Former minister of Science, Technology and Innovation Elioda Tumwesigye irregularly diverted funds to a tune of shs 73.47 billion from the activities on which it was budgeted and spent on other activities without seeking and obtaining the necessary approvals.
His actions were contrary to Paragraph 8.5.2 of the Treasury Instructions 2017 that state that the implementation of the budget shall strictly follow the work plans, procurements and recruitment plans as approved by parliament.
This has been revealed by the Auditor General in a report presented to by a technical team to the Committee of Parliament on Science and Innovations.
This website obtained the details of the audit report as below.
MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION (MOSTI)
Introduction
The Government of Uganda established a Ministry of Science, Technology and Innovation (MOSTI) on recognizing Science, Technology and Innovation (STI) are the drivers of socio-economic growth and transformation the world over. Science, Technology and Innovation development is an important determinant of progress and transition from pre-industrial to knowledge-based societies. Therefore, the extent to which a country has harnessed STI has a direct bearing on its level of development.
The STI sector comprises of two Votes, that is;
- Vote 023 – Ministry of Science, Technology and Innovation which has three Subventions, namely:
- Uganda National Council for Science and Technology (UNCST);
- The Presidential Initiative on Banana Industrial Development (PIBID); and
- Kiira Motors Corporation (KMC).
- Vote 110 – Uganda Industrial Research Institute (UIRI).
This brief summarizes the audit issues for these votes for the period 2016 to 2020, where the Office of the Auditor General carried out audits.
1.1 Mandate of the MoSTI:
The mandate of the Ministry is:to provide policy guidance and coordination on matters of scientific research, development and the entire National Innovation System in the country.
Vision:
Its vision is: A Scientifically Proficient and Technologically Advanced Innovative Society.
Mission Statement
To provide leadership, an enabling environment and resources for scientific research andknowledge based development for industrialization, competitiveness and employment creationfor a sustainable economy.
Strategic Objectives
The NDP III strategic objectives are:
- To develop requisite Science, Technology, Engineering & Innovation infrastructure;
- To build Institutional and human resource capacity in Science, Technology, Engineering & Innovation;
- To strengthen R&D capacities and applications;
- To strengthen the mechanisms and processes for technology development, transfer, adoption and nurture the national innovation potential; and
- To strengthen Programme Governance, implementation and coordination.
Audit Queries,
2.1. Report of the Auditor General on the Financial Statements of Ministry of Science Technology and Innovation for the Year ended 30th June 2019
2.1.1 Ministry of Science, Technology and Innovation
Revenue performance:
Auditor General observed that during the year, the MoSTI had a Budget shortfall of UGX 12.3 billion representing about 21% of the budget. This resulted from the MoSTI receiving UGX 47.1 billion instead of UGX 59.4 billion budgeted. This is contrary to Section 45 (1) of the Public Finance Management Act 2015 that requires the Accounting Officer to control the regularity and proper use of the money appropriated to the vote.Shortfalls in budgets imply that some activities may not have been fully implemented by the Ministry.
Under Absorption of Funds
Auditor General noted that out of the total warrants of UGX 47.07billion a total of UGX 46.46billion was actually spent by the entity resulting into an unspent balance of UGX0.61billion representing an absorption level of 99%. The unspent balance at the end of the financial year was subsequently swept back to the consolidated fund account.
This leads to failure to fully attain the intended objectives for the year.
Quantification of Outputs/Activities
Auditor General’s review of the entity performance reports for the financial year 2018/2019 revealed that the annual planned outputs/ activities assessed/reviewed were not quantified to enable measurement of performance. He observed that, in these cases, management reported in generic ways, i.e. STI regional centers of excellence established.
The Accounting Officer needs to have approved key performance indicators, as per the National Standard Indicator Framework which should be quantified to enable assessment of performance.
- Mischarges of Expenditure
Auditor General noted that funds to the tune of UGX.73.47 billion were irregularly diverted from the activities on which it was budgeted and spent on other activities without seeking and obtaining the necessary approvals. This is contrary to Paragraph 8.5.2 of the Treasury Instructions 2017 that state that the implementation of the budget shall strictly follow the work plans, procurements and recruitment plans as approved by parliament.
- Management of the Innovation Fund
Auditor General noted the following matters:
- Parliament did not approve Innovation funding for the financial year ended 30 June 2019, yet funds had been allocated during the last financial year leading to stalled work on projects that had been initiated.
- There is no legal framework establishing the fund and there are neither guidelines nor a database of beneficiaries of innovation fund in the country and the criterion for distribution to the different beneficiaries by MoSTI and Ministry of Finance Planning and Economic Development (MoFPED) is not clear.
- A review of the application of Innovation funds in the Ministry of Science Innovation and Technology revealed that the fund does not have conditionality and can be reallocated. For example, MoSTI was asked by the Ministry of Finance Planning and Economic Development in the 2017/2018 approved budget to reallocate UGX.2.5billion from Innovation fund to purchase office space and furniture and at the same time reallocated UGX.4.4billion to Presidential Initiative on Banana Development.
Advances to Personal Bank Accounts
Auditor General observed that contrary to Paragraph 31 of the Public Finance Management Regulations 2016, a sum of UGX 518 million was advanced to the Ministry of Science, Technology and Innovation staff through their personal bank accounts to undertake various operational activities.
The practice of depositing huge sums of money to personal accounts is not only irregular but also exposes Government funds to risk of loss, since the Ministry does not have any control over such funds.
Staffing Gaps
Auditor General observed that by the end of the financial year 2018/2019, out of the 152 established positions at the Ministry, only 125 were filled leaving 27 positions vacant. Failure to fill all the vacant positions can lead to challenges in executing the Ministry’s mandate and hence service delivery.
