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THE REPUBLIC OF UGANDA
OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF STATUTORY
AUTHORITIES AND STATE ENTERPRISES FOR THE YEAR
ENDED 30TH JUNE 2009
VOLUME 4
STATUTORY CORPORATIONS
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LIST OF ACRONYMS AND ABBREVIATIONS
AHP Allied Health Professionals
AHL Amber House Limited
LI Live stock Industries
AC Amnesty Commission
BOU Bank of Uganda
CCL Cable Corporation Limited
CMA Capital Markets Authority
CAA Civil Aviation Authority
COCTU Coordinating Office for Control of Trypanosomiasis in Uganda
CDO Cotton Development Organization
HTTI Crested Crane Hotel & Tourism Training Institute
CAA Civil Aviation Authority
DDA Dairy Development Authority
PU Privatization Unit
EAC East African Community
ERA Electricity Regulatory Authority
UICT Institute of Communication & Information Technology
KCCL Kasese Cobalt Company Limited
KML Kilembe Mines Limited
KSW Kinyara Sugar Works
LVFO Lake Victoria Fisheries Organization
LDC Law Development Centre
MTAC Management Training and Advisory Centre
MNS Mandela National Stadium
MEMD Ministry of Energy and Mineral Development
NAGRIC National Animal Genetic Resources Centre and Data Bank
NWMS Nakivubo War Memorial Stadium
NCC National Council for Children
NCHE National Council for Higher Education
NCS National Council of Sports
NCDC National Curriculum Development Centre
NDA National Drug Authority
NEC National Enterprises Corporation & Subsidiaries
NFA National Forestry Authority
NHCCL National Housing & Construction Company Limited
NMS National Medical Stores
NPA National Planning Authority
NWSC National Water & Sewerage Corporation
NWC National Women‟s Council
NYC National Youth Council
NHI Nile Hotel International
NSSF National Social Security Fund
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PLB Public Libraries Board
PPDA Public Procurement & Disposal of Public Assets Authority
REA Rural Electrification Agency
UACC Uganda Air Cargo Corporation
UBC Uganda Broadcasting Corporation
BC Broadcasting Council
UBOS Uganda Bureau of Statistics
UCDA Uganda Coffee Development Authority
UCC Uganda Communications Commission
UDB Uganda Development Bank
UDC Uganda Development Corporation
UEB Uganda Electricity Board
UEDCL Uganda Electricity Distribution Company Limited
UEGCL Uganda Electricity Generation Company Limited
UEGCL-TA Uganda Electricity Transmission Corporation (Twinning Arrangement)
UETCL Uganda Electricity Transmission Company Limited
UEPB Uganda Export Promotion Board
UIC Uganda Insurance Commission
UIA Uganda Investment Authority
UMDPC Uganda Medical and Dental Practitioners Council
UNBS Uganda National Bureau of Standards
UNCST Uganda National Council of Science & Technology
UNCC Uganda National Cultural Centre
UNEB Uganda National Examinations Board
UNMC Uganda Nurses & Midwives Council
CASSOA Civil Aviation Safety and Security Oversight Agency
MERECP Mount Elgon Regional Ecosystem Conservation Programme
KCCL Kasese Cobalt Company Limited
PSA Production Sharing Agreement
PPP Public Private Partnership
SCOUL Sugar Corporation of Uganda Ltd.
NIC National Insurance Corporation Ltd.
UTL Uganda Telecom Ltd.
QCIL Quality Chemical Industries Ltd.
UGCEA Uganda Ginners and Cotton Exporters Association
CSDP Cotton Subsector Development Credit
NHL Nsimbe Holdings Ltd.
MEL Mugoya Estates Ltd.
JV Joint Venture
MCELU Mugoya Construction and Engineering Limited Uganda.
MIC Management Investment Committee
VPDL Victoria Property Development Ltd.
BOD Board of Directors
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UPPC Uganda Printing & Publishing Corporation
UPHL Uganda Property Holding Limited
URC Uganda Railways Corporation
USL Uganda Seeds Limited
UTB Uganda Tourism Board
UWA Uganda Wildlife Authority
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TABLE OF CONTENTS
CHAPTER ONE ................................................................................................................................................................ 9
1.1 Mandate and Legal framework ........................................................................................... 9 1.1.1 The Auditor General’s Responsibilities............................................................................... 9 1.1.2 Responsibilities of Public Organisations on the financial statements ........................... 10 1.1.3 Representations by management..................................................................................... 10 1.2 VISION ............................................................................................................................... 11 1. 3 STATUS OF ACCOUNTS AUDITED DURING THE YEAR ..................................................... 11 1.4 SUMMARY OF MAJOR AUDIT FINDINGS OF THE REPORT .............................................. 12 1.4.1 Unremitted statutory deductions ..................................................................................... 12 1.4.2 Corporate Governance ...................................................................................................... 13 1.4.3 Asset Management ............................................................................................................ 14 1.4.4 Performance Review of Public Organizations.................................................................. 15 1.5 REGIONAL AUDITS ............................................................................................................ 16
CHAPTER TWO ............................................................................................................................................................. 18
2.1 AUDIT OPINION (CERTIFICATION OF ACCOUNTS) ........................................................ 18 2.1.1 Unqualified Opinion ........................................................................................................... 19 2.1.2 Unqualified opinion with Emphasis of Matter (EOM) ...................................................... 20 2.1.3 Qualified Opinion ............................................................................................................... 20 2.1.4 Disclaimer of Opinion ........................................................................................................ 22 2.1.5 Adverse Opinion ................................................................................................................. 23 2.2 ACCOUNTS WHERE EXAMINATION OF BOOKS OF ACCOUNTS HAVE BEEN CONCLUDED
BUT THE ACCOUNTS HAVE NOT BEEN CERTIFIED .......................................................... 23 2.2.1 COORDINATING OFFICE FOR THE CONTROL OF TRYPANOSOMIASIS IN ..................... 24 2.2.2 LAW DEVELOPMENT CENTRE: Year ended 30th June 2006 ............................................ 26 2.2.3 UGANDA NATIONAL CULTURE CENTRE: Years ended 30th June ................................... 26 2.2.4 UGANDA LIVESTOCK INDUSTRIES LTD ........................................................................... 27 2.2.5 NATIONAL COUNCIL FOR HIGHER EDUCATION .............................................................. 29 2.2.6 NATIONAL COUNCIL FOR HIGHER EDUCATION: ............................................................. 30 2.2.7 JOINT CLINICAL RESEARCH CENTRE: .............................................................................. 31 2.2.8 NAKIVUBO WAR MEMORIAL STADIUM (NWMS) ............................................................. 34 2.3 AUDITS IN PROGRESS ...................................................................................................... 36
CHAPTER THREE .......................................................................................................................................................... 37
3.1 UNQUALIFIED AUDIT OPINION WITH EMPHASIS OF MATTER PARAGRAPHS.............. 37 3.1.1 NILE HOTEL INTERNATIONAL LIMITED (31st DECEMBER 2008) ................................... 37 3.1.2 UGANDA COFFEE DEVELOPMENT AUTHORITY (30TH SEPTEMBER 2008) ...................... 37 3.1.3 NATIONAL DRUG AUTHORITY (30TH JUNE 2009) ............................................................ 38 3.1.4 CABLE CORPORATION LIMITED (31ST DECEMBER 2008) ............................................... 38 3.1.5 UGANDA NATIONAL COUNCIL OF SCIENCE AND TECHNOLOGY (30TH JUNE 2008) ...... 38 3.1.6 UGANDA NATIONAL COUNCIL OF SCIENCE AND TECHNOLOGY (30TH JUNE 2009) ...... 38 3.1.7 AMBER HOUSE LIMITED (31ST DECEMBER 2008) .......................................................... 39 3.1.8 UGANDA PRINTING AND PUBLISHING CORPORATION (30TH JUNE 2009) ................... 39 3.1.9 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2007) ................................................ 40 3.2 QUALIFIED OPINIONS ...................................................................................................... 40 3.2.1 NATIONAL WATER AND SEWERAGE CORPORATION (30th JUNE 2009) ....................... 40
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3.2.2 UGANDA AIR CARGO CORPORATION (30TH JUNE 2008) ................................................ 40 3.2.3 NATIONAL CURRICULUM DEVELOPMENT CENTRE (31ST DECEMBER 2004) ................. 41 3.2.4 NATIONAL CURRICULUM DEVELOPMENT CENTRE (31ST DECEMBER 2005) ................. 41 3.2.5 UGANDA DEVELOPMENT BANK (31ST DECEMBER 2008) ................................................. 41 3.2.17 UGANDA PROPERTY HOLDINGS LIMITED (30TH JUNE 2009) ...................................... 50 3.2.18 UGANDA SEEDS LTD (30TH JUNE 2007) ......................................................................... 50 3.2.24 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2005) .............................................. 54 3.2.25 NATIONAL CURRICULUM DEVELOPMENT CENTRE ....................................................... 55 3.3 QUALIFIED OPINIONS WITH EMPHASIS OF MATTER ..................................................... 55 3.3.1 NATIONAL YOUTH COUNCIL (30TH JUNE 2005) .............................................................. 55 3.3.4 UGANDA AIR CARGO CORPORATION (30THJUNE1999) .................................................. 57 3.3.5 UGMA ENGINEERING CORPORATION LIMITED (31ST DECEMBER 2008) ...................... 57 3.3.6 CIVIL AVIATION AUTHORITY (30TH JUNE 2008) ............................................................. 58 3.3.7 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2008) ............................................. 59 3.3.8 NATIONAL ENTERPRISE CORPORATION (30TH JUNE 2006) ........................................... 59 3.3.10 CIVIL AVIATION AUTHORITY (30TH JUNE 2008) ........................................................... 61 3.3.11 UGANDA REVENUE AUTHORITY (30TH JUNE 2009)....................................................... 62 3.4 DISCLAIMER OPINIONS.................................................................................................... 62 3.4.1 LAW DEVELOPMENT CENTRE (31ST DECEMBER 2002) .................................................... 62 3.4.4 THE HOTEL AND TOURISM TRAINING INSTITUTE (30TH JUNE 2005). ......................... 66 3.4.6 UGANDA RAILWAYS CORPORATION (31st DECEMBER 2007) ........................................ 68 3.5 ADVERSE OPINION ............................................................................................................ 70 3.5.1 POSTA UGANDA LIMITED (30TH JUNE 2007) .................................................................. 70
CHAPTER FOUR ............................................................................................................................................................ 72
4.0 ENERGY SECTOR AUDITS .................................................................................................. 72 4.1 STATUTORY CORPORATIONS ........................................................................................... 72 4.1.1 UGANDA ELECTRICTY TRANSMISSION COMPANY LIMITED .......................................... 72 4.1.2 UGANDA ELECTRICTY DISTRIBUTION COMPANY LIMITED ........................................... 73 4.1.3 KILEMBE MINES LTD. (30TH JUNE 2009) ......................................................................... 74 4.1.4 UGANDA ELECTRICTY GENERATION COMPANY LIMITED .............................................. 75 4.1.5 ELECTRICITY REGULATORY AUTHORITY (30TH June 2008) ........................................... 76 4.1.6 RURAL ELECTRIFICATION AGENCY (30TH JUNE 2009) ................................................... 77
CHAPTER FIVE .............................................................................................................................................................. 78
5.0 AUDIT OF INVESTMENTS BY GOVERNMENT IN PRIVATE COMPANIES ......................... 78 5.1 Section18. Audit of public monies in private organizations and bodies. ....................... 78 5.2 The third Schedule of the Public Finance and Accountability Act 2003 Accounts ......... 78
CHAPTER SIX ................................................................................................................................................................ 80
6.0 SPECIAL AUDITS AND INVESTIGATIONS ........................................................................ 80 6.1 COTTON DEVELOPMENT ORGANIZATION (CDO) ............................................................ 80 6.1.1 Compliance with the Loan Agreement ............................................................................. 81 6.1.2 Utilization of the Loan Funds ............................................................................................ 82 6.1.3 Impact ................................................................................................................................ 82 6.1.4 Recovery of Loans ............................................................................................................. 83 6.1.5 Non Compliance with Agreements ................................................................................... 83 6.1.6 Repayments ....................................................................................................................... 84 6.1.7 Revolving Fund .................................................................................................................. 84 6.1.8 Accrued Interest ................................................................................................................ 84
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6.1.9 Capacity to Pay .................................................................................................................. 85 6.2 NATIONAL SOCIAL SECURITY FUND (NSSF) ................................................................... 87 6.2.1 Procurement findings ........................................................................................................ 87 6.2.1.1 IMIS ................................................................................................................................. 87 6.2.1.2 Motor vehicle purchase .................................................................................................. 88 6.2.1.3 Legal services providers’ files ........................................................................................ 89 6.2.1.4 Private investigations file .............................................................................................. 89 6.2.2 Payment of salary advances, allowances and loans........................................................ 89 6.2.2.1 Managing Director NSSF ................................................................................................ 89 6.2.2.2 Deputy Managing Director NSSF ................................................................................... 89 6.2.3 Credit card usage by management ................................................................................... 90 6.2.4 Issues regarding JVs ......................................................................................................... 90 6.2.4.1 Nsimbe Holdings Limited (NHL) .................................................................................... 90 6.2.4.2 Victoria Property Development Limited (VPDL) ........................................................... 91 6.2.5 Listed securities ................................................................................................................. 93 6.2.5.1 Procurement of stockbrokers ........................................................................................ 93 6.2.5.2 British American Tobacco (Uganda) .............................................................................. 93 6.2.5.3 Bank of Baroda (Uganda) ............................................................................................... 93 6.2.5.4 Development Finance Company of Uganda .................................................................. 93 6.2.5.5 Stanbic Bank (Uganda) .................................................................................................. 94 6.2.6 Investments in fixed deposit ............................................................................................ 94 6.2.7 Sale of government bonds before their maturity date .................................................... 95 6.2.8 Purchase of land ................................................................................................................ 95 6.2.8.1 Temangalo ...................................................................................................................... 95 6.2.8.2 Branch offices ................................................................................................................. 96 6.2.8.3 Law firm single sourced ................................................................................................. 96 6.2.8.4 Investment Policy not followed ..................................................................................... 96 6.2.8.5 Arua Project .................................................................................................................... 96 6.2.8.6 Gayaza and forest land................................................................................................... 96 6.2.8.7 Lumumba ........................................................................................................................ 96
CHAPTER SEVEN .......................................................................................................................................................... 97 7.0 STATUS OF BUSINESS OF THE STANDING COMMITTEE ON COMMISSIONS, STATUTORY
AUTHORITIES & STATE ENTERPRISES ............................................................................. 98 7.1 Reports presented to the House ....................................................................................... 98 7.2 Reports concluded but not yet presented to the House ................................................. 98 7.3 Reports still under consideration ..................................................................................... 99
CHAPTER EIGHT ......................................................................................................................................................... 100
8.0 DIVESTITURE ACCOUNTS ............................................................................................... 100 8.1. Status of Divested Enterprises ....................................................................................... 100 8.2 Contingent Liabilities ...................................................................................................... 101 8.3 DIVESTITURE AUDIT OF UGANDA ELECTRICITY BOARD (UEB) ................................... 101 8.3.1 Introduction ..................................................................................................................... 101 8.3.2 Legal Status .................................................................................................................... 102 8.3.3 Ownership ........................................................................................................................ 102 8.3.4 Divestiture Process .......................................................................................................... 102 8.3.5 UEB Core Assets ............................................................................................................... 103 8.3.6 Asset valuation ................................................................................................................ 103
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8.3.7 Unbundling UEB Assets and Liabilities ........................................................................... 103 8.3.8 Findings on Divestiture of Uganda Electricity Board ..................................................... 104 8.3.5 Conclusion ........................................................................................................................ 105 Appendix 1 ................................................................................................................................. 106 Appendix A ................................................................................................................................. 108 Appendix B ................................................................................................................................. 110 Appendix C ................................................................................................................................. 112 Appendix D ................................................................................................................................ 114 Appendix E ................................................................................................................................. 118 Appendix F ................................................................................................................................. 120 Appendix G ................................................................................................................................ 122
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CHAPTER ONE
RESPONSIBILITY OF THE AUDITOR GENERAL AND LEGAL FRAMEWORK
This is volume 4 of the Auditor General‟s annual report to Parliament. The report presents
a summary of audit reports issued for Statutory Corporations / entities audited during the
period from 1st April 2009 to 31st March 2010.
1.1 Mandate and Legal framework
The 1995 Constitution of the Republic of Uganda under Article 163 (3) as amplified by the
National Audit Act 2008 Section 17, and other various Acts of Parliament establishing
Statutory Corporations and State Enterprises require the Auditor General to examine and
audit the accounts of these entities and submit annually a report to Parliament on the
financial as well as value for money audits. In addition, the Auditor General is mandated
to carry out special audits on any matter and report to Parliament. The National Audit Act
under Section 18 also states that the Auditor General may inquire into, examine,
investigate and report, as he or she considers necessary, on the expenditure of public
monies disbursed, advanced, or guaranteed to a private organization or body in which
government has no controlling interest.
1.1.1 The Auditor General’s Responsibilities
The scope of the Auditor General‟s work when conducting financial audits is to audit and
report to parliament by expressing an independent opinion as to whether or not the
financial statements, in all material respects, fairly state the results of operations of the
entities in accordance with International Financial Reporting Standards and in the manner
consistent with the respective Acts and Statutes establishing these entities as well as
complying with the relevant laws and regulations applicable to financial matters. These
standards require that ethical requirements are complied with and the audit is planned
and performed to obtain reasonable assurance as to whether the financial statements are
free from material error or misstatement.
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The audit also includes obtaining sufficient and appropriate evidence supporting the
amounts and disclosures in the financial statements to provide a basis for making an
opinion. The audit procedures selected depend on the auditor‟s judgment, including the
assessment of risks of material misstatements of the financial statements, whether due to
fraud or error. In making risk assessments, the auditor considers internal controls relevant
to the entity‟s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances.
An opinion will also be expressed as to whether or not any matters came to the Auditors‟
attention that causes him/her to believe that material errors and non-compliance with
laws and regulations, applicable to financial matters, had occurred.
1.1.2 Responsibilities of Public Organisations on the financial statements
It is the responsibility of The Directors of the audited entities to prepare financial
statements which give a true and fair view of the state of affairs and operating results of
their entities in accordance with International Financial Reporting Standards and the
various Acts and Statutes establishing them. This responsibility also includes designing,
implementing and maintaining internal controls relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether
due to fraud or error, selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in their circumstances. The audit of financial
statements does not relieve management, or those charged with governance of their
responsibility.
1.1.3 Representations by management
As part of normal audit procedures, the auditor will where necessary request management
of audited entities to provide written confirmations or oral representations that have been
received from management during the course of the audit
After conducting audits based on the scope of the auditor‟s responsibility stated above,
the auditor shall report to management in writing, any significant weaknesses based on
observations on the internal control system and other areas that come to his /her notice
which he / she considers necessary to be brought to management‟s attention by way of a
Management letter.
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1.2 VISION
The vision of the office of the Auditor General is “To be an Effective and Efficient Supreme
Audit Institution (SAI) in promoting public Accountability in the use of Resources in the
enhancement of good governance”.
Mission The mission of the office of the Auditor General is “To audit and report to the Public and
thereby make an effective contribution in improving public accountability”.
Core Values
The office of the Auditor General is run on three (3) specific core values which motivate
and guide staff in their endeavours to achieve the vision and mission of the office. These
core values are:-
Integrity
Objectivity and
Professional Competence
1. 3 STATUS OF ACCOUNTS AUDITED DURING THE YEAR
The Office of The Auditor General is responsible for the audit of Seventy six (76)
entities comprising of state enterprises, statutory authorities and commissions as listed in
appendix 1. The nature of the entities is such that their accounting dates are not co-
terminus (do not all end on the same date). Four different accounting dates feature in the
accounts of the entities as follows:-
Year ending 30th June,
Year ending 30th September,
Year ending 31st October and
Year ending 31st December.
A total of 198 audits were conducted during the year under review. Out of these audits,
111 audit certificates were issued to 65 entities. Forty four (44) other audits were
concluded but audit certificates could not be issued to these entities due to their failure to
prepare financial statements. The remaining forty three (43) audits in respect of 21
entities were still under progress.
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1.4 SUMMARY OF MAJOR AUDIT FINDINGS OF THE REPORT
1.4.1 Unremitted statutory deductions
During the period under review, seven public organizations failed to remit statutory
deductions amounting to Shs.3,436,170,469 to the relevant statutory authorities. Of these
amounts, un remitted taxes to Uganda Revenue Authority in respect of Pay As You Earn,
Value Added Tax and Withholding Tax amounted to Shs.2,278,405,227 while deductions
for Employee benefits relating to National Social Security Fund amounted to
Shs.1,157,765,242. Details are shown in the table below:
No Entity NSSF
Shs
Taxes
Shs
Amount
Shs
1 Hotel Training and Tourism
Institute
68,960,986 71,174,387 140,135,373
2 Uganda Broadcasting
Corporation
304,209,915 1,497,662,635 1,801,872,550
3 Nakivubo War Memorial Stadium
29,376,861 163,818,328 193,195,189
4 Mandela National Stadium 638,830,396 11,177,671 650,008,067
5 COCTU - 16,357,500 16,357,500
6 Management Training and Advisory Centre
116,387,084 114,188,183 230,575,267
7 Uganda National Bureau of
Standards
146,612,166 146,612,166
8 Uganda Export Promotion
Board
- 257,414,357 257,414,357
TOTAL 1,157,765,242 2,278,405,227 3,436,170,469
Pictorially, the above information can be shown in a pie chart as follows
This is a critical situation of non compliance with the law and remedial measures should
be sought to avoid penalties which may be charged by the respective statutory bodies.
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1.4.2 Corporate Governance
The framework for accountability in government specified in Section 15 and 19 of the
Public Finance and Divestiture Act (Cap 98) requires Accounting officers and their Boards
to be accountable for their entity‟s activities. It is mandatory for management of public
entities to put in place effective internal control systems to safe guard assets and
resources from mismanagement and fraud. The following commonly recurring corporate
governance issues were;
Public enterprises operating for long periods of over 2 years without Boards of directors.
Late renewal and appointment of new Boards by the respective line Ministers responsible
for the Public Enterprises and Organizations.
Board members of public enterprises involved in day to day management functions
instead of providing policy decisions and supervising management.
Public enterprises operating without approved budget estimates.
Board members remunerating themselves without approval from the line Ministers.
Irregular Board meetings below or exceeding the required minimum.
During the year under review a total of Fourteen (14) Public organizations had
governance issues as summarized in the table below;
No Entity Governance issues
1 Uganda National Council of Science & Technology Absence of Board of Directors
2 Uganda Air Cargo Corporation (UACC) Absence of Board of Directors
3 Uganda Broad Casting Corporation(UBC) Non approval of Board remunerations
4 National Enterprise Corporation(NEC) Absence of Board of Directors
5 National Council for Children(NCC) Absence of Board of Directors
6 Uganda Export Promotion Board(UEPB) Lack of approved budgets
7 Nakivubo War Memorial Stadium(NWMS) Board indebted to stadium without settling debts
8 COCTU Irregular Board meetings
9 Mandela National Stadium (MNS) Unsigned Board minutes.
10 National Council for Higher Education(NCHE) Board of Directors involved in
management functions
11 Uganda Livestock Industries Lack of approved budgets
12 National Planning Authority Absence of Board of Directors
13 Kilembe Mines Limited(KML) Absence of Board of Directors
14 Civil Aviation Authority Absence of Board of Directors
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Recommendations
Ministers responsible for these entities should ensure that appointment of new boards is
timely.
In order to avoid conflict of interest, in as far as the oversight function is concerned Board
members should avoid performing management functions.
Accounting officers of public enterprises should ensure that their budgets are approved by
the Board and line Ministers.
1.4.3 Asset Management
A review of public organizations revealed that many were noted to have poor or improper
management of non current assets. There was apparent lack of ownership to properties
as evidenced by absence of title deeds to many of the properties, absence of fixed assets
registers or incomplete and outdated fixed assets registers, non revaluation of assets for a
long period of time and impairment not tested periodically as required by the accounting
standards. During the year under review a total of Nineteen (19) Public organizations had
asset management weaknesses as shown below;
No Entity Asset management issues
1 National Water and Sewerage
Corporation (NWSC)
Lease hold land without titles
2 Uganda Coffee Development Authority Uninstalled Wet coffee processing machines
3 Cotton Development Organization (CDO) Absence of title to seed dressing stations
4 Uganda Electricity Generation Company
Ltd (UEGCL)
Impairment of assets (Dams)
5 Dairy Development Authority (DDA) Valuation of Property, plant and equipment
6 National Enterprise Corporation(NEC) Non Valuation of Property, plant and equipment
7 Law Development Centre(LDC) Outdated fixed assets register
Non Valuation of Property ,plant and equipment
Absence of title to properties
Encroachment on LDC land
8 Uganda Nurses and Midwives
Council(UNMC)
No fixed assets register
Non Valuation of Property ,plant and equipment
Absence of title to properties
9 Hotel Training and Tourism
Institute(HTTI)
Non Valuation of Property ,plant and equipment
Impairment of Property plant and equipment.
10 Management Training and Advisory
Centre(MTAC)
Absence of title to properties
Non revaluation of Property plant and Equipment
11 National Council for Children (NCC) Encroachment on NCC land
12 Uganda Seeds Limited(USL) Non Valuation of land and Buildings
15
Impairment of Buildings
13 Uganda Property Holding Limited (UPHL) Non Valuation of land and buildings
14 NAGRIC Absence of title to properties
Lack of livestock census register
No valuation of biological assets
15 Nakivubo War Memorial Stadium(NWMS) No fixed assets register
Absence of title to properties
No valuation of property plant and equipment
16 Uganda Broad Casting Corporation (UBC) No values to property and assets vested to UBC
Absence of title to properties
17 Uganda Livestock Industries No fixed assets register
Absence of title to properties
No valuation of property plant and equipment
18 National Curriculum Development
Centre(NCDC)
No depreciation of Motor vehicles
19 Uganda institute of Information and
Communication Technology
No values to assets vested to UICT from UCC
Recommendations
Legal ownership of properties should be secured and land titles/deeds obtained from
relevant authorities.
