OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF WAKISO DISTRICT LOCAL GOVERNMENT

FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016

DECEMBER, 2016

OFFICE OF THE AUDITOR GENERAL

UGANDA

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TABLE OF CONTENTS

LIST OF ACRONYMS ....................................................................................................... iii

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS ............................. 1

1.0 INTRODUCTION ....................................................................................................... 4

2.0 BACK GROUND INFORMATION .................................................................................. 4

3.0 ENTITY FINANCING ................................................................................................. 4

4.0 OBJECTIVES OF WAKISO DISTRICT LOCAL GOVERNMENT .......................................... 4

5.0 AUDIT SCOPE .......................................................................................................... 5

6.0 AUDIT PROCEDURES PERFORMED ............................................................................ 6

7.0 FINDINGS................................................................................................................ 6

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LIST OF ACRONYMS

ACRONYM MEANING

DLG District Local Government

DPAC District Public Accounts Committee 2007

ICT Information Communication Technology

IPPS Integrated Payroll Payment System

ISA International Standards on Auditing

ISSAI International Standards for Supreme Audit Institutions

ISSAI International Standards for Supreme Audit Institutions

LGFAR Local Government Financial and Accounting Regulations

LRDP Luwero Rwenzori Development Programme

MoESTS Ministry of Education Science and Technology and Sports

MoFPED Ministry of Finance Planning and Economic Development

NMS National Medical Stores

PFMA Public Finance Management Act, 2015

PPDA Public Procurement and Disposal of Public Assets

UGX Uganda Shillings

URA Uganda Revenue Authority

VAT Value Added Tax

WHT Withholding Tax

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REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF WAKISO DISTRICT LOCAL GOVERNMENT

FOR THE YEAR ENDED 30TH JUNE, 2016

THE RT. HON. SPEAKER OF PARLIAMENT

I have audited the financial statements of Wakiso District Local Government for the year ended

30th June 2016. These financial statements comprise of the Statement of Financial Position as at

30th June 2016, 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, 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 Wakiso District. 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 the

Financial Reporting Guide, 2008, 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 Cap 243 (as amended) 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 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

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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.

Except as discussed below, 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

Salary Over Payment - UGX.103,894,344

The District incurred overpayments of salary to staff amounting to UGX.103,894,344,

contrary to Section B (7) of the Uganda Public Standing Orders, 2010 which requires

correct payment of salary. Accordingly, this amount has been irregularly included in the

financial statements under employee costs.

Unsupported Pension Payments - UGX.155,740,590

A total of UGX.155,740,590 was paid in respect of pension claims without the supporting

files. There is uncertainty as to whether the amount in question was paid to genuine

pensioners.

Delayed Deletion of Employees - UGX.58,912,157

The district irregularly paid salary totalling to UGX.58,912,157 to staff who had been

earmarked for deletion as a result of either retirement, transfer of service or death. This

amount has been irregularly included in the financial statements under employee costs.

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Qualified Opinion

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

Opinion paragraph, the financial statements of Wakiso District Local Government 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, the Local Government Financial and Accounting Regulations, 2007 and the Local

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

Other Matters

I consider it necessary to communicate the following matters other than those that are

presented or disclosed in the financial statements that, in my judgement, are relevant to users’

understanding of the audit, the auditor’s responsibilities or the auditor’s report.

Irregular Procurement of Contractor

Section 43 of the PPDA 2003, requires that all procurements are undertaken in a manner

that promotes transparency, accountability and fairness. However, contrary to this

provision, a firm was awarded a contract at a price of UGX.15,188,224,517, instead of

awarding it to a firm with the lowest bid of UGX.9,871,635,060 for work on Seguku-

Kasenge-Buddo road leading to an apparent loss of UGX.5,316,589,450.

Irregular Award of Framework Contracts – UGX.214,253,253

The districts awarded framework contracts for the supply of goods amounting to

UGX.146,429,768 for items that were not repetitive in nature and whose need could be

defined in advance, and repair of motor vehicles for UGX.67,823,485. It was observed

that the practice was used to circumvent the requirement to undertake proper

procurement procedures for the items in question hence compromising value for money

in the procurement process.

