REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MAKERERE UNIVERSITY ... · 2021. 3....

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF

MAKERERE UNIVERSITY BUSINESS SCHOOL FOR THE YEAR ENDED 30TH JUNE 2019

OFFICE OF THE AUDITOR GENERAL

UGANDA

TABLE OF CONTENTS List of Acronyms ................................................................................................................................... 2

Opinion ................................................................................................................................................... 3

Basis of Opinion .................................................................................................................................... 3

Key Audit Matters ................................................................................................................................. 3

1.0 Implementation of the Approved budget .............................................................................. 3

Emphasis of Matter ............................................................................................................................... 6

2.0 Domestic Arrears ...................................................................................................................... 7

2.1 Accumulation of Domestic Arrears ......................................................................................... 7

2.2 Un-budgeted for Domestic Arrears ........................................................................................ 7

3.0 Quantifiable Contingent Liabilities .......................................................................................... 7

4.0 Non-quantifiable contingent liabilities.................................................................................... 8

Other Matters ........................................................................................................................................ 8

5.0 Un- accredited campus ............................................................................................................ 8

6.0 Staff in Acting capacity ............................................................................................................ 8

Other Information ................................................................................................................................. 9

Responsibilities of the Accounting Officer for the Financial Statements ...................................... 9

Auditor’s Responsibilities for the Audit of the Financial Statements ........................................... 10

Other Reporting Responsibilities ...................................................................................................... 11

Report on the Audit of Compliance with Legislation ..................................................................... 11

7.0 Staff Performance Management Initiatives......................................................................... 11

7.1 Performance Agreements/targets ........................................................................................ 11

7.2 Development of Performance Plans ..................................................................................... 12

7.3 Completion of Quarterly Performance Reviews ................................................................. 12

7.4 Completion of Performance Improvement Plans ............................................................... 12

7.5 Timelines on conclusion of disciplinary cases ..................................................................... 12

7.6 Client Charter .......................................................................................................................... 13

8.0 Procurement Anomalies ......................................................................................................... 13

8.1 Lack of Performance Security ............................................................................................... 13

8.2 Construction of Access Roads at MUBS - Nakawa campus .............................................. 13

8.3 Construction of Block 1-Bursar’s Office by M/s. Comico International Ltd .................... 14

9.0 Local Service Tax .................................................................................................................... 14

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LIST OF ACRONYMS

Acronym Meaning

GOU Government of Uganda

INTOSAI International Organization of Supreme Audit Institutions

ISSA International Standards on Auditing

PFMA Public Finance Management Act, 2015

TAI Treasury Accounting Instructions

UGX Uganda Shillings

VAT Value Added Tax

MDA Ministry, Department, and other Agencies

NTR Non Tax Revenue

UCF Uganda Consolidated Fund

MUBS Makerere University Business School

AIMS Academic Information Management System

LST Local Service Tax

URA Uganda Revenue Authority

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MAKERERE UNIVERSITY BUSINESS SCHOOL

FOR THE YEAR ENDED 30TH JUNE, 2019

THE RT. HON. SPEAKER OF PARLIAMENT

Opinion

I have audited the accompanying financial statements of the Makerere University Business School (MUBS) which comprise the statement of Financial Position as at 30th June 2019, the statement of Financial Performance, Statement of Changes in Equity and Statement of Cash Flows together with other accompanying statements for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In my opinion, the financial statements of Makerere University Business School for the year ended 30th June 2019 are prepared, in all material respects, in accordance with Section 51 of the Public Finance Management Act, 2015, and the Financial Reporting Guide, 2018. Basis of Opinion

I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statement’s section of my report. I am independent of Makerere University Business School in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act, 2008, the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics, the International Ethics Standards Board (IESBA) Code of Ethics for Professional Accountants (Parts A and B), and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matters described below to be key audit matters communicated in my report. 1.0 Implementation of the Approved budget

Section 45 of the Public Finance Management Act, 2015, requires the Accounting Officer to control the regularity and proper use of the money appropriated to the vote. According to Section 45 (3) of the same Act, the Accounting Officer shall enter into an annual performance contract with the Secretary to Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan for the vote for the financial year. Work plans are based on outputs to be achieved for the financial year and during implementation, efforts are required to be made to achieve the agreed objectives/targets for the entity within the available resources.