Revaluation of assets should be conducted and impairment testing carried out at periodic
intervals.
Maintenance and update of fixed assets registers should be carried out.
Land encroached upon should be secured.
1.4.4 Performance Review of Public Organizations
Audit of financial statements of public organizations revealed that some entities have been
operating profitably while others have been operating at a loss. Financial standing of
these entities has been evaluated basing on the accumulated surplus or deficit as at 30th
June, 2009, 31st December, 2008, 31st October 2008 and 30th September, 2008 depending
on the year end of the financial years of these entities.
An analysis of financial statements of fifty eight (58) entities whose accounts were
certified revealed that twenty six (26) made losses while thirty two (32) made profit. This
is summarized in the table below;
16
Public organization Number of loss
making
Number of
profit making
Total
Regulatory Authorities 7 13 20
Government Institutions 9 6 15
State Enterprises 10 13 23
Total 26 32 58
It was further noted that eleven (11) organisations had continued accumulating losses,
the following five (5) entities were singled out for making huge losses
No Entity Losses made in
Shs
Financial
year
reviewed
1 Uganda Electricity Generation Company Ltd (25,786,766,000) Dec 2008
2 Uganda Electricity Transmission Company Ltd (57,021,601,000) Dec 2008
3 Uganda Electricity Distribution Company Ltd (42,582,952,000) Dec 2008
4 National Social Security Fund(NSSF) (50,198,093,000) June 2008
5 Civil Aviation Authority (CAA) (11,291,238,000) June 2008
The earlier efforts are made, to reverse this trend the better for the economy of the
country.
Full details of the performance are shown in appendix A, B and C.
1.5 REGIONAL AUDITS
Uganda is a member of the following Regional Intergovernmental Organizations namely;
Intergovernmental Standing Committee on Shipping (ISCOS)
Northern Corridor Transit Transport Coordinating Authority (NCTTCA);
Common Market for Eastern and Southern Africa (COMESA)
East African Community (EAC).
The East African Audit Commission consisting of the five Auditors‟ General of East Africa is
mandated to audit the East African Community. During the year, the Auditor General of
Uganda chaired the audit of the East African Community and its organs, namely the East
African Secretariat, Lake Victoria Basin Commission (LVBC), Lake Victoria Basin
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Commission Partnership Fund (LVBCPF); Lake Victoria Environmental Management Project
II (LVEMP II) , the Civil Aviation Safety and Security Oversight Agency (CASSOA) and
Mount Elgon Regional Ecosystem Conservation Programme (MEPECP). The Auditor
General conducted the audits together with Auditors General of Rwanda and Tanzania.
The audit was completed and accounts presented to the East African Legislative Assembly
where it was reported to the Committee on Accounts for scrutiny on 23rd September,
2009.
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CHAPTER TWO
BASIS AND TYPES OF AUDIT OPINIONS ISSUED TO PUBLIC ORGANIZATIONS
This chapter deals with the basis and types of audit opinions issued to public organizations
during the Period 1st April 2009 to 31st March 2009.
2.1 AUDIT OPINION (CERTIFICATION OF ACCOUNTS)
During the period under review, a total of one hundred fifth six (155) audits were
undertaken and of these; forty two (42) opinions issued were unqualified, eleven (11)
opinions issued were unqualified with emphasis of matter (EOM) thirty (30) opinions
issued were qualified, twenty (20) opinions issued were qualified with emphasis of matter
(EOM), seven (7) opinions were issued with disclaimers, one (1) opinion issued was
adverse, while examination of books of accounts were concluded for forty four (44)
accounts but no certification was done.
Chart showing the proportion of audit opinions
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2.1.1 Unqualified Opinion
An unqualified audit opinion is issued when the Auditor is able to express an opinion and
concludes that the financial statements of an audited entity give a true and fair view or
are presented fairly, in all material respects, in accordance with the International Financial
Reporting Standards of the various Acts and Statutes establishing the state enterprises,
statutory authorities and commissions.
In the year under review Forty two (42) unqualified opinions without emphasis of matter
were issued to (23) public organizations compared to thirty eight (38) reported previously
showing an increase level of 10.5%, this is shown in the table below;
No Entity No of
reports certified
Financial year audited
1 Amnesty Commission 1 30th June 2008
2 Bank of Uganda 1 30th June 2009
3 Capital Markets Authority 1 30th June 2009
4 Management Training & Advisory Centre 4 31st Dec 2004- 31st Dec 2007
5 National Housing & Construction Co. Ltd 1 31st December 2008
6 New Vision Printing & Publishing Corporation 1 30th June 2009
7 Post Bank Uganda Limited 1 31st December 2008
8 Public Procurement & Disposal of Public Assets 1 30th June 2008
9
Uganda Institute of Information &
Communications Technology. 3 30thJune2006- 30th June 2008
10 Uganda Insurance Commission 1 30th June 2008
11 Uganda Investment Authority 1 30th June 2008
12 Uganda National Council for Higher Education 1 30th June 2006
13 Lake Victoria Fisheries Organization 1 30th June 2008
14 Uganda National Bureau of Standards 1 30th June 2008
15 Uganda National Examinations Board 4 30thJune 2005.-30thJune 2008
16 Broadcasting Council. 3 30thJune 2006-30th June 2008
17 Uganda Tourism Board. 1 30th June 2009
18 Uganda Communications Commission. 1 30th June 2009
19 Uganda Air Cargo Corporation. 1 30th June 2009
20 National Women‟s Council. 7 30th June 2002-30th June 2008
21 National Council for Children 3 30th June 2003,2004 and 2006
22 National Planning Authority 2 30thJune2007 to 30th June 2008
23 Uganda Bureau of Statistics 1 30th June 2009.
TOTAL 42
20
2.1.2 Unqualified opinion with Emphasis of Matter (EOM)
An emphasis of matter paragraph may be included in the Auditor‟s opinion to highlight
material matters and significant uncertainty which in the auditor‟s judgment do not affect
the financial statements of the entity, but may be of such importance that it is
fundamental to the users‟ understanding of the financial statements.
In the year under review Eleven (11) unqualified opinions with emphasis of matter were
issued to ten (10) public organizations shown in the table below
No Entity No of reports
certified
Financial year
Audited
1 Nile Hotel International Limited(NHI) 1 30th December 2008
2 Uganda Coffee Development Authority(UCDA) 1 30th September 2008
3 National Drug Authority(NDA) 1 30th June 2009
4 Cable Corporation Limited(CCL) 1 31st December 2008
5 Uganda National Council of Science & Technology 2 31st June 2008-2009
6 Uganda Electricity Distribution Company Ltd 1 30th September 200
7 Amber House Limited(AHL) 1 31st December 2008
8 Uganda Printing and Publishing Corporation 1 30th June 2009
9 National Council for Children(NCC) 1 30th June 2007
10 Rural Electrification Agency(REA) 1 30th June 2009
TOTAL 11
2.1.3 Qualified Opinion
An auditor expresses a qualified opinion when:
(a) The auditor, having obtained sufficient appropriate audit evidence, concludes that
misstatements, individually or in aggregate, are material, but not pervasive, to the
financial statements; or
(b) The auditor is unable to obtain sufficient appropriate audit evidence on which to
base the opinion, but the auditor concludes that the possible effects on the
21
financial statements of undetected misstatements, if any, could be material but not
pervasive.
In the year under review Thirty (30) qualified opinions were issued to Nineteen
(19) public organizations listed below;
No Entity No of
reports certified
Financial year Audited
1 Dairy Development Authority 4 31st Dec 2005- 31st Dec 2008
2 Uganda Wildlife Authority 1 30th June 2009
3 Kilembe Mines Limited 1 30th June 2009
4 National Water and Sewerage
Corporation
1 30th June 2009
5 Uganda Electricity Generation Co. Ltd 1 31st December 2008
6 Uganda Air Cargo Corporation 1 30th June 2008
7 National Curriculum Development Centre. 3 31st Dec 2004-31st Dec 2006
8 Uganda Broadcasting Corporation 1 30th June 2006
9 Uganda Development Bank 1 31st December 2008
10 National Social Security Fund 2 30th June 2007-30th June 2008
11 Uganda Property Holdings Ltd 1 30th June 2008-30th June
2009
12 Management Training and Advisory Centre
1 31st December 2008
13 Uganda Seeds Limited 5 30th June 2004-30th June
2008
14 Uganda Broadcasting Corporation 2 30th June 2007-30th June
2008
15 Uganda Electricity Transmission Co. Ltd 1 31st December 2008
16 Electricity Regulatory Authority 1 30th June 2008
17 National Council for Children 1 30th June 2005
18 Uganda Export Promotion Board 1 31st December 2006
19 Law Development Centre 1 30th June 2005
TOTAL 30
22
In addition Nineteen (20) Qualified opinions with Emphasis of matter (EOM) were issued
to Nine (9) public organizations listed below;
No Entity No of
reports certified
Financial year Audited
1 National Council for Children 1 30th June 2008
2 Uganda Export Promotion Board 2 31st Dec 2004-31st Dec 2005
3 Cotton Development Organization 1 31st October 2008
4 Uganda Air Cargo Corporation 10 30th June 1998-30thJune 2007
5 UGMA Engineering Corporation Ltd 1 30st December 2008
6 National Youth Council 1 30th June 2005
7 National Enterprise Corporation 2 30th June 2006-30th June
2007
8 Uganda Revenue Authority 1 30th June 2009
9 Civil Aviation Authority 1 30th June 2008
TOTAL 20
2.1.4 Disclaimer of Opinion
The Auditor shall disclaim an opinion when the auditor is unable to obtain sufficient
appropriate audit evidence on which to base the opinion, and the auditor concludes that
the possible effects on the financial statements of undetected misstatements, if any, could
be both material and pervasive.
The auditor shall disclaim an opinion when, in extremely rare circumstances involving
multiple uncertainties, the auditor concludes that, notwithstanding having obtained
sufficient appropriate audit evidence regarding each of the individual uncertainties, it is
not possible to form an opinion on the financial statements due to the potential
interaction of the uncertainties and their possible cumulative effect on the financial
statements.
During the year under review; I was not able to issue an opinion on the financial
statements of five (5) public organizations listed below;
23
No Entity No of reports
certified
Financial year
Audited
1 Law Development Centre 2 31stDec 2002-31st Dec 2003
2 Uganda Nurses & Midwives Council 2 30th June2004-30thJune
2005
3 Hotel Training and Tourism Institute 1 30th June 2005
4 Posta Uganda Limited 1 30th June 2008
5 Uganda Railways Corporation 1 30th June 2009
TOTAL 7
2.1.5 Adverse Opinion
The auditor shall express an adverse opinion when the auditor, having obtained sufficient
appropriate audit evidence, concludes that misstatements, individually or in the
aggregate, are both material and pervasive to the financial statements.
Public Organization issued with Adverse audit opinions during the year.
No Entity Type of audit opinion
issued
Financial year
Audited
1 Posta Uganda Limited Disclaimer 30th June 2007
2.2 ACCOUNTS WHERE EXAMINATION OF BOOKS OF ACCOUNTS HAVE BEEN
CONCLUDED BUT THE ACCOUNTS HAVE NOT BEEN CERTIFIED
A total of Forty four (44) audits were concluded for Thirteen (13) public organizations.
However, I was unable to certify these audits because signed financial statements were
not presented to my office due to the following reasons,
Some entities had no Boards to approve the financial statements.
Others had their financial statements rejected by my office because of non compliance
with reporting requirement and errors in the financial statements.
24
The following is a listing of these public organizations;
No Entity No of
years
Financial year under
review
1 Joint Clinical Research Centre 4 2005/2006-2008/2009
2 Nakivubo War Memorial Stadium 5 2004/2005-2008/2009
3 Livestock Industries 5 1998/1999-2000/2001
4 COCTU 4 2005/2006-2008/2009
5 Allied Health Professionals 1 2004/2005-2005/2006
6 National Council for higher Education 3 2006/2007-2008/2009
7 National Animal Genetic Resource Centre and
Data Bank (NAGRIC)
2 2004/2005-2006/2007
8 National Forestry Authority 2 2007/2008-2008/2009
9 Uganda Nurses and Midwives
Council
4 2005/2006-2008/2009
10 Uganda National Cultural Centre 7 Dec 2002-Dec2008
11 Uganda Institute of information and
Communication Technology
1 2008/2009
12 Law Development Centre 3 2005/2006-2007/2008
13 Mandela National Stadium 3 Dec 2006-Dec2008
TOTAL 44
The following are audit issues for public organizations whose audits were completed but
did not submit financial statements.
2.2.1 COORDINATING OFFICE FOR THE CONTROL OF TRYPANOSOMIASIS IN
UGANDA (COCTU)
Outstanding issues for the year ended June 30th 2008
Late submission of accounts
Management of the Council did not prepare and submit Final Accounts to the
respective authorities within 3 months after the end of the Financial Year as required
by the Public Finance and Accountability Act 2003, Sec 31(b) and the Uganda
Trypanosomiasis Control Statute 1992 sec 26(2). In addition, the accounts for the
financial year ended June 2008 were submitted in August 2009 (i.e. 11 months
later).
25
Non remittances of taxes
Deductions totaling Shs.8, 514,000 in respect of PAYE from gratuity payment to staff
was not remitted to URA.
Outstanding issues for the year ended June 30th 2009
Non remittances of taxes
Deductions totaling Shs.7, 843,500 in respect of PAYE from salaries to employees was
not remitted to URA.
Procurement of goods and services
We noted that procurement of some goods and services of Shs.13,250,600 was done
without following the Public Procurement and Disposal of Assets Regulations, 2003.
Procurement plans based on the approved budget were not made and submitted to
the Procurement and Disposal Authority. Instead, procurement was done in an adhoc
manner and without requisition from the user department. Besides, there were no
contracts committee minutes approving the transactions.
Internal control system
We noted that the internal control system of the Organization was weak in the
following areas:-
o Council did not operationalise the internal audit function as provided for in the
Council‟s organization structure.
o The entity did not have Accounting and Human Resource Manuals to guide the
operations of the Council.
o All payment vouchers and their supporting documents were not cancelled with
“paid” stamp during the financial years under review. The possibility of
duplication of payments could not be ruled out.
o The assets register was not updated on regular basis to ensure that all asset
acquisitions, disposals, their condition is documented.
o Uganda Trypanosomiasis Control Council had only one Board meeting for the
whole financial year instead of 4 as stipulated in their Statute of 1992, sec
10(1).
o Expenditure totaling Shs.10,635,700 did not have supporting documents such
as activity reports and receipts, rendering the expenditure doubtful
26
2.2.2 LAW DEVELOPMENT CENTRE: Year ended 30th June 2006
Lack of an approved budget
Sec 21 (Cap 132) of the centre‟s Act requires Management to submit to the Minister
responsible for finance, for his/ her approval, estimates of its income and expenditure
for the next ensuing year before the beginning of each financial year. Contrary to this
requirement, the Centre operated without an approved budget during the year under
review
Un accounted for funds
A total of shs.82,660,000 which was paid to Legal Aid Clinic as students contribution
for various activities, remained unaccounted for at the year end.
2.2.3 UGANDA NATIONAL CULTURE CENTRE: Years ended 30th June
2002,2003,2004,2005,2006 and 2007
Comprehensive fixed assets register
The Centre does not maintain a fixed asset register. Consequently all information and
explanations which was considered necessary to ascertain the completeness,
existence, ownership and valuation of property, plant and equipment could not be
obtained. Property, plant and equipment balances therefore may not be fairly stated.
Lack of bank reconciliation statements
There were no bank reconciliation statements for the bank Accounts maintained
contrary to best practice and the Financial Regulations and Accounting Manual of the
centre. Besides, certificates of bank balances were not availed for audit. I could not
therefore ascertain the correctness of the cash balances at the close of the year.
Revaluation of fixed assets
It was noted that a number of assets have unrealistic values while others have no
values attached to them at all. This is contrary to IAS 16 which requires assets of the
same class to be regularly revalued to reflect their fair values.
Depreciation policy
The non current assets were depreciated using the straight line method according to
the accounting policies. This is however, contrary to Section 10.7 of the Centre‟s
Financial Regulations and Accounting manual which requires non current assets to be
27
depreciated using the reducing balance method. This inconsistency needs to be
addressed.
Bad Debts Provision
Management did not make a provision for all doubtful debts as a result of the figures
for debtors reflected in the financial statements are not fairly stated.
Reserves
The reserves figure reflected in the Statement of Changes in Equity for the year ended
31st December 2002 of Shs.135, 855, 077 differs significantly with that reflected in the
balance sheet of the same year of Shs.130,069,946 by Shs.5,785,131. This difference
was not explained.
Un-receipted income
The total collection from plays staged by different groups in the Centre was
Shs.139,676,500 for 2004 and Shs.97,706,000 for 2005. These funds were neither
receipted nor banked. It was therefore not possible to ascertain and establish the
completeness of the total revenue collected and banked. Besides, utilization was not
availed.
Bankings not captured in the bank statements
A review of transactions on Account number 2060205 Allied Bank, to confirm the
authenticity of the bankings reported in the cash books for the periods ended 31st
December, 2006 and 30th June, 2007 revealed that although Shs.492,874,589 and
Shs.257,391,232 respectively is reported to have been banked, only Shs.387,551,807
and Shs.257,762,151 respectively was credited on the bank statements. This created
unexplained difference of Shs.105,322,782 and Shs.370,919 respectively. Bank
reconciliations reconciling bank balances at the end of these periods were not availed
to audit.
2.2.4 UGANDA LIVESTOCK INDUSTRIES LTD: Five years ended 31st December
1997,1998,1999,2000 and 2001.
Lack of company /Ranch annual Budgets
For the five year period under review, audit was not availed with approved budgets of
income and expenditure.
28
Rental payments
During the period under review, the company paid Shs 9,813,609 to M/S Francisco
Opoka estates as rental fees for the period ended December 1999. However, audit
noted that these payment lacked supporting documents including rental Agreements.
Un-supported payments
During the period under review, the company paid a total of Shs. 49,600,000 to M/S
Etatas Ltd to rehabilitate Kiryana and Kyempisi ranches. However audit noted that all
these payments were made without any supporting documents.
Trade creditors and other payables
Trade creditors and other payables were reported in the financial statements under
current liabilities as shown below.
1997- 5,129,502,975
1998- 5,603,699,938
1999- 6,198,252,672
2000- 6,302,862,829
2001- 7,655,853,642
The completeness, existence and accuracy of these liabilities could not be ascertained
because detailed creditors schedules confirming the valid amounts and creditors
ledgers to confirm their accuracy were not availed for audit.
Property, Plant and Equipment
A review of the Company‟s fixed asset values and records for the five year period
established the following;
i) The Company did not maintain a fixed assets register for the entire five
year period under review; as a result audit could not confirm the cost,
location, conditions, existence and values of assets maintained.
ii) Registration log books for the Company‟s motor cycles and motor vehicles
were not availed for audit, as a result audit could not confirm the
ownership of these motor vehicles, including the values in the financial
statements.
iii) Uganda Livestock Industries Ltd does not have title deeds to Ranches at
Kilak Kitgum; Lale Soroti and Land at Port Bell Kampala; in this respect
audit could not confirm the Company‟s ownership to these properties.
29
iv) The Company‟s Ranch Land at Aswa, Kiryana, Kyempisi, Lale, Maruzi and
Pader is not valued. Besides the other assets have never been revalued
since 1997. Consequently the entire value attached to property, plant and
equipment cannot be confirmed for accuracy and completeness.
v) Work in progress was not reflected in the accounts in 2001 yet capital
works amounting to Shs.2,730,634,545 were shown in 2000, no
corresponding increase in fixed assets to this amount was reflected in the
assets schedule.
2.2.5 NATIONAL COUNCIL FOR HIGHER EDUCATION: Year ended 30th June 2007
Non-compliance with PPDA and Regulation
It was noted that the Council did not follow laid down procedures required by PPDA in
the procurement of goods and services and the council did not have a contract
committee and procurements disposal unit in place. As a result payments totaling to
shs 10,281,800 for goods and services were made through cash advances.
Maintenance Expenditure
A sum of Shs.6,521,700 was paid to Goshem Uganda Limited for painting an office.
However, an independent verification of the work done was not carried out. It was
therefore not clear whether work done was according to specification.
Irregular payment of per diem
A sum of Shs.32,931,100 was paid to participants for residential workshops organized
by the council in respect of per diem, out of pocket allowance and transport refund.
We however, noted that the payment for these workshops was full board, meaning
that participants would be catered for fully. This payment was therefore irregular.
Payment of Gratuity
We noted that staff appointment letters indicate a gratuity rate of 15% while the
personnel manual stipulated a rate of 25%. Therefore, the correct gratuity balance
could not be confirmed in the financial statements.
30
2.2.6 NATIONAL COUNCIL FOR HIGHER EDUCATION:
Outstanding issues for the year ended 30th June 2008
Irregularities in the procurement process/activities
We noted the following irregularities from the examination and review of procurement
documents and activities of the Council for the period under review.
User departments did not prepare work plan for procurement based on the
approved budget for Submission to the Procurement and Disposal unit to
facilitate orderly execution of annually, procurement activities as prescribed in
the PPDA Regulations 96(1-3).
Although the nominated members of the contracts committee were approved by
the Secretary to the Treasury in the Ministry of Finance, Planning, and Economic,
there was no formal appointment by the Executive Secretary as required by the
PPDA Regulations 2003.
An extra member (an accounts assistant) to the Committee was added on the
list without following proper procedures.
The membership of the procurement and disposal unit did not sign the code of
ethical conduct in business using PP form 211 as prescribed by the PPDA
regulations.
Under Staffing
The council has a provision of 39 technical staff. However, a review of the pay roll and
personal files revealed that 15 of these positions had not been filled constituting about
39.5% of the approved structure. Specialized positions in procurement, transport,
public relations and human resources had not yet been filled by time of this report.
Lack of internal audit function
During the period under review, it was observed that the Council did not have in place
an internal Audit Department as prescribed by the NCHE Accounting Manual 2005 Sec
12.0 and The public Finance and Accountability Regulations 2003, 27 and 28.
Nugatory expenditure
The council engaged services of solicitors to defend the entity in the court of law in a
suit that arose when individuals who were dissatisfied with the grading of their
academic qualifications obtained from various academic institutions sued the council. A
31
sum of Shs 194,391,636 and Shs 45,000,000 were paid to the solicitor and individuals
as legal fees and fines respectively.
It was further noted that the process through which the legal firm was procured was
not transparent while management of the cases were affected by conflict of interest.
While the entity won some cases, the amounts that were awarded were not vouched
and disclosed in the accounts.
Outstanding issues for the year ended 30th June 2009
Understatement of non current assets in accounts
We noted that a donation of freehold land on plot no M834 measuring 1.216
hectares to the council was only disclosed in the notes to the accounts but was not
valued and disclosed in the financial statements.
2.2.7 JOINT CLINICAL RESEARCH CENTRE:
Outstanding issues for the two years ended 30th June 2009
Lack of procurement plans
We noted that JCRC procured goods and services from various suppliers without a
Procurement Work plan for the period under review. This is contrary to Sec.60 of
PPDA Act which requires user departments to prepare work plans and submit them to
PDU for implementation and consolidation into a procurement plan.
Contracts Committee
Sec 27 (2) of the PPDA Act (2003) requires members of the Contract‟s Committee to
be nominated by the Accounting officer and approved by the Secretary to the
Treasury. In absence of approval letters from the Secretary to the Treasury; audit
could not confirm whether the Contract‟s Committee of the Centre was legally
constituted.
Lubowa Construction Contract
In 2007, JCRC undertook to construct a modern hospital at Lubowa at a contract price
of Shs.6,111,600,964. The Project was to be completed on 20th March 2008. The
contract price was revised to Shs.8,185,518,570 resulting into a variation of
Shs.2,073,917,606 which is 34% of the original contract sum. The variations of the
32
Lubowa Constructions Contract did not get the approval of the contracts committee
and PPDA contrary to regulations.
Outstanding issue for the year ended June 30th 2007
Depreciation Policy
The Research Centre‟s accounting manual stipulates that depreciation of assets should
be based on the straight line method and that the following rates per year shall be
used: buildings 5%, computers 25%. It was however noted that all assets were
depreciated at a uniform rate of 20% without regard to the rates for the different
classes of assets. As a result of these, the book values of these assets are not fairly
stated.
Debtors
Review of the financial statements revealed that Shs.337,281,702 remained
unrecovered from debtors at the close of the year as compared to shs.364,388,822 at
previous year end. Poor recovery of debts from debtors increases the likelihood of
some debts becoming bad and doubtful.
Salary advances
We noted that received salary advances totaling shs.21,320,312 remained outstanding
and un-recovered at year end. Out of this sum Shs.15,392,640 was advanced to staff
for six months contrary to the research Centre‟s policy while Ushs.5,927,672 was not
reflected in the final accounts.
Repair of vehicles
During the audit we noted that repair of vehicles is done without requisition from the
users and a verification report by the transport officer. This is a weakness which could
result in irregular repair bills being paid.
Valuation of land at Mengo
It was noted that JCRC acquired land on plot 616 block 12 comprising of 0.5 acres.
However, this property is not recorded in the fixed asset register. Furthermore, the
reported amount at Shs.550,815,730 in the financial statements is only in respect of
the cost of building on which the Centre‟s head office is located excluding land.
33
Construction work at Kakira
A certificate of completion in respect of construction work by M/s Associated
Enterprises Construction (U) Ltd in respect of the Centre‟s Kakira branch built at a cost
of Shs.188,611,205 was submitted on 14th February 2008 by the supervising engineer.
A review of the inspection reports and a physical inspection of the site revealed that
the work had several defects as noted below:-
i) The floor was poorly done and in some places it has already developed
cracks.
ii) The roofing timber was rotting.
iii) The painting on the outside wall was peeling.
iv) Quality of the doors frames is not satisfactory.
v) The ceiling of the conference room is sagging.
This was an indicator of poor quality work and weaknesses in supervision by the
Engineers/Estates department.