John F.S. Muwanga

22nd December, 2016

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PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENT OF

WAKISO DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2016

This Section outlines the detailed introduction, background information, entity financing, audit

findings, management responses and my recommendations in the 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 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 Wakiso District Local Government (DLG) to

enable me report to Parliament.

2.0 BACK GROUND INFORMATION

Wakiso District was established in 1974 after splitting East Mengo District. The District

lies North of Kampala. It is boarded by Mukono and Wakiso Districts in the south,

Nakaseke in the West, Nakasongola in the North and Kayunga District in the East. It

has two counties of Bamunanika and Katikamu.

3.0 ENTITY FINANCING

Wakiso District was 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 district received grants totaling to UGX.68,798,493,322

from the Central Government, UGX.632,621,594 from donations and UGX.2,479,238,002

from locally generated revenues. The total revenue of UGX.71,910,352,918 constituted

97% of its approved budget estimates of UGX.74,355,833,259.

4.0 OBJECTIVES OF WAKISO DISTRICT LOCAL GOVERNMENT

The district’s main objectives are to;

Increase household incomes and promoting equity

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Increase access to quality social services

Improve stock and quality of economic infrastructure

Enhance the availability and quality of gainful employment

Enhance human capital Development

Strengthen Good governance, security and accountability

Promote sustainable population and use of environment and natural resources

Promote science, Technology innovation and ICT to enhance competitiveness

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. 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, 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.

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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

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.

7.0 FINDINGS

7.1 Categorization of Findings

The following system of profiling of the audit findings has been adopted to better

prioritize the implementation of audit recommendations;

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Table showing categorization of findings

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;

Table showing categorized summary of the findings

No Finding Significance

7.2 Overpayment of salary - UGX.103,894,344 High

7.3 Irregular Procurement of Contractor High

7.4 Irregular award of Framework Contracts - UGX.214,253,253 Moderate

7.5 Budget Performance Moderate

7.6 Unsupported Pension Payments Moderate

7.7.1 Staff in Acting Position Moderate

7.7.2 Delayed Deletions of Employees - UGX.58,912,157 High

7.7.3 Irregular Transfer of Service from other Local Governments High

7.8 Over Payment of Pensions - UGX.11,961,297 High

7.9 Award of procurement without confirmation of funds - UGX.30m Moderate

7.10 Irregular Contract Award UGX.181,689,257 High

7.11 Lack of District Land Titles High

7.12 Information Technology (IT) Policy Low

7.13.1 Staffing levels High

7.13.2 Health Facilities Moderate

7.13.3 Drug Management Moderate

7.14 Review of Internal Audit Function Moderate

7.15 Status of prior year audit recommendations Moderate

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7.2 Salary Over Payment - UGX.103,894,344

Section B (7) of the Uganda Public Standing Orders, 2010 requires salaries to be fixed at

annual rates and paid in twelve (12) equal installments. Salaries shall be paid correctly,

promptly and as a lump sum in accordance with the approved salary structure for the

Public Service.

A review of the payroll data and IFMS payments revealed variances between amounts

on the payroll and payments later made to personal accounts resulting into

overpayments amounting to UGX.103,894,344 contrary to Section B (7) of the Uganda

Public Standing Orders, 2010. This was attributed to weak controls in the management

and processing of the payroll, including absence of monthly reconciliations between the

IPPS payroll and the district staff register, hence presenting a risk of errors and fraud

going undetected.

The Accounting Officer acknowledged the finding which he attributed to errors and that

he had since instituted recovery measures.

I have advised the Accounting Officer to ensure that all excess funds paid are recovered

and in future, necessary reconciliations should be made before payments are effected.

7.3 Irregular Procurement of Contractor for Seguku-Kasenge-Buddo - 10Km

Section 43 of the PPDA 2003, requires that all procurements are undertaken in a manner

that promotes transparency, accountability and fairness.