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MUBS is mandated under the Public Universities and Other Tertiary Institutions Act, 2001 (as amended) to enhance Management and Business Education in the country through the provision of ideas, knowledge and skills at different levels in business and non – business.

In order to achieve this mandate, MUBS planned to implement and achieve a number of both recurrent and development deliverables under various programmes and projects. The entity had an approved budget of UGX.87,338,047,965, out of which UGX.79,053,801,105 was released. The key deliverables for the financial year 2018/19 were summarized in the table below.

Table: showing key deliverables for MUBS for the year

Sn Key deliverables Amount Cumulative percentage of

the approved budget

1 01: Teaching and Training 3,345,653,000 3.98

2 02: Research, Consultancy and Publications 820,000,000 4.96

3 04: Students' Welfare 2,516,170,000 7.95

4 05: Administration and Support Services 67,936,764,000 88.79

5 51: Guild Services 1,731,061,000 90.85

6 52: Subscriptions to Research and International Organizations

97,500,000 90.96

7 99: Arrears 343,444,000 91.37

8 71: Acquisition of Land by Government 50,000,000 91.43

9 72: Government Buildings and Administrative Infrastructure

4,250,187,000

96.49

10 75: Purchase of Motor Vehicles and Other Transport Equipment

450,000,000 97.03

11 76: Purchase of Office and ICT Equipment, including Software

69,010,000 97.11

12 77: Purchase of Specialized Machinery & Equipment

769,010,000 98.02

13 78: Purchase of Office and Residential Furniture and Fittings

467,734,000 98.58

14 81: Lecture Room construction and rehabilitation (Universities

840,000,000 100

Total 83,686,533,000

Makerere University Business School planned to achieve the above deliverables through the implementation of 14 outputs. I sampled 7 outputs worth UGX.75,529,489,012 representing 87% of the total budget for review and below are the findings;

Observation Recommendation

i Revenue performance

I reviewed the NTR estimates, revenue sources, and rates charged at vote level for the financial year 2018/2019 and noted that out of

the budgeted revenue of UGX.51,891,687,932 only

UGX.38,180,805,176 was collected representing the performance of 73.6% of the target.

Failure to collect revenue affects the implementation of planned

activities and the achievement of the intended objectives.

Management stated that measures are in place to ensure that

students pay the fees on time.

I advised the

Accounting Officer to enforce the

collection measures

to ensure timely collection of all fees

due to the University.

iii

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Quantification of Outputs/Activities

Out of the 14 outputs/activities with a total budget of

UGX.87,338,047,965 implemented by the entity during the

financial year, I sampled and reviewed seven (7) outputs/activities with a budget of UGX.75,529,489,012 representing 87% of the

total budget as indicated in the table below; Table showing outputs/activities planned

Details Number Budget

Total Outputs/activities 14 87bn

Outputs/activities sampled 7 76bn

Percentage 50% 87%

A review of the entity performance reports for the financial year 2018/2019 revealed that out of 37 activities assessed/reviewed, 21

activities representing 57% of the total activities were not

quantified to enable measurement of performance. Appendix I refers;

I observed that, in these cases, management reported in generic

ways, i.e. Carry out field attachment activities and supervision of

students, provide reading materials by increasing book ratio through e-books, facilitate students with disabilities with helpers

and gadgets, etc.

The failure to plan and report on the number of activities implemented renders it difficult to establish individual activity costs

for each planned output and this curtails effective accountability

when funds are subsequently spent. Furthermore, without clearly spelt out planned outputs, I could not ascertain whether funds

appropriated by Parliament and released were spent and the intended objectives achieved.

The Accounting Officer committed to improving/more detailed reporting in terms of quantification of activities performed by the

entity.

I await the

outcome of the Accounting Officer’s

improvement/more

detailed reporting in terms of

quantification of activities performed

by the entity.

iv Implementation of the quantified planned outputs An analysis of the outputs/activities that were quantified revealed

that though the entity absorbed (100%) of the funds that were released, some of the activities remained either partially or not

implemented at all.

Out of the 16 quantified activities assessed, five (5) activities

representing 31% were fully implemented, 9 activities representing 56% were partially implemented while two (2) activities

representing 13% were not implemented at all. Details are attached in Appendix 1. Below is a table showing a summary of

the implementation status.

