Local govts fail to recover sh8b from councillors
Jun 15, 2010
AT least 97 local authorities have failed to account for over sh8.3b advanced to councillors, an act that can result into loss or misappropriation of funds, the Auditor General, John Muwanga, has disclosed.
By Joyce Namutebi and John Eremu
AT least 97 local authorities have failed to account for over sh8.3b advanced to councillors, an act that can result into loss or misappropriation of funds, the Auditor General, John Muwanga, has disclosed.
In his latest report, Muwanga also said there was no evidence that Pay As You Earn deductions, totalling sh1.5b for the 2007/08 financial year from 23 districts, were remitted to the Uganda Revenue Authority (URA) as required by law.
Another 16 local governments also had no proof that withholding tax amounting to sh761m over the same period reached the tax authority. (See graphic for details).
“Failure by management to remit the taxes and obtain acknowledgement receipts from URA may attract fines and penalties,†Muwanga said in the report for the period ending June 30, 2008.
He said failure to recover advances could be a deliberate ploy to defraud council funds or a result of laxity in enforcing punitive measures against responsible officers.
Section 43 (2) of the Local Government Financial and Accounting Regulations requires that administrative advances should be authorised by the chief executive (CAO) and accounted for within a month.
The Chief Administrative Officers (CAOs) said recovering advances to the district political leaders was very frustrating.
They also said public service regulations regarding salaries further complicated the recovery process.
“You cannot attach the salary of the defaulters,†said one of the CAOs.
“You have to go through (the Ministry of) Public Service to create a code for recovering the money. If you try to do that, some will take it personally,†added the CAO, who did not want to be named.
Another CAO said whenever they issue instructions to chief finance officers to recover the money, the officers are intimidated and the CAOs are rendered helpless, since some of the local staff have political ‘godfathers’ and are difficult to discipline.
“Since CAOs are no longer appointed by the district service commissions, if they try to press ahead with the recovery, they are labelled ‘foreigners’ who should leave the sons of the soil (civil servants) alone,†observed another frustrated CAO.
However, John Wycliffe Karazarwe, the president of the Uganda Local Authorities Association, rubbished the arguments saying the CAOs were protected by law from intimidation by local politicians.
“The whole issue of a constitutional amendment to make the CAOs appointed by the centre was to cushion them from intimidation so that they do not implement illegal directives,†Karazarwe told The New Vision yesterday.
“So, there is no way they can say they cannot recover the monies lawfully advanced. Those who have failed to recover the monies unlawfully advanced should be called to account,†Karazarwe added.
The Auditor General said lack of recovery of advances to councillors could be a result of chief executives authorising advances to those who have not yet accounted for previous ones, and a lack of monitoring and enforcement of accountability.
“This could result into potential loss of funds and misappropriation of council funds. In addition, council funds are held up in advances and not used in appropriate priority areas in service delivery,†Muwanga said.
The biggest defaulter was Kitgum district with sh553.4m unaccounted for, followed by Pallisa Town Council (over sh506.5m).
Others included Bundibugyo (sh408.4m), Kamwenge (sh341m), Abim (sh320.8m), Nakapiripirit (sh294.4m), Kaabong (sh262.6m), Apac (sh241.5m), Kampala Central division (sh189.5m), Mukono (sh181.4m) and Adjumani.
The Auditor General pointed out that a number of accounting officers failed to adhere to the commitment control system, resulting into committing councils beyond their financial resources.
This, Muwanga said, had led to creation of liabilities reflected in outstanding creditors and domestic arrears amounting to over sh5b.
“A commitment control system should be complied with and officers who commit councils beyond available resources should be held personally liable.â€
On un-remitted taxes, the URA has warned that the defaulting local governments risk having their accounts frozen.
Paul Kyeyune, the authority manager for public and corporate affairs, said although they have not yet got a copy of the Auditor General’s report, they usually issue warnings (distress warrants) to the defaulting districts first.
“We may then enter a memorandum of understanding for them to pay in installments in order to avoid crippling their operations. If this fails, we then write to their bankers freezing their accounts until all the government revenue is recovered. The law allows us to do that,†Kyeyune explained.
Meanwhile, Moyo district was singled out for not reflecting sh772m in its financial statements, thereby understating the actual revenue realised.
