office of the auditor general · masaka and soroti in 1975. kampala and kampala city council branch...

OFFICE OF THE AUDITOR GENERAL

ANNUAL REPORT OF THE AUDITOR GENERALFOR THE YEAR ENDED 30TH JUNE 2010

VOLUME 1

PERFORMANCE REPORT

THE REPUBLIC OF UGANDA

2 OAG Performance Report 2009/ 2010

Table of Contents

List of Acronyms 3

Foreword by the Auditor General 5

1.0 Introduction 8

2.0 Performance in Audit Functions 11

3.0 Human Resource Management and Development 26

4.0 Administration, Communication and Judicial Matters 30

5.0 Financial Management, Budget Performance and Risk Management 36

6.0 International Relations 38

7.0 Corporate Social Responsibility 43

8.0 Registration of Accountants 44

Appendix I: Unaudited Financial Statements of OAG for the Year Ended 45 30th June 2010 Appendix II: List Of Office of the Auditor General; Regional Branch Offices 57

3OAG Performance Report 2009/ 2010

ACCA Association of Chartered Certified AccountantsADB African Development BankAFROSAI African Organization of Supreme Audit InstitutionAFROSAI-E African Organization of English-speaking Supreme Audit InstitutionsAG Auditor GeneralBFP Budget Framework PaperBns BillionsCAATS Computer Assisted Audit TechniquesCHOGM CommonWealth Heads of Government MeetingCISA Certified Information Systems AuditorCOSASE Committee on State Enterprises, Commissions and Statutory CorporationsCPA Certified Public AccountantDFID Department for International DevelopmentDPAC District Public Accounts CommitteeFINMAP Financial Management and Accountability ProgrammeGAO General Accounting OfficeGoU Government of UgandaHLGs Higher Local GovernmentsICGFM International Consortium on Government Financial ManagementICT Information Communications TechnologyIDI International Development InitiativeIFMS Integrated Financial Management SystemINTOSAI International Organizational of Supreme Audit InstitutionsIT Information TechnologyJICA Japan International Cooperation AgencyKCC Kampala City CouncilLGDP Local Government Development ProgrammeLLGs Lower Local GovernmentsLPAC Local Government Public Accounts CommitteeMAAG Multilateral Audit Advisory GroupMCC Millennium Challenge CorporationMTEF Medium Term Expenditure FrameworkNAA National Audit Act NAADS National Advisory Agricultural ServicesNAO National Audit OfficeNDA National Drug AuthorityNMS National Medical StoresNSADP North West Smallholder’s Agricultural Development ProjectNSSF National Social Security FundNUSAF Northern Uganda Social Action FundOAG Office of the Auditor GeneralPAC Public Accounts CommitteePFAA Public Finance and Accountability ActPPDA Public Procurement and Disposal Act

List of Acronyms

� OAG Performance Report 2009/ 2010

Office of the Auditor General

Vision, Mission and Core Values

Vision

“To be an effective and efficient Supreme Audit Institution (SAI) in promoting effective Public Accountability”.

Mission

“To audit and report to Parliament and thereby make an effective contribution to improving public accountability and value for money audit”.

Core Values

The Auditor General and the staff of the Office of the Auditor General in executing their responsibilities are committed to live by the office’s core values of :-

• Integrity: Being upright and honest• Objectivity: Showing impartiality and professional judgement• Professional competence: To act with diligence, proficiency and team spirit.

RHs Referral HospitalsROM Result Oriented ManagementSAI Supreme Audit InstitutionUNBS Uganda National Bureau of Standards USAID United States Agency for International DevelopmentVFM Value for Money

List of Acronyms (cont’d)

�OAG Performance Report 2009/ 2010

Foreword by the Auditor General

In accordance with my constitutional mandate Article 163 as elaborated on by the National Audit Act (2008), I am happy to present to you my annual report on the public accounts of Uganda in five volumes for the year 2009/2010. The first volume of the report is about the performance of my office. It is about what I planned, what I did and the level of my achievements in what I was able to do.

The Executive summary which follows this foreword outlines the contents of the five volumes which constitute my annual report for 2009/2010.

As my core constitutional function of external audit, a total of 3,446 audits were planned to be audited and 2,353 were completed and reported on while 1,093 (mainly accounts of LLGs), remained as work in progress at the year end.

Ten (10) performance audits were complet-ed during the year and they embraced the following areas:-

• State of roads,

• Procurement and control of drugs

• Procurement system in Local Governments: A case study

• Case management by Judiciary

• Environmental audit on forestry

• Management of UPE capitation grant

• Management of land registration

• Farm income enhancement and forest conservation

• Rural Electrification

• Buildings Construction and establishment of Assets Register under Justice, Law and Order sector (JLOS). The Directorate of Central Government successfully undertook its mandate as set out in volume 2 and in addition, issued 66 audit warrants for recurrent, development and statutory withdrawals of funds from the consolidated fund account amounting to Shs. 6,428,675,045,335 and inspected 51 Tertiary Institutions under the Ministry of Education and Sports.

The Auditor General Mr. John F.S. Muwanga poses for a photo with the ACLAIM Africa 2010 Integrity Award

� OAG Performance Report 2009/ 2010

The Directorate of Finance and Administration supports and facilitates the performance of the audit functions of the office. The Directorate managed the budget process and pre-pared and submitted for approval to Parliament a realistic budget with unfunded priorities amounting 7.850bn which were later successfully approved by Parliament resulting in an approved budget of 33.9 billion for the year.

Directorates of Local Government, Central Government and Statutory Corporations have eloquently outlined for the first time a consolidated brief and insightful analysis of the out-comes of their findings which have proved to be informative and interesting in the pres-entation of the data. The consolidated brief is a “must read” for those interested in public financial management as it forms a platform upon which future activities will be measured.

I would like to acknowledge the tremendous support the office has continued to receive from Parliament and the oversight Parliamentary Committees. This support has managed to enable us continue to achieve the success made this year.

My gratitude is also extended to the staff of the office who have toiled under challenging conditions most of the time. To the Development Partners and the Government headed by His Excellency the President, we thank you for your support and interest in what we do. I thank thee.

John F.S. MuwangaAUDITOR GENERAL

31st March 2011

�OAG Performance Report 2009/ 2010

Executive Summary

Under article 163(3) of the Constitution of the Republic of Uganda and section 13 of the National Audit Act, 2008, the Auditor General is mandated to audit and report to parlia-ment, 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 corporation or other bodies or organizations established by an Act of Parliament, annually by 31st March of the accounts audited for the financial year imme-diately preceding. It is against the above mandate that this report is herewith provided in five volumes:-

Volume 1 - Annual Performance Report of the Office of the Auditor GeneralVolume 2 - Audit Report on Central Government Ministries, Departments and Agencies Volume 3 - Audit Report on Local Governments including Referral Hospitals.Volume � - Audit Report on State Enterprises, Commissions and Statutory CorporationsVolume � - Value for Money Audit Reports

This first volume is presented in 8 sections as follows:-

Section 1, covers a brief history of the OAG, its legal mandate and operational frame-work, the functions of the Auditor General, current trends, major audit focus for the year, recent developments, budget out turn for the FY 2009/2010, and performance in the im-plementation of the corporate plan which runs through the report.

Section 2, presents a summary of the performance of the Office of the Auditor General in its core functions as defined under Article 163 of the Constitution of the Republic of Ugan-da and section 13 of the National Audit Act, 2008. In the FY 2009/10, I planned to audit 3,446 entities including 1,200 LLG back log audits and completed 2,353.

Sections 3-�, present a performance review of the Finance and Administration Directo-rate in the area of Human Resources Management, Administration, Communication and Judicial matters, Financial Management, Budget Performance and Internal Risk Manage-ment.

Section �, gives details on performance of OAG in international relations and activities, International conferences attended, international guests hosted and study tours conducted and membership of the Office of the Auditor General on international bodies.

Section �, gives a brief account on OAG involvement in Corporate Social Responsibility. In the audit year 2009/10, the office participated in the MTN marathon on 15th December 2010 where 45 officers were registered and participated.

Section 8, presents the performance of the Office as Registrar of Accountants as mandated under Section 18 of the Accountants Act, 1992.


1.1 Brief History

The Office of the Auditor General started in 1920 when the Colonial Audit Office in London was required to audit the accounts of the Uganda Protectorate Government. Its first local office was established in Entebbe headed by an auditor in 1929.

In 1952 the Office was transferred to Kampala and for the first time headed by an Auditor Gen-eral. Since then the Office has had five Auditors General with the fifth and current Auditor General being Mr. John F.S. Muwanga.

Since 1962 the Office of the Auditor General (OAG) opened new branch offices starting with Entebbe, Mbale and Gulu. More six branches were opened in Jinja, FortPortal, Mbarara, Arua, Masaka and Soroti in 1975. Kampala and Kampala City Council Branch offices were opened in 1980 and 1996 respectively. To date the office has 10 regional branch offices excluding Entebbe Office.

1.2 Current Macro structure of the Office

The Office of the Auditor General (OAG) has been structured in such a way as to ensure effective and maximum coverage of the audits of the Public accounts of Uganda. The Office is headed by the Auditor General (AG) who is the Chief Executive of the Office.

The AG is deputised by the Assistant Auditor General (AAG) who in turn is assisted by the Directors heading Directorates.

