OFFICE OF THE AUDITOR GENERAL

Transcription

1 OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BULAMBULI DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30 TH JUNE 2014

2 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BULAMBULI DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30 TH JUNE 2014 THE RT. HON. SPEAKER OF PARLIAMENT Introduction I have audited the accompanying financial statements of Bulambuli District for the year ended 30th June These financial Statements comprise of the statement of financial position as at 30 th June 2014, statement of financial performance, statement of changes in equity, cash flow statement together with other accompanying statements, notes and accounting policies. Management Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda and Section 8 of the Public Finance and Accountability Act, 2003 and section 64 and 86 of the Local Governments Act 1997 as amended, the Accounting Officer is accountable to Parliament for the funds and resources of the Local Government. The Accounting Officer is responsible for the preparation of financial statements, in accordance with regulation 68 of the Local Governments Financial and Accounting Regulation, 2007 and for such internal controls as management determines necessary to enable the preparation of financial statements that are free from material misstatements whether due to fraud or error. Auditor s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda, Section 86 of the Local Government Act and Sections 13, 16 and 19 of the National Audit Act, 2008 is to express an opinion on these statements based on my audit. I conducted my audit in accordance with the International Standards on Auditing(ISA)/ International Standards of Supreme Audit Institutions (ISSAIs). Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing audit procedures to obtain evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due 1

3 to fraud or error. In making those risk assessments, the Auditor considers internal controls relevant to the entity s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Part A of my report sets out my qualified opinion on the financial statements. Part B which forms an integral part of this report presents in detail, all the significant audit findings made during the audit which have been brought to the attention of management. PART A Basis for Qualified Opinion Funds not accounted for A sum of UGX.111, 319,388 remained unaccounted for at the time of audit, contrary to the Financial Regulations. Consequently, I could not confirm that the funds were utilized for the intended purpose. Qualified Opinion In my opinion, except for the possible effect of matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly in all material respects the financial position of Bulambuli District as at 30 th June 2014 and the results of its operations and cash flows for the year then ended, and comply in all material respects with the Generally Accepted Accounting Practice, the Local Governments Act cap 243 of the Laws of Uganda (as amended) and the Local Government Financial and Accounting Regulations, John F.S. Muwanga AUDITOR GENERAL 20 th February,

4 PART "B" BULAMBULI DISTRICT DETAILED REPORT OF THE AUDITOR GENERAL FOR THE FINANCIAL YEAR ENDED 30 TH JUNE Introduction In accordance with Article 163(3), of the Constitution of the Republic of Uganda, I am required to audit and report on the public accounts of Uganda and of all public offices, including the courts, the central and the local government administrations, universities and public institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I carried out the audit of the Bulambuli District to enable me report to Parliament. 2.0 AUDIT OBJECTIVES The audit was carried out in accordance with International Standards on Auditing and accordingly included a review of the accounting records and agreed procedures as was considered necessary. The audit was carried out with regard to the following objectives:- a. To verify whether the financial statements have been prepared in accordance with the requirements of the Local Governments Financial and Accounting Manual 2007; and the Local Governments Financial and Accounting Regulations 2007; and fairly present the income and expenditures for the year and of the financial position as at the end of the year. b. To verify whether all the funds of the entity were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. To verify whether goods and services financed have been procured in accordance with the PPDA Act. d. To evaluate and obtain sufficient understanding of the internal control structure of the entity, assess control risk and identify reportable conditions, including material internal control weaknesses e. To verify whether the management of the funds of the entity was in compliance with the Government of Uganda financial regulations. 3

5 f. To verify whether all the necessary supporting documents, records and accounts have been kept in respect of all activities, and are in agreement with the financial statements presented. 3.0 Audit Methodology The following audit procedures were undertaken:- a. Revenue Obtained all schedules of all revenues collected and reconciled the amounts to the cashbooks and bank statements of the entity. b. Expenditure The payment vouchers of the entity were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation. c. Internal Control System Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period d. Procurement Reviewed the procurement of goods and services under the various departments during the period under review and reconciled with the approved procurement plan. e. Fixed Assets Management Reviewed the use and management of the assets of the entity during the period under review. f. Financial Statements Examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessed the accounting principles used and significant estimates made by management; as well as evaluated the overall financial statement presentation. 4.0 Entity Financing Bulambuli District is financed by grants (Conditional and Unconditional) from the Central Government, development partners and locally generated revenues from taxes, fees, 4

