Question 1 Initial budget Shs '000' (3,000,000) (10,446,140) Actual Dr. Cr. Shs '000' Additional information:
(a) The following statement shows the budget estimates and trial balance for the National Centre of Breeding and Research (NCBR), a government statutory body, for the year ended 30 June, 2017:
- 1 The National Centre of Breeding and Research (NCBR) prepares its financial statements adopting accrual basis accounting and International Public Sector Accounting Standards (IPSAS).
- 2 The policy of NCBR is to depreciate buildings at 5% on reducing balance and machinery and equipment at 10% on straight line. The property valuer for NBCR, in the year-end report, stated that non- produced assets had increased by 30%.
- 3 A reconciliation of changes in the carrying amount of biological assets between the beginning and the end of the reporting period included in cultivated assets indicated that 70 heads of dairy cattle, 55 goats and 35 sheep each with a fair value of Shs 1,500,000, Shs 280,000 and Shs 650,000 per head respectively were either stolen or lost.
- 4 At the beginning of the financial year, NCBR received nitrogen conservation equipment from the World Food Security Organization as supplementary funding. It was estimated that in the open market, similar equipment costs Shs 870 million inclusive of shipping costs while taxes and other direct costs are estimated to result into 168%, whereas rebates amount to Shs 12 million. NCBR was to appropriate this donation under machinery & equipment.
- 5 On 10 July, 2016 the Ministry of Agriculture transferred buildings to NCBR valued at Shs 975 million. The buildings are to be used by NCBR to expand its operations.
- 6 Three years preceding the current reporting date, NCBR had acquired a liquid nitrogen making machine with expected life time of 15 years at Shs 150 million. The machine was expected to produce 700 cubic metres of nitrogen for artificial insemination services every year. However, due to poor environmental conditions, the machine's production capacity during the reporting period had reduced to 380 cubic metres per year. The replacement cost three years back of such a machine was estimated at Shs 40 million.
- 7 There was a mischarge on contract staff salaries (incl. casuals) amounting to Shs 128 million which was used by senior management to travel abroad, while Shs 32.7 million for social security contributions were charged on welfare and entertainment. While making monthly bank reconciliations, the accountant discovered that the cashier receipted revenue up to a tune of Shs 12.6 million from sale of (produced) government properties as miscellaneous receipts.
NCBR is authorised to collect non-tax revenue (NTR) to fill central government funding gaps and as a result, it sells hybrid agricultural
products including lambs, eggs, milk, and chicken and also trains farmers in modern farming practices. By the end of the financial year, the Centre had generated Shs 245 million in cash and Shs 36 million in credit sales. The Budget Committee had included this revenue in the projected sale of (produced) government properties.
With reference to relevant Public Sector Accounting Standards, prepare, for NCBR for the year ended 30 June, 2017 a statement of:
- (i) financial performance. (13 marks)
- (ii) financial position. (14 marks)
- (iii) budget performance, clearly showing the variance between
- the approved budget and actual expenditure for revenues and operating expenses.
- (9 marks)
(b) Of the tasks performed by the Secretary to the Treasury in the budgeting process in Uganda are issuing to the sectors the first Budget Call Circular by the 15th day of September of every financial year and preparing a medium-term expenditure framework, among others. Besides, each sector is required to prepare nd submit, to the Finance Minister, a budget framework paper containing a 'fiscal risk statement', who in turn submits a compiled statement to parliament for approval.
With reference to the Public Finance Management Act, 2015 and Public Finance Management Regulations, 2016:
- (i) describe the contents of the 'first budget call circular' and those of the 'fiscal risks statement' in the Budget Framework Paper.
- (7 marks)
- (ii) explain the items the Secretary to the Treasury bases on in preparing the medium-term expenditure framework for the purpose of preparing the annual budget.
- (4 marks)
- (iii) discuss the contents of a request for virement to the Minister of Finance by an Accounting officer.
(3 marks) (Total 50 marks)
Attempt two of the four questions in this section
(a) Uganda National Forest Authority (UNFA) appointed a Board of Surveys to review and identify assets to be disposed of in the financial year 2017/ 2018. The Board of Surveys submitted a report (below) in December 2017 with a list of assets recommended for disposal.