The Current Macro-Structure of the OAG is as depicted below:-

1.0 Introduction

Auditor General

Assistant Auditor General

Director of Audit Central

Government

Director of Audit Local

Government

Director of Audit Statutory

Corporations/ VFM

Director of Finance &

Administration


1.3 Recent Development

The National Audit Act (NAA) 2008 not only granted OAG greater autonomy and increased resources to undertake the audits of all public accounts of Uganda, but also increased the scope of the audits to be undertaken to include audit of public funds in private organizations, gender and environmental audits, procurement audits, audit of Government investments and audit of treasury memoranda besides the statutory financial and regularity audits, and Value for Money (VFM) audits.

The current structure of the OAG was experienced to be inadequate to cope up with the increased scope of the audits. The National Audit Office (NAO) UK was therefore contracted to review and redesign appropriate structure for OAG that would enable it handle the audits effec-tively.

The proposed macro structure of the recommended new OAG structure will be headed by the Auditor General and assisted by the AAG. The Chief Operating Officer (COO) will be the head of administration and finance and as the Accounting Officer of the office will be responsible for also the corporate and support services. The three Directors of audit will report directly to AAG. The structure is before the Parliamentary Committee for approval.

The proposed macro-structure of the OAG structure is as depicted below:-

Auditor General

COO AAG

DirectorCG 1&2

DirectorVFM

DirectorLG

DeptHRMD

DeptIT

Dept. Tech Support

DeptF&A

Internal Audit

Legal Unit

Proc. Unit


1. � Mandate of the Office of the Auditor General

The Office of the Auditor General is the Su-preme Audit Institution (SAI) of the Republic of Uganda. Under Article 163 (3) of the Con-stitution, the Office is required to audit and report to parliament on the Public Accounts of Uganda and of all Public offices including the Courts, the Central and Local Government Administrations, Universities and Public Insti-tutions of like nature, and any public Corpora-tions or other bodies established by an Act of Parliament and report to Parliament.

1.� Functions of the Auditor General

Article 163 (3) (b) requires the Auditor Gen-eral to conduct Financial and Value for Money audits in respect of any project involving public funds.

In addition, section 13(1), 8(2) of the National Audit Act (NAA) amplifies the mandate and functions of the Auditor General and details these functions to include the audit of classi-fied expenditure, Government investments, Treasury Memoranda, Procurements and conducting of Special Audits.

Under Article 163(4) of the Constitution (1995) as amended, the Auditor General is required to submit to Parliament annually by 31st March a report of the accounts audited for the financial year immediately preceding.

This report is provided under five (5) volumes: Volume (1) SAI performance Report, Volume (2) Central Government Audit Reports, Vol-ume (3) Local Government Audit Reports, Volume (4) State Corporations Audit reports and Volume 5 Value for Money Audits reports.

1.� Corporate Plan Implementation

The office of the Auditor General has been implementing a five year corporate plan for the period 2005/2006 to 2010/2011 which will be ending on 30th June 2011.

The Strategic Objectives of the OAG in the Corporate Plan have been:-

• To secure the financial and operational independence of the Auditor General

• To improve the quality of both the OAG’s budget preparation and Monitoring processes and management information systems.

• To create an environment that enables the OAG to operate efficiently and recruit, retain and motivate suitable staff.

• To improve internal and external commu-nications to raise the profile of the OAG with staff and key stakeholders

• To improve the quality of audit work by improving financial and value for money audits and developing and implementing effective quality assurance arrangements

• To promote increased accountability, pro-bity and transparency in the management of public funds and resources by producing reports that add value and make positive and practical recommendations.

The plan and implementation of the annual operational plans (the budget and policy state-ments) over the Financial Years since 2005/06 including the plan for 2009/2010 were guided by the six major corporate plan objectives of the office.

The assessment of performance regarding achievements of the objectives runs through this performance report of the Office as con-tained in this Volume 1 of the OAG report.


2.1 Major focus in the Audit during the year

The two relevant strategic objectives in the OAG Corporate Plan 2005/06 – 2010/011 that guided the performance of audit functions in the year were:-

• To promote increased accountability, probity and transparency in the management of public funds and resources by producing reports that add value.

• To improve quality of audit work by improving financial and Value for Money audits and having effective quality assurance arrangements.

The major focus in the audit for the FY 2009/10 was also based on the National Strategic Budget priorities for the FY 2009/10, the accountability sector policy objectives for the FY 2009/10 and the major audit findings from the preceding audit year 2008/09.

The National Strategic Budget Priorities for the FY 2009/10 were: improvement on the transport infrastructure, human development including health, education, water and sanitation; service deliv-ery, energy infrastructure development and reconstruction of war affected areas.

In the FY 2009/10, the Accountability sector of which OAG is a member committed itself to adher-ing to compliance policies, service delivery standards and regulations, promoting of the culture of public demand for accountability and value for money as well as intensifying the fight against cor-ruption.

Hence, the major focus for the audit of the Financial Year 2009/10 was on the areas summarized in the table A1 below:- Table A1 : Major focus in Audits of FY 2009/ 2010

Directorate Major focus Local authorities Audit Annual Financial and Regularity audits of Higher Local

Governments, Referral Hospitals, Lower Local Government and special audits.

State Corporations Audit Annual Financial and Regularity audits, Energy sector audits and special audits.

Value for Money Audits Environmental restoration projects, UPE capitation grant manage-ment, road maintenance and rehabilitation, Rural Electrification, National drugs store management, land management, procure-ment and contracts management and handling of cases by judiciary.

Central Government Audit Annual financial and regularity audits of Ministries, Departments and Agencies (MDAs), Road Sector and other Engineering audits and special audits.

2.0 Performance In Audit Functions


2.2 Performance in Audit Activities

In promoting increased accountability, probity and transparency in the management of public funds, the Office of the Auditor General does not stop at reporting audit results to Parliament but it also provides technical support to the various Public Accounts committees by attending the discussion meetings of the audit recommendations. All the Management Letters on Central Government Ministries, Departments and Agencies (MDAs); Local Governments and State Corporations Audits for 2009/2010 accounts were discussed both at the Headquarters and the Regional Branch Offices to produce reports that add value and make positive recommendations.

The Value for Money Audit Department was strengthened in terms of additional staff, transport facilities and budgetary allocation. All the VFM audit staff obtained additional training in VFM audit methods and techniques in order to assist in producing quality reports that add value and make positive and practical recommendations. Ten (10) VFM studies were conducted and exit meetings were held.

2.3 Staffing levels and the Ratio of Audit to Non Audit Staff

The Office of the Auditor General has an approved staff structure of 395 posts with a current staff-ing level of 95% from 82% in the FY 2008/9 due to the recruitment of 38 new staff.

The ratio of audit staff to non audit staff is currently 3:1. i.e. for every 3 auditors there is one non audit staff. This means that most of the OAG resources go to the core functions of the Office of the Auditor General.

The Auditor General Mr. John Muwanga (3rd from Right) poses for a photo with newly recruited OAG staff at a cocktail party held after their Induction Course at Ridar Hotel.


2.3.1 Performance of the Office in terms of the number of Entities Audited

Section 163 (3) of the constitution of the Republic of Uganda mandates the Office of the Auditor General to audit and report to Parliament annually on the public accounts of Uganda and of all public offices, including the courts, the Central and Local Government Administrations, Universi-ties and Public Institutions of like nature, and any public corporation or other bodies or organiza-tions established by an Act of Parliament. The Auditor General has to conduct both the regularity and performance audits.

In FY 2009/10, the Auditor General planned to conduct a total of 1614 Financial/regularity audits and 10 performance/value for money audits and managed to complete 2,368, financial and 10 performance audits respectively. In addition the Auditor General conducted 25 special audits.

The details are provided in the table below.

Directorate Entities Planned audits Completed In-processCentral Government MDA 88 88 -

Projects 115 113 2Special Audits 9 8 1

Local Government HLGs 215 215 -LLGs 2,766 1,707 1,059Regional Hospitals 13 13 -Special Audits 40 17 23

State Corporation State Corporations 194 184 10Special audits 13 13 -

Value for Money VFM audits 10 10 -Total 3,��3 2,3�8 109�

This section presents the performance of the Auditor General in audits Directorate by Directorate for the FY 2009/2010.

1� OAG Performance Report 2009/ 2010

2.3.2 Directorate of Central Government

The Directorate of Audit (Central Government), audits Government Ministries, Departments and Agencies (MDAs). In addition, the Directorate is responsible for audit of Government Projects, Treasury Memoranda, issue of Grants of Credit to the Ministry of Finance and Inspection of Tertiary Institutions under the Ministry of Education.

Scope and Objectives of the audit

The scope of the audit included transactions processed during the period 1st July 2009 to 31st June 2010. The main objective of the audit for the FY 2009/10 was to audit 246 Government Ministries, Departments and Agencies (MDAs) as well as projects and report on the findings to Parliament.

In the budget for FY 2009/10 Directorate was allocated Shs. 4,451.704,000 which was 18% of the OAG budget and spent Shs. 3,936,218,844 which was 88% of its budget allocation. Out of the total expenditure for the Directorate, Shs. 2,452,918,000 was spent on wages for 72 audit staff and 5 non audit staff giving a total of 77 staff as human capital input into the achieve-ment of the above outputs.

The Directorate planned to audit 88 MDAs, 115 projects, 9 special audits and inspect 51 tertiary institutions and it completed 88 MDAs, 115 projects, 8 special audits and inspected 51, Tertiary Institutions as summarized in the table below.

