified 11 Bulegeni TC 5,051, Unqualified 12 Busia DLG 247,172,865 1,600,000,000 6,387,080 4,965, Unqualified 13 Busia MC 57,064,907 46,217,928 6,142,000 1,807,699, Qualified 14 Busolwe TC x Unqualified 15 Butaleja DLG 20,431,500 x x Unqualified 16 Butaleja TC 1,492,000 1,767,500 62% x Unqualified 17 Kapchorwa DLG 17,464,343 12,405,500 7,077, ,201, ,345,720 Unqualified 18 Kapchorwa TC 5,074,091 8,036,350 Unqualified 19 Kibuku DLG 44,949,000 22,250,000 x Unqualified 20 Kibuku TC 71% Unqualified 21 Kween DLG 172,896,375 27,753, Qualified 22 Lwakhakha TC 4,488, Unqualified 23 Malaba TC 134,378,050 Unqualified 24 Manafwa DLG 53,369,800 13,321, ,203, ,262,236 37% x Unqualified 25 Manafwa TC 9,914,000 5,440,200 56% Qualified 26 Mbale DLG. 13,831,850 10,577, Unqualified 27 Mbale MC 77,262,150 33,288,580 10,670, ,387,356 x 149,210,972 2,973,815,434 Unqualified 28 Mbale RRH 111,387, ,407,745 Unqualified 29 Nagongera T.C. 1,100,000 Unqualified 30 Nakaloke T.C. 1,616,000 19,110,210 Unqualified 31 Pallisa DLG 36,657,650 8,154,000 Unqualified 32 Pallisa T.C 65,728,476 2,548,000 42,970,136 33,379,111 Qualified 33 Sironko DLG 446,743,490 19,811,244 35,420,000 33,072,000 39,754, Qualified r 34 Sironko TC Unqualified 35 Tororo DLG 1,457,758,987 11,256,200 37,175, ,760,883 19% 400,417, Unqualified 36 Tororo MC 4,743,311 6,033, % 1,397,702,463 1,554,561, Unqualified 818,849,886 19,811,244 3,818,588,667 2,204, ,896, ,853,452 29,636,115 1,099,759,838 1,986,961,740 (14-71)% 240,072,606 5 entities 9 entities 1,970,365, ,964,437 4,528,377,355 30

43 Entity Revenue Expenditure al Control and Governance Procurement anomalies Funds not accounted for Salary Arrears understaffing Outstanding commitments Lack of land titles Receivables Assets management Unspent balances Managemen Un-utilized t of ICT capacity building funds Un-Itilised Municipal Infrastruture Development funds High Opinion significan ce issues lack of Local Revenue Undercollection Irregular levy of Dev't tax Procuremen t files Breach of Inadequate Procuremen contracts t management Procedures Unauthoris ed contracts variations Incom pletely Unaccounted for Un-vouched vouche Administrative expenditure d advances expen diture Missing Vouchers shoddy work/incomplete projects Bugongi TC 46% Unqualified Buhweju DA 78,041, ,268,682 47% Unqualified Bushenyi DA 107,570,405 28% None Unqualified Bushenyi Ishaka MC 190,274,411 51% None Unqualified Butogota TC 0% 31,705, Qualified Hamurwa TC 54% 50,252, Unqualified Ibanda DA 152,336,448 7,223,750 49% Unqualified Ibanda TC 50% Unqualified Igorora TC 47% Unqualified Ishongororo TC 23,236,696 57,937,303 42,511,759 Unqualified Isingiro DA 521,722,209 3,492,500 73,391,916 48% None Unqualified Isingiro TC 52% None Unqualified Kabale DA 602,133, ,759,249 30% None Unqualified Kabale MC 241,647,766 51% 390,251,751 3,239,814,298 Unqualified Kaberebere TC 2,150,000 50% Unqualified Kabuyanda TC 33,605,214 Unqualified Kabwohe-Itendero T 243,233,215 16,263, Unqualified Kambuga TC 10,177,500 Qualifiedr Kanungu DA 22,289,076 9,919, ,494, ,495,032 43% None Unqualified Kanungu TC 29,202,300 Unqualified Kashenshero TC 28% Unqualified Katerera TC 55% Unqualified Katuna TC 62% Unqualified Kazo TC 62% Unqualified Kihihi TC 45,901,534 57,485,850 10,410, Qualified Kiruhura DA 198,483,510 58% Unqualified Kiruhura TC 12,858,687 30,400,000 71% Unqualified Kisoro DA 222,129,342 44% None Unqualified Kisoro TC 53% 36,900,356 Unqualified Kitwe TC 3,418, Mbarara DA 56,272, ,341,578 47% Unqualified Mbarara MC 1,094,173,302 38,684,282 41% 437,698, ,232,407 7,543,649,367 Unqualified Mitooma DA 135,790,022 23,676,147 0% Mitooma TC 52% Unqualified Muhanga TC 25% Nsiika TC 5,502,400 0% Unqualified Ntungamo DA 27% Unqualified Ntungamo MC 96,126,194 57% None Unqualified Rubaare TC 43,635,986 52% 47,184,480 None Unqualified Rubirizi DA 1,800,000 51,424,559 55% Unqualified Rubirizi TC 54% Unqualified Rukungiri DA 15% Unqualified Rukungiri MC 44% Unqualified Rushango TC 49% Unqualified Rwashamaire TC 42% Unqualified Sanga TC 95,272,629 37% None Unqualified Sheema DA 64,983,246 44% Unqualified Sheema TC 46% Unqualified TOTAL - MBARARA 3,600,986,191 9,919,000 75,105, ,195,275 1,605,818, % 136,827, ,036, ,484,158 10,783,463,665 31

44 Entity Local Revenue Undercollection Revenue Expenditure Internal Control & Governance Assest Management Irregular levy of Dev't tax Procurement anomalies Inadequ ate contrac ts manag ement Lack of Breach of Procuremen Procuremen t files t Procedures Unauth orised contrac ts variatio ns unsatisfactory Civil Works Unvouche d expendi ture Funds not accounted for Incompletely vouched expenditure Unaccounted for Administrativ e advances Missing Vouche rs Salary Unders Overpaymen taffing ts. Out standing Lack of ICT commitment Policy s Lack of land Receivables Unspent balances titles Under absorption of funds under USMID project Other SIGNIFICANT ISSUES Opinion Abim DLG 28,916, ,898, , ,357,138 29% x Unqualified Abim TC 1,327, ,518,420 3,269,000 x Qualified Amudat DLG 57,052,500 22,444,653 75% Unqualified Amudat TC 33,279,637 Unqualified Amuria DLG 15,130, ,106,022 7,885,000 66% x Unqualified Amuria TC 80.3% Unqualified Bukedea DLG 39,407,940 5,238,000 58% Unqualified Bukedea TC 230,314,769 6,930,000 72% Qualified Kaabong DLG 38,331,400 2,862,000 63,347, % Unqualified Kaabong TC 72% Unqualified Kaberamaido DLG 21,361, ,508,467 17,141,102 63% Unqualified Kaberamaido TC 29,715,881 60% Unqualified Kasilo TC 4,769,117 65% x 2,465,000 Unqualified Katakwi DLG 99,431, ,701,780 8,759,567 53% Unqualified Katakwi TC 1,715,000 50% 114,164,545 Unqualified Kotido DLG 350,562,261 19,591,000 24% x 108,703, Unqualified Kotido TC 39,872,500 64% 121,748,782 Qualified Kumi DLG 108,192, ,549,400 8,861, Unqualified Kumi TC 60,974,255 8,934,240 13,405,777 x Unqualified Lorengecora TC 70% x 379,976,896 Unqualified Moroto DLG 51% 45,400,000 Unqualified Moroto MC 2,506, ,527,515 1,016,592, Unqualified Nakapiripirit DLG Nakapiripirit TC 176,646,750 32,687,192 20,691,180 x Unqualified 32 x Qualified Napak DLG 164,179,000 6,603,287 30,269,697 42,615,934 Unqualified Ngora DLG 9,024,000 49% Unqualified Ngora TC 41,794,158 1,624,000 22% Unqualified Serere DLG 59% Unqualified Serere TC 2,125,000 Unqualified Soroti DLG 9,442,000 42% Unqualified Soroti MC 4,358,000 50% x x 2,228,864, Unqualified 794,012,515 36,846, ,028,882 2,303,623,818 39,872, ,720, ,999, ,970, ,976,896 3,245,456,345

45 PART II 5.0 DETAILED REPORT OF LOCAL AUTHORITIES 5.1 ARUA BRANCH ADJUMANI DLG Delayed completion of Civil Works It was observed that two contracts amounting to UGX 154,257,282 were awarded for Construction of school infrastructure (UGX 103,911,032) and a market (UGX 50,346,250). By the time of audit in August 2015, a sum of UGX.84,024,377 had been paid however, the civil works had not been complete and the contract period had expired as shown below:- M/s. Link Investment Ltd Contract sum UGX. 103,911,032 Description Period Amount Paid (UGX) Construction of The start and 2 units of semi end dates detached staff were house, kitchen 22/9/2014 and 2 stance and drainable 22/3/2015 latrines at respectively Aliwara Primary School. Audit Observation 58,728,727 The contract period has not been renewed. The facial boards, glasses and internal doors had not been fixed; Solar water tank and electrical wiring not installed and Kitchen chimney shutters and floor have not been completed. M/s. Maria Vusi Silvia Vuga Ltd Contract sum UGX. 50,346,250 Construction of Maasa Market. The start and end dates were 1/10/2013 and 31/3/ ,295, doors of casements at UGX.3,485,400 not fixed Water disposal system comprising of PVC, rain water pipe and gutters worth UGX.1,867,500 had not been done. A delay to complete the civil works denies the communities prompt services. 33

46 The Accounting Officer explained that the contractor for the construction of school had abandoned work. I advised the Accounting Officer to ensure that the works are completed ARUA MC Delayed Completion of Afra Road The maintenance of Afra road (0.5 km) under Ref: 751/wks./14-15 was done using Force on Account mechanism at a cost of UGX 616,977,880 using Uganda Road Fund. The scope of work involved grading, formation and shaping of road, application of 2 seals, construction of head walls & wing walls on culvert lines, installation of culvert lines on road and access road, supply of some construction lines and relocation of utilities and installation of street lights. It was observed that at time of inspection, that the Council had spent UGX 489,783,196. However, according to the bills of quantities the following works were still outstanding; Drainage works Tarmacking Gravelling Grading and shaping Relocation of utilities Street lights Utilities not relocated No gravel, grading & shaping (no earth work) 34

47 No drainage works done Buildings in the road not yet demolished The Accounting Officer explained that the project had delayed due to some individuals who had failed to remove the perimeter walls that were constructed in the road reserve. However, the District through the physical planning committee had given an ultimatum to the residents affected to remove the wall fences, but the materials in contention are safely secured and guarded in the Council yard. The matter should be given urgent attention MARACHA DLG Abandoned Contracts Construction of two class room block at Alikua Islamic Primary school. A Local contractor was engaged in 2013/14 to construct a 2 classroom block at Alikua Islamic Primary School at a contract sum of UGX.45,087,100 using PRDP funds. At the time of audit UGX.32,976,400 representing 73% of the contract price had been paid to the contractor. However, physical inspection of the site in July 2015 revealed that the contractor had roofed the building, fixed the windows and doors burglar frames but abandoned the site before plastering as shown in the photograph below; 35

48 Pictures above showing abandoned classroom block at Alikua PS The Accounting Officer explained that the contractor abandoned the site before completing the works. However, the project had been rolled over, planned and budgeted for in the financial year 2015/2016. I advised the Accounting Officer to pursue the contractor and ensure construction is completed. Construction of Pit latrines at Wadra and Curube HC IIs The district contracted a Local firm in the financial year 2012/13 to construct 2 pit latrines at Wadra HC II and Curube HC II at a contract sum of UGX 13,998,480 under PRDP/PHC funds. It was observed that UGX 4,626,040 was paid to the contractor. However, physical inspection of the sites revealed that the contractor abandoned the works at walling as shown in the photos below; Abandoned pit construction at Wadra HC II and Curebe HC II respectively In the circumstance, value for money may not be realised. 36

49 The Accounting Officer explained that the contractor abandoned the site before completing the works. However, the project had been rolled over, planned and budgeted for in the financial year 2015/2016. I advised the Accounting Officer to engage the contractor and ensure construction is completed MOYO DLG Construction of Out of Patient Department at Malanga HC 11 Construction of Out of Patient Department was awarded to MS Quks Enterprise at UGX 99,750,000 under PRDP. The contract commenced on 28 th January 2015 and was supposed to be completed on 15 th May At the time of inspection, the contractor had been paid UGX 88,153,414 representing 88%. However, the following works had not been done:- Electric installation worth UGX. 3,095,000 Screeding of the floor & verandah Roofing of the building was not complete Fixing of the Face board Concrete bench seat Medical sink worth UGX. 4,630,000 Both internal & external water drainage worth UGX. 16,839,000 Installation of the solar worth UGX 4,817,000. The Accounting Officer explained that all issues raised had been rectified and the construction had been completed. However, on further verification the issues were still outstanding. I advised the Accounting Officer to ensure that the works are completed before final payments are made MOYO TC 37

50 Construction of watchman s room and store at Perego village for proposed Garbage Site During the year M/s Oasis enterprise Ltd was contracted to construct a watchmans room and a store at Perego village at a contract sum of UGX 20,743,100. By the time of audit, the civil works had been completed and the contractor had been paid UGX 19,108,544 leaving a balance of UGX 1,634,556. Audit inspection carried out on 23 rd Oct, 2015 revealed that the iron sheets on the watchman s house and the store had been removed as shown below:- Iron sheets have been removed. The Accounting Officer explained that the Council secured land in Parego village, for development of a modern garbage management. However the community under the influence of some prominent people rejected the project. The matter was brought to the attention of top district officials, but no action was taken. Consequently the watch man s house and store were vandalized by the residents. I advised the Accounting Officer to follow up the matters with district officials and sensitize the community to ensure acceptance of the project by the community. 38

51 YUMBE DLG Delayed completion of contracts Regulation 18(3) LGFAR provides that budget estimates shall be based on the objectives to be achieved for the financial year and efforts shall be made to achieve the agreed objectives or targets, as programmed by the district. Furthermore, Regulation 26 (2) & 26(6) of the PPDA Regulation states that a user department will be responsible for contract management, once a contract is signed and shall report any departure from the terms and conditions of the contract to the Accounting Officer with a copy to the procurement and disposal unit. It was observed that three (3) contracts totaling UGX.430,233,040 undertaken during the financial year had not been completed at the time of writing this report and there was no evidence to show that the Accounting Officer had taken any action to compel the contractors finish the works. Besides, the contracts had expired. The details are shown below:- Delayed completion of contracts Proc Ref No Contract Details Contractor Contract Sum UGX Renovation of Amamba YUMB556/WRKS/14- Maternity Ward at Construction & 15/00026 Yoyo HC Engineering Works 51,000,840 YUMB556/14-15/00021 Construction of OPD at Barakala HC Babu and Brothers 114,817,280 YUMB556/14-15/00029 Construction/Raising the Level of Kochi 264,414,920 Drift Bridge Total 430,233,040 Delayed works deny the community timely services. The Accounting Officer explained that there were delays in processing payment certificates and the contractors had asked for time extension. The Accounting Officer was advised to ensure that the projects are completed. 39

52 ZOMBO DLG Grants Released but not Credited to the District General Fund Account Section 4.9 of the Local Government Financial and Accounting Manual (LGFAM) of 2007 requires Government to remit Conditional, Unconditional and Equalization Grants to the district and acknowledgement receipts sent to the Central Government (MoFPED), confirming the receipt of funds. However, a reconciliation of Cash Release/Treasury Credit Advices slip from Ministry of Finance, Planning and Economic Development against the District General Fund Account revealed that UGX. 200,363,048 purportedly released to the district were not credited on the district General Fund Account as shown below; Warrant Number Description Amount RW025/14/15 Development Grant for Oct ,396,048 RW024/14/15 Recurrent Grant for Oct ,967,000 Total 200,363,048 The Accounting Officer explained that the matter was noted during reconciliation of the releases from the Treasury and clarification was sought from the Permanent Secretary/Secretary to the Treasury on the two credit advices by the district. However, no response was provided and the money had not been received on the district account by end of year. In the circumstance, there is a risk that the funds could have been diverted. I advised the Accounting Officer to follow up the matter with the Ministry of Finance, Planning and Economic Development. Abandoned NUSAF Projects In a letter dated 4 th June 2014 the Office of the Prime Minister Wrote granting the district autonomy over the implementation of NUSAF projects which the district took over henceforth in its jurisdiction. Audit inspection carried out on the 4 th of August 2015 revealed that seven of the projects taken over as contained in the table below had not been completed. An interview with the NUSAF focal person revealed that the contractors were paid advances to start off works which is irregular under the NUSAF program. It was further 40

53 observed that performance security guarantees had not been sought from the contractors. Sub Project Signing Contract Contractor Date Sum Amount Paid Papoga P/S 3 YemimuUnegiu classroom 2/11/2011 Enterprises block 57,800,000 47,319,577 Pakadha HCII staff 27/11/2012 Daat Company 79,094,972 48,028,104 house Warr HC III 10/10/2012 Trinity Engineering and construction 78,910,125 68,023,004 Atyak P/S Ckovem Construction classroom 20/11/2012 engineering block 95,590,320 73,008,754 Kaya P/S Classroom 9/8/2012 Ulto Engineering Ltd 96,753,051 83,249,187 block Atyak HCIII 8/11/2012 Jagon company (U) 78,119,265 70,495,965 PakekAjja PS 27/12/2011 Jagon company (U) 79,312,500 77,311,668 Total 565,580, ,436,259 Pakadha HCIII staff house Patek Ajja P/S classroom blocks Papoga P/S classroom block Warr HCIII staff house 41

54 The Accounting Officer explained that the contractors moved to other sites prior to completing their contracts and later had cash flow shortages but added that memoranda of Understandings (MOU s) were signed between the IGG, the District and the contractor guarantying completion of the works. However the process has been slow and it was observed that inferior materials (window frames) had been used on majority of the sites. I advised the Accounting Officer to closely monitor the works progress and ensure works are done in line with standards specified in the contract agreements. Unspent Balances not returned to the Consolidated Fund Section 17(2) of the Public Finance management Act 2015 requires that a vote that does not expend money that was appointed to the vote for the financial year to repay the money to the Consolidated fund. Contrary to the above, a total of UGX 89,456,000 remained unutilized at year end and had not been returned to the Consolidated Fund at the time of writing this report contrary to the regulations. The Accounting Officer explained that the funds had been returned to the Treasury. However, the acknowledgment receipt from Treasury was not presented for audit verification. I advised the Accounting Officer to ensure that the unutilized funds are returned to the Consolidated Fund and the acknowledgement receipt from Treasury should be obtained and presented for audit verification. Delayed completion of Road Works The district signed a contract agreement with M/s. Six Way General Engineering on the 21 st of May 2013 for opening and rehabilitation of Palwo P/S - Agingo Chapel road at a contract sum of UGX. 185,410,540. The works were to be completed within (2 months) effective 21 st May 2013 to 22 nd August

55 It was observed that the project was delayed by 17 months and final certificate was issued for payment on the 13 th of February However it was observed that the district did not invoke the provisions of special condition no. GCC.49.1 of the contract that call for either termination of the contract or the aggrieved party (District) to be paid liquidated damages at a rate of 0.025% of final contract price per day or maximum of 10% of the entire works amounting to UGX. 18,541,054. Besides, there was no evidence that the contract period was extended by the contracts committee as required by PPDA regulations. It was further observed that the district retained UGX. 3,331,208 instead of UGX 9,270,527 representing 5% of the entire contract sum. Delayed completion of the works denied the communities the prompt use of facility. The Accounting Officer explained that the anomalies were due to lack of a Senior Engineer who had now been recruited for proper supervision. I advised the Accounting Officer to ensure that the works are properly managed and supervised. Service Delivery Rehabilitation of Gira-Alicudu and Pakadha-Awasi Roads The contract for the rehabilitation of Gira-Alicudu, Pakadha-Awasi road was awarded to Link Investments limited at a contract sum of UGX 151,782,750. The contract was effective from 25 th February 2015 to 25 th May A review of the records revealed that UGX 103,882,250 had been paid to the contractor. However, inspection carried out on the 5 th August 2015 revealed the following. The BOQs specified 900 mm culvert however, the contractor used 600 mm culverts leading to a financial loss of UGX 1,080,000. It was also observed that head walls for some culvert were not properly constructed. Consequently, some of them had been submerged below the road surface making it difficult to divert the rapid flowing waters as shown below 43

56 Accordingly the related cost of UGX 12,000,000 was rendered wasteful. The works were still on going as piles of murram was seen on the road as shown below The culvert bridge on Gira-Alicudu road was to be 12m with 1200mm in diameter implying that two lines measuring 6m each were to be installed as per the BOQs. However inspection revealed that only one line of 900mm diameter had been installed as shown below As a result the district incurred a fiancail loss of UGX.360,000 The culvert bridge on Pakadha Awasi road was supposed to be 18m with 1200 mm in diameter. Implying that three lines measuring 6 m each were to be installed. However by the time of inspection, only two lines of 900 mm diameter had been installed contrary to the BOQs as shown below 44

57 It was further observed that the Council trucks were being used to transport murram to the site although the contract had been awarded to a private contractor. The Accounting Officer promised to ensure effective supervision and monitoring of the contract. I advised the Accounting Officer to closely monitor the work in progress and ensure completion of the contract. Non-operational Health Centre The construction of semi-detached staff house, kitchen and two stance VIP pit Latrine at Mudhel HC III was awarded to M/s.E & B Construction Limited on 6 th February, 2012 as per contract agreement dated 13 th February, 2012 at a contract sum of UGX94,532,955. Review of the related records and an audit inspection carried out on 04 th August, 2015 revealed that although the contractor was fully paid upon completion of the work, the following shortcomings were identified; The OPD, semi-detached staff house, kitchen and two stances VIP Latrine had been abandoned as evidenced by the wild grass growing around the constructed structures in the photo below. 45