However, contrary to this provision, a firm was awarded a contract to work on Seguku-

Kasenge-Buddo (10 Km) and Lubowa Quality Super market Hill view close (2.1km), at a

contract price of UGX.15,188,224,517, instead of awarding it to a firm that had bided for

the same works at UGX.9,871,635,060, leading to apparent overspending by

UGX.5,316,589,450. It was observed that the lowest bidder was eliminated due to the

failure to back the schedule of general experience with signed agreement forms and

certificates of completion despite verification letters by some of the contracting entities

(Ministry of works and Transport, and Uganda investment Authority) that the firm had

been contracted before, for similar works. It was noted that the evaluation committee

waived off a major criteria of financial performance that required applicants to have an

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average turnover of UGX.20 Billion for the last 3 years citing noncompliance by all

bidders. However, the successful bidder had an average turnover of UGX.14 billion far

below the other bidders with average turnover of UGX.41.8 Billion and UGX.2 Trillion

respectively.

It was also observed that the successful bidder lacked the experience of having 2

successfully and substantially (70%) completed contracts in the last recent 3 years each

with a value of at least UGX.12 billion as the company only attached certificates

amounting to below UGX.4 Billion and UGX.12 Billion, which was only 10% completed

works. The waiver gave an unfair advantage to the awarded firm leading to unfair

competition and apparent overspending of UGX.5,316,589,450.

The Accounting Officer acknowledged the finding and explained that the Evaluation

team waived off some criteria under Financial Performance under average annual

turnover in line with the job being undertaken and the firm in question did not meet

both the general experience of having contracts in the last recent 5 years prior to the

bid submission deadline with activity in at least 8 months in each of the last recent 5

years (2011, 2012, 2013, 2014& 2015). This was considered a deliberate override of

regulations by the evaluation and contracts committees.

I advised the Accounting Officer to abide by the basic principles of procurement as laid

down in Section 43 and follow up this matter for possible action on whoever is found to

have been responsible for this loss to government.

7.4 Irregular award of Framework Contracts - UGX.214,253,253

Regulation 94(1) of the PPDA Regulations, 2006 requires Council to enter into

framework contracts for repetitive supplies but where the quantity and timing of the

requirement cannot be defined in advance. This is meant to reduce procurement costs

or lead times for a requirement which is needed repeatedly or continuously over a

period of time by having them available on a "call off" basis.

However a review of a sample of the districts’ frame work contracts revealed that, call

off orders were made for procurements amounting to UGX.146,429,768 for items that

were not repetitive in nature and whose need could be defined in advance, thus not

fitting within the definition of framework contracts. Similarly, the district issued call off

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orders to the tune of UGX.67,823,485 for repair services without comparing the prices of

various suppliers prior to issuance.

The Accounting Officer explained that items that have standardized costs can be

procured under framework contracts for easy procurement. It was observed however

that the practice may have been used to circumvent the requirement for proper

procurement procedures, thus compromising value for money in the procurement.

I advised the Accounting Officer to ensure that going forward, conditions governing

framework contracts are always observed.

7.5 Budget Performance

Regulation 18(3) of LGFAR, 2007 requires budget estimates to be based on objectives to

be achieved in the financial year and that during performance, efforts should be made

to achieve the agreed objectives or targets as per programs of Council.

It was noted that out of the approved budget of UGX.74,355,833,259, a total of

UGX.71,603,629,091 was received resulting into a shortfall of UGX.2,445,480,341 which

represents an underperformance of 3.3%. This was largely attributed to a shortfall in

GOU releases of UGX.906,916,693, as well as transfers from other government units

(especially lower Local Governments) of UGX.1,644,946,275 as shown in the table

below;

Table summarizing the District Revenue Out-turn

Source Budget (Ugx) Actual (Ugx) Variance (Ugx)

Local Revenue 2,483,699,969 2,479,238,002 4,461,967

GoU releases 64,377,818,568 63,470,901,875 906,916,693

Donor funds 521,777,000 632,621,594 110,844,594

Transfers from other

government units

6,972,537,722 5,327,591,447 1,644,946,275

Total 74,355,833,259 71,910,352,918 2,445,480,341

Furthermore, collection of revenue by the lower local governments, as well as budget

cuts by the Ministry of Finance Planning and Economic Development, across the entire

government might have also affected budget performance.