Internal control structure/operation
o Fixed asset register: Best practice requires that an asset register be maintained
and updated frequently for proper management, custody and maintenance of fixed
assets. During the audit we noted that an asset register was still not in place.
o Movement of drugs: The drug stores system at JCRC requires that drugs delivered
to JCRC are received in the stores while distribution is effected by first issuing out
to the pharmacy before dispatch to the respective centres. The stores and
pharmacy department each keep separate registers and we noted that a
reconciliation of the drugs issued from stores and received/issued by the pharmacy
was not carried out.
o Exchange rate for forex accounts: The Centre‟s Accounting manual stipulates that
conversions of currency shall be authorized by the financial controller and shall be
based on the bank rate for transactions with the same bank, otherwise the best
ruling rates of the day from the mass media would be used. A review of the
internal audit reports of the Centre revealed that the cashier and accountant in
charge of TREAT Project were dealing in foreign currency transactions and
determining rates being used without seeking approval from the financial controller
as required by the Centre‟s regulations.
34
2.2.8 NAKIVUBO WAR MEMORIAL STADIUM (NWMS)
Outstanding issues for three years ended 31st December 2007
Lack of an assets register
It was noted that management did not maintain a fixed assets register, to record asset
cost /value location and condition. Most assets were not engraved. Besides different
depreciation rates were used for loose tools at 61.25% in December 2004 and 50% in
December 2005 respectively contrary to IAS 16.
Revenue
i) Gate Collections
We noted that Turn style, the stadium revenue recording machine at entrances
was out of order. As a result ticket tabs could only be reconciled with tickets sold
against cash collected by management to ascertain gate collections. This method
is prone to errors and makes collusion possible with gate officials who can print
their own tickets sell them and not declare the tabs.
ii) Concession fees in respect of Nakivubo Park Yard
The trustees of Nakivubo Stadium (NWMS) entered into an agreement with
Kampala city council (KCC) under which KCC was to pay 30% of collections from
users of the Market stalls at Nakivubo park yard, however, KCC did not honor this
agreement upon which it was sued by the trustee of NWMS. On 26th May 1998, a
consent judgment was entered into by KCC and NWMS in which KCC agreed to pay
the rebate of 30% of the monthly collections but to date KCC has not remitted any
funds.
It was also noted that on 20th July 2000 KCC awarded the tender to M/S equator
Towing services to manage the Nakivubo Park yard at a contract fee of
Shs.16,500,000 per month for two years. It was noted that payment was only
made in 2005 and partially in 2006 and by time of this report a total of
Shs.86,927,060 remained unremitted by KCC.
Water Consumption Facilities
It was noted that the Stadium was using a water hydrant line for industrial
consumption usage contrary to National Water and Sewerage Corporation which
35
requires hydrants to be used for emergency fire fighting. Consequently NWSC billed
the Organization Shs.21,916,854 on the hydrant line and Shs.2,508,467 on the
commercial line. A sum of shs.24,425,321 had not been paid by the time of audit.
Non-compliance with PPDA rules and regulations
It was observed that management did not follow laid down procedures required by
PPDA in the procurement of goods and services during the year. The contracts
committee and procurement and disposal units are not in existence; as a result value
for money may not have been obtained from hiring out its properties as parking
space, Billboards, toilets.
Personnel files
A review of personnel records revealed that files for the 16 staff were not up to date.
Some files were found to be lacking in several major aspects like not having
application, promotional or even appointments letters. We could therefore not
ascertain whether the affected employees were transparently recruited.
Doubtful payments to clubs
During the financial year 2006 management made payments out of gate collections to
Football clubs, but acknowledgement receipts by the following clubs were not availed
for audit see table below;
Voucher Number Amount Club
3925/3/06 299,889 Express foot ball club
3924/3/06 299,889 Kampala United
3941/03/6 360,281 FUFA
3920/02/06 369,970 Victor FC
4161/06/06 407,846 FUFA
4020/04/06 262,702 KCC
Total 2,000,577
36
2.3 AUDITS IN PROGRESS
Forty three (43) audits were under progress at the time of issue of this report these are
listed below;
No Entity No of
years
Financial year under
review
1 Uganda Broadcasting Corporation 1 2008/2009
2 Uganda National Examinations Board 1 2008/2009
3 Uganda National Bureau of Standards 1 2008/2009
4 Uganda Coffee Development Authority 1 2008/2009
5 Cotton Development Organization 1 2008/2009
6 Amnesty Commission 1 2008/2009
7 National Enterprise Corporation and
Subsidiaries
2 2007/2008-2008/2009
8 Electricity Regulatory Authority 1 2008/2009
9 Public Procurement and Disposal of Assets
Authority
1 2008/2009
10 National Council for Children 1 2008/2009
11 National Women‟s Council 1 2008/2009
12 Broadcasting Council 1 2008/2009
13 National Animal Genetic Resource Centre and
Data Bank (NAGRIC)
2 2007/2008-2008/2009
14 Allied Health Professionals 3 2006/2007-2008/2009
15 Uganda Livestock Industries 8 2001/2002-2008/2009
16 Public Libraries Board 9 2000/2001-2008/2009
17 Uganda Insurance Commission 1 2008/2009
18 National Planning Authority 1 2008/2009
19 Uganda Investment Authority 1 2008/2009
20 Uganda Export Promotion Board 2 Dec 2007-Dec 2008
21 National Youth Council 3 Dec 2006-Dec 2008
TOTAL 43
37
CHAPTER THREE
DETAILED PARAGRAPHS OF AUDIT OPINIONS
3.1 UNQUALIFIED AUDIT OPINION WITH EMPHASIS OF MATTER
PARAGRAPHS
The following is a detailed listing of the audit issues arising from the audit of the 11 public
organizations certified with unqualified opinions with emphasis of matter
3.1.1 NILE HOTEL INTERNATIONAL LIMITED (31st DECEMBER 2008)
Unqualified audit opinion with emphasis of matter
Common Heads of Government Meeting (CHOGM) advances from Government
Shs.1,898,972,476
Government advanced Shs.1,898,972,476 to a local firm on account of Nile Hotel
International Limited (NHIL) which was used to carry out refurbishment works at Serena
Conference Centre. Of this amount, Shs.1,021,839,175 was considered to be a loan in the
financing agreement but the repayment terms were not clearly stated while
Shs.877,133,301 was advanced by government but without indicating in the financing
agreement whether it was a loan or an increase in government‟s share holding value in
NHIL.
3.1.2 UGANDA COFFEE DEVELOPMENT AUTHORITY (30TH SEPTEMBER 2008)
Unqualified audit opinion with emphasis of matter
Investments in Wet Coffee processing machines
The Authority invested Shs.834,815,878 in Wet Coffee processing machines financed by
government under the Strategic Export Program. These machines were offered to the
beneficiaries at a discounted price by 50%, to Shs.417,407,939 under a Finance lease
Arrangement managed by DFCU leasing. However, not all these machines have been
installed. As a result, the original objective of value addition was negatively affected and
repayment of the finance lease to UCDA delayed.
38
3.1.3 NATIONAL DRUG AUTHORITY (30TH JUNE 2009)
Unqualified audit opinion with emphasis of matter
Lack of Authority and commission.
There was lack of a duly constituted Authority and attendant Commission. The
Commission had expired prior to signing of these financial statements.
3.1.4 CABLE CORPORATION LIMITED (31ST DECEMBER 2008)
Unqualified audit opinion with emphasis of matter
Going Concern Matters
The company has accumulated revenue reserves deficit of Ushs7.9 billion as at 31st
December 2007 (2006: Ushs9.1 billion) and as of that date its total liabilities exceeded
total assets by Ushs5.4 billion (2006: Ushs6.5 billion). These conditions together with
other matters as set forth in the note to the financial statements indicate the existence of
a material uncertainty which may cast significant doubt on the company‟s ability to
continue as a going concern.
3.1.5 UGANDA NATIONAL COUNCIL OF SCIENCE AND TECHNOLOGY (30TH JUNE
2008)
Unqualified audit opinion with emphasis of matter
Absence of Board of directors
During the financial year as noted in the previous year council operated without a Board
of Directors, as a result policy decisions were initiated, approved and implemented by
management.
3.1.6 UGANDA NATIONAL COUNCIL OF SCIENCE AND TECHNOLOGY (30TH JUNE
2009)
Unqualified audit opinion with emphasis of matter
Absence of Board of directors
Same as in 3.1.5 above
39
3.1.7 AMBER HOUSE LIMITED (31ST DECEMBER 2008)
Unqualified audit opinion with emphasis of matter
Trade and Other Receivables
Note 7 in the Balance sheet of the financial statements indicates that there is weakness in
Debt collection with the overall debtors increasing from shs 2,534,157,146 in 2007 to shs
3,093,442,135 in 2008.
These conditions indicate the existence of a material uncertainty over trade receivables.
3.1.8 UGANDA PRINTING AND PUBLISHING CORPORATION (30TH JUNE 2009)
Unqualified audit opinion with emphasis of matter
Statutory Contributions
The financial statements indicate (Under note (6) that PAYE, VAT and WHT payable
increased from Shs.307,090,367 in 2007/08 financial year to Shs.479,409,013 in
2008/09 implying that these taxes are not paid regularly and/or on time thus exposing
the Corporation to unnecessary penalties.
Unremitted NSSF Contributions also increased from Shs.112,055,340 in 2007/2008
financial year to Shs.175,159,701 in 2008/09 indicating possible liquidity problem.
Trade debtors
Note 4 of the financial statements indicates that there are weaknesses in debt
collection with the overall Corporation‟s debtors increasing from Shs.427,703,964 in
2008 to Shs.865,748,794 in 2009.
These conditions indicate the existence of a material uncertainty over trade debtors
and the ability of the corporation to continue as a going concern. However, the
financial statements have been prepared on a going concern basis on the assumption
that continued financial support will be made available to the corporation by
Government.
40
3.1.9 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2007)
Unqualified audit opinion with emphasis of matter
Governance
During the financial year, the term of the council expired and had not been renewed. As a
result the Council operated without a governing council resulting in policy decisions being
initiated, approved and implemented by management.
3.2 QUALIFIED OPINIONS
3.2.1 NATIONAL WATER AND SEWERAGE CORPORATION (30th JUNE 2009)
Qualified Opinion
Lease hold land without Title Deeds
As indicated in note 19(c) to the financial statements. The corporation has some
leasehold land for which it does not have title deeds. The leasehold land prepayment
is therefore not amortized to the income statement. The Corporation is in advanced
stages of obtaining the relevant title deeds but this process had not been finalized by
the date of this report. Consequently, adequate assurance over the ownership of those
properties and completeness of leasehold amortization reported in the financial
statements could not be obtained.
Unaccounted for water
Due to technical and non- technical losses in the supply system, the Corporation is not
able to bill all the water produced from the pumping stations. As at 30 June 2009, the
non revenue water was estimated at 35.8% (2008:33.5%). Because of this limitation,
reliance could not be placed on the system for the purposes of testing the accuracy
and completeness of the Corporation‟s water revenue. There were no practical
procedures that could be adopted for this purpose. However, income from water
supplied and billed is subjected to adequate accounting and control procedures.
3.2.2 UGANDA AIR CARGO CORPORATION (30TH JUNE 2008)
Qualified Opinion
Debtors
Included under debtors in the financial statements is a figure of shs 4,193,864,273 which
has been long outstanding; the total amount of shs 4,193,864,273 is yet to be recovered.
41
The recoverability of this amount appears doubtful and in the absence of a specific
provision for bad debts, the debtors are not fairly stated.
3.2.3 NATIONAL CURRICULUM DEVELOPMENT CENTRE (31ST DECEMBER 2004)
Qualified Opinion
Debtors
Included under debtors in the financial statements is Shs.281,751,397
(US$120,903.35) in respect of royalties which were remitted by M/s Pearson Education
and M/S Macmillan Publishers of UK between September 1998 and June 2002 but was
instead erroneously banked on a former Director‟s personal account No. 8670587 of
Barclays Bank Queensway Kenya. In addition, Shs.54,075,000 (£25,020) was banked
on the same account in the period ended 31st December 2004). The total amount of
Shs.335,826,397 is yet to be recovered. The recoverability of the debt appears
doubtful and in the absence of a specific provision for bad debts, the debtors balance
may not be fairly stated.
Valuation of UNESCO Coupons
The Centre obtained UNESCO coupons valued at Shs.1,892,431 dating way back in
1970. However, the value of these coupons has not been discounted. Therefore the
value of these coupons may not be fairly stated in the financial statements.
3.2.4 NATIONAL CURRICULUM DEVELOPMENT CENTRE (31ST DECEMBER 2005)
Qualified Opinion
Debtors
Valuation of UNESCO Coupons
The issues above are the same as in 3.2.3.
3.2.5 UGANDA DEVELOPMENT BANK (31ST DECEMBER 2008)
Qualified Opinion
Investments in Associates IAS 28
The bank holds a 28% shareholding in Kajjansi Roses Limited, stated at Ushs.762
million in the balance sheet. IAS 28, Investments in Associates requires that such an
investment where the entity has significant influence be recorded using the equity
method of accounting. The bank has not recognized its share in the associate‟s profit
or loss for the year ended 31 December 2008. Further, the audited financial
42
statements of the associate as at 31 December 2008 were not available. Therefore,
the correctness of the investments could not be determined.
Investment property (‘IAS 40’)
The bank has recognized a fair value gain on investment property of Shs.9,670 million
based on an independent valuation done in 2008. Hither-to, the last fair valuation of
investment property was done in 2005 and since then no fair value gains or losses had
been recognized in the financial statements. IAS 40 requires the fair value of
investment property to reflect market conditions at the balance sheet date and the
gain or loss arising from the change in fair value of investment property recognized in
profit or loss for the period in which it arises. Had the bank been carrying out annual
fair value assessments as required by IAS 40, the fair value gain of Shs.9,670 million
included in 2008 income statement, would have been progressively recognized in the
respective accounting periods. As a result of the above, the profit for the year is
overstated and the opening balance of retained earnings is understated. However the
misstatement could not be qualified.
Financial instruments, Recognized and Measurement (‘IAS 39’)
IAS 39 requires that an entity shall assess at each balance sheet date whether there is
any objective evidence that a financial asset or group of financial assets is impaired. If
any such evidence exists, the entity shall determine the amount of the loss as the
difference between the asset‟s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset‟s original effective interest rate. This was done as at
31st December 2008. However as at 31st December 2007, the company‟s loan
impairment was based on number of days in arrears and fixed percentages, and not
estimated future cash flows as required by IAS 39. Management did not make an
impairment assessment and thus the impact on the financial statements of the
deviation in prior years from the requirements of IAS 39 pertaining to the above issue
could not be assessed.
43
3.2.6 NATIONAL SOCIAL SECURITY FUND (30TH JUNE 2007)
Unqualified audit opinion with emphasis of matter
Members Fund
Included in the members‟ fund account as at 30 June 2007 is an amount of
Ushs.360,592 million which has not been allocated to specific members. Management
has been unable to provide an analysis of this balance or confirm the completeness
and accuracy of balances credited to individual members accounts. Accordingly, it was
not possible to obtain sufficient appropriate audit evidence that the members‟ fund
account balance is not materially misstated.
Other Payables
A credit balance of Ushs.2,371 million is included in other payables as at 30 June
2007. Management was unable to provide an analysis of this amount and could also
not explain the nature of the credit balance. Accordingly it was not possible to obtain
sufficient appropriate audit evidence that other payables are not materially misstated.
3.2.7 NATIONAL SOCIAL SECURITY FUND (30TH JUNE 2008)
Qualified Opinion
Members Fund
Included in the members‟ fund account as at 30 June 2008 is an amount of
Ushs.206,405 million which has not been allocated to specific members. Management
has been unable to provide an analysis of this balance or confirm the completeness
and accuracy of balances credited to individual members accounts. Accordingly, it was
not possible to obtain sufficient appropriate audit evidence that the members‟ fund
account balance is not materially misstated.
Trade and Other receivables
A debit balance of Shs.10,829 million is included in other receivables as at 30 June
2008. Management was unable to provide an analysis of this amount and could also
not explain the nature of the debit balance. Accordingly it was not possible to obtain
sufficient appropriate audit evidence that trade and other receivables are not
materially misstated.
44
3.2.8 UGANDA BROADCASTING CORPORATION (30TH JUNE 2006)
Qualified Opinion
Vesting amounts from merged departments
Following the merger of the departments of Radio Uganda and Uganda Television to
form Uganda Broadcasting Corporation, an instrument vesting Property, assets and
liabilities of these departments to the Corporation was issued in May 2006. However
no values were attached to this instrument. There were no alternative procedures that
could be carried out to independently ascertain the value of the vested assets.
In light of the above, a material uncertainty exists over the accuracy and
completeness of the Corporations Property plant and equipment.
Title to Properties
The Corporation has not secured title to all its Land, except for Titles to Land at Kibira
road, Broadcasting house and Naguru hill included under its properties. Consequently I
am unable to confirm and quantify the value of Corporation‟s properties without titles.
Director’s Remuneration
The UBC Act provides for directors remuneration and allowances to be determined by
the line Minister. During the year under review, the line Minister did not approve any
rates for director‟s remuneration. Consequently I am unable to confirm the validity of
payments relating to directors remuneration during the year.
3.2.9 DAIRY DEVELOPMENT AUTHORITY (31ST DECEMBER 2005)
Qualified Opinion
There were three difference types of reports issued for each of the years 2005, 2006 and
2007. The issues raised were however, the same as in all the reports as detailed below:
Non Disclosure of uncollected Rent and electricity bills
The Authority leased its Dairy plant at Entebbe to a local firm in 2003.However by the
time of termination of the contract in 2004, the local firm had defaulted on rental dues
totaling Ushs.54,000,000 and had accumulated electricity bills of Shs.16,229,284.
Although management is pursuing the recovery of this debt at the time of audit, the
uncollected rent income is not disclosed in the Authority‟s books of account.
45
Property, plant and equipment
The Authority‟s assets were last valued in 1996 and, besides, most of the properties do
not have land titles.
IAS 16 requires that items of property, plant and equipment which are carried at
revalued amounts be revalued with sufficient regularity to ensure that the carrying
amount does not differ materially from that which would be determined using fair
value at the balance sheet date. The Authority has not carried out any subsequent
revaluation of the assets.
IAS 16 also requires the subsequent increase in the revaluation to be carried under
equity as revaluation surplus; this has not been done in the financial statements.
Due to the above limitations I am therefore unable to confirm the accuracy,
completeness and valuation of property, plant and equipment shown in the
balance sheet.
Government grants
The authority received grants relating to assets. IAS 20 requires that asset related grants
including non-monetary grants at fair value should be presented in the balance sheet
either by setting up the grant as deferred income or by deducting the grant in arriving at
the carrying amount of the asset.
The authority has not appropriately disclosed government grants in accordance with IAS
3.2.10 DAIRY DEVELOPMENT AUTHORITY (ENDED 31ST DECEMBER 2008)
Qualified Opinion
Non Disclosure of uncollected Rent and electricity bills
Property, plant and equipment
The above two issues are the same as in 3.2.9
Nugatory Expenditure
The Authority paid URA a penalty of Ushs.83,445,373 as a 2% interest charge per
month for delaying to remit PAYE deductions totaling 105,627,054 on time.
Although management stated that this resulted from inadequate funding to the
authority, this payment did not derive any extra value to the Authority and is deemed
nugatory expenditure.
46
3.2.11 UGANDA WILDLIFE AUTHORITY (30TH JUNE 2009)
Qualified Opinion
Non Compliance with IAS 12 Income Taxes
The financial statements do not comply with the requirements of IAS 12 on „Income
Taxes‟ as no income tax and deferred tax have been provided for. Management has
not quantified the effect of this non-compliance on the operating results of the
authority.
Concessions Income
There was an inadequate system of control of recording concessions income-franchise
fees on which we could rely on for the purpose of the audit. We were therefore unable
to verify the completeness of concessions income-franchise fees as stated in the
financial statements amounting to Shs.936.4 million. There were no satisfactory
alternative audit procedures that could be adopted to confirm that concessions
income-franchise fees are fairly stated.
3.2.12 UGANDA PROPERTY HOLDINGS LIMITED (30TH JUNE 2008)
Qualified Opinion
Recoverability of receivables from an Apparel Company
Included in the financial statements is an amount of Shs 4,741,740,000 relating to
unpaid rent from Apparel Tri Star Ltd. It was noted that Uganda Property Holdings has
not signed a tenancy agreement with Apparel Tri Star at inception in January 2003.
Furthermore a new company LAP Textiles ltd took over the Assets and liabilities of
Apparel Tri-Star limited. There is therefore uncertainty surrounding the recoverability
of this debt.
Valuation of Property, Plant and Equipment
Some of the Uganda Property Holdings properties in Uganda were last revalued in
2005 at the time of transfer. IAS 16 requires that when items of Property, Plant and
Equipment are revalued, the entire class of Property, Plant and Equipment to which
the Asset belongs should be Valued.
IAS 16 also states that items of Property, Plant and Equipment carried at revalued
amount be revalued with sufficient regularity to ensure that the carrying amount does
47
not defer materially from that which would be determined as the fair value at the
Balance sheet date. Due to the above limitations, the accuracy, completeness and
valuation of Property, Plant and Equipment shown in the Balance sheet cannot be
confirmed.
3.2.13 MANAGEMENT TRAINING AND ADVISORY CENTRE (31ST DECEMBER 2008)
Qualified Opinion
Title to Properties
The Centre has not yet secured title deeds to four properties at Plots M290 and M255
Ntinda Industrial Area and Plots 175 – 183 and PM 119 Nakawa. Consequently, I am
unable to confirm the Centre‟s ownership of these properties.
Land and Buildings
The value of the Centre‟s Land and Buildings is reflected as Shs.3,114.865,634 in the
financial statements against which depreciation of shs 49,397,933 has been provided.
IAS 16 requires land and buildings to be dealt with separately for accounting purposes
even when they were acquired together. Management has not yet been able to
identify separately the cost of land and buildings. It was therefore not possible for
audit to determine the actual value of the Company‟s land and buildings separately
and to confirm the depreciation charged.
Revaluation of Property Plant and Equipment
IAS 16 requires property plant and equipment carried at revalued amounts to be
revalued with sufficient regularity to ensure that the carrying amounts do not differ
materially from that which would be determined using fair values at the balance sheet
date. The centre has not carried out any subsequent revaluation of the assets.
Consequently the centre‟s assets may not be fairly stated.
3.2.14 UGANDA SEEDS LTD (30TH JUNE 2004)
Qualified Opinion
Attendance at the Stock take
The counting of physical inventories as of June 2004 was not observed by audit. There
were no other alternative procedures that could have been carried out to verify the
physical existence of inventories amounting to Shs 296,788,326. In this circumstance
48
a material uncertainty exists over the existence, accuracy and completeness of
inventory balances in the financial statements.
Trade receivables
Indicated under note 2(g) in the financial statements are trade receivables of
Shs179,704,680. These include shs160,871,000 of trade receivables which have been
outstanding for over two years. The recoverability of these debts appears doubtful;
and in the absence of a specific provision for bad and doubtful debts, the receivables
are not fairly stated.
3.2.15 UGANDA SEEDS LTD (30TH JUNE 2005)
Qualified Opinion
Attendance at the Stock take
The counting of physical inventories as of June 2005 was not observed by audit. There
were no other alternative procedures that could have been carried out to verify the
physical existence of inventories amounting to shs 218,459,171. In this circumstance a
material uncertainty exists over the existence, accuracy and completeness of inventory
balances in the financial statements.
Trade receivables
Indicated under note 2(h) in the financial statements are trade receivables of
shs164,471,000. These include shs160,871,000 of trade receivables which have been
outstanding for over two years. The recoverability of these debts appears doubtful;
and in the absence of a specific provision for bad and doubtful debts, the receivables
are not fairly stated.
49
3.2.16 UGANDA SEEDS LTD (30TH JUNE 2006)
Qualified Opinion
Valuation of property plant and equipment: Land and Buildings
The net book value of the company‟s property plant and equipment is indicated as
shs5,048,131,665 in the financial statements, this figure includes land and buildings of
shs3,065,000,000. Under IAS 16 land and buildings are separable assets and are dealt
with separately for accounting purposes even if they are acquired together. The
Company is therefore not able to effectively:
Identify separately the cost of land and buildings.
Allocate the depreciable amount of buildings.
Due to the above limitations, it was therefore not possible to confirm the accuracy and
valuation of the property, plant and equipment shown in the balance sheet.
Impairment of Buildings
The company‟s buildings at Kisindi Farm are dilapidated and require major repairs.
Due to the unavailability of cost /valuation relating to these buildings, it was not
possible to determine the impairment loss of the company‟s assets as required under
IAS 36 in order to reduce the carrying amount of buildings to the recoverable
amount and recognize the impairment loss in the financial statements.
Concession Income Uganda Seeds Limited (USL) entered into a leasing agreement with M/s Nyakatonzi
Cooperative Union Limited on 24th November 2005 for a 30 year lease of USL assets.
The lessee was to pay USD$150,000 as lease fee in respect of lease and concession of
the assets. In addition an annual concession fee amounting to 1% of the annual
gross sales generated from use of the leased assets was to be paid to USL. It was
noted that the Union has since defaulted on her obligation of remitting concession fees
and to date, no amount has been paid to USL. There was an inadequate system of
control of recording concessions income fees on which could be relied on for the
purpose of the audit. It was therefore not possible to verify the completeness of
concessions income fees as stated in the financial statements.
50
3.2.17 UGANDA PROPERTY HOLDINGS LIMITED (30TH JUNE 2009)
Qualified Opinion
Land and Buildings
The value of the Company‟s Land and Buildings is reflected together at a net book
value of Shs.64,406,292,451 in the financial statements contrary to IAS 16 which
requires land and buildings are dealt with separately for accounting purposes even
when they were acquired together. It was noted that management has not yet been
able to identify separately the cost of land and buildings. It was therefore not possible
for audit to confirm the actual value of the Company‟s land and buildings separately
for purposes of determining the depreciation charged. As a result the value of land
and buildings and the depreciation charged may not be fairly stated.