Status of Audits MDAs Projects Special Audits Inspection of Tertiary institutions

Total

Planned Audits 88 115 9 51 2�3Completed Audits 88 113 8 51 2�0In-process - 2 1 - 3

Grants of Credit Issued

Article 154 (3) of the Constitution of the Republic of Uganda requires the Auditor General to ap-prove withdrawals of all monies from the consolidated funds. Accordingly, during the year 2009/2010, the Directorate of Central Government Audit on behalf of the Auditor General authorized 66 withdrawals of funds from consolidated funds amounting to Shs. 6,428,675,045,335 billions.

The details are in the table 3-4 below:

Expenditure No. of Warrants Issued Amount (Shs)Recurrent 31 3,116,301,434,307Development 21 2,164,173,390,029Statutory 14 1,148,200,220,999Total �� ,�28,��,0��,33�

1�OAG Performance Report 2009/ 2010

Inspection of Tertiary Institutions

During the financial year 2009/2010, the Directorate of Audit (Central Government) inspected and reported on 51 Tertiary Institutions in the Education sector.

Audit of Treasury Memoranda

The National Audit Act (NAA) 2008, provides for the Auditor General to audit the Treasury Memo-randa. However, during the year, the Treasury was not able to present treasury memoranda in time.

Treasury memoranda were presented for the financial years 2001/2002, 2002/2003, 2003/2004 and 2004/2005 on 31st March 2011. Hence, no treasury memoranda was audited by the Office during the audit of 2009/2010 financial year.

Summary of Major Findings

Based on the above scope and objective, below is a summary of some of the findings from the audit for the Financial Year 2009/2010.

• Out of the 101 entities audited, 40 had unqualified opinions, 58 had qualified opinions, and 3 had disclaimer of opinions.

• Government borrowings from Bank of Uganda (BoU) increased during the period by 25.8 per cent from Shs.2.5 trillion to Shs.3.1 which is beyond the statutory limit prescribed by the Bank. In the borrowings Shs.441 billions was made without the approval of Parliament.

• Under HIPIC debt relief agreement between Government of Burundi (GoB) and GoU, GoB agreed to provide debt relief to GoU by cancelling interest of US$ 5,504,302. However, the interest cancelled was later amortized as an ex gratia payment to GoB without Parliamentary Authority. In addition, payment of the principal sum of US$ 8,166,466 has not been fully acknowledged as received by GoB.

• Expenditures amounting to Shs. 30,466,326,084 and Euros 7,460.54 remained unaccounted for contrary to the financial regulations which require all the expenditures to be accounted for by the year end.

• Overpayments were made in the various construction contracts arising from wrong measure-ments and inclusion of unexecuted work in the interim payment certificates (IPCs) by the super-vising consultants leading to estimated overpayments of Shs. 33.5 billions to the contractors.


Challenges encountered

The major challenges encountered in carrying out the audit were:-

• Delays by Accounting Officers in providing records/information to field audit staff during audit and further delays in receiving responses to management letters. This affects the audit completion and reporting deadlines as planned.

• A number of special audits were requested during the year. Not all these audits were anticipated, planned and budgeted for. The office therefore had to requisition additional funds to meet these obligations.

• Inadequate office space for.

• Short notice to attend PAC meetings, necessitating repriotization of scheduled work load.

Central Government Directorate staff attending a Report writing workshop at Imperial Royale Hotel.


2.3.3 Directorate of Local Authorities

The Directorate of Audit (Local Governments) carries out audits of all the Local Authorities includ-ing Regional Referral Hospitals.

In the Financial Year 2009/2010 the Directorate planned to audit 215 Higher Local Governments (HLGs); 11 Regional Referral Hospitals; 2,766 Lower Local Governments (LLGs) and 62 Special audits totaling to 3,056 audits. These included audit of back logs for 1,804 LLGs for the FYs 2007/2008, 2008/2009, 2009/201.


The scope of the audit included transactions processed during the period 1st July 2009 to 31st June 2010. The main objective of the audits for the FY 2009/10 was to audit and report on 215 HLGs, 2766 LLGs, 13 Referral Hospitals and 62 special audits.

In the budget for the FY 2009/10, the Directorate was allocated Shs. 7,465,246,000 which was 30% of the OAG budget and spent Shs. 6,505,898,000 which was 28% of the total OAG budget out turn. Out of the total expenditure for the Directorate, Shs. 3,773,614,000 was pent on wages for 122 audit staff and 46 non audit staff giving a total of 168 staff as human capital input into the achievement of the above out puts.

Based on the above resources, Directorate completed a total of 1,952 audits which included; 215 Higher Local Governments (HLGs); 13 Regional Referral Hospitals; 1,707 Lower Local Govern-ments (LLG), and 17 special audits as summarized in the table below.

Status of Audits HLGs LLGs Regional hospitals

Special Audits

Total

Planned Audits 215 2766 13 40 3,034Completed Audits 215 1,707 13 17 1,952In-process - 1,059 - 23 1,082


Summary of Findings

Basing on the above scope and objective, below is a summary of the findings from the audit of local authorities for the FY 2009/10:-

• For the audits on the accounts of Finan-cial Year 2009/2010 of HLGs audit opinions on 81 (36%) accounts were unqualified (clean report), on 142 (62%) accounts were qualified “except for” opinion; and on 5 (2%) accounts were disclaimer opinion.

No accounts for the Financial Year attracted an adverse opinion. In the case of LLGs for a sample of 385 LLGs a general improvement in financial management was noticed. Audit opin-ions improved to 36% unqualified, 60% quali-fied opinion, 10% disclaimer of opinion and 4% adverse opinion.

• Funds of Shs. 11,618,191,273 in form of administrative advances, incompletely vouched expenditures, un-vouched expenditures and doubtful expenditures relating to HLGs in the year 2009/2010 were not accounted for con-trary to financial regulations.

In addition, a sample of 385 LLGs audited revealed that Shs. 2,316,953,728 in respect of advances, incompletely and un-vouched expenditures; and doubtful expenditures re-mained outstanding contrary to Local Govern-ment Financial Regulations.

• Shs. 29,845,542,736 in HLGs and Shs. 2,418,919,054 in LLGs of conditional grants remained unspent at the end of the financial year. The intended services were not delivered nor did the Accounting Officers obtain authority from the Treasury to keep the funds.

• Accounting Officers in HLGs committed Shs. 19,585,399,783 and Shs. 331,014,767 in LLGs in the year ended 30th June 2010 without sufficient funds contrary to Local Government Financial and Accounting Regulations (LG-FAR).

• A number of Local Authorities procured items worth Shs. 34,226,178,869 without fol-lowing procurement regulations and guidelines.

• A number of Higher Local Govern-ments incurred expenditures amounting to Shs. 6,944,000,005 and LLGs incurred Shs. 822,158,167 in excess of provisions author-ized in the approved estimates contrary to the financial regulations.

• Shs. 988,237,247 in respect of con-ditional grants were diverted by some Local Governments to activities not prescribed in the conditions and guidelines of the grants in ques-tion.

• A number of Local Governments made deductions of Shs. 1,651,194,682 as tax but the amount was not remitted to Uganda Rev-enue Authority (URA) as required.

• Local Governments incurred expendi-tures of Shs. 227,193,653 that were neither budgeted for nor beneficial to the Local Coun-cils and hence wasteful.

• A number of Local Governments incurred expenditures amounting to Shs. 6,944,000,005 in excess of provisions author-ized in the approved estimates.



The major audit challenges encountered were:-

• Inadequate staffing at Senior Auditor level poised supervisory and quality review challenges.

• Senior level staff undertaking at the branch level reviews and professional training.

• Delays by Accounting Officer responding to Management Letters queries.

• Slow adoption of ICT skills by staff at the branch level.• ICT infrastructure and skills lacking in the Regional branch offices.

• Maintaining an ICT infrastructure and network with the branch offices particularly in the absence of power at the branches.

• Inadequate office space.

• Inexorably increasing number of audit entities (LGs) which impinge upon unbudgeted resources.

Senior management staff from the Local Authorities Directorate attending a workshop at Imperial Royale Hotel.


2.3.� Directorate of Statutory Corporations

In the audit of FY 2009/2010, the Directorate of Audit (State Corporations) conducted audits on State Corporations, Public Enterprises and Statutory Commissions. The entities fell in four categories based on the financial year ends. i.e.• Year ending 30th June • Year ending 30th September• Year ending 31st October• Year ending 31st December


The scope of the audit included transactions processed during the period 1st July 2009 to 31st June 2010. The main objective of the audit for the FY 2009/10 was to audit and report on 185 accounts of Statutory Corporations; Regulatory authorities and Projects whose accounts were submitted to the Auditor General.

In the budget for the FY 2009/10 the Directorate was allocated Shs.2,813,774,000 which was 11% of the OAG budget and spent Shs.2,544,014,000 which was 11% of the total OAG budget out turn. Out of the total expenditure for the Directorate totaling to Shs.1,721,066,000 was spent on wages for 34 audit staff and 5 non audit staff giving a total of 39 staff as human capital input into the achievement of the above outputs.

The Directorate planned to audit 184 State Corporations, Public Enterprises and Statutory Com-missions and completed 174 audits of the entities as summarized in the table below.

