THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL

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1 THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY IN MOGADISHU FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2015 OFFICE OF THE AUDITOR GENERAL UGANDA

2 TABLE OF CONTENTS LIST OF ACRONYMS... ii PAGE REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY IN MOGADISHU FOR THE YEAR ENDED 30 TH JUNE, DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY IN MOGADISHU FOR THE YEAR ENDED 30 TH JUNE, INTRODUCTION BACKGROUND INFORMATION ENTITY FINANCING OBJECTIVES OF THE EMBASSY AUDIT OBJECTIVES PROCEDURES PERFORMED FINDINGS... 5 i

3 LIST OF ACRONYMS Acronym Bn Billion GoU Government of Uganda MoFA Ministry of Foreign Affairs MoFPED Ministry of Finance, Planning and Economic Development PFAA Public Finance and Accountability Act, 2003 PFMA Public Finance Management Act, 2015 UGX Uganda Shillings ii

4 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY IN MOGADISHU FOR THE YEAR ENDED 30 TH JUNE, 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of the Ugandan Mission in Mogadishu for the year ended 30 th June These financial statements comprise of the Statement of Financial Position, the Statement of Financial Performance, and Cash flow Statement together with other accompanying statements, notes and accounting policies. Management Responsibility Under Article 164 of the Constitution of the Republic of Uganda (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of the Uganda Embassy in Mogadishu. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Public Finance Management Act 2015, and the Financial Reporting Guide, 2008, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Auditor s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda (as amended) and Sections 13 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing. Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing audit procedures to obtain evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor s judgment including the assessment of risks of material misstatement of financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal 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 1

5 audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Part A of this report sets out my opinion on the financial statements. Part B which forms an integral part of this report presents in detail all the significant audit findings made during the audit which have been brought to the attention of management and form part of my Annual Report to Parliament. PART A Opinion In my opinion, the financial statements of the Uganda Embassy in Mogadishu for the year ended 30 th June 2015 are prepared, in all material respects in accordance with Section 51(1) of the Public Finance Management Act, 2015 and the Financial Reporting Guide, John F.S. Muwanga AUDITOR GENERAL 14 th December,

6 PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY IN MOGADISHU FOR THE YEAR ENDED 30 TH JUNE, 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 Ugandan mission in Mogadishu to enable me report to Parliament. 2.0 BACKGROUND INFORMATION The Uganda Embassy in Mogadishu is responsible for representing Uganda s interests in Somalia. It is located at Mogadishu International Airport (MIA) Base Camp, Somalia. The Embassy is in its second year of operation since its inception in November ENTITY FINANCING The Embassy was financed by Grants from Central Government to the tune of UGX 2,565,000,000. Non-tax revenue of UGX. 873,733,860 was also collected, bringing the total revenue to UGX.438,733,860. The total grants revenue constituted 100% of the Embassy s approved budget estimates. 4.0 OBJECTIVES OF THE EMBASSY The objectives of the Embassy are to: Promote Regional Peace and Security Promote capacity building Institutions in Somalia Provide Diplomatic, protocol and consular services 3

7 Promote general Economic Cooperation Provide political representation to the Federal Government of Somalia. 5.0 AUDIT OBJECTIVES The audit was carried out in accordance with International Standards on Auditing and accordingly included a review of the accounting records and agreed procedures as was considered necessary. In conducting my reviews, special attention was paid to establish:- a. Whether the financial statements have been prepared in accordance with consistently applied accounting Policies and fairly present the revenues and expenditures for the period and of the financial position as at the end of the period. b. Whether all funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. Whether goods and services financed have been procured in accordance with the Government of Uganda Procurement regulations. d. Whether the Embassy had a sufficient internal control structure and the internal controls were working as intended throughout the year. e. Whether the management was in compliance with the Government of Uganda financial regulations. f. Whether all necessary supporting documents, records and accounts have been kept in respect of all activities, and are in agreement with the financial statements presented. 6.0 PROCEDURES PERFORMED The following audit procedures were undertaken:- (a) Revenue Obtained schedules of all revenues collected and reconciled the amounts to the cashbooks and bank statements. (b) Expenditure The payment vouchers were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation. (c) Internal Control system Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period audited. 4

8 (d) Procurement Reviewed the procurement of goods and services by the Ministry during the period under review and reconciled with the approved procurement plan. (e) Fixed Asset Management Reviewed the use and management of the Ministry assets during the period under audit. (f) Financial Statements Examined on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessed the accounting principles used and significant estimates made by management; as well as evaluating the overall financial statement presentation FINDINGS 7.1. Categorization of audit findings The following system of profiling audit findings has been adopted to better prioritise the implementation of audit recommendations. No Category Description 1. High significance Has a significant / material impact, has a high likelihood of reoccurrence, and in the opinion of the Auditor General, it requires urgent remedial action. It is a matter of high risk or high stakeholder interest. 2. Moderate significance Has a moderate impact, has a likelihood of reoccurrence, and in the opinion of the Auditor General, it requires remedial action. It is a matter of medium risk or moderate stakeholder interest. 3. Low significance Has a low impact, has a remote likelihood of reoccurrence, and in the opinion of the Auditor General, may not require much attention, though its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest Summary of audit findings S/N Observation Significance 7.3 Implementation of the mission Charter High 5

9 7.4 Staffing Structure Moderate 7.3 Implementation of the Mission Charter The Mission Charter details priority areas, in line with MoFA Strategic Plan 2010/ /15 where its resources are supposed to be directed as follows: Promotion of regional peace and security, Enhancement of capacity building support of public institutions in Somalia, Provision of diplomatic protocol and consular services in Somalia and Promotion of general economic cooperation. However, it was noted that there were no clear performance targets, indicators and/or milestones to guide the implementation of the stated charter activities. Besides, the mission s budget as per the 2014/15 MoFA Ministerial Policy statement was not aligned to the Mission charter. Without the key parameters for measuring performance, I could not ascertain the extent to which the Charter priorities and /or objectives had been accomplished. Management explained that the Embassy was liaising with MOFA to revisit the Charter priorities and set clear and measurable performance indicators, targets and milestones for each of the intended activities. I urged management to expedite the process of streamlining Charter priorities and setting of measurable performance indicators as well as ensuring alignment of the budgets with the mission charter. 7.4 Staffing Structure Mogadishu mission is categorized as small with 1+2 staff according to the Ministry of Foreign Affairs approved staff structure as at July This implies that the mission is expected to have total staff strength of three (3) staff inclusive of the Head of mission. It was however noted that the mission had a total of four (4) home based staff namely, the Head of mission, deputy head of mission, Accounting Officer and Administrative attaché, implying an excess of 1(one) staff. 6

10 The practice may stifle the implementation of planned activities through diversion of budgeted funds to meet the emoluments of the extra staff. The accounting officer explained that the mission staffing was in line with the approved staff structure. However, the head of HR at MoFA confirmed the posting of an extra staff (Administrative attaché) to the embassy due to the increasing level of business at the mission. I advised management to liaise with MoFA, and align the mission staffing with the approved structure. 7

11 FINANCIAL STATEMENTS 8

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY, RIYADH FOR THE FINANCIAL YEAR ENDED 30 TH JUNE, 2015

THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA EMBASSY, RIYADH FOR THE FINANCIAL YEAR ENDED 30 TH JUNE, 2015 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF