THE OFFICE OF THE AUDITOR GENERAL AND THE AUDITOR GENERAL’S DEPARTMENT
OFFICE OF THE AUDITOR GENERAL - oag.go.ug
Transcript of OFFICE OF THE AUDITOR GENERAL - oag.go.ug
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THE REPUBLIC OF UGANDA
OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30TH
JUNE 2014
VOLUME 2(B)
CENTRAL GOVERNMENT AND STATUTORY CORPORATIONS
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TABLE OF CONTENTS
LIST OF ACRONYMS AND ABREVIATIONS.................................................................................. iii
SECTION 1: INTRODUCTION ......................................................................................................... 1
1.1 MANDATE ............................................................................................................................ 1
1.2 AUDITED ENTITIES ............................................................................................................ 1
SECTION 2: DETAILED AUDIT FINDINGS..................................................................................... 3
2.1 SOCIAL DEVELOPMENT SECTOR ................................................................................... 3
2.1.1 EQUAL OPPORTUNITIES COMMISSION ......................................................................... 3
2.2 WORKS SECTOR ............................................................................................................... 6
2.2.1 UGANDA NATIONAL ROADS AUTHORITY ....................................................................... 6
2.2.2 TRANSPORT SECTOR DEVELOPMENT PROJECT (TSDP) ......................................... 51
2.2.3 ROAD SECTOR SUPPORT PROJECT 3 (RSSP 3)– NYAKAHITA-KAZO-KAMWENGE
FY 2012/2013 ..................................................................................................................... 56
2.2.4 THE UGANDA ROAD FUND ............................................................................................. 59
2.3 JUSTICE LAW AND ORDER SECTOR ........................................................................... 64
2.3.1 JUDICIAL SERVICE COMMISSION ................................................................................. 64
2.3.2 UGANDA LAW REFORM COMMISSION ......................................................................... 70
2.3.3 UGANDA HUMAN RIGHTS COMMISSION ...................................................................... 72
2.3.4 UGANDA REGISTRATION SERVICES BUREAU OPERATIONS ................................... 75
2.3.5 UGANDA REGISTRATION SERVICES BUREAU – LIQUIDATION ACCOUNT.............. 76
2.3.6 UGANDA LAND COMMISSION ........................................................................................ 77
2.4 PUBLIC SECTOR MANAGEMENT .................................................................................. 82
2.4.1 PUBLIC SERVICE COMMISSION .................................................................................... 82
2.4.2 LOCAL GOVERNMENT FINANCE COMMISSION .......................................................... 85
2.4.3 KAMPALA CAPITAL CITY AUTHORITY ........................................................................... 91
2.4.4 KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT PROJECT
(KIIDP) (TEN MONTHS PERIOD ENDED APRIL 2014) ................................................. 116
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2.4.5 BILL AND MELINDA GATES FOUNDATION – KCCA ................................................... 119
2.4.6 ELECTORAL COMMISSION ........................................................................................... 119
2.5 LEGISLATIVE SECTOR ................................................................................................. 124
2.5.1 PARLIAMENTARY COMMISSION .................................................................................. 124
2.6 HEALTH SECTOR........................................................................................................... 132
2.6.1 UGANDA AIDS COMMISSION ....................................................................................... 132
2.6.2 HEALTH SERVICE COMMISSION ................................................................................. 134
2.6.3 EDUCATION SERVICE COMMISSON ........................................................................... 136
2.7 ENERGY SECTOR .......................................................................................................... 138
2.7.1 ATOMIC ENERGY COUNCIL.......................................................................................... 138
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LIST OF ACRONYMS AND ABREVIATIONS
AIDS Acquired Immunodeficiency Syndrome
ART Anti-Retroviral Therapy
BFP Budget Framework Paper
BOU Bank of Uganda
BTC Belgium Technical Cooperation
CAES College of Agriculture and Environment Sciences
CAO Chief Administrative Officer
CDC Center for Disease Control
CEDAT College of Engineering Design Art and Technology
CEES College of Education and External Studies
CEMAS Computerized Education Management and Accounting System
CHOGM Commonwealth Heads of Governments Meeting
CHS College of Health Sciences
CHUSS College of Humanities and Social Sciences
CIID Criminal Intelligence and Investigations Department
COBAMS College of Business and Management Sciences
COCIS College of Computing and Information Sciences
COMESA Common Market for Eastern & Southern Africa
CONAS College of Natural Sciences
COVAB College of Veterinary Medicine and BioSecurity
CUFH China Uganda Friendship Hospital
DHO District Health Officer
DSCs District Service Commissions
EAC East African Community
ED Executive Director
EFT Electronic Funds Transfer
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ESAAG East and Southern African Association of Accountant Generals
ESC Education Service Commission
FAR Fixed Asset Register
FIEFOC Farm Income Enhancement and Forest Conservation
FOC Faculty of Commerce
FY Financial Year
GoU Government of Uganda
HC Health Centre
HIV Human Immunodeficiency Virus
HSC Health Service Commission
HSC Health Service Commission
IAS International Accounting Standards
IAS International Accounting Standards
ICGR International Conference for Great Lakes Region
ICT Information and Communications Technology
ICT Information Communication Technology
IFMS Integrated Financial Management System
ITFC Institute of Tropical Forest Conservation
JCRC Joint Clinical Research Center
JLOS Justice, Law and Order Sector
JMS Joint Medical stores
KCCA Kampala Capital City Authority
KYU Kyambogo University
L.T.C Lymphoma Treatment Centre
LANs Local Area Networks
LC Letter of Credit
LCs Letters Of Credit
M&E/MIS Monitoring & Evaluation/Management Information System
MDAs Ministries, Departments and Agencies
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MEACA Ministry of East African Affairs
MICT Ministry of Information and Communications Technology
MNRH Mulago National Referral Hospital
MoES Ministry of Education and Sports
MoFPED Ministry of Finance Planning And Economic Development
MoFPED Ministry of Finance, Planning and Economic Development
MoH Ministry of Health
MoLHUD Ministry of Lands, Housing and Urban Development
MoTIC Ministry of Trade, Industry and Cooperatives
MoTWA Ministry of Tourism Wildlife and Antiquities
MOU Memorandum of Understanding
MUBS Makerere University Business School
MUECCA (A) Makerere University Establishment of Constituent College Order Amended
MUK Makerere University
MUST Mbarara University of Science and Technology
MWE Water and Environment
NBI National Backbone Infrastructure
NCBS National College of Business Studies
NDA National Drug Authority
NHIS National Health Insurance Scheme
NMS National Medical Stores
NTC National Teachers College
NTR Non Tax Revenue
NWSC National Water and Sewerage Corporation
OAG Office of the Auditor General
OPD Out Patients Departments
PAC Public Accounts Committee
PAYE Pay As You Earn
PFAA Public Finance and Accountability Act
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PFAR Public Finance and Accountability Regulation
PIC Planning Investment Committee
PPDA Public Procurement & Disposal of Public Assets
PPS Private Patients Services
PS Permanent Secretary
PS/ST Permanent Secretary/Secretary to the treasury
PSC Public Service Commission
PSU Pharmaceutical Society of Uganda
S.T.C ward Solid Tumor Centre ward
TAI Treasury Accounting Instruction
UAC Uganda AIDS Commission
UBTS Uganda Blood Transfusion Services
UCI Uganda Cancer Institute
UGX. Uganda Shillings
UHI Uganda Heart Institute
ULC Uganda Land Commission
ULC Uganda Land Commission
UNHRO Uganda National Health Research Organisation
UNICEF United Nations International Children's Emergency Fund
URA Uganda Revenue Authority
USD United States Dollar
WAN Wide Area Network
WRS Warehouse Receipt System
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SECTION 1
INTRODUCTION
1.1 MANDATE
I am required by Article 163(3) of the Constitution of the Republic of Uganda and
Section 13 and 19 of the National Audit Act 2008 to audit and report on the Public
Accounts of Uganda and of all public offices including the Courts, the Central and
Local Government Administrations, Universities and Public Institutions of like nature
and any Public Corporations or other bodies established by an Act of Parliament.
Under Article 163 (4) of the Constitution, I am also required to submit to Parliament
by 31st March annually a Report on the Accounts audited by me for the year
immediately preceding. I am therefore, issuing this report in accordance with the
above provisions.
This is volume two (B) of my annual report to Parliament and it covers financial
audits carried out on public entities1 which are self-accounting and funded through
the central Government budget. The analysis of cross cutting and key issues and
status of completion of audits for these entities are covered under volume two (A).
1.2 AUDITED ENTITIES
Under this volume, 20 entities have been included. The list of entities and their
respective opinions is below.
No Entity Category Sector Opinion
1 Equal Opportunities Commission SA/SE Accountability Unqualified
2 Electoral Commission Commission Administration Qualified
3 Education Service Commission Commission Education Unqualified
4 Atomic Energy Council Council Energy Unqualified
5 Uganda Aids Commission Commission Health Unqualified
6 Health Service Commission Commission Health Unqualified
7 Uganda Human Rights Commission Commission JLOS Unqualified
8 Judicial Service Commission Commission JLOS Unqualified
1 Please note that this is not an exclusive list of all the entities.
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No Entity Category Sector Opinion
9 Uganda Law Reform Commission Commission JLOS Unqualified
10 Uganda Registration Services Bureau - Operations SA /SE JLOS Unqualified
11 Uganda Registration Services Bureau – Liquidation Account SA /SE JLOS Unqualified
12 Uganda Land Commission Commission Lands & Housing Unqualified
13 Parliamentary Commission Commission Legislature Unqualified
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16 Public Service Commission Commission PSM Qualified
17 Local Government Finance Commission Commission PSM Qualified
18 Kampala Capital City Authority SA / SE PSM Unqualified
19 Uganda National Roads Authority SA / SE Works Qualified
20 The Uganda Road Fund SA /SE Works Unqualified
The detailed audit findings are presented under Section 2 that follows.
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SECTION 2
DETAILED AUDIT FINDINGS
2.1 SOCIAL DEVELOPMENT SECTOR
2.1.1 EQUAL OPPORTUNITIES COMMISSION
2.1.1.1 Budget shortfall
Whereas the approved budget of the Commission during the year under
review was UGX..2,003,018,309, the entity realized only UGX..1,703,928,658
resulting into a short fall of UGX..299,089,651 (15%). Consequently the
following activities were not implemented;
Tribunal hearings at the headquarters.
Tribunal hearings at regional centres.
Inspections of work places.
Production of reports on government compliance to international
conventions
Monitoring and evaluation.
Advocacy and networking in districts.
Study and review customs and cultures of different tribes in Uganda on
issues of equal opportunities.
Management stated that despite writing to Treasury for release of the funds,
there was no response.
I advised management to continue liaising with the Treasury to ensure that
the appropriated resources are realized.
2.1.1.2 Understaffing
According to Section 12 of the Equal Opportunities Act 2007, for the
Commission to perform its functions better, it will establish offices at
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appropriate administrative levels. These offices will be filled by officers to
enable the Commission achieve its objectives.
However, out of the approved establishment of 49 posts, only 28 are filled
leaving 21 vacancies. Among the vacancies are; Vice Chairperson,
Undersecretary and Commissioner, Legal Services and Investighations. The
understaffing constrained the execution of its mandate.
Management attributed the staff shortage to inadequate funding and
indicated that recruitments would be phased with effect from financial year
2014/15.
I advised management to liaise with the ministries of Public Service, Finance,
Planning and Economic Development and Gender, Labour and Social
Development to obtain the necessary resources for staffing.
2.1.1.3 Arrears of Gratuity
A review of the employment terms of the Commission indicated that staff are
employed on three year renewable contract with the exception of the
Commission members whose renewable contract is five years.
Clause seven (7) of the contract of employment stipulates that “the employee
shall be entitled to gratuity at the end of each year‟s period of service”.
However, there was no evidence that employees were paid their gratuity at
the end of the year as stated in the contract agreement. Besides, it appears
there was no budget provision for the gratuity.
Breach of employment terms may result into litigation and associated costs to
the Commission.
Management explained that it was the responsibility of Ministry of Public
Service to budget for gratuity for the period and that a list of beneficiaries
was submitted for the purpose of determining gratuity due.
I advised management to follow up the matter so as to avoid accumulation of
gratuity arrears.
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2.1.1.4 Irregular gratuity rate paid to employees
Clause seven of the employment contract for technical staff states that the
rate of gratuity shall be 30% of the consolidated salary paid to the employee
during the contract period.
Contrary to this clause, a category of technical staff were paid gratuity for
financial year 2012/13 at the rate of 25% resulting into underpayment of
UGX..2,569,419.
Management explained that the 25% rate was effected by Ministry of Public
Service without explanation. Management further wrote to the Permanent
Secretary, Ministry of Public Service to rectify the anomaly but no response
had been received.
I advised management to liaise with Ministry of Public Service and harmonize
the gratuity rate to avoid legal conflict in future.
2.1.1.5 Property not transferred into the Commission’s names.
According to section 3 of the Equal Opportunities Commission Act 2007, the
Equal Opportunities Commission shall, in exercise of its functions be
independent and shall not be subject to the direction or control of any person
or authority.
However, it was noted that the Commission is occupying the premises and
using six vehicles registered in the names of the Ministry of Gender, Labour
and Social Development without a Memorandum of Understanding between
the two entities and this impairs its independence. This also makes it difficult
to pay utility bills, property tax as well as ground rent using the IFMS system
when the property is still registered in the names of the original owner.
I advised management to liaise with the Ministry and have the items
transferred into its names for ease of management.
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2.2 WORKS SECTOR
2.2.1 UGANDA NATIONAL ROADS AUTHORITY
2.2.1.1 Mischarge of Expenditure – UGX.3,501,412,816
Parliament appropriates funds annually in accordance with the needs of each MDA.
This appropriation is implemented through the budget in which funds are tagged to
particular activities and outputs using account and MTEF codes. Contrary to the
above; expenditure totalling to UGX.3,501,412,812 was inappropriately charged on
budget lines to fund activities that were not planned without authority.
I explained to management that mischarge of expenditure translates into
misrepresentation of expenditure balances in the financial statements and it is also
contrary to the intentions for which the funds were appropriated by Parliament.
In response management acknowledged the anomaly and committed that prior
approval for reallocation and virement shall be sought before any such expenditure is
incurred.
The outcome of management‟s commitment is awaited.
2.2.1.2 Upgrading of Mukono- Kyetume -Katosi/Kisoga –Nyenge Road
(74 Km)
On 15th November 2013, UNRA entered into an agreement with Eutaw
Construction Company Inc. of 622 Beach land Bivd Suite 201 Vero Beach Florida
USA for upgrading of Mukono- Kyetume -Katosi/Kisoga –Nyenge Road (74 Km) from
gravel to paved (Bitumen) for a contract price of UGX.165,272,156,814 including all
local taxes. Examination of expenditure vouchers showed that only
UGX.24,790,823,522 (15% of the contract price) was paid to the construction
company as advance payment. A review of the transaction details revealed the
following anomalies;
2.2.1.3 Limited Advertisement
Condition 4 of the Fourth Schedule of PPDA Act 2003 requires that open international
bidding shall be open to all bidders following public advertisement of a Bid Notice in
a publication of wide international circulation. Section 80 (2) of the PPDA Act 2003
provides that open international bidding is used to obtain the maximum possible
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competition and value for money where national providers may not necessarily make
this achievable. However a review of the procurement showed that the procurement
advertisement was run in Daily Monitor News Paper of Monday, April 2010.
There was no evidence that the procurement advertisement was put in the
foreign/international newspaper/media.
In the circumstances, there was non-compliance with the provisions of the PPDA law.
I advised management to always comply with the procurement law.
2.2.1.4 Performance guarantee
On 18th November 2013; UNRA received the contractor`s performance guarantee
from a local bank dated 13th November 2013. On the 19th November 2013, UNRA
management wrote to the contractor rejecting the performance guarantee on
condition that it was not consistent with the provisions of the contract data. A second
performance guarantee from the same bank dated 21st November 2013 was
tendered in by the contractor. On receipt of the performance guarantee, the Acting
Director Procurement wrote a memorandum dated 26th November 2013 to the
Director Finance and Administration (DFA) requesting him to verify the authenticity
of the performance guarantee and requested the DFA to inform them of the results
of the verification. The verification results were not presented for verification.
It is likely that the verification was not done. Paying out Government funds without
checking the authenticity and validity of the performance guarantee was risky and
could cause financial loss to Government.
In response, management explained that the Performance Guarantee was verified by
the DFA before payment was effected to the contractor and details regarding the
verification are under investigation by the IGG and Police.
I await IGGs and Police investigations on the matter.
2.2.1.5 Limitation in the Scope of Work - Due Diligence
A review of the correspondences on file showed that a due- diligence team was
appointed on the 31st October, 2013 to carry out legal establishment of the company
and examine the powers of attorney of the company managers. A review of the
correspondences seen showed that the due- diligence team highlighted that the
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findings were based on limitations of time and geographical location. I noted that
the team was given ten (10) days to carry out the due-diligence assignment and
were limited to information on the company`s website and other locally available
documents.
It was further noted that the team did not travel to Aberdeen Mississippi, United
States of America where the company was allegedly registered and hence did not
satisfy themselves as to whether the company existed and in operation. In the
circumstances, the due- diligence team was limited in scope. I could not rule out the
likelihood that the team did not carry out its assignment as expected.
Management responded that it was their expectation that the due-diligence report
would generate enough information for a decision to be taken. However, due to the
limitation of the assignment in terms of time and geographical location, only
preliminary findings could be obtained. It is now a requirement to carry out due
diligence on all major procurements and UNRA is currently implementing this
directive as directed by the Ministry of Finance, Planning and Economic Development.
I advised management to implement the recommendation of the Ministry of Finance,
Planning and Economic Development and all major projects to avoid such incidences.
2.2.1.6 Due Diligence Findings and Recommendations
The due diligence team submitted their report on 8th November 2013 to the Acting
Executive Director. However, during examination of the transaction details I noted
that some of the due-diligence team‟s findings and recommendations were ignored
by management. The due- diligence team noted some inconsistences with the
documentations of Eutaw Construction Company Inc, where it was highlighted that
the findings were preliminary and thus recommended for further investigations and
confirmation to be made before a final position could be reached.
The team further recommended that a physical verification should be undertaken on
the bidder‟s home country where the company was legally constituted through direct
contact with the relevant Government/State Agencies. The due diligence report was
dated 8th November 2013 and the agreement was signed on 15th November 2013. It
was evident that management ignored the findings and recommendations of the
due-diligence team by going ahead to conclude the contract.
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Further examination of correspondences on file showed that the Acting Executive
Director was directed to immediately sign the contract by the Hon. Minister of Works
in his letter dated 14th November 2014 while due- diligence was still being carried
out. I explained to management that signing the agreement while due-diligence was
still ongoing was irregular. Without a complete due-diligence; the competence,
existence and location of the company (contractor) could not be established.
The contract was therefore concluded and awarded without the physical verification
of the location of the company managers, and establishment of its competence
which was risky to Government.
Management stated that the issue is one of those under investigation by the IGG and
Police.
Results of the IGG and Police investigations are awaited.
2.2.1.7 Contract Manoeuvre by Eutaw Construction Company Inc. Florida
–USA
Examination of transaction details, showed that on 6th August 2013, Eutaw
Construction Company Inc. management (the “best evaluated bidder”) wrote to the
Minister of Works and Transport informing him of an offer of a discount of 15% of
the bid price of UGX.183,285,341,234. This price was however rejected and in his
letter dated 23rd August 2013, the Minister of Works and Transport informed the
company that the procurement law does not allow for counter offers after a bidding
process.
Further review of the agreement details revealed that management later entered into
an agreement at a contract price of UGX.165,272,156,814 far less than the bid price
of UGX.183,285,341,234 translating into a reduction in price of UGX.18,013,184,420
(183,285,341,234 – 165,272,156,814) which was 9.9% of the bid price. I could not
establish the cause of the reduction.
In response, management explained that the change in price was necessitated by a
change in the wearing course of the road project. At the time of bidding, it was
designed that the road would be of Asphalt Concrete (AC). However, overtime, UNRA
was informed by the Ministry of Works that there was a change of policy that all
roads out of the main corridor must receive a Double Surface Dressing Treatment
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(DSDT). A re-negotiation and re-computation of costs was undertaken and a
reduction of UGX.18,013,184,420 was achieved out of these changes.
I could not confirm the above position as the explanation was not supported.
2.2.1.8 Inconsistencies in the company that bidded and one that was
awarded the Contract
A review of the bid documents, the agreement and other transaction documents such
as the bid security and performance guarantee revealed the following
inconsistencies;
Bidding
While the company that bidded for the job was M/s Eutaw Construction Co. Inc.
of Aberdeen Mississippi; in his bid acceptance letter dated 7th November 2013
the Acting Executive Director wrote to the M/S Eutaw Construction Co. Inc. of
622 Beach land Bivd. Suite 201 Vero Beach Florida 32,963 United States of
America, a company that did not participate in the bidding process.
Contracting
While M/s Eutaw Construction Co. Inc. of Aberdeen Mississippi participated in
the bid process covering the whole procurement process, the contract was
awarded to M/s Eutaw Construction Co. Inc. of 622 Beach land Bivd. Suite 201
Vero Beach Florida which did not participate in the bidding process. This was
irregular.
Performance guarantee
While the Bid Security was issued in favour of M/s Eutaw Construction Co. Inc.
of Commerce St 109 W, Aberdeen Mississippi United States of America the
company that participated in the bidding process; the Bank Performance
Guarantee was issued in favour of Eutaw Construction Company. Inc. located on
622 Beach land Bivd. Suite 201 Vero Beach Florida 32963, United States of
America the company that did not participate in the bidding process.
It is evident that UNRA management dealt with two (2) companies at different
stages. Besides, there was no due-diligence carried out to confirm the legal existence
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and physical location of the company of both companies. Management responded
that this issue is under investigation by the IGG and Police. UNRA Board and indeed
the Police and IGG are in charge of these investigations and they shall take action
based on the findings.
I await IGG and Police investigations on the matter.
2.2.1.9 Unrecovered advance payment
Examination of expenditure vouchers showed that UGX.24,790,823,522 (15% of the
contract price) was paid to Eutaw Construction Company Inc. of 622 Beach land
Bivd. Suite 201 Vero Beach Florida USA on the 24th of January, 2014. However, I
noted that management had not made any effort to recover the money advanced
after the failed contract.
In response, management explained that the issue is under investigation by the IGG
and Police. UNRA Board and indeed the Police and IGG are in charge of these
investigations and they shall take action based on the findings.
I await the IGG and Police investigation on the matter.
2.2.1.10 Retendered works awarded to another company
During the review, I noted that on 12th January 2015, the same construction work of
Upgrading of Mukono- Kyetume -Katosi/Kisoga –Nyenge Road (74 Km) was
contracted to another company for a contract price of UGX.253,940,121,150. This
was far higher than the original contract price of UGX.165,272,156,814 in a failed
contract earlier awarded to Eutaw Construction Company Inc. of Suite 201 Vero
Beach Florida 32963 United States of America. This reflected additional spending.
Further a review showed that there was no valuation of the works done by the
former contractor to assess how much work had been executed and how much was
remaining to establish the basis for the negotiations of the contract price with the
new contractor.
In the circumstances, GOU/UNRA is likely to lose again on the works that were
already completed by the failed contractor Eutaw Construction Co. on top of the
unrecovered advance payment.
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In response, management explained that this was an admeasured contract and the
contractor will only be paid for the work they will have executed through proper
certification. Regarding recovery, the matter is before the Constitutional Court.
I advised management to ensure valuation of works executed by the failed
contractor (Eutaw) is carried out to aid the Board and other stakeholders to make
informed decisions.