Status of Audits State Corporation

Public Enterprises

Statutory Commissions

Total

Planned Audits 133 13 38 184Completed Audits 123 13 38 174In-progress 10 - - 10


Summary of Findings

Based on the above scope and objective, below is a summary of the findings from the audit for the FY 2009/10:-

• Of the accounts audited for the year, 67 attracted unqualified opinion, 55 qualified opinions, 38 disclaimer opinions and 1 adverse opinion.

• Commonly recurring corporate governance issues were noted in 25 public enterprises for example, Corporate Enterprises (PEs) operating for 2 years without Board of Directors; late renewal/ appointments of new Boards, absence of strategic plans, Board members getting involved in the day to day management functions, PEs operating without approved budgets, Board Members remunerating themselves without approval and holding of irregular Board meetings.

• Thirteen (13) public organizations failed to remit statutory deductions amounting to Shs. 8,901,858,221 to Uganda Revenue Authority (URA) (Shs. 5,563,915,525) and NSSF (Shs. 3,337,942,696).

• Review of public organizations revealed that 25 had poor or improper management of non-current assets or asset management weaknesses e.g. apparent lack of ownership to properties and absence of fixed assets register.

• A total of seventeen (17) Public Organizations were noted to have not wholly complied with the Public Procurement and Disposal of Assets (PPDA) Act and Regulations.

• Poor Management of Information Technology (IT) systems and resources were noted in 10 public organizations.

• Audit of fourteen (14) Public Organizations revealed material amounts of outstanding receivables of Shs.84,658,561,676. The organizations had weaknesses in management of the receivables and loans.

• Eighteen (18) Statutory Corporations and State Enterprises either lacked or were not complying with financial accounting and staff manuals in order to carry out business in an effective and efficient manner.

• There was a total unaccounted for expenditures together with loss of revenue amounting to Shs. 5,993,623,211 in form of advances, incompletely vouched expenditures, revenue losses and doubtful expenditures found in 14 Statutory Corporations and State Enterprises.

• There was also delay and non-submission of financial statements for audit by 32 public organizations.



The major challenge encountered in carrying out the audit was the inadequate staffing to manage a large portfolio.

Directorate of Statutory Corporations Senior Management team at a workshop. L-R: Anthony Kimuli Senior Principal Auditor, Francis Masuba Director of Audit, Isaac Madhvani Principal Auditor, Nicholas Kibuuka Senior Auditor & Charles Alumai Senior Principal Auditor


2.3.� Department of Performance/ Value for Money Audits

Performance/Value for Money (VFM) audit examines the economy, efficiency, effectiveness and environmental effects of government projects and operations. The audits endeavor to evaluate if activities, programmes or projects involving public funds in audited organizations have been man-aged and conducted with due regard to economy, efficiency and effectiveness.

During the FY 2010, the VFM audits are conducted in accordance with the International Organiza-tions of Supreme Audit Institutions (INTOSAI) standards. The audit covered Government Minis-tries, Departments, Agencies (MDAs) or any other public projects. The VFM reports add value to Auditor General’s financial audit to Parliament.


The VFM audit is a systematic, purposeful, organized and objective examination of government activities. Its scope includes the examination of economy, efficiency, effectiveness, and environ-mental effects of activities, procedures, accountability relationships, protection of public assets, and compliance with authorities.

The main objective of the audit for the FY 2009/10 was to conduct audits in properly considered and selected topics of interest and make recommendations for improvements in the areas stud-ies.

Review of VFM Reports with officials from SAI India in the OAG Boardroom at Crusader House.


In the budget for the FY 2009/10 department was allocated Shs. 2,626,000,000 which was 11% of the OAG budget and spent Shs. 2,479,801,000 which was 94% of its budget allocation. Out of the total expenditure for the Directorate, Shs. 984,441,000 was spent on wages for 17 audit staff and 4 non audit staff giving a total of 21 staff as human capital input into the achievement of the above output.

During the year (2009/2010) the Directorate planned to carry out 10 audits which included:-• Procurement system in Local Governments: A case study in seven Districts• State of Roads • Procurement and control of drugs. • Case Management by Judiciary. • Environmental audit on forestry. • Management of UPE Capitation Grant.• Management of Land Registration. • Farm Income Enhancement and Forest Conservation. • Rural Electrification.• Buildings Construction and establishment of Assets Register under Justice Law and Sector (JLOS).

Summary of Findings

Based on the above scope and objectives, the major findings regarding VFM audits were in the ten (10) areas selected for the VFM studies. Appropriate recommendations for improvement were made in each area studied. The areas of VFM studies selected during the year were:-

• Regulations of medicines in Uganda by the National Drugs Authority (NDA).• Procurement systems in Local Governments – A case study of seven Districts.• Functionality of land management institutions in Uganda• Management of the Farm Income Enhancement and Forest conservation Project by the Ministry of Water and Environment, and the Ministry of Agriculture, Animal Industry and Fisheries.• Disposing of cases in the Judiciary• Management of Road maintenance of National Roads by the Uganda National Roads Authority (UNRA).• Implementation of Rural Electrification Programme by Rural Electrification Agency (ERA).• Management of Universal Primary Education (UPE) Capitation Grant.• Environmental Audit of Forestry Activities in Uganda• Buildings Construction and establishment of Assets Register under Justice Law and Sector (JLOS).


The major challenges encountered in carrying out the audit were:-• Inadequate staffing to undertake ten (10) audits yet there are high expectations from Parliament and other stakeholders for more VFM audits.• Absence of parliamentary review of the audits already submitted.


2.� Support to Oversight Committees of Parliament

The Constitution of Uganda Article 153 mandates the Parliament of Uganda to perform the over-sight function over the public funds and requires the Executive arm of Government to account for the public resources entrusted to the Executive for provision of the public services.

The oversight function of Parliament over the public funds is exercised in practice through three accountability Committees of Parliament which include: the Public Accounts Committee (PAC) for Central Government Ministries, Departments and Agencies; the Local Government Public Accounts Committee (LGPAC) for Local Governments; and the Committee on Statutory Authori-ties, Commissions and State Enterprises (COSASE).

During the Financial Year 2009/2010, the Auditor General reported to the Speaker of Parliament on audits for the FY 2008/2009 and participated actively in the Committee discussions.

2.� Information Technology and Audit Development

During the year 2009/2010 the Office of the Auditor General reviewed the IT Strategic Plan which focused on creation of an appropriate IT governance structure, development of IT audit capacity, use of Automated Audit Tools, use of a new Automated Audits Management software (electronic working papers) and creation of an office wide ICT infrastructure to enhance communication and improve on audit business processes.

2.� Audit Quality Control and Quality Assurance

Besides the quality review carried out after every three years by the African Organization of Supreme Audit Institutions of the English Speaking Countries (AFROSAI-E), Office of the Audi-tor General in the year 2009/2010 carried out in-house arrangements for audit quality control and quality assurance through supervisor review.


One of the strategic objectives in the OAG Corporate Plan is to create an environment that enables the Office of the Auditor General to operate efficiently and recruit, retain, and motivate suitable staff.

To ensure efficient and effective human resources management and development, the depart-ment of Human Resource was involved in the activities of Office restructuring, Staff Recruitment, Performance appraisal, Training and Capacity building as well as ensuring staff welfare through procurement of a reputable health insurance service provider.The following achievements were registered during the year 2009/10:-

3.1 Human Resource Policies

The final OAG staff structure, staff rules and regulations were discussed and have been submit-ted for approval to the parliamentary committee on Finance, Planning and Economic Develop-ment.

3.2 Staff Recruitment and Promotion

During the year, 38 officers were recruited, inducted and posted. Two officers were also promoted to senior positions. The Office promoted some of the officers in lower positions to higher posi-tions. These together with the previously vacant posts filled include the Senior Personnel Officer, the Senior Planner, the Senior Procurement Officer the Senior Public Relations Officer, the As-sistant Secretary, the Senior Legal Officer, the Senior Information Technology Officer, 24 Auditors and the Principal Internal Auditor.

Newly recruited OAG staff pose for a group photo with the Auditor General & members of Top & Senior Management at the end of their Induction Course held at Ridar Hotel.

3.0 Human Resource Management and Development


3.3 Staff Trainings and Development

During the year 2009/2010, the office sponsored its staff to pursue professional accounting qualifi-cations. A total of seven (7) officers completed the courses and 7 others are on the way to com-plete. The number of professionally qualified staff has been increasing over the years as indicated below:-

Year Number at the beginning of the year

Increment* (Net Adjustment)

Number at end of year

200�/200� 48 4 52200�/200� 52 6 58200�/200� 58 5 63200�/2008 63 7 702008/2009 70 6 762009/2010 76 7 83

Note:The increment (Net adjustment) figure caters for staff who have left or joined OAG with full profes-sional qualifications.

In the same year, a total of 237 OAG staff undertook various trainings in audit of computerized accounting systems (IFMS) and use of CAATS and Teammate, audit of software, procurement audits, and financial audits.

All audit staff were trained in procurement audit, and use of TeamMate for carrying out audits. The staff also undertook courses as well as participated in training events of AFROSAI-E, INTO-SAI/ IDI, and Management Development Programmes in the UK (Crown Agents), USA (Harvard University) and Swaziland (ESAMI).


3.� Restructuring of the Office

To achieve objective 3, in the Corporate Plan 2005/2006 – 2010/2011, it was envisaged that the OAG structure would be reviewed in order to create an environment that enables the office to operate efficiently, recruit, retain and motivate suitable staff.