6 licenses and charges. During the year, the district received grants totaling to UGX12,485,835,886 from the Central Government; UGX.111,798,670 from locally generated revenues and UGX.208,209,300 from Development Partners. The total revenue of UGX12,805,843,856 constituted 93% of its approved budget estimates of UGX.13,703,829, Detailed Audit Findings This section outlines the detailed audit findings and my recommendations in respect thereof. 5.1 Funds not accounted for Regulation 42 and 43 (2) of the Local Governments Financial and Accounting Regulations 2007, require funds to be properly vouched and accounted for within a period of one month. It was observed that a sum of UGX.111,319,388 remained unaccounted for by the time of audit contrary to the Regulations as shown in Appendix 1. Consequently, I could not confirm that the funds were utilised for the intended activities. Accounting Officer attributed it to laxity of staff to properly account for the funds. I advised the Accounting Officer to ensure that funds are properly accounted for or recoveries from the concerned officers be made. 5.2 Local Revenue shortfall 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. It was observed that council set out to collect local revenue of UGX.205, 890,242 but only realised UGX.112,483,270 resulting in a shortfall UGX 93,406,972 representing 45% under performance as shown below; Code Local Revenue Budgeted 2013/2014 Actuals 2013/14 Variance Land Fees 22,765,000 23,461,500 (696,500) Application Fees/Local Service Tax 27,361,950 10,954,000 16,407,950 5

7 Advertisements/Bill Boards/Non - Refundable Fee Animal & crop Husbandry related Levies/Forestry , ,000 50,000 Registration of CBO's Registration (e.g. Births, 0 - Deaths, Marriages etc.) fees Registration of 43,380,310 24,917,081 18,463,229 Businesses/Development fees Agency Fees 20,229,810 14,923,000 5,306,810 Entry fees/park fees 20,005, ,005, Market/Gate charges 11,669,493 (11,669,493) Other Fees & charges/ Recovery/Interest from Bank Total 71,599,769 26,060,196 45,539, ,890, ,483,270 93,406,972 The Accounting Officer attributed the short fall to non-remittance of Local Service Tax of UGX.16,407,950 from the Centre, reverting of Muyembe Tax Park to Bulambuli Town Council and transfer of District accounts from Crane Bank to DFCU Bank which had promised 4% interest but never honoured. I advised the Accounting Officer to ensure that all budgeted revenue is collected. 5.3 Irregular levy of 2% development tax Section 13(0) of the fifth schedule of the Local Governments Act requires any Council to seek authority from the Minister of Local Government to levy taxes. A sum of UGX.15,714,385 was collected from contractors payments as 2% development tax, without approval by the Minister of Local Government. Details are in Appendix 2. The deductions may compromise quality of work and may attract legal battles between council and contractors. The Accounting Officer explained that the tax was approved by Council in the financial year and a request had been sent to the Ministry of Local Government to sanction the tax. I advised the Accounting Officer to follow up the matter with Ministry of Local Government to have the tax regularised otherwise its collection be halted. 6

8 5.4 Lack of Land Title Regulation 58 (4) of the Local Governments Financial and Accounting Regulations, 2007 states that the properties and assets of local governments shall be properly registered and titles issued. It was however observed that the district council did not have land titles for its property as the titles were in the names of Muyembe Sub County. This creates a risk of encroachment and disputes. The Accounting Officer explained that the district Council is in the process of securing the title in the district names after resettling Muyembe Sub-county on their own land. I advised the Accounting Officer to follow up the matter and ensure that land titles are transferred in the District names. 5.5 Understaffing The District has an approved structure of 1,449 positions. However, out of the 1,449 approved positions only 1,034 are filled, leaving 415 vacant positions, representing 29% of the establishment as shown below: Table showing understaffing Established position Position filled Vacant post Percentage filled %age vacant Staff Category District Local Gov t % 62.1% Health % 27% Secondary Teachers % 58% Primary teachers % 2.6% TOTAL % 28.7 Understaffing adversely affects service delivery. Management attributed understaffing to the ban on staff recruitment by the Ministry of Public Service. I advised the Accounting Officer to engage the Ministry of Public Service so that the vacant positions are filled. 7

