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OFFICE OF THE AUDITOR GENERAL
THE REPUBLIC OF UGANDA
REPORT OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL COUNCIL
FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016
1
TABLE OF CONTENTS
LIST OF ACRONYMS ............................................................................................................................... 2
1.0 INTRODUCTION .............................................................................................................................. 6
2.0 ENTITY FINANCING ....................................................................................................................... 6
3.0 AUDIT SCOPE .................................................................................................................................. 6
4.0 AUDIT PROCEDURES PERFORMED .............................................................................................. 7
5.0 FINDINGS......................................................................................................................................... 8
5.1 Categorization of findings .............................................................................................................. 8
5.2 Summary of findings ...................................................................................................................... 8
6.0 DETAILED AUDIT FINDINGS ........................................................................................................ 8
6.1 Unaccounted for funds ................................................................................................................... 9
6.2 Understaffing ................................................................................................................................... 9
6.3 Lack of land titles ............................................................................................................................ 9
6.4 Failure to close Bank Accounts ................................................................................................... 10
6.5 Irregular Hire of Road Equipment .............................................................................................. 11
APPENDICES .......................................................................................................................................... 12
Appendix 1: Unaccounted for Funds ................................................................................................. 12
Appendix 2: Understaffing .................................................................................................................. 12
Appendix 3: Irregular Hire of Road Equipment ................................................................................ 15
2
LIST OF ACRONYMS
Acronym Meaning
ISA International Standards on Auditing
LGFAM Local Governments Financial and Accounting Manual
LGFAR Local Governments Financial and Accounting Regulations
PPDA Public Procurement and Disposal of Public Assets
RT. HON. Right Honorable
UGX Uganda Shillings
3
REPORT OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL COUNCIL
FOR THE YEAR ENDED 30TH JUNE, 2016
THE RT. HON. SPEAKER OF PARLIAMENT
Introduction
I have audited the financial statements of Mityana Municipal Council for the year ended 30th
June 2016. 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, 1995 (as amended) and
Section 45 of The Uganda Public Finance Management Act, 2015, the Accounting Officer is
accountable to Parliament for the funds and resources of Mityana Municipal Council. 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 (as
amended), section 87 of the Local Governments Act, 1997 and Sections 13, 16 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
4
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
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”
Basis for qualified opinion
Unaccounted for funds
Expenditure amounting to UGX.5,328,000 remained unaccounted for at the time of audit.
Consequently, I was unable to confirm that the funds were utilised 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 Mityana Municipal Council as at 30th June
2016 are prepared, in all material respects, in accordance with the Local Government
Financial and Accounting Manual, 2007, Section 51(3) of The Public Finance Management
Act, 2015 and the Local Governments Financial and Accounting Regulations, 2007 and the
Local Governments Act cap 243 (as amended), of the Laws of Uganda.
5
Other Matter
I consider it necessary to communicate the following matter other than those that are
presented or disclosed in the financial statements.
Understaffing
The Municipality has an approved staff establishment of 245 positions. However, only 99
(40%) positions were filled leaving 146 (60%) positions vacant.
Understaffing negatively impacts on service delivery.
John F.S. Muwanga
AUDITOR GENERAL
16th December, 2016
6
PART "B"
DETAILED REPORT ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL
COUNCIL FOR THE YEAR ENDED 30TH JUNE 2016
1.0 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 the Mityana Municipal Council to
enable me report to Parliament.
2.0 ENTITY FINANCING
Mityana Municipal Council is financed by grants (Conditional and Unconditional) from
the Central Government, donations and locally generated revenues from taxes, fees,
licenses and charges. During the year, the Municipal Council received grants totaling
to UGX.594, 647,374 from the Central Government, and UGX.447,361,834 from
locally generated revenues. The total revenue of UGX.1,042,009,208 constitutes
87.3% of its approved budget estimates of UGX.1,193,370,886.
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.
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 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.
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 funds High
6.2 Understaffing High
6.3 Lack of land titles High
6.4 Failure to close Bank Accounts High
6.5 Irregular hire of road equipment Moderate
6.0 DETAILED AUDIT FINDINGS
This section outlines the detailed audit findings, management responses thereof and
my recommendations.
9
6.1 Unaccounted for funds
Regulation 43 (2) of the Local Governments Financial and Accounting Regulations,
2007 requires administrative advances to Council employees to be authorized by the
Chief Executive and to be accounted for within a month. However, an amount of
UGX.5,328,000 had not been accounted for at the time of audit as shown in
Appendix 1.
Consequently, I was unable to confirm that the funds were utilized for the intended
purpose.
The Accounting Officer promised to ensure that all the accountability is obtained.
I urged the Accounting Officer to ensure that accountability is obtained or else to
recover the funds from the responsible officers.
6.2 Understaffing
The Municipal Council has an approved staff structure of 245 positions. However,
out of the approved structure, only 99 (40%) positions were filled leaving 146 (60%)
positions vacant as shown in Appendix 2.