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In response, management explained that this was a direct result of non-realization of

funding from the observed sources, adding that this issue is perennial, and sometimes

results into failure to fully implement approved work plans for planned service delivery.

I advised the Accounting Officer to carry out a deep analysis of the budget performance

with a view of devising mechanisms to address such shortcomings, especially those

affecting revenue collection by the lower local governments.

7.6 Unsupported Pension Payments - UGX.155,740,590

Article 254(1) and (3) of the Constitution of the Republic of Uganda, 1995 (as amended)

provides that Public Officers shall on retirement receive such pension as is

commensurate with their ranks, salary and length of service. The payments should be

prompt, regular and easily accessible to the pensioners. The payment of pensions

entirely vests with the Ministry of Public Service.

It was noted that Government decentralized the payroll and pension system to

respective votes (MDAs and Local Governments) with effect from the financial year

2014/15. A review of the District IPPS pension payroll revealed that a sum of

UGX.155,740,590 was paid in respect of pension claims without pension files to support

the expenditure. I informed management about the possible risk of financial loss

through inaccuracies of calculation or even payment to non-bonafide pensioners as a

result of lack of supporting documentation.

Although the Accounting Officer stated that the files pertaining to pensioners paid during

the financial year were available, some files were still missing on verification and the

amount included in the above paragraph accordingly excluded the availed files.

I advised the Accounting Officer to engage the Ministry of Public Service to ensure that

all pension claims are supported with personal files to eliminate any risk of fraud during

payment of pensioners.

7.7 Human Resource Issues

7.7.1 Staff in Acting Position

According to Section (A-c) of Uganda Public Service Standings Orders, 2010, on

Appointment Procedures, an appointment on acting basis is expected to last not more

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than six months, and is subject to the direction by the Appointing Authority. Any period

of acting appointment beyond six months will be null and void and the officer holding

such an appointment shall automatically revert to his or her substantive post, unless the

Appointing Authority extends the appointment for another period of six months, but

shall not exceed 12 months in total.

It was observed that twenty one (21) district staff have been in acting capacity for more

than six months. The Accounting Officer attributed this to delayed verdicts for office

holders on interdiction and transfer of substantive office holders to newly created

Municipalities. He further explained that the district has undergone restructuring and

management was in the process of customizing the new structure.

I await the outcome of the implementation of the new district structure.

7.7.2 Delayed Deletion of Employees - UGX.58,912,157

Section B-a (12) of the Standing Orders 2010, stipulates that payment of a salary to a

Public officer shall be stopped immediately the officer ceases to render services to

Government under whatever circumstances including death.

During the financial year, the district irregularly paid salary totaling to UGX.58,912,157

to staff who had been earmarked for deletion as a result of either retirement, transfer of

service or death. The Accounting Officer attributed this to the Integrated Payroll

Payment System which is expected to automatically delete such cases adding that it was

a challenge if the system had failed to effect such a control, and promised to recover the

monies when the cases are being submitted for gratuity payment.

I advised the Accounting Officer to institute appropriate recovery procedures from the

concerned beneficiaries and in future, ensure that such cases are promptly removed

from the payroll, given that the Accounting Officers are now in charge of their payrolls

following decentralization.

7.7.3 Irregular Recruitment/Transfer of Service from other Local Governments

Paragraph 7 of the Standing Orders 2010; Appointment Procedures (A-C), requires that

appointment on transfer from “Other Public Service” or from a Local Government” to the

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“Central Government” and vice versa or from one Local Government to another to follow

the normal appointment procedures.

It is a requirement that the Accounting Officer submits the availability of the vacancy to

the District Service Commission for commencement of the recruitment process and in

order to ensure competitiveness, recruitment should be done internally by placing an

internal advert for qualified employees to apply and fill the position, or externally by

sourcing from the open market through advertisement of the position in the print media.

During the financial year, the district recruited 51 staff on transfer from other local

governments without following the procedures spelt out in the Standing Orders. The

vacant positions were neither declared nor advertised internally or in the print media,

but the applicants were recommended and shortlisted for interviews, hence casting

doubt as to how they got to know about the vacant posts. This undermined the

principles of transparency and fair competition, thus denying the would be candidates an

equal opportunity for employment.