3.2.18 UGANDA SEEDS LTD (30TH JUNE 2007)
Qualified Opinion
Valuation of property plant and equipment; Land and Buildings
The net book value of the company‟s property plant and equipment is indicated as
shs4,782,640,867 in the financial statements, this figure includes land and buildings of
shs3,065,000,000. Under IAS 16, land and buildings are separable assets and are dealt
with separately for accounting purposes even if they are acquired together. The
Company is therefore not able to effectively:
o Identify separately the cost of land and buildings.
o Allocate the depreciable amount of buildings
Due to the above limitations, it was therefore not possible to confirm the accuracy
and valuation of the property, plant and equipment shown in the balance sheet.
Impairment of Buildings
The company‟s buildings at Kisindi Farm are dilapidated and require major repairs.
Due to the unavailability of cost /valuation relating to these buildings, it was not
possible to determine the impairment loss of the company‟s assets as required under
IAS 36 in order to reduce the carrying amount of buildings to the recoverable
amount and recognize the impairment loss in the financial statements.
Concession Income
Uganda Seeds Limited (USL) entered into a leasing agreement with M/s Nyakatonzi
Cooperative Union Limited on 24th November 2005 for a 30 year lease of USL assets.
51
The lessee was to pay USD$150,000 as lease fee in respect of lease and concession of
the assets. In addition an annual concession fee amounting to 1% of the annual
gross sales generated from use of the leased assets was to be paid to USL. It was
noted that the Union has since defaulted on her obligation of remitting concession fees
and to date, no amount has been paid to USL. There was an inadequate system of
control of recording concessions income fees on which could be relied on for the
purpose of the audit. It was therefore not possible to verify the completeness of
concessions income fees as stated in the financial statements.
3.2.19 UGANDA SEEDS LTD (30TH JUNE 2008)
Qualified Opinion
Valuation of property plant and equipment: Land and Buildings
The net book value of the company‟s property plant and equipment is indicated as
shs4,553,856,279 in the financial statements, this figure includes land and buildings of
shs3,065,000,000. Under IAS 16, land and buildings are separable assets and are
dealt with separately for accounting purposes even if they are acquired together. The
Company is therefore not able to effectively:
Identify separately the cost of land and buildings.
Allocate the depreciable amount of buildings
Due to the above limitations, it was therefore not possible to confirm the accuracy and
valuation of the property ,plant and equipment shown in the balance sheet.
Impairment of Buildings
Concession Income
The above two issues are the same as in 3.2.18.
3.2.20 UGANDA BROADCASTING CORPORATION (30TH JUNE 2007)
Qualified Opinion
Vesting Assets from merged departments
Following the merger of the departments of Radio Uganda and Uganda Television to
form Uganda Broadcasting Corporation, an instrument vesting property, assets and
liabilities of these departments to the Corporation was issued in May 2006. However,
values in respect of these properties were not attached to the instrument and included
52
in the financial statements. In light of the above, a material uncertainty exists over
the accuracy and completeness of the Corporations Property plant and equipment
Title to Properties
The Corporation has not secured title to all its Land, except for Land at Kibira road,
Broadcasting house and Naguru hill included under its properties. Consequently I am
unable to confirm the ownership and accuracy of the value of these properties without
titles.
Gratuity
Included in the creditors schedule is Shs.230, 675,000 in respect to gratuity. This
benefit to staff is not provided for by the Human Resource Manual of the Corporation.
3.2.21 UGANDA EXPORT PROMOTION BOARD (31ST DECEMBER 2006.)
Qualified Opinion
Statutory Deductions
The Board did not remit Income taxes in respect of PAYE amounting to shs 324,197,838
during the year to Uganda Revenue Authority.
Non Compliance with laws and regulations is an offence which may result in fines,
penalties and litigation.
3.2.22 UGANDA BROADCASTING CORPORATION (30TH JUNE 2008)
Qualified Opinion
Vesting amounts from merged departments
Title to Properties
The above two issues are the same as in 3.2.20
Gratuity
Included in the creditors schedule is Shs.550,924,235 in respect to gratuity which is
not provided for in the Human Resource Manual.
Non Compliance with laws and regulations
The Corporation did not remit taxes in respect of PAYE of shs742,397,537 and VAT of
shs 755,265,098 during the year to Uganda Revenue Authority, In addition
53
shs304,209,915 in respect of Social Security Fund contributions was not remitted to
NSSF.
Non compliance with laws and regulations is an offence which may result in penalties
and litigation.
Trade debtors and other receivables
As indicated in note 12 to the financial statements, the Corporations debtors increased
from shs559,913,919 to shs 1,766,625,528 during the year. Over 75% of these
debtors have been outstanding for more than 4 months. In the absence of a provision
for bad and doubtful debts , I am unable to confirm that all the debtors and other
receivables are fairly stated in the financial statements.
3.2.23 LAW DEVELOPMENT CENTRE (18 MONTHS ENDING 30TH JUNE 2005)
Qualified Opinion
Fixed Assets Register
The Centre maintains a fixed assets register which has not been updated for a long
time. As .a result the net book value of property, plant and equipment as indicated in
the fixed assets register did not agree to that as reported in the balance sheet. Due to
the above limitations, it was not possible to confirm the accuracy, existence,
completeness and validity of property plant and equipment reflected in the financial
statement.
The Centre is therefore not able to effectively;
o Allocate depreciable amounts of this property, plant and equipment over their
useful life as required under IAS 16.
o Facilitate the fair presentation of fixed assets in the Centre‟s financial
statements.
Land and Buildings
The net book value of the Centre‟s Land and Buildings is indicated as shs.474,295,995
in the financial statements. Under IAS 16, land and buildings are separable assets and
are dealt with separately for accounting purposes even when they are acquired
together. It was noted that management has not been able to identify separately the
cost of land and buildings. It was, therefore, not possible to confirm the actual value
of the Centre‟s land and buildings separately.
54
Valuation of fixed assets
Although the Centre valued its land and building, the revalued amounts were not
reflected in the financial statements. Motor vehicles, furniture fittings and other assets
were not revalued.
o IAS16 requires that items of property, plant and equipment which are carried at
revalued amount be revalued with sufficient regularity to ensure that the carrying
amount does not differ materially from that which would be determined using fair
value at the balance sheet date. The Centre has not carried out any subsequent
revaluation of the revalued assets. This constitutes non-compliance with the
revaluation requirements of IAS 16.
o IAS 16 also requires the subsequent increase in revaluation to be carried under
equity under Revaluation surplus, this was not done in the financial statements.
Due to the above limitations I am unable to confirm the accuracy, completeness and
Valuation of the property, plant and equipment shown in the balance sheet.
Title to Properties
The Centre does not have title deeds to plots 1,34,69,508,509,510,614 and 615
included under its properties. Consequently I am unable to confirm the Centre‟s
ownership to these properties, and due to lack of a comprehensive fixed assets
register I am further unable to quantify the value of these properties without titles.
Encroachment on Land
The Centre has properties on plot 339 and 169 on blocks 9 and plot 69 Block 1 and on
Block 11882 in Bukoto. However, it was noted that these properties have been
encroached upon with permanent structures built on them. The Centre has not taken
action to remove the encroachers. Due to this limitation I am unable to confirm the
value and ownership to these properties.
3.2.24 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2005)
Qualified Opinion
Nugatory Expenditure
The council was sued by a staff for wrongful dismissal and awarded Ushs 12,146,580 in a
case in which the council did not defend.
55
It was further noted that the same officer while still serving the council was paid Ushs
4,100,000 for consultancy work, in addition to his salary.
3.2.25 NATIONAL CURRICULUM DEVELOPMENT CENTRE ( 31ST DECEMBER 2006)
Qualified Opinion
Depreciation Policy
The Centre depreciates its assets using a straight line method and applies a fixed rate of
depreciation on the cost of each asset category. However, depreciation was not charged
to motor vehicles as required by the centre‟s depreciation policy. In addition there was no
depreciation charged to library books valued at shs 8,806,906 contrary to IAS 16 which
requires depreciable amounts of an asset to be allocated on a systematic basis over its
useful life. As a result, the net book value of Fixed Assets of shs 558,927,859 in the
financial statements may not be fairly stated.
3.3 QUALIFIED OPINIONS WITH EMPHASIS OF MATTER
3.3.1 NATIONAL YOUTH COUNCIL (30TH JUNE 2005)
Qualified with Emphasis of matter
Procurement Procedures
Contrary to the PPDA Act, the Council did not have a contracts committee during the
period under review. Procurements were made in an adhoc manner in disregard to the
provisions of the PPDA Act. Furthermore, stationary and tyres procured at a total cost
of Shs.19,971,600 were not recorded in the council‟s books. Therefore, I could not
confirm that the actual deliveries were made and that the amount spent on
procurement of these goods was put to good use.
Unauthorized Borrowing of Funds
Contrary to Section 18 of the National Youth Council Act (Cap 319), the council
borrowed Shs.6,380,000 at a rate of interest of 17% per month without the approval
of the Minister. In this respect I could not confirm that the loan was legally obtained
and put to the proper use.
56
Internal Control
As mentioned in my previous report, the internal control structure of the council
remained weak. There was lack of segregation of duties as demonstrated by a single
individual performing the tasks of initiating payments, preparing vouchers, drawing
and paying out cash as well as writing up the prime books of entry of the council.
3.3.2 COTTON DEVELOPMENT ORGANIZATION (31ST OCTOBER 2008)
Qualified with Emphasis of matter
Titles to Seed Dressing Stations
The Organization has seed dressing properties (seed stores, seed dressing halls and
delinters) at Kasese, Ngetta, Nakivumbi and Kachumbala worth Ushs2.051billion for
which it has not secured Land titles for over four years. The security of these
investments is therefore not guaranteed.
Loan from UGCEA
Attention is drawn to outstanding amounts due to Uganda Ginners and Exporters
Association (UGCEA) of Shs7.8 billion stated in note 7 to the financial statements. The
Organization raised a loan from Uganda Ginners & Exporters Association UGCEA in
2003 to finance cotton seed activities which were implemented under the Strategic
Intervention Program (SIP) which is still outstanding. In the event that UGCEA recalls
the loan, the organization may not have sufficient resources to meet the payment.
3.3.3 UGANDA AIR CARGO CORPORATION (30THJUNE1998)
Qualified with Emphasis of matter
Ten separate audit reports were issued for the ten years 1998, 1999, 2000, 2001, 2002,
2003, 2004, 2005, 2006 and 2007. The issues therein were however the same as
detailed below;
Valuation of Property Plant and Equipment
The Corporation has an Aircraft, a Hercules Model L100-30 reflected at a cost of
Shs.8,382,954,749 in the financial statements. There has been no revaluation to this
aircraft for a long time. Consequently the carrying value of the Aircraft may differ
materially from its fair value at the balance sheet date.
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Depreciation policy on aircraft
It was noted that the Aircraft was depreciated using the reducing balance method at a
uniform rate of 5% contrary to IAS16 which requires depreciation of Aircrafts to be
done on specific parts at different rates and not generally because of the different
lifespan of these parts and components. As a result, the value of the aircraft may not
be fairly stated in the financial statements
Repair of the Air Craft
The Corporation‟s Aircraft Hercules C130 was impounded in Congo in 1995 and later
got involved in an accident in Cairo, Egypt in the same year. The repair bill estimated
at US$10.5m was financed by the Privatization Unit under the Ministry of Finance,
Planning and Economic Development. In the event the Privatization Unit recalls this
loan, the Corporation may not have sufficient resources to meet the payment.
3.3.4 UGANDA AIR CARGO CORPORATION (30THJUNE1999)
Qualified with Emphasis of matter
Contingent liability $10.5m (this affected the years 1999 to 2004 only)
The Corporation‟s Aircraft Hercules C130 was impounded in Congo in 1995 and later
got involved in an accident in Cairo, Egypt in the same year. The repair bill estimated
at US$10.5m was financed by the Privatization Unit under the Ministry of Finance,
Planning and Economic Development. In the event the Privatization Unit recalls this
loan, the Corporation may not have sufficient resources to meet the payment.
3.3.5 UGMA ENGINEERING CORPORATION LIMITED (31ST DECEMBER 2008)
Qualified with Emphasis of matter
Government of Uganda Loans
As disclosed in note 15 to the financial statements, the company has term loans from
the Government of Uganda amounting to Ushs.24.8 billion (2007: Ushs.24.3 billion)
for which no independent confirmation has been received. No formal agreements exist
in respect of Ushs.18.267 billion (2007: Ushs17.982 billion). I was not able to satisfy
myself as to the completeness and accuracy of the balance due to Government of
Uganda. In addition, I was unable to satisfy myself with the completeness and
accuracy of the interest charge for the year ended 31 December 2008 and prior years.
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Losses
The Company incurred a net loss of Ushs3.631 billion during the year ended 31
December 2008 (2007: Ushs.41,293 billion). These conditions along with other
matters as set forth in the note 2 to the financial statements indicate the existence of
a material uncertainty which cast significant doubt on the company‟s ability to
continue as going concern.
3.3.6 CIVIL AVIATION AUTHORITY (30TH JUNE 2008)
Qualified with Emphasis of matter
Receivables
At the end of the financial year, the carrying value of receivables stood at
Ushs.62,494,262,000; I am unable to confirm whether the balance reflected as
receivables in the financial statements is fairly stated due to incomplete reconciliation
of receivables. The amount of trade receivables in the financial statements is Ushs.91,
521,818,102 before deduction of provisions for doubtful debtors. The gross amount of
debtors includes government debtors of Ushs.63, 176,773,099. The amount of
government debtors balances verified is only Ushs.62, 100,094,483, leaving an un
reconciled difference of Ushs.1,076,678,616.
Inventory
As a result of incomplete reconciliation of the value of closing physical inventory to the
balance of inventory in the general ledger, it was not possible to confirm whether the
amount attributable to inventory in the balance sheet is fairly stated. While the
closing physical inventory as at 30th June 2008 was valued at Ushs.1,206,029,518 ,the
general ledger balance was stated at Ushs.1.105,927,521 and this was the value
adopted in the balance sheet.
Payables
It was also not possible to confirm the correctness of the carrying amount of Ushs.25,
689,227, 000 stated as the balance of payables in the financial statements due to an
adjustment totaling Ushs.180,504,373 in respect of debit balances.
Recoverability of Receivables
As stated in note 4 to these financial statements, the carrying value of receivables as
at 30th June 2008 increased from Ushs.51,435.065,000 (2006/2007) to Ushs.62,
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494,262,000 (2007/2008) representing an increase of 21.5%. The major categories of
the debt are owed by Government of Uganda. The majority of these debts have been
outstanding for over 6 years and their recoverability is not certain.
3.3.7 NATIONAL COUNCIL FOR CHILDREN (30TH JUNE 2008)
Qualified with Emphasis of matter
Encroachment on land.
The council acquired Land and a building from the Uganda Land commission at
Mukabya road, Nakawa in 2004. However, this property which is not secured has
been encroached upon by a Motor repair Garage. The Council has not taken any steps
to evict the encroachers. Furthermore the property has not been included in the
financial statements.
Due to the above limitation I am unable to confirm the ownership to this property and
the accuracy, completeness, valuation of property and equipment shown at shs
18,246,118 in the balance sheet.
Governance
During the financial year, the term of the council expired and had not been renewed. As
a result the Council operated without a governing council resulting in policy decisions
being initiated, approved and implemented by management.
3.3.8 NATIONAL ENTERPRISE CORPORATION (30TH JUNE 2006)
Qualified with Emphasis of matter
Two accounts were certified for the years 2006 and 2007. And they had similar issues as
raised below:
Valuation of property and plant at plot 38-40 Kibira road Bugolobi
Although the Corporation carried out a valuation of this property in 1998, a
subsequent revaluation was not carried out until 8 years later in 2005 when it was
sub-leased to NEC Health World Pharmaceuticals contrary to IAS 16. IAS 16 requires
that items of property, plant and equipment which are carried at revalued amounts be
revalued with sufficient regularity to ensure that carrying amounts do not differ
materially from that which would be determined using fair value at the Balance Sheet
date. Due to the above limitation , I am unable to confirm whether the sub-lease was
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carried at fair value and whether the figure of the leased property in the financial
statements is fairly stated.
Trade and Other Debtors
There are over 40 debtor accounts with account balances which have remained
dormant for over five years in respect of Luwero Industries Subsidiary. The
recoverability of these debts appears doubtful. In the absence of a specific provision
for bad debts, these debtors are not fairly stated.
Absence of board of directors
During the period under review, the National Enterprise Corporation and the
subsidiaries namely; NEC Farm, NEC Construction Works and Engineering Ltd and NEC
Luwero Industries operated without a Board of Directors. As a result policy decisions
were initiated, approved and implemented by management.
3.3.9 UGANDA EXPORT PROMOTION BOARD (31st DECEMBER 2004.)
Qualified with Emphasis of matter
Two accounts were certified for the years 2004 and 2005. And they had similar issues as
raised below:
Non Compliance with laws and regulations
The Board did not remit Income taxes in respect of PAYE amounting to shs
227,414,357 during the year to Uganda Revenue Authority.
Non Compliance with laws and regulations is an offence which may result in fines,
penalties and litigation.
Unapproved Budget
During the year the Board did not submit estimates of Income and expenditure for
approval. Absence of an approved budget contravenes section 13 of the Uganda
Export Promotion Board Act (Cap 102). Therefore expenditure incurred stands
unauthorized in the accounts.
Absence of Board of Directors
During the period under review there was no Board of Directors in place as a result
policy decisions were initiated, approved and implemented by management.
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3.3.10 CIVIL AVIATION AUTHORITY (30TH JUNE 2008)
Qualified opinion with emphasis on matter
Receivables At the end of the financial year, the carrying value of receivables stood at
Ushs.62,494,262,000; I am unable to confirm whether the balance reflected as
receivables in the financial statements is fairly stated due to incomplete reconciliation
of receivables.
The amount of trade receivables in the financial statements is Ushs.91,521,818,102
before deduction of provisions for doubtful debtors. The gross amount of debtors
includes government debtors of Ushs.63,176,773,099. The amount of government
debtors balances verified is only Ushs.62,100,094,483, leaving an un reconciled
difference of Ushs.1,076,678,616.
Inventory
As a result of incomplete reconciliation of the value of closing physical inventory to the
balance of inventory in the general ledger; it was not possible to confirm whether the
amount attributable to inventory in the balance sheet is fairly stated. While the
closing physical inventory as at 30th June 2008 was valued at Ushs1,206,029,518, the
general ledger balance was stated at Ushs1,105,927,521 and this was the value
adopted in the balance sheet.
Payables
It was also not possible to confirm the correctness of the carrying amount of
Ushs.25,689,227,000 stated as the balance of payables in the financial statements due
to an adjustment totaling Ushs.180,504,373 in respect of debit balances.
Recoverability of Receivables
As stated in note 4 to these financial statements, the carrying value of receivables as
at 30th June 2008 increased from Ushs.51,435,065,000 (2006/2007) to
Ushs.62,494,262,000 (2007/2008) representing an increase of 21.5%. The major
categories of the debt are owed by Government of Uganda. The majority of these
debts have been outstanding for over 6 years and their recoverability is not certain.
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3.3.11 UGANDA REVENUE AUTHORITY (30TH JUNE 2009)
Qualified with Emphasis of matter
Outstanding Reconciling Items
A review of the bank reconciliation statements revealed outstanding reconciling
differences representing bank credits not traceable to the collection cash books
(shs.1,800,120,481) and cash book collections not traceable to the bank accounts
(Shs.1,938,289,152). These differences have not yet been resolved and have an
effect on the reported collections and closing cash balances.
VAT Deferment
According to the information obtained from the ASYCUDA++ system, customs entries
with a BIF value of Shs.152,276,897,266 granted VAT deferment of
Shs.27,409,841,508 (being 18% thereof) remained un-validated beyond the thirty
days, with some dating as far back as July, 2007. Evidence for extension of this
facility was not provided hence rendering the recoverability of the amount uncertain.
Outstanding government taxes
Information obtained from the ASYCUDA++ system revealed that a total of
shs.3,337,763,547 remained outstanding during the year under review,
shs.2,356,598,147 representing 66% relates to the prior year.
Outstanding Transit Bonds
Transit bonds totaling shs.1,431,804,139 at various Customs stations to which they
were destined remained outstanding beyond the statutory period. Included were
outstanding transit bonds that go beyond July, 2008 (a year ago), a period too long
for any consignment to remain in transit. This is a potential revenue loss which
requires investigation.
3.4 DISCLAIMER OPINIONS
3.4.1 LAW DEVELOPMENT CENTRE (31ST DECEMBER 2002)
Disclaimer
Two accounts were certified for the years 2002 and 2003. And they had similar issues as
raised below:
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Fixed Assets Register
The Centre maintains a fixed assets register which has not been updated. The net
book value of property, plant and equipment as indicated in the fixed assets register
did not agree to that as reported in the balance sheet. The Centre is therefore not
able to effectively; allocate depreciable amount of this property, plant and equipment
over their useful life as required under IAS 16, and facilitate the fair presentation of
fixed assets in the Centre‟s financial statements. Due to the above limitations, it was
not possible to confirm the accuracy, existence, completeness and validity of property,
plant and equipment reflected in the financial statements.
Land and Buildings
The net book value of the Centre‟s Land and Buildings is indicated as shs.28,568,443
in the financial statements, under IAS 16 land and buildings are separable assets and
are dealt with separately for accounting purposes even when they are acquired
together. It was noted that management has not been able to identify separately the
cost of land and buildings. It was, not possible to confirm the actual value of the
Centre‟s land and buildings separately.
Valuation of Land, buildings and fixed assets
Although the Centre valued its land and building, the revised amounts were not
reflected in the financial statements, while Motor vehicles, furniture fittings and other
assets were not revalued. IAS16 requires that items of property, plant and equipment
which are carried at revalued amount be revalued with sufficient regularity to ensure
that the carrying amount does not differ materially from that which would be
determined using fair value at the balance sheet date. The Centre has not carried out
any subsequent revaluation of the revalued assets. This constitutes non-compliance
with the revaluation requirements of IAS 16. IAS 16 also requires the subsequent
increase in revaluation to be carried under equity under Revaluation surplus; this was
not done in the financial statements. Due to the above limitations I was unable to
confirm the accuracy, completeness and Valuation of the property, plant and
equipment shown in the balance sheet.
Title to Properties
The Centre does not have title to plots 1, 34, 69, 508, 509, 510, 614 and 615 included
under its properties. Consequently I am unable to confirm the Centre‟s ownership of
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these properties, and due to lack of a comprehensive fixed assets register, I am
further unable to quantify the value of these properties without titles.
Encroachment on Land
The Centre has properties on plot 339 and 169 on blocks 9 and plot 69 Block 1 and on
Block 11882 in Bukoto. However, it was noted that these properties have been
encroached upon with permanent structures built on them. The Centre has not taken
action to remove the encroachers. Due to this limitation, I am unable to confirm the
value and ownership to these properties.
Motor Vehicles
For values given to motor vehicles shown in the financial statements, we were unable
to obtain the documents confirming their purchase and values. Consequently we have
been unable to confirm the accuracy, completeness recording and accounting for this
property, plant and equipment.
Revenue balances
There were differences in GOU subventions from the Centre as shown in the
statement of income and expenditure of (Shs.1,080,525,886) and (Shs.1,010,004,001)
and that verified by audit of (Shs.946,321,335) and (Shs.966,004,001) for the years
2002 and 2003 respectively. Management attributed the differences to salaries for
staff and tuition for Bar course for Government sponsored students. However,
evidence to this effect was not availed. In this circumstance I was not able to confirm
the accuracy and completeness of income reflected in the income statement.
Cash and Bank Balances
The cash and bank balances of Shs.270,433,302 and Shs.227,060,924 for the years
2002 and 2003 respectively included in the accounts could not be confirmed because
bank statements and certificates of bank and cash balances were not availed for audit.
There were no alternative audit procedures that could be performed to confirm the
cash and bank balances.
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3.4.2 UGANDA NURSES AND MIDWIVES COUNCIL (30TH JUNE 2004)
Disclaimer
Fixed Assets Register
The Council does not maintain a fixed assets register indicating the break down of
property, plant and equipment and details of fixed asset particulars such as, location,
condition values, cost and date of purchase. The Council is therefore not able to
effectively;
Allocate depreciable amounts of these property, plant and equipment over their
useful life as required by IAS 16.
Facilitate fair presentation of fixed assets in the Council‟s financial statements.
In the circumstances therefore; it was not possible to confirm the accuracy, existence,
completeness and validity of property, plant and equipment of the Council.
Title to Property
The Council purchased a building in 2005 for shs.207 million which it expensed in the
year of purchase. The title to this building was not availed for verification.
Consequently it was not possible to confirm the ownership of this property.
Non disclosure of Property, Plant and Equipment
An inspection of the Council‟s assets to establish existence revealed that the Council
has assets such as motor vehicles, computers, furniture and fittings. However, these
Assets have not been disclosed at fair values in the financial statements contrary to
IAS 16.
Financial Statement Balances
Management did not keep proper books of account. There are no complete ledgers
and the trial balance was not prepared. As a result the accuracy of account balances in
the financial statements cannot be confirmed.
Cash and cash equivalents
Cash and cash equivalent amounts was reflected in the balance sheet, as
Shs.419,667,041 while the corresponding notes to the accounts had a figure of
Shs.382,110,997;
Management was not able to explain the difference of Shs.37,556,044. Furthermore
proper cash books were not maintained. There were no alternative procedures that
could be conducted to ascertain the accuracy of this figure. Therefore, a material
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uncertainty over the existence, accuracy and completeness of the Councils cash
balances exists.
3.4.3 UGANDA NURSES AND MIDWIVES COUNCIL (30TH JUNE 2005)
Disclaimer
Fixed Assets Register.
Title to Property
Non disclosure of Property, Plant and Equipment
Financial Statement Balances
The above four issues are the same as those raised in 3.4.2 above.
Cash and cash equivalents
Cash and cash equivalent amounts is reflected in the balance sheet, as
Shs.289,133,114 while the corresponding notes to the accounts has a figure of
Shs.264,324,115.
Management has not been able to explain the difference of Shs.24,808,999.