58 The door glasses are already broken as evidence in the photo below. The Acting District Health Officer admitted that the health Centre remained nonoperational due to lack of furniture. Non operationalization of such a Health facilities deprives the community access to medical services. Consequently, the community has to travel over 10 kilometer to Nyapea Health Centre to access medical services. The Accounting Officer explained that management had taken steps to operationalize the facility though at a minimal scale but will have it fully operationalized during the financial year 2016/17. I advised the Accounting Officer to ensure the Health facility is furnished and become operational. 46

59 Un-validated Staff Payroll Section (A-n) (19) the Uganda Public Service Standing Orders provides that in the absence of communication from an Officer and failure to resume duty within 30 days, the Officer shall be deemed to have abandoned duty. During the period under review, I conducted a validation exercise where I appointed Ernst and Young Certified Public Accountants on my behalf. Ernst and Young Certified Public Accountants in a letter dated 7 November 2014 wrote to the district asking for explanations in regard to the additional personnel found on the district payroll during the payroll biometric validation. It also highlighted that 118 staff had missed the validation exercise and cautioned that those who failed to present themselves would be at risk of deletion from the payroll. However it was noted at the time of writing this report that, the district had not yet implemented the recommendations of Ernst and Young since the affected staff were still on the payroll. There is therefore a risk of salary payments to ghost employees and an over exaggerated wage bill. The Accounting Officer admitted the anomaly and promised to implement the recommendations of Ernst & Young. I advised the Accounting Officer to implement the recommendations of Ernst & Young and ensure regular reconciliation between the payroll and the staff list. 5.2 FORT-PORTAL BRANCH BUNDIBUGYO DLG Salary Arrears Paragraph of the Local Governments Financial and Accounting Manual, 2007 states that all payments of salaries and wages shall be made monthly However, it was established that at the time of audit, the entity had salary arrears amounting to UGX 625,068,071. Out of this, only UGX 139,478,216 had been approved 47

60 by the Ministry of Finance, Planning and Economic Development for payment leaving a balance of UGX.485,589,855 still undergoing verification. Failure to pay the salary in time demotivates staff. The Accounting Officer explained that Council had so far written two letters requesting the Ministry of Finance, Planning and Economic Development to clear the arrears. I advised the Accounting Officer to follow up the matter with the Ministry to ensure that the salary arrears are paid KARAGO TC 1. Non-remittance of shared revenue to Lower Local Governments Fifth schedule, Part V (15A) of the Local Governments Act 1997 requires that a Town Council should distribute 5% and 20% of the total Local revenue collected amongst its Parishes and Village Councils respectively. However, it was observed that Council did not remit UGX 20,850,078 to Parishes and Village Councils as shared Local revenue as required by the Act. The Accounting Officer explained that Council implemented the planned activities on their behalf because they were not legally constituted to authorize opening of bank accounts and those currently serving as LC II Chairpersons and their executives were just interim and not recognized by the electoral commission. Failure to remit the funds to the village Councils & wards impairs service delivery at grassroots and contravenes the decentralization principle that underpins participation and involvement of communities in implementation of Government Programmes. I advised the Accounting Officer to always ensure that remittances to lower Local Councils in accordance with the laws and on a timely manner. 48

61 HOIMA DLG 1. Under collection of Contracted out Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires all revenue to be collected as budgeted. However, out of the amount of UGX.47,526,000 of revenue contracted out, UGX.13,132,000 was realized leaving a balance of UGX.34,394,000 as shown below:- Revenue source Contractor Contract Price Actual amount Un-realised UGX (UGX) Collected Buseruka main Kibalyerainda 2,124,000 NIL 2,124,000 market John Kinogozi Market Bahemuka 2,124,000 NIL 2,124,000 Julius wagesa market Sunday Ayubu 19,532,000 NIL 19,532,000 Buhuka Market ByaruhangaIss 12,390,000 3,850,000 8,540,000 a Rwenzori Market Bahemuka 3,000,000 2,980,000 20,000 Julius Butimba Market Mugisa John 2,285,000 2,052, ,000 Buhimba main Serukera Tadeo 2,118,100 1,250, ,100 market Kijangi landing Kibalyerainda 3,953,000 3,000, ,000 site John TOTAL 47,526,100 13,132,000 34,394,100 The Accounting Officer explained that management had put in place a revenue enhancement review Committee that reviews revenue performance every quarter. I advised the Accounting Officer to ensure that revenue collection is closely supervised and that in future all revenue budgeted is collected. Meanwhile, Council should follow the contractors for recovery. 49

62 HOIMA MC 1. Diversion of capacity building funds I carried out inspection of the Municipal Council and it was observed that capacity building expenditure worth UGX 7,200,000 was executed outside the Council s work plan. Diversion of funds from the planned activities translates into misallocation of resources. The Accounting Officer responded that the Municipal Council was advised to refund the funds spent outside USMID activities. The promised action is awaited KASESE DLG 1. SERVICE DELIVERY 7. Supply and Installation of six 40HP Maize Mills The District contracted Mupala Agency Ltd to supply and install six Maize Mills in 3 Sub Counties, 2 Divisions & 1 Town Council at a contract price of UGX 113,704,800 under contract number KSE/521/SUPLS/2014/2015/ At the time of the audit (July 2015) UGX 113,704,800 had already been paid to the contractor. The inspection of the facilities revealed that the maize mill had not been installed. This was as a result of inadequate power supply. The mills require a three phase power connectivity to enable them operate which was not in place where the machines were to be installed. It appears the venture was not properly planned. There is therefore a high likelihood of the mills not being installed leading to waste of resource. The Accounting Officer explained that the mills were installed however, for them to be connected to a three phase power; each beneficiary group had to pay UGX 6,000,000 which the groups could not afford. The matter requires urgent attention. 8. Health Service Delivery Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards 50

63 for proper functioning of Health centres. revealed the following short comings:- An inspection of selected health centres a) Kabatunda HC III Minimum Standard HC III Current Status Maternity ward No maternity ward 2 General wards Only 1 general ward 1 Medical waste pit No medical waste pit Placenta pit No placenta pit 8 of 2 stance pit latrine Only 2 of 2 stance pit latrine 18 staff Only 8 staff available Transport No transport available b) Nyamirame HC IV Minimum Standard HC IV Current Status Maternity ward Non Mortuary Non 1 General ward Non 10 of 2 stance latrines 1 of 4 stance latrine 48 required staff Only 17 staff Transport in case of emergency No transport The above shortcomings hinder effective health service delivery in the district. The Accounting Officer explained that Council had initiated a vigorous lobbying campaign to raise funds. I advised the Accounting Officer to engage the Ministry of Health to ensure that the issues affecting the health services are addressed. 2. Construction of the 5Km Road barrier MahangoMuhokya Road The District embarked on the construction of Mahango Muhokya road under Force on Account at a cost of UGX 137,874,050. According to the Bills of Quantities, civil works included site clearing, blasting of the rock, grading and culvert construction. The works started in November 2014 but the project completion date remained undefined. It was however, observed that an amount of UGX.251,732,500 had been expended by the time of audit in July 2015, implying an excess expenditure of UGX.113,858,450 over 51

64 the budget. This is despite of the fact that only site clearing and blasting of the rock had been done. It appears the variation was not well planned given the capacity of the district to undertake such project using Force Account Mechanism. The Accounting Officer explained that this was a new road opening to the inaccessible Mahango Sub County. He indicated that a lot more would be spent on the project. The Accounting Officer is advised to undertake due diligence on all projects to be undertaken prior to implementation. Meanwhile the project should be properly supervised and be completed KAGADI TC 1. Rehabilitation of Nsubuga road An amount of UGX.41,369,428 was incurred on opening of 3Km of Nsubuga road as detailed below:- Vr No. Date Payee/Contractor Details Amount LGMSD /01/2015 Art Centre Contractors 166(photo copy) 02/03/2015 Art Centre Contractors /09/2014 Karukana Enterprises Ltd /04/2015 Karukana Enterprises Ltd /04/2015 Karukana Enterprises Ltd Opening of Nsubuga road 14,074,714 Opening of Nsubuga road 6,574,714 Supply of wheel loader for 32 hrs for swamp filling of Nsubuga road. Supply of 14 culverts for Nsubuga road Hire of wheel loader for swamp filling of Nsubuga road 5,600,000 3,920,000 11,200,000 TOTAL 41,369,428 The road works were to start in November 2014 and be completed in June The document action review and audit inspection revealed the following shortcomings:- 52

65 i) Irregular Variation of the Contract Regulation 120 (12) Local Governments Public Procurements and Disposal of Assets Regulations 2006 requires contract committee s approval of any contract variation which is more than 15% of the original price of the contract. The contract with Art Centre Contractors to open Nsubuga Road at a contract price of UGX.14,973,100 tax inclusive was varied to UGX.21,547,814 which was 31% above the original contract but lacked approval. Consequently, the variation was irregular. No explanation was provided by management to this variation. I advised the Accounting Officer to comply with the procurement regulation. ii) Payment for no work done Field inspections carried out in October 2015 revealed that Item of the BOQ provided for side drains at cost of UGX 5,350,500. However, the side and mitre drains were not constructed yet the contractor was paid. The Accounting Officer explained that works for this road were carried forward to financial year 2015/2016. The matter requires urgent attention MASINDI MC 1. Non remittance of shared Local revenue collection Part V Section 14 (2) of the Fifth Schedule of the Local Governments Act 1997 (as amended) CAP 243, requires Council to distribute at least 30% of its revenue collection to division Councils in its area of jurisdiction on a monthly basis. Council did not remit an amount of UGX 149,380,756 to Lower Councils contrary to the regulations. Failure to remit funds impairs implementation of activities at the Lower Parishes and Villages. The Accounting Officer explained that a sum of UGX 111,048,716 had actually been remitted leaving a balance of UGX.38,332,040 by close of the year. 53

66 However, there was no evidence of remittance of funds to the Village Councils to support the explanation. I advised the Accounting Officer to ensure the funds are remitted to the lower Councils in accordance with the law KYEGEGWA DLG 1.Anesthetic Machine lying idle in Kyegegwa Health Centre IV The District received the Anesthetic Machine (DatexOhmeda) as a donation from Belgium Technical Cooperation (BTC) on the 21 st /1/2014. It was however, observed that the machine uses Halothane, Isoflurane, Oxygen and Sevoflurane which National Medical stores does not supply. Accordingly, the machine has been rendered idle. I advised the Accounting Officer to follow up with the Ministry of Health to ensure that the machine is put to use KIRYANDONGO DLG 1. Outstanding Utility Bills for Kiryandongo Hospital The Local Governments Financial and Accounting Manual, 2007 require all Local Governments recurrent and capital development expenditure transactions to be process through the commitment control system (CCS). However, it was observed that the hospital had outstanding electricity bill amounting to UGX 34,444,192 on Account No as at 30 th June The hospital is at a risk of power disconnection. The Accounting Officer attributed the outstanding bill to the the expansion of the Hospital and said that efforts are being made by management to have the Bills paid. I advised the Accounting Officer to ensure that the outstanding bill is settled promptly. 54

67 2. Absconded Staff not deleted from Payroll Public Service Standing Orders 2010 (B-a) (12), requires the payment of salary to be stopped as soon as an individual ceases rendering services to Government. However, it was observed that UGX 7,009,394 was lost as a result of staff who continued to access the payroll despite their abscondment from duty. The Accounting Officer admitted the shortcoming and explained that a number of staff who had absconded and others who had died had not been deleted immediately on the system because the information relating to them did not reach management in time for action. He promised to effect recovery at the time of processing their gratuity and pension. The Accounting Officer is advised to strengthen controls on payroll management to ensure that only genuine staffs are paid BWEYALE TC 1. Lack of Valuation List Section 4 of the Local Governments (Rating) Act requires the Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that the Council did not have an up-to-date valuation list. There is a risk that property rates as a source of Local revenue might not be exploited to its full potential and besides the applied rates may be below the current market rates. The short coming was attributed to inadequacy of funds to conduct the valuation exercise. I advised the Accounting Officer to ensure that the activity is prioritised during budgeting and funds allocated to update the valuation list. 55

68 KYENJOJO TC 1. Lack of an Up-to-date Valuation List Section 4 of the Local Governments Rating Act requires the Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that the Council did not have an up-to-date revenue valuation list. There is a risk that property rates as a source of Local revenue might not be exploited to its full potential and besides the applied rates may be below the current market rates. The Accounting Officer explained that the mechanisms have been put in place to have the list updated. I advised the Accounting Officer to ensure that the activity is prioritised during budgeting and funds allocated to update the valuation list KATOOKE TC 1. Failure to update the Valuation Lists Section 4 of the Local Governments (Rating) Act requires the Council to review its Valuation list at least once in every 5 years, or such longer period as the Minister may approve. It was observed that the Town Council did not have an up to-date valuation list. There is a risk that property rates as a source of Local revenue might not be exploited to its full potential and that the applied rates may be below the current market rates in the Council operating environment. The Accounting Officer admitted the shortcoming and attributed it lack of funding. The Accounting Officer was advised to prioritise the activity and allocate funds for updating the valuation list. 56

69 2. Service Delivery 2.1 Improvement of Nathan Asuman swamp (0.1km) Road The improvement of Nathan-Asuman swamp was scheduled to begin from 22 nd August 2014 and end by 19 th September 2015 at a cost of UGX.3,000,000. Works included bush clearing, grading, gravelling and reshaping of poor sections of the road. During the audit inspection carried out on 13/11/2015 the following shortcomings were identified:- The gravel had been eroded The road was already developing gullies due to the poor drainage system as shown below; Gullies seen on swamp and some sections of the road already eroded The Accounting Officer explained that the allocated budget by Council for the road was inadequate and did not allow for a sustainable service. The Accounting Officer was advised to ensure that poor works are properly supervised and value for money achieved. 3. Periodic maintenance of Kyamunianya swamp 0.1km Council set out to conduct periodic maintenance of Mukole-Kahanda market (Kyamunianya swamp 0.1km) at a cost of UGX 10,563,401. The work was scheduled to commence on 23 rd April 2015 and end on 29 th May Works included bush clearing, grading and reshaping of poor sections at the cost of UGX.10,563,401. During audit inspection carried out on 13/11/2015 the following shortcomings were identified; There were no headwalls installed at the culvert 57

70 Some culverts were already broken Culverts were not aligned in a straight line. Pot holes were already developing at the bridge The Accounting Officer explained that the allocated budget by Council for the road was small and did not allow for a sustainable service of which some of the funds had been diverted to another swamp. The matter requires urgent attention NTOROKO DLG 1. Periodic Maintenance of Rwebisengo-Rwangara Road, Spot Graveling & Shaping 16Km of 32.5Km Paragraph (6) of the LGFAM (2007) requires each activity to have its own work plan and budget. This is further supported by paragraph 5.4 of the Force on Account Guidelines Revised (Planning for Mechanised Routine Maintenance). Periodic maintenance of Rwebisengo-Rwangara road was executed in February 2015 under Force on Account, at the cost of UGX 34,000,000. At the time of inspections in August 2015, it was observed that the works had been completed and all the payments made but the entire road was in a sorry state with potholes as shown below; This was due to poor quality grading and shaping of the road. The Accounting Officer attributed the shortcoming to inadequate funding to maintain the 32 Km road with heavy traffic. I advised the Accounting Officer to ensure proper supervision of the road works. 58

71 5.3 GULU BRANCH APAC DLG 1. Unsupported Payment of Domestic Arrears A review of cash flow statement revealed that domestic arrears paid during the year amounted to UGX 3,789,821,272. However, the supporting documents were not provided for audit. Besides the Statement of Outstanding commitments as at 30 th June 2014 on Page 50 of the Financial Statements shows a balance of only UGX 23,085,261. In addition, the same statement of outstanding commitments reported outstanding statement of UGX.200,698,807 by 30 th June 2015 whereas a schedule of accounts payable on page 52 reported a balance of UGX.127,830,185 rendering the Financial Statement balances reported misleading. The Accounting Officer explained that there was a mix-up since monthly arrears cleared within FY 2014/15 was added to the arrears of the 2013/14 for the year and they have separated the arrears of previous financial year. There was however no change in the financial statements. I advised the Accounting Officer to reconcile the balances and make the necessary adjustments. 2. Unauthorized Reallocation Regulation 44 (1) of the Local Governments Financial and Accounting Regulations (LGFAR) 2007 requires the vote controller to ensure that expenditure is not incurred in excess of provisions authorized in the approved estimates or as may be amended by properly authorized virement, reallocation and supplementary estimates. However, reallocations amounting to UGX 4,532,761,373 were made on four programs without authority and proper reallocation warrants as detailed below: Code Item Budget Actual Variance 06 Education and Sports 9,711,475,000 13,481,894,421 3,770,419, Community based 208,696, ,379, ,683,695 services 59

72 Code Item Budget Actual Variance 10 Planning Unit 223,744, ,402, ,658,257 TOTAL 4,532,761,373 The Accounting Officer admitted the shortcoming and pledged to ensure proper budgetary planning and ensure reallocations are properly authorized. I advised the Accounting Officer to comply with the budgetary control measures. 3. Road Works 3.1 Abandoned Low cost road sealing The District contracted a local firm for construction of a Low Cost Sealing road of 2kms at UGX 363,143,268. The contract was awarded on 6 th June 2014 and completion date was 19 th December By the time of inspection in August 2015, UGX 104,636,723 representing (29%) of the contract price had been paid. However, the works had been abandoned by the Contractor as shown below: Bitumen materials abondoned on the site Road section where work was to be done. The Accounting Officer explained that the Contractor was not on site at the time of inspection. However, the Bitumen for sealing works was at site and the Contractor returned to the site. The delay was attributed to the break-down of district equipment. I advised the Accounting Officer to ensure the works are completed. 60

73 AGAGO DLG 1. Nugatory Expenditure Section 9 (2b) of the Local Governments (Financial and Accounting) regulations 2007, provides for the duties of the Chief Executive, among others to ensure that the public monies, property and resources for which he or she is responsible as Accounting Officer are properly managed and safe guarded. During the financial year UGX 156,501,982 was withdrawn by Uganda Revenue Authority from Health, Education and Local Government Management Service Delivery Programme as a penalty for non-remittance of Withholding Tax and Pay As You Earn for the year ended 2014 as shown below. VR. No. Date Payee Details Amount 3 03/05/2015 URA Money drawn from the district accounts for failure to remit taxes during the financial year 13/14. thus payment of the liability plus interest 57,888,664 Education Account 31/3/15 URA Money drawn from the district accounts for failure to remit taxes during the financial year 13/14. thus payment of the liability plus interest 48,613,318 Health Account 17 31/03/2015 URA Money drawn from the district accounts for failure to remit taxes during the financial year 13/14. thus payment of the liability plus interest GRAND TOTAL 50,000, ,501,982 The tax penalties would have been avoided if there was tax compliance. Consequently, the expenditure incurred is nugatory. I advised the Accounting Officer to ensure compliance with the Income Tax Law to avoid fines and penalties. 61

74 ALEBTONG DLG 1. Lack of Basic Facilities in Kakira Primary School The Local Governments Service Management and Service Delivery (LGMSD) program guidelines require schools to have enough classrooms and infrastructure. An inspection carried out at Kakira Primary School revealed that the school lacked adequate infrastructure. The buildings were dilapidated and the furniture was not enough. Consequently, pupils sit on the floor as shown below; Pupils seated on the floor The Accounting Officer attributed the condition of the school to inadequate funding. I advised the Accounting Officer to liaise with Ministry of Education and Sports to provide the necessary infrastructure GULU DLG 1. Payment of Salary to staff not on District List Section (B-a) of the Public Service Standing Orders, 2010 require that salaries shall be fixed at annual rates and paid in twelve (12) equal instalments, correctly and promptly and in lump sum in accordance with the approved salary structure of the Public Service. However, it was observed that UGX.71,972,777 was paid to employees whose names were appearing on the payroll but not on the district staff list. There is a risk of public funds being lost through salary payments to non bonafide employees. 62

75 The Accounting Officer stated that she was awaiting the results of the special audit being carried out by the District Internal Audit. I advise the Accounting Officer to harmonise the payroll and ensure proper review and payroll management. 2. Duplicate/Triplicate Names on the Payroll Section (B-a) (7) of the Public Service Standing orders, 2010 requires salaries to be paid correctly in accordance with approved salary structure for Public Service. A review of the two months (July 2014 and February 2015) payroll records reveal that there were a number of duplicates and triplicate names for employees. These names were identified as employees with the same names, supplier numbers, same bank and same bank account number. Employees in this category were paid thrice and/or twice a month for that period under review amounting to UGX 112,808,177. The Accounting Officer stated that there was an ongoing special audit which was being undertaken by the District Internal Audit for which they expect a report in two months time. I advised the Accounting Officer to ensure proper payroll management by clearing the payroll immediately to avoid duplicate payments. 3. Delayed Completion of Works Audit inspections were carried out in November 2015 on various contracts awarded to various service providers to assess their performance and the following matters were observed:- 63

76 Contractor Description Contract Period Omatala Women Renovation of Start and end Group Operating dates were; Contract Sum Theatre at 10/1/2015 and UGX.65,284,450 Wach Health 16/04/2015 Centre IV respectively Ms Lado Construction (U) Ltd Contract sum UGX.75,311,300 Ms Rapon Ltd Contract sum UGX.315,457,453 Construction of staff house at Pagik P/S Construction of Odek bridge along Acet- Jinkomi Road Start and end dates were; 02/12/2014 and 06/01/2015 respectively Start and end dates were; 18/11/2014 and 31/05,2015 respectively Amount Audit Observation Paid 23,728,768 The contract period had expired but was not extended The works were incomplete i.e. final touches and the painting were not yet done. Contractor had abandoned the site. 31,180,330 The contract period had expired but was not extended The project had been abandoned Contract documents not maintained to a certain level of management. The contract period expired and not extended. The contractor had abandoned the project and the road was completely impassable Delayed completion of works delays communities prompt service delivery. The accounting Officer admitted that the works stalled and stated that the contractors had abandoned the works. I advised the Accounting Officer to ensure that the works are completed KOLE DLG 1 Service Delivery 1.1 Aboke HC.IV An audit inspection was carried out on Aboke Health Centre IV to assess the conditions of the Health Centre s infrastructure and the following shortcomings were identified:- 64

