New Auditor General report reveals rot in govt ministries

PARLIAMENT. Billions of Shillings worth of taxpayers’ money meant for development activities in the financial year 2015/16, remain unaccounted for, including funds advanced to public servants in their personal accounts.
In a new report released on Wednesday, the Auditor General, Mr John Muwanga, found that in the financial year under review, more than Shs168b was irregularly spent on items that did not reflect the nature of expenditure and an additional Shs2.31b advanced to personal accounts of public servants by Ministries, Departments and Agencies (MDAs).
In keeping with the constitutional command, the Auditor General (AG) presented his findings before the House Speaker Rebecca Kadaga and requested Parliament to ensure that the public money go to planned activities and the culprits reprimanded.
The new report to Parliament paints a grim picture of the state of accounts of public offices, with the AG warning that “some issues [raised in the 2014/15 report] were not addressed” by the accounting officers, insisting that the new findings need urgent “redress”.
The AG report also found similar challenges in Local Governments and Statutory Authorities, where unspecified public officials either diverted or abused public funds with impunity.
The AG report is expected to be tabled in Parliament on January 10, and thereafter, the various accountability committees chaired by Opposition MPs will scrutinise the findings.
The various Accounting Officers are expected to appear before the committees to answer the audit queries.
For the 2015/16 financial year, 1,417 audits including 1,323 financial audits, 83 forensic investigations, eight value-for-money audits and three specialised audits were conducted.
The AG also found that on account of unexplained government indebtness, domestic arrears and other commitments have increased from Shs1.3 trillion to Shs2.2 trillion over the past three years.
The report, however, noted a discrepancy in domestic arrears after financial statements put the arrears at Shs2.254 trillion despite an audit putting them [arrears] at Shs2.700 trillion, indicating a deficit of Shs446b. This expenditure was not explained and it’s not clear whether money was spent on planned activities or not.
Yesterday, the Auditor General, voiced scepticism on the authenticity of some of the pension arrears and domestic claims being made and asked Parliament to interest itself in the unsupported expenditures.
“The concern here, is whether the arrears are genuine,” Mr Muwanga said.
He added, “We are not certain that all these pension arrears being made are genuine. Questions are being asked. The issue is lack of implementation of the Commitment Control System (CCS). Before you commit government, you have to ensure that the funds are available.”
“In a number of entities, accounting officers are paying for domestic arrears, which previously were not disclosed nor budgeted for and that some entities did not fully disclose their arrears position as a result of the guidance by the Secretary of the Treasury,” the Auditor General noted.
The AG proposed that the government should review the current policies on commitment control.
The AG’s analysis of payroll of local governments revealed that more than Shs11b in salaries was paid irregularly. Of the Shs11b, Shs9.5b (unsupported pension payments), Shs657 (wrongly paid salaries) and Shs1b (overpayment).
To weed out the phantoms, the Ministry of Public Service initiated a comparison of the biometric data from the National Identification System and IPPS that revealed that 1,629 cases in which details such as names and date of birth were grossly different.
At least 33 local governments procured items worth Shs27.548b without following public procurement regulations. Of the Shs27b, Shs1.3b procurements lacked procurement files, Shs21b were in breach of procurement procedures, Shs4b (inadequate contract management) and Shs0.315b (unauthorised contract variations).

AG warning
The Auditor General has also warned that wiring cash to the personal accounts of public officers “is not only contrary to accounting regulations but also exposes government funds to a risk of loss since staff may be tempted to divert such funds to personal gain, given the entities do not have any control over such funds deposited into personal accounts,”
For instance, of the Shs168b diverted to unplanned activities by the various government agencies, the AG noted that: “Mischarge of expenditure impacts on the credibility of the financial statements since the figures reported therein do not reflect true amounts expended on the respective items. It further impacts appropriateness of the future budgets since the reported actual figures are misleading.”
To illustrate what Mr Wilfred Niwagaba (Ndorwa West) called, “ominous nature” of public accounts, only 10 of the 22 State Enterprises audited were profitable while only one (1) declared dividends. Seven enterprises had debt ratios of more than 50 per cent implying that most of their assets are financed by debt.
The AG also advised that National Housing and Construction Company, Nakivubo War Memorial Stadium, Uganda Posts Limited and Mandela National Stadium are below the threshold where they may be able to recover their current obligations from their assets.
According to AG, more than 150 patients were referred for treatment abroad for treatment by the medical board at an estimated cost of more than Shs10b excluding flight, upkeep and attendants’ costs.

Issues at hand

YLP. On the Youth Livelihood Programme (YLP), overall recoverability stood at Shs5.501b (39%) of the Shs14.2b that was due for repayment by the beneficiaries.
Court awards. The outstanding amount in court awards and compensations has been accumulating over the last five years raising from Shs54b to Shs684b.
Payrolls. On the audit of salary and pension payrolls in government, the AG warned of manual interference between IFMS and IPPS, over and under-payment of salary and pensions, multiple salary payments, unsupported pension payments among others.

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