Understaffing overstretches the available staff beyond their capacity, creates job-
related stress to the fewer and negatively affects the level of public service delivery
to the community.
The Accounting Officer explained that Council had communicated the issue of
understaffing to the District Service Commission and is hoping that the vacancies will
be filled.
I advised the Accounting Officer to continue engaging the District Service
commission and ensure that the vacant posts are filled.
6.3 Lack of land titles
According to regulation 9 (j) of the Local Governments Financial and Accounting
Regulations, 2007, an Accounting Officer is required to ensure safe custody of all
assets of Council.
It was observed that Council lacked land titles to its properties as shown below;-
10
S/No Description
01 Abattoir land
02 Wabiruko land
03 Mityana Municipal Council Offices land
04 Magala Health Center II
05 Public toilet at Bbuye
06 Central market land (Plot No. 7-13 Mkt square)-
Lack of land titles creates a risk of encroachment and disputes.
The Accounting Officer promised to secure the titles from Uganda Land Commission.
I advised The Accounting Officer to expedite the process of acquiring the land titles.
6.4 Failure to close Bank Accounts
Mityana Municipal Council was established by an Act of Parliament and became
effective on 01/07/2015.
However, it was observed that four bank accounts are still in the names of Mityana
Town Council as shown below;-
S/N Account Name Balance as at
30/06/2016
01 Mityana Town Council LGMSDP (A/C No. 9030006339971) 1,267,181
02 Mityana Town Council Physical Planning (A/C No.
9030011559718)
658,639
03 Mityana Town Council (A/C No. 9010303144) 296,224
04 Mityana Town Council Ringebu (A/C No. 9028200007) 388,800
2,610,844
The Accounting Officer promised to effect closure of all bank accounts in the names
of Mityana Town Council.
This matter requires urgent attention.
11
6.5 Irregular Hire of Road Equipment
Section 5.7.4 of the Force Account Guidelines, 2013 (Scheme for maintenance of
District and Urban Roads using own equipment and Road gangs) requires the local
authorities to solicit road equipment from a regional centre or neighboring Local
Government.
It was observed that a sum of UGX.46,854,228 was spent on hiring road equipment
without solicitation from the regional centre or neighboring Local Government as
shown in Appendix 3.
The Accounting Officer explained that the Municipality will in future solicit road
equipment from the regional center and or neighboring district as required by the
guidelines.
I advised the Accounting Officer to always comply with the Force Account Guidelines.
12
APPENDICES
Appendix 1: Unaccounted for Funds
Date Vr No. Payee Details Amount Misstatement Remarks
30/6/2016 5/6/16 Kanaddi Trust Ent
additional works
incurred on construction
of pit latrine
1,134,000
1,134,000
no approval of additional
works, contract
agreement
on file
11/5/2016 068/05 Ssenyonjo
Dan
Engraving of
procured
items
582,000
582,000
no support
documents
attached
31/05/2016 011/05 Lugoloobi
JF
Refreshments
312,000
312,000
doubtful
expenditure; no support
documents
3/9/2015 22/9 Namuddu Rehema
Kilometrage allowance
140,000
140,000
No support documents
attached
17/2/16 034/02 Namuddu Rehema
Kilometrage allowance
140,000
140,000
No support documents
attached
15/9/15 02/09 Mityana svc stn
Svcing of UAR 028Y
1,320,000
1,320,000
No support documents
on file
20/5/2016 061/05 MBB 2000 Investments
Production of 2016/2017
budget 1,500,000
1,500,000
No LPO attached;
WHT not attached
3/5/2016 010/05 Medi
Kulayite
Salary
advance
200,000
200,000
Funds not
recovered
5,328,000 5,328,000
Appendix 2: Understaffing
MITYANA MUNICIPAL COUNCIL
STAFFING GAP
Job Title SCALE ESTAB Filled Gap
OFFICE OF THE TOWN CLERK
Town Clerk (Chief Township Officer U1SE 1 1 -
Personal Secretary U4 1 - 1
Driver U8 1 - 1
Sub-Total 3 1 2
ADMINISTRATION DEPARTMENT
Deputy Town Clerk (Deputy Chief Township Officer)
U1E 1 - 1
Senior Human Resource Officer U3 1 - 1
