OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT AND OPINION OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF KABERAMAIDO DISTRICT

FOR THE YEAR ENDED 30TH JUNE 2014

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REPORT AND OPINION OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF KABERAMAIDO DISTRICT

FOR THE YEAR ENDED 30TH JUNE 2014

THE RT. HON. SPEAKER OF PARLIAMENT

Introduction

I have audited the accompanying financial statements of Kaberamaido District for the year

ended 30th June 2014. These financial Statements comprise of the statement of financial

position as at 30th June 2014, statement of financial performance, statement of changes in

equity, 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 and Section 64 and 86 of

the Local Governments’ Act 1997 as amended, the Accounting Officer is accountable to

Parliament for the funds and resources of the Local Government. The Accounting Officer is

responsible for the preparation of financial statements, in accordance with regulation 68 of

the Local Governments Financial and Accounting Regulation, 2007 and for such internal

controls as management determines necessary to enable the preparation of financial

statements that are free from material misstatements whether due to fraud or error.

Auditor’s Responsibility

My responsibility as required by Article 163 of the Constitution of the Republic of Uganda,

Section 86 of the Local Government 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 my

audit in accordance with the International Standards on Auditing(ISA)/ International

Standards of Supreme Audit Institutions (ISSAIs). Those standards require that I comply

with 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 the risks of material misstatement of the financial statements,

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whether due to fraud or error. In making those risk assessments, the Auditor considers

internal controls relevant to the entity’s preparation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose

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 my 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

Procurements

Procurements worth UGX. 100,167,976 lacked procurement records contrary to the

regulations.

Qualified Opinion

In my opinion, except for the possible effects of matter described in the Basis for Qualified

Opinion paragraph, the financial statements of Kaberamaido District as at 30th June 2014

are prepared in all material respects, in accordance with the Local Government Financial and

Accounting Manual, 2007, Section 31(6) of the Public Finance and Accountability Act 2003,

the Local Government Financial and Accounting Regulation, 2007 and the Local

Governments’ Act cap 243 (as amended), of the Laws of Uganda.

John F.S. Muwanga AUDITOR GENERAL

20th Feburary 2015

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PART "B"

KABERAMAIDO DISTRICT DETAILED REPORT OF THE AUDITOR GENERAL FOR

THE FINANCIAL YEAR ENDED 30TH JUNE 2014

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 Kaberamaido District 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 Government Financial and Accounting

Manual 2007 and the Local Government 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.

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f. To verify 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.

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 payments 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 operation to establish whether sound

controls were applied throughout the period

d. Procurement

Reviewed the procurement of goods and services under the various department

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 evaluating the overall financial

statement presentation.

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4.0 Entity Financing

Kaberamaido District is financed by grants (Conditional and Unconditional) from

Central Government, development partners and locally generated revenues from

taxes, fees, licenses and charges. During the year, the district received grants

totaling to UGX 15,030,615,723 from Central Government, and UGX 207,825,240.

from locally generated revenues. The total revenue of UGX 15,238,440,963.

Constituted 90% of its approved budget estimates of UGX 16,888,839,698.

5.0 Detailed Audit Findings

This section outlines the detailed audit findings and my recommendations in respect

thereof.

5.1 Irregular Procurements

A review of the procurements files revealed the following shortcomings as shown in

appendix i;

Section 41 (1) of the Public Procurement And Disposal Of Public Assets Act (2003)

requires the procuring and disposing entity to maintain records on its procurement

and disposal proceedings for a period of seven years from the date of a decision to

terminate the procurement or disposal action, or the date of the completion of the

contract, whichever comes later. It was observed that the District procured goods

and services worth UGX.100,167,976, which lacked both procurement files and

procurement records. I could not confirm whether the procurements were carried

out transparently and competitively. (Refer to Colum (1))

Regulation 62 (1) of the LGPPDA Regulations (2006) requires a user department to

prepare an annual work plan for procurement, based on the approved budget, to

facilitate orderly execution of annual procurement activities; procurements worth

UGX 99,230,657 were undertaken during the financial year but were not provided for

in the procurement plan. (Refer to Colum (2)).

Regulation 124 (1) of the PPDA Regulations (2003) require that Pre-qualification shall

be based on the capability and resources of a bidder. Pre-qualified firms awarded

contracts worth UGX 61,952,000 lacked experience, equipment in similar contracts,

valid trading license, Income tax clearance, Powers of Attorney, Certificate of

registration, VAT Registration and Audited accounts. (Refer to Colum (3)).

Regulation 40 (1&2) of the LGPPDA Regulations (2006) require the use of Direct

procurement or disposal where exceptional circumstances prevent the use of

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competition after contract committee approval. The District used the direct

procurement method in procurements worth UGX 30,536,000 without justification.

(Refer to Colum (4)).

Quarterly procurement and disposal reports from October 2013-June 2014 were not

submitted to PPDA, contrary Regulations 7 of LG (PPDA) 2006. Additionally, all micro

procurements were not communicated to the Contracts Committee on monthly basis,

as required by Regulation 41(8) of LG (PPDA) 2006.