2.2.1.11 Receivables held in ABC Capital Bank
The schedule of other receivables includes a figure reflected as Prepayments in ABC
Capital Bank of UGX.173,701,010. This amount has been held in ABC Capital Bank for
over a year under unclear circumstances. During the review, I noted that there were
been no significant steps taken to recover the money held since the previous audit.
In response, management explained that this amount was fraudulently transferred to
ABC Capital Bank with the assistance of some UNRA Staff members and officers
working with ABC Capital Bank. Police instituted investigations where suspects were
arrested. The investigations have not been concluded yet. UNRA management
engaged Bank of Uganda to recover these funds from ABC Capital Bank though no
progress has been made. This case is now being handled by the UNRA Legal
Department who are engaging police and the office of the Director of Public
Prosecution to conclude the matter.
The outcome of management‟s effort is awaited.
2.2.1.12 Budget Performance
Funds not Utilized
A review of the budgeted revenue and expenditure against the actual expenditure for
the year showed that management had budgeted to receive UGX.2,198,606,856,359.
However UGX.2,025,250,018,096 (92%) was spent, leaving UGX.173,356,838,263
(8%) of the funds available unutilized. I noted that the gap was an operational issue
caused by delays in procurement leading to failure to consume all the allocated funds
translating into underperformance.
Failure to utilize the available funds affects implementation of the planned activities
which could lead to failure to fulfil the Authority‟s mandate in the long run.
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In response, management explained that this was mainly due to procurement delays
in progress on the Gulu Atiak Road and Fort-portal Kamwenge road that are financed
by TSDP. Management further explained that out of the gross tax of UGX.10bn that
was budgeted, only UGX.1bn was utilized resulting in a shortfall of UGX.9 billion
(unspent).
I advised management to always plan adequately and ensure full utilization of the
available funds.
Uncompleted Activities/Programs
Review of the Authority‟s quarter four performance (cumulative progress report for
projects and programs) revealed that a number of Activities/Programs were not
completed during the year translating into underperformance as summarised below;
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Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
1 Project 1033:
Design Hoima -
Kaiso -Tonya
(85km)
Acquisition of Land
by Government
Since the project start
UGX.10.8bn has been
paid out of the valued
UGX.11.8bn which is
95% of the amount
approved.
There was a delay in
approval of valuation
report for extra land
take.
Management should
explain the causes of the
delay that could lead to
paying more and or face
litigation challenges.
The valuation report
commenced after a
design review and the
valuation and approval
depends on the office of
the Chief Government
Valuer who has a
national task of advising
on value. UNRA‟s
programs sometimes
delay because the entity
has to seek approval
before any land
acquisition can be carried
out.
National Road This project was The Project is behind Poor planning could lead
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Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
Construction/Rehab
ilitation (Bitumen
Standard)
expected to be
completed by
December 2014.
schedule because rock
excavation Km 57-59
long has taken longer
than was anticipated.
to payment of project
extension costs.
No management
Response given.
No management
Response
given
2 Project 1035:
Design Mpigi-
Kabulasoka -
Maddu (135 km)
1035
Acquisition of Land
by Government;
The verification of
PAPs (Project affected
persons) along the
project road and cash
compensation
Commenced.
There was a delay to
finalize the procurement
of works contractor for
Kanoni-Sembabule
section.
Management should
explain the causes of the
delay and what measures
have been put in place to
avoid such occurrences.
Procurement of the
Consultant was initiated
in 2011 but the process
was halted due to
insufficient funds for FYR
2012/13. When the
project was revived, the
contract had to go to the
SG for approval.
Meanwhile the Valuation
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Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
had expired because it
was done in 2012 so it
had to be updated before
paying to reduce on the
rejections by the Project
affected persons (PAPs).
4 Output 04 5105
Axle Load Control
Procure 2 mobile
weigh bridges- two
multi-deck platform
weighbridge scales
for Mbarara and
Luwero
Not delivered yet Procurement delays
Management should
explain the cause of
procurement delays yet
there is a directorate of
procurement in place.
Analysis of the dates
marking the major
milestones in the process
does not indicate major
delays except getting
SG‟s approval which took
two months. Foundations
built at Luwero and
Mbarara, installation of
equipment to be
completed by end of
March 2015.
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Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
Procure design and
build contracts of
parking yards for
four OSBPs of
Busia, Malaba,
Elegu and
Mutukula.
Not delivered yet Procurement delays
Management should
explain the cause of
procurement delays and
plans underway to
complete the activity.
Technical and Financial
evaluation report
submitted to PDU.
5 Output 4 5172
Government
Buildings and
Administrative
Infrastructure-
Draft Design of
UNRA Headquarters
Terms of reference for
the design
Services were
finalized.
The procurement
delayed to commence
because MoWT received
un solicited offer from a
developer to construct 3
Towers including a
UNRA tower.
Management should
explain the progress of
the delayed activity.
UNRA is using the design
and build approach to
procure a designer and
contractor at once to
save on the time of
implementation of the
works (save
approximately one year).
6 Project 0295
Upgrade Kampala -
Gayaza- Zirobwe
(44.3km)
18
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
Acquisition of Land
by Government
5.93 hectares of land
were acquired out of
the annual target of
17 hectares and spent
UGX.18.1 billion out of
UGX.21.7 billion
budgeted.
Delayed approval of
contract for extra land
take and injurious
affection, absentee land
owners.
Management should
explain the poor
performance and avail
the current progress
status for review.
The original contract did
not cover the additional
land requirement and so
a new contract needed to
be prepared. Since it was
beyond the allowable
25%, the method of
procurement changed
and a direct procurement
instead was sought. The
procurement is in
advanced stages and the
additional land will be
acquired. However the
absentee landlords are
still a challenge and the
Consultant under the
new Contract will make
an effort to trace the land
owners. If they fail, the
19
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
land will be subdivided to
create the title for the
road reserve. In the
meantime UNRA has
applied to the MoLHUD
for gazettement of this
road reserve to ease the
process of gazetting.
National Road
Construction/Rehab
ilitation (Bitumen
Standard)
The consultant
submitted the
Inception
Report. He
recommended a new
design because the
existing one was out-
of date after more
than 10 years.
The target was not met
because the scope of
services changed and
the contract had to be
amended which took
time.
Management should avail
evidence of the progress
so far registered and
plans underway to speed
up the process.
No evidence of progress
so far made availed for
verification.
No evidence of progress
so far made availed for
verification.
7 Project 0955
Upgrade Nyakahita-
Ibanda-Fort Portal
20
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
(208km)
Acquisition of Land
by Government
9.78 hectares of land
were acquired and
properties therein
compensated out of
the annual target of
45.
Targets were not met
due to the delayed
contract for injurious
affection and extra land
take.
Management should
explain the poor
performance and avail
the current plans for
review.
The target was set high,
but compensation by the
time of the Audit review,
most of the land had
already been acquired.
However there was need
for additional land
acquisition arising out of
extensive redesign of the
road for which a contract
is under procurement.
National Road
Construction/Rehab
ilitation (Bitumen
Standard)
Kamwenge - Fort
Portal 22.8% of the
works was completed
out of the annual
target of 25%.
The target for
Kamwenge - Fort Portal
road was not met
because of under
performance of the
contractor.
Management should
explain the penalties
charged against the
contractor.
No evidence of penalties
charged against the
contractor availed for
verification.
No evidence of penalties
charged against the
contractor availed for
verification.
21
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
8 Project 0957
Design the New
Nile Bridge at Jinja
Contractor is
mobilizing. Expected
to end in August 2014
and actual works to
commence then.
The target was not met
because procurement
delayed to be finalized.
Management should
explain the cause of
Procurement
inadequacies.
The key areas of delay
were because of the
need to seek approval
from the funding agency.
Secondly due to the
complex nature of the
procurement, the bid
submission deadline had
to be extended twice to
accommodate the
addendums and requests
for clarifications that
UNRA had to handle.
9 Project 1032
Upgrade Vurra -
Arua - Koboko -
Oraba (92km)
22
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
Acquisition of Land
by Government
63.08 hectares of land
were acquired and
properties therein
were compensated out
of the annual target of
200.
Land compensation was
affected by the delayed
approval of valuation
report for Municipality
section.
The audit noted lack of
follow up on this matter
to have accelerated the
delays. Management
should explain the
anomaly.
The valuation report
commenced after a
design review and the
valuation and approval
depends on the office of
the Chief Government
Valuer who has a
national task of advising
on value. UNRA‟s
programs sometimes
delay because the entity
has to seek approval
before any land
acquisition can be carried
out which was the reason
for the delay in acquiring
land.
National Road
Construction/Rehab
ilitation (Bitumen
Standard)
The cumulative
progress since the
start of the project
was 72.25% of the
Cumulative
achievement was lower
than the programmed
largely because of
Management should
explain the plans
underway to complete
the delayed activity.
No plans availed for
review during
23
Projects/
Activities
Status of
performance
Variance in
performance.
Audit Remarks Management
Response
works completed out
of the programmed
75.85%.
encumbrances caused
by delayed payment of
compensation.
verification.
10 Project 1034
Design of Mukono-
Katosi-Nyenga
(72km)
Acquisition of Land
by Government
There was no land
acquisition because
of the requirement of
TIN (Tax Identification
Number)
Payment was affected
by MoFPED requirement
that all PAPs should be
paid through IFMS and
must have TIN.
Management should avail
evidence that the
payment was effected.
Payment has since been
effected after MoFPED
relaxed the need for a
TIN before compensation
National Road
Construction/Rehab
ilitation (Bitumen
Standard)
Contractor
commenced
mobilization of
equipment and
personnel; and setting
up a camp to
commence works in
July 2014.
The target was not met
because of delayed land
and property
compensation.
Management should
explain why this was not
planned for adequately to
avoid the many claims
and ensure effective
service delivery.
No evidence availed for
review during
verification.
24
I noted that most of the delays as summarized above were not due to budget
shortfalls but other reasons revolving around delays in procurement, inadequate
planning and lack of follow up on compensations and valuations.
I advised management to always plan adequately, ensure effective collaborations
with other stakeholders early enough and enforce project monitoring and supervision
for effective service delivery.
2.2.1.13 Un-refunded borrowings from Kampala Station by UNRA Head
Quarter- UGX.232,022,599
Examination of records at Kampala UNRA Station revealed that UNRA Headquarters
borrowed station funds totaling to UGX.1,017,612,528 for various activities from
both cash drawings and Land Compensation Funds during the year. As at the close
of the financial year, UGX.785,612,528 had been refunded leaving a balance of
UGX.232,022,599 outstanding. I noted that out of UGX.1,017,612,528 borrowed,
UGX.557,983,140 was cash drawings for headquarter official use. I explained to
management that cash drawings of huge sums are risky and irregular and could lead
to misappropriation of Government funds. Besides; borrowings translate into
diversion of funds that are meant to clear other planned activities for the year.
In their response, management explained that expenses worth UGX.1,017,612,528
were incurred by UNRA Kampala Station on behalf of UNRA Headquarters. These
borrowings were short term interventions undertaken for urgent critical activities
where UNRA Headquarters was unable to process immediate payments, but were
approved by the Accounting Officer or Director Finance and Administration. All
borrowings were refunded to the Station. The outstanding balance of UGX.232
million at the time of audit will be refunded during the Financial Year 2014/15.
I advised management to refund the remaining balance to Kampala station and also
to reduce on cash transactions.
2.2.1.14 AUDIT INSPECTION OF STATIONS
As part of the audit; inspection of the UNRA stations was carried out and below is a
summary of the findings;
Mpigi Station
25
a) Tractor tyres due for disposal
Inspection of station stores revealed that there were new tyres of size 9.5 -24 (15
tyres and 7.5 – 18 (16 tyres) that have been kept in store for more than 10 years.
According to management and review of stores ledgers, the tyres were for the
tractors which were used by the Ministry of Works and Transport and were left in
stores when the station was handed over to UNRA.
Given the size of the tractor tyres, they were occupying almost half of the stores
space and thereby limiting the storage capacity of the station store. There is a risk
that the tyres could get stolen and or expire leading to loss of value that would
accrue to UNRA arising from an early disposal. Management responded that the
supplies officer was notified about the tyres and arrangements for their disposal are
being finalized at head office.
I await the outcome of management action.
Kasese Station
a) Missing confiscated bitumen – 24 drums
A review of stores ledger and physical count done on the 03/12/2014 revealed that
Bitumen had a ledger balance of 58 drums. However, physical count revealed that
there were only 35 drums of bitumen at the station goods yard, an indication that 24
drums were missing.
According to management, the 24 missing bitumen drums were confiscated by the
Chinese who were escorted by Uganda Police to the station premises. Further review
showed the following observations:
The Police or the Chinese Nationals did not leave behind any documentary
evidence that they had confiscated the 24 drums of bitumen;
It was not clear why the two correspondences from UNRA to the Regional CIID
Fort-portal were signed by UNRA station store keeper on behalf of the Station
Engineer but not the Station Engineer himself as the station Accounting Officer;
The first communication from UNRA Kasese station to Regional CIID Fort-portal
was made on 10/09/2014 meanwhile, correspondences on file showed that the
26
drums of bitumen were confiscated in September 2012 implying that the station
management spent two years without following the matter.
Although the two correspondences available were from UNRA Kasese station to
the Regional CIID Fort-portal through the District Police Commander Ntoroko
District, there was no evidence that the communications actually reached the
Regional CIID Fort-portal.
The station lost 24 drums of bitumen reportedly confiscated by the police/Chinese
firm. I noted that there was laxity on the part of management in following up the
matter that led to loss of station materials and besides the loss was not captured in
the financial statements.
In response, management explained that a warrant of search document was
produced and the confiscated bitumen was witnessed and signed off by Police.
Management indicated that they are following up the matter with Regional CIID Fort
Portal to cause recovery of the bitumen.
I advised management to follow up the issue with police and ensure recovery of the
bitumen.
Moyo Station
a) Lack of pre-inspection report on the former ferry and related issues
UNRA procured and installed a new ferry at Laropi Ferry Landing site replacing the
old ferry that was in use before. During the review; it was established that the older
ferry was dismantled and the following anomalies were noted;
The Moyo Station management did not have documentary evidence concerning
the dismantled ferry. I could not therefore establish who authorized dismantling
of the former ferry. Besides; there was no documentary evidence in form of a
report on the list of the parts of the ferry that were removed as they dismantled
it.
I established that the ferry parts were left in different locations. Some box parts
of the ferry were at Laropi Landing site and others put apart were at UNRA Arua
station parking yard as shown in the photographs below;
27
Below: Parts of the old Ferry that were left at Laropi Landing site.
Below: Some of the parts of the old ferry that were transferred to UNRA Arua station
parking yard.
There were no documentary evidence of delivery and receiving of the ferry parts
at the Arua station hence parts were not taken on charge.
During the review, I could not trace the engine of the former ferry. According to
the Manager Ferries at UNRA headquarters, the ferry engine was at Luwero
UNRA station for repair however; there was no documentary evidence of the
engine movement. In the circumstances, it is possible that some portable parts
of the ferry could have gotten lost through theft as the ferry was being
dismantled.
The ferry parts left at the Laropi Landing Site unattended to could easily get
picked by scrap dealers and or sold off without authority.
I explained to management that the ferry engine is highly susceptible to
misappropriation. In response, management explained that the schedule of all the
parts is available and that the overall report is being compiled for verification.
28
I await for the final report for verification.
b) Hiring of Road equipment by the stations - UGX..5.2bn
During the review, it was noted that the Stations hire privately owned equipment like
motor graders, Bull dozers and Water Bowsers for carrying out road maintenance
work. I noted that the hiring of the privately owned equipment is a result of the
stations running and operating old and inadequate road equipment which is always
breaking down.
During the year under review, the stations spent UGX..5,264,577,411 on hire of road
equipment units. I explained to management that hiring of privately owned
equipment is expensive and does not seem to be sustainable at the current rate.
There is a possibility that this may result into the UNRA failing to maintain its own
equipment.
In response, management explained that hiring of equipment has steadily reduced
with increased equipment availability and receipt of new equipment. Management
was optimistic that by the beginning of the financial year 2015/16, UNRA will have 72
new earth moving equipment and 88 new trucks. It is anticipated that this equipment
fleet would be adequate for UNRA‟s maintenance needs. Management further
indicated that the procurement of equipment is in advanced stages and some
consignment has been received.
Management action on the matter is awaited.
2.2.1.15 Delayed delivery of 5 Motor Graders
A contract for the supply of Earth Moving Equipment – (16 Motor Graders) at a
Contract Price of JPY 288,000,000 (Japanese Yen Two hundred eighty eight million
only) was entered into on 18th June 2014 and the delivery period was stated to be
within 5 months after contract signing (end of November 2014).
Inspection of the UNRA Mpigi station yard on 10th February 2015 confirmed delivery
of eleven (11) Motor Graders while five (5) of them had not been delivered. A Letter
of Credit (LC) of JPY 192,960,000 in favour of the supplier was opened on 9th
29
December 2014. There was no follow up on the delays besides, no reminders were
seen on file. I explained to management that delayed supply of the Motor Graders
affects the operations of UNRA programs.
Management explained that 13 graders out of 16 have so far been delivered at Mpigi
UNRA Stores while the balance of 3 graders is awaiting tax clearance.
I advised management to follow up the undelivered graders and have them
delivered.
2.2.1.16 Staff Establishment Gaps
The Authority‟s approved staff structure shows 1,109 approved posts. However,
during the review, I noted that only 1,011 (91%) were filled leaving 98 posts (9%)
vacant as summarized below;
Directorate Approved Filled Vacant
Directorate of Internal Audit 16 6 10
Directorate of Finance and Administration 309 291 18
Directorate of Operations 704 645 59
Directorate of Planning 29 28 1
Directorate of Projects 23 21 2
Directorate of Procurement and Disposal 18 15 3
Total 1,109 1,011 98
The unfilled posts impact negatively on the Authority‟s service delivery.
Management responded that they have liaised with the Ministry of Finance and the
UNRA Board to address the existing staffing gaps. The Board has initiated the
restructuring process to establish the critical numbers required for proper functioning
of UNRA and once the process is concluded, further consultations and approvals shall
be sought from Ministry of Public Service and Ministry of Finance and the gaps shall
be filled.
Results of management‟s commitment are awaited.
30
2.2.1.17 Payment without a valid contract - Supervision of works along
Atiak-Moyo-Afoji Road
On the 13th December 2010, UNRA signed an agreement with a consultant for the
provision of Consultancy Services for Supervision of Construction of Bridge
Structures, Box Culverts and Ferry Landing Sites along Atiak-Moyo-Afoji Road for a
contract price of UGX.826,800,000 or such other sum as may become payable under
the provision of the contract, at the times and in the manner prescribed by the
contract for a contract duration of 26 months that commenced after 30 days from
the date the contract was signed i.e. 13th January 2011 (the contract started).
During the review; I noted that the contract lapsed on the 13th March 2013 and
UNRA wrote to PPDA on 10th of June 2013 in addendum No.1 requesting for approval
of the additional costs and the PPDA in their letters dated 16thJuly 2013 and 1st
October 2013 rejected the approval on the following grounds among others;
The contract variation of UGX.1,059,200,000 for 18 months an equivalent of
128% increment of the original contract price was higher than the initial contract
value of UGX.826,800,000 for 24 months,
In light of the fact that the civil works contract expired, the entity‟s request for
extension of the consultancy services for 18 months to supervise works during
the liquidation period does not amount to value for money;
The consultancy services contract expired on 13th March 2013 and UNRA
submitted its request to PPDA to extend the contract three (3) months after the
expiry.
Although PPDA rejected the extension of the consultancy contract agreement;
UNRA continued paying the consultancy firm long after the expiry date of the
contract. I noted that though the contract price was UGX.826,800,000, the
consultant was paid a total sum of UGX.1,687,819,070 implying that
UGX.861,019,070 was paid over and above the agreeable contract price as the
contract had not been renewed.
In response, management explained that the Consultant was contracted to supervise
construction of bridges and box culverts works along the Atiak-Moyo-Afogi road
31
under a time based Contract and while works were expected to be completed in a
period of 18 months, actual completion took a period of 32 months and the
consultant continued to supervise these works. The supervision contract provided for
such circumstances since it was a time based contract.
I advised management to always observe the PPDA law.
2.2.1.18 Engineering Audit Findings
Engineering audits were carried out on roads constructed by the Authority during the
year. Below are the key audit findings of the audits:
a) Inadequate planning
In the estimation of the total contract price for the Kampala – Entebbe Expressway,
the capping layer was costed at $32,240,000 almost the same amount as for the sub
base ($33,320,000). This assumes that wherever there is a sub base there will be a
capping layer underneath yet some sections may not need the capping layer that is;
where the sub grade meets the strength requirements to support the sub base. It is
important to note that besides strengthening weak sub grades, capping layers also
saves the cost of the sub-base. This makes the cost of the capping layer
unrealistically high (exaggerated). As the contract progresses UNRA should take keen
interest in the application of the capping layer given its potential for cost savings.
There are cases of heavy investments being incurred on maintenance of some roads
which are earmarked for full rehabilitation in the near future for example Kawempe –
Kafu is undergoing an Asphalt Overlay even when it was advised in the FY 2008/09
audit report that this intervention should not be undertaken since the resealing works
including some rehabilitation was just being implemented then. The works had then
been estimated to give the road 4-5 years and audit tests conducted had confirmed
that the base was weak in some sections thus not warranting an overlay to be placed
but to wait and plan for a full rehabilitation after the design life (4-5 years). This
weakness in planning is costing Government not less than UGX.140.5 billion for the
works as well as UGX.13 billion for variation of Price, US$ 2,937,714.2 plus
UGX.1,538,702,752 for the supervising Consultant. With better planning this amount
would have been utilized to kick start the full rehabilitation of the road which in the
32
long run would have saved government a substantial part of the rehabilitation cost
currently estimated at UGX.380 billion for the 160kms.
Inadequate planning in the procurement process and poor keeping of contract
management records was observed. The procurement process has continued to lag
sometimes to as long as 2 years from the time of bidding to the time of award of
contract. This has an effect on the parameters (Current /Base indices) used in the
computation of VoP (Variance on price) and in the case of periodic maintenance, the
delay results in further deterioration of the roads which in turn increases the scope of
works. The procurement of the supervising consultants after the contractor had
been identified was observed in a number of contracts. For example for design and
built of Mbarara – Kikagati road, initiation of procurement of the supervising
consultant was done one year and two months after securing the Design and Build
contractor. In the case of Kawempe-Kafu, the consultant was engaged 4 months
after the contractor had mobilized and this resulted in payment of a claim worth US$
3.2 million for idle plant and equipment.
UNRA should improve on the planning and procurement mechanisms to ensure that
activities are implemented timely to avoid loss of funds.
b) Costs of road construction
It was noted that there was inadequate cost control of projects characterised by
UNRA‟s inability to verify contractors‟ bids because of absence of unit rate
breakdown. Due to lack of cost control during tendering and award of contracts, the
costs of construction for a number of projects have continued to be high. For design
and built contracts there was no basic data for conducting preliminary designs and
hence no breakdown of the cost estimates is given. Contractors‟ resources to match
the volume of work were not usually provided and this led to unrealistic work
programmes that caused delays in completion of works.
The Accounting Officer explained that in a bid to improve on cost control, UNRA had
developed a contract management system which among others provides adequate
information on unit breakdown. Regarding bid submission all bidders are required to
avail the breakdown of their unit rates.
I expressed to the Accounting Officer the need to;
33
Exercise more cost control in road constructions by ensuring that unit rate
break downs in contractor‟s bids are clearly detailed and available to enable
objective and fair evaluation of contractor‟s bids.