2.2. REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION FOR THE YEAR ENDED 30 JUNE 2018
2.2.1 Ministry of Science, Technology and Innovation
Implementation of Budget Approved by Parliament
Auditor General observed that a total of UGX.57.95billion was budgeted to cater for the Ministry of Science, Technology and Innovation activities. However, by the close of the financial year 96% of the approved budget i.e. UGX.55.84billion had been received resulting into a budget shortfall of UGX.4.03 billion. The shortfall was attributed to release of less than budgeted funds from GOU which negatively affects the implementation of the Ministry’s activities.
Understaffing
It was noted that out of the approved structure of 136 Staff, only 61 (45%) positions had been filled leaving 75 (55 %) positions vacant including three key senior positions of Director Technoprenuership, Director Science Research and Innovation and Director Policy, Planning and Regulation.
Lack of Contract Management Plans
Regulation 51(3) of the Public Procurement and Disposal of Public Assets (Contracts) Regulations 2014 requires that, upon receipt of a contract, the contract manager should prepare a contract management plan using Form 49 in Schedule 2 and forward a copy to the to the procurement and disposal unit for purposes of monitoring.
A review of procurements sampled revealed that there were no contract management plans prepared. Lack of contract management plans may lead to poor and delayed contract implementation.
Lack of Strategic Plan
Section 13(7) of the Public Finance Management Act, 2015 demands that the entity obtains a certificate of compliance issued by National Planning Authority (NPA) aligning the entity’s budget to the Strategic Plan and the National Development Plan.
Auditor General however, noted that the Ministry did not have a strategic plan since its establishment in 2016. A Strategic Plan outlines the strategic objectives and milestones upon which an entity can measure its performance. Absence of such a plan denies the entity direction and makes it difficult to evaluate and assess performance of the Ministry in terms of its strategic objectives and mandate.
Absence of an Audit Committee
Section 46 (7) of Treasury Instructions, 2017 and Section 49 (4) of the Public Finance Management Act, 2015 require the Minister to appoint Audit Committee members for each sector of government on recommendation by the Secretary to Treasury. The audit committee plays a role of oversight in the financial management and reporting process.
Contrary to the above provision, it was observed the Sector of Science, Technology and Innovation does not have an Audit Committee. Absence of an Audit Committee weakens the governance and internal control structure of the Ministry as well as the other entities in the sector.
2.2.2 Presidential Initiative on Banana Industrial Development
Revenue Performance
Review of the statement of financial performance for PIBID for the year ended 30thJune, 2018, revealed that out of the budgeted revenue of UGX.22.47 billiona sum of UGX.20.42 billion (93%), was realized resulting into a shortfall of UGX.2.05 billion.
Expenditure Performance
It was however observed that at the close of the financial year, PIBID had a variance of UGX.3.2 billion by the PIBID’s total budgeted expenditure stood at UGX 22.47 billion against actual expenditure of UGX 19.22 billion.
This leads to low levels of service delivery and failure to fully implement planned activities.
1. Failure to Return Unspent Balances -UGX.1,303,336,960
Review of the Bank statement for the month of July 2018 revealed that UGX.1.3 billion was still on the bank account of PIBID.Management acknowledged the observationand stated that for purposes of compliance with Regulation 17(3) of the Public Finance Management Regulations 2016 on unexpended balances, PIBID management wrote to the PS/ST on 16thJuly 2018 to declare the said balances but they were directed to return the funds and they transferred to the consolidated fund UGX.1.11 billion as the available fund on the main PIBID account as at 1stAugust 2018.
1. Expired Term of the Board and Management Committee
The Presidential Initiative on Banana Industrial Development (PIBID) is a project of the Governmentof Uganda, which was commissioned in January 2005 and was accredited an Executive Instrument in October of the same year. Although there is an Executive Instrument dated 7thOctober 2011 renewing the life of the Project for five years, and the Board and Management Committee for another 5 years effective 7thOctober, 2010, there is no evidence of their continuity after 7th October 2015. Further, the Board and Management Committee was not fully constituted since one member did not take up the appointment. Management has however written to the appointing authority seeking guidance on their tenure.
1. Lack of Internal Audit Function
It was noted that PIBID did not undertake an internal audit during the year under review, contrary to Section 48(6) of the Public Financial and Management Act 2015, which provides for internal audit. This was attributed to the function being previously undertaken by MoFED, which was the original parent ministry to the project. PIBID had failed to recruit its own auditors owing to underfunding. Lack of an internal audit weakens the internal controls environment and may expose the entity to adverse risks.
1. Lack of Land Titles for PIBID Land
It was noted that the entity lacked land titles for its land at Sanga (approximately 50 acres) and land where the water source is located at Kyamugambira (approximately 4 acres). Management explained that the process of acquiring the land title of Katonya water works commenced in 2003 and they were due to start the process of acquiring the land title of 50 acres at Sanga early January after clarifying in whose names the title is to be processed. The Executive Director was advised to expedite the process so as to safeguard its land from encroachment and possible loss.
1. Audit Inspection of Tooke Factory
An audit inspection carried out in the Factory Premises in Bushenyi (Tooke Factory) revealed that construction of the pilot banana processing plant and quality assurance and research facilities is in progress and according to management; work is estimated at 95.4%, with ISO certification at 20%. Auditor General did not obtain full documentation and access to information necessary for the appraisal of the project since all the information (i.e. project appraisal reports) appears classified for fear of patent rights intrusion.
Further, interaction with plant managers revealed that the factory operates once a week and other equipment such as industrial kettle, drum drier and slicing unit have never been used. According to a report by the plant manager the factory has a capacity of producing two (2) tons per shift of flour but was being underutilized.