9 APPENDICES Appendix 1-Funds not accounted for Voucher Date Payee Amount Description remarks Finance PV /05/2014 Nandutu Phyllis 600,000 PV /3/2014 Wamayeye Ronald 700,000 PV /2/2014 Maziina Michael 1,000,000 PV /12/2013 V33/11/201 3 Nagudi Catherine 484,000 28/11/2013 Wanade John 700,000 Admin /11/2013 Tabali Moses 408,000 PV //08/2013 Wanade John 2,000,000 PV PV /05/2014 5/6/2014 Muduku Charles 399,000 Wamayeye Ronald 900,000 Purchase of printing stationary for payroll Facilitation for PAF field activities Facilitation for PAF monitoring By DEC members for 3rd Qtr Facilitation for supervision, monitoring &mentoring LLGs Facilitation for verification of PAF projects 2nd quarter Facilitation for a sensitization meeting Payment in respect of 4th Quarter Routine Audit Payment in respect of support supervision of LLGs Payment in respect of audit of sub counties 3rd Quarter No receipts, invoices, LPO, GRN, Delivery notes No field activity Program & report, receipts for stationary, fuel receipts and payment sheets No fuel receipts, PAF monitoring program &Report, payment sheets No monitoring program & reports No supporting documents were attached i.e. fuel receipts, payment sheets No fuel receipts of 68,000, stationary receipts of Shs 50,000, other supporting receipts Shs 290,000 No 4th Quarter audit work program/work plan, report, fuel receipts Shs 870,000, stationary receipts No fuel receipt of Shs 399,000, pre & post inspection report, payment sheets No audit work plan, report, fuel receipts and payment sheets 8

10 PV /05/2014 Wanade John 600,000 Education 0 PV /11/2013 Gimei Charles 450,000 Stat. Bodies PV /12/2013 Mayeku Tom 740,000 PV /05/2014 BututoJenepher & family 0 1,000,000 PV /05/2014 NangaiZemulani 1,300,000 Health M/s Shell Elgon Services 752,000 Dr.Mulongo M. 5,994,000 M/s Shell Elgon Services 4,725,000 1/4 chq055 Mafabi Martin 750,000 10/11 chq Shell Elgon Service Station 0 600,000 13/12 chq086 Zesani Gerald 6,655,000 Payment in respect of repair and service of UG-3030R Payment in respect of school inspection and monitoring Facilitation to Entebbe Dept. of survey and mapping Rent for the house used by DSC Facilitation for procurement unit activities in the 4th Quarter Fuel for support supervision too hard to reach areas Allowances for parish mobilisers and vaccinators Fuel supervision and vaccine delivery to lower Health Centres Delivery of 15 trips gravel Fuel for back stopping sensitization of Sub Counties Direct purchase of aggregates (10-14 MM) from Kampala `Build world` 60 Tones 5 trips total 4.2M and fuel 2,080,000, 130 Litres day No pre & post inspection reports, receipts Shs 450,000 lacks accountabilities No accountabilities attached No accountabilities attached No accountabilities attached 270 Litres diesel no M/Veh. Numbers No activity for shs.5, 566,000. No names, dates, signs Issue vouchers have no M/Veh. Nos. No receipt from supplier, no GRN No issue and demand receipts The 5 receipts for fuel not dated Rec Shs. 4.2M from Build world not dated paid cash. Fuel already paid for vide vr8/12 2/11 chq043 M/s Shell Elgon Services 750,000 Fuel for DHO for the months of Oct., Nov., and Dec Issue vouchers and credit statement do not show Motor Vehicle Reg. Numbers for consumption of fuel Construction of 2/5 chq 0195 Zesani Gerald 2,690,000 foundation of district H/quarters No documents 2/6 chq0220 Globest 2,000,669 Retention fee for No defects 9