Ensure that detailed and accurate work programs and resource inputs are
available for all contracts including the design and build.
Assess the performance and adequacy of the newly implemented Contract
management system in addressing cost control.
c) Delayed completion of works
Whereas UNRA had greatly improved in completing a number of projects within
expected durations, there were still some projects which were lagging behind
programme. By the time of audit inspection, the Kampala-Entebbe Expressway had
lost 9.54% of the project time, Vurra – Arua – Koboko project, Gulu – Atiak, Ishaka –
Kagamba and the Kawempe – Kafu overlay were all lagging behind completion
targets.
The Accounting Officer explained that delays in completion of works were mostly
caused by land acquisition challenges where UNRA has no direct control. However,
discussions with relevant authorities such as Ministry of Lands and Housing, Ministry
of Finance, Planning and Economic Development and Ministry of Justice were
underway to explore lasting solutions for land acquisition.
I advised the Accounting Officer to institute a comprehensive investigation into the
causes of delays of completion of works and set up the appropriate remedial
measures.
d) Delayed compensations for the Right of Way (RoW) on a number of
Projects
It has continued to be observed that there are a number of cases where contractors
have been asked to commence works when full compensation for the RoW has not
been completed. Disputes had emerged and the delayed compensations had caused
the works to be equally delayed with additional costs being incurred on the projects
in form of prolongation costs, costs on Variation of Prices (VoP) and maintenance of
Consultants on site. UNRA was not exerting enough effort in ensuring the
compensations disputes that exist are timely resolved and the RoW given to the
34
Contractor. Projects which have suffered such delays included Vurra – Arua –
Koboko, Kawempe – Kafu and Ntungamo – Kabale – Katuna.
The Accounting Officer explained that compensation delays were mostly caused by
land acquisition challenges where UNRA has no direct control.
I advised the Accounting Officer to ensure that;
Commencement of works by contractors on road projects is undertaken when all
compensation of persons on ROW has been carried out where possible.
For future projects, more control should be exercised in the compensation
process by early engagement and follow up with relevant authorities such as
Ministry of Finance, Planning and Economic Development, Ministry of Lands,
Housing and Urban Development and Ministry of Local Government.
e) Substandard works leading to defects
A number of defects were observed on projects which were a result of poor
workmanship by the contractors; these include asphalt failures, scouring of the stone
base and broken culverts. Specifically for asphalt failures noted on Lot 3 Rwentobo –
Kabale–Katuna road, and the Kawempe – Kafu Overlay, contractors were still on site
and repairs were being done.
Tests conducted on asphalt cores on the above roads as well as Mbarara-Kikagati
road, and Ishaka-Kagamba road failed the Indirect Tensile Strength test (ITS) i.e.
results showed values lower than the specification of 800kPa. This implies that the
pavements are susceptible to: longitudinal cracking, moisture related deterioration,
stripping and rutting. Low ITS also leads to micro cracks resulting from early cooling
of materials during field placing and compaction.
It was not clear whether the asphalt being used for the on-going repairs of failed
sections met the specifications and whether there was no need to replace the entire
stretch of which the same asphalt material was used in the first place.
The Accounting Officer explained that all asphalt constructed fully complied with the
specifications required. However of late, some distress was experienced along the
constructed asphalt sections and the possible causes were under investigations with
the view of determining the appropriate remedial measures. Regarding the failed
tests, he promised to follow them up with a view to taking the necessary corrective
measures.
35
I advised the Accounting Officer to;
Investigate the causes of Asphalt failures on the specified roads and carry out
necessary measures to rectify the defects and ensure the desired quality based
on the road design specifications is achieved.
Hold the contractors liable for rectification of defects pursuant to the
requirements of the Defects Liability Period clauses.
f) Irregular Payments –(Loss, Likely Loss and Nugatory Expenditure)
A review of payment certificates revealed irregularities related to payments for works
not executed, payments for defective works and payments that could have been
avoided with better procurement planning and contract management. The likely
losses will crystallise into losses unless management takes measures to have them
recovered. The table below shows the irregular payments noted for the projects with
the “likely losses” (UGX.45,315,967,993, USD.1,848,205 and Euro.68,558) losses
amount to (UGX.300,279,163 and Euro.66,698) and “nugatory expenditures” amount
to (UGX.2,464,934,174 and USD.3,663,761).
36
Road Contract Irregularity Likely Loss Loss Nugatory
Design and Build of Kampala –
Entebbe Expressway at
USD.479,172,021
Improper application of the VoP formula. $68,558
Design and Build of Mbarara-
Kikagati – Murongo Bridge Road
Works from Gravel to Paved
(Bitumen Standard) at
UGX.178,227,299,491
Changes in preliminary design vs actual
constructed pavement yet the costing was based
on the preliminary design. UNRA disregarded
PPDA condition for unentitled benefit of this
amount to the contractor.
UGX. 25,830,786,648
Failure to apply currency correction factor in the
computation of VoP.
UGX.16,999,819,835
Upgrading of Vurra – Arua –
Koboko – Oraba Rd to Paved
(Bitumen) Standard – 92Km by M/s
CICO at UGX.138,861,458,345
Poor planning and delay by NEMA in assessing the
impacts on the Rokoze stone quarry leading to
contractor‟s claim.
UGX.1,840,314,546
Asphalt Overlay of Kawempe -
Kafu2 at UGX.140,556,490,385
Prolongation costs-
Claim for contractor‟s idle plant and equipment for
4 months following a change of name of the
Consultant.
$3,213,876
2 The entire project costs worth Shs.140,556,490,385 for the works, 13bn for VoP, US$ 2,937,714.2 plus UGX. 1,538,702,752 for the Consultant is a waste of the taxpayers’ funds
since this intervention was not called for.
37
Road Contract Irregularity Likely Loss Loss Nugatory
Interest on delayed payments UGX.624,619,628 &
$449,885
Asphalt defects UGX.16,771,245
Reconstruction of the Mbarara –
Ntungamo – Kabale – Katuna
Section of the Northern Corridor
Route Lot No.3 (Km 95+000 – Km
150+000) at Euro 65,808,558.09
The price of materials, Po used in RoP calculation
was not justified.
€154,955
Lack of Right of Way-Claim by contractor for lack
of access to site.
€66,698
Defective Asphalt €1,693,250
Civil Works for Upgrading of Ishaka
– Kagamba road to bituminous
standard (35.4Km) at UGX.
112,718,570,492
Extra Road width overpaid UGX.214,652,426
VoP overpaid due to errors. UGX.161,276,564
Upgrading of Gulu-Atiak Road to
Paved Bitumen Standard (74Km) at
UGX.89,667,759,288
Liquidated damages-Contractor not charged
liquidated damages
UGX.1,928,828,025
Periodic Maintenance of Muhanga –
Kisiizi – Kebisoni Rd (61Km) at
UGX.2,775,586,000
Mitres, culvert end structures, stone pitching and
gravel not executed
UGX.195,93
2,1
75
Periodic Maintenance Rukungiri- Overpayment in pipe culverts and gravelling UGX.9,502,
38
Road Contract Irregularity Likely Loss Loss Nugatory
Mitaano-Kanungu (44Km) at UGX.
1,965,727,500
works. 250
Periodic Maintenance of Kazo –
Buremba – Nyakaliro (33Km) and
Nyakaliro – Kyegegwa (53Km) at
UGX.3,276,665,000
Liquidated damages not charged to contractor UGX.163,833,250
Emergency Repair of Karamoja
Flood Damaged Roads: - Package
3; Moroto (Ariamoi) – Lopei –
Kotido Road (102Km) at
UGX.2,031,200,000
Uncharged claim for non-completion of works UGX.63,935
,25
0
Gravel thickness UGX.12,909
,48
8
No evidence that the drift works were performed
by the contractor.
UGX.18,000
,00
0
Totals $68,558
€1,848,205
UGX.45,315,967,993
€66,698
UGX.300,279,16
3
$3,663,761
UGX.2,464,934,174
39
I advised the Accounting Officer to:
Review the IPCs and investigate the irregular payments for works not executed
and payments for defective works; in addition enhanced monitoring and
supervision of works being executed be undertaken;
Ensure that for the defective works already identified remedial measures should
be undertaken by the contractor before works are handed over to ensure the
desired quality of works is maintained.
Ensure the likely losses are investigated and appropriate action taken.
Nugatory expenditures should be avoided by improved planning of road
activities; UNRA should liaise with all other Government Departments that are
partners in the road works like NEMA, MoFPED, MoLH, MoJ etc. to come up
with remedial measures for the challenges prevalent in their supporting role to
UNRA.
g) Variation of prices / revision of prices
It has been observed that although UNRA has streamlined VoP clauses in the
current contracts, more still needs to be done. Contractors state in their appendix
to the tender documents the sources of their inputs and thus indices but during
execution of works these sources have changed without changing the source of the
indices which should not be allowed. This leads to unrealistic VoPs being assessed.
It was also observed that most Chinese Contractors use CEMAC indices for inputs
presumed to be purchased from China. These indices are not easily accessible by
the public and thus cannot be relied upon. The process of obtaining these indices
is difficult, not transparent and they involve re-basing for each contract which is not
an internationally adopted method.
Also noted was the mis-application of the VoP formulae where currency conversion
factors should apply to elements whose currency is different from the currency of
the formulae of payment. This non-compliance was observed in respect of the
Mbarara-Kikagati road where UGX.16,999,819,835 and Kampala-Entebbe
Expressway Projects where $68,558 had been over-certified respectively. For
40
Kagamba-Ishaka road, UGX.161,276,564 was over-certified as a result of errors
involving wrong euro exchange rate and only IPC No.10 was reviewed implying the
errors could be spread in earlier IPCs. For Mbarara-Ntungamo-Kabale-Katuna Lot 3,
€154,955 was over-certified as a result of use of unjustified factor for price of
materials at base.
The Accounting Officer explained that a lot of improvements had been made in the
VoP provisions and applications under the contracts. Furthermore whereas it is
possible to dictate the sources of indices for contracts fully financed by Government
of Uganda, for those funded by other stakeholders as World Bank, European Union,
ADB, JICA and Islamic Bank, the institutions prefer to leave the sources open to the
bidder. As an improvement, UNRA had proposed imposing a cap on VoP under
contracts to a maximum of 20% of the contract value. Regarding CEMAC indices,
he explained that UNRA was increasingly rejecting sources of indices that cannot
easily be accessed and verified.
I advised the Accounting Officer to;
Exercise more due diligence when evaluating bids and ensure that sources for
materials for intended works are accurately detailed and documented as this
will be a source of reference by the contractor when acquiring materials.
Task the contractors to detail the sources of indices used in the works contract
and ensure they are transparent and readily available to facilitate fair and
realistic computation of VoP; CEMAC indices be made readily available and
accessible for realistic VoP compensations if they are to be consistently used by
the Authority indices from National Bureau of Statistics of the source countries
be applied.
Ensure that for contracts where misapplication of the VoP/RoP formulae has
been done, corrections be made in upcoming IPCs and recoveries made.
41
h) Variation of price reconciliations on previously audited Contracts -
UGX. 34,575,679,456
Variation of Price was reviewed for 9 previously audited contracts on
recommendation by the Parliamentary Public Accounts Committee following
disagreements by UNRA. Out of a review of certified IPCs with errors and
subsequent joint re-computations with UNRA a total of UGX.34,575,679,456 in
VoP errors was established. The table below shows a summary of the reconciled
position:
S/No Project Title IPC
R
e
f
Value of Work VOP Jointly
Recomputed
(OAG/UNRA)
VoP % Recoverable
Amount
1 Fort Portal
Bundibugyo – Lamia
Road
45 UGX.217,648,455,701 UGX.77,798,990,19
9
35.75 UGX.21,577,696,52
2
2 Bugiri – Busia/Malaba 2 UGX.109,388,732,415 UGX.73,370,228,86
4
67.07 Nil
3 Nyakahita – Kazo
Road upgrading
project
31 UGX.133,137,332,394 UGX.25,560,471,58
6
19.20 UGX.8,106,545,320
4 Kazo – Kamwenge
Road upgrading
project
35 UGX.168,337,116,650 UGX.39,628,443,93
1
23.54 UGX.2,731,287,220
5 Soroto – Dokolo road
upgrading project
29 UGX.76,235,532,471 UGX.21,710,252,84
4
28.48 UGX.(291,296,627)
6 Dokolo – Lira road
upgrading project
26 UGX.94,749,247,587 UGX.24,601,676,80
7
25.97 UGX.1,276,255,648
7 Reconstruction of
Kampala – Mbarara
Northern Corridor;
Package C: Nsangi-
Kamengo; Lukaya-
Masaka & Katonga
Bridge.
34 €59,164,061.84 €19,194,248.38 32.44 Nil
8 Kabale – Kisoro –
Bunagana – Kyanika
68 UGX.184,572,534,677 UGX.68,925,843,79
7
37.34 UGX.883,894,746
42
S/No Project Title IPC
R
e
f
Value of Work VOP Jointly
Recomputed
(OAG/UNRA)
VoP % Recoverable
Amount
road upgrading
project
9 Package 1, BRMP Lira
– Karuma – Kamdini
Road
12 UGX.22,018,002,428 UGX.12,882,513,42
5
58.51 Nil
Total Recoverable VoP UGX.34,575,679,45
6
i) Environmental and social safeguards, and occupation health and
safety
It was observed that safety gear was in place on most of the project sites but
enforcement of their use by workers was lacking. Road safety warning signs during
and after constructions were found inadequate and the reason given by UNRA has
always been vandalism.
Also noted was grassing of slopes not being taken account of in some contracts like
Mbarara-Kikagati-Murongo which will lead to severe erosion of the slopes and thus
increases maintenance costs of clearing drains.
For Vurra – Arua – Koboko road, at all bridge locations, walkways were constructed
and encroached on the carriageway width which is very likely to cause accidents
because of a constriction created at these points despite the carriageway width of
6.5m being maintained. On the same project, costs were incurred due to delays in
NEMA approving the use of a stone quarry for project works.
The Accounting officer explained that, social safeguards matters along the roads
under review shall continue to be vigorously monitored.
I advised the Accounting Officer to
43
Sensitise the communities living alongside the roads on road safety measures
to avert vandalism of temporary and permanent road safety and informative
signs; UNRA project sociologists during constructions should spear head the
sensitisations and work hand-in-hand with Road Committees instituted and
governed under the Uganda Road Fund Act.
Ensure that Social Safeguards are taken seriously on road works and for the
case of bridge constrictions along Vurra-Arua-Koboko road, speed humps be
placed to minimise the chances of accidents.
j) Contracts management
Weaknesses still exist in the supervision and monitoring of works contracts by
UNRA. It was observed that there is frequent change of key consultant‟s staff on
some projects for example; Gulu-Atiak and Entebbe Expressway, on some periodic
maintenance contracts for example; Muhanga – Kisizi – Kebisoni and Rukungiri –
Mitaano – Kanungu, the consultant changed staff without notice but when UNRA
learnt about it, the staff were approved retrospectively without penalizing the
consultant. This affects project outputs both in terms of quality and time.
Irregular use of PPDA guidance on Jinja- Kamuli road for introduction of Price
adjustment Clause on the contract for Kafu- Kawempe road also shows weakness in
contract management. The project managers/supervisors lack adequate skills for
effective management of contracts.
I have advised the Accounting Officer to effectively implement the skills training
programme instituted for project managers/supervisors for proper management of
contracts to foster Value for Money in the undertakings. The merit of introduction
of VoP on Kawempe – Kafu road contract should be assessed by PPDA and general
advice sought for future contracts.
k) Summaries of key findings per project
The table below shows the summary of key findings for each of the projects
audited for FY 2013/14. The details of corresponding management responses and
audit comments are presented in the detailed engineering audit report:
44
S/n Road Contract /
Contractor / Amount
Key findings
1. Design and Build of
Kampala – Entebbe
Expressway (51.4Km) by
M/s China Communication
Construction Company
Limited (CCCC) at
USD.479,172,020.74
The Capping layer was costed at $32,240,000 almost the same amount as for the sub base ($33,320,000) yet some sections with strong enough subgrade may not need the capping layer.
Works running behind schedule with 9.54% of the time lost as of August 2014.
Delayed settlement of disputes for RoW compensations hence delaying the contractor with possible costs in claims.
Three cracks were observed on the abutment wall for the underpass at Km 5+810.
There was a crack on the wing wall for the underpass at Km 18+345
Enforcement of use of safety gear by workers was lacking.
CEMAC indices from China used cannot be easily accessed and were found to vary widely across projects.
In the Price adjustment foreign currency formula, no currency conversion factor is applied for Reinforcing steel which is purchased locally in Uganda resulting in an over-certification of $68,558.08
2. Design and Build of
Mbarara-Kikagati –
Murongo Bridge Road
Works from Gravel to
Paved (Bitumen Standard)
by M/s China
Communications
Construction Company Ltd
at UGX.178,227,299,491
Inadequate cost control of the project because of absence of unit rate breakdown and resources to monitor performance.
Procurement and Contract Management records not poorly kept and some missing.
Poor planning in the procurement process characterised by:
i. Placing of the notice for prequalification of D&B contractor before approval of both the procurement method and the prequalification document.
ii. Absence of key background data in the bid documents issued later, prolonging the procurement period.
iii. Initiation of procurement of the supervising consultant one year and two months after securing the D&B contractor;
iv. Direct procurement of the consultant to carry out feasibility studies for collecting the background information hence eliminating competition.
Potential savings of UGX.25,830,786,648 not claimed by UNRA from the contract in line
45
S/n Road Contract /
Contractor / Amount
Key findings
with PPDA advice, following changes in the preliminary design as compared to actual implemented design.
Un necessary inclusion of UGX.1,926,705,095 in the contract for construction of houses, laboratory and offices for the supervisor‟s representative.
At some locations where stone pitching was done, it was not laid up to the shoulder. The surface dressing works on access roads was not properly done. Culvert end wall structures on most access culverts were found to be poorly done with
headwalls lower than that of the road surface. Localised under-scouring of the bases of the side drains. Some concrete access culverts were found broken. Premature termination of lined drains in several locations. No adequate provision for access culverts to private premises especially in Urban areas.
Grassing of slopes was not included in the detailed design and not done. Overpayment of UGX.16,999,819,835 in VoP due to failure to apply the currency
conversion factor.
3 Upgrading of Vurra – Arua
– Koboko – Oraba Rd to
Paved (Bitumen) Standard
– 92Km by M/s Chongqing
International Construction
Corporation (CICO), China
at UGX.138,861,458,345
Environmental and social safeguards not properly addressed prior to commencement of works causing claims for extension of time with costs of UGX.1,840,314,546.
Bleeding observed on the Vurra junction and on approaches to speed humps. Crushed stone base was scouring around headwalls of access culverts. Poor Workmanship of at Km 89+050 for the first seal without repairing damaged primed
base course. Extensive cracking of the polymer modified concrete surfacing at Vurra. The parking lots in Arua town considered for DBST instead of concrete; Inferior quality mortar was being used for some lined drains.
Some access culverts laid without sealing the joints and not properly aligned. At Ch.29+691 cross culvert, the pitching stone work protection had failed. Concrete spalling and honey combs on abutments for bridge at Ch.26+850. At Km 79+937, the horizontal alignment for the curve was twisted and is likely to cause
accidents.
Walkways on bridges were constructed and encroached on the carriageway width and
46
S/n Road Contract /
Contractor / Amount
Key findings
likely to cause accidents unless speed on approaches is checked.
Inadequate warning signs where works were on-going and /or stalled. The workers crushing stones for pitching works had no safety gear. Delayed works at Ch.26+850 and Ch.17+500 due to compensation related disputes.
This will lead to increased project costs in claims.
4 Asphalt Overlay of
Kawempe – Kafu Road
(166Km) by M/s
EnergoprojektNiskogradnja
at UGX. 140,556,490,385
Nugatory expenditure of USD 3,213,876 for idle equipment & plant. Delayed completion of works by the contractor for over 10 weeks without the employer‟s
intention to charge for delayed damages.
Nugatory expenditure of UGX.624,619,628 & USD 449,885 as Interest on delayed payment of Interim Certificates.
Lack of Clearance of addenda no. 1 for service Contract by the Solicitor General. Irregular use of PPDA guidance on Jinja- Kamuli road for Introduction of Price
adjustment Clause resulting in payment of UGX.13,210,451,347 so far. There was bleeding, hairline cracks & longitudinal cracks in asphalt, and heaving. Siltation and vegetation growth along the lined drainage channel at Ch.52+820. Transverse and longitudinal construction joints without warning signs. At Ch.135+300, the thickness of asphalt was 55mm instead of 65mm specified.
UGX.16,771,245 at stake to be lost due to defective asphalt sections. Unreliable indices for bitumen in computation of VoP. Notwithstanding to the above findings, disregarded a recommendation in the FY 2008/09
audit report to defer application of the overlay since underlying layers were weak; more than UGX.140,556,490,385 is to be spent yet the works have shown signs of distress.
47
S/n Road Contract /
Contractor / Amount
Key findings
5 Reconstruction of the
Mbarara – Ntungamo –
Kabale – Katuna Section of
the Northern Corridor
Route Lot No.3 (Km
95+000 – Km 150+000)
by /s Reynolds
Construction Company
(Nig) Ltd at Euro
65,808,558.09
Poor record keeping by PDU. Deficient detailed breakdown of prices submitted by RCC.
Unjustified inclusion of transport costs, losses, taxes and duties in Po in the application of RoP resulting in Euro.154,955 over-certified.
Financial loss of EUR 66,698 cost claim for lack of access to site by the contractor.
Numerous cracks on the AC on the road section between Km 95+000 and Km 137.5 valued at Euro 1,693,250. The Asphalt failed the ITS tests.
Continuous longitudinal joint crack between the RHS & LHS sections of the road.
6. Civil Works for Upgrading
of Ishaka – Kagamba road
to bituminous standard
(35.4Km) by M/s General
Nile Company for Roads
and Bridges / Dott
Services Ltd JV at UGX.
112,718,570,492
Performance security and workmen‟s compensation policy expired, were renewed but no due diligence was conducted on the documents.
Non-participation of the Lead partners M/s General Nile Company. Delayed completion of works due to inadequate equipment, delayed compensation and
lack of final designs. Additional supervision cost of USD 1,096,121 and UGX. 36,330,000 is to be incurred.
Inadequate Traffic management/ safety signs. UGX.214,652,426 overpaid to the contractor in extra road width.UGX. UGX.161,276,564 overpaid due to errors in VoP computation in IPC No.10
7. Upgrading of Gulu-Atiak
Road to Paved Bitumen
Standard (74Km) by M/s
China Henan International
Cooperation Group Co. Ltd
(CHICO) at
Quantities of some work items like road bed preparation increased by 1,628%, Armco culverts by 2,075% raising doubts on the authenticity of the design.
Delayed completion of works and uncharged Liquidated damages of UGX.1,928,828,025 as only provisional extension of time was granted.
Several sections along the road between Ch.43+625 and Ch. 64+925 were identified to have suffered loss of second seal3.
Stripping and Raveling was observed on sections around Ch 67+345.
3BS/GA/PH/694/2014 of 30
th July 2014
48
S/n Road Contract /
Contractor / Amount
Key findings
UGX.89,667,759,288 Bleeding was observed on sections Ch 15+548, Ch 64+055,Ch 67+200 an indication of high bitumen content.
Edge failure was observed at several locations. No warning signs at active site locations. No dust pollution control mechanisms were observed at the quarry. Some access culverts installed were deformed e.g at Ch. 34+614 RHS. Pavement layer thickness (base and sub-base) revealed that specifications were not
being followed and the thicknesses laid were lower than specified in the contract.
8. Periodic Maintenance of
Muhanga – Kisiizi –
Kebisoni Rd (61Km) by
M/s Pearl Engineering Co.