I advised the

Accounting Officer to ensure that

funds are spent as per the approved

budget and follow-

up on projects behind schedule to

ensure that their completion is

expedited.

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Table: showing the level of implementation S/n Description Reporting Activiti

es Performance in %

1 ALL the planned activities have been achieved or realized (100%).

Fully Implemented

5 31%

2 A portion of some of the planned activities has been achieved or realized (less than 100%).

Partially Implemented

9 56%

3 The entity did not realize or achieve ANY of the planned outputs (0%).

Not Implemented

2 13%

Total outputs

16 100%

Non-implementation of planned activities implies that the expected

services to the beneficiary communities were not attained. For

example, the entity did not implement the following activities despite receiving 100% of the total budget;

Binding of 2,200 library books and completing renovations of

lecture halls at Main and Jinja Regional campuses.

The Accounting Officer explained that the partial performance was

due to an overlap of activities in the subsequent period. Also affected by prices between estimates and the actual market price

of goods and services. Non-implementation of some activities was as per funds releases at 95.2% of the budget and yet activities

were as per budget.

v Diversions/Mischarges Paragraph 8.5.2 of the Treasury Instructions, 2017 states that the

implementation of the budget shall strictly follow the work plans, procurements and recruitment plans as approved by parliament.

On the contrary; funds to the tune of UGX.141,363,732 were

irregularly diverted from the activities on which they were budgeted for, and spent on other activities without seeking the

necessary approvals. Details are in Appendix 2.

Diversion of funds is not only contrary to the Public Finance

Management Act, but it negatively affects the delivery of services and negates the purpose of budgeting.

Although the Accounting Officer explained that the payments were

made within their respective budgets. On verification; I noted that

UGX.141,363,732 was actually mischarged.

I advised the Accounting Officer

to always adhere to the approved

budget allocation or

seek approval in case of

reallocations.

Emphasis of Matter

Without qualifying my opinion, I draw attention to the following matter disclosed in the financial statements.

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2.0 Domestic Arrears

2.1 Accumulation of Domestic Arrears

Section 21 (2) of the Public Finance Management Act, 2015 states that a vote shall not take any credit from any local company or body unless it has no unpaid domestic arrears from a debt in the previous financial year, and it can pay the expenditure from the approved estimates as appropriated by Parliament for that financial year. Furthermore; paragraph 10.10.17 of the Treasury Accounting Instructions 2017 states that “An Accounting Officer will ensure that no payments due in any financial year remain unpaid at the end of that year. On the contrary, the School had accumulated domestic arrears to the tune of UGX.19,084,373,665 by the end of the financial year under review as indicated in Note 24. This rose by 177% from the previous year’s arrears of UGX.10,793,305,009.

Also, Included in the arrears total balance is UGX.8,610,930,762 payable to Uganda Consolidated Fund which resulted from the School’s failure to transfer back all the money advanced from UCF and functional fees of UGX.975,461,400 due to Makerere University for the financial year 2018/ 2019 that was not paid.

Accrued domestic arrears adversely hamper budget performance in the subsequent year as outputs anticipated in the appropriated budget cannot be attained due to settlement of the arrears. It may also result in litigation for non-payment of services already consumed. The Accounting Officer explained that the School is heavily underfunded, given that it only received UGX.590m towards domestic arrears for the period under review which was insufficient to cover the previous domestic arrears. I advised the management to ensure that sufficient budget provisions are made to cater to the settlement of outstanding domestic arrears.

2.2 Un-budgeted for Domestic Arrears

Section 7.4 of the Financial Reporting Guide, 2018 requires all domestic arrears to be verified and reconciled with the database maintained by the Accountant General and are budgeted for in the current year. However; domestic arrears totaling to UGX.1,227,876,796 was paid out during the year but the expenditure was not budgeted for. This included UGX.1,186,885,042 related to unremitted functional fees to Makerere University.

Payment for un-budgeted for arrears translates into diversion funds from the planned activities. The Accounting Officer explained that the school collects and transfers functional fees on behalf of Makerere University and therefore could not make them part of the domestic arrears and the School’s expenditure budget. I advised the Accounting Officer to always budget for outstanding liabilities.