11 20/6 Chq /11 chq062 25/11 chq065 28/11 chq068 3/9 Chq017 Agencies Ltd extension of Buluganya Sub County office, construction of staff extension House, Kitchen and 4 stance pit latrine at Buluganya S/C J &M Elgon Co. Ltd 1,691,185 Office furniture Zema Savings and Credit Co- Ltd Nasize Construction Firm Buluganya International (U) Ltd 2 Oceans Screen Printers 9,212,000 2,303,000 5,000,000 1,040,956 3A/1/ chq090 Madete Richard 455,000 3B/1 chq090 Madete Richard 650,000 5/11 chq Tsekeli Alfred 610,000 6/4 Chq060 Kongasis Petroleum Dealers 1,600,000 Construction of Chiefs House, Kitchen 2 stance pit latrine at Bulaago S/c Retention for completion of Bukhalu Sub County Completion and retention (shs.5,000,000) for Bulegeni S/c Office and staff House Emptying 5 stance Latrine and putting burglar proof Preparation of BFP as girded by MOFPED Submission of BFB and re- submission of OBT to MOFPED. Sector review meeting Fuel deposit used for beautification of district compound. liability certificate No GRN, Not taken on charge Certificate not signed by IOW (preparer) -Cert. issued on 30/12/2013 but payment made on 18/11/2013 (payment before cert. is issued). Payment made to `Ideal Merchant Property Holdings (U) Ltd` rec /11/2013 i.e. wrong payee No defects liability certificate, Paid to Buluganya International Ltd (rec /11/2013 No defects liability certificate, The House/ project was handed over on 20/11/2013 and retention paid on 28/11/2013 No requisition No documents- Receipts, signs, programmes, dates, No documents- Receipts, signs, programmes, dates, No minutes No demand and issue voucher 10

12 8/3 chq048 Madete Richard 2,410,000 9/3 chq049 Madoyi Michael 5,000,000 PV PV PV PV Shell Service Shell Service Kongasis Petroleum Shell Service Elgon Elgon Elgon 500,000 1,500,000 Facilitate follow-up of LLGs in preparation for NAT on 18/3/2014 Fencing District offices 10 Rolls of barbed wires and 20,000 Apple seedlings Payment in respect of fuel for coordinating departmental Payment of fuel for DCAO for April - June 1,600,000 Fuel for coordination 1,734,000 PV Nanoga Richard 2,000,000 PV PV Simaki Enterprises Ltd Shell Service Elgon 576,671 2,000,000 PV Chelimo Alex 750,000 PV Shell Service Elgon 500,000 PV Maziina Michael 780,000 PV Shell Service Elgon 1,000,000 PV Maziina Michael 780,000 PV Maziina Michael 910,000 Fuel supply to LLG s supervision & Back up Support Repair of motor vehicle LG Payment in respect of works done in procurement office CAO's fuel for August and September 2013 Monitoring of PAF PRDP projects in six sub counties Supply of fuel to CFO's office for March 2014 Facilitation of C/man V to travel to Entebbe for ULGA annual meeting Payment for fuel for chairman LCV for October 2013 facilitation of c/man V to Kampala, Munyonyo Hotel for JILOS Meeting Facilitation for UDIWSA meeting in No documents ( Reports, receipts, no dates for 17 days indicated, no names and signs of 5 staff mentioned ) DN, GRN availed. Lacks fuel consumption schedule Lacks fuel consumption schedule lacks fuel consumption schedule, Coordination program No PAF monitoring program & reports No pre & post inspection reports, No requisition, LPO, GRN, Delivery note Lacks fuel consumption schedule No invoice Lacks fuel consumption schedule No meeting invitation and agenda attached Lacks fuel consumption schedule No meeting invitation and agenda No meeting invitation and 11

13 PV Maziina Michael 790,000 PV Mayeku Tom 1,235,000 PV Maziina Michael 780,000 PV Mayeku Tom 1,607,500 PV Maziina Michael 780,000 PV PV PV PV PV Shell Service Elgon ZemaSavings & Credit Khaukha and Sons Betimu services Fred Hot Zema Savings & Credit 1,200,000 2,645,547 4,110,556 9,483,266 7,887,038 TOTAL 111,319,388 Entebbe Facilitation of speaker to Mbarara Annual General meeting (ULGA) Facilitation for training area land committee & swearing in ceremony Facilitation for LCV Chairman to travel to Kampala(OPM) Payment in respect of field visit for all public Lands and clarification Facilitation for C/man LCV travels to Kampala to attend ULGA meeting. Payment of fuel for school inspection and monitoring Construction of 2 classroom block, 5 stance pit latrine & supply 36 desks Construction of 4 classrooms, 5 stance line pit latrine & supply 72 desks Construction of 2 classroom block without office & supply of 36 desks Construction of 2 classrooms, supply of 36 desks at Bumusamali P/S agenda attached No invitation, fuel receipts, subscription receipt No report generated and swearing ceremony program not attached No Meeting minutes No board meeting minutes, visit program and report No meeting invitation No school inspection and monitoring report, program No GRN, LPO, Delivery note, invoice, for desks No GRN, LPO, Delivery note, invoice, acceptance letter, contract agreement No Contract agreement, award letter, acceptance letter, GRN, LPO, Delivery note, Invoice for desks No letter of ward, acceptance letter, invoice, contract agreement, GRN, LPO, Delivery notes 12