Ltd at UGX.2,775,586,000
Long procurement period of 11 months delay in award from the scheduled date. Change of consultant staff without approval by the client and no penalty given. The road had developed potholes, corrugations and gullies at various locations.
A number of culvert lines were installed without end structures. There was poor jointing of the culverts e.g. at Ch.2+250 The minimum pipe cover for most of the culvert lines was not achieved. The culvert line at Ch.16+500, had headwalls built with protruding pipes. Gravel used was of course type with 5% of size greater than 50mm. Overpayment of UGX.195,932,175 was made for inexistent mitres, culverts and their end
structures, stone-pitching and gravelling.
49
S/n Road Contract /
Contractor / Amount
Key findings
9. Periodic maintenance
Rukungiri-Mitaano-
Kanungu (44Km) by M/s
NICONTRA Limited at
UGX. 1,965,727,500
Long procurement period of 5 months delay in award from the scheduled date.
Lack of invocation of Clause 38.1 of the contract for rate change on item 2.2 which increased by over 13,000% and could have led to cost savings in the rate.
Change of consultant staff without approval by the client and no penalty given. Excess quantities for grading and gravel provided in the contract causing overpricing by
UGX.326,379,405.
The gravel used from Ch 0+000 to Ch 17+200 had course particles. Road surface defects like potholes, gullies and corrugations were observed. Siltation in some culverts was observed at Ch 7+300, 7+400, Ch 8+160. Vegetation overgrowth was observed in the side and mitre drains. Overpayment of UGX.9,502,250 was made in respect of culverts, and gravelling.
10. Periodic Maintenance of
Kazo – Buremba –
Nyakaliro (33Km) and
Nyakaliro – Kyegegwa
(53Km) by M/s Lexman
Ltd at UGX.3,276,665,000
Long procurement period of 5 months delay in award from the scheduled date.
Expired Performance Security. The delayed completion of works attracting liquidated damages of UGX.163,833,250. Rutting, water ponding, gullies and localised potholes were observed. A number of culverts had no end structures & others had cracked. At Ch.29+850 of Link 1, the culvert line inlet was completely silted/blocked. The side drains were mostly eroded and there was no provision of scour checks. The gravel wearing course contained more of coarse particles Item 3.8.2 for culverts increased in quantities by 189% attracting a rate change as per
Clause 38.1 and no variation order to the effect was seen.
IPC backup computations could not easily be matched to assess whether items of work paid represented value for money.
50
S/n Road Contract /
Contractor / Amount
Key findings
11. Periodic Maintenance of
Ngetta- Apala- Adwari
road, Lot 10 (46Km) by
M/s Mostom Company Ltd
at UGX.1,487,119,350
Delayed procurement process. The road at Ch.1+700 and Ch.11+100 had been narrowed due to erosion of the
shoulders.
Potholes, gullies and corrugations were observed at several locations. The headwalls did not meet the specified 0.6m height above the road surface.
Water ponding was observed at various locations along the road.
Some of the culverts had cracks on the invert e.g.Ch.13+800 and 17+000, some were out of alignment making them susceptible to displacement; Broken culverts are worth UGX.2,104,960.
Many culverts were silted and had vegetation overgrowth at the end structures.
There was a general lack of off-shoots in low lying areas that resulted in ponding.
12. Emergency Repair of
Karamoja Flood Damaged
Roads: - Package 3;
Moroto (Ariamoi) – Lopei –
Kotido Road (102Km) by
M/s Omega Construction
Limited at
UGX.2,031,200,000
Poor record keeping by PDU
Unjustified estimated cost of UGX. 2,210,858,560 without build-up unit rates.
Inadequate Control of Cost of the project, bidders are not asked to submit the unit break down/build-up of unit rates for the tender amounts
Noted potholes, depressions, rutting, gulleys, loss of camber and deformations.
Uncharged Shs 63,935,250 for non-completion of works as per SCC 60.1
Overpayment of UGX.12,909,488 due to variance between thickness of gravel certified in IPC, and verified thickness by the laboratory staff.
Payment to the contractor for works done by Kotido station on a drift amounting to UGX.18,000,000.
51
2.2.2 TRANSPORT SECTOR DEVELOPMENT PROJECT (TSDP)
2.2.1 Compliance with the Financing Agreement & GoU Financial Regulations
It was observed that management had complied in all material aspects with the
financing agreement and GoU financial regulations except for the following matters;
2.2.2 Delayed overall Contract Implementation process
It was noted that the contractors of Gulu-Atiak Road,
Vurra‐Arua‐Koboko‐Oraba Road and Fort Portal – Kamwenge Road delayed to
comply with the following:
i) Environmental, health and safety provisions.
ii) The supervisors‟ laboratories were not fully equipped.
iii) Handing over of sites to contractors.
iv) PAP valuations and compensation.
v) Approvals from the regulatory authorities (NEMA, UWA).
vi) Submission of work plans.
As a result, the projects have been delayed as noted below;
Roads Overall delay
Gulu-Atiak days 181
months 6.02
Vurra - Arua – Koboko – Oraba days 159
months 5.31
Fort Portal – Kamwenge days 317
months 10.56
Management explained that for all areas where land acquisition was an issue,
supplementary valuation reports were prepared working with the office of the Chief
Government Valuer. All outstanding compensation cases have been verified and are
ready to be paid. They further explained that for the future, the Consultancy
Services contract periods have been increased to allow them sufficient time to
52
address all social and compensation matters during the project implementation
period.
Management also explained that with strict adherence to the contractual
expectations of all parties, the contractors had been compelled to abide by their
safeguards obligations; and with the increased supervision by UNRA and other
oversight agencies, there had been noticeable improvement in compliance on all
TSDP projects.
I advised management to strengthen the monitoring process throughout the
contract implementation to reduce the delay in implementation of projects.
2.2.3 Unrealistic budget allocations
During the year under review, TSDP was allocated UGX.6.7 billion for
implementation of project activities. However, only UGX.886 million was utilized.
The balance of UGX.4.5 billion was spent on other projects without approval from
the Ministry of Finance, Planning and Economic Development (MoFPED).
Discussions with management revealed a mismatch in funding between budgetary
allocation and project activities as a result of uncoordinated planning between
UNRA management and MoFPED.
I advised management to always seek prior approval of inter project transfers.
UNRA and Ministry of Finance should also critically review the budgetary process
and match the project implementation progress before funds allocation and
approval.
2.2.4 General Standard of Accounting and Internal Control
A review was carried out on the system of accounting and internal control. It was
noted that management had instituted adequate controls to manage project
resources except for the following matters;
(i) IT general controls
Management did not have formalized user access matrix for accounting software.
The Chief Accountant instead had IT administrative access rights in Pastel
accounting software. This is an indicator of IT system control weakness and as such
53
there is a possibility that the controls would fail to prevent or detect misstatements
in the financial statements.
Management promised to revisit the pastel access rights and allocate the super user
access rights to the Director, Finance and Accounts.
Management action on the matter is awaited.
(i) Inactive pastel report writer module
It was noted that the Pastel report writer module was not being used by
management. It was further noted that accounts extracted from the Pastel
accounting software did not correspond to budget components and sub
components.
It is likely that it would be difficult to correlate expenditures to budget for each
components and sub components and also in the preparation, review and
understanding of the financial statements by stakeholders.
Management explained that the UNRA Chart of Accounts was based on specific
reporting requirements of each project, not on the GoU chart that was too general.
The TSDP Chart of Accounts was designed so as to enable UNRA report on
individual project components based on the TSDP structure as documented in the
Credit and Financing Agreements. They further explained that payments in TSDP
were based on Contracts. Financial progress on each contract was reported on
through the quarterly Interim Financial Reports (IFRs), where expenditure for each
project component was compared with the respective budget/signed contract value.
I advised management to upgrade the current PASTEL Version that will align
specific budget heads, to accumulate expenditure incurred and compare the same
with the budget of each component and sub components.
(ii) Un-reconciled IFMS allocations/Borrowings
UNRA was allocated funds on IFMS system towards land and property (LAP)
compensations on TSDP. However, during the review, I noted that part of the
funds received from government towards TSDP project LAP compensations as
54
accumulated in the IFMS statement was used to fund other projects as indicated in
the table below;
Project Details Outstanding
Balance at
July1, 2014
Lending to
other projects
Borrowings
from other
projects
Outstanding
Balance at
June 30, 2014
(UUGX. ‘000) (UUGX. ‘000) (UUGX.
‘000)
(UUGX. ‘000)
Outstanding
Balance
8,905,228 - - 8,905,228
Kampala-Entebbe
Express Highway
- 1,794,807 - 1,794,807
CCCC IPC 5 - 2,248,41 - 2,248,418
LPC to other GoU
projects
- 529,575 - 529,575
Total 8,905,228 4,572,800 - 13,478,028
Follow up of the borrowings was difficult.
It was also noted that management did not have a cumulative position of funds
received and could not provide a reconciliation between balances reflected in IFMS
statement and receipts recognized in TSDP financial statements. This could lead to
misstatement of the project financial statements balances resulting into inaccurate
disclosures.
I advised management to periodically reconcile the account to obtain an accurate
picture of funds borrowed for different projects and that spent on TSDP.
(iii) Lack of control accounts for advance payment, recoveries and IPC
retention from contractors
It was noted that UNRA did not maintain control accounts for advance payments,
recoveries and IPC retentions from the contractor‟s payment. Lack of control
accounts causes reconciliation problems especially the contractors accounts.
55
Management explained that according to their structure, each road contracts are
managed by a technical team which comprised of a Project Engineer, Project
Manager and a Director, responsible for all aspects of contract supervision and
management, both technical and financial, on behalf of the client and in accordance
with the conditions of the contracts. The technical Contract management team is
responsible for monitoring physical and financial progress of contracts.
Management intends to go full accrual so that the financial management system will
be realigned to track advances and recoveries.
I advised management to maintain a control account for all contractors to track
advance payments recovery and retentions for proper monitoring and recording in
the financial statements.
(iv) Inappropriate supporting documents in respect of payments
A sample of invoices verified revealed that some of the accountabilities worth
UGX.23,632,667 were found missing. It was also noted that advances paid for
activities were debited to expenditure and as a result no track was maintained for
pending accountabilities. In the absence of accountabilities, verification of
expenditure became difficult.
Management stated that the missing documents had been observed and would
ensure that this was not repeated.
I advised management to ensure that copies of accountabilities are kept together
with payment vouchers for easy access and review, and also advance paid should
be debited to asset and should be expensed only on receipt of accountability. In the
meantime, accountability documents should be provided or recoveries effected.
(v) Contra confirmation
At the time of writing this report, contra confirmation from UNRA and GoU for IFMS
account was not availed for scrutiny. In case of any reconciliation issues, the
account balances in the financial statements are likely to be misstated.
56
Management explained that they had written to the Office of the Accountant
General to confirm IFMS payments, however no response has been received from
the Accountant General‟s office.
I advised management to continue following up with the Accountant General with a
view of obtaining the contra confirmations.
2.2.3 ROAD SECTOR SUPPORT PROJECT 3 (RSSP 3)– NYAKAHITA-KAZO-
KAMWENGE FY 2012/2013
2.2.3.1 Compliance with The Financing Agreement And GoU Financial
Regulations
A review was carried out on the project compliance with the credit agreement
provisions and GoU financial regulations and it was noted that the project complied
in all material respects with the provisions in the agreement and applied GoU
regulations except in the following matters:
i) Kazo – Kamwenge performance rating below average
I noted that the contractor of lot-2 (Kazo – Kamwenge) section did not perform to
the expectations by the reporting period and on agreed upon rating. The contractor
performed at 47.25% which was below average as indicated in the table below:
Activity Expectation Total Score
Work progress 40 24.26
Environmental Management 20 8.10
Accommodation of traffic 10 2.70
Engineer‟s facilities 5 3.30
Camp-site/ contractor‟s establishment 10 3.60
Contractor‟s workers‟ welfare 10 4.09
Public Relations 5 1.20
Total 100 47.25
57
There is a risk that the contractor may not complete the work on the agreed time
and undesired quality of work could be delivered.
Management responded that the Contractor later increased his resources and works
were substantially completed. They also explained that the quality of the
constructed works was good.
I advised Management that explicit intervention and remedial actions should be
taken by the technical team at both UNRA and the consultants (project supervisor)
to minimize deficiencies in performance on future undertakings.
ii) Project Funding
The following were observed regarding the RSSP-3 funding:
The Government of Uganda share on the project was agreed at 27.45% and the
Bank at 72.55%. However, during the audit, I noted that the Government made
payments of UUGX.27,018,723,587 on Lot 1 which was 17% and
UUGX.14,743,421,917 which was 18% on Lot 2, out of the agreed 27.45%.
It was also noted that by the reporting period of 30th June 2013, the overall
progress of work was at 98% and 67% completed for Lot 1 and Lot 2
respectively. However, payments for the work done for lot 1 totalled to
UUGX.28,433,861,682 above completion percentage, and payments for lot 2
amounted to UUGX.28,664,511,351 below the completion percentage. The
table below refers.
Lot 1 Lot 2
Nature of contract: Admeasured contract Nature of contract: Admeasured contract
Contract amount: 134,385,576,794.65 Contract amount: 167,458,031,180
ADF share: 72.55% ADF share: UGX. 72.55%
GoU share: 27.45% GoU share: UGX. 27.45%
Name of firm: China Communications Construction Co. Ltd
Name of firm: China Railway Seventh Group Co. Ltd
Nationality: China Nationality: China
Headquarter: Beijing, China Headquarter: Henan, China
Overall estimated progress 98%
Overall estimated progress 67%
Payments: Payments:
58
Lot 1 Lot 2
Donor 133,113,003,354 83% Donor 68,788,947,622 82%
GoU 27,018,723,587 17% Gou 14,743,421,917 18%
160,131,726,941 83,532,369,539
Expected payment as of 30 June 2013
131,697,8
65,259
112,196,8
80,891
Computed difference 28,433,861,682 (28,664,511,351)
Funding inconsistencies may negatively impact on contract performance.
Management explained that Government‟s failure to fully meet its contribution to
the project was due to an inadequate budget. However, all the outstanding
payments are now being settled.
Management further explained that the observed increases were a result of cost for
variation of price (VoP) that due to inflation, increased beyond the amount that was
originally estimated in the contract. At contract signature, VoP costs were
estimated at 10% of the value of the works but at the time of audit, the proportion
had increased to 26% of value of the works arising out of increases in values due to
price indices that are applied to the price adjustment formula. Management also
indicated that an addendum that is subject to the Bank‟s approval has been
prepared to revise the amount for variation of price and increase the contract price
accordingly.
I await the results of management action on the variation of price.
iii) Inter-Project transfers
At the start of the year under review, the project had a net payables position of
UGX.14,444,650,464. During the year, the project borrowed additional
UGX.24,391,784,285 from other Projects and also transferred UGX.5,524,288,068
to other projects creating an overall payables position of UGX.33,312,146,681 at
the end of the financial year.
The inter project borrowings may negatively affect implementation arrangement of
the project.
59
I advised management to minimize the inter project transfers as these could disrupt
the implementation of project activities.
2.2.3.2 General Standard Of Accounting And Internal Control
A review was carried out on the financial management system of the project and it
was noted that management had put in place adequate controls to manage project
resources.
2.2.4 THE UGANDA ROAD FUND
2.2.4.1 Outstanding funds recoverable from implementing agencies
During the year under review, a number of implementing agencies had outstanding
amounts totalling to UGX.1,860,291,838 whose activities had not been undertaken
as planned and the funds that were to be recovered and refunded back to the
Uganda Road Fund. The unutilised amounts were a result of funds garnished by
court orders, garnished by Uganda Revenue Authority, inaccurate measurements
and/or overpayments to contractors, ineligible expenditure and unaccounted for
funds among others. The table below provides the details of unutilised amounts
that were outstanding as at 30th June 2014:
Details Amount (UGX.)
Road maintenance funds garnished by court orders 696,876,622
Funds garnished by URA 134,336,390
Inaccurate measurement of works/overpayments to
contractors 243,052,170
Ineligible expenditure 8,000,000
Unremitted to Town Council by District 18,000,000
Funds not remitted to Road Sector Account by Agencies 31,076,554
Unaccounted funds 728,950,102
Total 1,860,291,838
60
Some of these funds have been outstanding for more than one year. The summary
table below shows the period for which the funds have been outstanding. Recovery
of the funds has been delayed.
No Amount (UGX.) Outstanding since Number of Years
1 57,065,478 30th June 2010 5
2 84,093,597 30th June 2011 4
3 991,393,422 30th June 2012 3
4 727,739,341 30th June 2014 1
Total 1,860,291,838
Management explained that they have pursued recovery of the funds from the
affected implementing agencies with limited success. They have however referred
the matter to Ministry of Local Government being the supervising authority over the
defaulting Local Governments. Management further indicated that the matter will
be pursued to ensure quick recovery of the funds by the agencies during the
financial year 2014/15.
I await the outcome of the management efforts.
2.2.4.2 Sources of funding
The Road Fund Act provides for various sources of funding to the fund including
donations, Road user-charges and others. However during the review, I noted that
appropriations by Parliament was the only source of funding to the fund during the
year. I explained to management that failure to mobilize funding for the URF poses
a big challenge for the successful maintenance of roads, the objective for which the
fund was established.
In response, the Accounting Officer explained that the URF did not realize funds
from its various sources as listed in Section 21 of the URF Act because an
amendment to the Uganda Revenue Authority (URA) Act to enable the fund collect
its revenues has not been done.
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I advised management to liaise with the relevant authority with a view of fulfilling
the URF mandate of having a fund and collecting its revenue.
2.2.4.3 Lack of Enabling Regulations
URF was created in 2008 by an Act of Parliament. However six years later; I noted
that the fund secretariat does not have enabling policies. These include the Fund
Regulations, Risk Management and the Training Policy.
During the year, UGX.216,733,443 was spent on staff training without a training
Policy to guide its management on staff selection and trainings. I explained to
management that there is a risk that irrelevant training courses could be
undertaken that may not add value to the entity resulting into wasteful expenditure
and or misuse of funds.
In his response, the Accounting Officer explained that the above mentioned policies
are in a draft form awaiting the Minister to gazette. Once the approval is done,
management will assign a dedicated officer to manage the functions.
I advised management to have the manuals approved and operational.
2.2.4.4 Delayed Release of Funds to Designated Agencies
During the review, it was noted that the first quarter release of funds from Ministry
of Finance, Planning and Economic Development (MoFPED) was received on the
12th August 2013 however; URF took over three months to release these funds to
the affected 7 designated agencies as listed below. As a result, the agencies closed
the quarter with these balances.
Funds
received by
URF on.
Funds
when
released to
the DAs
No of
months
delayed
Agency EFT No Amount
UGX.
1 12/08/2013 07/11/2013 over 3
months Moroto District 6579 60,375,000
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Funds
received by
URF on.
Funds
when
released to
the DAs
No of
months
delayed
Agency EFT No Amount
UGX.
2 12/08/2013 07/11/2013 over 3
months
Ntungamo
District 6587 169,090,635
3 12/08/2013 07/11/2013 over 3
months
Sembabule
District. 6592 108,350,606
4 12/08/2013 07/11/2013 over 3
months Kole District 6648 79,105,355
5 12/08/2013 27/11/2013 over 3
months Lamwo District 6626 59,935,750
6 12/08/2013 27/11/2013 over 3
months Zombo District 6628 41,544,431
7 12/08/2013 27/11/2013 over 3
months Agago District 6652 165,098,501
TOTAL 683,500,278
I explained to management that delayed release of funds to designated agencies
affects implementation of the Annual Road Maintenance Programmes.
In response, the Accounting Officer explained that the funds could not be released
in time as the affected designated agencies had not updated their bank accounts
despite management‟s effort to inform the agencies to confirm their bank accounts.
I advised management to always endeavour to release road maintenance funds on
a timely basis.
2.2.4.5 Human Resource Issues
(a) Vacant positions
A review of the approved staff establishment of 31 posts showed that only 22 posts
representing 71% had been filled by the year-end leaving nine (9) vacant posts as
indicated in the table below. It was noted that at the time of this report, six (6)
posts had been advertised, however the recruitment process had stalled.
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S/N Position Established No. Filled Vacant
1. Internal Auditor 1 0 1
2. Head PDU 1 0 1
3. PDU Assistant 1 0 1
4. Manager corporate services 1 0 1
5. Manager policy & strategy 1 0 1
6. Human Resource Officer 1 0 1
7. System Administrator 1 0 1
8. Policy & Strategy officer 1 1 0 1
9. Policy & Strategy officer 2 1 0 1
Total
9
I explained to management that lack of such essential staff may negatively impact
on the Fund's performance and service delivery.
In response, the Accounting Officer explained that the delay in filling vacant
positions arose because the selection process for the positions of Head PDU, PDU
Assistant, and System Administrator flopped when the selected staff turned down
the offers due to low pay and the on-going selection process for Manager Policy
and Strategy; Manager Corporate Services, Head PDU, and Internal Auditor was
delayed because the recruitment process was to be outsourced to a consultant who
was not in place at the time of advertising for these positions. However, the
consultant was selected and has commenced on the recruitment process.
I advised management to expedite the recruitment process and have the vacant
posts filled.
(b) Staff turnover
It was observed that 5 members of staff resigned their positions or offered not to
have their contracts renewed
I explained to management that the high rate of staff turnover impacts negatively
on service delivery and the image of the entity.
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In response, the Accounting Officer explained that staff have previously raised
concern about remuneration and welfare in the annual staff retreat held in
December 2011. Staff retention has become a challenge because URF„s
remuneration is no longer competitive on the market. The Board is addressing the
issue by reviewing the structure and remuneration of staff with effect from next
financial year.
I advised management to address the above challenge.
2.3 JUSTICE LAW AND ORDER SECTOR
2.3.1 JUDICIAL SERVICE COMMISSION
2.3.1 Mischarge of Expenditure
The Parliament of Uganda appropriates funds annually in accordance with the
needs of each MDA. This appropriation is implemented through the budget in
which funds are tagged to particular activities and outputs using account and MTEF
codes.
A review of the Commission‟s payments revealed that there were mischarges under
various codes worth UGX.86,527,567 during the year under review. These
payments were made without requisite authority. Although there was a tremendous
reduction in the mischarged expenditure over the previous two financial years, the
practice undermines the budgeting process and the intentions of the appropriating
authority. The practice also leads to financial misreporting.
I advised management to streamline the budgeting process and ensure that funds
are allocated to budget lines in accordance with priorities. Any reallocations should
be undertaken in accordance with the regulations.
2.3.2 Fuel Payments/deposits unaccounted for
UGX.95,350,296 was deposited with a fuel company to supply fuel to the
Commission. However, the funds remained unaccounted for as the monthly fuel
65
consumption statements were not maintained and reconciliations not undertaken.
In absence of the fuel reconciliation and consumption statements, it was not
possible to ascertain how the fuel was consumed and utilised. Activity reports
linking to the fuel usage were not also availed for audit review. This poses a risk of
misuse of Government fuel.
I advised the Accounting Officer to ensure that fuel accountabilities are obtained
and kept for future reference.
2.3.3 Case Backlogs
The Judicial Service Commission (JSC) is mandated under Article 147(a) to receive
people‟s complaints and recommendations concerning the Judiciary and the
administration of justice and generally to act as a link between the people and the
judiciary. Upon receipt of public complaints, the Disciplinary Committee for judges
is expected to immediately hear such cases for administrative action.
However, as noted in the previous audit report, the Commission has been slow in
handling cases brought against judicial officers. At the closure of the previous year,
the figure for case backlog stood at 788.