Furthermore proper cash books were not maintained. There were no alternative
procedures that could be conducted to ascertain the accuracy of this figure. Therefore,
a material uncertainty over the existence, accuracy and completeness of the Councils
cash balances exists.
3.4.4 THE HOTEL AND TOURISM TRAINING INSTITUTE (30TH JUNE 2005).
Disclaimer
Land and Buildings
The Value of the Institute‟s Land and Building is indicated as Shs.1,556,547,952 in the
financial statements, against which depreciation of Shs.30,730,959 has been charged.
Under IAS 16, Land and Building are separate assets and are dealt with separately for
accounting purposes even when they are acquired together. It was noted that
management has not been able to identify separately the cost of Land and Buildings.
It was therefore not possible to confirm the actual value of the Institute‟s Land and
Buildings separately.
Valuation of Land and Buildings
The Institutes acquired Land (register Vol. 496 folio 17) on 1st September 1960
comprising 5,672 acres on which the hotel is located. The Buildings on this Land were
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revalued by the government valuer in 1996 at Shs.800,000,000 while the Land has
never been valued.
IAS 16 requires that items of Property, Plant and Equipment which are carried at
revalued amount be revalued with sufficient regularity to ensure that the carrying
amount does not differ materially from that which would be determined using fair
value at the Balance Sheet date. The Institute has not carried out any subsequent
revaluation of the revalued assets since 1996. This constitutes non compliance with
the revaluation requirements of IAS 16. Due to this limitation I am therefore unable
to confirm the accuracy, completeness and valuation of the property, Plant and
Equipment shown in the balance sheet.
Property Plant and Equipment (PPE)
It was noted that The Institute‟s Property, plant and equipment namely, Machinery
and Equipment, Motor vehicles, Crockery and Cutlery, Linen and Uniform have been
fully depreciated yet these assets are still in use. IAS 16 requires the residual value
and useful life of PPE to be reviewed at least at each financial year end and if
expectations differ from previous estimates the change be accounted for as a change
in accounting estimate in accordance with IAS 8. Management has not carried out a
review of the useful life of these assets nor a valuation to ascertain their values and
useful life.
Due to these limitations I am therefore unable to confirm the accuracy and valuation
of Property Plant and Equipment (PPE) stated in the financial statements at
Ushs1,337,024,518.
Government Grants
IAS 20 requires that the nature and extent of the government grants received be
appropriately disclosed in the financial statements. The standard also requires that
asset related grants including non monetary grants at fair value should be presented
in the balance sheet either by setting up the grant as deferred income or by deducting
the grant in arriving at the carrying amount of the asset. The Institute received a
grant of Shs.350 million at year end ear marked for construction of classroom blocks.
This transaction has not been treated in accordance with IAS 20 in the financial
statements.
Due to this limitation, I cannot confirm the accuracy of grants disclosed in the financial
statements.
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3.4.6 UGANDA RAILWAYS CORPORATION (31st DECEMBER 2007)
Disclaimer
Comprehensive Fixed Assets Register
The Corporation maintains fixed assets registers whose asset values are prepared in-
house by the management. The registers were revised and the results incorporated in
these financial statements. All asset carrying amounts were corrected except for
buildings and as a result I am unable to allocate their depreciable amount over their
useful lives.
Asset Revaluation The Corporation‟s assets were last revalued in 1988. The revaluation model under IAS
16, property, plant and equipment requires that, items of property, plant and
equipment which are carried at the revalued amount, be revalued with sufficient
regularity to ensure that the carrying amount does not differ materially from that
which would be determined using fair value at the balance sheet date. The
Corporation has not carried out any subsequent revaluation of the revalued assets.
This constitutes non-compliance with the revaluation requirements of IAS 16.
Although a revaluation of some assets was carried out for purposes of the concession
in April 2005, the results of the same cannot be relied upon for accounting purposes
because of the valuation models adopted.
Due to the above limitation, I was unable to establish as to whether the property,
plant and equipment in the financial statements are stated at fair value or not.
Revaluation Reserve The Directors undertook an in-house valuation of all property, plan and equipment in
1988 to take into account the currency reform of 1987. The results were incorporated
in 1989 financial statements as a surplus in the capital revaluation reserve amounting
to Shs.168.235 billion (2006: U.Shs.168.237 billion). This balance has been carried
forward over the years while the assets in question were being depreciated. This
accounting treatment contravenes the provisions of IAS 16, property, plant and
equipment.
Impairment of Assets
The following factor suggests that some of the Corporation‟s assets may be impaired:-
Included in plant and equipment are two passenger boats namely MV Barbus and MV
Mvule with a value of U.Shs.1.6 billion. Due to the lack of insurance for the boats and
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the declining marine passenger services, the Corporation suspended these services on
Lake Victoria several years ago and the boats are anchored at the Port Bell Pier.
Whereas MV Mvule was conceded, MV Barbus is still anchored at Port Bell with no
economic benefits flowing to the Corporation from it. Due to the matter relating to
the assets stated above, I was unable to determine the impairment loss of the boats
as required under IAS 36, Impairment of assets.
Investment in Subsidiary
The Corporation holds a controlling (98%) stake in Nalukolongo Railway Workshop
Limited (NRWL). The Corporation is still accounting for this investment in its books at
cost. Pursuant to the concession agreement, NRWL‟s assets were revalued and taken
over by the concessionaire and as such the Corporation has no right to cash flows in
form of dividends from NRWL. The Corporation has neither consolidated the effect of
this investment in its financial statements previously nor has it been derecognized in
light of the effects of the concession. In light of the above, the investment in the joint
venture has neither been accounted for in accordance with the requirements of IAS 27
Consolidated and Separate financial Statements, IAS 31 Interests in Joint Ventures,
nor IAS 39 Financial Instruments; Recognition and Measurement.
Valuation and Existence of Inventory
The Corporation has inventory held at its Nalukolongo warehouse that was neither
used in the Corporation‟s joint venture operations nor included in its books. They
include parts for locomotive engines (class 72 and Class 82), which are considered
obsolete, as the Corporation is no longer using them. These assets are not recognized
in the financial statements of the Corporation.
Long-Term Loans
The Corporation recorded several long-term loans in its books. These comprise of
funds borrowed or mobilized by the Government of Uganda from various multi lateral
and bilateral funding agencies for onward lending to the Corporation. I was not
provided with copies of the loan agreements with the exception of the Spanish Loan
Agreement. Furthermore, I did not obtain confirmation from the Government of
Uganda on the balances outstanding for the principal and accrued interest as at 31
December, 2007.
I was therefore unable to verify:-
Whether the terms and conditions of the loans had been complied with.
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Whether the principal loan balance and the accrued interest was fairly stated.
Whether the long and short term portions of the loans are appropriately
disclosed in the financial statements.
Uganda Government Contribution
As at 31st December, 2007, the Government of Uganda‟s contribution to the
Corporation amounted to UShs.39.99 billion. These contributions comprise both of
non-monetary/capitalization grants and revenue grant which were used for asset
acquisition. These Government grants have not been accounted for in accordance with
the requirements of IAS 20 Government grants which states that Government grants
related to assets, including non-monetary grants at fair value, shall be presented in
the balance sheet either as deferred income or by deducting the grant in arriving at
the carrying amount of the asset of which the deferred grant income should be
amortized over the useful life of the asset.
3.5 ADVERSE OPINION
3.5.1 POSTA UGANDA LIMITED (30TH JUNE 2007)
Balances due to international creditors
Included in the creditors and accruals figure of Ushs.13,317,407,000 is a balance of
Ushs.1,565,910,000 described as international payables in note 7 to the financial
statements. Posta Uganda Limited maintains ledgers for the international creditors
combined with international debtors. The ledgers could not be agreed to the balances
in the final accounts. Therefore, the existence of these creditors could neither be
confirmed nor the movement of the year verified.
Debit Balance under creditors
Included under creditors is a debit balance for money orders amounting to
Ushs.218,162,000. Normally, the balance on this account is supposed to be a credit,
representing cash received from customers due to be paid out. There was no
schedule available to support this balance; consequently we could not verify the
existence of this balance.
Prior Year Adjustment
During the year, unspecified entries amounting to a net debt of Ushs.3.063 billion
were posted on this account leading to a closing debit balance of Ushs. 414,714,000.
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These entries include a debit amount of Ushs.2 billion for liquid assets which should
have been applied to the Profit and Loss Account of the current year.
System Generated Entries
It was observed that a number of accounts had entries with a description of ‘system
generated entries’. explanations for these entries which included an entry to the Prior
Adjustment Account which had a material debit entry of Ushs.1.655,000,000 billion
were not obtained.
Inaccurate Debtors balances and completeness of Debtors’ balances
The general ledger does not have a provision for control accounts and subsidiary
ledgers. In addition, no reconciliation statements are prepared for debtors. There
were some variations between the debtors‟ amounts included in the accounts and the
confirmation received from the debtors. The completeness and accuracy of Debtor
balances totaling Ushs.621,000,000 due from Other Organizations could not be
confirmed.
Inaccuracies in computation of Pay as You Earn (PAYE)
Posta Uganda Limited does not properly operate the PAYE system. There were
various amounts paid to staff for which PAYE was not deducted and remitted to the
tax authority. The outstanding PAYE figure included in the financial statements is
understated by at least Ushs.93,205,513.
Opening balances
The previous year balances were qualified by the external auditor. Management has
not carried out a comprehensive exercise to reconcile the opening balances. There are
material variations between some of the opening balances in the accounts and the
financial statements of the previous year. The variations could not be reconciled.
Emphasis of matter
I further draw attention to note 17 in the financial statements which indicates that the
Company incurred a net loss of Shs.1,525,407,000 during the year ended 30th June
2007 and, as of that date, the Company‟s current liabilities exceeded its current assets
by Ushs.7,108,331,000. In addition, there is decreasing liquidity at the company
resulting in the inability to meet current liabilities as they fall due. These matters
indicate the existence of a material uncertain which may cast significant doubt about
the Company‟s ability to continue as a going concern.
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CHAPTER FOUR
4.0 ENERGY SECTOR AUDITS
During the year the directorate undertook a pilot audit under a sector wide approach. The
Energy sector was identified for this pilot Audit. The audit entities and projects reviewed
using this approach comprised the Ministry of Energy and Mineral Development and
Energy projects whose report is in volume 2, audits of Statutory Corporations and oil
exploration companies. Audits of oil exploration activities were done for licenses issued to
Blocks 1, 2,3A, 4B and 5. Reports on Oil exploration activities are available on request.
4.1 STATUTORY CORPORATIONS
STATUTORY AUTHORITIES Type of opinion
issued
Financial year
audited
1 Electricity Regulatory Authority Qualified with EOM 30th June 2008
2 Uganda Electricity Transmission Company Ltd Qualified 31st December 2008
3 Uganda Electricity Distribution Company Ltd Unqualified with EOM 31st December 2008
4 Uganda Electricity Generation Company Ltd Qualified with EOM 31st December 2008
5 Rural electrification Agency Unqualified with EOM 30th June 2009
6 Kilembe Mines Ltd Qualified with EOM 30th June 2009
4.1.1 UGANDA ELECTRICTY TRANSMISSION COMPANY LIMITED (31ST December
2008)
Qualified Opinion
Depreciation of property plant and Equipment
Included in Property, plant and equipment are asset additions worth
Ushs.32,856,279,827 that were not depreciated during the year due to the Company‟s
policy of not depreciating assets in the year of acquisition. The depreciation on these
assets would have been Ushs.1,253,927,757. This is in contravention of IAS 16
Property, Plant and Equipment that requires assets to be depreciated from the date
they are available for use.
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Valuation of Inventory
Included in the financial statements is inventory valued at Ushs.6,625,646,000 whose
valuation could not be independently tested due to unavailability of purchase invoices
or any other supporting documents. Further, despite indications of slow
moving/obsolete stock, no provision was made to reduce the realizable value of the
company‟s stocks. As a result, the valuation of the company‟s inventories could not be
confirmed since no alternative procedures could be performed in this regard.
Related Party Transactions
Included in the amount due to related parties is a balance of Ushs.30,987,371,102 due
to UEGCL which dates as far back as 2001. This amount has been long-outstanding
and its fair value could not be determined as well as its validity. The valuation and
validity of this amount could not be ascertained since no alternative procedures could
be performed.
4.1.2 UGANDA ELECTRICTY DISTRIBUTION COMPANY LIMITED (31ST DECEMBER
2008)
Unqualified with Emphasis of Matter
Current liabilities in excess of current assets
Note 2.1 in the financial statements indicates that the Company‟s current liabilities
exceeded its current assets by Ushs.31,291 million and its total liabilities exceeded its
total assets by Ushs68,489 million as at 31 December 2008 and the Company made a
net loss of Ushs42,582 million for the year then ended. These conditions indicate the
existence of uncertainty which may cast doubt about the Company‟s ability to continue
as a going concern. However the Company is a holding entity with its services fully
paid for from the tariff or by other agencies it provides services to.
The loans in the balance sheet were vested to the company form UEB by the
Government while it still managed and operated the distribution and supply of
electricity. The principal and interest repayments for loans are fully paid from the tariff
as part of the lease payments by the concessionaire. The operations of the off-grid
stations are subsidized from the tariff. Construction of rural electrification schemes is
fully funded by Government of Uganda through the Ministry of Energy and Mineral
Development. The Company has also got substantial liquid investments which will
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continue to generate income in the foreseeable future. These financial statements
have therefore been prepared on a going concern basis.
4.1.3 KILEMBE MINES LTD. (30TH JUNE 2009)
Qualified with Emphasis of matter
Sub-Lease Agreement between KML & Tronder Power ltd
Kilembe Mines Ltd entered into a sub-lease agreement with Tronder Power Ltd to
sublease 7.554 Acres of land for the period of 27 years upon payment of a premium of
shs.250m on the date of signing of the Agreement, and an annual rent of
shs.1,000,000. The agreement further states that if the rates are not paid as
stipulated for more than 6 months, the agreement will be terminated. Contrary to this
requirement, Tronder Power Limited had not paid the premium of shs.250m by the
time of audit.
In addition, the structures valued at shs14,000,000 formerly belonging to KML and
taken over by Tronder Limited have not yet been compensated for as per agreement.
These amounts have not been reflected in the financial statements of Kilembe Mines
Limited. We noted further that Tronder Power Limited has already erected permanent
structures on the land.
Board of Directors’ Responsibilities
For six months during the financial year, the company did not have a Board of
Directors having been directed by the Minister of Energy and Mineral Development to
step aside on 30th December 2008
Lack of a substantive Board deprived the entity of strategic direction. It is not clear
how key decisions affecting the company were taken in the absence of the Board of
Directors.
Investment in KCCL shs.17,426,428,620
Kilembe Mines Limited acquired 25% shareholding in Kasese Cobalt Company Ltd in
2001 at shs.17,426,428,620 (ref: note 10 to the accounts). This investment has
remained constant since 2001 and no dividend has ever been received by Kilembe
Mines Ltd.
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4.1.4 UGANDA ELECTRICTY GENERATION COMPANY LIMITED (31ST December 2008)
Qualified Opinion
Government of Uganda Loans
As disclosed in note 18 to the financial statements, the Company has long term loans
from the Government of Uganda amounting to Shs.102.9 billion (2007: Ushs.96.3
billion) for which no independent confirmation had been received. In addition no
formal agreement exists in respect of Government of Uganda-UEB refinancing loan of
Shs.33.3 billion (2007: Ushs.31.8billion). Accordingly, it was not possible to establish
the completeness and accuracy of the loans due to Government of Uganda.
Related Party balance
Included in note 20 in the financial statements are balances due from related parties
as at 31st December 2008 amounting to Shs.31 billion and amounts payable of Shs.1.4
billion. These balances have been outstanding for long periods and there was no
independent confirmation from these companies. Besides, management could not
confirm their recoverability. Accordingly, it was not possible to obtain sufficient
appropriate audit evidence that these balances are not materially misstated.
Due to Government of Uganda
An amount of Shs.32.8 billion (2007: Shs.32.5) as at 31st December 2008 is due to
Government of Uganda and has been outstanding since 2001. This amount was
transferred from Uganda Electricity Board (UEB) to UEGCL, who were supposed to
collect UEB debtors and use the proceeds to pay the Government. There was no
independent confirmation from Government regarding the existence and accuracy of
this amount. Accordingly, it was not possible to confirm completeness, existence and
accuracy of this balance and to obtain sufficient appropriate audit evidence that the
amount is not materially misstated.
Impairment of assets
The installed capacity of the power complex (Nalubale and Kiira) was 380MW and
during the year the average capacity generated was about 170MW. Management
attributed the low level generating capacity to low water levels, which resulted to
restricted amount of water released to the complex. However Management has not
carried out an impairment testing for the assets as required by the company‟s
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accounting policy No. 2(1) and International Accounting Standards No.36. Accordingly,
it was not possible to obtain sufficient appropriate audit evidence that the carrying
amount of the assets as at 31st December 2008 was not materially misstated.
4.1.5 ELECTRICITY REGULATORY AUTHORITY (30TH June 2008)
Qualified Opinion
Property, Plant and Equipment; Land and Buildings
The value of the Authority‟s Land and Building is reflected as shs1,970,000,000 in the
financial statements. This value is based on a revaluation done during December
2008, two months after the preparation and submission of the financial statements.
This condition did not exist within the reporting period as required by IAS 10, and
therefore the revaluation does not affect these financial statements. Further more the
Buildings have not depreciated. Due to inappropriate treatment to Land and Buildings
in the financial statements, I cannot confirm that the value of land and buildings is
fairly stated.
General Reserves
Following a revaluation carried out during December 2008, the Authority has reflected
a general reserve of shs687,538,018 in the financial statements. However the
revaluation was done after the reporting date and therefore the reserves do not
qualify to be an adjusting event as at the balance sheet date.
Depreciation of Books and Journals
During the financial year under review the Authority depreciated it‟s Books and
Journals at a rate of 20 % p.a resulting in a charge of shs1,900,194. The depreciation
rate has not been approved by the Board.
Office Equipments and Computers
Management still derives economic benefits from Office Equipments and Computers
which have been fully depreciated. The Authority has not carried out a revaluation of
these assets in accordance with IAS 16 which requires that the residual value and
useful life of an asset be reviewed at least each financial year to ensure that
expectations in usage and useful life do not differ materially.
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4.1.6 RURAL ELECTRIFICATION AGENCY (30TH JUNE 2009)
Unqualified with Emphasis of matter
Conflict of interest
The chair person to the Rural Electrification board is also the Accounting Officer and
the Principal signatory to the of Rural Electrification Agency Accounts. This is a conflict
of interest and violates the principles of a good corporate governance structure since
the board chairman participates in setting the organization‟s policy which (s)he then
implements.
Rural electrification Mini grids.
The board sourced and licensed two (2) local firms to run rural electrification Mini-
grids at Kalangala and Ngoma. It appears, however, that the Rural electrification
model and implementation framework applied did not evaluate their viability. At the
time of audit the two operators had abandoned the mini-grids citing failure to make
profits due to the high cost of diesel.
Un-implemented Rural electrification schemes.
The Agency has a backlog of 154 unimplemented rural electrification projects including
Presidential pledge projects. There is however no prioritization criteria in respect of all
these projects.
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CHAPTER FIVE
5.0 AUDIT OF INVESTMENTS BY GOVERNMENT IN PRIVATE COMPANIES
The audit of investments by Government in private companies under the public private
partnership arrangement (PPP) is governed by the following legal frameworks.
5.1 Section18. Audit of public monies in private organizations and bodies.
The Auditor General may inquire into, examine, investigate and report, as he or she
considers necessary, on the expenditure of public monies disbursed, advanced, or
guaranteed to a private organization or body in which government has no controlling
interest. In addition the Public Finance and Accountability Act 2003 also requires the
Accountant General to submit to the Auditor General details of these investments as
follows;
5.2 The third Schedule of the Public Finance and Accountability Act 2003 Accounts
to be submitted by the Accountant General states that;
The following accounts shall be submitted to the Auditor General and the Minister by the
Accountant General-
(i) A statement of investments held by the Government at the end of the year showing
the original cost and current value;
(j) A statement of the net worth of all state enterprises as at the end of the financial year;
During the year the Accountant General was required to avail a list of all
beneficiaries/investments in Private companies in which Government made investments
but did not have a controlling interest.
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He submitted the list of beneficiaries listed below:
No. Entity Subscribed Share
Capital
%of
Government
Share Holding
1 Housing Finance Bank 30,000,000,000 49.2
2 Sugar Corporation of Uganda Ltd. 9,181,500 23.8
3 National Insurance Corporation Ltd. 807,760,000 40
4 Uganda Telecom Ltd. 22,638,001,410 31
5 Kinyara Sugar Works Ltd. 3,000,456,160 49
6 Phoenix Logistics (31/July/2008) 5,097,599,190 49
7 Quality Chemicals Industries Ltd 23/July/2008 10,000,000,000 22
8 Commonwealth Resort Munyonyo 10,000,000,000 25
9 J&M International Hotel 2,000,000
10 Good Africa Coffee (20/June/2008)
Financial statements of the above PPP were not submitted to the Auditor General including a
statement of investments held at original cost and current value other than the shareholding
position above.
Due to these limitations it was not possible for me to carry out audits in the PPP arrangement.
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CHAPTER SIX
6.0 SPECIAL AUDITS AND INVESTIGATIONS
This chapter deals with special audits and investigations carried out during the Audit
reporting period 1st April, 2009 to 31st March, 2010. Under Section 22 of the National
Audit Act (NAA) 2008 the Auditor General may carry out special audits, investigations or
any other audit considered necessary by him or her. Special audits and investigations are
audits which do not follow normal statutory audit procedures. These are audits that may
cover more than one accounting period. During the year under review, the Auditor
General conducted five (5) special audits on Statutory Organisations as summarized
below;
Cotton Development Organization (CDO)
National Social Security Fund (NSSF)
African Trade Development Fund (ATDF)
National Housing and Construction Company Limited (NHCCL)
Quality Chemical Industries Limited (QCIL)
The special audits of African Trade Development Fund (ATDF), National Housing and
Construction Company Limited (NHCCL) and Quality Chemical Industries Limited
(QCIL) are still in progress.
Special audits of Cotton Development Organization (CDO) and National Social Security
Fund (NSSF) were completed and the outcomes of these special audits and
investigations are analyzed below;
6.1 COTTON DEVELOPMENT ORGANIZATION (CDO)
A special audit exercise was conducted to determine review loans to Cotton Development
Organization (CDO) and Uganda Ginners and Cotton Exporters Association (UGCEA) under
the Cotton Development Sub sector development credit (CSDP) disbursed by Bank of
Uganda. The objective of the audit was to:
Ensure CDO and UGCEA have complied with provisions of the Loan Agreement relating
to disbursement of funds from Bank of Uganda.
Review and assess the liquidity position and financial performance of CDO and UGCEA
in order to establish their ability to repay the loan.
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Ascertain accuracy and completeness of principal amounts lent, outstanding balances,
interest payable accruing from CDO and UGCEA and guaranteed by government of
Uganda in respect of the disbursed loans.
Ascertain actual balances and the status of the revolving account in Standard
Chartered Bank relating to UGCEA under the CSDP credit.
Obtain and analyze lists of beneficiaries from UGCEA and CDO.
Assess the impact of the credit facility on cotton production since 1998 to date.
A summary of loans received by UGCEA and CDO from the Bank of Uganda amounting to
Shs.9,865,054,080 is as follows:-
Agreements date Beneficiary and Amount Ug. Shs. Equivalent
2nd April 1998 CDO $1,250,000 1,427,500,000
14th July 1998 UGCEA $3,290,050 4,267,554,080
10th June 99 UGCEA 750,000,000
13th Sept 99 UGCEA 3,300,000,000
14th December 99 UGCEA 120,000,000
TOTAL 9,865,054,080
Findings
6.1.1 Compliance with the Loan Agreement
It was noted that management of both CDO and UGCEA complied in all material respects
with the loan agreement provisions except for the following:
UGCEA
UGCEA did not invite Bank of Uganda to witness the procurement, storage, distribution
and utilization of the pesticides. After restructuring of the Loan, did not give standing
instructions to the Participating bank to transfer into Bank of Uganda Seed Emergency
Response Programme Account all funds recovered under advice to Bank of Uganda-
Development Finance Department.
CDO
CDO did not enter into contract with designated ginners for the collection of the loans
advanced to farmers in form of seeds.
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Bank of Uganda
BOU did not maintain true and complete records and accounts of the programme and
arrange for the preparation of the accounts of the programme and the audit by an
independent qualified auditor acceptable to Government annually.
6.1.2 Utilization of the Loan Funds
According to the loan agreements between BOU, UGCEA & CDO, the money was meant
for purchasing pesticides and spray pumps which were to be distributed to the farmers.
These items were periodically purchased both locally and internationally and distributed to
farmers in the cotton growing areas. It was observed that the purchases of items started
in 1998 and ended in 2001, with the total value of the purchases totaling to $
8,949,455.5. Audit was generally satisfied with the utilization of the loan except for the
case of theft mentioned below.
An analysis of the records availed for audit revealed that out of the above procured items
10,032 units of pesticides and 20 units of spray pumps were stolen. Information received
from management was that those pumps were stolen by the entity‟s store‟s assistants
who were later dismissed and reported to Police.
6.1.3 Impact
The distribution and use of the pesticides plus the spray pumps by the farmers resulted in
a general increase in cotton production, farmer‟s income and foreign exchange earnings
from the inception of the intervention till 2004/05 and started declining again.
See the graphs 1 & 2.below
Graph 1
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Graph 2
Besides the government facilitation in form pesticides, seed dressing and spray pumps,
there were other factors which also affected the production and these were:-
Un-favorable weather conditions resulting in El-nino which caused rotting of cotton
balls thereby affecting the quality and quantity of cotton produced.
Poor soils and inadequate extension services.
Drought or late rains in some parts of the country.
Level of cotton prices during the year prior to the season ie if prices are poor,
farmers get discouraged and if good, farmers are encouraged to grow more
cotton.