3.0 Quantifiable Contingent Liabilities

The University disclosed contingent liabilities of UGX.4,492,251,721 in the statement of contingent liabilities on page 35 of the Accounts which majorly constitute court cases. Contingent liabilities could result in losses if the courts rule against the University.

The management is advised to endeavor and amicably resolve contentious matters.

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4.0 Non-quantifiable contingent liabilities

MUBS was involved in seventeen (17) cases in the courts of law, mainly with her former staff and students where eleven (11) of the cases remained pending at the close of the financial year. The cases arose mainly from the termination of employment contracts. There is a risk that in case of unfavorable rulings, the School may incur financial losses. The Accounting Officer explained that he was still waiting for a resolution from Court on all pending cases as presented. I advised management to carry out due diligence in all aspects of staff management to safeguard the School against litigations and possible unfavorable outcomes. Other Matters

In addition to the matters raised above, I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements.

5.0 Un- accredited campus

Section 119 A of the Universities and Other Tertiary Institutions Act, 2001 states that no person shall operate a University, other Degree Awarding Institution, or a Tertiary Institution without prior accreditation of its academic and professional programs by NCHE. However, I noted that MUBS Jinja and Arua campuses have not obtained accreditation by NCHE despite admitting students and conducting lectures at the campuses.

A campus that is not accredited may not be suitable for academic activities.

The Accounting Officer explained that, so far three (3) campuses (Mbale, Jinja, and Mbarara) have been accredited and NCHE has since made a second visitation to Arua Campus to finalize the accreditation process.

I advised the management to follow up on the matter with NCHE to have the campus accredited without further delay.

6.0 Staff in Acting capacity

According to Section A(A-c)(9) of the Public Service standing orders 2010, an appointment on an acting basis is expected to last not more than six (6) months and is subject to direction by the appointing authority. Any period of acting appointment beyond six months will be null and void. However; a review of personnel records of staff in acting capacity revealed that a number of staff members were in acting positions for more than six (6) months and there was no evidence that extensions were expressly authorized by the appointing authority. Acting in positions of service beyond six (6) months without the approval of the extension contravenes Public service standing orders and may cause governance challenges. In addition, a review of the approved MUBS organogram revealed that, the University is supposed to have two Deputy Principals namely: Deputy Principal Academics and Deputy Principal Finance and Administration. It was however established that the approved staff structure only provides for one deputy principal.

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The Accounting Officer explained that some of the academic staff positions cannot be elected due to lack of capacity to carry out elections and as the Institution continues to build capacity, administrative appointments are made by the Principal while for administrative heads like the Director of Studies, School Registrar, School Bursar, the recruitment process was halted by the IGG. On the deputy principal in charge of Finance and Administration, he explained that the law provides for one Deputy Principal however Council had made proposals for a 2nd Deputy Principal given the existing workload to the Ministry of Education and Sports and Ministry of Public Service. I advised the Accounting Officer to regularize the appointment of staff and ensure the matter is taken to the Council for appropriate alignment of the staff structure with the approved organogram. Other Information

The Accounting Officer is responsible for the other information. The other information comprises the statement of responsibilities of the Accounting Officer and the commentaries by the Head of Accounts and the Accounting Officer and other supplementary information. The other information does not include the financial statements and my auditors’ report thereon.

My opinion on the financial statements does not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially consistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information; I am required to report that fact. I have nothing to report in this regard. Responsibilities of the Accounting Officer for the Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Makerere University Business School.

The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Public Finance Management Act 2015, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the financial statements, the Accounting Officer is responsible for assessing the School’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer has a realistic alternative to the contrary.

The Accounting Officer is responsible for overseeing the School’s’ financial reporting process.

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Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISSAIs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the School’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the School’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause MUBS to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide the Accounting Officer with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with him/her all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with the Accounting Officer, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in

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my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Responsibilities

In accordance with sections 19 (1) of the National Audit Act, 2008, I report to you, based on my work described on the audit of Financial Statements, that; except for the matters raised in the compliance with legislation section below, and whose effect has been considered in forming my opinion on the financial statements, the activities, financial transactions and information reflected in the financial statements that have come to my notice during the audit, are in all material respects, in compliance with the authorities which govern them. Report on the Audit of Compliance with Legislation

The material findings in respect of the compliance criteria for the applicable subject matters are as follows;

7.0 Staff Performance Management Initiatives

The Government of Uganda has been implementing Public Service Reforms since the 1990s geared towards cultivating a performance culture focused on results, excellence and professionalism.