The Commission registered 187 cases, bringing the total number of cases to 975
but only 226 cases were handled and cleared. The un-cleared number of cases at
the close of the financial year stood at 749. Table below refers:
Cases carried forward
from 2012/2013
Cases registered
in 2013/2014
Cases concluded in
2013/2014
Cases carried
forward to
2014/2015
788 187 226 749
Delays in clearing case backlog impair the timely administration of justice.
The Accounting Officer explained that the Chairperson of the Commission is the
only full time member while the other members are part time. The part time status
of the Commission members undermines its ability to address day to day demands
connected to the Commission‟s mandate. This has restrained the Commission from
66
sitting frequently and deal with the disciplinary matters. The Accounting Officer
also explained that funding allocated to the Disciplinary Committee activities is
grossly inadequate and this greatly impacts on its ability to investigate, hear and
conclude cases in time.
I advised the Accounting Officer to engage the relevant stakeholders to consider
changing the Commission status to full time. Funding of the Commission should be
improved to enable the Commission deliver its mandate.
2.3.4 Inability to distribute civic education materials
The Judicial Service Commission is mandated by the Constitution of the Republic of
Uganda to carry out civic education on law and administration of Justice to the
public. To implement the mandate, the Commission printed 3,384 courts hierarchy
charts and citizens‟ hand books on law and administration of justice in Uganda in
Luganda, English and Swahili worth UGX.29,816,159. These civic education
materials were intended to benefit all citizens regardless of their legal background.
A visit at the stores in November 2014 revealed that 1502 books were still lying in
the stores thereby defeating the intended objective. Details are shown on table
below:
Item Cost
(UGX.)
Quantity
Procured
Quantity
issued out
Balance
in stores
Citizens‟ Hand Book in
Luganda
24,677,968 2000 944 1056
Citizens‟ Hand Book in
Swahili
4,738,191 384 88 296
Courts Hierarchy charts 400,000 1000 850 150
Total 29,816,159 3384 1882 1502
The Accounting Officer responded that the Commission budgeted for dissemination
of civic education materials under JLOS Secretariate but no funds were provided by
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the Secretariat to undertake the activity. As management, they came up with a
decision to distribute whenever the JSC staff are carrying out other field activities.
I advised the Accounting Officer to speed up the distribution of the procured
learning materials to the intended beneficiaries with a view of fulfilling the
Commission‟s mandate.
2.3.5 Staffing Gaps
A review of the staff list against the organizational structure revealed that 10 posts
were still vacant. These included the position of the Under Secretary; Registrar;
Deputy Registrar (PRI); Principal Legal Officer; Senior Assistant Records Officer;
three legal clerks; and two Personal Secretaries.
Lack of staff in vital positions of the organization affects the performance and
overall achievement of organization‟s goals and objectives due to work overload.
Management explained that the posts of Registrar and Deputy Registrar have been
re-advertised by the Public Service Commission. As for the common six (6) cadre
staff, the Commission has been in constant touch with the Ministry of Public Service
to ensure that these posts are filled.
I await the results of management efforts on the matter.
2.3.6 Understaffed Internal Audit Unit
It was noted that the organization structure provides for only one Internal Auditor
to carry out all internal roles and responsibilities for the entire Commission.
Inadequate staffing in the Internal Audit unit may result into lack of capacity by the
existing internal auditor to carry out the significant monitoring role. Consequently,
the efficiency and effectiveness of operations may decline due to inadequate
evaluation of control systems.
The Accounting Officer responded that the Commission‟s Internal Audit Unit is
under-staffed, however, management is in the process of restructuring the Internal
Audit department with a view of getting additional staff in consultation with the
68
Ministry of Public Service as well as that of Finance, Planning and Economic
Development.
I advised the Accounting Officer to seek support from relevant authorities with a
view of restructuring the existing organization structure to provide for an adequate
Internal Audit staff.
2.3.7 Absence of Risk Management Policy
Best practice requires that entity management has a structured process for
managing risks. By applying a structured process, key risks can be identified and
ways of mitigating them sought to avoid negative impact on the organization
operations. Furthermore, the Internal Audit Charter, November 2008, section 3.4
requires the Internal Audit to conduct risk management audits to ascertain whether
or not management has set procedures for risk identification and management
including fraud and money laundering.
However, it was noted that despite my highlight of this issue in the previous year
audit, the Commission has not yet put in place a well-documented policy for
managing risk.
The Accounting Officer explained that they have been working closely with the
Internal Audit Unit to collectively identify likely risks based on audits conducted and
the findings reported to management for necessary action to ensure minimum
occurrence of the likely risks.
I advised the Accounting Officer to develop a risk management strategy to monitor
and investigate the risks and their likelihood of occurrence.
2.3.8 Budget Performance
Review of the Commission‟s budget performance for the year revealed that the
approved budget for the financial year 2013/2014 stood at UGX.2,293,207,000. It
was however noted that, only UGX.1,989,847,545 was received (representing about
86.8% of the total budget), this resulted into a shortfall of UGX.303,359,455. The
shortfall in the releases partly affected implementation of planned activities. It was
69
noted that some planned key activities were not fully executed, such activities
included; printing and dissemination of citizens‟ hand books as indicated in 7.4
above, handling of disciplinary cases as indicated in 7.3 above and finalizing with
the court investigations as indicated in the table below.
Activities Details of activities not undertaken
Court investigations Out of the 24 planned investigation trips,
16 trips were carried out in various
districts. The institution still faces human
resource and transport challenges which
affect its planned performance targets.
Printing of Citizen‟s Handbooks Out of planned 4000 copies of the
Citizen‟s handbooks, the Commission
printed 2000 copies of the Citizen‟s
handbooks in Luganda, 1000 copies in
English and 384 copies in Kiswahili. This
represents 84.6% performance. The
remaining 15.4% is attributed to
inflation.
Failure to implement activities as planned impacted on the Commission‟s
achievement of its objectives.
The Accounting Officer explained that the Commission did not have control over
funds disbursements.
I advised the Accounting Officer to liaise with the relevant authorities with a view of
seeking for adequate funding to ensure that activities not implemented are
undertaken in accordance with work plans.
70
2.3.2 UGANDA LAW REFORM COMMISSION
2.3.2.1 Outstanding Payables
A review of the Statement of Financial Position revealed outstanding payables of
UGX.488,767,967 broken down into: trade creditors UGX.314,507,781; sundry
creditors UGX.172,391,288; and Withholding tax UGX.1,868,898. Outstanding
arrears are manifestation of non-compliance with the requirement of the
Commitment Control System. During the year under review, only UGX.711,001
worth of arrears were cleared from the outstanding arrears brought forward from
the previous year.
Accumulation of creditors may lead to loss of reputation, litigation and/or payment
of extra costs above the credit amounts.
The Accounting Officer explained that UGX.314,507,781 relates to staff
contributions to NSSF not remitted for the period 1996 to February 2008. The
payable arose out of a suit filed by NSSF against GoU. A consent judgment was
entered into between the Attorney General and NSSF. Management is however in
the process of engaging the Solicitor General on when the arrears will be paid. The
Accounting Officer further explained that UGX.172,391,288 arose out of office rent
arrears for the financial year 2011/12, because the landlord increased the rent late
in the course of the year after the budget process had been concluded. The rent
arrears will be cleared in the financial year 2014/15.
I advised the Accounting Officer to follow up with the relevant authorities to have
the arrears cleared.
2.3.2.2 Mischarge of Expenditure - UGX.77,415,412
The Parliament of Uganda appropriates funds annually in accordance with the
needs of each MDA. This appropriation is implemented through the budget in
which funds are tagged to particular activities and outputs using account and MTEF
codes.
71
It was however noted that during the year under review, there were mischarges on
various codes worth UGX.77,415,412 without the requisite authority. The practice
not only undermines the budgeting process and the intentions of the appropriating
authority but also leads to financial misreporting.
The Accounting Officer explained that mischarges usually arise due to constraints
within the budget. Some expenditure pressures arise within the quarter when funds
have already been realized. The Accounting Officer further indicated that they are
committed to working towards eradicating the practice altogether as they
strengthen their budgeting and monitoring processes.
I advised that the Accounting Officer to streamline the budgeting process and
ensure that funds are allocated to budget lines in accordance with priorities. Any
reallocations should be undertaken in accordance with the regulations.
2.3.2.3 Unaccounted for fuel - UGX.63,000,000:
The Commission operated the Advantage Card System with Standard Chartered
bank where the funds for fuel were disbursed to the Commission fuel account for
loading onto individual beneficiary officers‟ advantage cards.
However, no fuel register was maintained to record the use of the fuel. Besides, no
accountability in form of general receipts, monthly fuel reconciliations and fuel
consumption statements were provided for my review.
I advised that the Accounting Officer to put in place a fuel register and obtain fuel
statements for future use and reference.
2.3.2.4 Budget Performance:
Review of the Commission‟s budget performance for the year revealed that the
approved budget for the financial year 2013/2014 stood at UGX.7,420,535,812.
Out of the amount, UGX.6,456,051,515 was received (representing about 87% of
the total budget) resulting into a shortfall of UGX.964,484,297. It was noted that
some key planned for activities were not fully executed by the Commission. These
included reform and simplification of laws such as; the Employment Act, and
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Witness Protection Act, and revision of laws such as; the Civil Procedure laws,
Evidence Act, Medical Practitioners Act, Proceeds of Crime Act, Succession laws.
Furthermore the Commission did not quantify what they expected to achieve and
how much performance was realized. In absence of performance milestones, I was
not able to assess with certainty the actual output out of the appropriation funds.
The Accounting Officer explained that as far as the review of subsidiary laws,
preparation and submission of the final revision report (Principal laws) to the
Attorney General are concerned, a delay in submission was encountered because at
the time of submission, a series of unforeseen circumstances arose which required
a fresh round of editorial work on the draft revised Principal laws of Uganda.
I advised the Accounting Officer to ensure that planning figures are pegged to
particular items and to report on the actual outcomes in future. I also advised the
Accounting Officer to ensure that planned for activities are completed to enable the
Commission deliver its mandate.
2.3.3 UGANDA HUMAN RIGHTS COMMISSION
2.3.3.1 Case Backlogs
The Uganda Human Rights Commission (UHRC) is mandated under Article 52 (1)
and 53 of the Constitution of the Republic of Uganda to manage complaints related
to human rights abuse as one of its core activities. The Commission fulfils this
function through complaints receipt, registration, investigation, mediation,
counselling and the tribunal process.
A review of the Commission‟s performance reports revealed that some cases
registered before and during the period were not handled, thereby resulting into
case backlogs. At the closure of the previous year, the outstanding case backlog
stood at 1067. Registered cases during the year were 788 bringing the total
number of complaints to 1855, out of which only 770 (41.5%) cases were fully
investigated and ready for further action, including tribunal proceedings. The un-
cleared complaints at the year-end were 1085 representing an under performance
of 58.5%. The Table below refers:
73
Cases brought
forward from
2012/2013
Cases
registered in
2013/2014
Cases
concluded in
2013/2014
Cases carried
forward to
2014/2015
1067 788 770 1085
According to the annual reports, the delays in handling complaints conclusively
were attributed to the following factors:
Failure by the respondents to locate some of their witnesses thereby slowing
down the tribunal process.
Bureaucratic procedures at the Ministry of Justice and Constitutional Affairs
which delays the process of settling complaints amicably.
Absence of some regional Offices for Ministry of Justice and Constitutional
Affairs (MoJCA) in certain regions like Moroto, Fort portal, Masaka and Jinja to
expeditiously handle complaints.
Failure to attend tribunal hearings by Attorney General‟s representatives yet the
Attorney General is the respondent in most of the matters before the tribunal.
Inadequate finances to conduct frequent investigations
Hardships in locating witnesses who change the registered addresses
Files pending conclusion as a result of lack of information from some implicated
respondents and other stakeholders (experts).
One of the Members of the Commission resigned to take up another
assignment in another government organization and it took long for the
position to be filled. This affected the tribunal process.
Delays in clearing case backlog impair the timely administration of justice.
I advised the Accounting Officer to consider ways of addressing the challenges in
collaboration with other stakeholders like the JLOS Programme under MOJCA with a
view of reducing the registered complaints.
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2.3.3.2 Budget Performance
During the year, the approved budget for the Commission amounted to
UGX.9,800,407,297. However, by the close of the financial year,
UGX.9,664,910,526 had been received (representing 98.7% of the budget). A
review of the Commission‟s performance as per the 2013/14 Ministerial policy
Statement and semi-annual reports revealed that some planned activities had not
been done, while others were not undertaken at all. The table below refers:
Planned Key Activity Expected Output Actual output Variance
Human Rights Education
Production and
distribution of 3,000
copies of the quarterly
„Your Rights Magazine‟.
3,000 copies of the
quarterly „Your
Rights Magazine‟
produced and
distributed.
Nil 100% under
absorption.
Develop, translate and
print 5,000 brochures.
5,000 Brochures
developed,
translated and
printed.
1,000 Brochures
developed,
translated and
printed.
80% under
absorption.
Enhanced focus on economic, social and cultural rights
Visiting Health units. 495 health units
inspected.
225 health units
inspected.
(59%) under
absorption.
The Accounting Officer explained that the activities were not implemented due to
lack of sufficient funds.
I advised the Accounting Officer to always come up with realistic plans with a view
of delivering its mandate.
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2.3.4 UGANDA REGISTRATION SERVICES BUREAU OPERATIONS
2.3.4.1 Mischarged expenditure
The Parliament of Uganda appropriates funds annually in accordance with the
needs of each MDA. This appropriation is implemented through the budget in
which funds are tagged to particular activities and outputs using account and MTEF
codes.
A review of the Bureau‟s payments revealed that there were mischarges under
various codes worth UGX. 239,197,478 during the year. The payments were made
without requisite authority. The practice undermines the budgeting process and the
intentions of the appropriating authority. The practice also leads to financial
misreporting.
The Accounting Officer explained that the funds were utilized on a day to day
operational activities like staff facilitation allowances, assorted stationery and
advertising, and this was due to financial constraints faced because of low MTEFs.
Management however promised to improve the budgeting process.
I await the results of management commitment.
2.3.4.2 Absence of Capital Development Budget
It was observed that the Bureau has operated without a capital development
budget allocation since inception. Because of lack of a budget, the activities
earmarked as priorities were not funded during the year. These activities had been
budgeted at UGX.12,180,000,000 as indicated in the table below:
Activity Amount Budgeted
(UGX.)
Automation of Business Registry 10,372,000,000
Operationalization of four regional offices 710,000,000
Digitization of Civil Registry 320,000,000
Securitization of Certificates 244,000,000
76
Activity Amount Budgeted
(UGX.)
Printing and distribution of registration materials 534,000,000
Total 12,180,000,000
This gap has affected the entity‟s capacity to fund its capital development initiatives
and will in turn affect the implementation of its strategic plan.
The Accounting Officer responded that they have and will continue to engage the
Ministry of Finance, Planning and Economic Development for increased MTEF in
order to address this problem and other funding gaps.
I await the results of the management efforts.
2.3.5 UGANDA REGISTRATION SERVICES BUREAU – LIQUIDATION
ACCOUNT
2.3.5.1 Outstanding receivables
The receivables towards the liquidation funds as at 30th June 2014 stood at
UGX.8,177,490,354. This comprised of funds payable to the office of the official
receiver by companies in liquidation and funds borrowed by other agencies from
the liquidation funds as shown in the table below:
Debtor Amount (UGX.)
Ministry of Justice and Constitutional affairs 3,353,802,640
UEB to PMB 58,125,725
Ministry of Defence 1,866,600,000
UEGCL 1,134,989,464
MOJCA debt on behalf of Mwesigwa (deed of
assignment)
124,432,500
Kenya Railways debt 1,582,215,752
Tashobya debt 57,324,273
Total 8,177,490,354
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The continued holding of these funds by the debtors increases the risk of the debts
turning into bad debts.
The Accounting Officer responded that management has endeavoured to make all
efforts including engaging the Ministry of Finance – Privatization Unit to enable
recovery of the debts. Management is also engaging the Solicitor General to
recover/demand the debt from Kenya Railways. Further, management explained
that they had also held several meetings with UEGCL management to have the
outstanding debt recovered. All efforts are geared toward the recovery of the
receivables.
I await the results of management‟s effort.
2.3.6 UGANDA LAND COMMISSION
2.3.6.1 Outstanding property rates
Payables worth UGX.7,163,296,958 remained outstanding in property rates as at
the end of the financial year. I noted that the creditors have tremendously
increased by UGX.4,320,436,341 (60%) from UGX.2,842,860,617 of the previous
financial year. There is a possibility that the payables will soon become
unmanageable and the Commission could face litigation challenges for non-
payment.
Management explained that the payables pertain to the property rate bills which
accrue every year for which ULC is committed to pay by Statute. Unfortunately, the
budget provision cannot cater for these bills and thus they accumulate every year.
The Commission has on several occasions written to MoFPED on this matter but to
no avail.
I urged management to continue pursuing this matter with MoFPED for adequate
funding to settle the obligation.
78
2.3.6.2 Budget performance
a) Revenue performance
I noted that the Commission budgeted to receive UGX.15,994,657,000 however,
UGX.15,304,293,189 (95.7%) was received leaving UGX.690,363,811(4.3%)
unrealized. Failure to realise the set targets translates into underperformance which
in turn affects service delivery.
Management indicated that the revenue under performance was mainly attributed
to a reduction in the Leasehold applications because NTR is collected after
applications are approved and considered for offer. However, due to the suspension
of ULC Board by the Minister, there was a reduction in Commission meetings in
which these Leasehold applications are considered.
I advised management to liaise with the responsible authorities and ensure that the
suspension of the Uganda Land Commission (ULC) Board is resolved.
b) Un-completed planned activities for year
A review of the Commission quarterly performance reports revealed that the
following activities were not fully implemented during the financial year despite the
availability of funds;
Details of activity
Performance Audit Remarks.
Management
Responses Qty ed
Qty Achieved
Varia-nce
Lease applications that were being processed
600 309 291 Management should explain the cause of variance.
The commission processed 726 leases on Government land for investments, housing development and farming but issued out only 309. 417 leases were caught up by the Hon. Minister of lands directive to the Commission to stay
79
Details of activity
Performance Audit Remarks.
Management
Responses Qty ed
Qty Achieved
Varia-nce
transactions on Government land.
Government land titles that were to be processed.
60 10 50 Management should explain the cause of underperformance.
The Commission approved processing of 48 requests for titling Government land. 10 were fully processed and the rest are at different stages of completion. This is attributed to delays in survey works which are a responsibility of the respective Government land user MDAs
Bonafide occupants to be registered
1,750 0 1,750 Management should explain the failure to perform as planned.
Consideration and approval of the Land Fund Regulations which were to guide the process of registering bonafide occupants delayed in cabinet and the funds were reallocated and used to acquire more hectares of land.
Hectares of land to be acquired to secure bonafide occupants
4,000 3835 165 Management should explain the cause of underperformance.
4000 ha were targeted and 3834.764 Ha were achieved due to variation between the planned and actual compensation value as per the Chief Government valuer‟s.
Uganda Land Commission Bill to be drafted and stakeholders to be consulted on the draft Bill.
The first draft of Uganda Land Commission Bill was developed and consultations are still on going
Management should explain the failure to complete the consultation exercise.
Consultations on the bill are still on going.
To develop electronic data base
Procured a consultancy firm to develop the electronic data base management system
Management should explain the
Consultations still on going.
80
Details of activity
Performance Audit Remarks.
Management
Responses Qty ed
Qty Achieved
Varia-nce
management system for Government land inventory
cause of delays.
Certificate of financial implication for ULC Bill to be secured from MoFPED
Draft of ULC Bill was developed and consultations are still going on
Management should explain the cause of failure to complete the activity as planned.
The ULC Bill was drafted and consultations are still on going.
Failure to complete the planned activities in the scheduled period may impact
negatively on the general performance of the Commission and could lead to failure
to fulfil the entity‟s mandate.
I urged management to always ensure that all funded activities are undertaken.
2.3.6.3 Un-updated government land register
Management of the Commission failed to update a register of all land titles which
were processed and acquired for Government institutions contrary to Section 49 of
the Land (Amended) Act, 2004. I further noted that management has not come up
with a Register of Government Institutions with Land that is not surveyed and
therefore not titled. Cases of un-surveyed and untitled land were noted in NARO,
Uganda Police, Universities and Ministry of Lands among others. This exposes
government land to risk of loss through land encroachment.
Management explained that they have a fully compiled Inventory of Government
Land though not fully updated. Management has requested for funding from
MoFPED to complete this exercise.
81
I advised management to expedite the process of establishing a well updated
inventory of Government Land.
2.3.6.4 Dormant bank accounts
The Commission has five (5) bank accounts all held in Bank of Uganda however,
these accounts remained open yet they were dormant for the whole financial year
under review. Details in the table below: I explained to management that failure to
close dormant bank accounts is an avenue for irregular transactions.
Account No Account Title
1 003560068000001 Uganda Land Commission Salary Account
2 003560078000001 Uganda Land Commission Cash
3 003560168000001 Uganda Land Commission –NTR
4 003560308000001 Uganda Land Commission Forex Transfer A/C
5 003560318000001 Uganda Land Commission LC A/C
Management explained that they have written to MoFPED to have the accounts
closed however no action has been taken yet.
I advised management to follow up the matter with the Accountant General and
have the dormant accounts closed.
2.3.6.5 Failure to maintain a land fund bank account
Management of Uganda Land Commission did not keep a separate bank account
i.e. “the land fund account” contrary to the requirements of the Land (Amendment)
Act. Failure to maintain the account implied that the activities planned under the
land fund especially compensations and land acquisitions may not be achieved.
Management explained that Government has not fully operationalized the Land
Fund as per the requirements of the Land Act but indicated that the land fund
regulations, 2014 - Statutory Instrument Supplement No.6. will be used by Cabinet
to direct MoFPED to open a separate account for the Land Fund and allocate it
Funds.
82
I advised management to follow up the matter with the relevant authorities to
ensure that the account is opened and operationalized.
2.4 PUBLIC SECTOR MANAGEMENT
2.4.1 PUBLIC SERVICE COMMISSION
2.4.1.1 Mischarge of expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Commission‟s expenditures revealed that the entity charged
wrong expenditure codes to a tune of UGX.512,592,443. This constituted 13% of
total expenditure of the Commission. This practice undermines the importance of
the budgeting process as well as the intentions of the appropriating authority and
leads to misreporting.
Management explained that they have been rationalizing the use of funds released
since the funds are not sufficient. They further explained that they have always
found it difficult to effect payments based on items given that most activities are
process activities hence ending up charging various items according to Commission
priorities.
I advised the Accounting Officer to streamline the budget process to ensure that
sufficient funds are allocated to each account. Authority should be sought for any
reallocations.
2.4.1.2 Stationery not taken on charge –UGX.21,760,585
Treasury Accounting Instructions (TAI) Part 2 Chap.2 Section 203 Stores requires
that all store receipts should be posted in the ledger as soon as they have been
examined in accordance with the receiving procedure.
It was observed that stationery amounting to UGX.21,760,585 procured by the
Commission was not supported by delivery notes, goods received notes, invoices
83
and acknowledgement receipts and there were no alternative procedures to verify
delivery of the stationery. As a result I could not confirm that the stationery items
were procured and taken on charge as required by the regulations.
Management explained that the Commission does not have substantively appointed
stores staff but has stepped up close supervision in this area to streamline and
enforce stores control measures. The office supervisor has been assigned this
responsibility in the meantime.
I advised management to ensure compliance with the Treasury Accounting
Instructions.