6.1.4 Recovery of Loans
CDO received a loan of $1,250,000 under SERP while UGCEA received a combined total
amount of Shs.4.170bn and US$3,290,050 for both the pesticide programme and the
SERP the following was noted on recovery of these loans.
6.1.5 Non Compliance with Agreements
Both CDO and UGCEA were expected to give standing instructions to participating Banks
to transfer to the Bank of Uganda SERP and PP accounts all funds recovered. We noted
that only UGCEA complied and gave standing instructions to this effect. We were not
provided with any evidence by CDO that standing instructions were given. Instead CDO
appears to have left the responsibility to UGCEA to recover the money from ginners and to
directly repay BOU.
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CDO management response was that, it reached an understanding with UGCEA
management, for the ginners to own and manage the CDO Loan of shs 1,427,500,000 and
the accrued interest. This money was even reflected in the UGCEA accounts for the year
end 30th June 1999 as a liability.
6.1.6 Repayments
Out of this principal sum, a total of Shs.2.84 billion was remitted by UGCEA to BOU by
standing order instruction and Shs.500 million by cheque, bringing the total amount
remitted to Shs.3,340,609,301, leaving an outstanding balance of Shs.6,524,444,779.
6.1.7 Revolving Fund
We noted that on 28th February, 2000, the outstanding loan to UGECEA under CSDP was
restructured into a revolving fund to settle outstanding balances due to companies that
had supplied pesticide and spray pumps to finance the seed planting activities for
2000/2001 season. The revolving fund was to be recalled after 3 years i.e 6th Feb 2003.
Bank of Uganda was to have constant access to the revolving account records at all times.
After the expiry of the revolving fund period, BOU and UGCEA did not issue fresh standing
instructions to Standard Chartered Bank to resume transferring all funds recovered .This
resulted in the default of the loan repayment.
By the time of this audit, the revolving account (Standard Chartered Collection Account
No. 01040-108463 -01) was still operational. However, the last time money was deposited
on the account was 18th May 2007 when a cheque totaling Shs22,510,000 was deposited.
6.1.8 Accrued Interest
We noted from the review of BOU internal audit quarterly reports that accrued interest
due from CDO/UGCEA by September 2004 amounted to Shs.2,596,091,000. By January
2005 when BOU suspended accruing interest, the total amount due had risen to
Shs.3,193,377,841.
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6.1.9 Capacity to Pay
During our review of the cash flow statements and Bank statements for CDO and UGCEA
for the period between June 1999 and April 2009, it was noted that the liquidity position
of the two organizations kept on declining a persistent trend resulting into minimal cash
balances. A further review of the bank statements for UGCEA and CDO for the period
ending 30th march 2009 and 30th April 2009 respectively revealed the cash position as
indicated below.
UGCEA
Account no Bank Type of Account Amount Ugshs
01040108463-01 Standard Chart Bank Collection
account/revolving
841,047
01040108463-00 -do- operation 73,315
01400075426-01 Stanbic Bank operation 212,866,971
Total 213,781,333
CDO
Account no Bank Type of
Account
Amount Ugshs
01L2540582900 Dfcu K‟la operation 881,306,463
210211076-1 BOU 1,007,922,899
02L2540582900 Dfcu K‟la Capital account 66,117,108
01400904349-01 StanbicBank Lira operation 110,112,245
01400842616-01 Masindi -do- 21,402,350
01400444110-01 Mbale -do- 220,409,178
01400369124-01 Iganga -do- 164,234,783
Total 2,564,885,624
Less Outstanding
commitments
3,425,236,542
We noted that the current liquidity position of both CDO and UGCEA is poor. The total
indebtedness of CDO at the time of audit was Shs7.78billion, of which Shs.4.75 billion was
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borrowed from the revolving fund and Shs 3.02 billion from the Government Cotton Price
Subsidy given to the Ginners. The total indebtedness at the time of audit stood at
Shs.7.78billion, of which Shs.4.75 billion was borrowed from the revolving fund and
Shs.3.02 billion from the Government Cotton Price Subsidy given to the Ginners. Details
are as shown below.
A CDO Borrowing from UGCEA Recoveries
B (Borrowings from the Government Cotton Price Subsidy to Ginners)
CDO is 95% funded by Government and lack of Government‟s intervention raises going
concern issues. The CDO‟s inability to pay the UGCEA loans has been a subject of
previous audit reports.
6.1.10 Conclusion
Cotton Development Organization and Uganda Ginners and Cotton Associations may not
be in a position to repay the loans.
Non compliance with some provisions of the agreements affected the performance
of the loans.
Out of the Principal total amount of Shs.9,865,054,080 in loans to UGCEA and
CDO, Shs.3,340,609,301 was remitted to BOU leaving a balance of
Shs.6,524,444,779.
Loan advances from the revolving fund totaling Shs.4,75b to CDO remain unpaid.
The balance due from UGECEA is Shs.4,967,822,620 in respect of Principal amount
(Shs.1,774,444,779) and accrued interest (Shs.3,193,377,841) to February 20
Period Amount borrowed(Shs) Amount repaid(Shs) Outstanding
bal(Shs)
02/03 1,700,000,000 Nil 1,700,000,000
03/04 2,500,000,000 Nil 4,200,000,000
04/05 550,000,000 Nil 4,750,000,000
04/05 4,007,001,170 Nil 4,007,001,170
05/06 Nil 978,855,822 3,028,145,348
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6.2 NATIONAL SOCIAL SECURITY FUND (NSSF)
This summary provides a brief synopsis of the forensic investigation of NSSF and the key
findings. The full report which had earlier been submitted to Parliament forms an integral
part of this report. A copy of the report is available on the website.
6.2.1 Procurement findings
The Public Procurement and Disposal of Public Assets Act came into force on 21 February
2003 provides that it shall apply to all procurement using public funds. It was noted that
NSSF did not adhere to various rules and regulations of the Public Procurement and
Disposal of Public Assets Act (PPDA) Act during procurement of the following:
• IMIS.
• Motor vehicle lease.
• Legal service procurement.
• Private investigation services.
6.2.1.1 IMIS
The procurement process for the support component of the NSSF IMIS project was
reviewed. It was noted that the support component was divided into three phases; the
first to conduct a diagnostic study, the second to rectify IMIS and the third to provide
future technical support on an annual basis.
It was noted that there was no procurement requisition (PP Form 20) for phase 1 from
the user department–ISD.
It was noted further that the bid notice period was 12 days instead of the minimum 22
days required by the PPDA Act and Regulations.
NSSF wrote to the PPDA Authority for a waiver of the notice period vide a letter dated
10 April that was received by the Authority the following day, which was the day the
bids were opened.
NSSF did not receive a response to their letter requesting for a waiver.
The bid for phase 1 was awarded to CIAL at a bid price of USD 430,000 on 11 April
2007.
It was noted that a written response prepared by the user department-ISD to the MD-
NSSF concerning CIAL‟s report on phase 1. ISD stated among others, that the CIAL
report contained many inaccuracies, that the technical team was changed after the
contract award, that for future work the technical staff of CIAL are largely based
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abroad, and suggested a phased approach in fixing IMIS and that the bidding process
be open.
It was noted that there was no advertisement for the second phase or any open
bidding process and that the contract was awarded to CIAL at USD 4.9 million on 28
August 2007. The PPDA also detected this breach during its compliance check and
stated that “it was irregular for NSSF to have contracted the same firm (CIAL) to
identify problems (diagnostic study) and then award them to fix the IMIS problems
since they would have a conflict of interest”. The PPDA letter further states that “The
findings of the Authority under the Compliance Check report were communicated to
the entity which was requested to respond but the then Accounting Officer (MD-NSSF)
did not respond despite several reminders. The queries of the Authority are still
outstanding and a formal response is required…”
It was also noted that the contract for phase 2 states that CIAL has completed phase
1 to the satisfaction of NSSF. However, the report by the ISD at the end of phase 1
seemed to suggest otherwise.
It was noted that on 30 November 2007, three months after the award of phase 2, the
Contracts Committee approved a variation to the contract price from USD 4.9 million
to USD 5,472,845.
On 18 March 2009, NSSF applied for a waiver from PPDA for USD 900,000 to contract
CIAL for maintenance services for one year and additional training under phase 2. On
8 May 2009, the PPDA gave this waiver.
6.2.1.2 Motor vehicle purchase
On 5 June 2007, the NSSF Transport Department raised a requisition to procure 67
vehicles under an operating lease. It was noted that the bid notice days were 28
instead of 33 working days as provided in section 145 (1) (b) of the PPDA Act. It was
also noted that NSSF changed the contract from operating lease to hire purchase after
the contract was awarded, and the agreement included an option for NSSF to purchase
the vehicles within six months. The above change could have resulted in a breach of
regulation 219(3) (b) which states that “negotiations under competitive procurement
method shall not be conducted to materially alter the terms and conditions of contract
stated in the solicitation documents”.
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6.2.1.3 Legal services providers’ files
Ten legal files from service providers were examined and it was noted that Sections 79
and 84 of the PPDA Act were not adhered to as none of the service providers‟ submitted
proposals to the NSSF. NSSF did not adhere to sections 126 and 142 of the PPDA
Regulations which requires the preparation of a shortlist of service providers. It was also
noted that the suppliers did not submit all mandatory documentation as required by the
PPDA Act and Regulations.
6.2.1.4 Private investigations file
NSSF hired the services of a private company on 4 December 2007 to provide
investigation services. The company did not send a quotation to NSSF as required by
Section 84(3) of the PPDA Act. NSSF did not comply with Section 126 and 142(1) of the
PPDA Regulations, since it did not prepare a short-list of available providers of
investigation services. We also noted that the supplier‟s file did not contain most of the
mandatory documentation as required by the PPDA Act and Regulations.
6.2.2 Payment of salary advances, allowances and loans
6.2.2.1 Managing Director NSSF
The MD received housing advances exceeding the limit of his gratuity. Furthermore he
was paid gratuity without recovery of housing advances. He received a total of
Shs.259.2million in housing advances over 22 months. He received salary advances
exceeding his monthly salary on three different occasions; 02 August 2007, 14 April 2008
and 18 September 2008. Paragraph 25.1 of the Loan Policy3 allows for only one salary
advance per year. In 2007 and 2008, a total of six salary advances were authorised for
the MD. In total, Shs.148.6 million of salary advances was paid to him. As at 31
January,2009, the MD‟s ledger account indicated that he owed the fund Shs 244.2 million.
To recover this money from him, NSSF would have to deduct Shs.20.3 million per month
for the remaining duration of his contract. This is more than his monthly salary of
Shs.18million.
6.2.2.2 Deputy Managing Director NSSF
In year 2007, four salary advances were authorised for the DMD. Paragraph 25.1 of the
Loan Policy, only allows for one salary advance per year. As at 31 January 2009,the
DMD‟s ledger account indicated that he owed the NSSF Shs.111.5 million. To recover this
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money, the NSSF would have to deduct Shs.9.3 million per month from the DMD‟s
monthly salary of Shs.16 million, for the remaining period of his contract.
6.2.2.3 Others
Some members of staff received very low net salaries after deduction of advances, which
did not comply with paragraph 25.9 of the staff handbook.
6.2.3 Credit card usage by management
The MD-NSSF instructed Orient Bank to hold an NSSF investment account as lien for credit
cards issued to senior management. It was noted that US$. 37,141.71 and cash advance
of Kshs.29,075.50 relating to personal expenses and appearing on MD-NSSF‟s credit card
statement were debited to his ledger account at NSSF. At the date of audit, he had not
reimbursed NSSF for these charges.
6.2.4 Issues regarding JVs
6.2.4.1 Nsimbe Holdings Limited (NHL)
Despite repeated requests for the relevant financial and supporting documentation, these
were not provided to us and therefore we were unable to examine all supporting
documentation relating to the activities of this JV. However, the following issues were
noted.
Mugoya Estates Limited (MEL) was selected as a partner in this JV.
Other than Mugoya Construction and Engineering Limited Kenya (MCELK), we
found no recorded applications being received from other parties.
No record at NSSF of any minutes of the MIC was found, or the Board of Directors
(BOD) with regard to the consideration of the applications received from other
parties other than from MCELK.
The first application by MCELK was made on 16 June 2003 on behalf of Mugoya
Construction and Engineering Limited Uganda (MCELU). MCELU did not have an
Investment Licence, which should have constituted sufficient grounds for
disqualification.
The second application was made on 21 January 20047 by, the Managing Director
of MCELK, personally.
A local law firm was appointed to act for NSSF in the underlying transactions. Also,
we did not find any appointing documentation formalising the relationship between
NSSF and KAA.
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There was also a case of potential conflict of interest on the part of KAA, as they
acted for, not only the sellers of the land in question, but the buyer (NSSF) and
the JV Company as well.
Messrs. Byokusheka were appointed to undertake valuations on the property.
There was no competitive bidding. The surveyors met with the NSSF Investment
Manager on 3 March 2004 and discussed the valuation of some pieces of land,
including that owned by MEL and on which the project was to be developed. On
the same day, the firm were appointed by the MD to undertake the valuations.
Evidence of adherence to the required procurement process was not availed.
On 18 June 2004 and 6 July 2004, NHL requested NSSF for funding “in order to
undertake part of infrastructural development for Nsimbe Estates”. This was
authorised by the BOD of NHL in a meeting on 16 June 2004. There was no
provision in the Joint Venture Agreement (JVA) for funding of the project by PDL
or NSSF. This should have been subjected to an entirely new investment
approval/procurement process by NSSF.
NSSF held 49% shareholding in NHL and half of the Board Members of NHL were
NSSF representatives. As NSSF was an interested party, issues of conflict of
interest arose with regard to NSSF/PDL negotiating with NHL for provision of the
financing “on terms and conditions to be agreed” as stated in the letter dated 18
June 2004 fromNHL to NSSF.
PDL seconded their Project and Development Manager, a local to NHL and offered
to pay for their services. The BOD of NSSF belatedly approved the appointment of
this firm for a period of 55 months on 20 August 2004 after management had
already formalized the appointment. MBW was to receive a 15% advance
payment and quarterly payments for the balance.
6.2.4.2 Victoria Property Development Limited (VPDL)
Despite repeated requests for the relevant financial and supporting documentation, these
were not provided to us and therefore we were unable to examine all supporting
documentation relating to the activities of this JV. However, the following issues were
noted.
1. The USD 1 million loan advanced by NSSF to VPDL was not authorised by the
Minister or by the BOD of NSSF.
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2. The loan was advanced to VPDL through PDL. However, there was no legal
agreement between NSSF and PDL regarding the loan. It appears that the loan
was given without due process and it is also unsecured.
3. The MD-NSSF sought to re-classify this loan as an advance payment to VPDL, with
consequential loss to NSSF.
4. Management has not acted on the recommendations by Internal Audit for the
recovery of these funds.
5. There were numerous instances of potential conflicts of interest involving NSSF
staff, management and board members who served in staff, management and
boards of other third party entities with which NSSF maintained business
relationships. The following are examples of possible conflicts of interest:
(i.) Corporation Secretary of NSSF and Company Secretary of PDL.
(ii.) Director of NSSF, Chairman of PDL and Chairman of VPDL.
(ii.) MD of NSSF, Deputy MD of VPDL, Ag. MD of PDL, BOD Member of VPDL
and BOD Member of PDL.
(iv.) CIO of NSSF, BOD Member of VPDL and BOD Member of PDL.
(v.) BOD Member of NSSF and Chairman of VPDL.
(vi.) BOD Member of VPDL and Investment Manager of NSSF.
(vii.) BOD Member of NSSF and BOD Member of VPDL.
(viii.) CS of VPDL and Investment Manager of NSSF.
(ix.) In an Internal Memo dated 10 May 2004, the CFO of NSSF stated that “the
CFO of NSSF should directly control the finance functions of VPDL”.
(x) Appointment of a Legal Advisor for the Lubowa Project: The Company
Secretary of PDL recommended to VPDL the appointment of a lawyer as
the Company Secretary of VPDL. Later, this lawyer was appointed by NSSF
as the Legal Advisor for the Lubowa Project and received professional fees
for the same. Note that the Lubowa Project was being undertaken by
VPDL, where this same lawyer was also the Company Secretary. The CS-
NSSF and the lawyer were in partnership in the same law firm as at the
time of our review.
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6.2.5 Listed securities
6.2.5.1 Procurement of stockbrokers
Section 84(3) of the PPDA Act requires a proposal to be received from, in this case, the
stock brokers before their appointment to transact for NSSF. However, procurement
documentation for the stockbrokers used by NSSF for the period under review were not
provided.
6.2.5.2 British American Tobacco (Uganda)
The following in respect of transactions by Crane Financial Services (CFS) on behalf of
NSSF were noted:
CFS Sales Contract Note No. SC/354/Aug/07 has a price of Ushs 300 per share (value
Ushs 705,407,000) which is at variance with the price of Ushs 370 per share on USE
trading slips (value 869,722,830).
A CFS Statement of Account for the above transactions shows a deduction for CMA
charges of Ushs 14,964,888. It is not clear what this relates to.
The communication of sale from CFS to NSSF was two months after the sale, implying a
similar delay to NSSF receiving the funds.
6.2.5.3 Bank of Baroda (Uganda)
The following in respect of transactions by Crane Financial Services on behalf of NSSF
were noted:
CFS appears to have understated the funds owing to NSSF on Sale Contract Note No.
SC/51/Mar/08 by Ushs 519,350,000 by stating a price of Ushs 2,745 per share whereas
the price on the USE trading slips was Ushs 2,995 per share.
The former Chief Investment Officer of NSSF raised a complaint to the USE. On 1 April
2008, CFS paid NSSF an amount of Ushs 508,963,000. However, this amount is Ushs
10,387,000 less than Ushs 519,350,000.
6.2.5.4 Development Finance Company of Uganda
The following in respect of transactions by Crane Financial Services (CFS) on behalf of
NSSF were noted:
CFS Sale Contract Note No. SC/23/Feb/08 for the sale of 2,389,463 DFCU shares has a
price of Ushs 650 per share (value Ushs 1,553,150,950 before commission and
94
statutory charges). This is at variance with USE trading slips which show prices
between Ushs 700 with a total value of Ushs 1,664,204,400.
CFS Sale Contract Note No. SC/38/Feb/08 for the sale of 3,825,560 DFCU shares has a
price of Ushs 675 per share (value Ushs 2,582,253,000 before commission and
statutory charges). This is at variance with USE trading slips which show a price of
Ushs 665700 with a total value of Ushs 2,677,892,000.
After a complaint was raised by the Chief Investment Officer, the USE intervened and
imposed a fine on CFS of Ushs 107,264,131.
6.2.5.5 Stanbic Bank (Uganda)
The following in respect of transactions by Crane Financial Services (CFS) on behalf of
NSSF were noted:
• On 29 October 2007, CFS stated that it had purchased 3,185,800 shares whereas USE
trading slips show that it had purchased 4,477,500 shares.
• On 12 November 2007, CFS stated that it had purchased 1,000,000 shares whereas
USE trading slips show that it had purchased 978,000 shares.
• On 11 December 2007, CFS stated that it had purchased 2,071,657 shares whereas
USE trading slips show that it had purchased 2,076,657 shares.
• On 14 December 2007, CFS appears to have over-stated the cost of 20,411,996
shares that it had purchased for NSSF by Ushs 7,885,000.
• On 19 February 2008, CFS appears to have over-stated the purchase price of
2,410,000 Stanbic shares with a value of Ushs 12,050,000 as having been purchased
at Ushs 240 whilst trading slips showed that the same were purchased at Ushs 235
per share.
• On 25 February 2008, CFS stated that it had purchased 633,307 shares whereas USE
trading slips show that it had purchased 624,782 shares.
6.2.6 Investments in fixed deposit
A letter from NSSF to Citibank Uganda dated 3 May 2007 States that the signing mandate
should be operated by two authorized signatories. It was noted that the CS-NSSF alone
signed a letter dated 16 August 2007 authorizing the investment of Ushs.17 billion in
foreign currency fixed deposits and the transaction was effected on 17 August 2007.
A general payment voucher for this transaction was not provided during the audit. An
internal memo dated 17 August 2007 from the Acting Treasurer to the MD-NSSF
95
requesting authorization for this transaction and another one of Ushs.22.9 billion to be
entered into NSSF‟s books was noted. The memo indicated that the transaction of
Ushs.22.9 billion occurred on 8 August 2007. An undated journal voucher for the two
amounts which was prepared and posted by the Acting Treasurer was availed.
6.2.7 Sale of government bonds before their maturity date
NSSF sold several government bonds during the period September 2007 to November
2007. These bonds were sold before their maturity date. The decision to sell the bonds
was made by the MD-NSSF and was not deliberated by the MIC. Most of the bonds that
were sold to one of the companies were at a price below their discounted present value
(computed market worth) at the time. Even though gains were realised from the sale of
the bonds, these were below the market worth of the bond – a fact that could have been
revealed (by the MIC) through proper analysis of the bond prices.
An evaluation of the prices of the bonds and the prices at which NSSF sold the various
bonds revealed a total unfavorable variance of Ushs.5,790,785,765. A further evaluation
revealed an unfavorable variance of Ushs.2,757,616,821 between the market prices
prevailing at the time of sale and the price at which NSSF sold the bonds.
6.2.8 Purchase of land
Generally, NSSF‟s procurement and investment in land was not in accordance with the
PPDA Act. Nonetheless it was noted that PP Forms 20 that were used in the process for
the purchase of land were dated after NSSF had negotiated with the vendors. Under the
procurement act, a PPF 20 is used in the initial stages of the procurement process and
acts as a confirmation that money for the procurement envisaged is available from the
annual budget.
6.2.8.1 Temangalo
In the Temangalo land purchase, the MD-NSSF informed the team that he started the
procurement process by requesting for sale offers of land in Wakiso district in January
2008. It was noted that he had already started negotiations in December 2007 with one of
the Vendors for the purchase of his and another Vendors land in Wakiso. Thier land had
been surveyed and valued by December 2007, about a month before the alleged Request
for Proposals (RFP). No documented details of offers received arising from the RFP
process were availed for audit.
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6.2.8.2 Branch offices
It was noted that the board approved the development of four branches for the financial
year 2007/2008 but NSSF purchased a total of eight branches. There were no valuations
for two of the branches - Gulu and Hoima.
On the Kabale purchase, the Investment Officer negotiated with the vendor for an agreed
price of Shs.112,000,000, which was above the valuation returned by the three valuers
and then submitted to the Contracts Committee for approval of the two plots in Kabale.
6.2.8.3 Law firm single sourced
NSSF pre-qualified several law firms to assist in the purchase of land for the branch
offices. However, the procurement process for these firms was not carried out properly. A
law firm that was engaged to purchase land for the Hoima Branch Office, was single
sourced contrary to the requirements of the PPDA Act.
6.2.8.4 Investment Policy not followed
The NSSF Investment Policy was not followed. There were no details relating to the
expected returns and the anticipated risk exposures for the land purchases made.
6.2.8.5 Arua Project
NSSF paid a local firm of surveyors before a contract was signed. They then continued to
pay this firm USD.5,537.24 per month when the contract period expired, though there
was no written agreement on the extension of contract or approval from the CC. It was
noted that the firm issued two Interim Payment Certificates No.10 and 11 without due
consideration of the Valuation Certificates issued by the quantity surveyors and approved
by, the project managers.
6.2.8.6 Gayaza and forest land
We noted that NSSF‟s BOD had approved the purchase of land for forest development and
the purchase of swampy land in Gayaza at values higher than those recommended by the
valuers.
6.2.8.7 Lumumba
The project at Lumumba started in the year 2000 with the appointment of as project
architects. Though there was no contract between the two parties, there were Terms of
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Reference (TOR) which set out the duties of both parties and amount of payments due. It
was noted that Architects did not follow the TOR‟s and sent invoices for work that was
either not completed or partially completed.
In 2000, the project was initially estimated to cost USD.6,000,000, but this rose to
USD.21,991,896 in 2007 and USD.75 million in 2008, after changes to the initial design by
MD NSSF.
On 25 May 2008, MD-NSSF, ostensibly on instructions from the Board FIC, directed the
architects to revise the approved design to increase the number of floors from four to
sixteen and the number of basement parking levels from two to four. On 29 May 2008, he
instructed the Project Managers, to begin excavations for the increased number of floors
and parking levels. The revised design was approved by the NSSF‟s BOD in June 2008.
CHAPTER SEVEN
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7.0 STATUS OF BUSINESS OF THE STANDING COMMITTEE ON
COMMISSIONS, STATUTORY AUTHORITIES & STATE ENTERPRISES
The Parliamentary oversight Committee on Statutory Authorities and State Enterprises
(COSASE) is responsible for reviewing and making recommendations on audit reports and
subsequently reporting to Parliament on their resolutions.
During the period the COSASE committee considered and discussed Eighteen (18)
reports as follows;
7.1 Reports presented to the House
A report on the performance of National Drug Authority was presented to the House
covering the financial year 1999 to 2007
7.2 Reports concluded but not yet presented to the House
Nine (9) reports were discussed which are ready to be presented to the House these are
reports on the performance of the following;
Four (4) reports on the performance of, Amber House, Uganda Communications
Commission, Uganda Property Holdings and National Forestry Authority were discussed
but are yet to be presented to the House as follows.
No Audit Entity Financial years covered
1 Amber House Limited Dec 2004 to Dec 2006
2 Uganda Communications commission 1999/2000 to 2006/2007
3 Uganda Property Holdings Limited 2000/2001 to 2006/2007
4 National Forestry Authority 2003/2004 to 2006/2007
Five (5) reports on the performance of; Uganda Revenue Authority, National Housing and
Construction Company Limited, Amnesty Commission, Electricity Regulatory Authority,
Cotton Development Organization were discussed and these are under compilation for
presentation to the House.
No Audit Entity Financial years covered
1 Cotton development Organization 1999/2000 to 2007/2008
2 Amnesty Commission 2000/2001 to 2007/2008
3 Electricity Regulatory Authority 2004/2005 to 2006/2007
4 National Housing and Construction Company Limited 1999/2000 to 2004/2005
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7.3 Reports still under consideration
Eight (9) reports were under consideration during the period; these are reports on the
performance of the following;
No Audit Entity Financial years under
consideration.