In response, management explained that transfer of service by staff from other local

Governments is allowed, and Regulation 17 of the Public Service Commission

Regulations, 2009 allows districts to use their discretion not to advertise.

I noted that the cited Sections were applicable for a limited number and not for such a

big number of positions (51) which casts doubt on transparency in the recruitment

process, due to lack of competition for available positions. I advised the Accounting

Officer to ensure full adherence to the public service standing orders in regard to

recruitment of staff, by ensuring equal opportunity to all potential applicants.

7.8 Over Payment of Pensions - UGX.11,961,297

Section (L-b) (5) of the Public Standing Orders, 2010 states that; a public officer on

retirement shall receive such pension as is commensurate with his/her rank, salaries,

length of service and in accordance with the appropriate law.

Contrary to the regulations, pension payroll analysis carried out revealed that the figures

for IPPS were lower while the actual payments made on IFMS were higher for a number

of pensioners leading to over payment of pensions by UGX.11,961,297.

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The Accounting Officer attributed this to initial challenges of decentralization of the

pension management, such as delayed access, lack of supplier numbers and delayed

verification, among others in which some pensioners missed payment.

I advised the Accounting Officer to follow up the cases in question and initiate recovery

measures of the amounts involved.

7.9 Award of procurement without confirmation of funds - UGX.30,489,106

Regulation 87(5) of the LGPPDA, 2006 requires an accounting officer to ensure that the

total acquisition cost of procurement is committed prior to contract placement.

Contrary to the above, the district awarded contracts at contract prices above the sum

committed as per LGPP Form 1. As a result, an extra amount of UGX.30,489,106 was

awarded over and above the committed funding, without evidence of availability of the

extra resources. Awarding contracts without prior confirmation of availability of funding

undermines the budgeting process and could result into domestic arrears. This was also

attributed to a weak PDU that failed to guide the Accounting Officer, on what the

regulations require in such instances.

Although the Accounting Officer asserted that the all awards were supported with

confirmation of funds from user departments, on verification, contracts of

UGX.30,489,106, lacked evidence of confirmation of availability of funds.

I advised the Accounting Officer to always ensure confirmation of availability of funds to

avoid risks of accumulation of domestic arrears and litigation in case of delays in

settlement of the related invoices.

7.10 Irregular Contract Award - UGX.181,689,257

Regulation 102(1 and 3) of the Local Government PPDA regulations, 2006, requires a

security to be in a form and from an institution that is wholly acceptable to the Bank of

Uganda and valid for a period prescribed in the tender documents.

It was noted that two construction firms submitted bids for the renovation of Makindye

Sabagabo Sub-county offices (now Makindye Municipal council), at bid prices of

UGX.163,300,355 and UGX.181,689,257. However, the Best Evaluated Bidder submitted

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a bid security in form of a cheque of UGX.500,000 in favor of Wakiso DLG (Stanbic bank,

dated 5/2/16) which was not a requirement in the bid document.

A review of the standard bid document and the instruction to bidders (clause ITB 18.1),

however, exclusively stated that "A Bid security shall not be required". It was however

noted that the lowest price bidder was evaluated as non-compliant basing on failure to

submit a bid security. This appeared contradictory.

In view of the above, the disqualification of the lowest priced bid on such grounds and

the award of contract in favor of a higher bid is considered irregular and resulted into an

excess expenditure that could have been avoided.

The Accounting Officer stated that the unsuccessful bidder did not provide evidence of

experience of handling contracts of more than one hundred million or works of similar

complex nature and would not pass the technical evaluation stage.

I advised the Accounting Officer to follow the regulations and also exercise due care in

scrutinizing the evaluation reports before accepting the recommendations of the

evaluation and contract Committees.

7.11 Lack of District Land Titles

Regulation 58 (4) of the LGFAR, 2007 provides that the properties and assets of a local

government shall be properly registered, titles issued and valued. It was however,

observed that the district does not hold title for the bulk of the plots of land included in

the schedule, despite the fact that it has made substantial investments there on.

