OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA UGANDA HIGH COMMISSION, CANBERRA

OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA UGANDA HIGH COMMISSION, CANBERRA REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA HIGH COMMISSION, CANBERRA FOR THE YEAR ENDED 30 TH JUNE 2015 OFFICE OF THE AUDITOR GENERAL UGANDA

TABLE OF CONTENTS REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA HIGH COMMISSION -CANBERRA FOR THE YEAR ENDED 30 TH JUNE, 2015... 1 1.0 INTRODUCTION... 3 2.0 BACKGROUND... 3 3.0 ENTITY FINANCING... 3 4.0 RESPONSIBILITIES OF THE HIGH COMMISSION... 3 5.0 AUDIT OBJECTIVES... 4 6.0 AUDIT PROCEDURES PERFORMED... 4 7.0 AUDIT FINDINGS... 5 FINANCIAL STATEMENTS... 12 ii

ACCRONYMS ABBREVIATION MEANING FY GoU MoFA MoFPED NTR Financial Year Government of Uganda Ministry of Foreign Affairs Ministry Of Finance Planning And Economic Development Non Tax Revenue PFMA Public Finance Management Act, 2015 TAI Treasury Accounting Instructions, 2004 UCF UGX PDE Uganda Consolidated Fund Uganda Shillings Procuring and Disposing Entities iii

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA HIGH COMMISSION -CANBERRA FOR THE YEAR ENDED 30 TH JUNE, 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of the Uganda High Commission, Canberra for the year ended 30 th June 2015. These financial statements comprise the Statement of Financial Position as at 30 th June 2015, Statement of Financial Performance, and 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, 1995 (as amended) and Section 45 of the Public Finance Management Act (PFMA), 2015, the Accounting Officer is accountable to Parliament for the funds and resources of the High Commission. 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, 1995 (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 (ISA). 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 audit also includes evaluating the appropriateness of accounting policies used and the 1

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 Unqualified Opinion In my opinion, the financial statements of the Uganda High Commission, Canberra 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, 2008. Other matter I consider it necessary to communicate the following matter other than those that are presented or disclosed in the finanical statements that, in my judgement, is relevant to the users understanding of the audit report. Absence of a Mission Charter Ugandan Missions abroad are required to prepare and submit to the Ministry of Foreign Affairs annual Mission Charter and work plans. It was noted that, the High Commission did not prepre the mission charter for the FY 2014/15 as required. John F.S. Muwanga AUDITOR GENERAL KAMPALA 10 th December, 2015 2

PART B DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA HIGH COMMISION - CANBERRA FOR THE YEAR ENDED 30 TH JUNE, 2015 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 of 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 Uganda High Commission Canberra, to enable me report to Parliament. 2.0 BACKGROUND The Uganda High Commission, Canberra is located on 11 NGUNAWAL DRIVE, O MALLEY, ACT 2606. The High Commission has a duty of representing Uganda in Australia and New Zealand, and offer consular services. 3.0 ENTITY FINANCING The High Commission was financed by grants from Central Government to the tune of UGX.1,938,717,880. Non-tax revenue of UGX.183,137,820 and miscellaneous revenue of UGX.121,241 were collected, bringing total revenue to UGX.2,121,976,941. The total grant revenue of UGX.1,938,717,880 constituted 100% of its approved budget estimates. 4.0 RESPONSIBILITIES OF THE HIGH COMMISSION The High Commission is responsible for the following; To promote and protect Uganda s interests abroad To promote Uganda s image abroad To mobilize bilateral and multilateral resources for development To promote investment, trade and education To promote Uganda as an attractive destination for tourism, and To mobilize and motivate Uganda diaspora for national development 3

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 whether; a. The financial statements were 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 Embassy s 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 were 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 Embassy, assess control risk and identify reportable conditions, including material internal control weaknesses e. The Management of the Embassy complied with the Government of Uganda financial regulations. f. All necessary supporting documents, records and accounts had been kept in respect of all Embassy s activities, and were in agreement with the financial statements presented. 6.0 AUDIT PROCEDURES PERFORMED The following procedures were undertaken; a. Revenue Obtained schedules of all NTR collected and reconciled the amounts to the Embassy s bank statements and Navision Accounting System. b. Expenditure A sample of the Embassy s payment vouchers were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation. 4

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 Embassy during the period under review and reconciled with the approved procurement plan. e. Fixed Assets Management Reviewed the use and management of the Embassy assets during the period audited. 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. 7.0 AUDIT FINDINGS 7.1 Categorization of findings The following categorization of the audit findings has been adopted to enable a better prioritisation of 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. Accordingly, the table below contains a categorized summary of the findings that follow in the subsequent paragraphs of the report; 5

