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THE REPUBLIC OF UGANDA
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF
THE OFFICE OF THE PRESIDENT
FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016
OFFICE OF THE AUDITOR GENERAL
UGANDA
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TABLE OF CONTENTS
LIST OF ACROYNMS ............................................................................................................................ iii
1.0 INTRODUCTION ........................................................................................................................ 1
2.0 BACKGROUND INFORMATION................................................................................................ 1
3.0 ENTITY FINANCING ................................................................................................................. 1
4.0 OBJECTIVES OF THE OFFICE OF THE PRESIDNT ............................................................... 1
5.0 AUDIT SCOPE ............................................................................................................................ 2
6.0 AUDIT PROCEDURES PERFORMED ........................................................................................ 2
7.0 CATEGORIZATION AND SUMMARY OF FINDINGS .............................................................. 3
7.1 Categorization of findings ........................................................................................................ 3
7.2 Summary of Findings ............................................................................................................... 3
8.0 DETAILED FINDINGS ............................................................................................................... 4
8.1 Statement of financial performance ....................................................................................... 4
8.2 Papal closed and open cars ..................................................................................................... 4
8.3 High motor vehicle maintenance costs .................................................................................. 5
8.4 Boarded off vehicles not sold .................................................................................................. 6
8.5 Office of the President - Land issues ..................................................................................... 6
8.6 Staffing gaps ............................................................................................................................. 7
8.7 Outstanding arrears.................................................................................................................. 8
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LIST OF ACROYNMS
RDCs Resident District Commissioner’s
ICT Information Communication Technology
MoFPED Ministry of Finance Planning and Economic Development
UGX Uganda Shillings
BOU Bank of Uganda
LC Letter of Credit
NSSF National Social Security Fund
TAI Treasury Accounting Instruction
VAT Value Added Tax
UPE Universal Primary Education
USE Universal Secondary Education
PFMA Public Finance Management Act, 2015
ULC Uganda Land Commission
MPS Ministerial Policy Statement
OP Office of the President
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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF
THE OFFICE OF THE PRESIDENT
FOR THE YEAR ENDED 30TH JUNE, 2016
THE RT. HON. SPEAKER OF PARLIAMENT
I have audited the financial statements of the Office of the President 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 Public Finance Management Act, 2015, the Accounting Officer is
accountable to Parliament for the funds and resources of the Office of the President. 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. 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
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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 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 and form part of my
Annual Report to Parliament.
PART “A”
Opinion
In my opinion, the financial statements of the Office of the President for the year ended 30th
June, 2016 were prepared, in all material respects in accordance with Section 51 of the
Public Finance Management Act, 2015 and the Financial Reporting Guide, 2008.
Emphasis of Matter
Without qualifying my opinion, I draw attention to the following matter;
Outstanding Domestic Arrears-UGX. 37,144,575,107
The Office had outstanding commitments to the tune of UGX.37,144,575,107 contrary to the
established commitment control system that requires management to commit the Ministry
only when funding was appropriated and has been confirmed.
John F.S. Muwanga
AUDITOR GENERAL
KAMPALA
14th December, 2016
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REPORT OF THE AUDITOR GENERAL AND SUPPLEMENTARY INFORMATION
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PART "B"
DETAILED REPORT OF THE AUDITOR GENERALON THE FINANCIAL STATEMENTS
OF THE OFFICE OF THE PRESIDENT FOR THE YEAR ENDED 30TH JUNE 2016
This Section outlines the detailed introduction, backgroud information, entity financing, audit
findings, management responses, and my recommendations in respect thereof.
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
that is to say, 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 Office of the President to
enable me report to Parliament.
2.0 BACKGROUND INFORMATION
The vote of the Office of the President is 001. The Office is located on Sir Apollo
Kaggwa Road behind the Parliamentary Building. The OP’s Vision is “A secure, well
Governed and developed Nation” and the Mission is “To provide leadership in public
policy management and good governance for National Development”.
3.0 ENTITY FINANCING
The Office of the President was financed by releases from Central Government
totaling to UGX.134,957,387,728. The total revenue of UGX.134,957,387,728
constituted 99% of its approved budget estimates of UGX.135,765,437,440, of which
UGX.134,957,387,728 was total expenditure.
4.0 OBJECTIVES OF THE OFFICE OF THE PRESIDNT
The following are the objectives of the Office of the President:-
(a) To provide support to Cabinet in the discharge of its Constitutional Mandate of
formulating, determining and implementing Government Policy.
(b) To provide support to Government Business Coordination Committee and
Permanent Secretaries, meeting and implementation roles respectively.
(c) To provide support to the policy development capacity in Government.