77 The hospital is not fenced exposing the facility to security challenges as shown below: Animals grazing freely at the hospital premises The buildings are dilapidated and in a sorry state as below: Dilapidated buildings There is need for urgent renovation. There are only two (2) toilets which are about to collapse. 65

78 One of the functioning toilet with a deep Abandoned toilet which can act hole traced to the stance prone to as a harbor for snakes and also collapse risky to children since the pits are not closed Expired drugs were damped along Alyat Swamp a short distance away from the Health facility. However, some expired drugs were stored in the same shelves with the drugs in use. The Accounting Officer admitted the shortcomings and indicated the rehabilitation of Aboke HC IV has started. I advised the Accounting Officer to liaise with the Ministry of Health and ensure that the Health Centre is rehabilitated KITGUM DLG 1. Inspection of Kitgum Main Hospital The audit inspection of Kitgum main Hospital revealed that some of the structures at the Hospital were in a sorry state and required urgent renovation. It was observed that condemned structures were being used as Tuberculosis wing and others as stores as shown in photos below: 66

79 Pictures of scenes at Kitgum Hospital Dilapidated structures -stores and the TB department/wing It was further observed that some drugs were piled on the floor instead of pallets. This puts the drugs to a higher risk of expiration because of moist conditions. The Accounting Officer explained that the Hospital was meant to be in the first phase of renovation by the Ministry of Health under the Uganda Health Sector Strategic Plan (UHSSP) but missed the opportunity and the hospital is now scheduled to be renovated in the second phase. I advised the Accounting Officer to follow up the matter with the Ministry of Health to ensure renovation is undertaken. 2. Stalled Projects Audit inspection carried out in June 2015 on various projects rolled over from the previous year, revealed that some projects had stalled as shown below:- 67

80 Contractor Description Contract Period Amount Paid Audit Observation Ms United Orphans Construction of Start and end Construction had Company Ltd one block of two dates were; stalled for more Contract sum classrooms at 07/02/02011 and than 4 years and UGX.37,000,000 Lagoro Seed 07/05/2011 the structures Secondary were being School continuously eroded away by weather effects. No contract documents were maintained to ascertain the level of management follow ups. Originally Ms Omrid General Enterprises Contract sum; UGX.114,963,600 Completion of children s ward at Omiya-Anyima Health Centre UGX.22,860,000 paid to Omrid General Enterprises (Contractor) No works were done by contractor after receiving advance of UGX.22,860,000 Advance to Contractor had not yet been recovered. Later, UGX.85,000,000 advanced to Health department to complete Ms Gemodwong Enterprises Ltd Contract Sum; UGX.48,503,782 Construction of staff houses at Camgweng Primary School Contract Agreement signed on 16 th May 2011 UGX.85,000,000 advanced to Health department Works were ongoing by Health department Construction had stalled for more than 4 years. The structures were eroded away by weather effects. No contract documents were maintained to ascertain the level of management follow up efforts. The Accounting Officer attributed the delay to the interdiction of; the then substantive Chief Administrative Officer which led to failure by Contractors to access funds which eventually was returned to the Treasury. The Accounting Officer further explained that Ms Omrid General Enterprise (Contractor) was being prosecuted by President s Office. 68

81 I advised the Accounting Officer to initiate measures to ensure that the civil works are completed LAMWO DLG 1. Road Works 1.1 Incomplete Project Audit inspections carried out on two road rehabilitation to assess the condition of the roads and status of work done revealed the shortcomings:- Contractor Description Contract Period Amount Paid (UGX) Audit Observation Ms Lab Plus (U) Ltd Contract Sum UGX159,945,370 Installation of culverts on Palabek Kallokung road and vented drift construction on Limur Stream Start and End dates were 28/02/2014 and 30/06/2014 respectively 110,629,607 Although the contractor demobilized from the site and culverts were left hanging with no headwalls. The contractor started work on 11/04/2014 and stopped work on 30/09/2014. He later abandoned work. Broken culverts created large holes in the middle of the road. Work on the vented drift had not been completed. 69

82 Contractor Description Contract Period Amount Paid (UGX) Audit Observation Force Account on Rehabilitation of Gem Central Pawena Road UGX 206,953,600 Head walls for some culvert lines had not been constructed. The headwalls had been costed at UGX.7,402,600 Some sections of the road were not compacted. Some sections of the road were not graveled though budgeted for at UGX.103,372,000 The Accounting Officer stated that the works had now been completed using the Force on Account for both projects. I advised the Accounting Officer to follow up the contractor who failed to complete the works and indicate the source of funds for completion of the two projects using Force on Account Mechanism LIRA DLG 1. Delayed Completion of Lira-Soroti Road The audit of the construction of Low Cost Sealing at Boroboro-Lira Soroti road, at a contract sum of 199,447,169 revealed the following shortcomings: 70

83 Contractor Description Contract Period MS Pehan Construction Start and end Construction Ltd of a low cost dates were; Contract sum Sealing at 04/11/2014 UGX.199,447,169 Boroboro-Lira and Soroti Road 4/02/2015 Amount Paid Audit Observation (UGX) 103,934,608 Partial works had been done The contract period had expired and not been extended There procurement irregularities observed namely; No record of bid documents and submission documents contrary to Regulation LGPDAR 2006 Delayed completion of projects denies the community prompt service delivery. Delayed completion of the works was attributed to lack of capacity by the contractor and lack of close supervision. I advised the Accounting Officer to enhance supervision and ensure that work is completed in a timely manner. 2. Health Equipment Donated To Ogur HC IV Regulation 9(2) (j) of the Local Government Financial and Accounting Regulations, requires the chief executive to establish proper storage facilities with accounting and financial control systems to ensure efficient receipt, issue and safe custody of stores, vehicles, plant and other assets. The Health Centre IV received a donation of Health equipment worth US $450,000 from NUHITES and USAID programmes. However, the 71

84 equipment was not availed for physical inspection. There is a risk that the equipment could have been lost. The Accounting Officer promised to follow up the matter and ensure that the equipment is availed for audit verification. I urged the Accounting Officer to follow up matter and ensure that the items are made available for audit verification PADER DLG 1 Transfers to Un operational Institutions According to quarterly releases to the Local Government a total of UGX.161,056,000 was transferred from the Ministry of Education and Sports to Pader Technical and Farm School on a quarterly basis via the district vote 547 as shown below: School Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Technical and Farm School 40,264,000 40,264,000 40,264,000 40,264, ,056,000 However, it was observed that the Technical school was not operational in the district rendering the transfer fictitious. In my previous reports, I reported that Operational Funds amounting to UGX.555,933,000 were transferred to the same Technical and farm School for the financial years 2012/2013 and 2013/2014. The Accounting Officer explained that Pader Technical Farm School exists in Pader Sub County but for the last three financial years (2012/2013, 2013/2014) and (2014/2015) it is under construction. The Accounting Officer further stated that Inspector General of Government regional office, Gulu is already investigating the matter. However, he stated that since the monies were direct transfers to the institution yet to be operationalized, the Ministry of Education and Sports is responsible because it advises the PS/ST for the releases. 72

85 I advised the Accounting Officer to follow up the funds with the Institution to ensure proper utilization. 2. Delayed Completion of Civil Works It was observed that a contract amounting to UGX 71,004,310 was awarded to a Local firm for construction of three classroom block at Lacekocot Primary School. By the time of audit, October 2015 a sum of UGX 63,903,879 representing 90% of the contract sum had been paid, however, the works had not been completed and the contract period had expired as shown below: Contract Description Contract Period MS Loborom Construction of The start and Company Ltd 3 classroom end dates Contract sum block at were UGX.71,004,310 Lacekocot 10/12/2014 Primary School and 11/3/2015 respectively Amount Paid Audit Remarks 63,903,879 The contract period had expired and had not been renewed. The construction was incomplete and the contractor had abandoned the site. The delayed completions of works deny the community the timely services. The Accounting Officer explained that Council had recommended the contractor to be terminated and a new one sought to complete the works. The matter requires urgent attention. 73

86 5.4 JINJA BRANCH BUGIRI DLG 1 Poor Contracts Management Local Government Public Procurement and Disposal of Assets(LGPPDA) 119(3) states that upon receipt of a copy of a contract, the contract supervisor shall prepare a contract implementation plan and forward a copy to the head of user department, secretary of the contracts committee among others for monitoring purposes. Additionally, section 119(10) f, requires the contract manager to submit reports on the progress or completion of a contract as required by PDU or the Accounting Officer. It was however, observed that contract managers for a sample of projects worth UGX.490, 392,030 did not have implementation plans on file. In addition, no reports on progress or completion were presented for verification. Poor management of contracts may result in paying for shoddy works and poor service delivery. The Accounting Officer admitted the shortcoming and pledged to effect corrective measures. I advised the Accounting Officer to always ensure proper supervision and implementation of the contracts BUYENDE DLG 1. Supplementary Budget Local Government Financial Accounting Regulations (LGFAR), 2007 requires that if new or additional funds are required over and above the approved budgetary provisions, which cannot be met by virement or re-allocation, the vote controllers concerned shall apply to the Chief Executive for a Supplementary provision. However, it was observed that, the budget was revised from UGX 14,564,405,571 to UGX 16, 052,290,612 representing an increase of UGX 1,487,885,

87 However, there was no evidence that the supplementary was approved by the District Council. The Accounting Officer had indicated that approval was obtained but no minutes of Council were presented for audit verification. I advised the Accounting Officer to comply with the regulations and to provide evidence of Council approval for audit verification. 2. Service Delivery 2.1 District Health Service Delivery Paragraph (D) of the Local Government Management and Service Delivery (LGMSD) program Operational Manual for Local Governments 2009 sets minimum standards for proper functioning of Health Centres. However, inspection of the health centres revealed that most of the basic minimum standards were not met as summarized in the table below; a) Kidera Health Centre IV Package Operational Theatre Minimum Observation Remarks standard 1 1 Non Functional due to lack of personnel, has no capacity to transfuse blood Reliable 0 Ambulance needs repairs, has been grounded for three years Means of Transport Power Source Reliable 0 Solar is functional only in the theatre, Grid was disconnected due to failure to meet electricity bills Doctors Staff Houses staff accommodated while 23 staff are not Waste Pit 1 0 Medical waste burnt in an open area OPD 1 1 No shade for patients Water Source Reliable 1 Functional Borehole, Running water was disconnected due to failure to pay water bills Incinerator Functioning Not functioning Was constructed last year at a cost of UGX 10,000,000 however, it has not functioned till to date 75

88 b) Bugaya Health Centre III Package Minimum standard Observation Remarks Maternity 1 1 No delivery beds. Water Supply 1 0 No reliable water source. General Ward 2 0 Part of the maternity converted to a general ward. Staff Houses 5 2 Five staff accommodated, 10 staff commute from kamuli Town. Latrine Stances 16 5 Patients and workers share Latrines. Medical waste 1 0 Medical waste is burnt in an open area. pit c) Irundu Health Centre III Package Minimum District Remarks standard status Maternity 1 1 No delivery beds Water 1 No reliable water source Supply General Ward 2 1 Male, female and children share one ward Staff 5 3 Nine staff accommodated, 8 staff Houses commute Latrine Stances Adequate d) Health Services Accessibility indicators Category District status Minimum Standard Practicing Doctor: population ratio: 1: :24,000 Nurse: Population ratio: 1: :1700 Midwives: pregnant women (15-49) ratio: 1:518 1:9000 Accounting Officer attributed the gaps to financial constraints but indicated that she was engaging the political leadership, funding Ministries and agencies for readdress. I urged the Accounting Officer to follow up with Ministry of Health and Ministry of Finance and Economic Development and other stakeholders to ensure that the above shortcomings are resolved. 76

89 3.1 Education Service Delivery a) b) Inadequate standards in Primary Schools Section (a) of the Local Governments Management and Service Delivery (LGMSD) operational Manual 2009 and (a) requires Local Governments to deliver services in conformity with Primary Education Minimum National Standards of Service Delivery (MNSSD). Analysis of the school statistics for the schools in the district revealed that the standards w Level e of r educat ion e Primar y Secon b dary MNSS e D l Indicator Ratio MNSSD Pupil: Latrine stance ratio: 1:93 1:40 Pupil: Desk ratio: 1:5 1:3 Pupil: Textbook ratio: 1:65 1:3 Drop-out rate: 42% O Pupil Teach er Ratio Pupil Classro om Ratio Pupil Teacher Ratio ow minimum as shown in the table below; Pupil Classroom Ratio Education accessibility indicators Pupil Teach er Ratio Pupil Classro om Ratio Pupil Teacher Ratio Pupil Classroo m Ratio 1:95 1:180 1:66 1:170 1:61 1:131 1:61 1:126 1:75 1:84 1:70 1:82 1:68 1:75 1:85 1:90 1:55 1:55 1:55 1:55 1:55 1:55 1:55 1:55 Pupils of Nkone Primary School P.4 class pictured during a teachng session 77

90 Shortage of teachers, inadequate classrooms, inadequate desks and inadequate pit latrines (stances) negatively affect student performance which had a failure rate of 50%. Accounting Officer explained that she was engaging the Ministry of Education and Sports and other stakeholders to increase on the funds so as to address the shortcomings. I advised the Accounting Officer to lobby Government for the necessary support to address the above shortcomings in order to improve the performance of the schools IGANGA DLG 1. Encroachment on Forest Reserve Regulation 9 (j) of the LGFAR 2007, requires the Accounting Officer to ensure safe custody of all assets of the District. It was observed that, Nabukolyo Local Forest Reserve, a permanent wetland with 16 Hectares had been encroached on by Rice growers while 32 hectares of Wakatanga Local Forest Reserve had been encroached on by Maize farmers. The Accounting Officer explained that the district had joined hands with National Forestry Authority to handle the issue. The matter requires urgent attention. 2. Service Delivery 2.1 Education Sector a) Standards of Education in Primary Schools The Local Governments Management and Service Delivery (LGMSD) operational manual section (a) Program2.1.2 (a) requires Local Governments to deliver services in conformity with Primary education minimum national standards of service delivery. Documentation review revealed that the district standards are below the national standards as shown in a table below; 78

91 Table of School Infrastructure No. Ratio National Standard Average of (33) schools 1 Classroom : Pupil 1:55 1:94 2 Latrine: Pupil 1:40 1:90 3 Desk:Pupil 1:3 1:7 Inadequate infrastructure negatively affects the academic performance. The Accounting Officer is advised to engage the Ministry of Education to address the matter. 2.2 Inspection of Health Centers and the Hospital Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. a) Patient Over Load Review of health inspections reports for the year revealed that the District health services has a patient over load compared to the set national standards which has slowed down the progress of the District in meeting the national development goals shown in tables below; Cadre National standard Iganga District Doctor 1: :36200 Nurses 1:1700 1:3291 Consequently, the medical staff are over worked and the facilities not sufficient. The inspection of the health facilities revealed the following shortcomings: b) Health Centers An audit inspection of the Health Centres of Igombe HC III, Nawandala HC III, Ituba HC II and Buyanga HC II also revealed the following shortcomings; 79

92 1. Igombe HC III Minimum standard HC 111 one Maternity ward Basic accommodation for all core staff Power source Eight two stance pit latrines Medicines Current status No maternity ward None out of 8 staff is accommodated No power supply. The solar system supplied in July 2011 broke down One 4 stance pit latrine Lacked items like gauze, cotton wool and medicine like mabendazole, Vit A, cycline capsules, phelasulphate, amoxyll, phenobabitom, magnesium, pilton, injection peninciline and metronendazole 2. Nawandala HC III Minimum standard Two general wards Basic accommodation for all core staff Current status One mixed ward for both men and women The health center has 3 medical workers out of 11 accommodated. Staff quarters are still under construction; however, they lack a toilet. 3. Buyanga HC II Minimum standard HC 11 Basic accommodation for all core staff Power source One Water source Medical equipment Current status No accomodation No power source No water source; nearest borehole is in Dhakhaba Primary School 1/2km away No weighing scale for adults, no fridge and medicine like Panadol, amoxyll, injectables, promathavane among others plus uniforms The Accounting Officer acknowledged the above shortcomings and attributed them to inadequate funding. I advised the Accounting Officer to engage the Ministry of Health to address the matter. 80

93 IGANGA MC 1. Unpaid Salary Arrears Section B, Paragraph 25 of the Public Service Standing Orders, 2010 provides that salary arrears that accrue to a public officer within a financial year shall be paid through the payroll within the same financial year. However, it was observed, that Council had accumulated staff salary arrears amounting to UGX. 100,745,400. Failure to pay employees salaries in time demotivates staff and negatively impacts on service delivery. The Accounting Officer attributed this to inadequate funding of the wage bill. I advised the Accounting Officer to liaise with the Ministry of Public Service and the Ministry of Finance Planning and Economic Development to ensure that the salary arrears are settled. 2. Service delivery 2.1 Education Sector a) Standards in sampled primary schools Paragraph (a) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual for 2009 sets the minimum national standards for delivery of Primary Education. A review of the education standards as at 30 th June 2015 in sampled primary schools revealed that the schools were not meeting the required national standards as shown below; School requires national standards Classroom : Pupil 1:55 Latrine : Pupil 1:40 Teacher : House 1:4 Iganga Municipal 1:90 1:90 1:4 Council Igamba Primary School 1:73 1:63 1:30 Bugumba Noor Islamic Primary School 1:49 1:22 Nil 81

94 School requires national standards Classroom : Pupil 1:55 Latrine : Pupil 1:40 Teacher : House 1:4 Kasokoso Primary 1:68 1:64 1:36 School Nakavule Primary School 1:112 1:67 1:33 Noor Islamic Primary 1:86 1:86 Nil School Buliigo Primary School 1:55 1:49 1:15 These inadequacies impact adversely on the academic performance of the institutions. The Accounting Officer attributed the challenges to limited funds, disbursed by the Central Government. I advised the Accounting Officer to engage the Ministry of Education and Sports and other stakeholders to ensure that the above inadequacies are addressed and the minimum national standards met. 2.2 Inspection of the Health Facilities Standards in Sample Health Centres Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centres. An inspection of selected health centres revealed the following shortcomings:- a) Iganga Municipal Council HC III Minimum standard HC 111 Current status Two staff houses type 1 No accommodation One staff house type 2 Two staff houses type 3 Medical equipment - Fridge needs repairs - Microscope requires routine servicing 82

95 b) Walugogo HC II Minimum standard HC 11 Two staff houses type 1 Current status No accommodation c) Prisons HC II Minimum standard HC 11 Two staff houses type 1 Three of two stance pit latrines (eco toilet) Water source Current status No accommodation No latrines No source The above shortcomings hinder effective health service delivery in the municipal Council. The Accounting Officer attributed the shortcomings in health service delivery to inadequate funding. I advised the Accounting Officer to engage the Ministry of Health to have the issues of health service delivery addressed. d) Review of Health Management Committees Section 5.4 of Ministry of Health Guidelines 2012 requires Health Unit Management Committees to meet at least quarterly to conduct health unit business. Audit observed that the health management committees in 3 Health Centers of Walugogo HC II, Prisons HC II and Ignaga Municipal Council HC III did not conduct any meetings. Failure to meet regularly undermines the oversight roles of the committees. The Accounting Officer admitted the shortcoming and attributed it to inadequate funding of the health centres. I advised the Accounting Officer to ensure that adequate funds are provided to the management committees to enable them execute their mandate. 83

96 JINJA DLG 1. Non Delivery of Medical Supplies Audit observed that an amount of UGX. 906,061,920 had been allocated to the District for supply of medicines by the National Medical Stores. However, it was observed that only UGX.854,579,967 worth of drugs was supplied. The balance of UGX.84,960,928 could not be accounted for. The non-delivery of drugs and medical supplies greatly affects the capacity of health facilities to offer health services to the Local community. I advised the Accounting Officer to follow up with Ministry of Health and National Medical Stores (NMS) to ensure that the NMS honours its obligation. 2. Status of Project Implementation 2.1 Inspections of Health Facilities District Health Service Paragraph 2.1.1(D) of the Local Government Management and Service Delivery (LGMSD) Program Operational Manual 2009, for Local Governments sets minimum standards for proper functioning of health centers. However, audit inspection of a sample of Health Centers revealed that most of the health centres did not meet basic minimum standards as shown in the table below: (a) Buwenge General Hospital Minimum Requirements Maternity ward Operating Theatre General Ward Power Source for Operations (Refrigeration, Lighting and Theatre Operations) Budget Provision for the Hospital Current Status No Operating Theatre No General Ward No Power Source though UGX.28,968,400 was deposited to UMEME for Supply of Power 0n 29 th June No Budget for Medicines and Non-Wage activities. 84

97 Administration Block Basic accommodation for all core staff Basic Operating Theatre One Pediatric ward At least one Mortuary for the Hospital At least one medical Waste Pit Under construction Lacks Accommodation for Core Staff No Operating Theatre Lacks a pediatric ward Lacks a mortuary Lacks medical Pit (b) Wakitaka Health Centre III Minimum/Standards /Requirements At least one stance pit latrine for each House Basic accommodation for all core staff Access to modern energy lighting for maternity and laboratory Current Status Two Pit latrines for the two homes and out patients Two out of the 19 staff are accommodated No Power Source. Health Center was disconnected by UMEME because of outstanding bill. (c) Bugembe Health Centre IV Minimum/ Standards /Requirements One General Ward One Mortuary Current Status No General Ward No Mortuary (d) Lumuli Health Centre II Minimum / Standards Current Status /Requirements Access to modern source of energy No Power Source 5 Beds 1 Bed Medical Examination Bed No Examination Bed Weighing Scale No weighing Scale Baby Cot No baby Cot Water Source No Water source 85