2.4.1.3 Outstanding domestic arrears
UGX.73,540,596 due to various suppliers remained outstanding for the fourth year
running, i.e. since 2009/2010. The bigger portion of the arrears amounting to
UGX.66,955,379 relate to UMEME being unpaid electricity bills. The Commission
risks litigation from the suppliers which may lead to losses in form of damages and
interest awards by courts.
Management explained that they have followed up the matter with Ministry of
Finance, Planning and Economic Development and as a result, a provision of
UGX.13,628,000 for the arrears in the budget for financial year 2014/2015 was
made. Management further explained that the balance is progressively being
reduced through deductions made by UMEME on the prepaid accounts at the rate
of 30% per payment.
I advised management to continue liaising with Ministry of Finance, Planning and
Economic Development and have the arrears cleared.
2.4.1.4 Budget performance
Public Finance and Accountability Regulations 2.10(b) entrusts the Accounting
Officer with ensuring that all controls such as those contained in the approved
estimates and warrants are strictly observed. Budget estimates are based on
outputs to be achieved for the financial year and during implementation, effort
84
should be made to achieve the agreed objectives or targets of the entity within the
availed resources.
A review of the budget performance for the year revealed that some targets were
not achieved despite release of funds for the vote functions. Details are as below.
The inadequate performance may hamper service delivery and the appropriating
authority‟s objectives may not have been met.
Vote
function
output
Item
description
Quantity Amount
budgeted
(UGX.’00
0)
Amount
released
(UGX.’00
0)
Quantity Remarks
135206 Guidance
and
Monitoring-
Advertiseme
nts
Adverts to
be
conducted
by PSC
166,000 166,000 Released
one advert
“PSC Internal
Advert
Despite funding,
only
UGX.17,200,000
was spent which
is 10% of actual
release.
135275 Purchase of
motor
vehicles and
other
transport
equipment
One
vehicle
procured
250,000 170,792 One vehicle
purchased –
double cabin
The commission
over budgeted for
the purchase of
one car because it
spent only
UGX.82,186,936
therefore diverting
the balance of
UGX.88,605,939
as indicated in 7.1
above.
Management explained that the Commission decided to intensify performance
audits during the period when there were no Members of PSC and also
concentrated on induction of new members of the District Service Commissions
(DSC). Where field visits were not done to provide technical guidance, technical
staff of DSC were brought to PSC offices for coaching in specific areas.
85
I advised management to ensure adequate implementation and supervision of
planned and budgeted for activities.
2.4.1.5 Absence of IT strategic plan
As noted in my previous report that Public Service Commission has an IT resource
Centre responsible for maintaining data of the Public Service Commission. However,
the Commission does not have a strategic IT plan that ensures adequate security
and protection over computers and of data held on computers or information
systems operated by the Commission.
There is a risk of wastage in the absence of the IT strategic plan given the
considerable investments in terms of computers, accessories and data security.
Management explained that the Commission has embarked on the development of
the IT Strategic Plan and that the delay was caused by the on-going merger of the
PSC System with IFMS and IPPS. Management further explained that the
Commission in the meantime ensures security and protection over computers and
data by operating an external back – up System by a Senior Officer at the rank of
Commissioner who also keeps a close password to all sensitive information.
I advised management to expeditiously formulate and have the plan approved to
help provide proper procedures to guide in the use of IT resources.
2.4.2 LOCAL GOVERNMENT FINANCE COMMISSION
2.4.2.1 Mischarge of expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Commission‟s expenditures revealed that the entity charged
wrong expenditure codes to a tune of UGX.241,919,355 which constituted 6.8% of
total expenditure. This practice undermines the budgeting process as well as the
intentions of the appropriating authority and leads to misreporting.
86
Management in their response acknowledged the mischarges and attributed it to
the inadequate budget allocation for gratuity and allowances both of which are
statutory obligations.
I advised the Accounting Officer to streamline the budget process to ensure that
sufficient funds are allocated to each account. Authority should be sought for any
reallocations.
2.4.2.2 Outstanding commitments
It was noted that UGX.17,525,048 (payables) due to URA in taxes remained
outstanding for the third year running contrary to section 124(1) that requires
remittance within fifteen days after end of month in which the payment subject to
the withholding was made. No effort has been undertaken to have it cleared. The
Commission risks fines and penalties from the tax body for the unremitted taxes.
Management attributed this to non-allocation of funds for domestic arrears in the
appropriation despite several requests from the Accountant General for the item
inclusion. Management further explained that the outstanding dues will be settled
in the financial year 2014/2015 once the funds have been sought.
I await the outcome of management efforts.
2.4.2.3 Outstanding advances
Receivables amounting to UGX.52,575,575 were not collected by the close of the
financial year. UGX.49,138,063 relates to the period 2011/12 and UGX.3,437,512
relates to the period 2012/2013. It should be noted that the amount accrued in the
financial year 2012/2013 was not included in the statement of financial position as
at 30th June 2014 therefore understating the receivables by UGX.3,437,512.
Management explained that consultations are underway with the Accountant
General‟s office over UGX.49,138,063 advanced to an official who suffered a stroke
and is unable to carry out any official activity. Management further stated that
necessary adjustments for UGX.3,437,512 will be made to cater for the outstanding
position.
87
I advised management to adjust the financial statements of the commission
accordingly. The outcome of consultations with Accountant General is also
awaited.
2.4.2.4 Non deduction of PAYE from Gratuity Payments
It was noted that the Commission paid UGX. 241,809,552 being gratuity to all staff.
However, contrary to the tax law, UGX.72,542,866 was not deducted from gratuity
payment. Failure to deduct taxes exposes the Commission to a risk of penalties and
fines, and it culminates into loss of Government revenue.
Management explained that payments without offsetting tax was based on a letter
from URA dated 21st September 2001 exempting gratuities and pensions being paid
from the consolidated fund from tax. I explained to management that according to
the letter, exemption was applicable to only pension gratuity in accordance with the
Pensions Act and not contract gratuity.
I advised the Accounting Officer to institute recovery measures for the un-deducted
amounts for onward remittance to URA.
2.4.2.5 Advances to individual personal accounts
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), require
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder is required to be
appointed by the Accounting Officer with the approval of the Accountant General.
However, it was noted that UGX.241,922,320 was advanced to Commission staff
through their personal bank accounts to undertake direct procurements and other
activities of the Commission.
Such a practice of depositing huge funds on personal accounts exposes
Government funds to risk of loss, since the commission does not have any control
over such funds deposited on individual personal accounts.
Management explained that it was resolved to minimize these advances where
practicable by using the cashier as the agent to manage cash and make payments
88
where necessary. Management further explained that requests will be made for
program officers to be appointed as temporary imprest holders for up-country
activities.
I advised management to ensure strict adherence with the requirements of the
Treasury Accounting Instructions.
2.4.2.6 Doubtful payments on spares and repairs
UGX. 140,273,112 was paid to several pre-qualified garages for repairs of
Commission vehicles for the financial year 2013/14. A review of the transactions
revealed the following which were contrary to Section 816 of the Treasury
Accounting Instructions, 2003, Part 11 Public Stores Chapter 8 outlining modalities
for maintenance of vehicle inventories:
• There were no vehicle repair assessments done by a competent mechanical
engineer prior to commitment of vehicles to garages for repair. The garages
could thus take advantage in assessing repair needs and consequently inflating
repair costs.
• No competent mechanical engineer from the Commission was at hand to
inspect and certify repairs undertaken by the garages.
• The spare items replaced (used spare parts) were not returned to stores for
independent verification by audit.
I informed management that there was a risk that garages could have taken
advantage in assessing repair needs and consequently inflating /falsifying repair
costs. In absence of checks, the genuineness of the repairs could not be
ascertained.
Management explained that consultations with Ministry of works were undertaken
and guidance on the appropriate process to follow was provided and the
involvement of the Chief Engineer‟s office reviews on all servicing and repairs has
now been instituted.
I await the effectiveness of the instituted system.
89
2.4.2.7 Dormant account
The Commission had a dormant account “Local Government Sector Investment
Plan-LGFC” (Account number 110088000020) with a balance of UGX.124,888,417.
This was contrary to guidance from the Accountant General which provides that all
Government accounts held with Bank of Uganda are automatically blocked if they
are inactive for a period of six months. It was noted that this account has been
non-operational with the same balance both in the previous financial year and the
year under review. Dormant accounts are risky as they provide an avenue for
perpetuating fraud through concealment.
Management explained that they had written to the Permanent Secretary/Secretary
to the Treasury on the same issue and had been advised to wait for communication
from the donors before any action is taken.
I advised management to liaise with the donors immediately and have the account
closed.
2.4.2.8 Pre-qualified framework contracts
It was noted that 80% of procurements undertaken by the entity were under frame
work contracts. However several procurement regulations were flouted as stated
below;
Section 237 (2) of the PPDA regulations requires a bidder to indicate the unit
rate for each item. Further, section 237 (7) provides for a price adjustment in
accordance with section 244 and 245. It was noted that all frame work
contracts neither had fixed prices nor price adjustment clauses to be used
during the agreed period.
Section 126 (4) of the PPDA regulations requires a PDU to rotate pre-qualified
providers on successive shortlists where pre-qualification is used for a group of
contracts. It was noted that one provider was single sourced to supply assorted
stationary, tonners, printing and photocopying services almost the entire year
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of frame work contract among the updated 20 pre-qualified suppliers of the
similar items.
The Commission risks being exposed to non-competitive prices and optimal
budgeting for supplies may be hampered due to fluctuating prices for projected
procurement requirements.
I advised Management to ensure that all requirements under the framework
contracts are complied with.
2.4.2.9 Budget performance
Public Finance and Accountability regulations, 2003 section 2.10(b) entrusts the
Accounting Officer with ensuring that controls such as those contained in the
approved estimates and warrants are strictly observed. Budget estimates are based
on outputs to be achieved for the financial year and during implementation. Effort
should be made to achieve the agreed objectives or targets of the entity within the
availed resources.
Review of the budget performance for the year under review revealed that the
activity in the table below was not achieved despite Government releasing funds.
The table below refers:
Vote/
Program
me
Item
descript
ion
Quantity Amount
Budgeted
Released Quantity Remarks
Vote
function
1353
Output-
135375-
purchase
of motor
vehicles
and
other
equipme
nt
Purch
ase of
one
station
wagon
Purchase
of tyres
and spare
parts
99,700,000 93,593,26
2
No
vehicle
purchased
Despite
93%
funding
no vehicle
was
procured.
The authority‟s objectives may not have been met.
91
Management explained that the amount released from Treasury under the
Development Budget was not adequate to purchase the station wagon as had been
planned and therefore used the funds to purchase other Capital items.
I advised management to always undertake planned activities as approved.
2.4.3 KAMPALA CAPITAL CITY AUTHORITY
2.4.4.1 Outstanding receivables
The trade and other receivables increased from UGX.58,950,497,967 to
UGX.63,232,221,289 (representing 7% increase from the previous year‟s balance).
The change in receivables was partly due to change in accounting policy on
provision for doubtful debts from 30% to 10% of outstanding receivables. Out of
the receivables amount of UGX.70,258,023,654(excluding 10% provisions),
UGX.59,905,664,404 relates to arrears of property rates UGX.49,000,673,808 and
Ground rent UGX.10,904,990,596 that have remained outstanding for over 5yrs.
Failure on the part of management to recover outstanding receivables may lead to
further accumulation of receivables to unrecoverable levels which may require
writing off hence financial loss to the Authority.
Management explained that a special team was appointed to handle revenue
arrears which have been segmented with focus on clients with bigger arrears
bearing in mind the 80/20 parity rule. Management further explained that the
Permanent Secretary/Secretary to Treasury was requested to withhold at source
arrears to the tune of UGX.10billion owed by various Government departments. The
KCCA litigation department has also been directed to pursue arrears cases worth
UGX.8 billion through the courts as sensitization activities to clients to enhance
voluntary compliance are going on.
I advised management to streamline its debt management policy with a view of
recovering outstanding arrears.
92
2.4.4.2 Shortfall in Government Grant
The Authority estimated to receive UGX.118,409,594,604 as grants from the Central
Government. However, only UGX.116,836,314,649 was released creating a short
fall of UGX.1,873,051,171. Failure by Government to release all budgeted funds to
the Authority stalled implementation of some programs thereby denying services to
the beneficiary communities.
Management stated that it appealed to Government to release all budgeted funds in
order to fully implement the approved work plan.
I advised management to continually engage the Ministry of Finance, Planning and
Economic Development to ensure that budgeted funds are actually released.
2.4.4.3 Incomplete asset register
A review of the asset register and reports from real estate management unit
revealed the following;
A number of plots of land were not stated in the fixed asset register
Plots of land stated in the asset register were not backed with land titles
Some Plots of land in the fixed asset register lacked plot numbers, and
location.
Refer to the table below:
Land details Amount (UGX.) Remarks
Bukasa primary school 556,000,000 Land title not yet
acquired
Block 18 Plot 234 , Nateete 900,000,000 Land title not yet
acquired
Bukoto Health centre No land title, no
valuation and asset not
in the asset register
FRV 402 Folio 21 Plot A-16A
Naguru link
Not yet valued and thus
not in the asset register
Block 208, Plot 1035, 3883 &
3884 at Kawempe Kyadondo
Not yet valued and thus
not in the asset register
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Land details Amount (UGX.) Remarks
LRV 1485 Folio 1 Plot 4A-12A
Namugera Road Mbuya (99
years-Lease from KDLB)
Not yet valued and not
in the asset register.
LRV 374 Folio 1 Plot 22 Plot
1A Kitante
Not yet valued and not in
the asset register.
Plot 20-22 and Plot 24
Nakivubo
Not yet valued and not in
the asset register.
LRV 2833 Folio 5 Plot 2
Kenneth Close
Not yet valued and not in
the asset register.
There is a risk of loss of assets because of the incomplete asset register.
Management explained that some plots of land were not stated in the asset register
pending conclusion of valuation by the Chief Government Valuer. Management
further explained that the process of securing land titles is underway for Bukasa
primary school and Block 18 Plot 234, Nateete.
I advised management to expedite the process of property verification and
valuation to avoid any future encumbrances.
2.4.4.4 Absence of Public Accounts Committee
Section 58 of the Kampala Capital City Authority (KCCA) Act, 2010 stipulates that
there shall be established for the Capital City, a Public Accounts Committee (PAC)
consisting of a Chairperson and four other members appointed by the Lord Mayor
and with the approval of the Minister. This Committee is responsible for examining
the reports of the Auditor General, Chief Internal Auditor and any reports of
Commission of Inquiry and submits its reports to the Authority and to the Minister
and the Minister lays the report before Parliament.
As reflected in my previous year report, the Capital City Public Accounts Committee
is yet to be instituted. Absence of Authority Public Accounts Committee implies
that the corporate governance structures are inadequate and the recommendations
of Internal Audit department, Auditor General and other investigation agencies may
not be reviewed and implemented as required.
94
Management explained that the Authority has a standing committee in place
overseeing the function of internal audit in accordance with section 16 of KCCA Act
2010. Management further explained that section 58 of the same Act also requires
the authority to form a Public Accounts Committee which performs almost similar
function as the standing committee in charge of the audit function of the Authority.
I advised management to liaise with the line Ministry in consultation with
Parliament in order to harmonize the contradictions within the law.
2.4.4.5 Organizational structure - Staffing gaps
The Authority does not have adequate staff numbers to achieve the desired
performance as out of an approved organization structure of 1,332 posts, only 395
positions are filled by contract staff representing only 29.7% of the required
workforce. 641 positions including key positions of Administration officers, Treasury
officers have been filled by staff recruited on Temporary basis representing 48% of
the required workforce.
Lack of adequate staff coupled with the workload on the existing staff may impact
negatively on service delivery and achievement of the targeted output/results.
Segregation of duties may not be adequately done as required.
Management explained that the challenge of the current inadequate staffing is due
to budget constraints other than the speed of the relevant recruitment authorities.
Management further explained that KCCA appoints staff in line with the budget
allocation and that the budget provision for the financial year 2014/15 has so far
allowed the Authority to increase the staffing number by 3% that is from 395 to
421, accounting for 32% of the approved structure compared to 29% as at end of
the financial year 2013/14 while the permanent staff members are still being
complemented by staff on 4 months‟ contracts.
I advised management to liaise with Ministry of Finance, Economic Planning and
development with a view of increasing budget provisions for staff costs so as to
address the problem of staffing gaps.
95
2.4.4.6 Court and out of court settlements
A review of quarterly reports from the legal department revealed that the entity
incurred lost legal cases or engaged into out of court settlements worth
UGX.2,463,978,558 which arose from management‟s conduct of operations like
alienating of land during construction, breach of contract agreements and delayed
signing of contracts. A number of costs also arose from duplicate allocation of land
titles and leases by Kampala District Land Board (KDLB), thus causing a liability to
KCCA. There is a risk that amount incurred in Court claims, could affect service
delivery as planned activities may be hindered or not funded.
Management explained that these cases were due to poor contract management
during the tenure of the defunct KCC, however contract management has since
improved. Management further explained that other activities arose from acts or
omissions of KDLB and by virtue of section 63 of the Land Act which requires that
all expenses of KDLB are charged on KCCA funds.
I advised management to act diligently in executing its mandate to avoid
expenditure arising from litigation.
2.4.4.7 Unaccounted for Festival funds
Section 181 requires all vouchers to contain full particulars of each service or good
and be accompanied by such supporting documents as may be required so as to
enable them to be checked without reference to any other documents.
It was noted that UGX.74,547,100 advanced to a Supervisor, Revenue
Reconciliation on 4th October 2013 a day to the event to cater for festival
emergencies was not accounted for before the staff absconded from duty. In
absence of the relevant accountabilities, I was unable to confirm whether the funds
were put to the intended purposes for which they were requisitioned.
96
Management explained that the affected staff left KCCA before handing over and
submitting full accountability. Management further explained that the staff‟s
gratuity has not yet been paid and Police is pursuing the case.
I advised management to ensure that all Authority funds are properly requisitioned
and accounted for within the statutory period. Meanwhile, I await police action on
the matter.
2.4.4.8 Procurement of Public Transport Management system
The Authority signed contract with an International Company to provide a system
to manage public transport at cost of USD.2,753,932. A review of the contract
document revealed that the contractor included withholding tax (6%) amounting to
USD.133,255 on the costing schedule. This implied that the withholding tax cost
was to be incurred by KCCA contrary to the Income tax Act. There is a risk that
management may incur illegible costs arising from the contract hence resulting into
a loss of government funds.
Management explained that a letter was written to the contractor seeking an
addendum to the contract by removing the withholding tax from the costing
schedule.
I advised management to pursue the matter and recover the funds from the
outstanding balance of 37% of contract price. Further, management should ensure
there is strict adherence to Income tax laws in future for procurement of goods and
services.
2.4.4.9 Budget performance
Public Finance and Accountability Regulations 2.10(b) entrusts the Accounting
Officer with ensuring that all total controls such as those contained in the approved
estimates, warrants and others are strictly observed. Budget estimates are based
on outputs to be achieved for the financial year and during implementation, effort
97
is required to be made to achieve the agreed objectives or targets of the entity
within the availed resources.
Review of the budget performance for the year under review revealed that some
targets were partially or not achieved by the end of the financial year. Service
delivery is hampered and the appropriating authority‟s objectives are not met. Refer
to the table below:
Vote
function
output
Item
descripti
on
Planned
outputs
/quantity
Amount
budgeted
(UGX.)
Amount
released/
collected
(UGX.)
Actual out
Put as at
30th June
2014
Audit
remarks
Roads
and
drainage
works
Constructi
on of
Prince
Charles
drive
retaining
wall –
including
road
reconstruct
ion
Building of
retaining wall
so that road
is opened to
traffic
1,000,000,000 1,000,000,
000
procurement The
constructi
on work
had
commenc
ed
Reconstruc
tion of
Mbogo
Road
(PAVED)
Construction
of 1.9km
Mbogo road-
upgrade to
paved road
2,521,131,800 2,356,736,
000
Still
struggling
with
contractor to
complete
Construct
ion is not
yet
complete
d.
Reconstruc
tion /
upgrade
Lot-2
Mutundwe
4.5km
Weraga
2.45km
Wansaso
0.18km
13,122,000,00
0
15,167,589
,100
Works
started on
Mutundwe
road.
Expected to
be completed
by March
2015
Works
are
ongoing
Drainage
improvem
ent and
Replaceme
nt of
Manhole
Covers
Manhole
cover
replacement
within the
450,000,000 71,647,600 The single
sourced
company
ALTIUS
Manholes
have not
yet been
fully
98
Vote
function
output
Item
descripti
on
Planned
outputs
/quantity
Amount
budgeted
(UGX.)
Amount
released/
collected
(UGX.)
Actual out
Put as at
30th June
2014
Audit
remarks
maintena
nce works
city ENGINNERIN
G (U) LTD
did not
deliver the
manholes
installed
in the
city.
LGMSD Health
infrastruct
ure
Kitebi
health
centre
renovated
Renovation
of kawaala
H/C
Kisenyi
health
centre
remodeled
1,729,892,000 1,729,892,
000
Works on
kitebi still at
about 20%
Renovation
at Kawaala
still at
design
stage
Procurem
ent for
the
constructi
on of
Kawala
Health
centre
has
commenc
ed.
Delay in implementation of planned activities affects the Authority in the
achievement of its mandate.
I advised management to expedite the process of Programmes implementation to
ensure that all planned activities are implemented within the target period in order
to the achieve Programmes objectives.
2.4.4.10 KCCA Football Club (KCCA FC)
A review of KCCA Football Club activities during the year under review revealed the
following;
a) KCCA FC Governance Structures
(i) Failure to hold Annual General Meeting (AGM)
Section 131 (1) of the companies Act (Cap 110) states that” Every company shall in
each year hold a general meeting as its Annual General Meeting (AGM) in addition
to any other meetings in that year, and shall specify the meeting as such in the
notices calling it; and not more than fifteen months shall elapse between the date
99
of one annual general meeting of a company and that of the next; except that so
long as a company holds its first Annual General meeting within eighteen months of
its incorporation, it need not hold it in the year of its incorporation or in the
following year.”
On the contrary, KCCA Football Club Limited, a private company incorporated on
13th December 2006 did not hold an Annual General Meeting during the year and
there was also no evidence of AGMs held in the recent past.
Failure to hold AGMs denies shareholders the right to monitor the Company and
also casts doubt on the stewardship role of management.
(ii) Non-functional structures
Other non-functional organs of the company are:
The Executive Committee
Finance Committee
Audit Committee
Legal Committee
Women Football Committee
Marketing, Communications and Fans Committee
Estates, Security and Safety Committee
Management explained that the AGM is attended by members of the club who
presently are the institution (KCCA) and the Board (which is appointed by the
institution). Management further explained that as overseers of the operational
activities, the Board reports to the Authority on a quarterly basis through the
Executive Director and therefore the essence of an AGM might be superfluous.
I advised management as a shareholder with controlling interest in the club to liaise
with the relevant stakeholders to ensure that AGMs are held in accordance with the
law and also ensure that all corporate governance structures of the club are
existent and functional.
100
b) Inadequate Record Keeping
It was noted during the audit that KCCA FC did not maintain a Cashbook in which to
record all receipts and payments for KCCA Football club funds. The Club had a
budget of UGX.1,979,908,000 for 2013/2014. However, all the receipts and
payments were not recorded in a cash-book which include 85% of the gate
collections at every match, grants from KCCA, annual membership fees, grants from
FUFA, CAF and FIFA, Donations. Other records indicated in the Kampala Football
club constitution under Article 35 that were not updated/ maintained include:
Members Register- Although this is in place, it was last updated in 2003 thus
it is not reliable.
Accounting Ledgers -These are not kept and maintained.
Register of Shareholders- This is not in place.