The above shortcomings undermined the basic principles of maximum competition,

disclosure, transparency and accountability and value for money was not achieved.

The Accounting Officer attributed the matter to failure of user departments to submit

implementation records to PDU, time constraint, failure to update the procurement

plan and poor filing of documents. The Accounting Officer promised to rectify the

anomalies.

I advised the Accounting officer to rectify the anomalies and provide training where

capacity gaps are noted.

5.2 Transfers to Non-Governmental Hospitals

The District transferred UGX 219,442,000 to various non-governmental hospitals as

a grant to help subsidize medical facilitation and ensure that there is better health

service delivery. (See the Details in Appendix ii). However, the following

shortcomings were noted:

There was no memorandum of understanding to specify the utilization and

management of the grants.

The District did not carry out quarter two, three and four performance and

service delivery reviews for the money that was transferred.

UGX 1,140,000 in respect of purchase of drugs from Joint Medical store for

Kaberamaido catholic Dispensary remained unaccounted for.

Transfers totalling to UGX 12,000,000 to Otuboi and Bululu COU HC II

remained unaccounted for.

This was caused by lack of memoranda of understanding between the District and

the hospitals for the utilization and management of the grant.

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Failure to effectively manage this grant materially affects service delivery.

The Accounting Officer acknowledged the shortcoming and promised to have the

health management boards of the respective health facilities in place and sign the

memorandum of understanding.

The Accounting Officer was advised to ensure that a memorandum of understanding

to guide the utilization and management of the grant is put in place.

5.3 Contract Variation

Regulation 120(12) of Local Government Public Procurement and Disposal of Assets

Regulations requires any variation above 15% to be approved by the Authority.

Contractor awarded a contract to construct a laboratory at Angara Health HC III

was paid UGX 13,653,988 (29%) above the original cost of UGX. 47,115,762

without an approved variation from PPDA regulations.

Unapproved variation is irregular and may be a Conduit for over payments.

This was caused by failure to comply with the LGPPDA regulations on variation.

According to the Accounting Officer the over payment was 2,204,248 that the District

will seek to recover from the contractor.

I advised the Accounting Officer to adhere to the Local Government Public and

Procurement Disposal of Assets regulations and seek for the approval of the variation

by PPDA.

5.4 Understaffing

The District has an approved structure of 346 staff. However, out of the 346

approved posts, only 212 (42.8%) are filled, leaving a 134 vacant posts representing

38% of the establishment. (See appendix iii).

It was explained that the understaffing was caused by the ban on recruitment by the

Ministry of Public Service. Understaffing undermines service delivery.

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The Accounting Officer explained that the Ministry of Public Service had authorized

the recruitment of some key staff positions in the district.

I advised the Accounting Officer to ensure that the vacant posts are filled as

appropriate.

5.5 Local Revenue Shortfall

Regulation 32 of the Local Government Financial and Accounting Regulations 2007

requires the head of finance to collect all budgeted revenue. However, the district

collected UGX 125,283,937 of the budgeted Local Revenue of UGX.142,956,772,

resulting into a shortfall of UGX.17,672,835. The local revenue shortfall adversely

affected service delivery.

The Accounting Officer attributed the shortfall to business fluctuations; brake down

of district tractor for hire, animal quarantine, resistance from taxi operators to pay

park fees and low turn up of bidders.

I advised the Accounting Officer to institute measures to ensure that all local revenue

budgeted is collected.

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Appendix i

Procurement Irregularities

No.

Contract Details

Contractor

Contract Sum Missing procurement files and requisition form/BEB Notice/Record of Bid receipt and Opening.

Procurements not in plan.

Irregular Pre-qualification

Direct Procurement

1 2 3 4

1 Rehabilitation works of a staff Room and an Office with a Store in Apele P/S

Anyim Lach Enterprises 29,452,000 29,452,000

29,452,000

2 Supply of wooden office chairs, wooden office desks, lockable book shelves and lockable notice boards to 8 Sub counties

Mejo Construction firm 26,000,000 26,000,000

3 Supply of 500 bags of cassava cuttings to Production Dep't

Ocent Enterprises 18,500,000 18,500,000

4 Construction of a 5-stance drainable latrine in Otuboi Town ship P/S

CanPwonyi Construction Co. 17,615,000 17,615,000

5 Supply of Reinforced concrete culverts for force account road works

Ogur millers ltd 14,896,000 14,896,000

6 Renovation of OPD Block at Bululu H/C III

Goana Co. Enterprises 14,500,000 14,500,000

7 Completion of a 4 classroom

J. Fene Enterpris 14,182,499

14,182,499 (no file)

