UGANDA HIGH COMMISSION, KIGALI

Transcription

1 THE REPUBLIC OF UGANDA UGANDA HIGH COMMISSION, KIGALI REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 TH JUNE 2014 OFFICE OF THE AUDITOR GENERAL UGANDA

2 TABLE OF CONTENTS PAGE List of Acronyms... ii REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 TH JUNE, INTRODUCTION BACKGROUND INFORMATION OBJECTIVES OF THE MISSION AUDIT OBJECTIVES AUDIT PROCEDURES PERFORMED FINDINGS Failure to reconcile receipts in the General Ledger (GL) and the Bank Non approvals of payments within Navision Construction of the proposed chancery at Kacyiru Kigali Irregularities in the payments to a Supervisor Performance of the Mission... 9 i

3 List of Acronyms NTR PFAA UCF USD A/c UGX Non Tax Revenue Public Finance and Accountability Act Uganda Consolidated Fund United States Dollars Accounts Uganda Shillings ii

4 UGANDA HIGH COMMISSION, KIGALI REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 TH JUNE, 2014 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of the Uganda High Commission, Kigali for the year ended 30 th June These financial statements which are set out on pages 6 to 44 of appendix 1, comprise of the statement of financial position, statement of financial performance and statement of cash flow together with other accompanying schedules, notes and accounting policies. Management Responsibility Under Article 164 of the Constitution of the Republic of Uganda (as amended) and Section 8 of the Public Finance and Accountability Act (PFAA), 2003, the Accounting Officer is accountable to Parliament for the funds and resources of the Mission. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Public Finance and Accountability Act 2003, and the modified cash basis of accounting, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Auditor s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda (as amended) and Sections 13 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing. Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing audit procedures to obtain evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor s judgment including the assessment of risks of material misstatement of financial 1

5 statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances but not for purposes of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Part A of this report sets out my opinion on the financial statements. Part B which forms an integral part of this report presents in detail all the significant audit findings made during the audit which have been brought to the attention of management. PART A Opinion In my opinion, the financial statements of the Uganda High Commission, Kigali as at 30 th June 2014 are prepared, in all material respects, in accordance with the Financial Reporting Guide, 2008 and Section 31(6) of the Public Finance and Accountability Act, John F.S. Muwanga AUDITOR GENERAL KAMPALA 27 th February,

6 PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF UGANDA HIGH COMMISSION KIGALI FOR THE YEAR ENDED 30 TH JUNE 2014 This Section outlines the detailed audit findings, management responses, and my recommendations in respect thereof. 1.0 INTRODUCTION Article 163 (3) of the Constitution of the Republic of Uganda,1995 (as amended) requires me to audit and report on the public accounts of Uganda and all public offices including the courts, the central and local government administrations, universities, and public institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I carried out the audit of the Mission to enable me report to Parliament. 2.0 BACKGROUND INFORMATION The Uganda High Commission in Kigali, is located on Plot 31, Avenue de la Paix, B.P. 656, Kigali. The Mission is in charge of Rwanda. 3.0 OBJECTIVES OF THE MISSION The Mission has the following objectives:- Target support from Rwanda. Report on the repatriation of Rwanda refugees from Uganda. Target a growth rate of the net trade imbalance in favour of Uganda. Report on the welfare of the Ugandan community living in Rwanda. Report on the implementation by Rwanda of the bilateral and relevant regional peace instruments/initiatives. Consular Services including collection of NTR and its subsequent remittance to the UCF. 3

7 4.0 AUDIT OBJECTIVES The audit was carried out in accordance with International Standards on Auditing and accordingly included a review of the accounting records and agreed procedures as was considered necessary. In conducting my reviews, special attention was paid to establish whether: a. The financial statements have been prepared in accordance with consistently applied Accounting Policies and fairly present the revenues and expenditures for the period and of the financial position as at the end of the period. b. All High Commission funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. Goods and services financed have been procured in accordance with the Government of Uganda procurement regulations. d. To evaluate and obtain a sufficient understanding of the internal control structure of the High Commission, assess control risk and identify reportable conditions, including material internal control weaknesses. e. The High Commission management was in compliance with the Government of Uganda financial regulations. f. All necessary supporting documents, records and accounts have been kept in respect of all High Commission activities, and are in agreement with the financial statements presented. 5.0 AUDIT PROCEDURES PERFORMED The following audit procedures were undertaken: a. Revenue Obtained schedules of all revenues collected and reconciled the amounts to the Mission s cashbooks and bank statements. 4

8 b. Expenditure The Mission payments vouchers were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation. c. Internal Control System Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period audited. d. Procurement Reviewed the procurement of goods and services under the Mission during the period under review and reconciled with the approved procurement plan. e. Fixed Assets Management Reviewed the use and management of the Mission assets during the period audited. f. Mission s Financial Statements Examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessed the accounting principles used and significant estimates made by management; as well as evaluating the overall financial statement presentation. 6.0 FINDINGS 6.1 Failure to reconcile receipts in the General Ledger (GL) and the Bank A review of the process of posting of the visa receipts into the system revealed that monthly collections were posted lump sum instead of being entered individually. I was therefore unable to reconcile the individual collections to the bank. It was further noted that the Visa fees collections and TMPS deposits on bank 3 (USD Account) and bank 5 (Local Account) respectively could not reconcile with manual collection ledgers prepared at the High Commission by USD in bank 3 and FRW 103,900 in bank 5. 5