The Club does not produce annual financial statements.
This was caused by laxity on the part of the Executive Committee of the club to
enforce the requirements of the Club Constitution. As a result of non-maintenance
of records, I could not confirm that all revenue due was collected, receipted,
recorded and properly accounted for; and that all expenditure incurred were duly
authorized, paid to the right persons and recorded in the accounting books.
Management explained that a review process on club‟s operations to improve its
administration and management was underway.
I advised the KCCA FC Board members to ensure that complete records for the club
activities are maintained to facilitate financial reporting.
c) Non-Compliance with PPDA Act, regulations and guidelines
Section 55 of the Public Procurement and Disposal of Public Assets Act and
Regulations, 2003 required all public procurements and disposals to follow the
procedures prescribed therein.
101
Examination of payment vouchers for the KCCA Football club for 2013/2014
revealed that the club made payments and purchases for services and goods which
were above the tenderable threshold. However, it was noted that supplies and
services were procured by staff using cash advances to the tune of
UGX.122,850,000 without following the procurement process. In all cases, Local
Purchase orders were not issued. I was therefore not able to obtain assurance that
the procurement process yielded value for money. KCCA FC is therefore exposed to
a risk of loss of funds through procurement by cash.
Management explained that a review process on club‟s operations to improve its
administration and management was underway.
I advised KCCA as a major shareholder with Board representation to ensure that
club management avoids the use of cash procurements and follow proper
procurement procedures as prescribed by the PPDA law.
2.4.4.11 Inspection of schools
Inspection of a number schools in all five divisions of Kampala revealed that the
schools faced several challenges that impacted on service delivery namely:
a) Land ownership
During inspection, it was noted that a number of schools funded by the Authority
had land disputes which meant that the Authority risked losing its investment in the
schools in case the land was sold. For example in the case of Nabagereka primary
school where the bonafide owner of the land sold off the land, the school was
demolished yet KCCA had invested over UGX.50million on the renovation of the
school in the prior year and capitalized the investment in the fixed asset register for
the year under review. The Authority risks losing its investment in the schools on
the disputed land.
Management explained that apart from 4 schools (Kisaasi Primary school , Bukasa
Primary school, Mirembe primary school and Kamokya primary school), that are
owned by KCCA. Other schools‟ land is owned by other authorities such as Uganda
102
Land Commission, Kampala District Land Board, Faith Based Organizations like
churches and Muslim organizations and Buganda Land Board. Management further
explained that KCCA has been negotiating with the aforementioned stakeholders to
obtain lease or Memorandum of Understanding that can allow the Authority to
make long term investments on the land and sustain service delivery in the city.
I advised management to continue liaising with the relevant stakeholders like
Uganda Land Commission and Ministry of Education to ensure that school land and
buildings are safeguarded.
b) Other observations
The following are the observations made in the schools inspected;
Kiteebi primary school lacked furniture in its school libraries
Namungona Kigube‟s land had been encroached on by neighbours.
Nakesero, Buganda road and Murchison bay primary schools had a high
number of classroom per pupil ratio and there is need for more classrooms.
Naguru Katale primary school lacked a school fence to safeguard school
property.
Kawempe Muslim primary school was experiencing water shortages that
affected school sanitation.
The above challenges hamper effective service delivery.
Management explained that Kitebi primary school will be supplied with desks in the
financial year 2015/16. Management further explained that the water shortages in
Kawempe Muslim Primary school are being addressed through a partnership
between African Evangelistic Enterprise/Water Aid which has just completed a
10,000 litre harvesting tank in the school to address the water shortage.
I advised management to continue taking the necessary steps to solve the
bottlenecks for effective service delivery in the schools.
103
2.4.4.12 ENGINEERING AUDIT FINDINGS
Engineering audit was carried out in KCCA for the year under review. The findings
are below:
a) Contract Management
It was noted that supervising consultants were engaged after the contractors had
commenced works leading to delays in issuance of design drawings and hence
delaying actual completion of the projects. This was noted for the Rehabilitation of
Jinja Road project, construction of Mbogo Road Project, Reconstruction / Upgrading
and Periodic Maintenance of several roads in Nakawa Division and Upgrading of
Drainage Black Spots Contract Phase 1 (Sixth Street, Ben Kiwanuka Road, Jinja
Road Access, Luthuli-Bandali – Rise, Salaama Road, Kawempe – Ttula Road).
The Accounting Officer explained that to address the problem, framework
contracts will be applied for consultancy supervision in future contracts.
I advised the Accounting Officer to always procure supervision consultants prior to
commencement of works to enable timely review of designs and thereby avoid
delays in contract implementation.
b) Delayed completion and abandonment of works
It was t noted that two projects including Mbogo road and Drainage of black spots
were abandoned resulting into delayed completion of the works. Liquidated
damages amounting to UGX.56,725,464 were not charged against the contractor
for Construction of Mbogo road for the delays in the completion of the works.
I advised the Accounting Officer to have the amounts recovered and to ensure that
liquidated damages are charged for the delayed works as required by the contract.
The Accounting officer explained that liquidated damages would be charged in the
final account.
104
c) Quality of works
Generally, the overall quality of the works on the projects audited was good.
However, there were instances where defects such as alligator cracks drainage
defects, ponding, uncovered manholes, segregation were identified which needed
rectification. These were noted on all the road projects selected.
Furthermore, test results on AC sample cores showed that some sections did not
have the binder content or the air voids as per the specifications.
The Accounting Officer explained that for projects under defects liability period, the
defects had been identified under the snag list and were being worked upon
whereas for the Nakawa and Luzira roads, correction of defects was an on-going
process since the contract was still under execution. There was an exception for the
black spots and Mbogo road projects where the contracts had been terminated and
the defects would be rectified under force account.
I advised the Accounting Officer to exercise more control over the quality of works
being executed and ensure that the defective works identified on the specific
projects are rectified by the contractor and the desired quality achieved.
d) Summary of key findings per project
Below is a summary of key audit findings as a result of the engineering audit per
project:
S/No Key findings Management
response
Audit remarks
/recommendations
1. Rehabilitation of Jinja Road section from Yusuf Lule Junction to
Nakawa (Katalima Road Junction) by M/S
EnergoProjektNiscogradnja Ltd at UGX. 10,126,298,101
Un updated bill of
quantities (BoQs) to
reflect changes after
design review.
The bill of quantities
(BoQs) for the project
was updated after the
design review and it was
the basis for the
Updated BoQs were
not used for
certification of works.
I advised the
Accounting Officer to
105
S/No Key findings Management
response
Audit remarks
/recommendations
Variation. ensure that the revised
BoQs are used
whenever there is a
review.
The Consultant was
engaged after 48% of
the works were
completed. The
consultant‟s scope
included a design
review and hence
required the
Consultant‟s
engagement before
contracting the works
out.
KCCA has now put in
place framework
contracts for consultancy
supervision to
minimize/control such
delays.
Consultants should be
engaged before
commencement of the
contracts.
The Authority should
assess the adequacy of
framework contracts
for consultancy
supervision of civil
works in ensuring that
they actually minimize
and control works
delays and achieve
value for money in
implementation of civil
works.
At the time of field
inspections road
sections had ponding,
alligator cracks,
uncovered manholes
and segregation.
The observed defects
were identified as part of
the snag list issued to
the contractor. These
failed areas are mostly
around sewer manholes
which frequently
The Contractor should
be tasked to rectify the
defects to achieve the
desired quality.
The Authority should
monitor and ensure all
106
S/No Key findings Management
response
Audit remarks
/recommendations
overflow with sewage
weakening the asphalt.
The contractor has been
instructed to use C25
concrete to surround the
manholes to avoid
sewage penetrating
under the asphalt and
thus weakening it.
The Contractor is
gradually attending to
the defects during the
defects liability period.
defects are actually
corrected during the
defects liability period.
2. Reconstruction of Mbogo Road (Paved) by M/s Omega Construction
Limited at UGX. 2,521,131,767
Liquidated damages
amounting to UGX.
56,725,464 were not
charged to the
contractor as per
GCC49.1 of the
contract.
Liquidated damages
could not be charged for
works that were done
within the performance
period of the contract
which ended on February
4, 2014. The works that
were approved for
payment in interim
payment certificate no. 1
were executed during
the performance period
of the contract and tests
were conducted by
Contractors should
always be charged
liquidated damages for
the delays as per
contract.
107
S/No Key findings Management
response
Audit remarks
/recommendations
MoWT laboratory on 8th
January 2014. Liquidated
damages however, will
be charged for any works
that were executed after
February 4, 2014 in the
final accounts.
Delayed issuance of
design drawings and
report at
commencement of
works. Detailed design
drawings were issued
to the contractor 56
days after issuing the
Commencement order.
The initial
commencement date of
the contract was 29th
May 2013. However the
contractor wrote vide
letter ref
OME/MPM/KCCA/TRMRM
D/2013/011 dated 5th
July 2013 notifying that
he would be starting
works on 26th July 2013,
effectively changing the
start date. The first set
of design drawings was
issued to the contractor
on the 24th July 2013 to
avoid any delay in the
implementation of the
contract. (See
attachment 1.2e)
The document
submitted does not
relate to the
commencement order.
The Accounting officer
should always abide by
best practice by
ensuring detailed
design drawings and
report are available
and issued to the
contractor at
commencement of
works to avoid delays
in contract
implementation
The supervision
consultant for the
works was
commissioned 49 days
The commencement date
was effectively changed
by acceptance of the
The commencement
date did not change
because the
108
S/No Key findings Management
response
Audit remarks
/recommendations
after the
commencement of
works, making it
unclear who supervised
the works before.
contractor‟s letter dated
06th July 2013 to 26th
July 2013. So the
consultant was engaged
in time.
contractor‟s letter did
not refer to a
commencement order.
The Accounting Officer
should ensure that
supervision consultants
are procured before
commencement of
works.
Quality related defects
were observed on
several sections of the
Road, including
segregation signs,
cracks, poorly
constructed overlays
and drainage
defects.(Silted culverts,
collapsed ,manholes,
unprotected slopes and
scoured channels)
The contract was
terminated by the
Employer due to
fundamental breach of
contract by the
contractor specifically by;
(i) Failure to rectify
defective works
(ii) Failure to
maintain a valid advance
payment guarantee
(iii) Failure to perform
the contract within the
maximum liquidated time
of 100 days.
The contract is under
arbitration awaiting a
final ruling. The
Employer intends to
The Accounting officer
is advised to ensure
that;
Final account is
prepared and all
contractual
obligations with the
contractor are
concluded.
Enhanced supervision
is carried out on the
new contractor
tasked to rectify
defective works to
ensure the desired
quality of works is
achieved.
109
S/No Key findings Management
response
Audit remarks
/recommendations
rectify the defects using
another contractor.
3. Upgrading of Gomotoka Road by Kiru General Services Ltd at UGX.
1,400,006,282
Quality related defects
were observed on
some sections of the
road revealing 2
broken manholes,
some road edges were
not flashing with the
drains and lack of
screens for debris from
access road drains.
The manholes were
broken by heavy trucks
which are not supposed
to use the road. There
are road signs clearly
indicating the tonnage
allowed on the road.
Police has been advised
to enforce this
regulation. The
contractor was however
instructed to make good
and has replaced the
covers.
Screens for debris were
not included in the BOQ
and the drains are self-
cleaning because of the
slopes.
In the sections where the
road edges do not flash
with the drains, the
asphalt had been laid
after stone pitching
works. This was evened
up with a concrete
The Accounting officer
should
Ensure;
Defective works
on the road edges and
road drains are
rectified to the desired
quality of works.
Sensitization of public
and road users about
safeguard and
destruction of
manhole covers
Use of superior
materials in manhole
construction deterring
theft of manhole
covers
110
S/No Key findings Management
response
Audit remarks
/recommendations
coping and trimming of
edges.
4. Reconstruction/Upgrading and Periodic Maintenance of
Kintu/Kitintale(1.0km), Kamuli Link/Ndagire(0.65km),
Cannon(0.8km), Circular Drive(0.4km), Valley Drive(0.8km),
Corporation(0.27km) Martyrs access(0.35km),
Wanaichi(0.4km),Access2(0.1km), UNEB Access(0.35km),
Lakeside(1.0km), Radio Maria(0.55km), Mutungo-1(0.75km),
Mutungo Ring Road-2(0.75km), Kabalega Crescent(0.9km),
Buvuma(0.27km) Roads in Nakawa Division
Contractor: M/S Abubaker Technical Services and General Supplies
Ltd
Contract value : UGX. 14,602,410,905
The Consultant was engaged three (3) months after contract commencement
KCCA has now put in
place framework
contracts for consultancy
supervision to
minimize/control such
delays.
The Accounting Officer
should ensure that
supervision consultants
are procured before
commencement of
works.
Quality related defects were observed on some road sections such as edge failures, alligator cracks, ponding, damaged side drains , stone pitching and vegetation overgrowth
The roads were
inspected while the
works were in progress.
The mentioned failures
were identified and the
consultant issued
instructions for their
correction. Currently they
are largely rectified and
The Accounting officer
should ensure that
defective works
associated with edge
failures, alligator
cracks, ponding, side
drains, stone pitching ,
vegetation overgrowth
are rectified by the
111
S/No Key findings Management
response
Audit remarks
/recommendations
the remaining few are
being rectified on a case
by case basis by the
contractor during work
progress
contractor before
handover of the works.
5. Upgrading of drainage Black Spots Contact Phase 1 (Sixth street, Ben
Kiwanuka road, Jinja Access, Luthuli-Bandali – Rise, Salaama Road,
Kawempe – Ttula road)
by M/S Omega Construction Ltd at UGX. 4,181,073,515
Final designs were
submitted 8 months
after signing of
contract, leading to a
claim for idle time for
plant and personnel of
UGX. 1,700,000,000
This claim is still being
reviewed by the
consultant as evidence
provided was not
satisfactorily, hence
being disputed by the
Employer. The figure
recommended by the
consultant was not
justifiable and has not
been accepted by the
Employer. The Employer
recommended to
consultant to close off
this matter in accordance
to provisions of GCC
clause 44.4 which states
that, “the contractor shall
not be entitled to
compensation to the
Final design drawings
and report should be
made available and
issued to the contractor
at commencement of
works to avoid
associated delays in
contract
implementation and
associated claims.
112
S/No Key findings Management
response
Audit remarks
/recommendations
extent that the
Employer‟s interests are
adversely affected by the
contractor‟s not has
given early warning or
not having cooperated
with the Project
Manager”.
The Consultant was
appointed 3 months
after commencement,
with a scope that
included design review,
which was submitted
late into the contract
implementation. The
result was a claim for
idle time and time
extension by the
Contractor.
The time extension was
granted to the contractor
at no extra cost to the
Employer (see
attachment 1.5c). The
claim for idle time made
by the Contractor was
disputed by the
Employer.
The Accounting Officer
should ensure that;
Supervision
consultants are
procured before
commencement of
works to enable
designs of works is
reviewed for quality
and avoid delays in
contract
implementation.
The adequacy of
framework contracts
for consultancy
supervision proposed
by the accounting
officer be assessed to
ensure quality works
is achieved and
delays in completion
of work minimized
and controlled
There was inadequate
coordination with It is the contractors Response not
113
S/No Key findings Management
response
Audit remarks
/recommendations
third parties such as
National Water and
Sewerage Corporation
(NWSC) in relocation of
infrastructure within
the works of KCCA
responsibility to liaise
with third parties like
UMEME, NWSC etc as
per technical
specification A14
That notwithstanding,
KCCA made Efforts to
coordinate several third
parties such as NWSC,
UMEME, etc. This was
through letters and
meetings and there were
contact persons to
consult
satisfactory.
The Accounting Officer
has an obligation of
ensuring that there is
coordination with third
parties other than the
contractors if they are
Gov‟t agencies such as
UMEME and NWSC in
implementation of civil
works especially
where;
Water and sewerage
infrastructure
interferes with road
works
Power lines interfere
with road works
This will facilitate
smooth implementation
of works by the
contractor and avoid
unnecessary delays
associated with
accommodating works
of these utility service
providers
Contractor was not
penalised for
abandoning works on
Salama Road, Ttula
KCCA can only penalize
the contractor at
payment, and no
certificate had been
The Accounting officer
is advised to ensure
that a final account is
prepared and all
114
S/No Key findings Management
response
Audit remarks
/recommendations
and Bugolobi as
required by GCC59.2
but later terminated
the contract before the
client did over payment
delay of IPC4.
presented during that
period of site
abandonment.
KCCA started on the
process of termination
(request was at SG) but
due to required
approvals, delays are
eminent. The contractor
went ahead to terminate
before KCCA got
approvals from SG.
Nevertheless, KCCA
rejected the grounds for
contractor‟s action and
later terminated after SG
approval.
The Employer did not
approve payment of IPC
no.4 on grounds of
failure by the contractor
to fulfil contractual
obligations of renewing
performance guarantee
and lack of quality
assurance reports. The
contract was finally
approved for termination
by Solicitor General and
a letter forwarded to the
contractual obligations
with the contractor are
concluded.
115
S/No Key findings Management
response
Audit remarks
/recommendations
contractor in January
2015. A final account is
under preparation by the
consultant. (see
attachment 1.5f)
Filed Observations along
road sections on the
black spots revealed the
following;
Salama Road – varying
diameter weep holes,
lack of relief points to
flood areas at back
slope to the drain,
Bandhali rise/Bugolobi
– overburden left in the
island between drains,
overgrown bush, lack
of weep holes, lack of
manhole covers, poorly
restored road.
Entebbe Road – un-
restored areas at
manholes near capital
shoppers, settlement/
depression of restored
wearing course,
alligator cracks on
restored asphalt, un-
even paving blocks,
choked and silted
manhole covers.
Ttula Road – lack of
weep holes,
abandoned stone
The contract was
terminated and the
contractor shall be
penalized for uncorrected
defects on compilation of
a final account.
All uncompleted and
defective works noted on
the respective project
sites have not yet been
paid.
All Uncompleted works
and defects noted are
planned to be addressed
in-house.
Defects on Entebbe road
are already being
addressed in-house.
Works which were
abandoned like on Tula
road will be done after
The Accounting officer
should ensure that;
Defective works
identified on the
black spots on
Salama road,
Bandhali rise,
Entebbe road are
rectified by the
contractor and the
desired quality
achieved.
Close and continuous
monitoring and
supervision of
implementation of
civil works is carried
out to enable early
detection and
corrections of defects
identified to ensure
quality works are
achieved.
116
S/No Key findings Management
response
Audit remarks
/recommendations
pitching works, gulley
and pit formation with
mudslides on drain
sides expanding to
nearby
houses(cracked),
vegetation overgrowth,
garbage dumping and
sewage/ filth flow.
Electoral commission /
Jinja Road – vegetation
overgrowth, cracked
headwall, and sewage
flow.
sourcing for another
contractor to complete
the works.
The sewage flow is as a
result of illegal
connections of sewage to
storm water lines. At the
same time, the National
Water and Sewerage
Corporation project
which is laying sewer
lines close to this section
will be a permanent
solution in that it will
help illegal sewage
systems to be properly
connected.
2.4.4 KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT
PROJECT (KIIDP) (TEN MONTHS PERIOD ENDED APRIL 2014)
(a) Compliance with Financing Agreement and GOU Financial
Regulations
It was noted that project management had complied with the credit agreement
provisions and GoU financial regulations except for the matter noted below;
117
(b) General Standards of Accounting and Internal Control Systems
A review was carried out of the project system of financial management and it was
noted that management had instituted adequate controls to manage project
resources.
(c) Status of Project Implementation
A review and inspection of project activities was undertaken and the following were
noted;
i) Construction of Lubigi channel drainage system
I noted the following during inspection when I visited the completed construction of
Lubigi channel drainage system:-
• Some parts of the channel mostly the downstream had encroachers (Flower
gardens).
• At Hoima road, the culvert constructed was fully covered with swampy
vegetation.
• The downstream of the channel had a lot of depositions and silt.
In the circumstances, the smooth water run-off in the area was hindered.
Management explained that they have taken note of the flower gardens established
along the channel banks and they are making arrangements to evict the persons
and convert those spaces into public parks. They further explained that the cleaning
and maintenance of the channel is still a responsibility of the contractor (M/s
Spencon) whose contract is still under defects liability period. Management has
continued to supervise the contractor and will ensure regular cleaning and
maintenance of the channel.
Management effort to the effect is awaited.
ii) Kitezi Land Fill Extension
I noted the following when I visited the completed construction of Kitezi Land fill
extension:-
118
• Some fencing poles had broken down.
• Re shaping of the cells was not complete.
• Filling of the cells with hard core stones was not fully done as some bottom
areas did not contain any stones.
• The chain link concrete poles were not of good quality.
The defects mentioned above affected the attainment of initial objectives.
Management explained that the identified anomalies were being addressed.
Management had commenced on works to restore cell bottoms for the steep
embankment in cell 3. With regard to filling of the cells with hardcore stores, silt
had been deposited and the landfill management had commenced works to deliver
waste into the cells as a drainage blanket to prevent clogging of the aggregate.
The damaged poles had been replaced while the defective ones will be addressed
under the defects liability period.
I advised management to follow up the contractor and ensure that the remaining
works are concluded.
iii) Kimera Road
Inspection of the completed construction works of Kimera road revealed that the
street lights constructed were not functioning properly. In addition, the road was
not cleaned by the contractor as agreed and it was full of dirty materials. The
contractor therefore breached the contractual obligation of installing functioning
lights, cleaning the road, and removing all construction materials from the site. The
intended objectives of the project may not have been fully achieved.
Management responded that they are yet to carry out investigations and address
the short comings with the contractor since the contract was still under the defects
liability period.
I advised Management to ensure that works are done and completed according to
the contract.
119
2.4.5 BILL AND MELINDA GATES FOUNDATION – KCCA
Budgeting and Budget controls - over expenditure on International Travel
Contrary to the donor conditionality that required any expenditure variance on a
budget line above 10% to be approved by the donor, it was noted that there was
over expenditure on international travel of more than 10% without approval. Over
expenditure without donor approval is ineligible and may necessitate a refund.
Management explained that total Project travel costs were within the total budget
except the line item on international travel that was paid in excess of 10%.
I advised management to always seek the required authority prior to re-allocation
of funds from one budget line to another.
2.4.6 ELECTORAL COMMISSION
2.4.6.1 Rent Expenses
Section (H-b) (1) of the Public Service Standing Orders states that “Occupancy of
any Government Housing shall be governed by a Tenancy Agreements detailing the
terms and conditions of the tenancy. The tenancy agreement shall be drawn in
consultation with the Government Valuer”.
Payments amounting to UGX..305,700,000 to various Land Lords for properties
rented for district offices lacked tenancy agreements. In the absence of the
agreements, I could not confirm the correctness of the payments. Meanwhile
UGX..463,070,327 that was paid in advance by the Commission as rent was not
reflected in the Financial Statements as a prepayment (receivable). In the
circumstances, the networth is misrepresented in this regard.
Although the Accounting Officer indicated that the tenancy agreements were
available, they were not availed for verification.
120
I advised the Accounting Officer to ensure that all rental payments for district
offices are supported with tenancy agreements. In addition the prepaid rent should
be reflected as a receivable in the financial statements.
2.4.6.2 Payables
The Commission, in its Statement of Financial Position as at 30th June, 2014
disclosed a payables balance of UGX..8,139,451,273 which relate to expenses
incurred on Data entrants during the preparations for Lower Local Councils in the
financial year 2009/10 (UGX..472,324,176) and Gross Tax incurred during the
procurement of ballot papers for the 2011 General Elections (UGX..7,748,161,249).
Delayed settlement of payables may result into litigation and their attendant costs.