During the year the Office procured the service of the National Audit Office of the UK to conduct the restructuring exercise which was concluded. The draft OAG restructuring report containing findings and recommendations was produced submitted to Parliament for approval. In the audit year 2009/2010, new critical posts that had been created through trading off of existing positions were filled. This was to boost the capacity of the office to further meet the dire demands of operationalising the National Audit Act, 2008 and for effective implementation of the corporate plan.

3.� Staff Performance Appraisal

Having conducted staff sensitization workshops, on Result Oriented Management (ROM) and performance appraisal for all OAG staff both in Kampala and the Regional Branch offices in the previous year, the Office conducted appraisals for all 400 staff in the Financial Year 2009/2010.

However, the efforts to fully implement ROM have continued to suffer due to inadequate man-power to provide continued support and monitoring of staff performance, especially in the regional branch offices.

OAG staff attending a Restructuring workshop conducted by officials from NAO UK.


3.� OAG Health Policies

In the year 2009/2010 the OAG continued to implement HIV/AIDS policy under which 27 staff and their spouses who live with HIV/AIDS as well as those with life threatening illnesses like hyperten-sion, cancer and diabetes were supported to ensure that they live a useful life both to the nation in general and OAG in particular.

The Office introduced a health care scheme which the staff are now accessing. AAR was selected as the best firm to provide the services which cover the employee, the spouse and two biological children.

3.� De-linkage from Public Service

The enactment of the NAA, 2008, granted the Office of the Auditor General financial and opera-tional independence including the human resource management function.

However, to fully delink OAG staff from the main stream Public Service and operationalise the various legislations, there was need to come up with OAG specific staff Rules and, Regulations (TCS).

The draft staff rules and regulations were prepared and in accordance with section 42(1) of the NAA, was submitted to Parliament for approval. On the other hand, a consultant was engaged to develop the HR manual.

Despite the achievements, there were some challenges:-

• The Statutory Instrument giving effect to the provisions of the National Audit Act, 2008 regarding staff terms and conditions as provided for under Section 42 of the Act has not been approved.

• The delayed approval of the Staff rules and Regulations by Parliament made it hard to regularize appointment of OAG staff and dictated the continued dependency of the office on the mainstream Public Service Regulations.


The core vote function of the OAG is to conduct external audit in terms of Financial, Value for Money and Special audits of the public accounts of Uganda and submitting to Parlia-ment an annual audit report.

This core function is supported by the Adminis-tration function which endeavors to provide logistics, facilities and conducive environment for the proper function of the office in accord-ance with the OAG Corporate Plan objectives to create an environment that enables the Office to operate efficiently, and to improve internal and external communications of the OAG to raise the profile of the Office.

�.1 OAG Records and Information Management

The OAG Records Information Management (RIM) Unit comprises of the Central Registry at the Headquarters where all current Human Resource Management and administrative records are controlled, Records centre (Ar-chives) where all semi-current and archival records are managed, Resource Centre where all Library and knowledge resource material are managed.

There is also a Branch Registry at every Re-gional Audit Branch Office managed by 9 Records Assistants.

The records and information management function is critical to OAG’s operations. During the year, the Records and Information Manage-ment Unit of OAG assisted to develop policy, procedures, rules and regulations for man-agement of records and archives in the OAG; designed, managed and operated records and information management systems appropriate to the changing needs of OAG; provided tech-nical advice on records and information man-agement to the OAG management and staff; ensured the preservation and conservation of

records relating to the functions of OAG andprovided access and reference to archival records, knowledge and information resources in the office.

During the FY 2009/10, efforts were directed towards minimizing the major challenges that inhibited the effective performance of the RIM functions over the previous year, 2008/09.

These included acute shortage of storage space for semi-current records that are criti-cal to the deliberations of the Public Accounts Committees (PAC); congestion of the offices of senior officers due to the increasing volume of paper records; and proliferation of paper docu-ments.

All records were appraised; retention and dis-posal schedules were developed and reviewed; and as a result, all non-active records were collected at one centre and duly processed for ultimate disposal. This enabled decongestion of offices and creation of substantial storage space for the semi-current records.

In a bid to improve service delivery of the resource centre, a user-needs survey was conducted. Consequently the facility located at Crusader House was replenished with 287 additional relevant journals, reports and other recent publications.

However, the Resource Centre was yet to be optimally utilized by the staff as it still doubled as a Board Room due to persistent shortage of office accommodation.

Meanwhile, among the major challenges still to be overcome, was the proliferation of paper documents. This remained a big challenge at all staff levels.

�.0 Administration, Communication and Judicial Matters


The OAG management stepped up staff sensitization endeavours to use available IT facilities, especially the OAG intranet and webmail to minimize paper work.

Other key areas that needed to be addressed include improvement of information security; vital records protection and disaster management planning; developing knowledge management strategies that are in line with international standards and global best practice; keep up with the challenges of implementing an electronic records and document management system; and/ or automating the OAG records and information management processes so as to catch up with and keep abreast of the AFROSAI-E benchmarks.

A screenshot of the OAG website www.oag.go.ug


�.2 Office Accommodation

During the year the Office of the Auditor General (Headquarters) was housed partly at the Treas-ury Building, 1st Floor of Embassy House Building and in rented premises at Crusader House, in Kampala. The regional Branch offices of Arua, Gulu, Soroti, Fortportal and Masaka were housed in OAG premises while the regional Branch offices of Kampala, Kampala City Council and Mbara-ra were housed in other Government institutional buildings.

However, the Government of Uganda with support of the Development Partners made a provision for construction of the Audit House (OAG Headquarters) and 3 regional offices in Mbale, Mbarara and Jinja. Jinja and Mbale office buildings were constructed and completed during the year and occupied by OAG staff.

The designs and bid evaluation for the audit house in Kampala and the related negotiations for contract award were finalized. The process to secure land for construction of Mbarara regional branch office was also finalized and a title obtained.

Members of OAG Top Management, Ministry of Finance, Planning & Economic Development & OAG Mbale Branch staff pose for a group photo at the hand-over ceremony of the newly constructed Mbale Regional Branch Office.


�.3 Transport Equipment

During the year 2009/2010, the office acquired a total of nineteen (19) new vehicles. Four (4) from African Development Bank (ADB), 11 from Financial Management and Accountability Programme (FINMAP) and four (4) from GoU Project Funds.

These vehicles were deployed to the various Directorates to facilitate field operations.

�.� Assets Management

The Office has continued to maintain an asset register that was installed in 2007/2008. The regis-ter was updated with the details of all the office assets including vehicles, furniture, motorcycles, buildings etc acquired during the year 2009/2010.

Updates were done in the assets register whenever there was any asset acquisition, transfer and disposal. The assets were fully engraved in their respective categories including both donated and GoU assets.

To effectively and efficiently manage its vehicles fleet, the office came up with a transport policy. The draft transport policy was approved by Top Management for implementation.

The Auditor General Mr. John F.S. Muwanga receives car keys from the FINMAP Project Co-ordinator Mr. Johnson Mutesigensi. Looking on is the former Director of Audit Local Authorities Mr. Aloysius Mayanja.


�.� Information Communications Technology Infrastructure

JICA revamped the OAG Training Centre with new furniture and 18 desktops to make it fully func-tional. All the desktops have access to IFMS and have Teammate and IDEA application software installed in them.

During the year ICT and IT audit trainings were regularly and frequently undertaken with the facilities at the centre. Two additional projectors for training and 20 cameras for field audits were procured for the centre during the year 2009/2010.

Since 2007/2008, the OAG website continued to be work in progress with constant updates. In the year 2009/2010 the second phase of the OAG website update was undertaken. The Intranet continued to be an important communications tool in the Office with regular updates of our office activities on the net.

Gulu branch was successfully added to the OAG network bringing the number of branches con-nected to seven (7). Regular maintenance visits to all our audit branch offices were undertaken by our IT team on quarterly basis.

However, the efficient operation of OAG-ICT was hampered by several challenges. There was un-reliable service provided to the OAG net work connectivity. Maintaining optimum link speed in our branches and Headquarters office provided a challenge in the IT operations of the Office. Embassy and Crusader House were heavily affected, so were Soroti and Arua offices.

The measures to ameliorate these challenges should include upgrading the network at the Embassy House and the Crusader House; upgrading the Data Centre to provide better services; acquiring further consignment of laptops to have 1.1 staff laptop ratio; and renewal of the OAG Teammate and the IDEA licences.


�.� Communication and Public Relations

A communications committee was instituted responsible for the formulation, implementation, monitoring and review of the internal and external OAG communication strategies so as to improve internal and external communication to raise the profile of the Office with staff and other stakeholders. In the most recently recruited lot of staff, a Senior Public Relations officer was recruited and is responsible for building, maintaining and managing the reputation of the Office of the Auditor General using all forms of media and communication.

Information fliers were prepared after every other two months and posted on the intranet where all staff have access. This improved the internal communication in the Office of the Auditor General.

�.� Professional Liability Indemnity Insurance

During the year 2009/2010, the Office took a professional liability indemnity insurance policy of Shs. 300 millions with an annual insurance premium of Shs. 6 millions to protect itself in the probable event that the Office is sued on the contents of its audit reports.


During the year and in accordance with two strategic objectives of the OAG; • to improve the quality of budget preparation, financial management and budget monitoring and

• to secure financial and operational independence of the Office.