Table showing categorized summary of the findings NO FINDING SIGNIFICANCE 7.2 Absence of a Mission Charter Moderate 7.3 Un-established Diplomatic Relationship between Moderate the Independent State of Papua New Guinea and the Republic of Uganda 7.4 Inadequate Funding of Mission Activities Moderate 7.5 Absence of: a Procurement Plan, Contracts Moderate Committee, Evaluation Committee, and Procurement and Disposal Unit 7.6 Human Resource management matters Moderate 7.7 Follow Up on the Prior Year Audit Recommendations Moderate 7.2 Absence of a Mission Charter Ugandan Missions abroad are required to prepare and submit to the Ministry of Foreign Affairs annual Mission Charter and work plans. I however noted that the High Commission (HC) did not prepare the Mission Charter for the FY2014-15 despite the guidance given by the Hon. Minister of Foreign Affairs in the letter Ref: MFA/X/16 of 16 th April, 2014. In the absence of such a charter, the Mission lacked a guiding tool that could have enabled management to focus their resources appropriately so as to attain the overall Mission objectives. In his explanation the Head of Mission stated that for some activities, though included in the Mission Charter; hardly get adequate funding for their implementation. He cited that the majority of key activities in the Mission Charter of FY 2013-14 remained unfunded. These included: production of promotional materials; mobilization for bilateral and multilateral resources; participation in diaspora functions; and Independence Day celebrations. She however added that the Mission Charter for FY 15-16 was prepared and adopted. I advised the Accounting Officer to always prepare Mission Charters in every financial year to enable her focus mission resources towards attainment of envisaged goals and objectives. 7.3 Un-established Diplomatic Relationship between the Independent State of Papua New Guinea and the Republic of Uganda Basing on the Principles of the UN Charter and the provisions of the Vienna Convention on Diplomatic Relations, 1961, and the Vienna Convention on Consular Relations, 1963, the Republic of Uganda proposed to establish diplomatic relations 6

with the Independent State of Papua New Guinea at ambassadorial level in May, 2008. Accordingly, in May, 2013 (5 years later), the Ministry of Foreign Affairs (MoFA) proposed the appointment of H.E the Ambassador of Australia to represent the Government of the Republic of Uganda in the Independent State of Papua New Guinea. It was, however, noted that H.E the Ambassador has failed to present his accreditation to the Independent State of Papua New Guinea despite his personal efforts. The failure to establish the diplomatic relations may lead to a risk of the Government of the Republic of Uganda failing to reap economic and other international benefits that may accrue from the relationship. The Accounting Officer explained that the Head of Mission was to take up the matter directly with the Permanent Secretary, Ministry of Foreign Affairs and the Chief of Protocol. I await the outcome of the discussions between the Head of Mission, and Permanent Secretary, Ministry of Foreign Affairs and the Chief of Protocol. 7.4 Inadequate Funding of Mission Activities The Uganda High Commission in Canberra has a duty of representing Uganda in Australia and New Zealand, and offer consular services. According to the Accounting Officer, the mandate involves a lot of activities and travel, which require adequate funding. An analysis of the budget performance of the High Commission for the financial year under review revealed that a sum of UGX.1,938,717,880 was received as per the approved budget (comprising of Recurrent - UGX.1,868,717,880 and Capital development - UGX.70,000,000). This resulted into 100% budget performance. However, according to management, although the releases matched with the approved budget, the mission s financial proposals as stipulated in the charter for the previous year were not adequately funded. The Accounting Officer explained that the Mission usually prepares adequate budgets for the execution of the Mission Charter; however this is reduced during the process of budget approval. She further explained that due to the follow-up visits with the relevant department in MoFA, there was a slight increase in the budget provisions in the FY15-16. She hoped for adequate funding in the FY16-17 with intensified effort. 7

I await the outcome of the follow-up efforts by the Accounting Officer. 7.5 Procurement Management a) Absence of a Procurement Plan Regulation 96, clause (1) to (3) of the PPDA Regulations, 2003 requires a user department to prepare and submit to the PDU a multi-annual rolling work plan for procurements based on the approved budget. The procurement plan should enhance financial predictability, accounting and control over procurement budgets. In addition, the plan should facilitate the entity to plan, organize, forecast and schedule its procurement activities. A review of the High Commission s procurement files and records showed that the Mission did not prepare a procurement plan for the financial year under review. Absence of such a plan implies that procurements were not properly scheduled and organized, which exposes the Mission to a risk of obtaining uncompetitive prices. In addition, there was no evidence to indicate that the Mission prepared and filed procurement returns with PPDA Authority, as required under the law. The Accounting Officer noted the audit observation and explained that it was an oversight. She however noted that the procurement plan for FY 15-16 was developed. I advised the Accounting Officer to always ensure that procurement plans are prepared to guide the Mission s procurement activities. In addition, procurement returns should be prepared and filed with PPDA authority. b) Absence of Contracts Committee, Evaluation Committee, and Procurement and Disposal Unit Regulation 4 of the PPDA (PDEs outside Uganda) Regulations, 2014, requires a Mission abroad to establish a Contracts Committee, an Evaluation Committee, and a Procurement and Disposal Unit and gives guidance on the operations and composition of these committees. Contrary to the above provisions of the Regulations, the Mission did not establish any of the above committees. This resulted into direct procurements of goods and services totaling to AUD.55,568.53 equivalent of UGX.139,441,446. This was irregular. Additionally, the absence of the said Committees, casts doubt as to whether the procurements were transparent and that the Mission obtained good value for money. 8