The Accounting Officer indicated that whereas a request to settle the arrears was
made to MoFPED, there was no provision in the Commissions MTEF ceiling. He also
explained that the Commission was working with MoFPED to clear tax obligations.
I advised the Accounting Officer to follow up with MoFPED and obtain an
adjustment on the MTEF ceilings to enable him settle the obligations.
2.4.6.3 Officers in Acting Capacities beyond the recommended Periods
It was noted that five officers of the Commission had been occupying their positions
in acting capacities for more than the maiximum six (6) months stated in paragraph
4.7.7 of the Electoral Commission Personnel Manual. There was no evidence on file
to show that there had been attempts to fill the positions with substantive
appointments. The practice has the effect of demotivating staff.
The Accounting Officer acknowledged the anomaly and indicated that the staff had
been appraised and the process of confirmation was underway. I advised the
Accounting Officer to fill the positions substantively.
2.4.6.4 Understaffing
The Electoral Commission Act 1997 Section 20(1) states that there shall be as many
Electoral Districts as there are Administrative Districts.
121
According to the Commission organogram, each electoral district should be headed
by a District Registrar who is deputised by an Assistant Registrar.
Review of the Commission staffing levels revealed a shortage of 26 staff country
wide with the majority shortages being among Election Officers (Assistant District
Registrars). The shortage of technical staff may negatively affect the conduct of
elections in the country.
In response, the Accounting Officer explained that the posts had been advertised
and the process of filling the positions was ongoing. I await the outcome of this
undertaking.
2.4.6.5 Failure to engrave Assets
Inspection of the assets revealed that all printers and scanners in the printery, the
laptops and desktop computers of the commission had not been engraved with
unique identification numbers contrary to regulation 101 of the Public Finance and
Accountability Regulations 2003. The practice could lead to misappropriation and
loss of Commission assets with no possibility of recovery.
The Accounting Officer indicated that the process of engraving the assets was
ongoing. I await the outcome of this undertaking by the Accounting Officer.
2.4.6.6 Irregular payment of Medical expenses
UGX..233,195,850 was refunded to staff of the Commission in respect of medical
expenses contrary to Paragraph 7.4.2.4 of the Electoral Commission Personnel
Manual which requires the staff to obtain medical services from Government or
Traditional hospitals. There is a risk of false claims being paid resulting into loss of
public funds.
The Accounting Officer explained that some districts were remote which made it
difficult to access the government hospitals and where they were available some of
them did not offer the required services.
122
I advised the Accounting Officer to streamline the provision of medical care to staff
to avoid settlement of possible false claims.
2.4.6.7 Under-absorption of funds for National Consultative Forum (NCF)
Out of the total funds budgeted and received of UGX. 500,000,000 for NCF
activities, only UGX..431,167,902 (86%) of the total buget was actually spent
leaving a balance of UGX.. 68,832,098. Under-absorption of the funds may imply
failure to implement planned activites of the forum. It was further noted that the
budget line of fuel, lubricants and oils was overspent by UGX..40,655,453 without
request for reallocations.
The Accounting Officer explained that that implementation of NCF activities started
late and by the closure of the financial year, some of the planned activites had not
been implemented.
I advised the Accounting Officer to ensure adequate and appropriate planning for
NCF activities.
2.4.6.8 Expenditure on NCF Meetings
The NCF Performance Report and Summary of planned activities for 2013/14
financial year indicated that each of the three (3) committees of the NCF had
planned to hold four (4) meetings (one meeting per Quarter) during the financial
year under review.
However it was noted that all the Committees sat more times than was expected
resulting into unauthorized expenditure of UGX..39,150,000 as per details in the
table below;
123
Committee No. of meetings budgeted
for
Number of
meetings held
Variance Number of
members who
attended
Rate per
person (UGX.)
Expenditure for extra meetings
(UGX.)
Business
Committee
4 7 3 9 290,000 7,830,000
Legal and
Electoral
Affairs
Committee
4 8 4 15 290,000 17,400,000
Finance and
Budget
Committee
4 8 4 12 290,000 13,920,000
Total 39,150,000
Management explained that before Government started funding NCF, UNDP used to
engage consultants who would carry out preliminaries on all documentation before
committees would begin on their deliberations. However with Government funding,
the respective NCF Committees would generate both the plenary as well as the
draft documentation for discussion. This therefore necessitated the committees to
ask for more meetings from the business committee so as to finalize the required
documentation.
I advised management to cause revision of the required meetings to enable proper
planning and budgeting.
124
2.5 LEGISLATIVE SECTOR
2.5.1 PARLIAMENTARY COMMISSION
2.5.1.1 Advances to Individual Personal bank accounts
a) Non-compliance with Treasury Accounting Instructions
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), require
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder should be appointed
by the Accounting Officer with the approval of the Accountant General. However, it
was noted that UGX.3,429,105,022 was advanced to Commission staff through their
personal bank accounts to undertake direct procurements and other activities of the
Commission. Such a practice of depositing huge funds on personal accounts
exposes Government funds to risk of loss, since the Commission does not have any
control over such funds deposited on personal accounts.
Management explained that this was due to some of the Commissions‟ activities
that are field based across the country, such as committee field trips. However,
steps will be taken to pay these funds directly to concerned staff and Members of
Parliament, except advances to Committee Clerks specifically to cater for
refreshments and other sundry expenses while on field trips.
I advised management to ensure strict adherence with the requirements of the
Treasury Accounting Instructions.
b) Advances to personal accounts not accounted for
A review of advances to personal accounts was carried out and it was noted that
accountability to the tune of UGX.27,401,000 had no supporting documentation.
Further, vouchers for payments amounting to UGX.421,200,400 advanced to a
Director could not be accessed as they had been taken by the IGG for further
investigation. As such I was unable to confirm whether the funds were applied to
the intended purposes.
125
Management explained that effective July 2014 enforcement of strict compliance to
pay beneficiaries directly through their bank accounts was undertaken and this is
likely to reduce on unaccounted for funds.
I advised management to ensure funds are accounted for or enforce recovery
measures from the affected staff.
c) Travel Abroad trips not undertaken
UGX.20,592,000 was paid to three members of the Commission for purposes of
facilitating travel to various destinations outside Uganda. However the travels were
not undertaken and as such funds ought to have been refunded.
Management explained that the funds will be recovered from the member‟s
subsequent emoluments. I await management‟s effort on the matter.
2.5.1.2 Official Attire Standardisation and frequency of Payments for Official
Attire
Section 54 of the Parliamentary Service (staff) regulations 2001 provides for
provision of at least two pairs of the prescribed attire each year to enable
Commission staff maintain the dignity of Parliament. Staff entitlements are set in
accordance with salary scales from UGX.480,000 to UGX.1,520,000.
It was noted that the Parliamentary Commission paid UGX.1,257,880,000 in cash to
staff to enable them acquire at least two pairs of the official attire during the year
under review. However the following issues were noted;
(i) Standard official attire: Cash advances were made to staff and accountabilities
were submitted after procurement. However, this method was lacking as there
was no standard attire procurement since it was evident that officers bought
from different suppliers without any verification of quality procured. I noted
UGX.10,260,000 as unaccounted for in respect of official attire by staff.
126
(ii) Frequency of payment: It was noted that some officers were getting more
payments during the year than others ranging from two to six times a year
depending on the individual directorates budgets.
All the above were due to lack of standardization defining quality desired and where
to procure with an aim of acquiring and maintaining uniformity and quality. The
regulation was open ended with little guidance.
Management explained that the rates were payable “at least twice” in a financial
year and the policy did not require staff to purchase standard or uniform attire, but
rather buy and wear attire that was decent and commensurate with the status of
Parliament. Management further explained that with effect from 1st July, 2014,
official attire was regularized as clothing allowance which is paid twice a year for all
staff among the approved allowances and is taxable.
I advised management to provide guidance in respect of the required attire to staff.
In the meantime, I await outcome of Management efforts in regularization of the
clothing allowance.
2.5.1.3 Staffing Gaps
Good strategic planning and management requires an entity to carry out human
resource planning to ensure that an adequate number of qualified staff is in place
to carry out the operational activities of an entity so as to enable it achieve strategic
objectives. A review of the Commission‟s organizational structure revealed that out
of the available 485 posts, 403 posts were filled leaving 82 posts vacant
(representing a 17% vacancy level). The key vacancies among others are as
detailed below:
Post Vacant
Directors 2
Asst. Directors 2
Chief internal Auditor 1
Deputy Editor 1
127
Post Vacant
Deputy SAA ( Sergeant At Arms) 1
Senior Principal Administrative Assistant 1
Principal Legal/ Administrative Counsel 2
Principals 18
Seniors 16
Clerk Assistant 7
Economist 5
Service delivery is highly hampered by the delays in filling the vacancies especially
at senior management level and staff fatigue may not be ruled out given the fact
that some staff may be performing functions of two or more officers.
Management explained that the Parliamentary Commission approved the Report on
the Review of the Parliamentary Structure-2011 and decided that recruitment of
personnel to fill positions would be carried out in phased approach over a period of
five (5) years with a projection of thirty four (34) new staff per year. The
recruitment process for some of the posts is ongoing while others have been
planned for the next financial year.
I advised management to continue with the recruitment to ensure that all gaps are
filled.
2.5.1.4 Internal Audit
A review of the Internal Audit function of Parliamentary Commission revealed the
following issues:
The Commission has only one internal auditor who also acts as Head of Internal
Audit and yet the structure provides for three staff. This has created huge
workload which cannot be handled by one officer. This number is considered
inadequate in view of the increased activities (increased budget) for the
Commission.
The current functional structure of the Commission places Internal Audit as a
department under Administrative Services headed by the Director Finance and
128
Administration (DFA). However, with the changing roles of Internal Audit
function and the principles of good governance, the current placement of the
department under the ambit of the DFA means that the internal audit actually
reports to the Director Finance and Administration which is not in line with good
corporate governance practices.
Absence of an efficient Internal Audit function leads to lack of appraisal on the
adequacy and effectiveness of internal control systems and non-detection of fraud
in time which could lead to loss of assets and misstatements in books of accounts.
Management explained that the Parliamentary Commission was concerned about
the lack of manpower and accordingly, in April, 2014 two posts were advertised and
in the end, no suitable candidate was identified for the post of Chief Internal
Auditor though a successful candidate was identified for the position of Internal
Auditor and has already reported for duty. The post of Chief Internal Auditor was
re-advertised and shortlisting of the applications was taking place by the time of
writing this report.
I await the outcome of management‟s effort in recruitment of a suitable Chief
Internal Auditor.
2.5.1.5 Absence of Audit Committee
Regulation 29 and 30 of the Public Finance and Accountability regulations, 2003
and section 8 of the Public Finance and Accountability Act, 2003 require the Minister
in charge of Finance to establish and appoint Audit Committees whose functions are
advisory to the Accounting Officer.
During the year ended 30th June 2014 the Parliamentary Commission had no Audit
Committee and as such the following functions were not undertaken by the
committee:
The Commission‟s Internal Audit annual and operational plans were not
reviewed and approved.
The Commission‟s Internal Audit functions were not periodically reviewed and
its overall quality reported on.
129
There was no review of the adequacy of the Internal Audit function, its
adherence to professional standards, independence, standing, scope, resources
and reporting arrangements.
There was no consideration of objectives and scope of any additional work to
be undertaken by internal auditors so as to ensure that there was no conflict of
interest and compromise.
There was no discussion with the Accounting Officer on the Internal Audit
findings and their recommendations and review or monitor their
implementation.
There was no representation of Internal Audit concerns about under
facilitation/funding to the relevant Accounting Officer, the Accountant General
and the Secretary to the Treasury or the Minister.
There was also no review of the Commission financial statements prepared by
the Accounting Officer to ensure adequate disclosure and fair presentation.
Management explained that the establishment of the Audit Committee had delayed
because of consultations where the Commission was advised to choose between
setting up its own Committee and using one of the already established Sectoral
Audit Committees on which the Commission was due to make a decision in its next
meeting.
I await the decision of the Commission in establishing an audit committee.
2.5.1.6 Budget performance
Public Finance and Accountability Regulations, 2003, section 2.10(b) entrusts the
Accounting Officer with ensuring that all controls such as those contained in the
approved estimates and warrants are strictly observed. Budget estimates are based
on outputs to be achieved for the financial year and during implementation, effort is
required to be made to achieve the agreed objectives or targets of the entity within
the availed resources.
Review of the budget performance for the year 2013/2014 revealed that some
targets were not fully achieved. It was noted that renovation of Development house
and plumbing of the Parliamentary building were incomplete by the end of the
130
financial year despite full release of the budgeted amount. Details are as in the
table below.
131
Vote/
Progra
mme
Item
description
Budgeted Quantity/
outputs
Amount
Budgeted
(UGX.)
Released
(UGX.)
Actual Quantity/
out puts
Remarks
Project
0355
Rehabilitation
of Parliament
Carry out emergency
repair of the roof of the
Parliamentary building
Complete renovation of
the Development house
State of the art
plumbing completed
8,966,232,226 8,966,115,876 Repair of roof of
Parliamentary
building
Partial renovation
of development
house and
plumbing
undertaken
Development
house
renovation not
completed
Plumbing of the
parliamentary
building not
completed
Management explained that renovation on Development House has been completed as per contract and the building will be handed
over to the Parliamentary Commission on 3rd February, 2015. Further, the contractor which carried out the repairs on the plumbing
system experienced many challenges which resulted in delays in completion of works.
I advised management to always ensure that activities are undertaken as planned.
132
2.6 HEALTH SECTOR
2.6.1 UGANDA AIDS COMMISSION
2.6.1.1 Nugatory Expenditure
The Commission incurred fees and legal charges of UGX..12,766,000 arising out of
a court settlement of a case in which the entity had failed to pay M/s Maka Motors
Ltd for repair services rendered. The costs are considered nugatory as they would
have been avoided had the Commission settled its obligations timely. Besides,
compliance with the Government commitment control system would have enabled
the entity avoid accumulation of liabilities.
In response, the Accounting Officer attributed delayed settlement of the debts to
detailed verification procedures since the documents submitted by the Company
dated as far back as 2008.
I advised management to ensure proper record keeping and timely settlement of
genuine claims when they are submitted.
2.6.1.2 Staffing levels
Out of 84 approved positions, 56 positions had been filled leaving 28 vacancies.
Among the unfilled posts were key positions such as Chief Accountant, Grants
Officer, Communication Officers, Head of ICT, Zonal Coordinators, Programme
Officers and Assistants. Absence of key staff may hinder efficient operation of the
Commission.
The Accounting Officer stated that filing the vacancies was constrained by
inadequate funding and plans were under way to fill the gap in a phased manner.
I advised management to ensure the key positions are filled accordingly.
133
2.6.1.3 Un explained Fluctuation of Non-tax revenue
Analysis of non-tax revenue (NTR) collections over the last three years revealed
wide fluctuations. It was noted that NTR largely comprised rental income which is
considered relatively predictable .The table below refers:
F/Y 2010/11 2011/12 2012/13 2013/14
NTR (UGX..) 6,200,000 28,670,000 9,950,000 30,650,000
Unexplained fluctuations cast doubt on the reliability of NTR collections.
In response, the Accounting Officer attributed the fluctuations to the tenant‟s
inability to pay on time.
I advised the Accounting Officer to report the outstanding NTR as revenue in
arrears and ensure that the amount is recovered.
2.6.1.4 Failure to finalize a strategic plan
Best practice requires an entity to prepare a strategic Plan that spells out its long
term direction. The plan also outlines the strategic objectives and milestones upon
which an entity can measure its performance. It was however noted that the
Commission has not put in place a strategic plan since its establishment in 1992.
Lack of a strategic plan impairs coordination and evaluation of the Commission‟s
activities.
In response, the Accounting Officer stated that a draft strategic plan covering the
period 2015/2016-2019/2020 had been developed and would be approved by June
2015.
I advised the Accounting Officer to ensure a strategic plan is put in place and
implemented accordingly.
2.6.1.5 Delayed Formulation of the Board Charter
The institutional review report of 2011, section 3.2.2, advised that a board charter
be put in place to spell out the definite terms of service for the board members,
performance management and evaluation mechanisms, composition of committees,
134
and the appointment of board members to enhance the accountability of board
members. However, it was noted during the audit that the charter had not been put
in place which may affect the effective operation of the Board.
In response, the Accounting Officer explained that a draft charter had been
developed and is due for submission to the board for approval.
I advised the Accounting Officer to ensure finalization of the charter to streamline
the relationship between the Management and the Board.
2.6.1.6 Failure to report asset losses
Part 217 Part (b) of the Treasury Accounting Instructions, 2003 requires that in
case of loss of assets/inventory, a report of the loss or deficiency must be made to
the Accountant General and copied to the Secretary to the Treasury immediately it
is discovered. Contrary to the above instructions, a loss of a generator valued at
UGX..2,000,000 was not reported to the relevant authorities.
Besides, the loss was not reported in the Statement of losses of public moneys,
stores and other assets in the financial statements, making them misrepresented.
The loss was attributed to lack of proper security measures in the stores. In
response, the Accounting Officer stated that the loss was reported to the Police and
an update is awaited.
I advised the Accounting Officer to institute proper security measures in the store
premises and ensure that the loss is reported to the Treasury without further delay.
2.6.2 HEALTH SERVICE COMMISSION
2.6.2.1 Payables
The payables increased from UGX..2,920,555 in the previous year to
UGX..75,489,633 in the current year. Included in the payables was a tax liability in
respect of PAYE (UGX..15,024,998) and WHT (UGX..2,920,555) which may attract
penalties.
135
The Accounting Officer attributed the payables to the bouncing of electronic funds
transfer (EFT) instructions resulting from wrong entries of details in the accounting
system, as shown below.
Company Item Amount (UGX.)
URA PAYE 15,024,998
Victoria Motors Payment for Motor Vehicle 57,544,080
Balances B/F WHT 2,920,555
Total 75,489,633
I advised the Accounting Officer to settle the tax liabilities without further delay and
to always ensure correct entry of information into the EFT system.
2.6.2.2 Shortfall in Revenue performance
Out of the UGX..3,885,301,949 approved for the year under review, only
UGX..3,469,500,474 was realized resulting in a shortfall of UGX..415,801,475
(11%). As a result, planned activities such as; holding of two (2) regional
workshops for DSCs, DHOs, CAOs and Hospital Managers, developing a costed plan
for construction of HSC office premises, and drafting Recruitment Guidelines for the
Health Workers were not undertaken. It was also noted that a number of unfunded
priorities such as purchase of land for office accommodation, validation of Health
Workers in Central Government Health Institutions, reviewing Terms and Conditions
of Service-Training and Qualifications remained outstanding.
The shortfall was attributed to failure to release appropriated funds by Ministry of
Finance, Planning and Economic Development (MoFPED). I advised the Accounting
Officer to continue liaising with the MoFPED, to ensure that all appropriated funds
are released to enable implementation of planned activities.
2.6.2.3 Staffing Gaps
Out of the approved staff establishment of 63, only 51 positions were filled leaving
12 vacancies. Among the vacant key positions were: Principal Personal Secretary,
Senior Human Resource Officer, Systems Administrator, Personnel Secretary,
Records Officer and Senior Office Supervisor. The absence of key staff mentioned
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above affects office management, human resource management and supervision of
Information and Communications Technology equipment.
In response, the Accounting Officer explained that the posts of the Principal
Personal Secretary, Senior Office Supervisor, Systems Administrator, Personnel
Secretary, Records officer, Assistant records Officer and Receptionist had been
presented to Public Service Commission for filling, while the positions of Senior
Human Resource Officer were to be filled by the Ministry of Public Service through
deployment.
I advised management to follow up the recruitment and development of staff
without further delay.
2.6.3 EDUCATION SERVICE COMMISSON
2.6.3.1 Revenue shortfall
Examination of the statement of appropriation revealed that out of the budgeted
revenue of UGX..6,034,344,000 for the year under review, the Commission
received UGX..5,412,724,499 resulting into a shortfall of UGX..621,619,501 (10%).
Revenue shortfall hinders implementation of planned activities.
The Accounting Officer attributed the shortfall to non-release of funds on the Gross
tax Account, freezing of salaries of two members whose contracts had ended and
vacant posts which were not filled. It appears the Commission did not adequately
plan for procurement and staff recruitment activities to enable timely requisition for
the funds.
I advised management to always ensure proper procurement planning and timely
recruitment of staff to be able to requisition and absorb budgeted funds in a timely
manner.
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2.6.3.2 Budget Performance Review
A Review of the performance of the Commission in regard to the expected outputs
revealed that in a number of areas, actual outputs fell short of planned outputs as
shown below;
Planned
Activities
Expected
Outputs
Actual outputs Remarks
Output
075201.
Management of
Education
Personnel.
Appointment of
2,000 teaching and
non teaching
Personnel.
-Appointed 82
Teaching and Non
teaching staff in
NTCs.
Did not appoint
1,918 Teaching and
Non teaching
personnel.
Confirmation of
2,000 teaching and
non-teaching
personnel.
Confirmed and
Regularized 277
teaching and non
teaching staff.
Did not confirm
1,723 teaching and
non- teaching
personnel
Promote 4,000
Primary Teachers
under Scheme of
Service
Did not promote
4,000 primary
Teachers.
Supervising and
guiding 112
Districts on
Recruitment.
Did not supervise
and guide the 112
districts on
recruitment.
Failure to recruit and/or confirm teachers and non-teaching staff as planned may
adversely affect staff motivation and ultimately result into poor performance of
students/pupils.
In response, the accounting officer explained that recruitment of teachers was not
undertaken because there was a temporary freeze on recruitment by the Ministry of
Public Service. It was also stated that inadequate funding constrained supervision
activities in the districts.
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I advised management to liaise with the relevant stakeholders and source
necessary resources for implementation of planned activities.
2.7 ENERGY SECTOR
2.7.1 ATOMIC ENERGY COUNCIL
2.7.1.1 Budget Performance
Review of the budget performance revealed that whereas the Council budget
was UGX..3,547,113,510, it realised UGX..1,277,354,799, resulting into a
shortfall of UGX..2,319,758,711 (65%).
As a result of the shortfall, various planned activities such as setting up the
Radiological Emergency Preparedness and Response Plan (EPRP) committee,
development of a national action plan for EPRP, procurement of calibration
and inspection equipment, and fencing of the waste management facility
were not undertaken.
In response, management indicated that the subvention received from the
Ministry of Energy and Mineral Development (MEMD) was inadequate for
execution of the planned activities.
I advised management to liaise with MEMD so that a budget line for the
Council is created in the Ministry budget. In addition the Ministry is urged to
source adequate funds for the Council.
2.7.1.2 Inadequate Staffing
Out of the Council‟s staff establishment of 51 positions, only 30 (58%)
positions were filled leaving 21 (42%) vacancies. Some of the key vacant
posts were; Chief Radiation Protection Officer (RPO) - Inspectorate, Principal
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RPO (Environmental and Nuclear Waste), Senior Human Resource Manager
and Store keeper. In the circumstances, the Council is constrained from
achieving its mandate.
In response management stated that, staff recruitment is planned for the
next financial year. I have advised management to carryout recruitment in a
phased manner starting with the most critical positions.
2.7.1.3 Signatories to the Bank Account
In my previous year‟s report to parliament, I indicated that the Council‟s
Secretary was not a signatory to the Bank of Uganda Account contrary to
Section 17 of the Atomic Energy Act. During the year under review, it was
noted that the Council resolution for the Secretary to become signatory to
the Account remained outstanding.
In the circumstances, there is a risk of mismanagement of the financial
affairs of the Council without the knowledge of the Chief Executive Officer.
In response management indicated that it was working closely with the
Ministry of Energy and Mineral Development to implement the resolution.
I await the outcome of management‟s action in this regard.