98 Minimum / Standards /Requirements One Placenta Pit An incinerator Access to modern energy lighting for maternity and laboratory Current Status No Placenta Pit No Incinerator No Power Source (e) Mutai Health Center II Minimum/Standards /Requirements Basic accommodation for all core staff One Incinerator for the Health center Current Status No staff House for Core staff No Incinerator Inadequate health facilities have a negative impact on service delivery. attributed to inadequate funding. This was The matter requires urgent attention. 2.2 Education Sector a) Assessment of the Minimum Recommended Infrastructure in Primary Schools The Ministry of Education and sports has established the minimum national standards (MNS). However, inspections carried out in Universal Primary Education schools revealed that the current infrastructural status in the District schools fall below the minimum standards in terms of classroom: pupil ratio, teacher: pupil ratio, desk: pupil ratio, stance: pupil ratio and house: teacher ratio. Teacher: Pupil Ratio: - The recommended ratio of teacher: pupil ratio is 1:55; whereas the average ratio of the District was 1:35, in some schools were found to be badly off at 1:70. Inadequate Teachers Houses: - most schools either had one teacher house or none at all. Text books: Pupil ratio:-although the recommended Text book pupil ratio 1:3 in most schools its 1:15 and beyond. 86

99 Desk Pupil ratio: - The recommended desk: pupil ratio is 1:3. However, Namulesa Muslim Primary schools had a ratio of 1:25. In adequate infrastructure negatively impacts on the performance of the pupils Management acknowledged the challenges and attributed this to financial constraints but promised to have them addressed when funds are available. I advised the Accounting Officer to engage the relevant stake holders so that adequate resources are mobilized for infrastructural development in the school. C) Performance Over the Years The following table shows primary 7 academic performance of the District over a period of three years. YEAR DIV(1) DIV(2) DIV(3) DIV(4) UNGRADED ABSENT Total Review of performance for the last 3 Years as per the table above shows that most primary seven candidates passed in division II. Additionally, a significant number of Pupils (13.2%) of students passed in division 4, implying that most of them may not have qualified for Secondary School admission due to failure to attain minimum requirements. According to the Accounting Officer, the poor academic performance was attributed to inadequate infrastructure. The matter requires urgent attention KAMULI DLG 1. Delays to Lay Budget Estimates before the District Council 87

100 Section 18(2) of the Local Government Finance and Accounting Regulation 2007 states that the chairperson of the Local Government shall, not later than the fifth day of June of each year, cause to be prepared and laid before the District, estimates of revenue and expenditure and annual plans of the District for the next financial year. However it was observed that the budget estimates for the financial year 2014/2015 were not laid before District by the 15th day of June 2014 which was in disregard of the law. It was also noted that UGX35,657,850 was incurred without the vote on account approval. A delay in the approval of budget estimates implies that there will be delays in implementing District Activities hence delays in service delivery. The Accounting Officer attributed the delay to the Speakers refusal to convene a meeting to consider the budget. I advised the Accounting Officer to ensure that the budget law is strictly adhered to. 2. Expenditure 2.1 Nugatory Expenditure Regulation 9 (2b) of the LGFAR, 2007, requires the chief executive to ensure that the public monies, property and resources for which he or she is responsible as Accounting Officer are properly managed and safeguarded. However, it was observed that Court awarded Charles Akoyo (former DEO) a total sum of UGX 267,788,936 as emoluments accrued from the time he was interdicted to the date of the payment including interest at Court rate from the date of interdiction till payment in full. The costs arose when the court ruled that the interdiction and the subsequent dismissal by the district were unlawful. The costs could have been avoided had management taken due care in ensuring that the dismissal was lawful. Accordingly the expenditure was nugatory. The Accounting Officer admitted the shortcoming and attributed it to failure to follow the logical legal provisions and safeguards. 88

101 The Accounting Officer should ensure that appropriate decisions making are to avoid such nugatory expenditure KAYUNGA DLG 1. Inspection of Civil Works It was observed that a number of projects had not been completed by the time of audit as shown below:- Project Construction of a staff house with a 2 stance pit latrine at Bungoma primary school Construction of a staff house with a 5 stance pit latrine at Nsiima church of Uganda Primary school Amount Start (UGX) date 65,035,575 04/12/ ,644,500 23/11/20 14 End date Inspection Status date 30/05/ th July 2015 Incomplete 23/05/ th July 2015 Incomplete No water gutters Earthing not installed Painting was still ongoing Total 132,680,075 The delay to complete the civil works can lead to extra administrative costs. The matter requires urgent attention KAYUNGA TC 1. Lack of Legal Ownership of Council Assets Regulation 58(4) of the Local Government Financial and Accounting Regulation (LGFAR), 2007 requires that the properties and assets of a Local Government including land be properly registered and titles issued. However, it was observed that 4 vehicles purportedly owned by the Town Council lacked log books. 89

102 In addition, the Town Council did not have land titles for the land situated in Ntenjeru kayunga sub-county and in Kanjuki. Consequently, I could not confirm the ownership of the assets. The Accounting Officer, attributed the shortcoming to partial payments made on some piece of land by the Town Council and explained further that the processes to have them surveyed will commence thereafter. I advised the Accounting Officer to ensure that Land Titles and Log books for Council vehicles are secured LUUKA DLG 1. Service Delivery 1.1 Education Sector a) Schools Ministry of Education and Sports has established the minimum National Primary Education Standards. On the contrary, the district performance was poor as illustrated in the table below:- No Indicator MNSSD Actual 1 Teacher pupil ratio 1:55 1:164 2 Classroom pupil ratio 1:55 1:198 5 Desk pupil ratio 1:3 1:9 6 Permanent teacher At least 4 teachers per 1:25 accommodation 7 Latrine stance pupil ratio 1:40 1:117 8 Building maintenance 2%of capital expenditure (not funded by LDG) budget of education Not allocated as all funds are used for construction- No maintenance 9 No of school inspections per term (not funded by LDG) Performance over years below standard Source: The district literacy report 2015 Inadequate infrastructure negatively impacts on the academic performance of students. 90

103 The Accounting Officer admitted the challenges and promised to have them addressed. I advised the Accounting Officer to engage the relevant authorities to ensure that the matters are addressed LUUKA TC 1. Lack of Health Facilities Section 2.1.2(b) of the Local Government Service and Management Delivery opertaional manual for Local Government require, every parish should have a health center II and the Town Council (Sub-county) should have a health center III. It was observed that the 5 parishes in the Town Council namely;busonga, Kitwekyambogo, Busimawu, Lwanda and Kiyunga, lacked a health centre as required by the guidelines. The communities are therefore denied public health services. The Accounting Officer admitted the shortcoming but explained that this was due to inadequate funding which affected the Council s ability to construct the health centres. I advised the Accounting Officer to engage the relevant stakeholders and ensure that the Health Centres are established MAYUGE DLG 1. HEALTH 1.1 District Health Service Delivery Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. However, inspection of a number Health Centers revealed that most of the basic minimum standards had not been met as summarized in the tables below: 91

104 a) Kityerera Health Center IV Minimum standard HC IV Basic accommodation for all core staff Adequate Medicines Transport The service delivery package for HC IV requires a HC IV to have two doctors Staffing The standard requires a health centre IV to have two doctor s houses. The standard requires the health center to have 9 staff houses Current status Only 10 staff out of 48 are accommodated Inadequate drugs were observed No ambulance despite the fact that it is located more than 50KM from the nearest Regional referral hospital The health centre operates without a doctor Inadequate There was no doctor s house found. The health centre has only two staff houses Equipment Theatre equipment still covered in plastic bags. Equipment has been idle for over two years. b) Baitambugwe Health Centre III Minimum standard HC 11I Running water Current status No running water although a borehole has been improvised Basic accommodation for all core Two staff are sharing a house out of 15 Staff Non Delivery of Medical Supplies It was observed that an amount of UGX.510,600,855 had been allocated to the District for supply of medicines by the National Medical Stores. However, it was observed that only UGX 391,469,967 worth of drugs where supplied. The balance of UGX 119,830,582 was not supplied. Management attributed this to lapses in National Medical Stores delivery system. 92

105 The non-delivery of drugs and medical supplies greatly affects the capacity of health facilities to offer health services to the Local community. I advised the Accounting Officer to follow up with Ministry of Health and National Medical Stores (NMS) to ensure that the NMS honours its obligation NAMUTUMBA DLG 1. Service Delivery 1.1 Education Sector The Local Governments Management and Service Delivery (LGMSD) operational manual section (a) Program2.1.2 (a) requires Local Governments to deliver services in conformity with Primary education minimum national standards of service delivery. Analysis of a sample of 10 schools revealed that the required minimum education standards have not be attained as shown below; School Teacher : pupil Classroom : pupil Latrine stance: pupil Standard 1:55 1:55 1:40 Mpumiro P/s 1:72 1:92 1:129 Bulagazi P/s 1:59 1:263 1:120 Kategere P/s 1:62 1:201 1:160 Budatu P/s 1:85 1:104 Bunyinkiira P/s 1:207 1:83 Bukono P/s 1:62 1:108 1:132 Nabitula P/s 1:68 1:239 1:96 Nawaikona P/s 1:67 1:118 1:94 Nawampandu P/s 1:69 1:88 1:81 Namutumba Upper P/s 1:60 1:132 1:185 NAKISI P/s 1:56 1:125 1:100 The inadequate facilities negatively impacts on the academic performance of the schools. 93

106 The Accounting Officer attributed the shortcomings to inadequate funding for the UPE capitation grants to the schools. I advised the Accounting Officer to engage stakeholders to ensure that the required education standards in the primary schools are attained. 1.2 Health Sector Section of the LGMSD Operational Manual 2009 sets out Minimum National Standards of Service Delivery (MNSSD), inspections of 8 Health Centers within the District revealed the following deviations from the standards as set out in the MNSSD; a) Health Center II s Kiranga HC II and Namuwondo HC III Minimum Standards At least 1 functional and accessible pit latrine OPD and Outreach services Current Status Kiranga had no pit latrine Namuwondo Health Center II did not have medical beds b) Health Center III s Minimum Standards OPD with community shed Current Status Namutumba, Magada and Ivukula HC III OPD but without a community shed MNSSD stipulate 2 staff houses No staff house Two General wards One general ward(ivukula, Nawaisoke HC IIIs) Eight two stance pit latrine One 2 stance lined pit latrines lacking in Namutumba, Magada, Ivukula and Nawaisoke HC IIIs. c) Nsinze HC IV Minimum Standards Current Status 94

107 Minimum Standards Current Status One Mortuary None Two Doctors houses One exits One Operating theater The theatre is not operational due to Lack of a Doctor and Anaestretic officer. Ten two stance pit latrine 6-2 stance lined pit latrines exist Means of transport- one Non functional ambulance. The Accounting Officer attributed the above shortcomings to inadequate resources. I advised the Accounting Officer to engage Ministry of health and ensure that the short comings are addressed NAMAYINGO DLG 1. Service Delivery 1.1 Water Sector a) Poor Water Coverage and Non Functioning Water Sources According to the District Development Plan and sector Objectives for the financial year 2014/15 the district was to increase water coverage to 77%. A review of the performance reports water coverage in the district was 34% while 21% of the water services were non-functional as detailed below; Sub county Total Population Boreholes Functiona l 95 Non Functiona l Total Population served BANDA 55, , BUHEMBA 32, , BUSWALE 33, , BUYINJA 25, , MUTUMBA 48, , NAMAYINGO T.C 14, , SIGULU 42, , Coverage %

108 Sub county Total Population Boreholes Functiona l Non Functiona l Total Population served TOTAL 252, (21%) , Coverage % The low water coverage exposes the communities to unsafe water hence a risk of water borne diseases. The Accounting Officer attributed the shortcomings to low funding; but promised to lobby for more funding. I advised the Accounting Officer to engage the relevant stakeholders to secure the funding to address the matter. b) Lack of Water Quality Surveillance Section 4.14 of the water and sanitation sector guidelines 2009/2010 requires Local Governments to carry out measurement for water quality of newly constructed and existing water sources. However, out of the 429 old water sources, only 50 were tested for water quality representing 11% and this was done by National Water and Sewerage Corporation. Failure to test water consumed by the community, subjects them to the risk of taking unsafe water which may lead to contracting of waterborne diseases. The Accounting Officer attributed the lack of water testing equipment to financial constraints. I advised the Accounting Officer to engage the relevant authorities and acquire water testing equipment. 1.2 Inspection Report Paragraph of the Local Government Service and Management Delivery (LGSMD) operational Manual (Primary Education service delivery) requires a primary school to 96

109 meet certain required minimum standards. However, a review the performance reports in the education sector revealed that District standards were below the minimum standards as shown below; No Indicator Minimum Actual for District standards/national 1 Teacher pupil ratio 1:55 1:67 2 Classroom pupil ratio 1:55 1:95 3 Desk pupil ratio 1:3 1:5 4 Permanent teacher At least 4 teachers 1:32 accommodation 5 Latrine stance pupil ratio 6 Building maintenance (not funded by LDG) 7 No of school inspections per term (not funded by LDG) 1:40 1:70 2%of capital expenditure budget of education 2 1 Not allocated 8 Performance over years Poor Management admitted the shortcomings and attributed them to inadequate funding. The Accounting Officer was advised to engage the Ministry of Education and Sports to address the above shortcoming. 5.5 KAMPALA BRANCH BUVUMA DLG 1. Unpaid Staff Salaries Regulation 54(2) of the LGFAR, 2006 requires all employees to be paid monthly salaries and employees salaries and pensions should be due and payable on the last day of each month but arrangements may be made to effect earlier payment, particularly at times of public holidays. However, the Payroll audit carried out in the month of August, 2015 revealed that 171 District staff and 14 Political Leaders had not been paid their monthly salary and Gratuity respectively for the month of June 2015 to the tune of UGX.120,318,

110 This could have been a result of inefficiencies in payroll management. Delays in salary payment may de-motivate staff and affect service delivery to the community. The Accounting Officer explained that the Ministry of Finance, Planning and Economic Development allocated insufficient funds to the district for salaries for the month of June Consequently, some members of staff were not paid. The Accounting Officer further indicated that the matter was communicated to the Ministry for additional funding. I advised the Accounting Officer to ensure that all salary arrears are paid GOMBA DLG 1. Un authorized Expenditure Regulation 24(1) of the Local Governments Financial and Accounting Regulations, 2007 states that expenditure for which there is insufficient or no provision in the approved estimates shall not be incurred until a supplementary estimate has been approved. However, contrary to the regulation, it was observed that expenditure amounting to UGX.67,315,000 was incurred on road works that were not provided in the annual workplan submitted and approved by Uganda Road fund for the year under review as shown below; DATE VOUCHER NO CHEQUE NO PAYEE 07/08/ Aug 895 Mwoota African Investment 08/ Mutyaba Herbert Kaggwa 12/11/14 12/ Mwoota African Investment DETAILS OF PAYMENT supply of diesel for road works for Kashengo- Buyinja 13 m allowance for supervision of Buyanja road fuel for grading of Kisaka -Mamba road AMOUNT 11,520,000 4,875,000 11,000,000 19/12/14 10/ Wamala Geofrey periodic maintenance of Kasana-Mamba road 750, Mwoota African Investments /1001 Highways Solutions ltd fuel for opening of Kisozi-Kiberero road hire of machine on Kisozi-Kisoze- road 5,000,000 14,918,000 30/01/ Jan 1002 Wamala Geofrey release of amount on Kisozi-Kibeere road 1,100,000 98

111 11/02/ Feb 1010/11 Highways Solutions ltd hire of machine on Kisozi-Kibere- road 18,188,000 TOTAL 67,351,000 This was irregular. The Accounting Officer explained that these roads were handled as emergency cases and that Council approved this activity under greater Kisozi Livelihood Road construction region. However, the Council minutes approving these roads were not presented for audit verification. I advised the Accounting Officer to ensure that all expenditure is approved by Council LUWERO DLG 1. Loss of Cash Regulation 95 of the Local Governments Financial and Accounting Regulations, 2007 requires all officers of the Council who hold public money, documents and books of account, to ensure their safe custody and take adequate steps to ensure their protection, handling, security and banking, as set out in the accounting manual. Contrary to this requirement, the financial statements indicate that the district incurred a financial loss of UGX.50,115,600. Out of this amount, the loss of UGX 19,962,950 has been outstanding as far back as the year 2000/2001 while UGX 30,152,650 was lost in the financial year under audit. Loss of cash may be due to poor supervision of responsible officers and weak internal controls. Failure to recover losses over a long period may lead to their write-off as bad debts. In response, the Accounting Officer explained that efforts to recover carried over losses totaling to UGX 19,962,950 were futile as no status report was received from police. The Accounting Officer further indicated that the process of writing off this loss was ongoing. The Accounting Officer further explained that the recent loss of UGX30,152,650 was investigated internally, which led to interdiction of two officers and the matter was submitted to police for further investigations. The Accounting Officer was advised to follow up the matter with police to ensure recovery. 99

112 2. Salary Arrears Regulation 54 (3) of the Local Governments Financial and Accounting Regulations, 2007 states that all Local Governments shall be up to-date with salary and pension payments. However, review of the payroll verification reports by the Senior Personnel Officer (SPO) revealed that the district had unpaid arrears for the months of May and June 2015 totalling to UGX 203,101,945. Delayed salaries payment de-motivates staff. The Accounting Officer explained that the arrears arose from payroll errors which occurred during the transition period decentralising the payroll and migration from the legacy system to IPPS. I advised the Accounting Officer to ensure that the errors are rectified and the arrears paid to the respective officers. 3. Review of the Youth Livelihood Programme (YLP) During the financial year 2014/15, the district incurred UGX.467,200,590 to support various youth groups under the Youth Livelihood Programme. Review of the group files revealed the following; 3.1 Funds Not Recovered Chapter 2.8 (g) of the Youth Livelihood Programme program document, 2013 requires the enterprises to have a reasonable maturity period that permits re-payment of the Interest-free Revolving Fund within a time period of one (1) year. However, it was noted that the evaluation teams did not evaluate the maturity of the projects and consequently 96% of the funds equivalent to UGX.442,358,600 was not recovered by the end of the financial year. In response, the Accounting Officer explained that the Youth Livelihood project has a maturity period of three years, and that funds would be recovered to enable access to new groups. I advised the Accounting Officer to ensure that the funds are recovered timely. 4. Inspections of Nalinya Lwantale Primary School i) Old Structures 100

113 Indicator 2 (d)(i)of the minimum standards indicators for Education institutions 2010 requires a school to have buildings that meet occupational safety standards set in various laws. On inspection, the audit team noted that the school had a number of old structures which is a threat to the lives of both the students and staff since these are in a very sorry state such as the administration block shown below; The Old Administration Block ii) Lack of a Library Indicator 2 (d)(vii)of the minimum standards indicators for Education institutions 2010 requires a school to have a library,or reading corner. On inspection, the audit team noted that the school had a small room for a library which does not provide space for students to sit and read from. This may lead to a decline in the students performance due to absence of a conducive atmosphere for the students to read Pupil Absenteeism The school has a total of 274 students however at the time of inspection, only 100 students were present. Class P1 P2 P3 P4 P5 P6 P7 TOTAL NO Pupils engaged in unauthorised activities Eighteen (18) P.2 pupils were found digging early morning which activity was not part of the school curriculum. This wastes valuable study time and may affect completion of the syllabus. 101

114 Lack of sick bay facilities Indicator 2 (d)(xiii)of the minimum standards indicators for Education institutions 2010 requires a school to have a resting place for pupils. Audit observed that the school had no sick bay facilities or a resting place. This may affect the students and teachers in case of any emergencies where there is need for rest Lack of accommodation for Teachers The school does not have accommodation for staff; hence they have to walk long journeys to the school. This hampers their movement especially in the rainy season as their basic means of transport is a bicycle. This may be the explanation for the poor performance in the school. The Accounting Officer explained that the School Facilities Grant was inadequate to address all the above challenges. I advised the Accounting Officer to communicate the issues to the relevant authorities for possible funding. 5. Review of Luwero Rwenzori Development Project (LRDP) 5.1 Doubtful Supply of 126 Friesian In-Calf Heifers Ms. Kesso Technical Services Ltd. was awarded a contract for Supply of 126 Friesian In Calf Heifers under the Luwero Rwenzori Development Project (LRDP) at a contract price of UGX.260,820,000 under Contract No.LUWE532/SUPLS/14-15/ On 23rd January, 2015, the district paid the contractor UGX.237,387,600 for the supply of 122 Heifers on voucher No.PYPLN However, a review of the expenditure and procurement process revealed the following matters: Some of the alleged beneficiaries lacked contacts like telephone contacts, parishes of residence and second names. Consequently, tracing the persons to confirm receipt of the animals worth UGX 18,630,000 was difficult. The cows allegedly supplied did not have identification tags and as such they could not be differentiated from any other cows. 102

115 The Accounting Officer confirmed that 122 cows were procured and distributed; noting that some of the beneficiaries did not have phone contacts but the beneficiaries could be located through the Sub County Chiefs of the respective Localities. I advised the Accounting Officer to ensure that the groups are adequately monitored so that project objectives are achieved. 5.2 Supply of 46,666 Banana Tissues Culture Plantlets 46,666 banana tissues culture plantlets were supplied by M/s Agro-Genetic Technologies Ltd. under the Luwero Rwenzori Development Project (LRDP) at UGX.139,998,000 under Contract No.LUWE532/SUPLS/14-15/ On 27 th April, 2015, the district paid the contractor the full contract sum of UGX.139,998,000 on payment voucher No.PYPLN A review of the supporting documents revealed that supplies were made to 7 Sub-counties as shown below: Sub-county Quantity Kalagala 11,660 Zirobwe 8,806 Nyimbwa 11,680 Butuntumula 11,820 Kikyusa 900 Makulubita 900 Bamunanika ,666 However, a review of the inspection report of the Acting SAS Kikyusa (Mr. Misitu Magambo) of 10 th February, 2015 revealed that many of the plantations were dying. Consequently the assessment of the beneficiaries capacity to manage the project was rendered futile. The Accounting Officer, explained that the banana regime was being affected by new diseases, and that the absence of Sub-County Agriculture extension staff was affecting provision of the needed services to farmers. 103