The district also failed to account for sh134m, while another sh134.8m released with respect to equalisation grants and drilling of boreholes had not been used for the third year running.
AT least 97 local authorities have failed to account for over sh8.3b advanced to councillors, an act that can result into loss or misappropriation of funds, the Auditor General, John Muwanga, has disclosed.
In his latest report, Muwanga also said there was no evidence that Pay As You Earn deductions, totalling sh1.5b for the 2007/08 financial year from 23 districts, were remitted to the Uganda Revenue Authority (URA) as required by law.
Another 16 local governments also had no proof that withholding tax amounting to sh761m over the same period reached the tax authority. (See graphic for details).
“Failure by management to remit the taxes and obtain acknowledgement receipts from URA may attract fines and penalties,†Muwanga said in the report for the period ending June 30, 2008.
He said failure to recover advances could be a deliberate ploy to defraud council funds or a result of laxity in enforcing punitive measures against responsible officers.
Section 43 (2) of the Local Government Financial and Accounting Regulations requires that administrative advances should be authorised by the chief executive (CAO) and accounted for within a month.
The Chief Administrative Officers (CAOs) said recovering advances to the district political leaders was very frustrating.
They also said public service regulations regarding salaries further complicated the recovery process.
“You cannot attach the salary of the defaulters,†said one of the CAOs.
“You have to go through (the Ministry of) Public Service to create a code for recovering the money. If you try to do that, some will take it personally,†added the CAO, who did not want to be named.
Another CAO said whenever they issue instructions to chief finance officers to recover the money, the officers are intimidated and the CAOs are rendered helpless, since some of the local staff have political ‘godfathers’ and are difficult to discipline.
“Since CAOs are no longer appointed by the district service commissions, if they try to press ahead with the recovery, they are labelled ‘foreigners’ who should leave the sons of the soil (civil servants) alone,†observed another frustrated CAO.
However, John Wycliffe Karazarwe, the president of the Uganda Local Authorities Association, rubbished the arguments saying the CAOs were protected by law from intimidation by local politicians.
“The whole issue of a constitutional amendment to make the CAOs appointed by the centre was to cushion them from intimidation so that they do not implement illegal directives,†Karazarwe told The New Vision yesterday.
“So, there is no way they can say they cannot recover the monies lawfully advanced. Those who have failed to recover the monies unlawfully advanced should be called to account,†Karazarwe added.
The Auditor General said lack of recovery of advances to councillors could be a result of chief executives authorising advances to those who have not yet accounted for previous ones, and a lack of monitoring and enforcement of accountability.
“This could result into potential loss of funds and misappropriation of council funds. In addition, council funds are held up in advances and not used in appropriate priority areas in service delivery,†Muwanga said.
The biggest defaulter was Kitgum district with sh553.4m unaccounted for, followed by Pallisa Town Council (over sh506.5m).
Others included Bundibugyo (sh408.4m), Kamwenge (sh341m), Abim (sh320.8m), Nakapiripirit (sh294.4m), Kaabong (sh262.6m), Apac (sh241.5m), Kampala Central division (sh189.5m), Mukono (sh181.4m) and Adjumani.
The Auditor General pointed out that a number of accounting officers failed to adhere to the commitment control system, resulting into committing councils beyond their financial resources.
This, Muwanga said, had led to creation of liabilities reflected in outstanding creditors and domestic arrears amounting to over sh5b.
“A commitment control system should be complied with and officers who commit councils beyond available resources should be held personally liable.â€
On un-remitted taxes, the URA has warned that the defaulting local governments risk having their accounts frozen.
Paul Kyeyune, the authority manager for public and corporate affairs, said although they have not yet got a copy of the Auditor General’s report, they usually issue warnings (distress warrants) to the defaulting districts first.
“We may then enter a memorandum of understanding for them to pay in installments in order to avoid crippling their operations. If this fails, we then write to their bankers freezing their accounts until all the government revenue is recovered. The law allows us to do that,†Kyeyune explained.
Meanwhile, Moyo district was singled out for not reflecting sh772m in its financial statements, thereby understating the actual revenue realised.
The district also failed to account for sh134m, while another sh134.8m released with respect to equalisation grants and drilling of boreholes had not been used for the third year running.