Consequently, a number of performance management initiatives have been introduced for enhancing performance and service delivery in the Public Service. These include Open Performance Appraisal System, Rewards and Sanctions Framework, Client Charters and Service Delivery Standards and Performance Agreements/Plans among others.

Makerere University Business School operations are guided by the Universities and Other Tertiary Institutions Act, 2001 (as amended). The School has a human resources manual, 2009 that provides for human resource management and development. The School has an approved organization structure comprising of 2,551 staff out of which 1,049 posts have been filled, leaving a balance of 1,502 posts vacant.

I undertook a review of the School’s staff in post to examine how the entity has implemented the above initiatives and I noted the following;

7.1 Performance Agreements/targets

I noted that out of the 24 members of Senior Management none had signed Performance Agreements. Failure to sign performance agreements incapacitates the University from effectively measuring its staff performance against agreed set targets.

Although the Accounting Officer stated that the School has a performance agreement that is filled/ signed annually by all senior members of management, I was not availed copies for verification.

I advised the management to ensure that senior managers sign performance agreements upon which their performance can be measured.

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7.2 Development of Performance Plans

Section 4.0 of the MUBS human Resources manual requires the School to periodically review key accountabilities of all staff agreed upon as performance targets. Best practice would then require that all staff would use the agreed-upon accountabilities to develop performance plans.

However, I noted that out of 1,027 staff in post at the beginning of the financial year 2018/19, none of the staff filled in the annual performance plans. As a result, the basis against which individual performance achievements can be measured at the end of the assessment period is not provided. I advised the Accounting Officer to ensure that all staffs prepare performance plans as a basis for measurement of performance at the end of the assessment period.

7.3 Completion of Quarterly Performance Reviews

Section 4.0 of the School Human Resource manual requires the School to periodically review key accountabilities of all staff agreed upon as performance targets to reward good performance and in case of weak performance identify obstacles and where possible remove them. It was however noted that there were no quarterly performance reviews undertaken by the staff during the year under review. The practice denies management the ability to ensure that activities in line with the agreed performance plan are on track and to provide advice and take timely remedial action. I advised the management to ensure that all staffs undertake quarterly performance reviews for better staff performance.

7.4 Completion of Performance Improvement Plans

Best practice requires that where performance targets have not been met; performance improvement initiatives shall be inbuilt in the performance plan for the subsequent year, to address those challenges. Performance Improvement plans help identify and understand the key reasons and underlying causes of poor performance and guide managers and supervisors in the identification of capacity needs.

However, I noted that there were no Performance improvement initiatives identified in the financial year 2017/18 and therefore none of the staff had performance improvement plans included in the performance plan/training plan of the year under review as required. I advised the management to ensure that staffs prepare performance plans as a basis for the measurement of staff performance at the end of the assessment period.

7.5 Timelines on the conclusion of disciplinary cases

I noted that cases that require administrative investigation took averagely five (5) months to be concluded and those that required police investigations took averagely more than 15 months contrary to the provisions of the human resources manual. Delays in resolving cases may create more challenges that could affect the University operations.

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The Accounting Officer explained that disciplinary cases ordinarily take one month except for exceptional cases. I advised the management to ensure that all disciplinary cases are handled as per the provisions of the human resources manual.

7.6 Client Charter

Best practice requires the entity to develop and publish service delivery standards with regard to the respective services they provide. A client's charter lays out an explicit standard of service delivery to enable the clients to understand what they can reasonably expect from service providers. However, I noted that management is yet to develop and operationalize a clients’ charter. The Accounting Officer explained that the process of developing the Charter was ongoing. I advised the Accounting Officer to expedite the development and publishing of service delivery standards.

8.0 Procurement Anomalies

8.1 Lack of Performance Security

Section 12 (1) of the PPDA (Contracts) Regulations, 2014 states that performance security shall be required to protect the procuring and disposing entity against non- performance of a contract. Review of the special conditions of the contract documents signed by the contractor and management for 12 contracts of total value UGX.2,085,590,179 revealed that the contractors needed to provide performance securities of 10% of the contract prices in the form of unconditional Bank guarantees. However, there were no performance securities submitted by the contractors.