116 I advised the Accounting Officer to liaise with relevant authorities to ensure that the diseases and lack of agricultural extension staff are addressed WOBULENZI TC 1. Non Remittance of Revenue to Lower Local Governments Part V (15A) of the Local Governments Act 1997 (as amended) requires a Town Council to distribute 5% and 20% of the total shared revenue to Parishes and Village Councils respectively. However, it was observed that the Town Council had not remitted shared revenue amounting to UGX.57,381,236 to Parishes and Village Councils as shown in the Table below:- Un-Remitted shared Revenue to LLGs Total Collections 276,151,872 Less Property tax 44,546,930 Less sale of Assets 2,080,000 Total sharable 229,524,942 25% for LLGs 57,381,236 Failure to remit shared revenue to the lower Councils denies service delivery at the Lower Local Governments. The Accounting Officer explained that although the Council had not followed the process of deflections, the funds had been allocated to various activities in the entire respective zones. I advised Management to ensure that remittances due to lower Councils are made promptly to provide services to the communities MPIGI DLG 1. Outstanding Employee Benefits Regulation 54(3) of the LGFAR, 2007 states that all Local Governments shall be up-todate with salary and pension payments. However, a review of the financial statements revealed that the district had pension arrears amounting to UGX.143,507,454, gratuity 104

117 for political leaders amounting to UGX.2,358,720 and employee costs amounting to UGX.170,820,839 by the close of the year under review, contrary to the regulation. Further review of the district account No revealed that UGX.339,165,628 was deposited on the account on 26 th of June 2015 to settle the arrears. However, the Accounting Officer explained that before funds were transferred to the beneficiaries accounts, the funds were withdrawn from the District account by the Ministry of Finance, Planning and Economic Development. I advised the Accounting Officer to follow up the matter with the relevant authorities and ensure that the arrears are settled MUKONO DLG 1. Delayed Completion of Civil Works During the year, the district received UGX 86,171,050 under the School Facilities Grant(SFG). Documentary review of a sample of projects implemented and audit inspection carried out in July 2015 revealed the following short comings; Contractor Description Period Amount Paid UGX M/S Kosolo Construction of The UGX.57,208,555 Construction contract 2 classroom Co Ltd at period was UGX.86,171,05 block, office, from 0.No.Muko542 24/12/2013 store and supply /Wrks/13- to 14/00002 furniture at 30/06/2014 Koome Buyana R/C P/S in Koome S/C Audit Observation Project was grossly behind schedule by 13 month. Un completed works Fixtures (UGX.14,747,000) Lightening protection (UGX.1,301,000), Windows and doors (UGX.12,326,900) Floor and wall finishes (UGX.10,335,500) Facial and barge boards (UGX.672,000) Delayed completion of work denies the communities prompt services. The Accounting Officer explained that the projects were far behind schedule and he attributed it to the site being a hard to reach area. The Accounting Officer further explained that the contractor had been instructed to complete the works. 105

118 I advised the Accounting Officer to follow up the matter to ensure that construction works are completed MUKONO MC 1. Understatement of Receivables Section (2) of the Local Governments Financial and Accounting Manual, 2007 provides that, under accrual accounting, revenue is realized when a transaction occurs and not when cash or its equivalents are received.a review of the municipality valuation roll for property rates indicated that the chargeable amount from properties was UGX.9,512,935,000 and the tax collectable was UGX.681,833,797. Audit however observed that the receivables were disclosed at UGX 142,837,442, implying that the receivables were understated by UGX.538,996,355. Furthermore, management did not budget for collectable property tax. The Accounting Officer indicated that there was difficulty in isolating residential properties from commercial ones for purpose of charging tax. I advised The Accounting Officer to update its property register to accurately reflect the chargeable property tax. 2. Doubtful Expenditure on Utility Bills Section (1) of the Local Governments Financial and Accounting Manual, 2007, requires that before any voucher is passed for payment, the Head of Finance shall ensure that the voucher and any supporting documents or invoices are correct in all relevant particulars. Audit revealed that, during the year the Municipal Council paid UGX.48,753,148 purportedly to settle outstanding utility bills. However, the payments were not supported by utility bills nor utility ledgers. I was therefore unable to confirm the basis for this payment; hence the expenditure was rendered doubtful. I advised the Accounting Officer to ensure that all expenditure is adequately supported before it is passed for payment. 106

119 5.5.8 NAKASEKE DLG 1. Un-authorised Excess Expenditure Regulation 24 (3) of the Local Governments Financial and Accounting Regulations, 2007 requires the Chief Executive not to commit Council unless there is a provision in the approved estimates by Council before expenditure is incurred. I observed that UGX.1,011,278,633 was spent over and above the approved budget of UGX.7,785,941,465 under Education department on salaries without authority of the Council. Management explained that there was a supplementary received from Central Government to cater for shortages in salaries for teachers. However, there was no formal communication from the Ministry of Finance Planning and Economic Development about the supplementary to enable initiation of the process of approving the supplementary budget by the Council. I advised the Accounting Officer to always seek Council approval before effecting expenditure NAKASONGOLA DLG 1. Outstanding Pension liability Paragraph 4.2 (3) of the guidelines for processing Gratuities and Pensions under the DeCentralised mode of May 2015, requires Accounting Officer to budget and account for pensions and gratuities under their Votes. However, it was observed that the district had outstanding pension liability of UGX.158,361,947 payable to former employees of the district. The Accounting Officer attributed the pension liability to budgetary constraints. I advised the Accounting Officer to make retirement requests and create retirement plans on IPPS for possible funding ENTEBBE MC 107

120 1. Delay in Completion of a Maternity Ward at Katabi Health Centre III A Local firm was awarded a contract for construction of a maternity ward at Katabi HCIII under project reference Ente.752/Wrks/ /00014 at contract sum of UGX 185,328,120. The start date was 22 nd April 2014 and expected completion date was 30 th June Audit inspection of the maternity ward in September, 2015 revealed that works were behind schedule by three months as shown below; Windows not fitted, No lightening conductor Internal fittings not yet completed with toilet and bathroom yet to be installed Septic tank still under construction Delayed completion of works deny the community timely services. The Accounting Officer attributed the delay in completion of the Maternity Ward to inadequate release of Primary Health Care Development Funds. I advised the Accounting Officer to ensure that the civil works are completed on schedule. 5.6 MASAKA BRANCH KALANGALA DLG 1. Lack of Vehicle Movement Logbooks 108

121 Section (1) of the Local Governments Financial and Accounting Manual, 2007 states that asset log books especially for vehicles, tractors, among others should be maintained to identify exactly what activities have been performed and at what date and time. It was however observed that there are no vehicle log books maintained. In the absence of the vehicle movement register, controls over vehicle movement and fuel consumption are weakened. The Accounting Officer promised to establish the movement log books for all district vehicles. I await the Accounting Officer s action KIBOGA DLG 1. Under Funding of UPE and USE Schools Guidelines from the Ministry of Education require Chief Administration Officers of Local Authorities to ensure that conditional grants to schools are received and not retained for any other purposes. A review of head counts for the 21 UPE funded schools and 9 USE schools revealed that the District schools were under funded by UGX.243,894,350 and UGX.64,160,046 respectively. This hinders the provision of quality services to the schools in the district. The Accounting Officer explained that the District Education Officer and the Chief Administrative Officer communicated to the Ministry of Education, Science, Technology and Sports about this anomaly but there was no response. I advised the Accounting Officer to continue liaising with the Ministry of Education, Science, Technology and Sports to address the matter KIBOGA TC 1. Long Outstanding Debtors 109

122 Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires that the Head of Finance is responsible for ensuring that revenue collectors, defined under these regulations, carry out their duties properly to ensure that all revenue due to the Council is promptly collected in the approved manner and banked intact. However, a review of the schedule of debtors indicated that Council had overdue debtors of UGX 36,231,042 in respect of Graduated tax and Taxi Park fees arrears which have been outstanding since 2006/07 from Kiboga District Administration and M/S Honey pot Enterprises and Transport Company. Accumulation of overdue debts limits availability of resources and negatively impacts on service delivery. The Accounting Officer explained that at one time Council hired a lawyer and court brokers but Ms. Honeypot Enterprises and Transport Co. had no physical assets to attach while Kiboga District has continuously promised to pay. I advised the Accounting Officer to pursue the collection of the debts and consider recommendation for write-off where necessary LYANTONDE TC 1. Lack of an up-to-date valuation list Section 4 of Local Government Rating Act provides that for the purposes of levying such rate as it may determine on the basis of the rateable value of hereditaments within a rating area, the Local authority shall cause to be made, for every rating area, within its limits, the first valuation and thereafter a valuation list, once at least in every five years, or such longer period as the Minister may approve. However, Council did not have an up-to-date valuation list as a basis for levying rates for Local revenues collected during the year 2014/15. The Accounting Officer explained that Council had submitted to the Contracts Committee their procurement requisition to secure a competent firm to revalue all properties. 110

123 I advised the Accounting Officer to ensure that a valuation list is updated MASAKA DLG 1. Failure to transfer unconditional grants to Sub-Counties Treasury released an amount of UGX 204,622,000 for the Sub-Counties. However, a review of transfers to Sub-Counties revealed that out of the UGX 204,622,000, only UGX.146,010,663 was transferred to the Sub-counties leaving a balance of UGX.58,611,337. Failure to transfer the funds to Sub-Counties negatively impacts on service delivery. The matter requires urgent attention MITYANA DLG 1. Outstanding Commitments Regulation 11 (1) of the Local Government Financial & Accounting Regulations, 2007 provides that the head of finance shall ensure that commitments should not be approved unless there is sufficient balance available in the relevant budget item. However, it was observed that Council had outstanding obligations totalling to UGX.94,949,931 as at 30 th June Delays to settle outstanding commitments may lead to litigation and costs. The Accounting Officer explained that outstanding commitments arose out of insufficient funding but they will progressively be cleared. I advised the Accounting Officer to adhere to the commitment control system and ensure that the outstanding debts are settled. 2. Lack of a fully constituted District Service Commission Section 54(1 &2) of the Local Governments Act, 1995 requires that there shall be a District Service Commission for each District which will consist of a chairperson and such 111

124 other members as a District Council shall determine, at least one of whom shall represent urban authorities and all of whom shall be appointed by the District Council on the recommendation of the District executive committee with the approval of the Public Service Commission. However, it was observed that the Commission was not fully constituted since it comprises of only 3 members out of the approved 5 with no chairperson during the period under review. The Accounting Officer explained that the District Council nominated 2 members whose names were forwarded to the Ministry of Public Service for approval and response was awaited. I advised the Accounting Officer to follow up the submission and ensure that the vacant positions on the Commission are filled MITYANA TC 1. Failure to issue receipts for revenues collected Paragraph of the Local Governments Financial and Accounting Manual 2007, requires that for all revenues received by Council, acknowledgement receipts which are serially numbered and printed in triplicates be issued. However, management did not avail revenue receipts issued for Local revenues amounting to UGX.29,352,663 as shown below; Particulars Total Local revenue collected as reported in the financial statements 2014/2015 Amounts 463,021,427 Amounts receipted as per availed receipts 433,668,764 Un receipted revenues 29,352,

125 This could lead to abuse of District Funds. The matter requires urgent attention MUBENDE DLG 1. Unremitted PHC funds to Health Centres and NGO Hospitals Article 193 (2) of the Constitution refers to a conditional grant as the minimum grant that shall be paid to Local Governments to run decentralized services. It was observed that the district had not remitted to Health Centre II and some NGO hospitals UGX.18,081,790 as shown in the table below;- S/N Health centre / NGO Hospital conditional grant Expected conditional grant received conditional grant outstanding 1 Mubende Town Council HC 11 2,063,523 1,500, ,523 2 Hope for the Needy Kitokolo project (NGO) 8,800, ,800,000 3 Kyanamugera NGO 8,800,000 5,218,585 3,581,415 4 St Matia Mulumba 8,800,000 6,705,284 2,094,716 5 St Gabriel Mirembe Maria 12,000,000 8,957,864 3,042,136 40,463,523 22,381,733 18,081,790 Non remittance of conditional grants adversely affects service delivery. The Accounting Officer explained that Council had written to the Permanent Secretary Ministry of Health drawing his attention to the omission. I advised the Accounting Officer to follow up the matter with Ministry of Health and ensure that the funds are remitted. a. Delays to complete doctors house at Kasambya Health Centre III 113

126 The District awarded a contract to M/S Kamwebi Finance Investments Ltd to construct a Doctors house at Kasambya Health Centre III at contract sum of UGX.75, 079,500. The contract start date was 14 th February 2013 and estimated end date was 30 th May, At the beginning of the Financial Year 2014/2015, UGX.69,219,325 had been paid, but the project was still incomplete with an outstanding amount of UGX5,860,175. Inspections carried out on 8 th July, 2015 revealed that there were uncompleted works totalling UGX.8,500,500 as shown below;- Plumbing and drainage works had not yet been done for UGX.5,192,500, Painting/touch ups not yet done for UGX 400,000. Electrical fitting and installation not done for UGX.2,508,000 Unfinished works on the Kitchen for UGX.400,000 This implies that the contractor had been paid for works not done. The Accounting Officer explained that the construction started as early as FY 2012/2013 and progress has been slow largely due to the weaknesses of M/S Kamwebi Financial Investments Ltd, the contractor. The contract was formally terminated, in August 2015, and the District issued an intention to sue notice to the company, for breach of contract. The matter requires urgent attention RAKAI DLG 1.1 Road Sector Kagamba-Bbaale-Lwentulege road Council carried out works on this road at a cost of UGX 58,621,200. On inspection, it was observed that culverts purchased at UGX 7,896,000 were not installed. This amounts to wasteful expenditure. The Accounting Officer promised to have the anomalies rectified. I advised the Accounting Officer to ensure that all the culverts are installed. 114

127 1.1.2 Lwanda-Kiwenda Road Council carried out works on this road at a cost of UGX 43,601,000. It was observed that culverts valued at UGX 19,493,000 were dumped by the road side. The Accounting Officer promised to follow up the matter and ensure that all culverts are installed. I advised the Accounting Officer to ensure that the work is completed RAKAI TC 1. Non Remittance of Shared Local Revenue Part V of the Local Governments Act of 1997 as amended requires a Town Council to remit 5% and 20% of the total Local revenue collected to parish and village Councils that make up the Town Council respectively. It was observed that an amount of UGX.12,384,260 had not been remitted contrary to the law. Non-remittance of shared Local revenue denies lower Councils the opportunity to participate in promotion of Government programs. The Accounting Officer explained that the administrative units services were imbedded in the Council programmes hence each Local Council project was implemented by the Council. I advised the Accounting Officer to comply with the law SEMBABULE TC 1. Failure to remit shared Local revenue to lower Local Governments 115

128 Part V of the Local Governments Act of 1997 as amended requires a Town Council to remit 5% and 20% of the total Local revenue collected to parish and village Councils that make up the Town Council respectively. However, Council did not remit an amount of UGX.5,126,838 (25%) to the village Councils contrary to the law. Non-remittance of shared Local revenue denies the lower Councils to participate in planned Government programs. The Accounting Officer explained that the money was not remitted to Lower Councils due to financial constraints. I advised the Accounting Officer to ensure that the shared Local revenue is remitted to Lower Councils as prescribed by the regulations BUKOMANSIMBI TC 1. Non-compliance with statutory obligations i. Failure to remit PAYE Income Tax Act Cap 340 Section 19(1) requires employment income to attract Pay As You Earn (PAYE) and remit it to Uganda Revenue Authority. However during the financial year, management deducted but did not remit PAYE amounting to UGX.2,942,400. Failure to remit the PAYE deducted may result into fines and penalties by the tax body. The Accounting Officer promised to remit the tax. I await the action of the Accounting Officer s promise. ii. Failure to Charge Value Added Tax (VAT) Section 4 (a) of the Value Added Tax (VAT) Act cap 349 requires imposition of VAT on eligible supplies. To the contrary management did not charge VAT amounting to UGX.11,302,

129 Failure to charge and remit VAT attracts fines and penalties. The Accounting Officer explained that a payment plan has been drafted to ensure that the tax is remitted. I urged the Accounting Officer to comply with the tax law KALUNGU DLG 1. Over Expenditure on Software Activities Paragraph 4.2(b) of the Water and Sanitation Sector guidelines of May 2012 requires that Software activities for rural water supply and sanitation shall be allocated up to 8% of District Water and Sanitation Conditional Grant (DWSG). Management received funds for DWSG worth UGX 328,985,492 therefore software activities should have been UGX 26,318,839. However, actual expenditure on software activities was UGX.47,363,500 leading to an over expenditure of UGX.21,044,661 representing 63% of the total grant received. Over expenditure on software activities limited the availability of funds for other planned activities. For example, management planned to construct 10 hand augured wells but only 5 were constructed. The Accounting Officer explained that this was due to wrong charging of items in software activities. I advised the Accounting Officer to ensure that expenditure on software activities is in accordance with the sector guidelines LWENGO DLG 1. Utilization of the Capacity Building Grant (BG) Section 8 of LGMSDP operational guidelines requires that not less than 25% of the total capacity building grant in the year should be used in Lower Local Government (LLGs). However, a review of CBG expenditure revealed that the district spent UGX.26,689,

130 while UGX.5,203,980 was spent at Lower Local Government which is 16% of the total expenditure of UGX.32,128,106. This affected implementation of capacity building activities in the LLGs. The Accounting Officer explained that most of these funds were utilized for the training of staff in the lower Local Government. I advised the Accounting Officer to ensure that the grant is utilized in accordance with the guidelines. 2. Payment of salaries to non-validated staff A review of the payroll records revealed that 49 members of staff missed the payroll validation exercise that took place in August The personnel officer explained that the District contacted Ernest and Young who conducted the exercise on behalf of Auditor General to fix a date for the staff to be validated but this had not yielded results at the time of the audit. However, the District continued to pay the staff monthly salaries amounting to UGX.243,928,090. This exposes the district to a risk of paying staff that are not legitimate. The Accounting Officer promised that the staff will be validated when the validation exercise resumes. The matter requires urgent attention LWENGO TC 1. Under Utilization of LGMSDP Funds The Town Council budgeted for and received UGX.6,671,977 under the Local Government Management Service Delivery Programme (LGMSD). However, it was observed that Council did not implement all the planned activities for which the funds were provided resulting into an unspent balance of UGX.6,300,000 (94%) being transferred back to Treasury. 118

131 The Accounting Officer explained that the non-utilization was due to delayed procurement process by the contracts committee. I advised the Accounting Officer to ensure that in future, Council activities are implemented on schedule and according to work plans to avoid repaying back funds to Treasury MATEETE TC 1. Non-compliance with statutory obligations Income Tax Act Cap 340 requires that all allowances gained by a resident individual on part time employment be subjected to a tax at 30%. However, during the financial year under review, the Town Council paid UGX.7,970,000 to Councillors and Standing Committees in allowances without deducting PAYE of 30% equivalent to UGX.2,391,000 as required by the law. This exposes the Council to fines and penalties from the tax body. The Accounting Officer explained that management was not aware that the deductions should have been made from those allowances. I advised the Accounting Officer to recover these taxes and promptly remit them to URA. 2. Failure to remit shared Local revenue to Lower Local Governments Part V of the Local Governments Act of 1997 as amended requires a Town Council to remit 5% and 20% of the total Local revenue collected to parish and village Councils that make up the Town Council respectively. It was observed that an amount of UGX.4,291,897 had not been remitted contrary to the law. Non remittance of shared Local revenue affects implementation of planned activities which highly inhibits service delivery at the Lower Local Councils. 119

132 The Accounting Officer explained that due to the fact that the Town Council earns very little revenue yet it has to offer service delivery in these parishes, it had been resolved in the meeting of all Chairpersons of LCI and LCII that the Town Council retains these funds to improve on service delivery. I advised the Accounting Officer to ensure that the shared Local revenue is remitted as required by law. 3. Irregular repair of tractor Section 3.14 (1), (2) and (3) of the Local Governments Financial and Accounting Manual, 2007 provides procedures to be followed for approval of a re-allocation. The procedures require the vote controllers to initiate the process addressed to the Chief Executive who will in turn submit to the Executive Committee for approval. If approved, the Chief Executive will communicate accordingly with copies to Head of Finance, Internal Audit and Auditor General. On the contrary, UGX.5,412,311 was budgeted to be used to construct a slaughter slab but the executive approved that the amounts be used to buy land where a public toilet would be constructed. However, the funds were instead used to repair the tractor without prior approval of the executive. In addition, the procurements were not forwarded back to the District Contracts Committee for approval and there were no re-allocation warrants prepared. The Accounting Officer explained that the available funds were allocated to the repair of the tractor to avoid commotion which would result from non-collection of garbage and that the Council would look for funds to purchase land for the construction of the public toilet. I advised the Accounting Officer to comply with the regulations regarding re-allocations. 120

133 4. Use of direct procurement for the hire and repair of equipment under Force Account Section 2.1 of the Circular No.3 of 2012 To Local Governments on Use of Force Account Mechanism issued by Public Procurement and Disposal of Public Assets Authority on the 21st September, 2012 requires the Procuring and Disposing Entity to procure required supplies using the procurement rules and methods in the PPDA Act, 2003 and the Local Government (PPDA) Regulations, 2006 and the Guidelines issued by the Authority. It was however observed that the district had prequalified firms for hire and repair of road construction equipment, the Town Council instead advanced an amount of UGX.14,007,000 to the Engineer to acquire equipment. The Accounting Officer explained that they had to use direct procurement under the force on account system to acquire the said spare parts/ services for the Town Council to have a bargaining power as the said pre-qualified supplier were quoting higher prices for the same products. I urged the Accounting Officer to follow the force on account guidelines for the hire and repair of road construction equipment. 5.7 MBALE BRANCH BUDAKA DLG 1. SERVICE DELIVERY 1.1 Non-Functioning Health Centre Mugiti HC III Paragraph (d) of the Local Government Management and Service Delivery (LGMSD) Programme operational manual for Local Government sets minimum standards for proper functioning of health centres. It was observed that the district constructed and completed Mugiti HC III at a cost of UGX.292,468,766 as detailed below:- Project Name Amount (UGX) 121