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block in Oyama p/s

es

8 Supply of 34 office chairs and 10 Tables to Health Dep't

Doma Engineering Works 14,000,000 14,000,000 14,000,000

9 Construction of 3 stances Drainable pit latrine at Otuboi P/S

Epic Developers Ltd 12,603,477

12,603,477 (no file) 12,603,477

10 Basic Computer Training for sub-county and district

Mukiz Business Ltd 9,972,180 9,972,180

11 Supply of furniture to Natural Resources Department

Atopi Ipenet Enterprises (U) LTD 8,890,000 8,890,000 8,890,000

12 Construction of 2 stance VIP Drainable latrine in Alwa sub county

Emio Civil Engineering and Construction 7,000,000

7,000,000 (no file)

13 Construction of 2 stances pit latrine with bath shelter at Kaberamaido HCIV

Eurolight Foundation (U) LTD 6,750,000 6,750,000 6,750,000

14 Construction of 2 stancs pit latrine with bath Shelter at Aperkira HCIII

CanPwonyi Construction Co. 6,700,000 6,700,000

15 Wiring and Supply of electricity to Kaberamaido H/C IV

Solex Energy Care (U) Ltd 6,565,000

6,565,000 (no file) 6,565,000

16 Installation of rain water harvesting system at Apapai p/s

CanPwonyi Construction Co. 6,000,000

6,000,000 (no file)

Total 213,626,156 100,167,976 99,230,657 61,952,000 30,536,000

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Appendix ii :

Transfers to Non-government Hospitals

Vr No Date Account Details Payee Amount

30//8 27/08/2013 Health Transfer to Lwala Hospital Lwala Hospital 41,236,000

31//8 27/08/2013 Health

Transfer to KAB Catholic

Dispensary KAB Catholic Dispensary 7,500,000

32//8 27/08/2013 Health Transfer to Kaberamaido COU

Kaberamaido Church of

Uganda HC II 3,000,000

33//8 27/08/2013 Health Transfer to Otuboi COU Otuboi COU HC II 1,500,000

34//8 27/08/2013 Health Transfer to Bululu COU Bululu COU HC II 1,500,000

15//11 11/11/2013 Health

Transfer to Lwala Hospital for

2rd quarter Lwala Hospital 41,236,000

16//11 11/11/2013 Health

Transfer to Kaberamaido COU

for 2rd quarter

Kaberamaido Church of

Uganda HC II for 2rd

quarter 7,500,000

17//11 11/11/2013 Health

Transfer to KAB Catholic

Dispensary KAB Catholic Dispensary 1,500,000

18//11 11/11/2013 Health

Transfer to Otuboi COU for 2rd

quarter Otuboi COU HC II 1,500,000

19//11 11/11/2013 Health

Transfer to Bululu COU for 2rd

quarter Bululu COU HC II 1,500,000

08//2 17/02/2014 Health

Transfer to KAB Catholic

Dispensary for 3rd quarter KAB Catholic Dispensary 5,000,000

22//2 17/02/2014 Health

Transfer to Lwala Hospital for

3rd quarter Lwala Hospital 41,236,000

23//2 17/02/2014 Health

Transfer to Kaberamaido

Catholic dispensary for 3rd

quarter

Kaberamaido Church of

Uganda HC II for 2rd

quarter 7,500,000

24//2 17/02/2014 Health

Transfer to Kaberamaido COU

for 3rd quarter Kaberamaido COU 1,500,000

25//2 17/02/2014 Health Transfer to Otuboi COU for 3rd

Otuboi COU 1,500,000

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quarter

26//2 17/02/2014 Health

Transfer toBululu COU for 3rd

quarter Bululu COU 1,500,000

26//5 19/05/2014 Health

Transfers to Lwala Hospital for

4th quarter Lwala Hospital 41,234,000

27//5 19/05/2014 Health

Transfers to Kab Catholic

Dispensary for 4th quarter KAB Catholic Dispensary 7,500,000

28//5 19/05/2014 Health

Transfers to Kab COU for 4th

quarter Kab COU 1,500,000

29//5 19/05/2014 Health

Transfers to Otuboi COU for 4th

quarter Otuboi COU 1,500,000

30//5 19/05/2014 Health

Transfers to Bululu COU for 4th

quarter Bululu COU 1,500,000

Total

219,442,000

Appendix iii.

Staff Gaps

Departments Approved Filled Vacant %Filled % Vacant Overstaffing

Office of the chief CAO 3 3 0 100.0% 0.0% 0

Administration department 24 9 15 37.5% 62.5% 0

Statutory bodies 7 4 3 57.1% 42.9% 0

Procurement unit 3 2 1 66.7% 33.3% 0

Finance department 19 10 9 52.6% 47.4% 0

Education & sports 11 5 6 45.5% 54.5% 0

Production & marketing 16 6 10 37.5% 62.5% 0

Department of works staff 20 7 13 35.0% 60.0% 0

Community based services 8 3 5 37.5% 62.5% 0

Natural resources 18 5 13 27.8% 72.2% 0

Planning unit 6 2 4 33.3% 66.7% 0

Internal audit 6 2 4 33.3% 66.7% 0

District health office 11 7 4 63.6% 36.4% 0

Total for district staffs 152 65 87 42.8% 57.2% 0

District health staffing 194 147 47 80.3% 27.3% 7.6%