OFFICE OF THE AUDITOR GENERAL

Transcription

1 OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KOLE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30 TH JUNE 2016

2 Table of Contents LIST OF ACRONYMS INTRODUCTION ENTITY FINANCING AUDIT SCOPE AUDIT PROCEDURES PERFORMED FINDINGS Categorization of findings Summary of Findings DETAILED AUDIT FINDINGS Unaccounted for Advances Pension anomalies Low recovery of Youth Livelihood funds Un-acknowledged transfers to Youth Livelihood groups Un- acknowledged Tax Remittances... 9 Appendix I: Unaccounted For Funds...10 Appendix II: Unacknowledged transfers to Youth Livelihood groups...11 Appendix III: Unacknowledged taxes

3 LIST OF ACRONYMS Acronym UGX RT. HON. ISA LGFAR FYR PPDA LGFAM MOLG MGLSD HC PHC MOH OWC MAAIF PRDP ICT YLP OPD MOU NMS LGMSD TPC DEC OAG Meaning Uganda Shillings Right Honourable International Standards on Auditing Local Government Financial and Accounting Regulations Financial Year Public Procurement and Disposal of Public Assets Local Governments Financial and Accounting Manual Ministry of Local Government Ministry of Gender, Labour and Social Development Health Centre Primary Health Care Ministry of Health Operation Wealth Creation Ministry of Agriculture, Animal Industry and Fisheries Peace Recovery and Development Plan Information Communication Technology Youth Livelihood Program Out patients Department Memorandum of Understanding National Medical Stores Local Governments Management and Service Delivery Technical Planning Committee District Executive Committee Office of the Auditor General 2

4 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KOLE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2016 THE RT. HON. SPEAKER OF PARLIAMENT Introduction I have audited the accompanying financial statements of Kole District Local Government for the year ended 30 th June These financial statements comprise the Statement of Financial Position as at 30 th June 2016, Statement of Financial Performance, Statement of Changes in Equity, Cash flow Statement together with other accompanying statements, notes and accounting policies. Management s Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act of 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Kole District Local Government. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Local Governments Financial and Accounting Manual, 2007 and for such internal control as management determines 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, 1995 (as amended), Section 87 of the Local Governments Act 1997, 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 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 the financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal controls relevant to 3

5 the entity s preparation 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 qualified audit 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 Basis for Qualified Opinion Unaccounted for funds A total amount of UGX.132,412,780 remained unaccounted for at the time of audit. Consequently, I was unable to confirm that the funds were utilized for the intended purposes. Qualified Opinion In my opinion, except for the possible effects of matter described in the Basis for Qualified Opinion paragraph, the financial statements of Kole District Local Government as at 30 th June 2016 are prepared, in all material respects, in accordance with the Local Governments Financial and Accounting Manual, 2007, Section 51(3) of the Public Finance Management Act 2015, the Local Governments Financial and Accounting Regulations, 2007 and the Local Governments Act cap 243 (as amended), of the Laws of Uganda John F.S. Muwanga AUDITOR GENERAL 15 th December,

6 PART B DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KOLE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE INTRODUCTION In accordance with Article 163(3), of the Constitution of the Republic of Uganda, 1995 (as amended), 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 Kole District to enable me report to Parliament. 2.0 ENTITY FINANCING Kole District Local Government is financed by grants (Conditional and Unconditional) from the Central Government, donations, transfers from other Government Units and locally generated revenues from taxes, fees, licenses and charges. During the year, the district received grants totaling to UGX.15,590,922 from Central Government, UGX.153,510,532 from locally generated revenues, UGX.943,079,597 from other Government Units and Donor funds of UGX.880,075,219. The total revenue of UGX.17,567,588,079 constituting % of its approved budget estimates of UGX.17,502,392,000 was realized. 3.0 AUDIT SCOPE 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. 5

7 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 2003 (as amended) 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. 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. 4.0 AUDIT PROCEDURES PERFORMED 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. 6

8 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. 5.0 FINDINGS 5.1 Categorization of findings The following system of profiling of the audit findings has been adopted to better prioritize 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. 5.2 Summary of Findings No Finding Significance 6.1 Unaccounted for Advances High 6.2 Outstanding employee benefits- Pension arrears High 6.3 Low Recovery of Youth Livelihood funds High 6.4 Delivery of medicines to Lower Health Units High 6.5 Un-acknowledged transfers to Youth Livelihood groups Moderate 6.6 Non-functioning Machine Moderate 6.7 Un- acknowledged Tax Remittances Moderate 6.8 Wrong Packaging Low 7