(d) Strengthening offices of the Resident District Commissioners (RDCs) to monitor
the implementation of Government priority programs like Universal Primary
Education (UPE), Universal Secondary Education (USE), Primary Health Care,
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Rural Water and Sanitation, Conservation of National Resources and
Environment, Disaster Management, Dissemination of Marketing Information
and overall monitoring of the “Prosperity for All.”
5.0 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. In conducting my reviews, special attention was paid to
establish whether:-
a. The financial statements have been 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 the Office 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 have been 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 Office, assess control risk and identify reportable conditions,
including material internal control weaknesses.
e. The Office management was in compliance with the Government of Uganda
financial regulations.
f. All necessary supporting documents, records and accounts have been kept in
respect of all Office, and are in agreement with the financial statements
presented.
6.0 AUDIT PROCEDURES PERFORMED
The following audit procedures were undertaken:-
a. Revenue
Obtained all schedules of all revenues collected and reconciled the amounts to
the Office of the President’s cashbooks and bank statements.
b. Expenditure
The Office of the President payments vouchers were examined for proper
authorization, eligibility and budgetary provision, accountability and support
documentation. It was established that all Office of the President funds were
utilized for the intended purposes.
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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 Office of the
President 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 Office of the
President during the period audited.
f. Office of the President’s 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 CATEGORIZATION AND SUMMARY OF FINDINGS
7.1 Categorization of findings
The following system of profiling of the audit findings has been adopted to better
prioritise 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.
7.2 Summary of Findings
No Finding Significance
8.1 Statement of financial position Moderate
8.2 Papal closed and open cars Moderate
8.3 High motor vehicle maintenance costs High
8.4 Office of the President- Land issues High
8.5 Staffing gaps Moderate
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8.6 Boarded off vehicles not sold Moderate
8.7 Outstanding arrears High
8.0 DETAILED FINDINGS
8.1 Statement of financial performance
The Statement of Financial Performance on page 9 and note (7) disclosed a sum of
UGX.18,050,000 as Non-tax revenue. This amount relates to a sale of documents
amounting to UGX.2,050,000 and Rent of UGX.16,000,000. I reviewed the tenancy
agreement and established that rent payable was UGX.2,000,000 per month which
would translate into Non-tax revenue of UGX 24,000,000 a year. Management did
not provide adequate information and explanation as to why only UGX.16,000,000
was disclosed. I have brought this understatement of revenue to the attention of
management for action.
Management explained that the NTR receipts from sale of Bid documents and rental
fees had not been provided by URA and the canteen to enable a reconciliation.
Management action on the matter is awaited.
8.2 Papal closed and open cars
It was established that UGX.322,200,000 was transferred to the Ministry of Works for
the procurement of Papal in November 2015. A review of the available documents
indicated that Office of the President entered into a memorandum of understanding
with Ministry of Works and Transport on 22nd October 2015 in which the latter was to
procure two cars to be used by the Pope during his visit to Uganda. According to the
Memorandum of Understanding, Ministry of Works & Transport was required to
furnish reports to the coordinating Ministry (Office of the President) regarding the
expenditures made out of the funds released for the procurement of the said
vehicles. However, there was no such report availed for review which is an indication
that Ministry of Works may have failed on its part.
A review of the Ministry Assets Register did not have the said cars which is an
indication that Office of the President does not own the said vehicles. I was not able
to physically inspect the said vehicles to confirm their existence.
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In response, the Accounting Officer explained that the Office had requested Ministry
of Works and Transport to submit a report on the particulars of the two vehicles and
arrangements were being made to have the two vehicles handed over to his Office.
I await the outcome of this arrangement.
8.3 High motor vehicle maintenance costs
It was noted that Resident District Commissioners and their deputies are required to
oversee security and monitor implementation of government programs in the various
Districts across the country. For their effective and efficient operations, they are
required to be facilitated with mechanically sound vehicles. However it was observed
that out of 175 vehicles provided to the commissioners, only 31 (18%) are below the
recommended five years official use, while 144 (82%) have been used for over five
years. This has led to frequent breakdowns due to age and rough terrains,
translating into high maintenance costs. During the year under review, a sum of
UGX.1.722bn was spent on maintenance of the entity vehicles with the RDCs vehicles
taking a big part of it.
During the financial year 2015/2016 Office of the President procured only 10 double
cabin pickups out of 144 due for replacement. I observed that this is low and require
revisiting. The table below shows the number of vehicles that have been in use for
over 5 years.