134 Construction of maternity ward at Mugiti HCIII (2013/14) 139,101,980 Construction of OPD at Mugiti HC III (2013/14) 65,000,000 Construction of 4 stance pit latrine at Mugiti HCIII (2014/15) 11,799,196 Construction of 4 stance pit latrine at Mugiti HCIII (2013/14) 9,900,923 Total 292,468,766 However, audit inspection revealed that the health centre is not functional. Failure to operationalize the health center has continued to deny the community the badly needed services. The shortcoming was attributed to lack of staff and drugs. The Accounting Officer explained that Skeleton staff had been deployed at the Centre and the Ministry of Health had indicated that allocation of drugs and funds was to begin in the financial year 2015/2016. I advised the Accounting Officer to continue liaising with the stakeholders to have the health center functional BUDAKA TC 1. PROCUREMENT Contract payments not properly supported Regulation 5.4.5(2) and (3) of the Local Government Financial and Accounting Manual 2007 requires payments for goods/ services to be supported by records including; Duplicate copy of requisition for goods from the user department; Duplicate copy of the Local Purchase Order (LPO); Delivery Note from supplier; Goods Received Note (GRN) from stores; Supplier s Invoice; and Contracts Committee Authority; Copy of Contract/Agreement for the service; and certificate of performance, or Inspection Report approved by a Technical Expert recognized by the Council. However, contrary to the regulation, Council made payments amounting to UGX 97,355,300 to various Suppliers/ Contracts which lacked supporting documents. 122

135 I advised the Accounting Officer to avail the documents for audit verification BUDUDA DLG 1. Service Delivery 1.1 Health Sector Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. However, on inspection of Bududa hospital and some health centers revealed a number of shortcomings as outlined below; a)bududa Hospital The Audit Inspection of the hospital revealed the following:- S/No. Shortcoming Identified Management Response 01. Under staffed with 89 staff out of the approved structure of 190, there is no staff in pharmacy and anesthesia. The hospital administrator is the Acting District Personnel Officer at the same time without an assistant. The Hospital recruitment was last done in Only one vehicle is available - an ambulance that does all the hospital operations. The issue is noted but more staff was being transferred from the Health Centre 111s to beef up the hospital operations. This issue was forwarded to the Ministry of Health for action. Poor facilitation of the hospital could result in poor service delivery. I advised the Accounting Officer to engage the Ministries of Health and Finance and Economic Development to assist in ensuring that the hospital is better facilitated for effective service delivery. 123

136 5.7.4 BUDUDA TC 1. Lack of a Physical Development Plan Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority or city shall establish an urban physical planning committee which shall cause to be prepared urban and Local Physical Development Plans and detailed plans. However, it was observed that the Town Council neither had a Town Planning Committee nor Physical Development Plan. Lack of Physical Planning Committee undermines orderly and organized Town development. The Accounting Officer attributed the Shortcoming to lack of technical staff including; a Physical Planner, Land Surveyor, Architect and Cartographer. I advised the Accounting Officer to ensure that a Physical Planning Committee is constituted and a physical development plan developed BUKWO TC 1. Lack of Urban Physical Plan Section 11 and 12 of the Physical Planning Act, 2010 provides that each Urban Authority or City shall establish an Urban Physical Planning Committee which shall cause to be prepared urban and Local physical development plans; to recommend development applications to the board for change of use of land and to determine the development application relating to location, dumping sites or sewerage treatment which may have injurious impact on environment among other responsibilities. However, it did not have an approved physical development plan at the time of audit. It was also noted that the Town Council lacks a planner to offer the required technical advice. The absence of an approved plan undermines orderly and organized Town development. The Accounting Officer explained that failure to recruit a physical planner was due to insufficient wage bill. 124

137 I advised the Accounting Officer to prioritise the recruitment of a physical planner to develop the urban physical plan BUSIA DLG 1. Procurement 1.1 Unsupported Evaluation reports Section 27 (8) of the Local Governments (Public Procurement and Disposal of Assets) Regulations 2006 provides that the evaluation committee shall undertake the assessment of tenders Submitted, rank them and submit an evaluation report and assessment scores to the procurement and disposal unit for submission to the contracts committee. However, Audit of Twenty one (21) procurement files worth 1.6bn revealed that whereas evaluation reports had been prepared, there were no individual score sheets to support the results as required by the regulations. Consequently, I was not able to confirm that evaluation of contracts was undertaken in a transparent manner. I advised the Accounting Officer to enforce procurement regulations to enhance transparency in procurement evaluation. 2. Service Delivery 2.1 Health Services Section D of the Local Government Management and Service Delivery (LGMSD) Program Operational Manual provides for minimum standards of health service delivery. However, inspection of health centers revealed a number of matters that are outlined below; b) Status of Masafu Hospital Masafu General Hospital is the only district hospital serving Busia, Namayingo and parts of Kenya as a District Referral Hospital. According to management, this Hospital has 125

138 generally improved provision of curative, preventive and promoted health services. However, inspection of the hospital revealed a number of challenges as outlined below; Issue Staffing Gap Transport Challenges Shortage of Infrastructure Shortage of Drug Observation The hospital currently has only 86 out of the required 185 staff establishment. This in turn has outstretched the current staffs that have to pick up extra hours and shifts. Quality of health services is also undermined in such circumstances. Administrative Officer communicated the challenges and requested for the ministry s intervention to help avert the staffing gap. The hospital has an old ambulance Reg. UG 3699M as the only vehicle which serves patients on referral, routine movements and as an administrative vehicle for consultative purposes. The cost of maintenance has become too high since the vehicle is too old and is overstretched. The hospital lacks an Administrative block, an appropriate store for safe keeping of medicines and other items, a laundry room, modern mortuary, kitchen, Askari house, staff quarters fence, computers for records office, shelves for patient files and borehole to combat water shortages. Disposal of medical waste is also a challenge as the hospital does not have an incinerator. There is an acute shortage of drugs. It was noted that at the time of inspection, the credit line was exhausted due to discrepancies in the planned allocation and actual release. The Accounting Officer explained that she had communicated the challenges to the responsible Ministry of Health and also requested the Ministry s intervention on the issue of staff shortage. I advised the Accounting Officer to continue following up the matter with the Ministry of Health and the challenges addressed. c) Non Functioning Health Centers in the District 126

139 Three health Centre IIs in Butangasi, Buyengo and Kubo Sub counties constructed in 2012/2013 to a tune of UGX. 193,012,422 were to-date not functional. These health centers have all the necessary facilities including OPDs and latrines and a 2 in 1 staff house. It was also noted that the centers have one staff (enrolled nurse) each, posted there in January 2014 using SDS funds. These 3 nurses are in the meantime helping out at Masafu hospital waiting for the centers to be operationalized. Further noted was that the ministry was yet to provide fund allocation to the new centers. The Accounting Officer attributed the delay in operationalizing these centers to failure by Ministry of Health to Code the centers to enable them receive drugs from NMS. Evidence to confirm this was however not readily provided. The continued existence of facilities that are not being used denies the intended users timely and easy accessibility to health services BUSIA MC 1. Service Delivery 1.1 Delayed Completion of a Project Regulation 43 (2, 3 and 5) of the LG PPDA Regulations, 2006 requires that all procurements and disposals shall be conducted in a manner that promotes transparency, accountability and fairness, maximisation of competition, promotes economy, efficiency and value for money. However, during the financial year 2013/2014, a contract of UGX 1,807,699,504 was awarded to M/s Engineering Trade Links ltd for construction of the main office block at Busia Municipal Council. By the time of audit in September 2015, UGX.429, 864,902 had been paid to the Contractor. However, audit inspection revealed that the Contractor had abandoned the site. 127

140 The Accounting Officer explained that he had sought no objection from the Office of Solicitor General to have the contract terminated and was awaiting the response. I advised the Accounting Officer to follow up on the process of terminating the contract should be expedited to allow for the contract and ensure that the project is completed BUTALEJA DLG 1. Unsupported Payment of Salary Arrears Section 26 of the General rules on Payment of Salaries (B - a) in standing orders provides that Salary arrears that accrue to a Public officer within a financial year shall be paid through the payroll within the same financial year. However audit revealed that on 13th January, 2015, the Accounting Officer submitted a request for payment of salary arrears amounting to UGX.563,921,414 out of which UGX 219,432,034 was paid leaving a balance of of UGX 344,489,380 outstanding. The arrears relate to financial years ( ). However, the payment schedule did not specify the details of the period paid and pay change reports to support the arrears. There is a risk that some of the payments could have been made to ineligible persons. The matter require urgent attention KWEEN DLG 128

141 1. Unsupported Settlement of Domestic Arrears Section 5.4.6(1) of the Local Governments Financial and Accounting Manual, 2007 requires the Head of Finance to ensure that payment vouchers and any supporting documents are correct before being passed for payment. However, note 14 to the Cash flow statement shows that the district paid a total of UGX.172, 896,375 as domestic arrears. However, the supporting documents were not presented for audit verification rendering expenditure doubtful. The Accounting Officer explained that the arrears related to salaries but no documentary evidence was availed for audit verification. I advised the Accounting Officer to avail the supporting documents for audit verification. 2. Duplicate payments Section (B-a) (7) of the Public Service Standing Orders,2010 requires salaries to be paid correctly in accordance with the approved salary structure for the Public Service. However, Payroll analysis revealed duplicate payments totalling to UGX 22,314,308. The Accounting Officer explained that the seemingly duplicate payments were genuine payments relating to salary arrears for previously unpaid months, unapplied EFTs and duty allowance. Verification however revealed that out of the total duplicate payments, UGX.12, 668,999 remained unexplained. I advised the Accounting Officer to justify the payments MANAFWA DLG 1. Duplicate Payments of Salaries Section (B-a) (7) of the Public Service Standing Orders,2010 requires salaries to be paid correctly in accordance with the approved salary structure for the Public Service. However, Payroll analysis revealed Thirty (30) transactions appearing as duplicate salary payments. These transactions amounted to UGX 21, 994,

142 The Accounting Officer explained that the seemingly duplicate payments were caused by a number of factors including; repayments made to make good the bounced payments, summation of previous unpaid months of July, august and September 2014 and June However, I was not able to verify the claims in the response as both BOU statement and salary invoice register could not be readily provided at the time of verification. 2. Delayed Completion of Civil works at Bukimanya Health centre 111 The district contracted Local Contractor to construct Bukimanya HC iii at a contract price of UGX.179, 262,236 in 2010/2011 financial year. By time of inspection in September 2015 a sum of UGX.170, 299,000 had been paid leaving only UGX.8, 963,236. However, inspection revealed that the building had stalled, appeared to have been abandoned and had developed cracks as shown below:- The matter requires urgent attention MBALE DLG 1. Outstanding revenue arrears 130

143 Sec. 98(1) & (2) of the Local Governments Financial and Accounting Regulation (LGFAR), 2007 requires the Head of Finance and heads of revenue collecting departments to ensure that prompt reminders are sent when revenue becomes overdue and If a reminder fails to produce payment within thirty days of its dispatch, legal proceedings be instituted. However, review of the statement of arrears of revenue revealed that the district had outstanding revenue amounting to UGX 1,026,358,254. Revenue arrears deny the Council the opportunity of using the money to provide services promptly. The Accounting Officer explained that management has been undertaking numerous measures to including legal action. 2. Service Delivery Issues 2.1Inspection of Nakaloke Health Centre III a) Lack of Essential facilities and equipment Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. However, inspection of the Nakaloke Health Centre III revealed that essential equipment were lacking as shown in the table below; Essential equipment Oxygen equipment; Protective gears such as gumboots & aprons for labor suit officers; Bulb sucker for babies and Resuscitation equipment kit for the new born babies were missing. Water supply Delivery beds The labor suite and post-natal ward did not have running water and light. The Health center had only one delivery bed which was rusty. We established that on average 10 mothers gives birth daily implying the one bed is inadequate. 131

144 Lack of such essential equipment and other facilities negatively affects health service delivery to the communities. The Accounting Officer explained that Ministry of Health had planned to procure medical equipment and maternity and other equipment for the districts. I advised the Accounting Officer to continue following up the matter to ensure that such essential equipment and facilities are availed to the Health Centre SIRONKO DLG 1. Audit Inspection Budadiri Health Centre IV a) Lack of Minimum Basic Requirments Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. However, inspection of Budadari Health Centre IV carried out on 26/08/2015 revealed that the health Centre lacks an ambulance and a drug store. Operating a medical center without an ambulance exposes the lives of patients who may not be transfered to a refferal hospital in time. Also, poor storage of drugs may result in faster expiry and or loss through theft. The Accounting Officer explained that several formal requests had been made to the Permanent Secretary, Ministry of Health with no response.on the issue of stores, he 132

145 indicated that funds had been allocated for remodeling an alternative room that shall be used as a store. I advised the Accounting Officer and the District Health Officer to continue appealing to Ministry of Health and Finance to ensure that the health center is properly facilitated to provide better services to the people. 2. Long Outstanding Salary Arrears The Uganda Public Service Standing Orders Section B-a (25) provides that Salary arrears that accrue to a Public officer within a financial year shall be paid through the payroll within the same financial year. Further, Section (26) provides that responsible officers shall process all residual salary arrears by 30th September. On the contrary, it was noted that the district accumulated salary arrears for employees amounting to UGX 315,193,294. The arrears for some employees date as far back as 2008 which indicates a weakness in follow up. Failure to pay employee s salaries in time demotivates them and negatively impacts on service delivery. The Accounting Officer attributed these arrears to the staff who were erroneously deleted from the payroll during the general cleaning of the payroll by the Ministry of Public Service. He indicated that pay change reports had been prepared and arrears approved by the Ministry of Public Service. I advised the Accounting Officer to follow up the matter to ensure that the affected staff are paid withiout further delay BUDADIRI TC 1. Lack of Physical Planning Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority or city shall establish an urban physical planning committee which shall cause to be prepared urban and Local physical development plans and detailed plans; to recommend development applications to the board for change of use of land and to determine the 133

146 development application relating to location, dumping sites or sewerage treatment which may have injurious impact on the environment among other responsibilities. However, it was observed that the Town Council neither had a Town planning committee nor an approved development plan. It was further noted that the Town Council lacked a planner. Lack of a physical planning undermines orderly and organized Town development. The Accounting Officer explained that the physical planning committee was not fully constituted due to lack of critical personnel; He however indicated that interviews had been conducted for the physical planner. The Town Clerk was advised to ensure that a Town planning committee is constituted to facilitate the process of obtaining an approved physical plan and to implement it TORORO DLG 1. Retired staff still accessing payroll Paragraph 5.6.3(2) Local Governments Financial and Accounting Regulation (LGFAR), 2007 requires that the Personnel Officer should ensure that staffs that have left the service of the Local Government are removed immediately from the payroll. However, records indicated that a number of persons supposed to have retired during the year remained on the payroll for several months receiving salaries amounting to UGX.75,179,202. The Accounting Officer attributed the anomaly to failure by Integrated Personnel Payroll System (IPPS) to detect staff due for retirement. I advised the Accounting Officer to ensure recovery of the funds from pension benefits. 2. Failure to maintain contract management records Regulation 119(10) (a) (vii) of LGPPDA 2006 provides for proper contract management records, to be maintained. However, it was observed that in a sample of 14 contracts valued at UGX.1, 457,758,987 the contract management records were not properly 134

147 maintained. The documents including; implementation plans, site minutes, work records and related contract work progress reports for contracts undertaken were not presented for audit verification. This was attributed by management s failure to appoint contract managers. The Accounting Officer admitted the shortcoming and promised to address the matter. I urged the accounting Officer to ensure that contract managers are appointed and to ensure that contract management records are properly maintained. 3. Failure to collect property rates/taxes Section 11(g) of Local Government Financial and Accounting Regulation 2007 requires the head of finance to supervise and ensure the prompt collection of all revenue due to the Council and bring it to account. However, the district set out to collect property tax and demand notices were issued for UGX.670, 626,897, for the FY 2014/2015, but realized only UGX.270, 209,017 leaving a balance of UGX.400,417,880 by the end of the year. Uncollected taxes undermine service delivery. The Accounting Officer explained that Council was considering taking legal action on defaulters. I advised the Accounting Officer to use all the available means to enforce the recovery of the outstanding balances from defaulters TORORO MC 1. Diversion of capacity building funds I carried out inspection of the Municipal Council and it was observed that capacity building expenditure worth UGX.1,180,000 was executed outside the Council s work 135

148 plan. Diversion of funds from the planned activities translates into misallocation of resources. Project management responded that the Municipal Council was advised to refund the funds spent outside USMID activities. The promised action is awaited LWAKHAKHA TC 1. Lack of Urban Plan Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority or city shall establish an urban physical planning committee which shall cause the preparation of the urban and Local physical development plans and detailed plans, to recommend development applications to the board for change of use of land and to determine the development application relating to location, dumping sites or sewerage treatment which may have injurious impact on the environment among other responsibilities. However, it was observed that the Town Council lacked an approved urban development plan. It was further observed that the Town Council had no physical planning budget and lacked a planner. The absence of the urban development plan undermines orderly and organized Town development. The Accounting Officer explained that the Town planning committee had made a proposal to the Ministry of Local Government to support the Town Council with resources for a detailed physical plan. I advised the Accounting Officer to expedite the process of developing the physical development plans to guide orderly and organized Town development BULAMBULI DLG 1. Service Delivery 136

149 1.1 Mayembe Health Centre IV The inspection of the Health Centre revealed the following shortcoming:- a) Expired TB drugs Section 1.8 of the World Health Guidelines for the Safe Disposal of Unwanted Pharmaceuticals in and after Emergencies Interagency 1999 outlines the consequences of improper disposal or non-disposal of expired pharmaceuticals. However, inspection of Muyembe Health Centre IV revealed that the Health Centre had expired TB drugs estimate at 500 kilograms. The expired drugs may be diverted for resale to the general public. The drugs were also not properly stored as can be shown by the photograph below. The Accounting Officer explained that a Non-Governmental Organization (NGO) called GREEN LABLE had been contracted by ministry of health and USAID to collect and destroy expired items but the operations stopped in He explained further that NMS had been informed and the district had budgeted for an incinerator. I advised the Accounting Officer to liaise with Ministry of Health and National Medical Stores (NMS) and have the expired drugs disposed of. b) Lack of Resuscitation equipment kit in the Maternity Ward 137

150 Paragraph (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centres. Statistics provided by the health Centre management revealed that four (4) out of the 79 new born babies on average die per month as a result of lack of the kit. However, inspection of Muyembe Health Centre IV revealed that the health center lacked a resuscitation equipment kit. According to the medical personnel, the kit is very critical for the lives of new born babies in case of asphyxia and supplying oxygen to infants. There is a risk of a loss of life for many babies as a result of the absence of this machine. The Accounting Officer attributed the absence of the machine to inadequate funding. However the district is negotiating with the line Ministry to acquire the kit. The matter requires urgent attention BULAMBULI TC 1. Non- Remittance of shared Local revenue According to the Local Government Act 1997 (as amended), fifth schedule, Part V (15A), a Town Council is required to remit 5% of the total Local revenue collected to parishes and 20% to village Councils. However, it was observed that the Town Council did not remit UGX.12, 861,485 contrary to the law. Failure to remit funds to Lower Local Councils negatively impacts on service delivery at Lower Local Governments. The Accounting Officer explained that the remittances to parishes and villages were channelled through co-funding under the LGMSD projects that were beneficial to the same communities. He however failed to provide evidence of how each 4 parishes and 23 villages had benefited. I advised the Accounting Officer to ensure that the share of Local revenue is remitted to the Lower Local Councils as required by the law. 138

151 BULEGENI TC 1. Lack of physical planning Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority or city shall establish an urban physical planning committee which shall cause to be prepared urban and Local physical development plans and detailed plans; to recommend development applications to the board for change of use of land and to determine the development application relating to location, dumping sites or sewerage treatment which may have injurious impact on the environment among other responsibilities. However, it was observed that the Town Council lacked a planner. Absence of a physical planning undermines orderly and organised Town development. The Accounting Officer explained that management was in the process of lobbing for funds to facilitate physical planning activities. He indicated that a submission for recruitment of a physical planner had been made to the District Service Commission. I advised the Accounting Officer to ensure that physical planning is undertaken and a planner recruited. 5.8 MBARARA BRANCH BUSHENYI DLG 1. Unpaid Salary Arrears Section (B-a) part 11 of the Public Service Standing Orders General rules on payment of salaries requires the Accounting Officer to ensure that public officers access the payroll within four (4) weeks from assumption of duty. However, some employees did not access the payroll within the four weeks which led to accumulation of salary arrears amounting to UGX.107,570,405. The Accounting Officer explained the district is following up the matter with Ministry of Finance, Planning and Economic Development for payment. I advised the Accounting Officer to ensure that the arrears are paid. 139

152 5.8.2 KABALE DLG 1. Staff Salary Arrears Section 25(B-a) of the Public Service Standing Orders 2010 states that salary arrears that accrue to a Public officer within a financial year shall be paid through the payroll within the same financial year. However, salaries worth UGX.626,759,249 for Primary, Secondary & Tertiary Teachers, Health & District staff were outstanding as at 30 th June Late payment of staff salaries demotivates staff and negatively affects service delivery. The Accounting Officer explained that the process of clearing all outstanding salary arrears was on-going. I advised the Accounting Officer to engage the relevant authorities and ensure that salary arrears are settled. 2. Lack of financial Statements for Health Centres Regulation 62(4 & 5) of the Local Governments Financial and Accounting Regulations, 2007 states that the officer in charge of a health unit shall submit monthly financial statements to the sub-county and where the health unit is unable to prepare the financial statements, assistance shall be sought from the sub-accountant of the sub county and copies of the financial statements to be copied to the District Chief Executive. Contrary to the above, the Health units were not submitting their monthly financial statements to the sub county and the chief executive at the district. Failure to present financial statements impairs review and analysis of their performance. The Accounting Officer explained that there was lack of skills for preparation of financial statements but the district was taking steps to address this. I advised the Accounting Officer to liaise with the responsible authorities to ensure that the necessary guidance on financial statements is sought and staff capacity enhanced. 3. Service delivery i. Education a) Performance of UPE Schools 140