Consequently, the council land is exposed to risk of encroachment and disputes.

The Accounting Officer explained that they have a budget for titling of at least four plots

and will progressively survey and get titles for its land.

I advised the Accounting Officer to expedite the process and ensure land titles are

secured for all land belonging to the district.

7.12 Information Technology (IT) Policy

Section 110 of the LGFAR (2007) requires the chief executive to designate an officer to

ensure that adequate information and communication technology policies are

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established and are applied to enable adequate security and protection, over computers

and of data held on computers or information systems operated by the Council.

It was observed that the district has a number of computers and their accessories meant

to improve processing of information. However, there are no proper procedures

formulated to guide use of this equipment and there is no designated officer to handle

IT matters contrary to the law. Consequently, there was no effective general and

application controls in existence in the District that would ensure proper logical and

physical access and security over data. Absence of IT controls, poses a risk of wastage

and loss of vital information.

In his response, the Accounting Officer promised to have an information policy in place

to address this issue by end of the financial year.

I advised the Accounting officer to expedite the process of formulating IT policies, to

guide in management of IT resources and also fully harness the use of ICT as a

business enabler.

7.13 Inspection of District Health Centres (HC)

Wakiso district has five (5) Health Centre IVs out of which three (3) Health Centre IVs

and one district hospital were inspected, and the following were noted;

7.13.1 Staffing levels

It was noted that the Health Centres have inadequate staff. Out of the total established

staff of 328, only 259 were filled leaving 68 posts vacant. Notable among the vacant

posts were the critical posts of Senior Nursing Officer as well as Public Health Nurses. In

absence of such vital personnel, the quality of service delivery is likely to be affected.

Details in the table below;

Table showing staffing gaps at Heath Centre visited

HEALTH CENTRE APPROVED

STRUCTURE

FILLED

POSITIONS

VACANT

POSITIONS

Kasangati HC IV 48 39 08

Buwambo HC IV 47 35 12

Wakiso HC IV 43 38 05

Entebbe Hospital 190 147 43

328 259 68

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The Accounting Officer attributed this to retirement of officers and support staff, and

explained that they had placed a request for recruitment of new staff.

I advised the Accounting Officer to liaise with the responsible authorities to ensure that

the staffing levels at the health centers are improved for better service delivery.

7.13.2 Health Facilities

Medical practice requires that good health facilities in terms of buildings, equipment and

other accessories are provided and maintained in good condition in order to offer quality

health services to the community.

However a physical inspection of the Health Centre IVs, revealed inadequacies, such as:

Inadequate staff quarters, lack of transport facilities, lack of storage facilities,

inadequate delivery beds, poorly maintained buildings, overcrowding, among others.

Absence of good health facilities hinders effective service delivery.

The Accounting Officer stated that they did not receive capital development from

ministry of health for the financial year 2015/2016, but they have continued to advocate

for support for infrastructural development and the need is overwhelming.

I advised the Accounting Officer to liaise with the relevant stakeholders especially

Ministry of Finance, Planning and Economic Development, to ensure that the

development budget of the district is improved to allow improvement of health facilities.

7.13.3 Drug Management

From a sample of key drugs supplied to health centers, I reviewed their usage and

noted the following;

a) Expired Drugs

During the inspection of health centers, it was noted that the facilities had expired drugs

within their stores and no efforts had been made to have the drugs safely disposed as

shown in the table below;

Table showing expired drugs HEALTH CENTRE DRUG QUANTITY EXPIRY DATE

1 Kasangati HCIV Starl Park 18*30 10/2015

RHE 1*24*28 11/2015

RH 5*3*28 10/2015

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HEALTH CENTRE DRUG QUANTITY EXPIRY DATE