I explained to management that there is a risk that substandard works and services could be performed and/ or contractors may fail to perform all their obligations thereby exposing the College to losses.

Management is advised to always ensure that performance securities are obtained and should not be released until all the obligations of the provider are fulfilled as stated.

8.2 Construction of Access Roads at MUBS - Nakawa campus

The contract for construction of the MUBS Nakawa campus roads was signed on the 31st of July 2017 between MUBS and the contractor Destiny Civil Engineering Works Co. Ltd at a price of UGX.1,498,478,047 and was supposed to be completed in 24 months inclusive of the defects liability period. The defects liability period should have ended in July 2019. Whereas the project was completed, I noted the following anomalies;

As at the time of audit (October 2019); UGX.1,264,052,653 had been paid to the contractor, leaving a balance of UGX.234,425,394 not paid (this includes 10% retention of UGX.149,847,804).

UGX.214,900,000 was not yet accounted for as at the time of audit as shown below;

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Item Amount billed Audit Remarks on inspection

Road marking using road marking paint- using white paint

15,000,000

Not done.

Preparing the area for planting grass 2,400,000

Not done.

Allowance for prime cost sum of 100m for preparation of detailed designs and main contractors profit

115,000,000

Not accounted for

Allow for 75m provisional sum for supervision by resident engineer and 10% main contractors profit

82,500,000

Not accounted for

Total 214,900,000

There are no humps and no speed limit signposts to control the speed of motorists.

I advised the Accounting Officer to ensure that defects and missing works are addressed before the contractor is paid retention.

8.3 Construction of Block 1-Bursar’s Office by M/s. Comico International Ltd

The contract was signed on the 28th of June 2017 and was supposed to be completed in 24 months inclusive of the defects liability period. The defects liability period ended in July 2019. Whereas the project was completed, I noted the following anomalies;

i) The building currently houses most of the sensitive offices including the Bursar’s office, HR office, procurement office, projects, and strategy among others, but it does not have burglar proofs on doors and windows. The school risks losing valuable documents in case of break-ins by thieves or striking students.

ii) The contract provided for UGX.239,000,000 as a contingency that was not yet accounted for at the time of the audit.

I advised the Accounting Officer to address the issue of safety and also ensure that funds are properly accounted for.

9.0 Local Service Tax

Section 10.24.1 of the Treasury Instructions, 2017 states that statutory deductions from public officers, where applicable, shall be effected through the payroll and remitted promptly to the respective Institutions, such statutory deductions include Pay As You Earn (PAYE), Local Service Tax (LST), NSSF contributions and contributions to the workers’ unions. I noted that UGX.92,715,000 was deducted from the University employees as LST but was not remitted to the respective local councils where staff reside as required by the Treasury instructions.

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Nonremittance of statutory deductions is irregular and may cause litigations and penalties against the School. It also affects service delivery in the Local Councils. Although the Accounting Officer explained that the funds were remitted, evidence of remittance was not availed for verification.

The Accounting Officer is advised to remit the funds to the respective councils.

John F.S. Muwanga AUDITOR GENERAL

12th December, 2019

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Appendices

Appendix 1- Implementation of the quantified planned outputs

Sub Program/Project

Output Activities/ Key Performance Targets

Are there clear targets and performance indicators to measure progress (Yes/No) If no give reason

Planned Target for the Financial year (A)

Budgeted amount UGX( Bn (B)

Revised budget UGX Bn ( C )

Amount released (Bn) (D)

Amount Spent UGX (Bn) (E)

Achieved Target by Financial year end (Annual performance report) (F)

Out Put Variance (A-F)

Implementation status (Fully (F), Partially (P), or Not Implemented (NI))

Causes for the output variances (to be Obtained from accounting Officers)

Was the activitity reported on in the periodic monitoring reports- (Yes/No) If no give reason

Is the performance of the activity accurately reported in the annual performance reports-(Yes/No) If no give reason

Remarks

Administration

075101-Teaching and Training

Admit 12,000students for first year on all programs

yes 1,200 3.34 4.78 4.28 4.23 11,001 999 Partially implemented

Less turn up of students in the e up country branches to what was anticipated Other universities offering MUBS programs including the mother institution MUK.