Assistant Town Clerk U4 1 - 1
Human Resource Officer U4 1 1 -
Information Officer U4 1 - 1
13
Records Officer U4 1 - 1
IT Officer U4 1 - 1
Stenographer Secretary U5 2 1 1
Senior law Enforcement officer U5 1 1 -
Assistant Inventory Management Officer (Stores Manager)
U5 1 1 -
Pool Stenographer Secretary U6 2 - 2
Office Typist U7 1 1 -
Office Attendant U8 4 2 2
Driver U8 4 2 2
Askari U8 4 1 3
Cemetery Attendant U8 2 - 2
Law Enforcement Officer U6 1 - 1
Sub-Total 29 10 19
FINANCE AND PLANNING
DEPARTMENT
Principal Treasurer U2 1 - 1
Senior Accountant (Revenue & Expenditure )
U3 2 1 1
Senior Planner/ Economist U3 1 - 1
Statistician/ Economist U4 1 1 -
Accountant U4 1 - 1
Senior Accounts Assistant U5 1 1 -
Accounts Assistant U7 2 1 1
Sub-Total 9 4 5
WORKS DEPARTMENT
Municipal Engineer (Principal Executive Engineer
U2 1 - 1
Senior Engineer (Civil) U3 1 - 1
Senior Assistant Engineering Officer (Roadsand Building)
U4 2 - 2
Physical Planner U4 1 1 -
Environment Officer U4 1 - 1
Assistant Engineering Officer (Water,
Electrical and Mechanical)
U5 3 - 3
Surveyor U5 1 - 1
Road Inspector U6 1 - 1
Land Supervisor U6 1 1 -
Plant Operator U8 4 - 4
Drivers U8 6 - 6
Plant / Motor Vehicle Attendant U8 7 - 7
Sub-Total 29 2 27
EDUCATION DEPARTMENT
Principal Education Officer U2 1 - 1
14
Senior Inspector of Schools U3 1 - 1
Inspector of Schools U4 1 - 1
Education Officer ( Guidance ands
Conselling)
U4 1 - 1
Sports Officer U4 1 - 1
Sub-Total 5 0 5
COMMUNITY BASED SERVICES
DEPARTMENT
Principal Community Development Officer
U2 1 1 -
Senior Community Development Officer
U3 1 - 1
Labour Officer U4 1 - 1
Sub-Total 3 1 2
INTERNAL AUDIT
Senior Internal Auditor U3 1 - 1
Internal Auditor U4 1 - 1
Sub-Total 2 0 2
PROCUREMENT AND DISPOSAL UNIT
Senior Procurement Officer U3 1 - 1
Procurement Officer U4 1 - 1
Sub Total 2 0 2
PRODUCTION AND MARKETING
Principal Commercial Officer U2 1 - 1
Senior Veterinary Officer U3 1 - 1
Agricultural Officer U4 1 1 -
Veterinary Officer U4 1 - 1
Fisheries Officer U4 1 - 1
Commercial Officer U4 1 - 1
Sub-Total 6 1 5
PUBLIC HEALTH DEPARTMENT
Medical Officer of Health Services
(Princ. Medical Off.)
U2 1 - 1
Principal Health Inspector U3 1 - 1
Health Educator U4 1 - 1
Health Inspector U5 1 1 -
Sub-Total 4 1 3
DIVISION COUNCIL FOR A
MUNICIPALITY: 3 DIVISIONS
Senior Assistant Town Clerk U3 3 1 2
Treasurer U4 3 1 2
Community Development Officers U4 3 1 2
Assistant Treasurer U5 3 1 2
Pool Stenographer Secretary U6 3 1 2
Law Enforcement Officers U7 3 - 3
Town Agents U7 15 13 2
Law Enforcement Assistants U8 15 - 15
15
Office Attendants U8 3 - 3
Drivers U8 3 - 3
Askaris U8 6 2 4
Sub-Total 60 20 40
TOTAL (Without Health Centres) 152 40 112
HEALTH CENTRES
HEALTH CENTRE III (3)
Senior Clinical Officer U4 3 2 1
Clinical Officer U5 3 3 -
Nursing Officer/ Nursing U5 3 2 1
Laboratory Technician U5 3 2 1
Enrolled Midwife U7 6 4 2
Enrolled Nurse U7 9 9 -
Laboratory Assistant U7 3 3 -
Health Assistant U7 3 3 -
Health Information Assistant U7 3 2 1
Nursing Assistant U8 9 9 -
Askari U8 6 - 6
Porter U8 6 - 6
TOTAL 57 39 18
HEALTH CENTRE II ( 4)
Enrolled Nurse U7 4 4 -
Enrolled Midwife U7 4 4 -
Nursing Assistant U8 8 8 -
Health Assistant U7 4 4 -
Askari U8 8 - 8
Porter U8 8 - 8
TOTAL 36 20 16
Overall total 245 99 14
6
Appendix 3: Irregular Hire of Road Equipment
Date PV Name Details Amount Remarks
28/06/2016 07/06 Genset equipments
Hire of road equipment Kayunga-Kanamba link
10,800,000
Irregular hire of road
Equipment
28/06/2016 06/06 Genset equipments
Hire of road equipment-Kinyankali-Kayunga Rd-
7,200,000
Irregular hire of road
equipment
3/2/2016 02/02 Genset equipments
Hire of equipment (Bakunga grdns, Musajjatalemwa and
Mosque rds)
8,637,288
Irregular hire of road
equipment
18/12/2015 06/12 Genset
equipments
hire of equipment (Bakunga
grdns, Musajjatalemwa and
Mosque rds)
2,752,540
Irregular hire
of road
equipment
18/12/2015 05/12 Genset hire of equipment (Danya Irregular hire
16
equipments Rd) 17,464,400 of road
equipment
Total
46,854,228