OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BUYENDE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30 TH JUNE 2015
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BUYENDE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30 TH JUNE 2015 THE RT. HON. SPEAKER OF PARLIAMENT Introduction I have audited the accompanying financial statements of Buyende District Local Government for the year ended 30th June 2015. These financial statements comprise of the Statement of Financial Position as at 30th June 2015, 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 Financial management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Buyende 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, 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 the entity s preparation of financial statements in order to design audit procedures that are 1
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 unqualified 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 Unqualified Opinion In my opinion, the financial statements of Buyende District Local Government as at 30 th June 2015 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. Emphasis of matter Without qualifying my opinion, I draw attention to the following matter presented in the financial statements. Supplementary Budget The budget was revised from UGX 14,564,405,571 to UGX. 16,052,290,612 representing an increase of UGX 1,487,885,041. However, there was no evidence that the supplementary budget was approved by the District Council John F.S. Muwanga AUDITOR GENERAL 30 th November, 2015 2
PART B BUYENDE DISTRICT LOCAL GOVERNMENT DETAILED REPORT OF THE AUDITOR GENERAL FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2015 1.0 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 Buyende District Local Government 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
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 Buyende District Local Government is financed by grants (Conditional and Unconditional) from Central Government, donations and locally generated revenues from taxes, fees, licenses and charges. During the year, the District received grants totaling to UGX 13,846,088,889 from Central Government, UGX119, 384,457 from locally generated 4
revenues and 208,456,090 from donations realizing the total revenue of UGX14, 173,929,436 constituting 88% of its approved budget estimates of UGX16,052,290,612. 5.0 DETAILED AUDIT FINDINGS This Section outlines the detailed audit findings, management responses and my recommendations in respect thereof. 5.1 Supplementary Budget Local Government Financial Accounting Regulations (LGFAR), 2007 requires that if new or additional funds are required over and above the approved budgetary provisions, which cannot be met by virement or re-allocation, the vote controllers concerned shall apply to the Chief Executive for a Supplementary provision. However, it was observed that, the budget was revised from UGX 14,564,405,571 to UGX 16, 052,290,612 representing an increase of UGX 1,487,885,041. However, there was no evidence that the supplementary was approved by the District Council. The Accounting Officer had indicated that approval was obtained but no minutes of council were presented for audit verification. I advised the Accounting Officer to comply with the regulations and to provide evidence of Council approval for audit verification. 5.2 Salary Paid to Retired Staff Section 12 (1) of the Pensions Act, Chapter 286 sets the mandatory retirement Public Officer at age of sixty years. However, audit observed that two officers received a total of UGX 11,013,969 post the mandatory retirement age of 60 as show below:- NAME Date of Birth Expected Retirement date Salary Earned after retirement period Galinemera Patrick David 15/12/1954 15/12/2014 5,642,196 Badhube Anna Mary 28/06/1954 28/06/2014 5,371,773 TOTAL 11,013,969 The matter should be given urgent attention. 5.3 Lack of Contract Register 5
Regulation 121 of Local Governments Procurement and Disposal of Assets Regulations 2007 states that the procurement and disposal unit shall keep records of all contracts placed by a procuring and disposing entity. Section 5.4.7 (2) and (3) of the Local Government Financial Accounting Manual 2007 provides that details of payment shall be entered in the contract register in accordance with the LGFAR 2007 and on completion of the contract, details of retention money and penalties, if any, shall be entered in the contract register. On the contrary, the contracts register was not maintained for all procurements of goods and services during the financial year In the absence of a contracts register, the supervision and monitoring of contracts is rendered difficult. Management explained that the registers were updated but the updated regulation was not availed for audit verification. I advised the Accounting Officer to establish a contracts register. 5.4 Inadequate Revenue Register Regulation 33 (1) and (2) of the Local Governments Financial Accounting Regulations, 2007 require maintenance of a revenue register and Regulation 4.6.2 (2) of the Local Government Financial and Accounting Manual of 2007 requires management to maintain each revenue source in a separate register, showing details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears, to enable tracking of revenue. However, it was noted that the Town Council did not maintain complete revenue registers for revenue. Consequently, I was unable to verify the accuracy of revenue reported. The Accounting Officer had indicated that the registers were updated but were not availed for review. I advised the Accounting Officer to ensure that the revenue register is maintained in the correct format and with all the relevant information. 5.5 Lack of Land Titles Section 58(4) of the LGFAR, 2007 requires properties and assets of a Local Government to be properly registered, titles issued and valued. 6