Tetracycline eye 10*1 12/2015

Dextrose 50% 6*1 05/2016

Atropine Sulphate 8*1 04/2016

Chloramphenicol 36*1 12/2015

Septrine 960mg 28*1000 04/2016

Septrine 120mg 2*1000 01/2016

Nevirapine Syrup 8 bottles 03/2016

Alluvia 100mg/25mg 23*60 11/2015

2 Wakiso HCIV Flucanozale 7 bottles 03/2016

Chlorpromazine 1*1000 06/2016

RH Pead 2*3*28 06/2016

Lopinavir/Ritonavir 1*20 06/2016

Benzathine 50vials 03/2016

Bupivacane 140vials 06/2016

PH/NA/CL filling solution 8 bottles 05/2016

3 Entebbe hospital Piriton Tab 2*1000 8/2015

Quinine tab 1*1000 3/2015

Quinine tab 1*1000 9/2015

X-Beta N eye 69 tubes 6/2015

Dexamethasone 30 amps 8/2015

Hydralazine 9 amps 5/2015

Aspirin tab 1*1000 9/2015

I noted that some of the expired drugs had been delivered by the National Medical

Stores (NMS) within a short period to the expiry date. It was not clear why such drugs

remaining with short shelf life would be delivered. The Accounting Officer also alluded to

large quantities supplied of uncommonly used drugs adding that disposal of expired

drugs is a function of Ministry of Health. In the meantime, the District Health Officer

had issued a circular to all facilities not to receive drugs with a remaining expiry shelf life

of three months.

I advised the Accounting Officer to liaise with the Ministry of Health and NMS to ensure

that the expired drugs are safely disposed in accordance with the health drug disposal

standards.

b) Frequent Drug Stock outs

I observed that there were drug stock outs before the next consignments could be

received. Some of the stock outs were of vital drugs necessary for treatment of common

ailments as shown in the table below. Drug stock outs could be attributed to supply of

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drugs without properly assessing the drug requirements of a health unit.

Table showing drug stock outs HEALTH CENTRE DRUG DRUG STOCK OUT (DAYS)

Kasangati HCIV Dextrose 50% 78

Albendazole 400mg 200

Chlorpromazine 48

Atropine Sulphate 1

Cotton wool 9

Metformin 15

Sputum Containers 318

Nystatin Suspension125ml 370

Metronidazole Syrup 320

Lopinavir/Ritonavir 350

Mebendazole Tabs 688

Wakiso HCIV Cotrimoxazole 13

Albendazole 240

Ceftriaxone 23

Glibenclamide 25

Bendrolfualida 137

Entebbe Hospital Caps Doxycycline 63

Injection X-pen 191

Injection Gentamycin 42

Injection Ceftriaxone 7

Cap Amoxyl 57

Tabs Panadol 19

Tabs Ferrous 63

The Accounting officer attributed the stock outs to delivery of the standard drug kit

mainly to health centers II and III without due consideration to the catchment

population, but they were developing a drug redistribution strategy.

I advised the Accounting Officer to ensure proper assessment of the drug requirements

of the health centers before requisitioning for drugs and other medical supplies.

Meanwhile, I await the outcome of the implementation of the suggested drug

redistribution strategy.

c) Variances in delivery of drugs

A comparison between statements of medicine by NMS and records at Health centers

showed variances in the quantities of the drugs delivered. Cases of over and under

delivery of drugs were noted, as per table below;

20

Table showing variances in drug deliveries HEALTH

CENTRE

CYCLE DRUG NMS

FIGURE

HCIV

FIGURE

(Over)/Under

Delivery

Wakiso HCIV 05 Nifedipine 20 mg R 10 50 (40)

Entebbe Hospital 01 Suture PGA2 372 360 12

01 Suture PGA2 348 360 (12)

04 Set Infusion Acid 725 800 (75)

Buwambo HCIV 05 Paracetamol/Suspension 45 60 (15)

The discrepancies may have resulted from either poor record keeping at the health

centers or dumping of drugs by the NMS. I was however not shown evidence of

complaints to NMS for short deliveries, nor given explanation in regard to over supplies.

Overall, the Accounting Officer stated that they had taken the issue of drug

management seriously by training staff on logistics management to address the gaps

and that they were committed to development of stringent internal controls.

I advised management to strengthen their drug forecasting processes as well as internal

controls over drugs management at Health Centre’s in form of record keeping, as well as

custody and reporting.