1 Uganda Electricity Transmission Company 2005/2006 to 2007/2008
2 Uganda Coffee Development Authority 2000/2001 to 2007/2008
3 Uganda Investment Authority 2000/2001 to 2007/2008
4 Uganda National Bureau of Standards 2002/2003 to 2007/2008
5 Uganda Bureau of Statistics 2000/2001 to 2007/2008
6 Civil Aviation Authority 2004/2005 to 2007/2008
7 National Water Sewerage Corporation 2002/2003 to 2007/2008
8 Public Procurement and Disposal of Public Assets
Authority
2003/2004 t0 2007/2008
9 Posta Uganda 1998/1999 to 2006/2007
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CHAPTER EIGHT
8.0 DIVESTITURE ACCOUNTS
This chapter deals with privatization of public enterprises during the year ended 30th June
2009.
8.1. Status of Divested Enterprises
A total of 132 enterprises were divested by government of which 93 were privatized, 11
were concessioned, 5 were repossessed by the former owners and 39 were struck off the
register of companies/liquidated, 2 dissolved. 40 other enterprises had been listed for
divestiture as at 30th June 2009. Below is a summary of method s of divestiture of these
public enterprises covering the period 1992 to 30th June 2009.
Method of Divestiture No of divestitures transactions
1 Auction 6
2 Concession 11
3 Debt Equity Swap 2
4 Initial Public Offering 4
5 Joint Venture 2
6 Liquidation / Struck off the Co register. 39
7 Management Buy Out 4
8 Pre-emptive rights 9
9 Repossession 5
10 Sale of Assets 22
11 Share Sale 28
Total 132
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Pie Chart presentation of Methods of Divestiture transactions
Details of the status of divested enterprises are attached to this report under appendices
D,E and F. By the time of this report, a total of 85 divestiture transactions had fetched a
cumulative total of shs 432,632,462,206 with 75 of them fully paid for. There were 7
others with a total outstanding balance of shs 18.318 bn while 3 transactions of pre-
emptive rights had not yet been exercised. Details of these are attached to this report
under appendices G.
8.2 Contingent Liabilities
Contingent liabilities from divested enterprises in respect of litigations against government
dating as back as 2003 remain unresolved. These post-divesture issues require urgent
(Government) intervention to prevent further build up of the burden. Appendix G provides
a summary of these litigations and court cases).
8.3 DIVESTITURE AUDIT OF UGANDA ELECTRICITY BOARD (UEB)
8.3.1 Introduction
The Uganda Electricity Board (UEB) was classified under Class II of the PERD Statute 1993
as an enterprise in which the State is supposed to retain the majority shareholding and
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the Electricity Act 1999, provided for the formation of successor companies to assume all
responsibilities and obligations duties, objectives and functions including property, rights
and liabilities of UEB with the exception of the regulatory functions.
8.3.2 Legal Status
Uganda Electricity Board (UEB) was established by the Electricity Ordinance of 1948 which
was replaced by the Electricity Ordinance of 1961 and eventually re-enacted by the
Electricity Act Chapter 135 of the Laws of Uganda 1964.
The Board was established with the main functions relating to generation, transmission,
distribution and supply of electricity, inspection and testing of electrical plant and the safe
use of electricity, and for purposes incidental to and connected with matters aforesaid.
8.3.3 Ownership
UEB was 100% owned by Government of Uganda with a paid up capital of
Shs.92, 362,811,000 .
8.3.4 Divestiture Process
All the functions of UEB were unbundled for purposes of divestiture, and vested into
holding companies responsible for;
Generation: forming the Uganda Electricity Generation Company (UEGCL) to own
and operate the Kiira and Nalubale hydro-electric power stations to generated and sell
electricity to the Transmission Company.
Transmission: forming Uganda Electricity Transmission Company (UETCL) to own
the electricity transmission infrastructure above 33KV and responsible for buying
power in bulk from generators and selling it to distribution companies and for export.
Distribution: forming Uganda Electricity Distribution Company (UEDCL) to own and
operate the grid connected to supply infrastructure operating at 33KV and below;
inherit the responsibility for retail of electricity, metering, billing customers of UEB
including all outstanding balances.
Electricity Regulatory Authority (ERA) was created to regulate the activities of the
successor companies.
UEB the parent Company to administer Residual matters pending liquidation on
completion.
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8.3.5 UEB Core Assets
A hydropower Dam and a Power station of 180 MW (Owen Fall Power Station) and
Extension Kiira Dam 200 MW
1400 Kilometers of Transmission lines
900 kilometers of distribution lines
Diesel generation (1-9MW) plus Seven small thermal power stations in remote regions (
Arua, Kapchorwa, Kitgum, Maziba (Kabul), Moroto, Moyo, Nebbi, Rukungiri)
Mini-hydro 1MW (Kabale)
150,000 customers
Other potential assets;
Hydro power sites at Budhagali, Busowoko, Kalagala, Kamdini, Karuma, Ayago North and
Ayago South
Nyagak Mini-hydro station (4.5MW)
8.3.6 Asset valuation
UEB asset values as at 31st December 1995 as per financial statements
Land and Buildings 34,994,064,433
Furniture and Fittings 278,893,099
Motor Vehicles 3,084,985,297
Transmission and Distribution 293,739,334,416
Generation 215,196,447,645
Computer and office Equipment 87,383,092
Tools and Equipment 2,049,524,279
Total 549,680,632,261
We were not availed with the evidence of any other asset valuation after 1995.
8.3.7 Unbundling UEB Assets and Liabilities
Assets of UEB were unbundled as follows;
Non Core assets (Amber House, Kimaka Estate)
Amber House: Amber House valued at shs 5 billion was transferred to Ministry of
Finance by signing a Transfer Share Certificate effective from 15th September
2005.
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Kimaka Estate: At its 301st meeting of 22nd August 2003, DRIC noted and
approved the estimated revenue of shs 4.53 billion foregone in implementing the
Presidential directive of transferring the estate constructed at a loan of
US$8,222,185.50 to Ministry of Defence to function as a Military Academy in Jinja.
UEB Houses/Estate: The properties were valued at shs 12,733,650,000 out of
which houses worth shs 10,061,950,000 were sold to the sitting tenants and who
paid for them using their terminal benefits (either topping up) and others sold to
the public amounted to shs 2,671,700,000.
Core Assets: On 30th March 2001, the assets were vested among the holding
companies of Uganda Electricity Distribution Company Limited (UEDCL), Uganda
Electricity Generation Company Limited (UEGCL) and Uganda Electricity
Transmission Company Limited (UETCL).
To date the liquidation of UEB is still going on and a report is awaited.
8.3.8 Findings on Divestiture of Uganda Electricity Board
Two concessions were accomplished (Distribution and Generation), however, no records
are available to assess the values of the “concessioned” assets in both cases and without
an independent value attached to the assets, it‟s difficult to determine the basis on which
the concession fee was charged by GOU.
However, PU management believes that concession fees which were a result of a bidding
process had no relevance to the values of the Assets leased especially when the
Concessionaire was required to invest in the power sector.
Contrary to the cabinet decision under minute 401 (CT 2001) which recommended that all
real estate properties owned by Government including those to be acquired in the future
be vested with Uganda Property Holdings Ltd (UPHL) for proper management, audit noted
that the property was instead transferred to the Ministry of Finance.
The available records indicate that Amber House was registered under Amber House Ltd
with 100% government share holding and was managed by an agent M/s Bageine and
Company Ltd until March 2008 when the company employed its own Estate manager.
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M/s Bageine agency cost government a cumulative management fee of shs124,487,041
(between 15th September 2005 when the property was transferred to Ministry of Finance
and march 2008 when M/s Bageine‟s contracted was terminated). This cost would have
been avoided if the Cabinet recommendation was adhered to.
iii) UEDCL and UEGCL have concessioned all their main activities for 20 years, leaving the
two companies with only the supervisory role of Umeme and Eskom respectively.
8.3.5 Conclusion
i. Shs 124,487,041 is a nugatory expenditure.
ii. The concession fees for both generation and distribution may not have been fair.
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Appendix 1
List of seventy Six (76) public organizations audited by the Auditor General
1 Allied Health Professionals
2 Amber House Limited
3 Amnesty Commission
4 Bank of Uganda
5 Cable Corporation Ltd
6 Capital Markets Authority
7 Civil Aviation Authority
8 Coordinating Office for Control of Trypanosomiasis in Uganda
9 Cotton Development Organization
10 Crested Crane Hotel & Tourism Training Institute
11 Dairy Development Authority
12 Divestiture & Redundancy Accounts
13 East African Community
14 Institute of Communication & Information Technology
15 Kilembe Mines Ltd
16 Kinyara Sugar Works
17 Lake Victoria Fisheries Organization
18 Law Development Centre
19 Management Training & Advisory Centre
20 Nakivubo War Memorial Stadium
21 Nambole Stadium
22 National Animal Genetic Resources Centre and Data Bank
23 National Council of Sports
24 National Council for Children
25 National Council for Higher Education
26 National Curriculum Development Centre
27 National Drug Authority
28 National Enterprises Corporation & Subsidiaries
29 National Forestry Authority
30 National Housing & Construction Co. Ltd
31 National Medical Stores
32 National Planning Authority
33 National Social Security Fund
34 National Water & Sewerage Corporation
35 National Women‟s Council
36 National Youth Council
37 New Vision Printing and Publishing Corporation
38 Nile Hotel International
39 Post Bank Uganda Limited
40 Posta Uganda
41 Public Libraries Board
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42 Public Procurement & Disposal of Public Assets
43 Rural Electrification Agency
44 Uganda Air Cargo Corporation
45 Uganda Broadcasting Corporation
46 Uganda Broadcasting Council
47 Uganda Bureau of Statistics
48 Uganda Coffee Development Authority
49 Uganda Communications Commission
50 Uganda Development Bank
51 Uganda Development Corp.
52 Uganda Electricity Board
53 Uganda Electricity Distribution Co.
54 Uganda Electricity Generation Co.
55 Uganda Electricity Regulatory Authority
56 Uganda Electricity Transmission Co.
57 Uganda Export Promotion Board
58 Uganda Insurance Commission
59 Uganda Investment Authority
60 Uganda Livestock Industries
61 Uganda Medical and Dental Practitioners Council
62 Uganda National Bureau of Standards
63 Uganda National Council for Higher Education
64 Uganda National Council of Science & Technology
65 Uganda National Council of Sports
66 Uganda National Cultural Centre
67 Uganda National Examinations Board
68 Uganda Nurses & Midwives Council
69 Uganda Printing & Publishing Corp.
70 Uganda Property Holding Limited
71 Uganda Railways Corp.
72 Uganda Seeds Company Limited
73 Uganda Tourism Board
74 Uganda Wildlife Authority
75 Uganda Women Council
76 UGMA Engineering Corporation Limited
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Appendix A
Summary of operational and financial standing of Public organizations audited during the period 1st April 2009 to 31st March 2010 No Statutory Authority/State Enterprise Surplus/Deficit
for the year
Accumulated
Surplus/Deficit
for the year
A (i) Public organizations audited for financial years ended 30th June 2009
1 Bank of Uganda (BOU) 2,885,000,000 1,012,129,000,000
2 Capital Markets Authority (CMA) (738,718,000) 1,087,930,000
3 Kilembe Mines Ltd (KML) (5,842,063,772) (26,264,603,508)
4 National Drug Authority (NDA) 2,423,597,822 11,219,059,934
5 National Water and Sewerage Corporation
(NWSC)
12,350,645,000 36,696,814,000
6 National Women‟s Council (NWC) (7,986,870) (1,392,321)
7 New Vision Printing and Publishing Corporation 2,182,847,000 17,885,149 000
8 Uganda Bureau of Statistics (UBOS) (1,462,255,236) 2,881,327,764
9 Uganda Air Cargo Corporation (UACC) 4,893,701,067 (20,631,002,268)
10 Uganda Communication Commission (UCC) 18,270,350,534 38,327,394,491
11 Uganda National Council For Science and
Technology (UNCST)
(1,888,012,981) 1,042,700,627
12 Uganda Printing and Publishing Corporation
(UPPC)
17,732,000 2,004,043,000)
13 Uganda Property Holdings Ltd (UPHL) 465,885,824 425,135,340
14 Uganda Tourism Board (UTB) 35,631,168 8,032,101
15 Uganda Wildlife Authority (UWA) (1,216,197,000) (10,652,253,000)
16 Uganda Revenue Authority (URA) 8,676,103,233 5,282,539,508
17 Civil Aviation Authority (CAA) (11,291,238,000) (134,031,291,000)
A (ii)
Public organizations audited for financial
years ended 30th June 2008
18 Broadcasting Council (BC) 58,817,461 233,134,384
19 Electricity Regulatory Authority (ERA) 179,702,929 2,603,897,429
20 Lake Victoria Fisheries Organization (LVFO) (US $643,922) US $1,271,842
21 National Council For Children (NCC) (73,052,814) (58,825,601)
22 National Council For Disability (NCD) (9,105,681) 2,268,667
23 National Medical Stores (NMS) 3,019,501,000 9,224,522,000
24 National Planning Authority (NPA) 927,664,734 1,259,548,385
25 National Social Security Fund (NSSF) (50,198,093,000) 7,465,951,000
26 Public Procurement and Disposal of Public Assets
Authority (PPDA)
1,588,646,765 4,830,751,521
27 Uganda Broadcasting Corporation (UBC) 68,090,923 (1,051,573,209)
28 Uganda Institute of Information and
Communications Technology (UICT)
451,183,721 1,110,701,191
29 Uganda Insurance Commission (UIC) 767,404,936 1,228,009,826
30 Uganda Investment Authority (UIA) (1,239,048,054) 971,726,392
31 Uganda Medical and Dental Practitioners Counci
(UMDPC)
40,196,477 88,978,420
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32 Uganda National Bureau of Standards (UNBS) (729,812,299) (1,169,961,881)
33 Uganda National Examination Board (UNEB) (251,480,601) (52,159,750)
34 Uganda Post Ltd (83,693,000) (5,538,764,000)
35 Uganda Seeds Ltd (USL) (225,348,303) (3,115,277,306)
A (iii) Public organizations audited for financial years ended 30th June 2007
36 Crested Crane Hotel & Tourism Training Institute
(HTTI)
(146,729,523) (1,112,212,890)
37 National Animal Genetic Resource Centre and
Data Bank (NAGRIC)
(12,032,000) 19,307,000
38 National Council of Sports (NCS) 18,424,083 327,332,858
39 National Enterprise Corporation (NEC) (2,822,712,655) (14,460,218,032)
A (iv) Public organizations audited for financial years ended 30th June 2005 & 2004
40 Law Development Centre (LDC) 947,084,321 1,508,543,565
41 National Youth Council (NYC) 114,305 (60,657,825)
42 Uganda Nurses and Midwives Council (UNMC) (130,533,927) 289,133,114
43 Uganda Export Promotion Board (UEPB) (219,992,002) (360,714,658)
B Public organizations audited for financial years ended 31st October 2008
44 Cotton Development Organization (CDO) 2,116,679,810 761,922,682
C Public organizations audited for financial years ended 30th September 2008
45 Uganda Coffee Development Authority (UCDA) 1,059,701,974 940,131,106
D
Public organizations audited for financial
years ended 31st December 2008
46 Amber House Ltd (AHL) 822,969,846 3,960,213,059
47 Cable Corporation Ltd (CCL) 388,053,000 (7,491,545,000)
48 Dairy Development Authority (DDA) 801,076,684 669,528,684
49 Management Training & Advisor Centre (MTAC) 159,524,369 (399,215,498)
50 National Housing and Construction Co Ltd
(NHCCL)
4,720,310,000 28,167,013,000
51 Nile Hotel International Ltd (NHI) 841,235,000 145,775,000
52 Post Bank Uganda Ltd 1,048,588,078 3,485,822,139
53 Uganda Development Bank Ltd (UDB) 11,583,878,000 18,054,208,000
54 Uganda Development Corporation (UDC) (122,276,000) (1,285,595,000)
55 Uganda Electricity Distribution Co Ltd (UEDCL) (42,582,952,000) (104,070,603,000)
56 Uganda Electricity Generation Co Ltd (UEGCL) (25,786,766,000) (65,582,798,000)
57 Uganda Electricity Transmission Co Ltd (UETCL) (57,021,601,000) (25,529,601,000)
58 UGMA Engineering Corporation Ltd (3,631,799,000) (47,587,726,000)
110
Appendix B Summary of operational and financial standing of Public organizations audited during the period 1st April 2009 to 31st March 2010 categorized under Regulatory Authority’s, Government institutions and State Enterprises from appendix A No Statutory Authority/State Enterprise Surplus/Deficit
for the year
Accumulated
Surplus/Defici
t for the year
A (i) Public organizations audited during the period 1st April 2009 to 31st March 2010
Government Institutions
1 National Women‟s Council (7,986,870) (1,392,321)
2 Uganda Bureau of Statistics (1,462,255,236) 2,881,327,764
3 Uganda National Council For Science and Technology (1,888,012,981) 1,042,700,627
4 Lake Victoria Fisheries Organisation (US $643,922) US.1,271,842
5 National Council For Children (73,052,814) (58,825,601)
6 National Council For Disability (9,105,681) 2,268,667
7 Uganda Institute of Information and Communications
Technology
451,183,721 1,110,701,191
8 Uganda Medical and Dental Practitioners 40,196,477 88,978,420
9 Crested Crane Hotel & Tourism Training Institute (146,729,523) (1,112,212,890)
10 National Animal Genetic Resource Centre and Data Bank (12,032,000) 19,307,000
11 National Council of Sports 18,424,083 327,332,858
12 Law Development Centre 947,084,321 1,508,543,565
13 National Youth Council 114,305 (60,657,825)
14 Uganda Nurses and Midwives Council (130,533,927) 289,133,114
15 Management Training & Advisor Centre 159,524,369 (399,215,498)
Regulatory Authorities
1 Bank of Uganda 2,885,000,000 1,012,129,000,000
2 Capital Markets Authority (738,718,000) 1,087,930,000
3 National Drug Authority 2,423,597,822 11,219,059,934
4 Uganda Communication Commission 18,270,350,534 38,327,394,491
5 Uganda Tourist Board 35,631,168 8,032,101
7 Uganda Wildlife Authority (1,216,197,000) (10,652,253,000)
8 Broadcasting Council 58,817,461 233,134,384
9 Electricity Regulatory Authority 179,702,929 2,603,897,429
10 National Planning Authority 927,664,734 1,259,548,385
11 Public Procurement and Disposal of Public Assets
Authority
1,588,646,765 4,830,751,521
12 Uganda Insurance Commission 767,404,936 1,228,009,826
13 Uganda Investment Authority (1,239,048,054) 971,726,392
14 Uganda National Bureau of Standards (729,812,299) (1,169,961,881)
15 Uganda National Examination Board (251,480,601) (52,159,750)
16 Uganda Export Promotion Board (219,992,002) (360,714,658)
17 Cotton Development Organisation 2,116,679,810 761,922,682
18 Uganda Coffee Development Authority 1,059,701,974 940,131,106
111
19 Dairy Development Authority 801,076,684 669,528,684
20 Uganda Revenue Authority 8,676,103,233 5,282,539,508
21 Civil Aviation Authority (11,291,238,000) (134,031,291,000)
State Enterprises
1 Amber House Ltd 822,969,846 3,960,213,059
2 Cable Corporation Ltd 388,053,000 (7,491,545,000)
3 Kilembe Mines Ltd (5,842,063,772) (26,264,603,508)
4 National Enterprise Corporation (2,822,712,655) (14,460,218,032)
5 National Housing and Construction Co Ltd 4,720,310,000 28,167,013,000
6 National Medical Stores 3,019,501,000 9,224,522,000
7 National Social Security Fund (50,198,093,000) 7,465,951,000
8 National Water and Sewerage Corporation 12,350,645,000 36,696,814,000
9 New Vision Printing and Publishing Corporation 2,182,847,000 17,885,149 000
10 Nile Hotel International Ltd 841,235,000 145,775,000
11 Post Bank Uganda Ltd 1,048,588,078 3,485,822,139
12 Uganda Air Cargo 4,893,701,067 (20,631,002,268)
13 Uganda Broadcasting Corporation 68,090,923 (1,051,573,209)
14 Uganda Development Bank Ltd 11,583,878,000 18,054,208,000
15 Uganda Development Corporation (122,276,000) (1,285,595,000)
16 Uganda Electricity Distribution Co Ltd (42,582,952,000) (104,070,603,000)
17 Uganda Electricity Generation Co Ltd (25,786,766,000) (65,582,798,000)
18 Uganda Electricity Transmission Co Ltd (57,021,601,000) (25,529,601,000)
19 Uganda Post Ltd (83,693,000) (5,538,764,000)
20 Uganda Printing and Publishing Corporation 17,732,000 (2,004,043,000)
21 Uganda Property Holdings Ltd 465,885,824 425,135,340
22 Uganda Seeds Ltd (225,348,303) (3,115,277,306)
23 UGMA Engineering Corporation Ltd (3,631,799,000) (47,587,726,000)
112
Appendix C
Financial standing of public organizations with up to date financial statements submitted for audit for the years ended 30th June 2009 and 31st Dec 2008 No Statutory Authority/State
Enterprise
Accumulated Surplus/Deficit for the past three years
Public organizations audited with financial years ended 30th June
NAME OF ENTITY 2008/09 2007/08 2006/07
shs shs shs
1. Uganda Air Cargo Corporation (UACC) (20,631,002,268) (25,524,703,335) (26,241,946,520)
2. Uganda Wild Life Authority (UWA) (10,652,253,000) (9,436,056,000) (6,140,516,000)
3. New Vision Printing and Publishing
Corporation
17,665,149,000 16,660,953,000 13,444,426,000
4. Bank of Uganda (BOU) 1,012,129,000,000 241,018,000,000 100,428,000,000
5. Uganda Tourism Board (UTB) 8,032,101 (27,598,967) (31,616,203)
6. Kilembe Mines Ltd (KML) (26,264,603,508) (20,171,252,442) (19,331,260,322)
7. National Women Council (NWC) (1,392,321) 6,594,549 3,547,759
8. Uganda Bureau of Statistics (UBOS) 2,881,327,764 4,343,583,000 3,328,955,377
9. National Drug Authority(NDA) 11,219,059,934 8,795,462,112 4,662,305,779
10. Uganda Property Holdings (UPHL) 425,135,340 (40,750,484) (129,330,512)
11. National Water and Sewerage Corporation (NWSC)
36,696,814,000 20,574,775,000 9,419,424,000
12. Uganda Communications commission
(UCC)
38,327,394,491 20,057,043,957 10,884,169,530
13. Uganda National Council for Science and Technology (UNCST)
1,042,700,627
3,851,833,549
5,224,867,770
14. Uganda Printing and Publishing Corporation (UPPC)
(2,004,043,000)
(2,008,978,000)
(1,569,224,000
)
Public organizations audited with financial years ended 31st December
NAME OF ENTITY DEC. 2008 DEC.2007 DEC.2006
15. Dairy Development Authority(DDA) 669,528,780 (131,548,904) (107,148,000)
16. Management Training and Advisory Centre(MTAC)
(399,215,198) (558,739,866) (579,003,461)
17. Amber House Ltd (AHL) 3,960,213,059 3,148,253,309 2,450,592,899
18. Nile Hotel International Ltd (NHI) 145,775,000 (695,460,000) (1,356,340,000)
19. Post Bank Ltd 3,485,822,139 2,542,195,834 1,763,683,238
20. Uganda Electricity Transmission
Company limited (UETCL)
(25,529,601,000) 31,491,984,000 30,968,410,000
21. National Housing and Construction Company Limited (NHCC)
28,167,013,000 21,366,545,000 14,842,297,000
22. Uganda Development Corporation Ltd
(UDC)
(1,163,319,000) (1,163,319,000) (1,035,625,000)
23. Uganda Electricity Generation
Company (UCDL)
(65,582,798,000) (39,796,032,000) (31,853,239,000)
24. Cable Corporation Limited (CCL) (7,491,545,000) (7,879,600,000) (9,113,602,000)
25. UGMA Engineering Corporation Ltd (47,587,726,000) (43,955,927,000) (39,659,207,000)
26. Uganda Development Bank Ltd (UDB) 18,054,208,000 6,635,207,000 6,048,148,000
27. Uganda Electricity Transmission Company (UETCL)
(25,529,601,000) 31,491,984,000 30,968,410,000
113
28. Nambole National Stadium (2,687,622,918) (2,770,496,076) (2,199,780,757)
29. Civil Aviation Authority (CAA) (134,031,291,000) (124,301,271,000) (102,668,098,000)
30. Uganda Revenue Authority (URA) 5,283,539,508 (2,856,169,106) (10,882,374,921,)
Public organizations audited with financial years ended 31st October
NAME OF ENTITY OCTOBER 2008 OCTOBER 2007 OCTOBER
2006
31 Cotton Development Organization (CDO)
761,922,682 (1,411,487,556) (991,548,245)
Public organizations audited with financial years ended 31st October
NAME OF ENTITY SEPTEMBER
2008
SEPTEMBER
2007
SEPTEMBER
2006
32 Uganda Coffee Development Authority (UCDA)
1,670,741,895 (2,539,598,232) (2,539,598,232)
114
Appendix D
DIVESTITURES AND OUTSTANDING TRANSACTIONS AS AT 30th JUNE 2009
Public Enterprise Buyer
Date Method of sale
Price Money collected
Balance (m)
1 Acholi Inn Ms Laoo Ltd
May-95 Sale of Assets
Shs 235 m 108,000,000
122
2 African Ceramics Co.
Muhindo Enterprises Ltd May-96
Sale of Assets Shs.0.270 bn
270,000,000
-
3 African Textile Mills P.S.Patel
Mar-96 Share Sale
Shs.1.4 bn 100,000,000
679
4 Agip (U) Ltd Agip Petrol International May-96
Share Sale Shs.1.675 bn
1,664,141,892
-
5
Agricultural Enterprises Ltd
Commonwealth Development Corp
Oct-93 Joint Venture US$ 12.7 m 3,835,414,534
-
6 Apollo Hotel Corporation Ltd.
MIDROC Ethiopia plc Mar-01
Share Sale US$ 18m
32,040,000,000
-
7 Associated Match company Ltd
Madhvani Group Jun-01
Shares/Preempitve rights Sh. 46,164
46,164
-
8 Bank of Baroda Bank of Baroda (India) Jun-99
Shares/Preempitve rights Shs 2.5bn
2,500,000,000
-
9 Barclays Bank of Uganda Ltd
Barclays Plc Oct-98
Shares/Preempitve rights Shs 5bn
5,000,000,000
-
10
BAT Uganda (PHASE 1, 20% of shares)
BAT Investments Ltd.