Yes No. The annual performance report reported 10,790

UGX.559M was under funding for the output UGX.53m was warranted but not spent

Carry out field attachment activities and supervision of students

No. no of visits not stated

Not quantified

N/a N/a Partially implemented

Some students failed to get placements and hence not supervised

Yes No. the number of field attachments and supervision made not stated

Conduct and organize at least two workshops per department

yes At least 2 per department

Actual number not reported

N/a Partially implemented

Yes No. the actual number of workshops conducted not mentioned

17

Procure 2,400 books both from local and international authors

yes 2,400 1,200 1,200 Partially implemented

Funding gap caused by short fall in the NTR collected ad late payment of students affected implementation of budgeted activities.

Yes Yes

Bind 2,200 library books

yes 2,200 0 2,200 Not implemented

No No .not mentioned in the performance report

Provide reading materials by increasing book ratio through e- books

no Not quantified

Subscribed to 40 databases

N/a N/a yes No. the no achieved not stated

Register, lecture and examine 21,000 students on all MUBS programs


Late application for admission, student poor performance and therefore do not qualify for admission, competition especially form MUK

yes No. reported registered students as 17,705

Graduate 6000 students


Some students who could not graduate because of having retakes

yes No. reported 4,972

issue 3000 transcripts and certificates

yes 3,000 Actual number not reported

N/a N/a N/a No No. was not reported

18

Train 199 staff under capacity development as follows PHD;58 masters and PGD ,83 undergraduate,83 and diploma,5

yes 199 71 128 Partially implemented

Staff were scheduled for training but limited resources

Yes No.

075102- Research, Consultancy and Publications

Facilitate research in the business school through seminars and conferences

No Not quantified

0.82 0.82 0.39 0.39 N/a N/a Partially implemented

Funding gap affected full implementation of the activity. The activity was budgeted only on NTR which realised a shortfall of 24%.

yes No. extent to which the activity was implemented not stated

425,342,070 budgeted not received.

publications in research journals

No Not quantified

N/a N/a Partially implemented

Funding gap affected full implementation of the activity

yes No. extent to which the activity was implemented not stated

075104- Students' Welfare

Facilitate students with disabilities with helpers and Gadgets.

No Not quantified

2.52 2.52 2.46 2.46 52 N/a N/a Yes Actual number of students facilitated not stated

UGX. 51,511,650 was shortfall in budgeted cost

Feed 1300 government students and student leaders

yes 1300 1259 41 Partially implemented

Not given yes No. 890 reported

Accommodate 200 students

yes 200 210 (10) Fully implemented

Some disabled students were accommodat

Yes Yes

19

ed

Pay living-out-allowances to 1,100 government students.

yes 1,100 947 153 Partially implemented

Not given Yes No. reported 890

Facilitate disabled students

No Not quantified

38 N/a N/a N/a Yes No. No of students facilitated not stated

Maintain students hostel

No Not quantified

None N/a Not implemented

Funding gap. Cost of feeding students increased from the budgeted cost

No No. not reported at all

075105 -Administration and Support Services Identify

Identify goods and services for school operations

No Not quantified

67.94 69.24 64.77 64.77 N/a N/a N/a Not given No Not reported UGX 4,475,193,674 budgeted was not received

Procure and pay suppliers for goods and services offered.

No Not quantified

N/a N/a N/a Not given No Not reported

Maintained school assets for quality service

No Not quantified

N/a N/a N/a Not given Yes No. Actual performance not stated

20

Payment of salary to 1,031 staff members.

yes 1,031 1,051 (20) Fully implemented

Recruited more staff during the year

Yes No. Actual no of staff who were paid salaries not stated

Conduct staff evaluations.

No Not quantified

N/a N/a N/a Not given No Not reported

Recruit and promote staff.

149 staff recruited , 9 staff promoted

N/a N/a Not given Yes No. The actual number of staff who were recruited and promoted was not stated.

Offer staff welfare activities and Requirements.

No Not quantified

N/a N/a N/a Not given yes No. Actual performance not stated

provide medical services

No Not quantified


Staff benefits and entitlements

No Not quantified


Submitted accurate timely financial reports

No Not quantified


Prepare budgets and budget Performance reports.