Furthermore, during the year an Economist was attached by the Ministry of Finance to the Office to assist in the budgeting process. Later on in the year a Senior Planner was recruited to under-take and coordinate the budget process.

The office used the computerized budget performance monitoring and reporting tool to prepare quarterly financial and physical progressive reports. This tool generates information on quarterly basis about the revenues received and the actual outputs. This enhanced on our budget monitor-ing.

�.1 Budget Performance

Pursuant to the National Audit Act, 2008 section 33 which provides for the preparation and sub-mission of estimates of the year, of administrative and development expenditures and estimates of revenues of the OAG, the Office prepared its budget for the financial year 2009/2010.

The total budget approved for the office for 2009/2010 was Shs. 27.73 bn for both development and statutory recurrent expenditures. Although no Non-Tax Revenues (NTRs) were anticipated during the year, a total collection of Shs. 500,000 was realized from tender fees.

The total budget of shs. 27.73 bns from GoU funds was allocated as general staff salaries Shs. 12.991 bns (47%), Statutory recurrent was Shs.11.5 bn (42%), contract staff salaries Shs. 0.385 m (14%) and development budget Shs. 3.10 bn (12%) including Donor funds. Of the development budget, the total donor funds amounted to Shs. 2.31 bn while the GoU Component was Shs. 900 m.

These donor funds of US$ 2.89m administered under FINMAP project and were allocated for undertaking external auditing of OAG clearing backlog audits of Lower Local Governments train-ing of staff, construction of the audit house and implementing activities associated with the opera-tionalization of the National Audit Act, 2008.

The OAG budget increased as compared to financial year 2008/09. Whereas the approved budg-et for 2008/09 was Shs. 21.178 bn (with an actual outturn of Shs. 20 bn) a 30% rise was given in 2009/10 to reach 27.73 bn with an outturn of Shs. 23.43 bn.

In the financial year 2009/2010 the office prepared and submitted estimates for the financial year 2010/2011. Parliament provided and approved budget of shs. 33.9 bn to facilitate the audit activi-ties and office accommodation for subsequent financial year.

�.0 Financial Management, Budget Performance and Risk Management


A summary of the Budget, Actual Releases and MTEF Projections for three years is shown in the table below:-

Table 1-8: Budget, Actual Releases And Mtef Projections In Billions Of Shillings2008/09 2009/10 2010/11 MTEF Projections

Budget Type

Approved Budget

Actual Outturn

Approved Budget

Actual Outturn

Approved Budget

2011/12 2012/13

Recurrent 19.486 18.354 24.518 22.5 32.240 32.707 32.707GoU Devt 0.310 0.310 0.900 0.9 0.960 0.830 0.990Donor Devt 1.382 1.382 2.310 2.310 0.754 0.184 -Total 21.1�8 20.0�� 2�.�28 2�.�10 33.9�� 33.�21 33.�9�

�.2 Financial ManagementWith a budget of Shs.27.040bn for FY 2009/2010, approved by Parliament, the Of-fice was able to carry out and report timely on a total of 2,051 Financial, Special and Value for Money audits. A total of 1200 audits were carried out on the lower local government back logs.

A total of 150 staff were trained in various skills including professional accounting, VFM au-dit, use of Teammate, Procurement Audit and Managerial skills development programmes. The Office Logistics and infrastructure was ex-panded by acquiring 19 additional vehicles and assorted furniture.

�.3 Internal Audit, Internal controls and Risk ManagementDuring the year the Office of the Auditor Gener-al had a section of internal audit, which verified effectiveness, of internal controls and advised on risk management.

The Office continues to improve internal control systems in a bid to ensure proper adherence to the financial management policies and proce-dures.

The Office recruited a Principal Internal Auditor during the financial year 2009/10 as planned; bringing a total number of two officers in the section.

Four (4) internal quarterly audit reports were produced in the year. These were made avail-able to the Accounting Officer to assist him to manage the risks involved in the use of re-sources

�.� ProcurementThe office had an established procurement unit which was headed by a procurement officer and together with contracts Committee handled all office procurements. The unit was boosted with the recruitment of one more staff at Senior Procurement Office level as planned.

In order to ensure value for money in all the procurements, the unit prepared a procurement plan for the year. The procurement plan was prepared and executed fully during the year. A new plan for 2010/11 was also completed and approved by the PPDA.

�.� Financial Reporting and AuditIn accordance with section 35 of the National Audit Act, the office prepared and submitted the financial statements for the FY 2009/10 as at 30th June 2010 as per the required statutory date of 30th September 2009.

However, Parliament did not appoint an Auditor to audit the accounts of the Office of the Audi-tor General for the Financial Years 2005/2006 to 2009/2010.


During the year 2009/2011 the Office of the Auditor General related with a number of International Organizations to get support and to share experiences and knowledge.

In addition, the officers of the Office (OAG) also made international visits to other relevant organi-zations outside Uganda to learn from and share experiences with them.

�.1 INTOSAI and IDI

INTOSAI is the International Organization of Supreme Audit Institutions. It is an organization or association of Supreme Audit Institutions (SAIs) of countries who are members of the United Nations (UN). IDI means International Development Initiative. It is the training arm of the INTOSAI through which members of INTOSAI share knowledge, skills and information through training.

The Office of the Auditor General subscribes to and is a permanent member of INTOSAI. During the Financial Year 2009/2010 the OAG was represented and actively participated in the programmes and activities of INTOSAI through paying membership fees, attending conferences, workshops, training events and exchanging correspondences.

The activities and programmes enabled the OAG to share knowledge, information and experi-ences with other National Audit Offices (SAIs) globally.

INCOSAI is the International Congress of Supreme Audit Institutions. This is the supreme organ of INTOSAI established under article 4 of the INTOSAI statue, 2009; it had its first meeting in 1953 in Cuba. Since then it has been assembling after every three years. This congress is at-tended by heads of SAIs. In May 2010 the assembly was held in South Africa and the Office of the Auditor General was represented by two officers.

�.2 AFROSAI and AFROSAI-E

AFROSAI is the African Organization of Supreme Audit Institutions. It is a continent wide organi-zation of Supreme Audit Institutions (SAIs) of Africa and a Regional African continental member of the INTOSAI. Through participating in the programmes and events of AFROSAI, member SAIs share knowledge, information and experiences on public sector audit issues.

The office of the Auditor General subscribes to and is a member of AFROSAI. During the financial year 2009/2010 the office participated actively in exchanging knowledge, skills, information and experiences within the framework of AFROSAI through conferences, workshops, training events and surveying correspondences.

�.0 International Relations


AFROSAI-E is a sub-regional organization of English Speaking AFROSAI members. Its Sec-retariat is in Pretoria, South Africa.

The Office of the Auditor General subscribes to and is an effective member of AFROSAI-E.

In the financial year 2009/2010 the office ac-tively and extensively participated in several activities of AFROSAI-E through meetings, conferences, workshops, training events pay membership fees and self-assessment visits to share knowledge, information, skills and experi-ences.

�.3 The Common Wealth Auditors General Conference

The Commonwealth Auditors General Con-ference is an association and conference organized once every three (3) years by the Countries who belong to the Commonwealth of Nations.

The Office of the Auditor General of Uganda is a member of the Commonwealth Auditors Gen-eral Conference. The Office last participated in the Bermuda Conference in July of financial year 2008/2009.

The next conference will be in April 2011 in Namibia and the office will participate in the Conference.

�.� United Nations Independent Audit Advisory Committee (UN-IAAC)

The Independent Audit Advisory Committee of the United Nations (UN-IAAC) is a subsidiary body of the General Assembly of the United Nations (UN) established to serve in an expert advisory capacity to assist the General Assem-bly of the UN in fulfilling its oversight responsi-bilities.

The Auditor General of Uganda was appointed and as member of the UN Independent Audit Advisory Committee.

In his capacity as a member, the Auditor Gen-eral attended all the meetings of the Committee in the Financial Year 2009/2010.

�.� World Bank Multilateral Audit Advisory Group

The World Bank Group has established a Mul-tilateral Audit Advisory Group (MAAG) that is specifically tasked with advising the Audit Com-mittee of the World Bank (WB) on audit requests from the Supreme Audit Institution (SAI) or other National Audit Offices.

The advice given (by MAAG) includes assess-ing compliance of the SAIs with the agreed terms of references for the audit; assessing adherence to the agreed group rules, and providing objective comments on the resulting audit reports.

The Auditor General of Uganda is a member of this Multilateral Audit Advisory Group (MAAG) of the World Bank and is assisted by the Assistant Auditor General.

�0 OAG Performance Report 2009/ 2010

�.� International Consortium on Government Financial Management (ICGFM)

The ICGFM works globally with Governments, Organizations and individuals who are interested in developments in public financial management. The Consortium brings together diverse Govern-mental Entities, Organizations and individuals who include financial management practitioners in all levels of Government.

The Office of the Auditor General (OAG) was made as one of the six organizational members of the Consortium to serve on its Governing Board. During the Financial Year 2009/010 the office sent four (4) Senior Officers to participate in the Conference activities of the Consortium.

�.� International Delegations

Since the visible improvement in quality and quantity of performance of the Office of the Audi-tor General in the eyes of the external stakeholders; and the successful adoption of efficient and effective audit tools and methods in auditing computerized accounting and financial management System, (such as the IFMS) the office started receiving a stream of International Delegations wishing to share experiences and broaden their knowledge with the National Audit Office (SAI) of Uganda.