9 6.0 DETAILED AUDIT FINDINGS This section outlines the detailed audit findings, management responses and my recommendations. 6.1 Unaccounted for Advances Regulation 43(2) of the LGFAR of 2007 requires that administrative advances to Council employees be authorized by the Chief Executive and accounted for within one month. However, it was observed that, a sum of UGX.132,412,780 remained unaccounted for at the time of audit contrary to the Regulations as shown in Appendix I. Consequently, I was unable to confirm that the funds were utilized for the intended purposes. I advised the Accounting Officer to ensure that the funds are accounted for or else effect recovery from the responsible Officers. 6.2 Pension Arrears Regulation 54(3) of the LGFAR, 2007 states that all Local Governments shall be up-todate with salary and pension payments. It was however observed that pension arrears amounting to UGX.288,959,183 remained outstanding at year end. The Accounting Officer explained that the Ministry of Finance had promised to have all salary and pension arrears cleared during the month of December I advised the Accounting Officer to continue engaging the relevant authorities and ensure that the arrears are settled. 6.3 Low recovery of Youth Livelihood funds Chapter 6 (i) of the Youth Livelihood Programme Guideline, 2013 states that all the project grants disbursed to each Youth Interest group will be treated as a revolving fund to be repaid in accordance with the Project Financing Agreement between the District local Government and the beneficiary youth interest group, witnessed by the area resident State Attorney. 8

10 It was observed that Kole DLG had disbursed a total of UGX.316,880,700 to 47 youth groups out of which 24 youth groups made repayments to the tune of UGX.18,090,215 (6%) as at 23 rd September 2016 leaving outstanding balance of UGX.298,790,485. It was observed that the Programme Focal Person was on interdiction for allegedly creating ghost groups and as a result most documentation relating to the disbursed amounts could not be availed for audit. The Low recovery may render the project unsustainable. The Accounting Officer attributed the low levels of recovery on the deliberate refusal of youth groups to repay the funds while other groups mismanaged the funds. I advised the Accounting Officer to ensure that the funds are recovered promptly Un-acknowledged transfers to Youth Livelihood groups During the financial year, UGX.134,960,200 was transferred to various youth groups under the Youth Livelihood Program. However, UGX.80,699,000 lack acknowledgements by the youth groups thereby casting doubt as to whether remittances were made to bonafide beneficiaries as shown in Appendix II. I advised the Accounting Officer to obtain the acknowledgements from the beneficiary groups and avail them for audit verification. 6.4 Un- acknowledged Tax Remittances Section 127(1) of the Income Tax Act, 1997 ( as amended to 2002) requires a withholding agent shall maintain, and keep available for inspection by the Commissioner, records showing, in relation to each year of income payments made to a payee, and tax withheld from those payments. However, it was observed that 6% withholding tax totaling UGX.79,005,876 deducted from payments to various contractors was purportedly remitted to Uganda Revenue Authority (URA) but lacked acknowledgement receipts as shown in Appendix III. Non-remittance of taxes attracts fines and penalties leading to loss of funds. I advised the Accounting Officer to obtain the acknowledgement receipts and present them for audit verification. 9