However, it was observed that the district did not have land tittles for the 11 Health Centres and the 6 sub county headquarters. The District land is exposed to risk of encroachment and disputes. It was further observed that thirty plots covering an area of 100.415 hectares and located in various sub counties had been occupied by encroachers within the local community. No efforts have been made to either engage the community or have these land surveyed. The Accounting Officer attributed it to inadequate funding but the process of acquiring the title deeds had started and is ongoing. I advised the Accounting Officer to ensure that the land is surveyed and titles secured. 5.6 Staffing The District has an approved establishment structure of 1,596 employees. However, out of the 1596 approved posts only 1,333 positions have been filled resulting in 232 vacant positions representing 50.8% staffing gap as shown in appendix 1. Accounting Officer explained that the gaps resulted from inadequate wage bill and the ban on recruitment by the Ministry of Public Service. Inadequate staffing undermines service delivery to the community. I advised the Accounting Officer to liaise with the relevant authorities and ensure that the vacant posts are filled. 5.7 Service Delivery 5.7.1 District Health Service Delivery Paragraph 2.1.1 (D) of the Local Government Management and Service Delivery (LGMSD) program Operational Manual for Local Governments 2009 sets minimum standards for proper functioning of Health Centres. However, inspection of the health centres revealed that most of the basic minimum standards were not met as summarized in the table below; a) Kidera Health Centre IV Package Minimum standard Observation Remarks 7
Operational Theatre Means Transport of 1 1 Non Functional due to lack of personnel, has no capacity to transfuse blood Reliable 0 Ambulance needs repairs, has been grounded for three years Power Source Reliable 0 Solar is functional only in the theatre, Grid was disconnected due to failure to meet electricity bills Doctors Staff Houses 11 7 15 staff accommodated while 23 staff are not Waste Pit 1 0 Medical waste burnt in an open area OPD 1 1 No shade for patients Water Source Reliable 1 Functional Borehole, Running water was disconnected due to failure to pay water bills Incinerator Functioning Not functioning Was constructed last year at a cost of UGX 10,000,000 however, it has not functioned till to date b) Bugaya Health Centre III Package Minimum standard Observation Remarks Maternity 1 1 No delivery beds. Water Supply 1 0 No reliable water source. General Ward 2 0 Part of the maternity converted to a general ward. Staff Houses 5 2 Five staff accommodated, 10 staff commute from kamuli town. Latrine Stances 16 5 Patients and workers share Latrines. Medical waste 1 0 Medical waste is burnt in an open area. pit c) Irundu Health Centre III Package Minimum District Remarks standard status Maternity 1 1 No delivery beds Water 1 No reliable water source Supply General Ward 2 1 Male, female and children share one ward Staff 5 3 Nine staff accommodated, 8 staff Houses commute Latrine Stances 16 15 Adequate 8
d) Health Services Accessibility indicators Category District status Minimum Standard Practicing Doctor: population ratio: 1:160259 1;24,000 Nurse: Population ratio: 1:11447 1;1700 Midwives: pregnant women (15-1:518 1;9000 49) ratio: Accounting Officer attributed the gaps to financial constraints but indicated that she was engaging the political leadership, funding Ministries and agencies for readdress. I urged the Accounting Officer to follow up with Ministry of Health and Ministry of Finance and Economic Development and other stakeholders to ensure that the above shortcomings are resolved. 5.7.2 Education Service Delivery a) Inadequate standards in Primary Schools Section 2.1.1 (a) of the Local Governments Management and Service Delivery (LGMSD) operational Manual 2009 and 2.1.2 (a) requires Local Governments to deliver services in conformity with Primary Education Minimum National Standards of Service Delivery (MNSSD). Analysis of the school statistics for the schools in the district revealed that the standards were below minimum as shown in the table below Education accessibility indicators 2011-2014 Level of educatio n 2011 2012 2013 2014 Teach er Ratio Classroom Ratio Teacher Ratio Classroo m Ratio Teache r Ratio Classroom Ratio Teache r Ratio Classr oom Ratio Primary 1:95 1:180 1:66 1:170 1:61 1:131 1:61 1:126 Seconda 1:75 1:84 1:70 1:82 1:68 1:75 1:85 1:90 ry MNSSD 1:55 1:55 1:55 1:55 1:55 1:55 1:55 1:55 Indicator Ratio MNSSD : Latrine stance ratio: 1:93 1:40 : Desk ratio: 1:5 1:3 : Textbook ratio: 1:65 1:3 9
Drop-out rate: 42% O s of Nkone Primary School P.4 class pictured during a teachng session Shortage of teachers, inadequate classrooms, inadequate desks and inadequate pit latrines (stances) negatively affect student performance which had a failure rate of 50%. Accounting Officer explained that she was engaging the Ministry of Education and Sports and other stakeholders to increase on the funds so as to address the shortcomings. I advised the Accounting Officer to lobby government for the necessary support to address the above shortcomings in order to improve the performance of the schools. 10
Appendix 1: Staffing Department/Sector Approved Filled Not Filled Chief Administrative Officer's Office 3 02 01 Human Resource 22 06 12 Statutory Bodies 9 2 7 Internal Audit 5 3 2 Planning 5 2 3 Finance 15 10 5 Education (District Education Officer s Office) 10 4 6 Production 32 17 15 Primary Schools 1077 1035 0 Secondary Schools 139 63 76 Natural Resources 18 6 12 Community Services 8 5 3 Technical Services & Works 16 7 9 District Health Services 168 140 28 Sub-counties 69 31 38 TOTAL 1596 1333 217(50.8%) 11