Sep-99
Shares/Preemptive rights
US$ 7m 10,290,000,000
-
11 BAT Uganda (PHASE 2)
Various Jun-00
Initial Public Offering - USE Ushs 4.6 bn
4,608,794,753
-
12 Blenders (U) Ltd Uniliver Overseas Holding BVC Aug-94
Share Sale US$ 531,586
38,109,750
-
13 Uganda Telecom Detecom
Jun-00 Share Sale
US$ 33.5m 50,975,088,162
-
14 Dairy Corp Sameer
Concession
US$0.5 m 892,000,000
-
15
Development Fiance Company of Uganda
Various Jul-04
Initial Public Offering - USE
Shs 10.1 billion
18,369,374,559
-
16 East African Distilleries ltd
International Distillers & Vintners Nov-92
Share Sale US$ 600,000
731,063,195
-
17 ENHAS
Efforte Corp, Global Airlinks & Sabena
Apr-98 Shares/Preemptive rights
US$ 3.75m 1,226,193,448
-
18 Foods & Beverages Ltd
James Mbabazi May-96
Auction Shs.0.670 bn
670,000,000
-
19 Fresh Foods Ltd Eddie & Sophie Enterprises May-96
Auction Shs.0.0009 bn
900,000
-
20
Government Central Purchasing Corp.
Management and Employees
Jul-00
Management Buy Out
Shs 1.09 bn 1,091,276,000
-
21 Hilltop Hotel Three Links Ltd
May-95 Sale of Assets
Shs 35 m 10,000,000
25
22 Hotel Margherita Reco Industries Ltd Aug-94
Sale of Assets US$ 400,000
365,184,210
-
23 International television sales
ROKO Construction Dec-96
Sale of Assets Shs 0.32bn
320,000,000
-
24 Kakira Sugar Works
East African Holdings Ltd. Jul-00
Shares/Preemptive rights Shs 3.5 bn
3,500,000,000
-
25
Kampala Auto Centre (Gomba Motors Ltd)
Management Nov-95
Auction Shs.0.110 bn
8,200,000
-
115
26 Kibimba Rice Co. Ltd.
Tilda Holdings Sep-96
Share Sale Shs 1.607 bn
1,523,515,000
-
27 Kinyara Sugar Works Ltd
Rai Holdings Oct-06
Share Sale US$33.5 million
61,546,870,000
-
28 Lake Victoria Bottling Co. Ltd
Crown Bottlers (U) Ltd Feb-93
Share Sale Shs 6.46 bn
3,621,000,000
-
29 Lake Victoria Hotel (PHASE 1)
Windsor Ltd Aug-95
Share Sale Shs. 3.06 bn
2,962,387,928
-
30
Lake Victoria Hotel Ltd (Phase 2) - Windsor Lake Victoria
The Windsor Ltd.
Aug-00
Shares/Preemptive rights
US$ 1.75m 2,962,387,928
-
31 Lango Dev. Co. Sunset International Ltd. May-98
Share Sale Shs 0.1bn
100,000,000
-
32 Lira Hotel Showa Trade Company Ltd Jan-95
Sale of Assets Shs 250 m
50,000,000
200
33 Masindi Hotel Ottoman Engineering Feb-00
Sale of Assets US$ 500,000
198,500,000
-
34 Motorcraft and Sales Ltd.
Andami Works Ltd. Sep-96
Share Sale Shs 0.200 bn
200,000,000
-
35 Mt. Elgon Hotel
Bugisu Cooperative Union May-95
Sale of Assets Shs 650 m
650,000,000
-
36 Mt. Moroto Hotel Kodet International Nov-94
Sale of Assets Shs 40 m
40,000,000
-
37 Mweya Safari Lodge
Madhvani Group Aug-95
Concession Shs.1.821 bn
1,821,112,067
-
38
National Housing & Construction Corporation
Libyan Arab Foreign Investment Co. Jun-05
Debt/Equity Swap US$20.3 m
35,789,600,000
-
39
National Insurance Corporation Ltd (60%)
IGI Jun-05
Share sale US$3.625m
6,307,822,446
-
40
NEC Pharmaceuticals Ltd.
Haupt Groupe Dec-99
Joint Venture US$ 1.5m
-
-
41
New Vision Printing and Publishing Co Ltd (20%)
Various Sep-04
IPO and Rights Issue
Ushs 9.2 billion
2,040,000,000
-
42 Nile Breweries Madhvani Group
Apr-92 Repossession
shs 500m -
-
43 Nile Hotel International Ltd
Serena Tourism Promotion Services Jan-04
Concession US$1.2m
2,340,000,000
-
44 NYTIL Textile Industries Ltd
Picfare Ltd Mar-96
Sale of Assets Shs 7.0 bn
2,132,000,000
-
45 PAPCO Industries Ltd.
Praful C. Patel Feb-99
Share Sale Shs 100m
100,000,000
-
46 Uganda Railways Corp
Concession US$ 2m
3,479,200,000
-
47 Republic Motors Rafiki Trading Company Dec-95
Auction Shs.0.395 bn
148,000,000
-
48 Rock Hotel Swisa Industries Ltd Nov-94
Sale of Assets Shs 300 m
300,000,000
-
49 Rwenzori Highland Tea Company Ltd
Finlays Groups May-02
Share sale/ Preemptive rights Ushs 1.45 bn
-
-
50 SAIMMCO Steel Rolling Mills Ltd. Sep-99
Share Sale Shs 202m
199,333,633
-
51 Second National Operator
MTN Mar-98
Concession US$ 5m
6,664,000,000
-
52 Shell (U) Ltd Shell Petroleum Co. Ltd Dec-92
Debt/Equity Swap Shs 12.79 bn
12,790,000,000
-
53 Soroti Hotel
Speedbird Aviation Services Ltd Jan-95
Sale of Assets Shs 150 m
150,000,000
-
116
54 Stanbic Bank (U) Ltd.
IPO Dec-96
Share Sale Ushs 6.9 Bn
35,812,000,000
-
55 Stanbic Bank (U) Ltd.
SBIC Africa Holdings Ltd. Nov-96
Share Sale ushs 6939m
6,938,819,178
-
56
Steel Corporation of East Africa Ltd (SCEA).
Muljibhai Madhvani & Co. Ltd Jul-00
Shares/Preempitve rights
Shs 0.32bn 362,912,000
-
57 Total (U) Ltd Total Outre Mer
Mar-96 Share Sale
Shs.5.7 bn 5,645,992,433
-
58 Transocen 1998 (U) Ltd
Coin Ltd. Jul-01
Share Sale Shs 361m
361,000,000
-
59 TUMPECO GM Company Ltd
Aug-94 Share Sale
US$ 700,000 +Shs 429 m
693,350,000
-
60 Uganda Hire Purchase Co.
Tadeo Kisekka Nov-95
Auction Shs.0.00024 bn
240,000
-
61 Uganda Cement Industry - Hima
Rawals Group of Industries Dec-94
Sale of Assets US$ 20.5 m
17,948,945,000
-
62 Uganda Cement Industry - Tororo
Corrugated Sheets Ltd Oct-95
Sale of Assets Shs.5.75 bn
5,864,857,750
-
63 Uganda Clays Ltd. Various
Oct-99
Initial Public Offering - USE Shs 1.46 bn
1,182,415,300
-
64 Uganda Commercial Bank
Westmont Asia ltd Oct-97
Share sale ushs 12610m 12,610,000,000
-
65 Uganda Commercial Bank
Stanbic Bank Feb-02
Share Sale by BoU Net Ushs 21.9 billion
21,900,000,000
-
66
Uganda Consolidated Properties (PHASE 1)
GoU
Apr-99
Sale of Assets
US$ 9m 11,250,000,000
16,174
67 Uganda Motors Ltd Management
Nov-95 Management Buy Out Shs.0.803 bn
300,000,000
-
68 Uganda Electricity Distribution Co Ltd
Umeme May-05
Concession US$1.4 m
10,765,000,000
-
69 Uganda Electricity Generation Co Ltd
Eskom Enterprises Nov-02 Concession US$0.5 m
993,000,000
-
70 Uganda Fisheries Enterprises
Nordic-African Fisheries Co. Ltd
May-95 Share Sale US$ 1.1 m 105,600,000
994
71 Uganda Garment Industries Ltd.
Phoenix Logistics Uganda Ltd. Aug-00
Sale of Assets US$ 0.5 m
850,000,000
-
72
Uganda Grain Milling Co.(PHASE 1)
Calebs International
Dec-96 Share Sale
Shs 5.3bn 5,336,000,000
-
73 Uganda Hardwares Ltd
Management Oct-95
Management Buy Out Shs.0.298 bn
18,200,000
-
74
Uganda Pharmaceuticals Ltd.
Vivi Holdings Jul-96
Share Sale Shs 1.501 bn
1,524,620,000
-
75 Uganda Industrial Machinery Ltd.
F.B. Lukoma May-97
Share Sale Shs 7 m
7,000,000
-
76
Uganda Leather and Tanning Industry (ULATI)
IPS (U) Ltd Jul-95
Sale of Assets Shs.1.71 bn
1,594,150,000
-
77
Uganda Libyan Arab Holding Co Ltd
Preemptive Apr-08
Preemptive Ushs 2 M
-
78
Uganda Livestock Industries Ltd _Kiryana Ranch
Ziwwa Ranchers May-02
Concession U Sh.0.800 bn
850,000,000
-
79
Uganda Livestock Industries Ltd _Kyempisi Ranch
Royal Ranchers Ltd
May-05 Lease of Assets
Ushs 391 m 391,000,000
-
80
Uganda Meat Packers Ltd (Kampala Plant)
Uganda Meat Industries Ltd
Aug-95 Sale of Assets
Shs.0.7 bn 588,094,172
-
81 Uganda Meat Teso Agric Nov-97 Sale of Assets Shs 0.3bn
117
Packers-Soroti Industrial Co Ltd. 185,755,445 124
82 Uganda Seeds (Kasese)
Lease/concession Sep-05
Lease/concession Shs 326 m
273,000,000
-
83
Uganda Seeds (Masindi and Kisindi)
Lease/concession Sep-05
Lease/concession US$350,000
648,495,259
-
84 White Rhino Hotel Dolma Associates Ltd May-95
Sale of Assets Shs 200 m
200,000,000
-
85 White Horse Inn
Kabale Development Company Ltd. Aug-94
Sale of Assets Shs 600 m
600,000,000
-
86 Winits (U) Ltd EMCO Works Ltd
Oct-95 Auction
Shs. 0.274 bn 102,500,000
-
87 Printpak (U) Ltd
Cancelled-Assets belonged to Lonhro
MBO n/a
-
-
88
Uganda American Insurance Company
American Life Insurance Company Nov-92
Repossession n/a
-
-
89 Uganda Crane Estates Ltd.
Buganda Kingdom Jun-97
Repossession n/a
-
-
90 Uganda Securiko Ltd
Securiko (U) Ltd Aug-93
Repossession n/a
-
-
91 Comrade Cycles (U) Ltd.
Uganda Motors Ltd. Jan-97
Share Sale n/a
-
-
92 Uganda Spinning Mills, Lira
Guostar Enterprises (U) Limited 1999
Sale of Assets by Court Order
n/a -
-
93 Uganda Tea Corporation
Mehta Group May-94
Repossession n/a
-
-
Total
432,632,462,206
18,318
Total Divestiture transactions
93
Liquidations 39
Total 132
118
Appendix E
PEs STRUCK OFF THE COMPANIES REGISTER /LIQUIDATED AS AT 30 JUNE 2009
Name Date of sale Nature of divestiture
1 Associated Paper Industries Ltd Apr-98 Liquidation
2 Gobbot (U) Ltd. Jul-96 Voluntary Liquidation
3 Intra africa Traders Jun-87 Liquidated
4 Ugadev Properties Ltd. Mar-98 Struck off Register
5 Agro-Chemicals Nov-93
Voluntary Liquidation & Struck Off Co
Register
6 Chillington Tools Co. Ltd. Jun-98 Liquidation
7 Coffee Marketing Board Ltd Apr-03 Voluntary Liquidation
8 Domestic Appliances Nov-93 Struck Off Company Register
9 Farm Marchinery Ltd, Namalere. Jan-97 Struck off
10 International Television Sales Nov-93 Struck Off Company Register
11 Itama Mines Nov-93 Struck Off Company Register
12 Johnas Brothers Ltd Apr-03 Voluntary Liquidation
13 Lebel (EA) Ltd. Nov-93 Struck Off Company Register
14 Lint Marketing Board Jul-94 Recievership
15 Paramount Manufacturers Ltd.(residual) Oct-93 Struck Off Company Register
16 Peoples Transport Co. Ltd. Jun-94 Recievership
17 Produce Marketing Board Liquidation on going
18 R. O. Hamiliton (U) Ltd Nov-93 Struck Off Company Register
19 SINO (U) Ltd. Oct-98 Voluntary Liquidation
20 Sukulu Mines Nov-93 Struck Off Company Register
21 The Uganda Fish Marketing Corp (1969) Ltd TUFMAC) Nov-93
Voluntary Liquidation & Struck Off Co Register
22 Toro Development Corporation Jul-91 Struck off Register
23 Tororo Industrial Chemicals and Fertlizers (TICAF)
Voluntary Liquidation
24 Ugadev Bank Ltd. Liquidation
25 Ugadev Holdings Ltd. Mar-98 Struck off Register
26 Ugadev Investments Ltd. Jul-91 Struck off Register
27 Uganda Air Ltd. 1976
Dissolved by Decree 15, 1976 (Airline decree)
28 Uganda Airlines Holdings Ltd. Apr-01 Liquidation
29 Uganda Aviation Services 1976
Dissolved by Decree 15, 1976 (Airline decree)
30 Uganda Bags & Hessian Mills Mar-97 Voluntary liquidation
31 Uganda Consolidated Properties Ltd (residual) Jan-01
Liquidation
32 Uganda Crane industries limited 2003 Liquidation
33 Uganda General Merchandise Ltd. Jul-94 Liquidation
34 Uganda Grain Milling (PHASE 2) Jan-04 Creditor Liquidation
119
35 Uganda Toni Services Not registered in Company Registry
36 Uganda Tourist Development Corporation 1994
Dissolved by Uganda Tourist Board
Act
37 Uganda Transport Co. Ltd. Jun-94 Struck off Register
38 Uganda Wild Life Development Co. Nov-96 Struck off Register
39 Wolfram Investments Ltd. Voluntary Liquidation
120
Appendix F
THE REMAINING ENTERPRISES LISTED FOR DIVESTITURE AS AT JUNE 2009
No. Parastatal Comment PERD Class GOU share %
1 Amber House Ltd Fomerly subsidiary of UEB I 100%
2 Cable Corporation Ltd. divestiture completed III 51%
3 Dairy Corporation Ltd. Concessioned to Sameer Group III
100%
4
Housing Finance Company of Uganda
Ltd. To be divested II 50%
5 Industrial Promotion Services Ltd Pre-emptive rights III 30%
6 Kasese Cobalt Company Ltd (KCCL) To be divested III 25%
7 Kilembe Mines Ltd. PPP / Concessioning III 99.996%
8
Kinyara Sugar Works Ltd. Divested & remainder to be divested through IPO III 49%
9
Mandela National Stadium
Pending concessioning II 100%
10 Munyonyo Resort To be determined and divested
11 National Enterprise Corporation To be divested II 100%
12
National Housing and Construction
Co. Ltd. Partial divestiture II 51%
13
National Insurance Corporation To be divested through IPO III 40%
14 National Medical Stores To be divested I 100%
15
National Water & Sewerage
Corporation PPP / Concessioning II 100%
16
New Vision Printing & Publishing Ltd. Partial divestiture through IPO II 53%
17
Nile Hotel International Ltd.
Concessioned to TPS Uganda II 100%
18 Post Bank (U) Ltd PPP / Concessioning II 100%
19 Pride Uganda Ltd. To be divested
20 Sugar Corporation of Uganda Ltd. divestiture completed III 30%
21
Tropical Africa Bank Ltd. (Libyan Arab
Holding) To be divested III 51%
22 Uganda Air Cargo To be divested II 100%
23 Uganda Commercial Bank/Stanbic IPO II 10%
24
Uganda Consolidated properties Ltd / Kulubya properties To be divested 93%
25 Uganda Crane Industries Ltd To be divested 100%
26 Uganda Development Bank N/A II 100%
27 Uganda Development Corporation To be revived I 100%
28
Uganda Electricity Distribution Co.
Ltd Concessioned to UMEME II 100%
29 Uganda Electricity Generation Co. Ltd Concessioned to ESKOM II 100%
30 Uganda Hotels Ltd (residual) To be wound up 100%
121
31 Uganda Libyan Arab Holdings Ltd To be divested 51%
32
Uganda Livestock Industries Ltd. Kiryana & Kyempisis ranches
concessione out III 100%
33 Uganda Posts Ltd PPP / Concessioning II 100%
34
Uganda Printing and Publishing
Corporation
I
35 Uganda Prison Industries Ltd. PPP / Concessioning II 100%
36 Uganda Property Holdings Ltd Asset Holding comapmy I 100%
37 Uganda Railways Corporation Concessioned to RVR II 100%
38 Uganda Seed Ltd Concessioned out II 100%
39 Uganda Telecoms Ltd To be divested through IPO III 31%
40
UGMA Engineering Company Ltd. divestiture completed
III 51%
Residual
PrintPak
Uganda Spinning Mills, Lira
122
Appendix G
PENDING CLAIMS (LITIGATIONS) AGAINST GOVERNMENT AS AT JANUARY 5, 2010 Public
Enterprise
Case/Parties/PE Particulars of Claim
1 Nyanza Textile Industries Limited
(NYTIL)
IGG vs. Gordon Ssentiba & Ors & AG HCCS No. 431 of 2006)
Compensation by the minority shareholders in NYTIL for their interest in
the company which according to a
Consent Judgment would amount to approx. US $ 9 Million. The Consent
Judgment which was entered against Government was successfully challenged
by IGG in the High Court and Court of
Appeal and was set aside. The minority shareholders appealed to the Supreme
Court
2 Uganda Electricity
Board (UEB) and
successor Companies
Bagamuhunda vs. UEB HCCS
No 1044 of 2001.
Kalibbala Vincent & Others vs AG
HCCS 107/2008
Edison Mavunwa & Another (on behalf of 194 Others) Vs
UEGCL & Attorney General – High Court Civil Suit No.
353/2003;
John Walugo & 175 Ors Vs UEB, UEDCL & UETCL – High
Court Civil Suit No. 967/2006;
and
Josephine Nakafeero & 844 Others Vs UEB, UETCL &
UEDCL - High Court Civil Suit No. 760/2006; and
Kyambadde Henry, Paul Nyamarere & 636 Others Vs
UEDCL & UETCL – High Court Civil Suit No. 138/2008.
Claim for terminal benefits computed
based upon their consolidated salary.
Judgment was entered in favour of the Plaintiffs
The Plaintiffs have sought declaration
from court that some UEB former
employees are entitled to pension arrears for the period 2006 – 2008.
Claim by 203 former employees of UEB
now working with UEGCL for terminal benefits not paid when UEB was
unbundled.
Claim of 1,500 former employees of UEB
now working with UEGCL for terminal
benefits not paid when UEB was unbundled.
The plaintiffs challenged the basis of the
payment of gratuity to them as terminal benefits for their period of service with
the successor companies. They contend
that they ought to have been paid pension in terms of the UEB Standing
Instructions
3 Uganda General
Merchandise
Uganda Transport
Company (1975)
a) UNIDRO vs AG HCCS No. 4/
2007;
b) George Zziwa & Others Vs
AG & DRIC - HCCS No.
Creditors of Uganda General Merchandise
supplied merchandise which was never
paid and instituted the suits for recovery of the monies due at the time of
liquidation.
123
Ltd
People‟s Transport
Company,
Uganda
Grain Milling Co Ltd
3/2007
c) Mugenyi & Co. Advocates Vs
AG HCCS No. 663 of 1994
d) Specioza Kalungi & 61
Others Vs AG & DRIC – HCCS No 63 of 2008
4 Uganda Transport Co. Ltd.
Ayoub Ibrahim Vs. AG HCCS No. 192/ 2003
Claim former employees for advances arbitrarily deducted from their terminal
benefits
5 Apollo Hotel Corporation
a) Kazooya & Others Vs Apollo Hotel Corporation, Sheraton
Hotel Limited & AG HCCS No. 64 of 2003
b) Clement Othieno vs. AG
c) David Lubega vs. AG HCCS No. 601/07
Claim for terminal benefits not paid after divestiture.
Claim for “Association fees” i.e. 25% of
the terminal benefits
6 Kilembe Mines
Limited (KML)
Kaija Mugenyi and 137 others
vs. Attorney General HCCS No. 755 of 2003
Claim for under payment of terminal
benefits based on approved terms and conditions of service retrospectively.
7 East African Steel Corporation
Mugalula & Others vs. MMCL & SCEAL
HCCS No. 640/1994
Claim arose out of a suit by former workers against MMCL & SCEAL. MMCL
was indemnified by Government
8 Uganda Railways Corporation (URC)
a) NSSF vs URC & AG HCCS No. 277/2008
b) Victor Byemaro vs URC HCCS No. 249/2009
c) Nkote Charles, Sabani
Magemeso vs. URC & URA H.C.C.SNo.107/2009
Claim for un-remitted workers contributory benefits under the NSSF Act
Claim for declarations that URC should
have remitted NSSF contributions for 200 URC workers
Claim arising from computation of the tax liability of the plaintiffs. The plaintiffs
allege that they were unlawfully taxed
9 Kibimba Rice Co. Ltd.
Notice of Intention to Sue – Peter Muwafu, Wandera
Basirita, Samanya Eriasa and
181 Others vs AG
Claim for compensation for land submerged after Tilda took over
operation of Kibimba
10 Diary Corporation
Limited (DCL)
a) Morris Ogwal Vs DCL, HCCS
No. 614/2003
b) Otai Samuel Vs DCL HCCS
No. 800/2003
c) Agono Charles Vs DCL, HCCS No. 814/2003
Behangana Richard Vs DCL - HCCS No. 883/2003
Claims are for payment of terminal
benefits and other allowances.
124
11 Other Diary
Corporation Limited cases
a) Owor Alex vs. DCL
HCCS No. 320 of 2006 b) Wekhasa Fred & 6 others
vs. DCL HCCS No. 1152 of
1998
c) Gerald Muhumuza vs. DCL HCCS No. 108 of 2004
d) Otai Samuel vs. DCL
HCCS No.261 of 2003
e) Edward Keijuko vs.
DCL HCCS No. 813 of 2003
f) Ephraim Kizito vs. DCL &
Attorney General HCCS No. 71 of 1977 and Civil Appeal
No. 36/2003
g) Habib Kiggundu vs. DCL
HCCS No. 17/ 1995
h) Mwesigwa Samuel vs. DCL
HCCS No. 59 of 2002
i) Alonga John Charles vs. DCL HCCS No. 48 of 2004
j) Siraj Hassan Kajura Vs. DCL
& URA
Former Employee claiming special
damages for salary arrears, general damages, interests and costs of the suit.
Terminal benefits claim, damages for
unlawful termination of employment Claim for unlawful termination of
employment and general damages.
Claim for payment of forced leave salaries, compensation for earnings lost
while on forced leave and damages. Court
entered judgement for UGX 8,575,299 inclusive of costs. This money was
deposited in court as a condition to stay execution of the judgement pending
appeal to the high court and a review of
the judgement of the court. Claim for terminal benefits, salary arrears
and allowances amounting to UShs 57,834,954 with interest of 25% and
general damages plus costs. Supreme Court Appeal: Claim for recovery
of milk cooling plant and lost revenue
from the DCL‟s confiscation of the milk cooler.
Compensation for the loss of
developments, damages for trespass,
mesne profits and costs.
Claim for unpaid salary plus, and travel allowance on retirement, general
damages for mental stress and costs of
the suit.
Claim for wrongful dismissal, general damages, terminal benefits, pension and
Claim arising from computation of the tax liability of the plaintiffs. The plaintiffs
allege that they were unlawfully taxed
12 Coffee Marketing
Board Limited
(CMBL)
CMBL Vs. National Union of
Clerical Commercial
Professional & Technical Employees
Misc. Application No. 74 of 2006
Claim for under payment of Terminal
Benefits Claims
13 African Textile
Mills, Nytil, Ug. Garment, & Lira
Spinning Mills)
Uganda Textile Garment
Leather & Allied Workers Union Vs. AG - HCCS No. 58 of 2009
Claim for recovery of Union Fees arising
from a check-off system of 3%
14 Kinyara Sugar Works Ltd
Nyeko Smith and Others vs. Kinyara Sugars Works Limited
& AG – HCCS 009/2009
Claim for terminal benefits bythe former employees of National Sugar Works
Kinyara
125
(Masindi)
15 Trans Ocean U Ltd Foods & Beverages Ltd (FBL)
Vs. AG – HCCS No. -/2003
FBL claimed US$ 730,000 for haulage
expense. Transocean counter-claimed for US $ 230,000
16 Uganda Posts & Telecomm.
Corporation
(UPTC)
a) Several former UPTC employees
b) Bernard Mweteise, Asaph Ndawula & 8823 Others vs.
Uganda Telecom Limited, Post Bank (U) Limited, Uganda
Posts Limited, Ug
Communication Commission & AG - HCCS No. 135/2003
Claims for pension under Ug Communications Employee Pensions
Scheme (UCEPS)
Declaration that former 825 former UPTC workers are entitled to pension payments
arising before the unbundling of UPTC