11 APPENDICES Appendix I: Unaccounted for funds DATE VC NO PAYEE DETAILS AMOUNT REMARKS ADMINISTRATION 0 9/10/ /09/15 MT. OIL (U) LTD 1,000,000 12/11/15 MT OIL (U) LTD Fuel 2,000,000 STATUTORY BODIES 0 2/22/ /02/16 MT. OIL (U) LTD Fuel for politicians 6pple 3,550,000 Requested for 7m. But 3,550,000 not accounted for 4/18/ /04/16 MT. OIL (U) LTD C/persons fuel 500,000 LGMSDP 0 03/04/16 OCEN PATRICK Production of structural 810,000 no accountability drawings for toilets 06/06/16 OKELLO OBONG Supervision of LGMSDP 1,000,000 no accountability FELIX projects CBG 0 21/12/15 1/12/2015 Ochoda Edward Advance to Ochoda 2,994,000 18/5/16 1/5/2016 Ochoda Edward Training of newly recruited 6,617,000 CDD 0 4/1/2016 OGWANG Support supervision of 936,000 GEOFFREY CDD groups 4/4/2016 MT. OIL (U) LTD Monitoring of CDD groups 1,000,000 4/6/2016 OJAN EGITS Meeting of stakeholders 1,000,000 TOMMY for YLP Works 0 29/9/15 1/10/2015 Ocenpatrick Monitoring by technical 2,480, Ocenpatrick Supervision of ongoing road works 1,280, Ocenpatrick Monitoring of road activities 1,800,000 4/4/2016 1/4/2016 Ocenpatrick To follow up on steelpipe culverts 830,000 9 Ocenpatrick Allowances for technical monitoring 1,000,000 9 Ocenpatrick Fuel for technical monitoring 750,000 28/6/16 20 Ocenpatrick Road gang wages 12,758,000 HEALTH 0 03/09/15 OCEN PATRICK Preparation of BOQ`s 1,335,000 09/10/16 OGWANG MOSES District coordination RAY meeting during measles 1,410,000 availed 10

12 campaign 25/10/15 OGWANG MOSES RAY Follow up Madonna in 30 villages between October and November by 3 teams in Alito and Ayer 17/02/16 OCEN PATRICK Monitoring PRDP health projects- Q3 2,624,000 11/06/16 OGWANG MOSES RAY 13/06/16 OGWANG MOSES RAY Music, dance and drama to promote USF activities 5,554,900 Follow up visits of old triggered villages in Ayer S/C Monitoring USF activities 15/06/16 OGWANG MOSES RAY 1,040,000 19/06/16 ECIR BONNY MDA data collection and post MDA monitoring 9,304,000 28/06/16 OGWANG MOSES RAY District leaders monitoring sanitation activities 1,800,000 31/06/16 OGWANG MOSES Verification of ODF villages RAY 2,780,000 43/06/16 TOTAL (U) LTD Fuel- Sanitation activities 7,452,000 FINANCE AND PLANNING 0 12,220,000 28,000,000 availed 04/09/1 OKELLO OBONG Budget conference 3,039,000 not 5 FELIX 3,819,000 accounted for. 04/11/1 OKELLO OBONG PAF monitoring activities 5 FELIX 1,660,000 01/12/1 5 OKELLO OBONG FELIX Statistical data collection 2,640,000 CBS 0 05/09/2 OGWANG Support to disability Accountabilities 015 GEOFFREY groups 3,000,000 not availed 03/12/2 OJAN EGITS Travel to Kampala 015 TOMMY 1,174,000 11/06/2 ACIRO LUCY UWEP sub county activities 016 EJURA 1,239,880 12/06/2 OJAN EGITS Training, DEC meetings, 016 TOMMY monitoring and 3,055,000 supervision, sub county monitoring and technical supervision TOTAL 132,412,780 Appendix II: Unacknowledged transfers to Youth Livelihood groups 5/1/2016 AMUGE YOUTH ,100,000 No BAKERY acknowledgement 11

13 BARDYEL YOUTH ,250,000 No acknowledgement GRAIN MILLING OKAR YOUTH GROUP ,600,000 No acknowledgement ALIKIMALO GUARD A ,280,000 No acknowledgement YOUTH AWALO YOUTH GROUP ,900,000 No acknowledgement OBANGADIT GROUP YOUTH ,640,000 No acknowledgement 52,770,000 7/1/2015 YLP GROUP 7,955,000 Missing 7/1/2015 YLP GROUP 6,312,000 9/2/2015 ORIBCING YOUTH GROUP 4,850,000 10/1/2015 OBANGA AMIO ,112,000 10/1/2015 TELELA YOUTH COMM DEVT ASS. 4,700,000 27,929,000 Total 80,699,000 Missing Missing Missing Missing Appendix III: Unacknowledged taxes Date Payee Particulars Amount Remark 23/11/15 URA 159,211 No receipt 23/3/16 URA 1,173,722 No receipt 18/5/16 URA 958,638 No receipt 18/5/16 URA 187,013 No receipt 24/6/16 URA 5,912,109 No receipt PRODUCTION 0 1/7/2016 URA 195,816 No receipt 3/23/2016 URA 584,100 No receipt URA 179,400 No receipt STATUTORY 0 BODIES 8/28/2015 URA 414,000 No receipt 9/2/2015 URA 2,160,000 No receipt 9/3/2015 URA 276,000 No receipt URA 660,000 No receipt URA 111,000 No receipt URA 624,000 No receipt URA 138,000 No receipt URA 660,000 No receipt URA 246,000 No receipt URA 2,160,000 No receipt