In the period of reporting, the office hosted International Delegations from Eritrea, Somaliland, Gambia and Ethiopia. The Office also received a delegation from the Malawi SAI led by the Auditor General of Malawi.

The Ethiopian delegation pose for a photo with the Auditor General Uganda Mr. John Muwanga (4th from Left) & members of OAG Top Management during their viist to Uganda.

�1OAG Performance Report 2009/ 2010

�.9 JICA and OAG

JICA and OAG have related closely with the former giving capacity building support to the latter. In the year 2009/2010 JICA supported the Office in four major areas:-

i) In the VFM audit area it :- • Supported training needs assessment (TNA) of OAG VFM audit staff in collaboration with SAI of India. • Funded formal training of 15 VFM audit staff in India • Developed VFM public relations audit leaflets for OAG stakeholders.

ii) In the area of ICT it:- • Provided 20 high resolution cameras for field work, • Supported the training of 257 OAG audit staff in use of TeamMate, • Assisted in carrying out ICT training needs assessment (TNA) with technical assistance of the SAI of India. • Revised ICT strategy of OAG in collaboration with the SAI of India

iii) In the area of public works audit it:- • Assisted in training of 14 OAG staff in Public Works Audit in Japan • Funded short-term workshop training for 35 OAG staff facilitated by consultants from Japan.

iv) In the area of Human Resources Management it:- • Sourced and funded management and leadership development programmes (MDPs) for 13 members of the Top Management.

President Board of Audit of Japan (sitted 2nd from left) & his staff pose for a photo with the OAG team.


�.10 International Study Tours

Officers of the Office of the Auditor General do make visits to relevant organizations abroad to learn, share information and experiences.

In the year of reporting the Director of Central Government Audit and the IT team visited the SAI of India to learn use of and management of ICT.

In addition, the OAG VFM audit team visited SAI of Ghana and India to learn and share experiences on VFM audits.

The Director of Audit Central Government Mr. Stephen Kateregga (1st from Right), JICA Coordinator Ms. Maki Okubo (1st from Left) & part of the OAG IT team pose for a photo with the Principal Director International Relations Mr. Jagbans Singh during the visit to SAI India.


Corporate social responsibility is a commitment to improve community wellbeing through discre-tionary corporate practices and contributions of corporate resources to improve societal welfare at large. Under this corporate social responsibility, the Office undertook various social initiatives to support social causes which contribute to community welfare. These initiatives were aimed at:-

• Improving the corporate image of the Office of the Auditor General • Increase its ability to attract, motivate and retain staff • Increase sensitization of and appeal to stakeholders

At community level, the office has so far participated in major national sports events. In the year 2009/2010, it contributed Shs.500,000 to the National Golf Tournament whose proceeds were used to support breast cancer initiatives.

Again in 2009/2010, registered its employees for participation in the MTN marathon. This was an annual sports event hosted by MTN which brought together regional athletes’ from Africa. The proceeds were used to support various community health programs like maternal health, water and sanitation and to assist the disadvantaged persons in the war ravaged areas of Northern Uganda.

The OAG Corporate team poses for a group photo after successfully completing the MTN Kampla Marathon.

�.0 Corporate Social Responsibility

�� OAG Performance Report 2009/ 2010

Section 8 of the Accountants Act, 1992, empowers the Auditor General to be the Registrar of Accountants in Uganda. It requires the Auditor General to register and maintain a register for the Accountants.

In the Financial year 2009/2010 the Auditor General registered 104 Accountants.

8.0 Registration Of Accountants

��OAG Performance Report 2009/ 2010

GOVERNMENT OF THE REPUBLIC OF UGANDA

REPORTS AND FINANCIAL STATEMENTS FOR

… OFFICE OF THE AUDITOR GENERAL …

FOR THE YEAR END 30th JUNE 2010

Appendix I: Unaudited Financial Statements of OAG for the year ended 30th June 2010.


Statement of Responsibilities of the Accounting Officer

The financial statements set out on pages 1 to 22 have been prepared in accordance with the provisions of the Public Finance and Accountability Act, 2003 [the Act]. The financial statements have been prepared on the modified cash basis of accounting and comply with the generally accepted accounting practice for the public sector.

In accordance with the provisions of Section 8 of the Public Finance and Accountability Act, 2003, [the Act], I am responsible for the control and personally accountable to Parliament for the regu-larity and propriety of the expenditure of money applied by an expenditure vote, or any provision funded wholly through the Consolidated Fund, and for all resources received, held or disposed of.

Under the provisions of Section 31 of the same Act, I am required to prepare, sign and submit financial statements to the Minister responsible for Finance, the Auditor General, and to the Accountant General within a period of three months from the end of the Financial Year. Accordingly, I am pleased to submit the required financial statements in compliance with the Act. I have provided, and will continue to provide all the information and explanations as maybe required in connection with these financial statements.

To the best of my knowledge and belief, these financial statements agree with the books of account, which have been properly kept.

I accept responsibility for the integrity of these financial statements, the financial information they contain and their compliance with the Public Finance and Accountability Act, 2003.

……Joseph L Ewama …………………….Accounting Officer [Names & Signature]

………Office of the Auditor General…………………

…1�th September 2010….Date


The Role of Office Of the Auditor General

The principal address of the Office is:

Office of The Auditor GeneralP.O Box 7083Plot 2/12 Apollo Kagwa RoadTel; (256414) 344340/521Auditor General; (256414) 255487Fax: (256414) 345674KampalaE-mail: [email protected]: www.oag.go.ug

Vision: “To be an effective and efficient Supreme Audit Institution in promoting effective public accountability”

Mission: “To audit and report to Parliament and thereby make an effective contribution to improv-ing public accountability and value for money spent”

Core ValuesThe Office is committed to upholding the following as its core values:-Integrity – Being upright and honest.Objectivity – Display impartiality and professional judgment.Professional Competence – Act with diligence, proficiency and team spirit.

The Office is the Supreme Audit Institution (SAI) provided for under Article 163 (3) of the Constitu-tion of the Republic of Uganda. The Office is responsible for auditing and reporting on the public Accounts of Uganda and of all public Offices including the Courts, the central and Local Govern-ment Administrations. Universities and Public Institutions of like nature and Public Corporations or other bodies established by an Act of Parliament also form the scope of this audit for reporting to Parliament.


Commentary on the Financial Statements by the Head of Accounts

The Office had an approved annual budget of Shs. 25bn including development budget of Shs. 09bn while the recurrent budget was Shs. 24bn. Being a statutory vote, a full release was made for the expenditure items except salaries which are paid through straight thru processing based on filled in positions. A total Release of Shs. 23.2bn was received during the year with the unre-leased funds comprising of Salary for vacant positions and gross tax which was released directly to the Central Bank.

During the year, the office did not have any domestic arrears and therefore there were no such payments in the accounts. There were a few adjustments in the financial reports for 2008/09 in development budget for items that had wrong postings on the system which was unavoidable. These had been communicated and agreed with the Accountant General’s Office.

The office has a long running overdrawn balance on the TGA carried on from previous years and it should be recovered from the unspent balances of 2008/09 financial to write it off the books.

I take full responsibility for the integrity of these Financial Statements, the financial information they contain and their compliance with the PFAA 2003.

………Ambrose Promise……………..………..Head of Accounts [Names & Signature]

……1�th September 2010……….Date:


Statement of Financial Performance for the year ended 30th June 2010[Based on classification of expenditures by nature]

Budget 2010Shs

Notes Actual30th June 2010Shs

Actual30th June 2009Shs

Operating revenueGrants from foreign governments 2 -Grants from international organiza-tions

3 -

Domestic Grants 4 -25,418,218,000 Transfers received from the Treasury 5 23,458,997,707 18,664,041,664

Transfers received from other govern-ment units

6 -

- Non-Tax Revenues 7 500,000 7,470,000 Other Revenue 8

25,418,218,000 Total operating revenue 23,��9,�9�,�0� 18,��1,�11,��Operating expenses

16,298,772,000 Employee costs 9 14,339,438,185 11,074,841,3258,219,078,000 Goods and services consumed 10 8,195,625,960 5,905,298,229900,368,000 Consumption of property, plant &

equipments 11 869,221,553 124,894,106

Interest expense 12Subsidies 13Transfers to other Organizations 14 31,526,910 868,649,382Social benefits 15Other expenses 16Foreign exchange losses (gains) 18

25,418,218,000 Total operating expenses 23,�3�,812,�08 1�,9�3,�83,0�2- Surplus/(deficit) from operating

activities23,685,099 697,828,622

Finance costs 17Losses of cash only (refer to State-ment of reported losses)Extraordinary items 19

- Net surplus/ (deficit) after extraordi-nary items

23,�8�,099 �9�,828,�22

The accounting policies and notes set out on pages 23 to 40 form an integral part of these finan-cial statements.The financial statements on pages 5 to 20 were approved by the Accounting Officer on 14th Sep-tember 2010

…… Joseph L Ewama …………………Accounting Officer [Names & Signature]


Statement of Financial Position as at 30th June 2010.Notes 30th June 2010

Shs30 June 2009Shs

ASSETSCash and Cash equivalents 20 671,418,781 649,903,310Receivables 21Inventories 22Investments 23Investment properties 24Total Assets ��1,�18,�81 ��9,903,310LIABILITIESBorrowings (interest bearing liabilities) 25 26,590,279 26,590,279Payables 26 -Pension liabilities 27Total liabilities 2�,�90,2�9 2�,�90,2�9NET ASSETS / (LIABILITIES) ��,828,�02 �23,313,031

REPRESENTED BY;NET FINANCIAL WORTH ��,828,�02 �23,313,031

Statement Of Changes In Equity (Networth) As At 30th June 2010 30th June 2010

Shs30 June 2009Shs

Net worth Last Year (B/F) 623,313,031 665,118,125Less: Transfers to the UCF account ( Balances) - (52,089,937)Add: Bounced EFTs ( Stale cheques) - (22,811,929)Less: Project Balances (701,299,362)Adjustment : Under/Over Statement of Domestic Arrears of Past Years

36,567,512

Less: Cash WHT to URA (Unrecoverable) (2,619,628)Add: Prior Year adjustment of unspent cash EFTs for 2008/09

450,000

Add: Surplus/ Deficit for the Year 23,685,099 697,828,622 CLOSING NET FINANCIAL WORTH ��,828,�02 �23,313,031

The accounting policies and notes set out on pages 23 to 40 form an integral part of these finan-cial statements.