7.14 Review of Internal Audit Function

Section 90 of the Local Government Act Cap 243 (as amended), requires every District,

City, Municipal and Town Council to provide for an Internal Audit Department who

should prepare quarterly audit reports and submit them to the Council giving a copy to

the District Public Accounts Committee (DPAC). In addition, ISSAI 1610 allows the

external auditor to place reliance on the work of the internal auditor in accordance with

ISA 315 after consideration that the Internal Audit is likely to be relevant to the Audit.

However, our review of the internal audit department and its operations revealed that

the department was weak. While the district establishment of the department indicated

nine (9) staff, only two (2) were in place. In addition, according to internal audit, the

actual operational funds availed to the department of UGX.169 Million (about 0.001% of

the district budget of UGX.74 Billion) appear to be meagre, given the extent of audit

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work they would have to undertake across the District. I further noted the absence of

internal audit plans and inadequacies in internal audit reports. In the absence of a

strong and functional internal audit department, the risk of the existence of weak

internal controls cannot be understated.

The Accounting Officer stated that the audit staff were assigned duties in newly created

Municipalities and Town Councils, but they were in a process of formalizing

appointments for internal audit staff.

I advised the Accounting officer to ensure that the Internal Audit Department is

strengthened to enhance the internal control system of the district.

7.15 Status of Prior Year Audit recommendations

A review of the implementation status of the prior year audit recommendations revealed

the following;

Table showing status of prior year audit findings

Findings Recommendations Implementation Status

Auditors Comment

PAYROLL AUDIT:

Over payment of

salary of UGX.2,275,126,315.

The Accounting Officer was

asked to ensure the

recoveries are made

The recovery was

commenced till when

IGG halted the same pending the issuance of

the investigation report.

Not addressed.

Partial recoveries

made and IGG following up the

matter

Salary arrears paid without supporting

records of

UGX.14,600,581

The Accounting Officer was asked to ensure the

recoveries are made

The recovery was commenced till when

IGG halted the same

pending the issuance of the investigation report.

Not yet addressed

Non-remittance of

shared inspection fees to Lower

Councils of UGX 23,068,020

The Accounting Officer was

requested to remit shared revenue to the Lower Local

Governments promptly.

Shared revenue has

now been remitted to the Lower Local

Governments promptly

shared revenue

remitted

Procurements not

in the Procurement Plan

worth

UGX.801,756,780

The Accounting Officer was

advised to integrate new procurement needs into the

district approved

procurement plan for implementation.

Addressed Procurement

needs for the year under review were

integrated into the

district approved procurement plan

for implementation.

Items not taken on Accounting Officer was Addressed The issue has

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charge

advised to institute proper

controls over stores to

avoid abuse.

been partially

addressed.

Material delivered on site such as

marram and culverts were still

not being taken on charge.

Management of The

Luwero – Rwenzori

Programme: Groups did not

maintain records. Consequently, the

groups did not prepare and submit

quarterly progress

reports to the District

The Accounting Officer was

advised to ensure that the

subject matter specialists regularly monitor the

projects and enforce maintenance of proper

records.

Not addressed The funds were

still unaccounted

for at the time of the audit and

neither had the planning office

been furnished with any activity

reports

Works Department;

Nakusaze-Kiwande – Gomebe in Bussi

2km - although the road is 4km, only

2km were worked

on. The rest of the road was reduced

to a path with no routine

maintenance done

at all. Also the section which was

worked on was narrow.

The Accounting Officer to

ensure close supervision of the road works.

Supervision of works is

being implemented

The narrow

section of the road was widened and

maintenance is labour based

coupled with close

supervision of the district engineer.

However ,there were sections of

the road that were

not wed

Lack of Land Titles

The Accounting Officer was

advised to expedite processing of titles.

The process of

surveying and titling properties owned by

the district local

government was underway.

Not addressed

Outstanding

Commitments totalling to

UGX.391,417,310 remained unsettled

by the end of the

year.

The Accounting Officer was

advised to ensure that creditors are settled

promptly.

The issue has not yet

been addressed

Not addressed

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The above table shows that not all recommendations have been fully implemented by

the District. The Accounting Officer is accordingly advised to ensure that all audit

recommendations are always implemented, for better service delivery.