Years covered Number of vehicles %
Above- 8 years 11 7.7%
Above -7 years 26 18.3%
Above 5 years 107 74.%
Total 144 100%
The Accounting officer attributed the high costs of vehicle maintenance to the aged
fleet used by RDCs and DRDCs in the rugged rural terrain. The Office had on several
occasions raised funding requests with the Ministry of Finance, Planning and
Economic Development but no positive response had been received.
I advised the Accounting Officer to continue engaging Ministry of Finance to allocate
more funds to replace the ageing fleet.
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8.4 Boarded off vehicles not sold
It was established from the Board of Survey Report for the year ended 30th June
2016 that several vehicles were recommended for boarding off in the previous years
but management had not taken any action to have them boarded off. Some were
found packed at different garages implying the likelihood of losing these assets was
high. Table showing vehicles recommended for boarding off.
No Type of Vehicle Reg. Number Location
1 Pajero UG 0958C Afrolite
2 Nissan UG 1809C Afrolite
3 Nissan UG 1880C Headquarter
4 Nissan UG1881C RDC Lira
5 Nissan UG1947C Singh Lira
6 Ford UG 1958C Headquarter
7 Toyota UAG- 561K Kampala
8 Nissan UG1801C Afrolite
9 Nissan UG 1882C Speedway
10 Nissan UG 2108C Afrolite
11 Nissan UG 1894C Afrolite
12 Toyota UG 1549C Afrolite
This action also contravenes Regulation 295(5) of the PPDA Regulation which
requires the procuring and disposing entity to periodically identify assets to be
boarded off within a specified time.
Management explained that a team was constituted to carry out the inspection and
valuation to determine reserve prices. The exercise was still on-going and a report
was expected soon.
I wait the outcome of this exercise.
8.5 Office of the President - Land issues
It was noted that the Office of the President has various properties across the
country. A review of the related correspondences categorised land into different
stages in as far as ownership is concerned, which requires a follow up with Uganda
Land Commission in the following categories;
Approximately 7.6 Hectares of Land in 6 districts had Deed Plans submitted to
Uganda Land Commission to process land titles yet no titles had been processed.
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Land in 36 districts where some survey exercise has been on-going for over the
years yet the exercise has not been concluded. I could not establish the size of
this land.
Land in 37 districts which is not surveyed and in some areas the size of the land
is not known, which might result in the office losing some of the pieces of this
land.
In 3 districts, the location of the Land is not known. Government is likely to lose
this land if no follow up is done.
14 districts had some properties developed with government buildings and are
accommodating Offices of RDCS yet these properties have no land titles.
If there is no vigilance in securing this land encroachers are likely to take advantage
and take over this land.
In response the Accounting Officer stated that they had only managed to secure land
titles for the offices of the Resident District Commissioners of Adjumani, Buhweju
and Gulu. He also stated that the Office had been regularly requesting the Ministry of
Lands, Housing and Urban Development, Uganda Land Commission and the District
Local Governments to expedite the process of finalising the remaining land titles.
I await the outcome of the efforts taken by the office.
8.6 Staffing gaps
It was noted that out of the approved posts totalling 643 staff, only 448 (69.67 %)
were filled resulting into a shortfall of 195 staff representing 30.3 %. It was observed
that the unfilled gaps include top management positions which raise doubt as to
whether the Ministry can achieve its mandate.
In response the Accounting Officer stated the except for the few top management
vacancies, bulk of the remaining vacancies included that of the Stenographer
Secretaries (54) and Office Typists (42) who were declared to Ministry of Public
Service to cause their recruitment and deployment.
I advised management to continue liaising with the relevant authorities and have the
gaps filled.
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8.7 Outstanding arrears - UGX. 37,144,575,107
The entity had a total outstanding arrears of UGX.37,144,575,107 relating to sundry
creditors and gratuity arrears as detailed in the table below. This is contrary to
paragraph 188 Part 1 of the TAIs that requires an officer authorised to incur
expenditure to ensure that no payments due in a financial year remain unpaid at the
end of the year. Staffs that were to receive their gratuity were denied the
entitlement.
S/N Particulars Amount
1 Sundry creditors 16,336,658,236
2 Gratuity 20,807,916,871
Total 37,144,575,107
Documents available indicate that the entity outstanding bills totalled
UGX.194,609,185 for electricity and UGX.54,064,676 for water. These outstanding
amounts were not included in the list of domestic arrears for the year and therefore
the total arrears position was understated.
I advised the Accounting Officer to ensure adherence to the commitment control
system to limit accumulation of domestic arrears and where arrears exist, there
should be a budgetary provisions to avoid diversion of funds. In the meantime
arrears that were not disclosed should be included in the 2016/2017 position.
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APPENDIX 1
FINANCIAL STATEMENTS