No Not quantified

Quarter three budget performance reports

N/a N/a Not given yes No. Actual performance not stated

21

075152 -Subscriptions to Research and International Organisations Number

Number of Organizations subscribed to and Research Collaborations and grants achieved

No 0.098 0.098 0.081 0.081 N/a N/a N/a Funding gap Yes No. Actual performance not stated

Ugx .17,000,000 was budget shortfall for the output

Support to MUBS Infrastructural Dev't

075172 -Government Buildings and Administrative Infrastructure

Complete block one for offices

yes 100% 4.25 4.25 3.59 3.59 100% Nil Fully mplemented

N/a yes yes Ugx 579,543,504 was funding gap for the output

Complete the Library short tower for graduate students

Yes 100% 100% Nil Fully implemented

N/a yes Yes

Constructed access roads at the MUBS main Campus

Yes 100% 100% Nil Fully implemented

N/a yes yes

To have architectural plans for the seven (7) storeyed building

yes 7 1 7 Partially implemented (14%)

Late payment by students which affect the timely implementation of planned activities.

yes yes

22

Appendix 2-Mischarge of Expenditure of UGX.141,363,732

Description EFT / Check Number

Payment Date

Distribution Amount

code charged

code charged-narration

Budget code

Supplier comment

Transfer for Guild activities FY 18-19

19612782 28-Sep-18

500,000 263104 Transfers to other govt. units

211103 MUBS MBALE CAMPUS Allowances for guild mischarged on transfer to other Gov’t units

Funds to cater for students activities in

mubs regional campuses

22671100 9-Apr-19 2,000,000 263104 Transfers to other govt. units

211103 MUBS ARUA CAMPUS Allowances for guild mischarged on transfer to other Gov’t units


19612783 28-Sep-18

3,021,000 263104 Transfers to other govt. units

211103 MUBS MBARARA CAMPUS

Allowances for guild mischarged on transfer to other Gov’t units

FUNDS FOR MBALE CAMPUS ACTIIVITES

18499300 27-Jul-18 1,750,000 263104 Transfers to other govt. units

223006 MUBS MBALE CAMPUS Utilities mischarged on transfer to other Gov’t units

GUILD FEES FOR 2018/19

22196088 11-Mar-19

655,200 263104 Transfers to other govt. units

211103 MUBS MBALE CAMPUS Allowances for guild mischarged on transfer to other Gov’t units


19615739 28-Sep-18

1,548,000 263104 Transfers to other govt. units

211103 MUBS ARUA CAMPUS Allowances for guild mischarged on transfer to other Gov’t units

Payment for supply of stationary for March 2019

23095305 13-May-

19 7,200,000 221012

Small Office

Equipment 221011

SWIFT WASTE

MASTERS LTD

Stationery mischarged on small

office equipment

payment for stationery for the school

22179592 5-Mar-19 14,505,840 221012 Small Office Equipment

221011 Office Automation & Equipment

Stationery mischarged on small office equipment

Purchase of office requirements for exam unit

23607794 31-May-19

10,028,892 221012 Small Office Equipment

221011 Qbranch Uganda Limited


Payment for stationary for couseworks for semester II Ay 18/19

22653904 3-Apr-19 11,431,800 221012 Small Office Equipment

221011 Office Automation & Equipment


Funds to purchase

tonner catridge 20757385 7-Dec-18 850,000 221012

Small Office

Equipment 221011 Ikabat Samuel

Stationery mischarged on small

office equipment

Payment for stationary for quarter 3 AY 2018/19

22456858 25-Mar-19


221011 Caliber Supplies (U) Limited


23

Payment for Printing of Joining instructions for Ay 2018/19

21554415 25-Jan-19 15,600,000 221012 Small Office Equipment



Payment for supply of fieldwork logbooks

22456858 25-Mar-19




Payment for stationery for the school

22179589 5-Mar-19 20,326,271 221012 Small Office Equipment

221011 Qbranch Uganda Limited


PHD Research and publication facilitation second installment

22456925 25-Mar-19

15,000,000 221007 Books, Periodicals & Newspapers

221003 OLYANGA MONI ANTHONY

Research and publication supposed to be charged on Staff Training was mischarged on books ,periodical

and news paper

141,363,732

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