9 Management attributed this to posting of receipts to cash in transit instead of posting to the bank directly. Management further explained that they had sought assistance from the Navision Support Team to guide the Consular Officer on how to post individual collections to enable a smoother reconciliation. I advised management to always post the individual collections to the bank to enable reconciliation. 6.2 Non approvals of payments within Navision According to the commission cash books generated by the system, payments worth USD 152,191 and FRW 43,970,383 from a local and dollar accounts were not approved by the Accounting Officer even when there was evidence that these payments were actually manually approved before payment was effected. Management could not explain this anomaly and referred this matter to Navision experts at Treasury for further consultation. I advised management to continue liaising with Navision Support Team at Treasury and have the system issue resolved once and for all. 6.3 Construction of the proposed chancery at Kacyiru Kigali Irregular use of VAT refunds According to one of the (PS/ST) communication dated 11 th December 2013, the High commission in Kigali was authorized to utilize VAT refund amounting to USD 101,332 on project activities. The Accounting Officer was also requested to provide a revised implementation schedule showing details of the remaining activities and the cost to end of the project. At the time of audit, USD 290, had been refunded indicating that USD 188, was utilized without the requisite approval by the Permanent Secretary/Secretary to the Treasury. I was also unable to confirm whether the activities on which these funds were spent on had been budgeted for. A revised implementation schedule showing details of the remaining activities and the cost to end of the project was not provided at the time of writing this report. 6

10 Management explained that the refund had been utilised in line with Project activities. These included air travel and allowances for the Construction Management Team related to the regular Site Chancery meetings between the Client (Uganda High Commission, the Contractor and the Consultant), Contracts Committee meeting costs related to the various procurement procedures for furniture and security equipment. Management promised to submit a full report on the implementation schedule of VAT refund to the PS/ST once the Chancery construction is completed. I advised management to ensure that approvals are sought prior to utilizing the VAT funds. 6.4 Irregularities in the payments to a Supervisor In June 2009, a supervising company was contracted by Government to undertake consultancy services and supervision of the proposed construction of the Chancellery building at Kacyiru-Kigali at a contract price of Shs.448,400,000 (VAT inclusive). At the time of audit, Shs.369,930,000 (USD 155,644.23) had been paid leaving a balance of Shs.78,470,000. According to special conditions of the contract (page 23), payments should have been effected as per the following schedule; Table 1: Payment schedule as per the special conditions Activity to be carried out Provision of inception report Comments 20% Paid against payment request No. 1 and No 2. Ref MoFA 01 dated 13/11/2010 Feasibility Design 15% Paid against payment request No. 1 and No 2. Ref MoFA 01 dated 13/11/2010 Scheme Design 15% Paid against payment request No. 3. Ref MoFA 01 dated 31/05/2011 Final Design and 15% Paid against payment request No. Tender documents 3. Ref MoFA 01 dated 31/05/2011 Construction supervision 30% Determined at the date of commencement of construction on 28/03/2013. They had supervised for 7 months as at 4/12/2013 and billed for 7 months. UGX 78,470,000 has been paid based on 7 Fees UGX 89,680,000 67,260,000 67,260,000 67,260,000 78,470,000

11 End of defects liability period the assessment. 5% 0 Total payment 369,930,000 The following were noted; Non adherence to special conditions in the agreement According to GCC 8.1 of the special conditions of the agreement the period within which the services may have commenced is June GCC 18.1 also stipulated that the period within which the services shall have been completed following commencement of the services is 2 years. The above conditions imply that the contract should have expired in It was however noted that even after the expired contract, the firm went ahead and billed Shs.78,470,000, being construction supervision for the 7 months period supervised (from the date of commencement of construction on 28/03/2013 to 4/12/2013) without an addendum/revised contract terms. At the time of writing this report, the bill had been settled. Ideally, the supervision costs should have been settled after finalization of the construction. Management explained the procurement process for an addendum to the contract had commenced in consultation with the parent Ministry of Foreign Affairs. Management effort on the matter is awaited Failure to Claim for the Tax Refunds No taxes were claimed from payments to the firm worth Shs.148,353,991 thus a loss of government funds. Management explained that the withholding tax of 6% would be recovered from the firm at the time of effecting the final payment due to them. I advised management to always deduct taxes considering that embassies are exempted from paying taxes. 8

12 6.4.3 Failure to trace one of the payments to the firm worth USD 68,288 in the system USD 68,288 paid to the firm being engineering and feasibility design was not posted as a payment in the Navision system. I could not establish how the funds were paid. I explained to management that if this problem is not resolved, double payment cannot be ruled out on future transactions. Management explained that they had sought an explanation from the Navision Support Unit regarding the anomaly as to why the payment is not reflected in the system. I advised management to investigate this anomaly with Navision experts and have it resolve. 6.5 Performance of the Mission Incomplete Mission Charter At the time of writing this report, the mission charter was in a draft form. The Charter outlines the road map that the Mission intends to follow in the future to enable the achievement of its mandate. In the absence of the approved mission charter, there is a risk that the Mission activities are not in tandem with the Uganda Government Foreign Policy. In addition, it becomes difficult to review the performance of the Mission with regard to its strategic goals. Management explained that in conjunction with the line department of the Ministry of Foreign Affairs, SMART targets had been drawn up in January 2015 reflecting more achievable performance targets. They stated that the draft Mission Charter is pending approval and signature of the Honorable Minister of Foreign Affairs. I advised management to expedite the approval process and have the charter in place. 9

13 APPENDIX 1 FINANCIAL STATEMENTS 10