153 Analysis of performance in 134 schools across the district for the period 2008 to 2014 indicated that a total of 28,705 pupils who sat Primary seven between 2008 to 2014, only 3% (1,001 pupils) passed in grade one, 7% (1,961 pupils) failed, 10% (2,906 pupils) were disqualified. This reflects unsatisfactory performance in the district. The Accounting Officer explained that the laxity of parents and teachers, pupils absenteeism and pupils low competitive spirit were the main causes of the poor performance and promised to continue with the mobilization of parents and other stakeholders in a bid to improve on the poor performance. I advised the Accounting Officer to engage the relevant stakeholders to address the matter. b) High Drop Out Rate A review of pupil enrolment trends in 292 UPE schools in the district (P7 examination centres) from the year 2008 when the students were in primary one (34,597 pupils) to when they sat primary seven in 2014 (10,446 pupils) (100%coverage) revealed high dropout rate of 70% as shown in the table below: Year Class P1 P2 P3 P4 P5 P6 P7 34,597 28,124 23,394 20,199 16,760 13,289 10,446 Total No. of pupils This may lead to declining literacy levels hence affecting community development. The Accounting Officer explained that the negative trend is due to high poverty levels with some parents failing to provide meals, sanitary pads, and other necessities to their children and promised to continue advocating for joint efforts to reduce the high dropout rate. The matter requires urgent attention. c) Poor State of Universal Primary Education Schools The Local Governments Management and Service Delivery (LGMSD) Guidelines require schools to have classrooms, teachers houses and latrines. Inspection of 8 primary schools in the district revealed inadequate infrastructure as classrooms had muddy floors 141

154 and some had walls made of rids and mud. The walls of classrooms had cracks in them and the schools completely lacked running water facilities and accommodation for teachers. Some of the latrines were collapsing and the roofing on the classrooms was very old and leaking in Schools like Kyeibare, Kihesi and Kamutungu Primary Schools. The inadequate classrooms and latrines affect the learning environment and hygiene leading to poor pupil performance and lack of clean water puts the lives of both pupils and teachers at risk. The Accounting Officer explained that the district authorities will continue lobbying the relevant Ministries and other stake holders to improve the poor state of UPE schools. I advised the Accounting Officer to continue the lobbying and also engage all stakeholders for ways of improving the conditions in UPE schools. ii. Health Sector Issue Details Response Recommendation Drug Stock Out There were cases of stock outs of medicine in some health centres in the district; a case in point was Kyogo HC III which ran-out of the medicines listed below: TYPE OF MEDICINE 1. Combined Oral Contraceptive (Family Planning pill) 2. Erythromycin (For treating Sexually Transmitted Infections in pregnant women) CONSUMPTION PERIOD OF STOCK OUT 18 cycles per April 2014 to April month tablets in a 1 st October 2014 month to 30 th October 2014 The Accounting Officer explained that the challenges in health service delivery have persisted due to inadequate funding which has remained constant for more than seven years despite the growing population. 142

155 Issue Details Response Recommendation Non-functional Theatres Despite theatres of Health Centre IV s being well equipped with basic equipment, and having doctors, they were not functional. This was mainly due to the lack of anesthetic and theatre staff. The District Health Officer explained that the district had advertised but did not attract applicants as the required staff were very few in the market. Non-functional Solar Power Systems The district with the assistance of the Ministry of Health and Development Partners, installed solar power in most health facilities at all levels over the last 5 years. However, the systems were failing due to the aging batteries that needed replacement and could not store enough power thus failing the solar power system. Failure to have power at the health centres makes it hard for them to handle complicated medical cases that need surgical operation. Non-Functional Ambulances Inadequate Infrastructure The ambulances at Health Centre IV s were not functional. These are multi-purpose pick up ambulances that were procured more than 10 years ago. They are old and need a lot of resources to repair them. It was difficult for the health centres to function without reliable means of transport for patients that needed more specialized health care services. The district lacked infrastructure to house all health centres. Cases in point were Kiyebe, Nyamabare and Nyaruhanga Health Centre II s that are being housed in rented buildings. The three Health Centres paid annual rent of UGX.3,000,000 which would have been saved if they had their own buildings. I advised the Accounting Officer to liaise with the Ministries of Health, Finance Planning and Economic Development and other stakeholders to address these short comings so as to improve on health service delivery. 143

156 Issue Details Response Recommendation Inadequate Staff Accommodation All staff could not get accommodation at their stations due to lack of houses. As a result, the health staffs either commute from long distances or stay in outpatient departments and wards, along with their families. The latter option implies that the infrastructure meant for service delivery is not available. Inadequate Buildings in Health Centres Page 19 of the Primary Health Care Guidelines for the Financial Year 2014/15 from the Ministry of Health states the basic building s requirements for the various levels of health care in the district as below:- LEVEL HEALTH CARE OF BASIC BUILDINGS REQUIREMENTS Health Centre IV medical buildings: Out Patient Department, Drug Store with Health Sub District (HSD) Office, Operation Theatre, General Ward, Maternity Ward, Mortuary, Placenta pit, Medical waste pit staff houses: 18 housing units for staff Health Centre III medical buildings: Out Patient Department, General Ward, Maternity Ward, Placenta pit, Medical waste pit staff houses: 10 housing units for staff Health Centre III medical buildings: Out Patient Department, Emergency Ward, Placenta pit, Medical waste pit staff houses: 4 housing units for staff Contrary to the above requirements, a number of health centres lacked some of the required buildings as detailed in Appendix 144

157 Issue Details Response Recommendation KATUNA TC 1. Non-compliance with statutory obligations Section (5) (b) of the Local Governments Finance and Accounting Manual 2007 (LGFAM) 2007, requires all payments to be remitted to Uganda Revenue Authority (URA) with the schedules of payers not later than the 15 th day of the following month. It was however observed that UGX.5,511,453 in respect of Pay As You Earn (PAYE) and withholding tax deducted during the year was not remitted to URA. In addition, there was no evidence that the 18% VAT of UGX.6,390,270 in respect of revenue collections was remitted to URA as shown below; Local revenue source Amount UGX Market fees 7,435,500 Parking fees 28,066,000 Total 35,501,500 18% VAT 6,390,270 Non remittance of taxes may attract fines and penalties from the tax body. The Accounting Officer explained that URA owed the Town Council money that was paid erroneously and reconciliation was yet to be made. I advised the Accounting Officer to comply with the tax law. 2. Purchases not Taken on Charge Section of the LGFAM 2007, requires that on receipt of goods delivered, the Store Keeper shall count them and check for conformity with the Local purchase order (LPO) and raises a goods received note (GRN) for acknowledgement and take the goods 145

158 on charge. However, a review of stores records revealed that purchases totalling UGX.15,191,360 were not recorded in stores records. This can lead to abuse. The Accounting Officer explained that this was mainly due to deliveries that were field based. I advised the Accounting Officer to ensure that all procurements are properly recorded in the stores records HAMURWA TC 1. Non Transfer of Shared Local Revenue The Local Governments Act 1997 (as amended), Fifth Schedule, Part V (15a), requires the Town Council to distribute 5% and 20% of the total Local revenue collected amongst its Parishes and Village Councils respectively. Contrary to this provision, out of the UGX.39,797,285 expected transfers, only UGX.4,868,001 was transferred leaving a balance of UGX.34,929,284 not transferred. Non-transfer of shared Local revenue denies the lower Local Councils the opportunity to fully implement their planned activities. The Accounting Officer explained that the un-transferred funds were spent on construction of the new office administration block. I advised the Accounting Officer to ensure that the shared Local revenue is remitted to the parishes and wards as required by the law. 2. Un-authorized write off of Bad Debts Section (2) of the Local Governments Financial and Accounting Manual 2007 states that where a loss exceeds 50 currecy points and the loss is not recoverable, the executive committee of Council shall inform the Minister of Local Governement who in consultation with the Auditor General shall advise Council on the action to be taken and grant them permission to write off the losses. Contrary to the above, debtors amounting 146

159 to UGX.16,174,000 were writen off without permission from the Ministry of Local Governement. Un-authorized write off of debts is irregular. The Accounting Officer explained that the bad debts write off was done with approval of Council. I advised the Accounting officer to liaise with the Minister of Local Government and obtain approval to write off bad debts KABWOHE-ITENDERO TC 1. Failure to collect debts Section of LGFAM, 2007 states that any debt not collected is a serious matter and represents a loss to Council. However, it was noted that debts amounting to UGX.16,263,050 remained uncollected by the year end as shown in the table below;- Name of Debtor Source of Revenue Amount KyogabirweAnnet Shauriyako market 544,000 Kariyo B Lois Beer club Kabwohe-nyanga 160,000 Arber contractors co. ltd Trading licence 5,366,300 Mpamiza Willy Trading licence 9,792,750 MubangiziSeriano Local hotel tax 400,000 Total 16,263,050 The Accounting Officer explained that there was an ongoing effort to make the concerned individuals pay through court. I advised the Accounting Officer to ensure that all the debts are collected. 2. Stalled Construction of Office Block 147

160 The Town Council entered into a contract with a Local firm, Arber Contractors Ltd to construct an office block at a contract sum of UGX.198,289,000. The start and completion dates were 13 th January 2015 and 13 th May 2015 respectively. By the time of audit in September 2015, UGX.108 million had been paid to the contractor which was equivalent to 54% of the contract price. However, at the time of inspection in September 2015, the works had been abandoned at foundation stage as shown in the pictures below; The Accounting Officer explained that the civil works shall be supervised very closely and would mobilize more funds to complete it. I advised the Accounting Officer to ensure that the civil works are properly supervised KIHIHI TC 1. Lack of Creditors and Debtors Ledgers Regulation 59 of the Local Governments Financial and Accounting Regulations 2007, requires each Local Government to maintain ledgers. However, it was observesed that Creditors and Debtors of UGX.21,098,856 and UGX.12,756,000 respectively reflected in the balance sheet lacked supporting ledgers contrary to the regulations. Consequently, I could not confirm the accuracy and completeness of the balances reflected in the financial statements. I advised the Accounting Officer to establish the ledgers to enhance accuracy and completeness of the financial statements. 148

161 2. Un-collected revenue from Sale of Trees During the financial year 2012/13, Kanungu District disposed of Meizimera forest trees in Kihihi Town Council at UGX 212,000,000. The sale agreement provided that 40% of the sales proceeds were supposed to be credited on Kihihi Town Council account. Note 3 (statement of receivables) to the financial statements reported on expected share worth UGX 10,410,000 from the sale of trees. The amounts remained uncollected at the time of audit. Uncollected receivables adversely affect Council cash flows and hinder implementation of Council activities, hence affecting service delivery. The Accounting Officer explained that the Chief Administrative Officer had forwarded the matter to the Solicitor General for further management. I advised the Accounting Officer to follow up the matter with the district to ensure that the revenue is collected KIRUHURA DLG 1. Outstanding Salary Arrears Regulation 54 (2) of the Local Governments Financial and Accounting Regulations (LGFAR), 2007 provides that employees salaries and pensions shall be due and payable on the last day of each month but arrangements may be made to effect earlier payment. Section B Paragraph 25 of the Public Service Standing Orders 2010, provides that the salary arrears that accrue to a public officer within a financial year shall be paid through the payroll within the same financial year. On the contrary, it was noted that the district accumulated salary arrears for health staff and teachers amounting to UGX 294,495,032. Failure to pay employees salaries in time demotivates staff and negatively impacts on service delivery. The Accounting Officer explained that a request had been made to the Accountant General and the Permanent Secretary/Secretary to the Treasury to pay the arrears. 149

162 I advised the Accounting Officer to follow up the matter with the relevant authorities and to ensure that the salary arrears are settled. 2. Inadequate facilities in Primary schools Section (a) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual requires Local Governments to deliver services in conformity with primary education minimum national standards of service delivery. Analysis of the school statistics in the district revealed that the standards were below the required minimum standards as shown in the table below; Standard Current Ratio Minimum Standard Classroom Pupil Ratio 1:98 1:55 Desk Pupil Ratio 1:5 1:3 The Accounting Officer explained that the district depends on Central Government releases which are largely inadequate but the matter was being followed up with Ministry of Education and Sports and that of Ministry of Finance, Planning and Economic Development. I advised the Accounting Officer to follow up the matter with the Ministry and ensure that the challenges are addressed KISORO DLG 1. Inadequate standards in Primary Schools Section (a) Program2.1.2 (a) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual requires Local Governments to deliver services in conformity with Primary Education minimum national standards of service delivery. A sample of 40 schools revealed that the average school standards were below the recommended standards as shown below;- Standard District Ratio Minimum Standard 150

163 Classroom Pupil Ratio 1: 70 1:55 Teacher Pupil Ratio 1:58 1:55 Latrine Pupil Ratio 1:70 1:40 Desk Pupil Ratio 1:5 1:3 The Accounting Officer explained that the district was constrained by low funding as it had had the same Schools Facilities Grant budget allocation since I advised the Accounting Officer to follow up the matter with The Ministry of Education, Sports, Science and Technology to ensure that primary schools meet the national minimum standards. 2. Congestion at Kisoro Hospital The maternity wards were designed to accomodate 25 patients at a time. However, inspections carried out at Kisoro Hospital reavealed that they were accommodating over 36 patients with some sleeping on the floor and using mats. The Accounting Officer explained that the situation was due to the influx of patients that come from the boarders of Rwanda and the Demoractice Republic of Congo for which they have no alternative but to provide the services. I advised the Accounting Officer to lobby for more funding from the relevant authorities to address the matter KISORO TC 1. Non-transfer of Shared Local Revenue Part V of the Local Governments Act of 1997 as amended requires a Town Council to remit 5% and 20% of the total Local revenue collected to Parish and Village Councils that make up the Town Council respectively. It was observed that Council collected UGX 547,712,520 as Local revenue during the period under audit. However, UGX.28,047,439 in respect of the mandatory 25% share of revenue to parish and village Councils was not remitted. This impaired the participation of parish and village Councils in the implementation of the community programs. 151

164 The Accounting Officer explained that this was because calculations for the two levels had not been completed but promised to remit the balance. I advised the Accounting Officer to comply with the law. 2. Failure to up-date the Property Valuation list Section 4 of the Local Governments (Rating) Act requires the Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. It was observed that the Council s property valuation was outdated for 5 years. There is a risk that property rates applied may be below the current market rates. The Accounting Officer explained that Council had advertised for procurement of valuers to undertake the exercise but had not attracted any firm in the previous year and efforts were on-going. I advised the Accounting Officer to ensure that the property valuation list is up-to-date MBARARA DLG 1. Outstanding Salary Arrears Section B Paragraph 25 of the Public Service Standing Orders provides that salary arrears that accrue to a public officer within a financial year shall be paid through the payroll within the same financial year. It was however, observed that the district accumulated salary arrears for health workers and teachers amounting to UGX.181,341,578. The delay to pay salary demotivates staff. The Accounting Officer explained that a verified list of the salary arrears was forwarded to Ministry of Finance, Planning and Economic Development and the response was awaited. I advised the Accounting Officer to ensure that salary arrears are settled. 2. Accumulated Rental Arrears Regulation 32 of Local Governments Financial and Accounting Regulations 2007, requires Council through the Head of Finance to ensure that all revenues budgeted by 152

165 Council is promptly collected and banked intact. Contrary to the above, Council failed to collect UGX.67,762,000 from tenants who reside in Council s residential and office blocks as shown below;- HSE NO OCCUPANT RATE/MONTH UN PAID PERIOD BALANCE UNPAID 24 Hon. Mujuni V. Kyamadiidi 150,000 May 2013-June ,900,000 UNICEF Grounds AMPROC INC. 3,422,000 Part of April ,000 AMPROC INC May 2013-April ,596,000 Admin. Block A/G/ Lobby Racheal Mirembe Arinaitwe 200,000 Sept June ,000,000 TOTAL 67,762,000 Uncollected rent denies the district revenue to meet its obligations. The Accounting Officer explained that recoveries were ongoing except for three tenants who had been submitted to Solicitor General. I advised the Accounting Officer to follow up the matter and ensure that rental arrears are collected NTUNGAMO DLG 1. High Drop Out Ratio A review of pupil enrolment trends in 208 UPE schools in the district (P7 examination centres) from the year 2008 when the students were in primary one (24,345 pupils) to when they sat primary seven in 2014 (6,279 pupils) (100% coverage) revealed high dropout rate of 72% as shown in the table below: Year Class P1 P2 P3 P4 P5 P6 P7 Total No. of 153

166 pupils 22,345 14,750 13,066 11,607 10,032 8,713 6,279 The negative trend may be due to high poverty levels and lack of a district policy to ensure that pupils remain in schools. This may lead to declining literacy levels hence affecting national development. The Accounting Officer explained that the high dropout ratio was partly due to pupils crossing over to the private schools. I advised the Accounting Officer to liaise with other stake holders to address the factors that cause school dropouts. 2. Health Service Section 4 of the Primary Health Care Guidelines for the Financial Year 2014/15 from the Ministry of Health (Page 19) state the basic infrastructure requirements for the hospitals in the district to include; adequate staffing, outpatient department, administration offices, operation theatres (2 rooms), female ward (at least 15 beds), pediatric ward (at least 15 beds), maternity ward (at least 15 beds), male ward (at least 15 beds), mortuary, placenta pit and medical waste pit among others. A number of weaknesses that hinder effective health service delivery were noted at Itojo Hospital as detailed below: a) Inadequate Hospital Equipment REQUIRED FACILITIES STANDARD STATUS/CHALLENGE BEDS 60 beds minimum Hospital has over 200 patients per day i.e over 50 patients per ward GENERATOR 2 Stand-by generators One small generator is operational, not standby as it 154

167 REQUIRED FACILITIES STANDARD STATUS/CHALLENGE required lacks constant fuel supply and an automatic switch OPERATING TABLES 2 are required Not even one table is operational REFRIFILATORS Mortuary lacks refrigeration, bodies are put on mortuary benches WASHING MACHINES 2 are required None is functional WARDS Hospital has only 4 wards No casualty ward, no surgery ward or room for isolation of infectious cases. b) Poor state of Hospital Infrastructure The ceiling of the outpatient department of the hospital was leaking due to old roofing. This led to the breakdown of various parts of the ceiling as seen in the picture below. 155

168 c) Understaffing in the Hospital The approved staffing is 183 but only 136 positions are filled representing 74% leaving a gap of 47 (26%). Details in the table below;- Department Approved Filled Vacant Medical officers Dental Pharmacy 3 5 (2) Nursing Allied health professionals Administrative and other staff Support staff (9) TOTAL d) Outstanding Utility Bills The Hospital had accumulated an electricity bill amounting to UGX.286, 355,594 over a period of 3 years. The hospital is exposed to the risk of being cut off power supply which may cause operational challenges. e) Expired Drugs Inspection of drug stores at Itojo Hospital revealed that the hospital had a pile of expired drugs. The expired stock included drugs that expired in 2011 but were still lying in the stores. Expired drugs are a financial loss to Government. Besides, delayed disposal poses a risk to the lives. f) Hygiene The hospital sewage system is blocked and it does not function properly as some pipes that take waste to the lagoon are very old and broken and thus the hospital toilets don t function. g) Lack of Constant Water Supply 156

169 There s no constant water supply as the water pump that provides underground water can t operate without electricity and the water pump is too strong for the generator to run. h) Encroachment on Hospital Land The hospital has no titles to their land which exposes it to encroachment as the cemetery land had been encroached on by one Rutaro Hitler. i) Absence of Store Keeper At the time of audit inspection, none of the two store keepers was present. In case of a shortage of medicines in the pharmacy, the medicine in the stores can t be accessed. The Accounting Officer explained that the poor health services were due to inadequate funding. I advised the Accounting Officer to liaise with the Ministries of Finance Planning and Economic Development, Health and Local Government and other authorities so as to improve on staffing levels, health infrastructure, equipment and funding for better service delivery. 3. Financial Statements for Health Centres Regulation 62(4 & 5) of the Local Governments Financial and Accounting Regulations, 2007 states that the officer in charge of a health unit shall submit monthly financial statements to the sub-county and where the health unit is unable to prepare the financial statements, assistance shall be sought from the sub-accountant of the sub county and copies of the financial statements to be copied to the District Chief Executive. The district has 40 health centres which spent UGX.3.394, 103,044. The Health units were not submitting monthly financial statements to the sub county and the chief executive at the district. Failure to present financial statements impairs informed decision making. The Accounting Officer explained that this was due to understaffing, lack of training and low levels of practical experience by clerks. 157

170 I advised the Accounting Officer to provide the necessary guidance to ensure that financial statements are prepared in accordance with the regulations RWASHAMAIRE TC 1. Non Remittance of Taxes Section 123(1) of Income Tax Act Cap 340, provides that a withholding agent shall pay to the commissioner any tax that has been withheld or that should have been withheld under this Part within fifteen days after the end of the month in which the payment subject to withholding tax was made by the withholding agent. However a review of payment vouchers revealed that Pay As You Earn (PAYE) and Withholding Tax (WHT) amounting to UGX.5,322,709 that was deducted from staff allowances was not remitted to Uganda Revenue Authority (URA). Non remittance of tax may attract fines and penalties from the tax authority. The Accounting Officer explained that the taxes will be paid. I advised the Accounting Officer to comply with the law to avoid fines and penalties RUKUNGIRI DLG 1. Rehabilitation of 13.1 km Access roads in Nyarushanje Sub County under batch A lot 9Ref: CAIIP-3 RUKU/WRKS/2012/13/CAR-BATCH A LOT 9 Ms. RUP Engineering Ltd was awarded a contract for the rehabilitation of 13.1 Km access roads in Nyarushanje Sub County at a cost of UGX 1,055,518,225. It was noted that out of the contract sum of UGX 1,055,518,225, UGX.405,000,000 had been paid. The contract had expired on 26 th June, 2015 but works were still on-going. No evidence of contract extension. The inspections carried out on 30 th June 2015 on Nyakishenyi Minera section covering a distance of 5.6 Km and the bridge works revealed poor workmanship by the Contractor as shown below; 158

171 Picture 1: No head walls installed Picture 2: Blocked culverts, no head walls, inadequate murram on the road The Accounting Officer explained that all the anomalies identified would be fixed by the Contractor. I urged the Accounting Officer to ensure that the contractor is not paid before executing the Contract as per agreement RUKUNGIRI MC 1. Lack of a Master Plan Section 32 Part 1 (b) 3 rd schedule of the Local Governments Act requires an urban Council to have a master plan for proper land use and coordinated development. However, it has been observed that Council has no approved master plan from the 159