14 URA 312,000 No receipt URA 246,000 No receipt URA 624,000 No receipt URA 138,000 No receipt 1/12/2016 URA 111,000 No receipt URA No receipt URA 138,000 No receipt URA 276,000 No receipt URA 234,000 No receipt URA 276,000 No receipt URA 390,000 No receipt URA 270,000 No receipt URA 234,000 No receipt URA 2,160,000 No receipt URA 390,000 No receipt URA 140,750 No receipt URA 236,750 No receipt URA 1,052,750 No receipt URA 314,750 No receipt URA 416,750 No receipt LGMSDP 0 URA 284,474 No receipt URA 297,780 No receipt URA 598,586 No receipt URA 1,049,760 No receipt URA 449,388 No receipt WORKS URA 912,000 No receipt URA 45,000 No receipt URA WHT 3,512,430 No receipt URA 532,525 No receipt ura WHT 2,063,113 No receipt URA WHT 2,675,571 No receipt ura 6,573,357 No receipt URA 45,600 No receipt URA 156,000 No receipt URA 391,500 No receipt ura 90,900 No receipt ura 898,860 No receipt ura 5,568,651 No receipt EDUCATION 0 13

15 06/01/2016 URA WHT- NAKABELLA INVESTMENT LTD 872,520 No URA receipt 06/01/2016 URA WHT- ANDEN 1,012,860 No URA receipt CO. LTD 06/01/2016 URA WHT- 1,228,980 No URA receipt Completion of Onyut PS 06/01/2016 URA WHT- JOYCOM SERVICES LTD 909,660 No URA receipt 15/04/2016 URA WHT- CLJ 1,546,338 No receipt. INVESTMENT LTD URA WHT- 115,260 Details not No receipt. URA WHT- 81,240 Details not No receipt. URA WHT- 736,800 Details not No receipt. URA WHT- 958,956 No receipt. MONOTEL INVESTMENT LTD URA WHT- 729,840 Details not No receipt. URA WHT- MID 1,308,006 No receipt NORTH BUILDERS & CIVIL URA WHT- ROMEO 989,838 No receipt CONTRACTORS LTD URA WHT- 47,555 Details not No receipt. URA WHT- Mofa 1,194,690 No receipt Investments LTD URA WHT- OTILE 255,730 No receipt FLORENCE & SON 28/06/2016 URA WHT- 1,009,440 Not remitted Multimoore solutions 28/06/2016 URA WHT- APAP GO 449,400 No receipt NANGA MIXED FARM LTD 28/06/2016 URA WHT- 1,023,240 No receipt RAODMAN GROUP (U) LTD 23/06/2016 URA WHT 907,200 NOT REMITTED 14

16 HEALTH 0 URA PAYEcontracted URA PAYEcontracted URA PAYEcontracted URA PAYEcontracted 17/02/2016 URA WHT- AVOR CONSTRUCTION CO. LTD URA PAYEcontracted URA PAYEcontracted URA WHT- BOLD INVESTMENT CO LTD URA PAYEcontracted URA WHT- KAKAIN ENGINEERING LTD URA PAYEcontracted URA WHT- BOLD INVESTMENT CO LTD URA WHT- ADAKINGO COMPANY LTD URA WHT- KAKAIN ENGINEERING LTD URA WHT- KAKAIN ENGINEERING LTD FINANCE AND PLANNING 1,146,076 No receipt 572,898 No receipt 640,478 No receipt 851,058 No receipt 1,016,934 No receipt 851,153 No receipt 851,153 No receipt 647,340 No receipt 728,154 No receipt 1,059,072 No receipt 728,154 no receipt 230,160 no receipt 811,589 No receipt 894,727 No receipt 289,177 No receipt URA WHT- Kakan 351,046 Payment certificate not No receipt. URA WHT- Kamon 393,900 Not remitted Enterprises TOTAL 79,005,