The financial statements on pages 5 to 20 were approved by the Accounting Officer on 14th Sep-tember 2010

……… Joseph L Ewama ……………Accounting Officer [Names & Signature]


Cash Flow Statement for the year ended 30th June 2010 [Direct Method]Notes 30th June 2010

Shs30th June 2009Shs

CASH FLOWS FROM OPERATING ACTIVITIESTotal receipts from operating revenues were (see below): 23,��9,�9�,�0� 18,��1,�11,��PAYMENTS FOR OPERATING EXPENSES:Employee costs 14,339,438,185 11,074,841,325Goods and services consumed 8,195,625,960 5,905,298,229Interest expenseSubsidiesTransfers to other Organizations 31,526,910 868,649,382Social benefitsOther expenses Net Advances paidDomestic arrears paid during the year Pension Arrears paid during the YearLosses of cashLetters of Credit receivableExtraordinary itemsTotal payments for operating activities 22,��,�91,0�� 1�,8�8,�88,93�Net cash inflows/(outflows) from operating activities 892,90�,��2 822,�22,�28CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipments (869,221,553) (124,894,106)Proceeds from sale of property, plant and equipmentsPurchase of investmentsProceeds from sale of investmentsPurchase of investment propertiesProceeds from sale of investment propertiesNet cash inflows/(outflows) from investing activities (8�9,221,��3) (12�,89�,10�)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from external borrowingsRepayments of external borrowingsProceeds from other domestic borrowingsRepayments of other domestic borrowingsNet cash flows from financing activities - -Net increase (decrease) in cash and cash equivalents 23,�8�,099 �9�,828,�22

The accounting policies and notes set out on pages 23 to 40 form an integral part of these finan-cial statements.The financial statements on pages 5 to 20 were approved by the Accounting Officer on 14TH September 2010

…………… Joseph L Ewama …………Accounting Officer [Names & Signature]


Cash Flow Statement for the year ended 30th June 2010 (continued)

For cash flow purposes receipts from operating revenue comprise:

Notes 30th June 2010Shs

30th June 2009Shs

Operating revenueGrants from foreign governments 2Grants from international organizations 3Equalization grants 4Transfers received from the Treasury 5 23,458,997,707 18,664,041,664Transfers received from other government units 6Non-tax revenues 7 500,000 7,470,000Miscellaneous 8Advances RecoveredDeposits ReceivedTotal receipts from operating activities 23,��9,�9�,�0� 18,��1,�11,��

Reconciliation of movement of cash during the yearNotes 30th June 2010

Shs30 June 2009Shs

At the beginning of the year 649,903,310 728,275,916Less: Transfers to UCF account (Balances) - (52,089,937)Less: Project balances written Down (701,299,362)Add: Bounced EFTs ( Stale cheques) (22,811,929)Less: WHT paid to URA - Unrecoverable (2,619,628)Add: Prior Year 2008/09 EFT Cash adjustment refunded to TGA

450,000

Net increase (decrease) of cash from the Cash flow Statement 23,685,099 697,828,622At the end of the year ��1,�18,�81 ��9,903,310

For purposes of the cash flow statement, cash and cash equivalents comprise30th June 2010Shs

30th June 2009Shs

Cash and bank balances 20 671,418,781 649,903,310Less bank overdrafts 25Net cash and bank balances ��1,�18,�81 ��9,903,310


……… Joseph L Ewama ………………Accounting Officer [Names & Signature]


Statement of Appropriation Account [Based on services voted by Parliament]

Actual30 June 2009Shs.

Notes Actual30th June 2010Shs.

Budget30th June 2010Shs.

Variance30th June 2010Shs.

RECEIPTSGrants from foreign govern-ments

2

Grants from international organizations

3

18,664,041,664 Transfers received from the Treasury

5 23,458,997,707 25,418,218,000 1,959,220,293

Transfers received from other government units

6

Non-Tax Revenues 7Miscellaneous 8

18,��,0�1,�� Total receipts 23,��8,99�,�0� 2�,�18,218,000 1,959,220,293EXPENDITURE- by services as per appropriation

6,160,505,150 Prog 01 - Headquarters 7,073,570,118 7,477,128,500 403,558,3823,723,848,815 Prog 02 – Directorate of Cen-

tral Government3,936,218,844 4,372,000,000 435,781,156

2,162,515,224 Prog 03 – Directorate of Statutory Authorities

2,541,014,635 2,814,000,000 272,985,365

5,107,552,111 Prog 04 – Directorate of Local Authorities

6,505,898,674 7,169,371,500 663,472,826

576,490,452 Prog 05 – Directorate of Value for Money and Quality Assurance

2,479,801,494 2,685,350,000 205,548,506

23�,301,290 Development Budget Expenditure

8�9,221,��3 900,3�8,000 31,1��,��

1�,9��,213,0�2 Total expenditure for services appropriated

23,�0�,�2�,318 2�,�18,218,000 2,012,�92,�82


……… Joseph L Ewama ………Accounting Officer [Names & Signature]


Statement of Appropriation Account [Based on nature of expenditure for services voted]





RECEIPTSGrants from foreign govern-ments

2

Grants from international organ-izations

3

18,664,041,664 Transfers received from the Treasury

5 23,458,997,707 25,418,218,000 1,959,220,293

Transfers from other govern-ment units

6

Non-Tax Revenues 7 -Miscellaneous 8

18,��,0�1,�� Total receipts 23,��8,99�,�0� 2�,�18,218,000 1,9�9,220,293EXPENDITURE- by nature of expenditure

11,074,841,325 Employee costs 9 14,339,438,185 16,298,772,000 1,959,333,8155,905,298,229 Goods and services consumed 10 8,197,065,580 8,219,078,000 22,012,420124,894,106 Consumption of property, plant

& equipments (fixed assets)11 869,221,553 900,368,000 31,146,447

Interest expense 12Subsidies 13

861,179,382 Transfers to other government units

14

Social benefits 15Other operating expenses 16Domestic arrears paid

1�,9��,213,0�2 Total operating expenses 23,�0�,�2�,318 25,418,218,000 2,012,492,682Finance costs 17

1�,9��,213,0�2 Total Expenditure 23,�0�,�2�,318 25,418,218,000 2,012,492,682



………… Joseph L Ewama …………Accounting Officer [Names & Signature]


Statement of reconciliation between total expenditure per Statement of Appropriation Ac-count to total expenditure in Statement of Financial Performance

Notes 30th June 2010

Shs30th June 2009Shs

Total expenditure per Appropriation Account 23,�0�,�2�,318 1�,9��,213,0�2Add: Letters of credit receivable prior year but delivered during the year Transfers received from other government units - Transfer to Treasury NTR 500,000 7,470,000Transfer to Treasury Gross Tax 31,026,910Accrued ExpenditureForeign exchange losses (gains)

23,�3�,2�2,228 1�,9�3,�83,0�2Less:Letters of credit receivable at year-endTransfers made to other government units 1,439,620Domestic Arrears paid

Total Expenditure per Statement of Financial Performance 23,�3�,812,�08 1�,9�3,�83,0�2



…… Joseph L Ewama …………Accounting Officer [Names & Signature]


Statement of Revenues collected during the year ended 30th June 2010[Based on source of revenue] (Memorandum Statement)





RECEIPTSNon-tax revenuesInvestment incomeDividendsRentOther property incomeIncome from Disposal of Assets

7,470,000 Administrative fees & licensesFines and penaltiesMiscellaneous receipts 500,000 - (500,000)

�,��0,000 Total Non-Tax Revenue �00,000 - (�00,000)



………… Joseph L Ewama ………………Accounting Officer [Names & Signature]


1. ARUA

2. GULU

3. FORT PORTAL

4. JINJA

5. KAMPALA

6. KCC

7. MASAKA

8. MBALE

9. MBARARA

10. SOROTI

Appendix II: Regional Audit Branch Office

P.O. Box �083 KampalaPlot 2/12 Apollo Kaggwa Rd

Tel: +2��-�1-�3��Fax: +2��-�1-�3��

E-mail: [email protected]: www.oag.go.ug

office of the auditor general · masaka and soroti in 1975. kampala and kampala city council branch...

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