172 Ministry of Lands Housing and Urban Development. This exposes the Council to a risk of unplanned developments. The Accounting Officer explained that the draft plan had been submitted to Ministry of Lands, Housing and Urban Development for approval. I advised the Accounting officer to follow the matter and ensure that the master plan is approved IGORORA TC 1. Failure to do Property Tax assessment Section of the Local Governments Finance and Accounting Manual 2007 requires urban Councils to appoint a committee to do property tax assessments based on valuation of land and buildings. It was observed that the Town Council did not do the valuation of properties for the purpose of property tax assessment and collection. There is a risk that the Town Council applied rates lower than the current market rates. The Accounting Officer promised to budget for valuation and assessment of properties in the Town Council in the financial year 2016/2017. The matter requires urgent attention BUTOGOTA TC 1. Audit of Financial Statements A review of the financial statements revealed the following shortcomings;- 1.1 Lack of Fixed Assets Schedule It was observed that the Town Council reported net assets of UGX.82,587,789 in the balance sheet and a depreciation charge of UGX.36,444,608 in the income and expenditure statement. However, no fixed assets schedule was attached to the financial 160

173 statements to support the figures. In the circumstances, I could not confirm the accuracy of depreciation charge and the value of assets reported. 1.2 Misstated Capital Reserves Capital reserves at the end of previous financial were reported in the balance sheet as UGX.124,699,701 and yet note 12 to the accounts reported capital reserves brought forward of UGX.118,064,861. This implies that capital reserves were misstated by UGX.6,634,840. The misstatement makes the financial statements wrong. 1.3 Balance sheet The entity presented unbalanced balance sheet with net assets of UGX.82,587,787 against net worth of UGX.2,330,679 giving rise to unsupported assets worth UGX.84,356,399. I could not confirm how the assets were financed /acquired. 1.4 Lack of Notes to the Cash Flow Statement It was observed that presentation of items in the cash flow statement contradicts the Local Government Financial and Accounting Manual, The cash flow statement did not have explanatory notes, and as such I could not confirm the reported figures. The above matters were brought to the attention of the Accounting Officer but were not responded to. I urged the Accounting Officer to ensure that the matters are addressed and the financial statements prepared in compliance with the Local Government Accounting Framework SHEEMA DLG 1. Failure to honour staff contractual obligation Section B-a (17) of the Public Service Standing Order states that a public officer s individual contractual obligations such as hire purchase, loan, and contributions to saving schemes, trade unions and staff associations may be deducted from his or her salary in accordance with the regulations. A review of the payroll data revealed that 161

174 various district officers acquired loans from various financial institutions and the district guaranteed to remit monthly deductions to the financial institutions. However, the district did not honour its obligation. The District officers owed institutions a total sum of UGX.201,181,640 in form of monthly deductions at the time of audit. Failure to deduct the required installments owed to financial institutions is a breach of loan agreement and may lead to litigation. I advised the Accounting Officer to ensure that the funds owed to the financial institutions are recovered from the relevant officers and remitted regularly BUGONGI TC 1. Lack of a master Plan Section 32 of Part 1 (b) of 3rd Schedule of the Local Government Act 243 requires an urban Council to have a master plan for proper land use and coordinated development. The Town Council came into existence in the financial year 2010/11. However, audit observed that Council had not secured an approved master plan for the Town Council from the Ministry of Lands Housing and Urban Development. Lack of a structural urban plan exposes the Town Council to a risk of unplanned developments. The Accounting Officer explained that a draft plan had been submitted to the Ministry and was scheduled for consideration. I advised the Accounting Officer to follow up the matter with Ministry of Lands Housing and Urban Development and ensure that the master plan is approved BUHWEJU DLG 1. Outstanding Salary Arrears Section B-a (11) of Public Service Standing Orders 2010 requires the Accounting Officer to ensure that a public officer accesses the payroll within four (4) weeks from the date 162

175 of assumption of duty. A review of the employees records revealed that some district employees had not accessed the payroll resulting into salary arrears of UGX.136,268,682. Delayed salary payment demotivates staff. The Accounting Officer explained that submissions to Ministries of Finance, Public Service and Local Governments were made and payment was awaited. I advised the Accounting officer to follow up the matter with the relevant authorities and ensure that the salary arrears are settled RUBAARE TC 1. Non Remittance of Shared Local Revenue The Local Government Act 1997 (as amended), Fifth Schedule, Part V (15a), requires the Town Council to distribute 5% and 20% of the total Local revenue collected amongst its wards and village Councils respectively. However, the Town Council did not transfer UGX.39,204,195 to the lower Local Councils. Non remittance of shared Local revenue denies the lower Local Governments the opportunity to participate in planned community programs. The Accounting Officer explained that the Town Council would transfer the unremitted funds to the wards in installments in the FY The Accounting Officer s promised action is awaited RUBIRIZI DLG 1. Outstanding Salary Arrears Regulation 54(2) of Local Governments Financial and Accounting Regulations 2007 requires employees to be paid monthly salaries and employees salaries on the last day of each month. However, a review of the staff records of the entity revealed that UGX. 51,424,559 of salary arrears remained unpaid at the time of audit. Accumulation of salary arrears demotivates staff. 163

176 The Accounting Officer explained that efforts had been made to inform relevant Ministries on this matter for appropriate action but no response had been received. I advised the Accounting Officer to follow up the matter with the relevant Ministry to ensure that the arrears are paid. 5.9 SOROTI BRANCH ABIM DLG 1. Financial management of UPE Funds Section 64(4) of Local Government Financial and Accounting Regulation 2007 require primary Head Teachers to keep proper cash books in respect of all sums of money received and expended by the school and the matters in respect of which receipt and expenditure take place. During the financial year 2014/15, UGX 162,384,016 was released to different UPE schools in the district and the documentation review revealed the following shortcomings. Lack of cashbooks and bank statements Vouchers not sequentially numbered Poor filing of accountabilities Inadequate accountabilities The Accounting Officer promised to train the Head Teachers in basic book keeping. I advised the Accounting Officer to ensure that all Head Teachers are trained in book keeping. 2. Inadequate Infrastructure under Primary Education in the District. Section of the Local Government Management and Service Delivery (LGMSD) Guidelines 2009 provides the Minimum National Standards of Service Delivery for UPE schools. The analysis of statistic data for the Primary Schools in the district revealed that a number of them do not meet the minimum standards as shown below; 164

177 Details Standard District achieved level minimum standard number of class rooms Classroom pupil ration 1:72 1:55 No of Text Books Text book Pupil ration 1:8 1:3 number of desks Desk pupil ratio 1:11 1:3 Audit inspections of sampled Primary Schools also revealed the following shortcomings; School Findings Pictures Abim primary School Dilapidated class room blocks Lack of desks (from p1 to p6) Lack of boys domentry (boys sleep in class rooms) Lack of a kitchen and dining hall Sinking toilets and dilapidated bathroom Inadequate staff houses, only 6 out of 25 teachers are housed. Lack of teachers toilets Koya Primary school Lack of enough desks Lack of staff accommodation most teachers sleep in grass thatched houses Dilapidated pupils toilets Lack of staff toilets Wilela primary School Lack of office and staffroom Dilapidated kitchen School premises are not fenced and gardens are destroyed by community animals Inadequate staff accommodation (only 4/14 teachers are housed) Inadequate desks 165

178 School Findings Pictures Gulotoro Primary School Alerek Primary School Rongom Primary school Two water tanks are vandalized Lack of pupils desks (only the pieces of brocken ones) Lack of office and staff room p.1 is used as an office Lack of teachers accommodation and toilets (only 2 out of 10 teachers housed) Inadequate class rooms for pupils P1 to P5 completely have no desks and other classes desks are few Latrines are filled up and no doors Inadequate staff accommodation, only 10 out 21 teachers are housed and others sleep in grass thatched houses. Inadequate pupils books The school land is not fenced Inadequate and dilapidated classrooms Lack of teachers toilets Inadequate staff houses and teachers are housed in grass thatched houses Katala Primary school In adequate pupils class rooms (one of the class room s roof swept by wind) In adequate staff accommodation 166

179 Dilapidated structures create a potential hazard to the school community. The Accounting Officer attributed the shortcomings to lack of funds for infrastructure development. I advised the Accounting Officer to engage the Ministry of Education Science and Technology and other relevant stakeholders for improved funding ABIM TC 1. Service Delivery 1.1 Water Sector Section 14 of the PPDA regulations require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management processes and ensure that implementation of the contract are as per the agreed terms. During the financial year 2013/14, a Local firm was contracted to undertake works and management of Abim water supply and sewerage system. The company was to receive a management fee of 85% of monthly collections, 10% for capital investment & major repairs and 5% to water board expenses. An account in the names of Escrow was opened for collections to be deposited before sharing. However, audit of the water project revealed the following anomalies: No records were provided for the Escrow a/c transactions making it difficult to confirm whether all receipts were banked and shared as per the contract terms. There was no evidence of supervision of the project by Council and the contractor s books had never been audited by the Internal Audit of Council. The Council undertook direct collections on the Urban water Account in the form of application fees and other charges amounting UGX 27,960,300 but there was no work plan for water activities on which the funds were used. 167

180 Analysis of the project revealed that it was not viable due to the low collection efficiency and high running costs noted below; The total billing from April 2014 to May 2015 was UGX 45,697,550 but the total collection was UGX 35,059,450. The management fee payable was UGX 27,136,200 compared to the total running cost of UGX 43,754,546. The Accounting Officer explained that poor performance of the private operator was noted but the Karamoja umbrella would continue to help Council with regular evaluation to ensure that the private operator performs. I advised the Accounting Officer to enhance the supervision of the project and ensure that the expected benefits are achieved. 2. Local Government Management Service Delivery 2.1 Incomplete Civil Works on construction of 2 classroom block at Amul primary School Section 14 of the PPDA regulations require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management processes and ensure that implementation of the contract are as per the agreed terms. During FY 2010/11, the Council contracted a Local firm for construction of a 2 Classroom block in Amul primary school at a contract sum of UGX. 29,948,020.. However, the works stalled with no evidence of progress on site as shown in the photo below; The project was behind schedule by 4 years. The Council had earmarked an amount of UGX 13,872,620 to complete the payment. 168

181 Delayed completion of projects may lead to extra administrative costs and denies the community the intended services. The Accounting Officer explained that management wrote to the district contracts committee for a variation in the contract price as assessed by the user department but to date no action has been taken. I advised the Accounting officer to follow up the matter with the district contract committee for approval of the variation and ensure that the classroom block is completed BUKEDEA TC 1. Unverifiable Comparative Figures Regualtion 70 of Local Government Financial and Accounting manual requires the Chief Executive to submit the financial statements to the Auditor General for audit. I reported last year that fininancial statments for financial year 2013/14 wre not availed for audit contrary to regualtions. The matter has not been resolved. Consequently, I was not able to veerify comparative figures reported in the current financial year statments. The Accounting Officer promised to avail the financial statements. I advised the Accounting Officer to always ensure that comparative figures presented are supported by financial statements KOTIDO DLG 1. Education Sector 1.1 Kacheri Secondary School The Inspection of Kacheri secondary school revealed the following shortcomings: 169

182 A school facility ( a block of 4 classrooms with chairs) constructed at a cost of UGX 239,456,000 has remained unutilised for the last two years. The school facilities are not maintained. There is bush in the compound and surroundings. The school buildings and furniture were abandoned without any security as shown in the photos below:-. Unutilized desks in classroom Bushy compound near classrooms Fencing around school land The Accounting Officer explained that the school lacked sanitary facilities, housing and accommodation for teachers and that these are planned for in the next financial year 2016/2017. I advised the Accounting Officer to prioritise the allocation of resources and ensure that the school functions properly. 1.2 Payment for no work done During the FYR 2011/12, the district contracted a Local firm for completion of an administration block at Panyangara SS at a contract sum of UGX. 189,701,500. The contract start and end dates were 15/12/2011 and 10/5/2012 respectively. A total payment of UGX 182,424,753 (96%) had been made by 27/5/2014. It was observed that a total of UGX 15,664,000 was paid to the contractor for no work done as shown in the table below; 170

183 Item. No Items not supplied Qty Unit Price UGX Amount UGX 1 Chairs ,000 7,250,000 2 Office tables 4 1,200,000 4,800,000 3 Staffroom tables 9 250,000 2,250,000 4 Nim trees 40 20, ,000 5 Lightening protection 714,000 Total 15,414,000 The Accounting Officer promised that the district will compel the contractor to complete the remaining works before retention money is paid. The matter requires urgent attention KUMI DLG 1. Wasteful Expenditure Paragraph 9(2)(b) of the Local Governments Finance and Accounting Regulation, 2007 state the duties of the accounting officer among which is to ensure that the public moneys, property and resources for which he or she is responsible are properly managed and safeguarded. A Local firm was awarded a contract to construct an arch bridge on Ogoloi-Ongoria Swamp at a cost of UGX. 45,381,000 funded by NUSAF 2. By the time of audit all the money had been paid. However, physical inspections in September 2015 revealed that the arch bridge was constructed in the middle of a swamp without any connecting roads rendering the expenditure wasteful and no value for money achieved for the money spent as shown in the photos below; 171

184 Cross-sections of Ogoloi -Ongoria Arch Bridge swamp crossing without connections to any road The Accounting Officer explained that the district had anticipated more financing from NUSAF to open the linking roads but the funds were never received. I advised the Accounting Officer to pursue the funding and ensure that the purpose for which the arch bridge was constructed is achieved MOROTO DLG 1. Financial management of UPE Funds Section 64(4) of Local Government Financial and Accounting Regulation 2007 requires primary head teachers to keep proper cash books in respect of all money received and expended by the schools. However, documentation review of 7 schools revealed incomplete Cash Book, absence of the original accountability documents, failure to pre-sequentially number vouchers. The Accounting Officer explained that the district is planning to build head teachers skills in book keeping through capacity building grant and also encouraging them to take short courses to upgrade their knowledge of financial reporting. I urged the Accounting Officer to ensure that all the head teachers are properly trained in basic accounting. 172

185 5.9.7 NAKAPIRIPIRIT TC 1. Unsupported Account Balances in the Financial Statements Regulation 59 (c) of LGFAR 2007, require each Local Government Council to maintain a general ledger and subsidiary ledgers. There were no Expenditure and Revenue Ledgers availed for audit. Consequently the account balances in the financial statements were unsupported. The Accounting Officer attributed this to inadequate Accounting Knowledge of the head of finance. I advised the Accounting Officer to ensure that Ledgers are always prepared and also to organise an accounts basic course for the head of finance SOROTI DLG 1. Dry Boreholes Regulation 15 (4) of the LGFAR 2007, states that if at any time the funds managed by the administration sustains a loss by reason of the neglect or default of any officer, the officer shall be liable to be surcharged with the amount and any sums due to him. The district signed a contract with a Local firm for drilling, casting, installing and test pumping 12 deep bores under lot-1 out of which, 5 boreholes paid for at a total cost of UGX.43,565,836 were dry implying that no value for money was achieved. The Accounting Officer attributed the shortcoming to differences in the sighting and drilling contractor and yet dry wells are discovered after test pumping has been done. I advise the Accounting Officer to enhance supervision to avoid losses in future. 2. Audit Inspection of Primary school facilities 173

186 Audit inspection revealed that most of the schools had very poor accommodation for the teachers and poor classroom structures as shown in the table below; Name of School Issue Photos Old and dilapidated Obule Primary School teachers accommodation that potentially are harmful to their health. Obule Angorom Primary School Poor teacher s accommodation Structures and Students of P.4 were seated down. Tubur Primary School Students in P.1 were seated on the floor and poor accommodation structure The Accounting Officer explained that funds, disbursed by the Central Government to the district annually cannot meet demands for classroom accommodation. I advised the Accounting Officer to liaise with relevant authorities for increased SFG funding to rehabilitate the schools SOROTI MC 174

187 1. Service Delivery a. Dilapidated school accommodation and classroom structures Audit inspection revealed that some of the schools had very poor classroom structure and old toilet facilities as shown in details below; Name of School Issue Photos Aloet School Primary The school has dilapidated classroom structures that are dangerous to both the pupils and teachers. Pioneer School Primary The school has got no staff room block. The teachers were found seated and marking pupil s exercise in the compound. The school has dilapidated staff accommodation structures that are dangerous to the teachers. The school also has dilapidated classroom structures that are dangerous to both the pupils and teachers. The Accounting Officer explained that school buildings are gradually being rehabilitated in a phased manner due to inadequate funding. He added that more lobbying has to be done by all stakeholders. 175

188 I advised the Accounting Officer to liaise with relevant authorities to ensure that classroom structures are rehabilitated NGORA DLG 1. Book Keeping in U.P.E Schools Section 64(4) of Local Governments Financial and Accounting Regulations requires primary head teachers to keep a cashbook in respect of all money received and expended by a school. However it was observed that 56 Primary Schools lacked the necessary books of account. This weakens controls over use of funds at the primary schools The Accounting Officer explained that training had been planned under capacity building grant of LGMSD for the financial year I advised the Accounting Officer to ensure that the planned training is undertaken for all the schools in the district. 2. Service Delivery. Paragraph 9 (b) of the Local Governments Financial and Accounting Regulation, 2007 require the accounting officer to ensure that the public moneys, property and resources are properly managed and safeguarded. However, audit inspection revealed at the following short comings:- 2.1 Idle Dental Machine and Theatre Equipment The district paid a Local firm UGX.16,000,000 for the supply of Dental Machine to Ngora Health Centre IV. However, the machine was still idle and packed 20 months after delivery as shown in the photos below. 176

189 Dental machine still parked 20 months after delivery 2.2 Idle Theatre Equipment The District paid a Local firm UGX. 34,670,000 for supply of an operating bed, Autoclave Machine and Anaesthetic Machine to Ngora Health Centre IV. Similarly the machine was idle and still parked 2 months after delivery. See photos below. Theatre equipment still parked 2 months after delivery Having functional equipment that is not in use denies the public the needed service. I advised the Accounting Officer to provide rooms for the two machines so that they can be utilised to avoid wasting away and denying service to the public. 2.3 Audit Inspection of Primary school facilities 177

190 Audit inspection revealed that most of the schools had very poor accommodation for the teachers and poor classroom structures as shown in the table below; Name of School Issue Photos Akarukei Primary School Dilapidated classroom structures that are harmful to pupils health. Old Classroom Structures Atapar Primary School Poor classroom structures and teacher s accommodation Structures Kodike Primary School Poor classroom structures and teacher s accommodation Structures Koloin Primary School Poor Structures Classroom 178

191 Name of School Omuriana Primary School Issue Poor Accommodation structures, Photos The Accounting Officer attributed the challenges to limited funds, disbursed by the Central Government. I advised the Accounting Officer to liaise with the relevant authorities for increased SFG funding to enhance infrastructure. 3. Stores/Inventory Management. Regulation 83 (1) of the LGFARs of 2007 requires the district to have stores section and to employ a suitably qualified and experienced officer to be the stores control officer and head of that section. However it was observed that the stores lacked aqualified personnel and the items were not properly arranged as shown below and ledgers were also not up-to-date Store with disorganized inventory The Accounting Officer admitted the shortcomings and promised that a stores assistant will be recruited next financial year to address the matter. The matter requires urgent attention. 179

192 NGORA TC 1. Dilapidated Township school structures and congested classrooms Audit inspection revealed that Ngora Township School had very poor classroom structures while the existing ones were congested as shown below; Name of School Issue Photos Dilapidated classroom structures that are harmful to pupil s health. Ngora Township Primary School. Poor classroom and teacher s accommodation Structures 180

193 Name of School Issue Congested classrooms that make the environment un healthy to both teachers and pupils. Photos The Accounting Officer explained that the situation will be brought to the attention of Council and the District as more funding is sought from Peace Recovery and Development plan (PRDP) and Local Government Management and Service Delivery. I advised the Accounting Officer to liaise with the relevant stakeholders including Ministry of Education and ensure that the infrastructure is rehabilitated SERERE DLG 1. Service Delivery 1.1 Education Sector a) Book Keeping and financial management of UPE Funds Section 64(4) of Local Governments Financial and Accounting Regulation 2007 require primary head teachers to keep a cash book in respect to all money received and expended. During the year under review, UGX 457,126,475 was released to different UPE schools in the district, however, a review of the accounting records revealed the following shortcomings. Some schools have no cashbooks. Some cash books are not properly posted. Vouchers were not properly written and numbered sequentially. 181

194 Lack of payment vouchers and accountabilities This is an indication of poor financial management. The Accounting Officer explained that the head teachers were earlier on trained but just failed to put in practice the skills attained. I advised the Accounting Officer to explore the possibility of using sub accountants at sub county level to help financial management of primary schools. b) Inadequate and Dilapidated Infrastructure in Primary Schools Section of the Local Governments management and Service Delivery (LGMSD) guidelines 2009 provides the minimum National Standards of Service Delivery for UPE Schools. Documentation review and field inspection revealed a number of shortcomings as shown in the table below:- School Findings Pictures Kamod Pri Sch. Dilapidated p.1, 2 & 3 block which is likely to cause an accident any time Deteriorated dining hall and dormitory block Inadequate teachers accommodation Lack of teachers toilets Lack of power Teachers accommodation teacher/house ratio etc. 182

195 School Findings Pictures Agule Pri sch. Congested class rooms Lack of enough desks Lack of staff accommodation Lack of staff toilets Lack of safe water Abulabula Pri Sch. Aputon Pri Sch. Congested class rooms with over 200 pupils in P1 and 198 in P2 Lack of desks in p1, p2 and P3 Inadequate books Lack of teachers house and teachers have opted to sleep in class rooms, office and a store The school has no space for the office and office work is conducted from the veranda and in cases of weather change, P2 class is used as an office Lack of teachers accommodation and toilets Inadequate class rooms (all class rooms are congested) Inadequate books Inadequate desks, P1 have no desks at all 183

196 School Findings Pictures Adukut Pri Sch. Labor Pri Sch. Kamurojo Kakor PS In adequate teachers accommodation and P.1 is being used to accommodate some teachers and one of the teachers house is in a bad state. Inadequate class rooms for pupils P1 & P2 completely have no desks and other classes desks are few Lack of beds in the boys and girls dormitories The roof for a 4 class room block was swept by the wind and no action take since February In adequate toilets Lack of teachers accommodation P1 & P2 have no desks Lack of desks and classrooms Aep School Primary Inadequate classrooms 184