The Accounting Officer explained that in the FY14-15, the Contracts Committee was established, but remained not functional. However, in FY 15-16 the Committee members were re-instated with members nominated to each committee. I advised the Accounting Officer to ensure adherence with the PPDA guidelines and to always establish the Committees as stipulated by the guidelines. 7.6 Human Resource Management a) Staff Performance Appraisal I noted that the Mission staff were not periodically being appraised and the Head of Mission attributed the challenge to the fact that most of the staff were on contract. However, I noted that only locally based staff were on contract which was not the case with home-based staff. Besides, it is also imperative that performance of staff on contract be reviewed before renewal of their contracts. I further noted that there were no performance plans prepared for staff, and there were no schedules of duties expressly allocated to staff. Failure to develop and implement a sound staff appraisal system may create laxity amongst staff, thus leading to poor attainment of mission objectives. The Accounting Officer acknowledged the audit observation and promised to carry out regular staff appraisals, going forward. I await implementation of the Accounting Officer s action. b) Payment of Superannuation Contributions According to the Department of Foreign Affairs and Trade, the Superannuation Guarantee Scheme is an integral part of the Australian Government s retirement income policy. Under the Superannuation Guarantee law, Missions are required to pay superannuation contributions for the Mission s eligible employees at a minimum rate of 9.5 of their ordinary time earnings. The contributions can be directly paid into a complying superannuation fund or a retirement savings account. The Missions are further required to pay the contributions for each eligible employee on a quarterly basis by the due dates. However, a review of personnel payroll revealed that only one out of the five locally based staff was being paid for superannuation, also not in a manner prescribed by the Department of Foreign Affairs and Trade, since she was directly receiving her contributions. 9

In his explanation, the Head of Mission indicated that if the law was to be followed to the latter, then the Mission would fail to employ anyone given the strict minimum wage policies of the country and the constrained resource envelope. He further stated that the terms and conditions of the local staff were on most occasions negotiated at a personal level with the individual employee. I however found that the negotiations were neither documented nor formally signed off by the parties. The failure to abide by the laws and policies of the country as advised by the Australian Department of Foreign Affairs and Trade, may lead to penalties being imposed on the Mission. The Accounting Officer noted the audit observation and promised to take up the matter with MoFA and other relevant stakeholders. I await the outcome of the Accounting Officer s action. c) Staff Medical Insurance Section M-a (Medical Attention) Para.14 of the Public Service Standing Orders, 2010 (Revised) requires a Foreign Service officer to be fully covered by a medical insurance. I noted that to the contrary, the Mission was not operating any medical insurance scheme for the benefit of the staff. However I also noted that on some occasions, staff would be paid for refund of medical expenses. The failure to operate an insurance scheme may result into payment of substantial medical expenses, especially when staff are faced with emergency medical conditions. The Accounting Officer explained that in FY2014-15 the budget for staff medical insurance was not adequate and staff were only paid refunds for medical claims. However in FY 2015-16, the budget improved and management was in the process of sourcing different health insurance providers for all Mission staff. I await the outcome of the Accounting Officer s action. 7.7 Follow Up on the Prior Year Audit Recommendations A review of the status of implementation of prior year s audit recommendations revealed that some recommendations had not been implemented, as detailed in the following table; SN AUDIT ISSUE RECOMMENDATION AUDIT REMARKS 1 Unspent Balance Receipt of remittance Receipt obtained for UGX.107,200,862.60 (NTR- of NTR- UGX.57,608,294 only. The UGX.63,656,344 and UGX.63,656,344 be difference of Expenditure at source- obtained from UGX.6,048,050 remains 10

UGX.43,544,449) 2 Excess Expenditure: Medical expenses- AUD.1,954.80; Computer supplies-aud.97.74; Welfare & Entertainment- AUD.488.70; and Electricity & Gas-AUD.1,954.80 Treasury Mission seeks authority for retention of UGX.43,544,449. The mission should always seek authority whenever the shortfalls occur in the budget. 3 Procurement of Goods Ensure that Procurement structures are instituted un accounted for. Authority to retain amount spent at source not seen. The audit recommendation not implemented as the audit issue continue occurring, despite the promise by the Accounting officer to stop it. In the current year, the excess expenditure has been observed as follows: Social Security contribution AUD.1,068.26 Postage & Courier AUD.396.28 Travel abroad AUD.8,903.22 Fuel, Lubricants &Oils AUD.280.03; and Machinery & Equipment AUD.225.23 The recommendation was not implemented as stated by the A/O. Issue has again been raised. Issue still being followed up. 4 Renting of Property Mission should consider constructing 5 Foreign Service allowance Up-grade the Mission Matter still outstanding 6 Review of inventory Carry out Board of Survey Board of Survey carried out exercise and report issued. 7 Understaffing Recruit staff Staff recruited and posted. Mission fully staffed. I advised the Accounting Officer to ensure that audit recommendations are always implemented as they are aimed at enhancing managements stewardship over public resources. 11

8.0 FINANCIAL STATEMENTS APPENDIX 1 12