14 Appendix 2-Irregular levy of 2% development tax Receipt No. Particulars Amount Azom Construction Co 141, Nabomarks (U) Ltd 126, Zema Savings & Credit Co Ltd 411, Globest Agencies Ltd 199, KLR (U) Ltd 736, Absolom& Brother Ltd 161, Absolom& Brother Ltd 168, KLR (U) Ltd 333, Ocean screen printers 70, Digital World 4, Ideal Merchant property holdings 129, Digital sounds & Sights 7, Ocean screen printers 21, Link Burg (U) Ltd 148, Masijapo 52, Ocean screen printers 39, Ocean screen printers 37, Ideal Merchant property holdings 188, Buluganya International Ltd 13, Buluganya International Ltd 8, Buluganya International Ltd 11, Buluganya International Ltd 29, Buluganya International Ltd 30, American Tower company Kampala 1,100, Aswaki Construction Co 209, Absolom& Brother Ltd 82, L.H.M ground water exportation 40, Health Dept 505, Buluganya International Ltd 47, Buluganya International Ltd 287, LGMSD 123, Link Burg (U) Ltd 54, Nabuti technical services Ltd 20, Nabuti technical services Ltd 19, Ocean screen printers 36, Gundu Construction & Builders 122, Super Elgon Contraction Ltd 5, Zimondo Multipurpose 11, PIA Building & Construction 7, Shelter Hitech 5, Shelter Hitech 8, G & W 7,424 13

15 10372 Kasande Agency 75, Shelter Hitech 17, M/S Infrastructure 7, Reina savings & Credit co Ltd 3, G & W 12, Musamani& Sons 12, Buluganya International Ltd 12, Education Dept 53, Education Dept 83, Techo Design Engineering 198, Ocean screen printers 80, , Buluganya International Ltd 5, Buluganya International Ltd 4, Kawama General Ent 8, Sibita Contractors 4, Nalwali General enterprises 48, Digital World sounds & Sights 4, Buluganya International Ltd 6, Nabomax 173, Buluganya International Ltd 232, Agolo General Enterprises 357, Gundu Construction & Builders 3, Nabaya General enterprises 5, Gundu Construction & Builders 3, Buluganya International Ltd 30, Betimu Hot services Ltd 193, Zema Savings & Credit Co Ltd 100, Zema Savings & Credit Co Ltd 160, Buluganya International Ltd 75, Zimondo Multipurpose 175, Nambasi International Ug Ltd 168, Sibita Contractors 5, Sibita Contractors 4, Ideal Merchant property holdings 12, Globest Agencies Ltd 212, Azom Construction Co 107, Ocean screen printers 16, LGMSD 216, Nabmax International Ltd 188, Bulambuli DLG Works 230, Bulambuli DLG Works 97, Bulambuli DLG Works 235, Works & Technical services 93, Bunagani Young farmers 701,090 14

16 10615 Kasande Agency 270, Education Dept 448, LGMSD 58, Health Dept 165, Buluganya International Ltd 16, Education Dept 262, Education Dept 31, Education Dept 208, Works & Technical services 334, Works & Technical services 139, Health Dept 288, Production & marketing 238, Works & Technical services 323, Works & Technical services 218, Health Dept 329, Works & Technical services 192, Education Dept 202, Health Dept 180, Education Dept 344, Education Dept 94, Buluganya International Ltd 66, Production & marketing 228, Production & marketing 103, Works & Technical services 81, Works & Technical services 37, Works & Technical services 170, Education Dept 289,457 TOTAL 15,714,385 15