Double Cabin Pick-up (UAA 900)
Mowing machine Motor cycle Wheel Loader
Year of make
Serial/ Engine No.
CAT123- 004763 RX.05218- 964
GX312-Y347 YH452-00- 132
HQ yard UNFA Mbale office yard
UNFA Hoima office Yard UNFA Rubanda office yard
- (i) Using a suitable form as prescribed by the PPDA Act, 2003 and regulations 2014, write requisition for disposal to the accounting officer for approval of the above assets. (10 marks)
- (ii) As manager in-charge of assets management, advise UNFA on appropriateness of public auction as a method of disposing of the Authority assets and the rules governing disposal of public assets by public auction. (10 marks)
(b) Rukiga Municipal Council invited bids for the disposal of its old assets that were recommended by the board of surveys during the month of March 2018. The bids were received and evaluated to determine the best bidders for the various items. However, Tubalemese Ltd (TL), one of the companies that had submitted bids but was unsuccessful following the evaluation process, wants to lodge a complaint for administrative review by the accounting officer.
Advise TL on what should be included in a complaint letter to the accounting officer. (5 marks) (Total 25 marks)
- (a) "Corruption, fraud and money laundering have affected our public institutions'', as quoted in one of Uganda's leading daily newspapers. It all started on 2 March, 2018 when Mr. Walugembe, a senior public servant in the Ministry of Local Government, signed for and picked the allowances for his driver and bodyguard but never passed on this money to them. Okello (the driver) and Opoko (the bodyguard) were meant to travel with Mr. Walugembe upcountry to inspect the progress of the World Bank funded construction projects in Mbale and Gulu districts. When they asked Mr. Walugembe about their facilitation, he told them that the accountant said that the IFMS system was on and off and could not be able to process their travel allowances in time.
- On returning from upcountry visits, Opoko and Okello went to the accountant to inquire about their allowances. The accountant showed them the payment voucher where their allowances had been signed for by Mr. Walugembe on 2 March, 2018. The accountant told them that Mr. Walugembe is a very difficult man who has been accused of money laundering, fraud and corruption but is feared within office and no one has ever reported him. He advised them to report the matter to any of the government agencies that are fighting fraud, corruption and money laundering.
- Opok and Okello are confused and they have come to you for advice on suitable government agencies to report this matter to.
- Discuss the differences in the mandate between the following agencies in relation to the above scenario:
- (i) Uganda Financial Intelligence Authority and Directorate of Criminal Investigation and Crime Intelligence.
- (6 marks)
- (ii) Office of the Auditor General and Office of the Inspectorate of Government.
- (7 marks)
- (b) The Minister of Finance has appointed you the chairperson of the audit committee for the energy and minerals sector of government. This sector comprises one ministry and seven agencies.
- In accordance with the Uganda Public Finance Management Act, 2015 discuss the functions of the sector audit committee.
- (12 marks) (Total 25 marks)
- (a) During 2017, a public sector entity changed its accounting policy for the treatment of borrowing costs that are directly attributable to the acquisition of a hydro electric power station that is under construction. In the previous periods, the entity had capitalised such costs. It has now decided to expense, rather than capitalise them. Management considers that the new policy is preferable, because it results in a more transparent treatment of finance costs and is consistent with local industry practice, making the entity's financial statements more comparable.
- The entity capitalised borrowing costs Shs 5.2 billion incurred during 2016 and Shs 10.4 billion in periods prior to 2016. All borrowing costs incurred in previous years in respect of the acquisition of the power station were capitalised. The accounting records for 2017 show a surplus before interest Shs 60 billion and interest expense Shs 6 billion (which relates only to 2017). The entity has not recognised any depreciation on the power station because it is not yet in use. In 2016, the entity reported a surplus before interest Shs 36 billion, opening accumulated surplus was Shs 40 billion and closing accumulated surplus was Shs 76 billion. The entity had Shs 20 billion of contributed capital throughout, and no other components of net assets except for accumulated surplus.
- With reference to the relevant International Public Sector Accounting Standards (IPSAS), present the public sector entity's statement of financial performance and changes in net assets for 2017, with the 2016 restated balances.
- (9 marks)
- (b) Events after the reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorized for issue.
- With reference to the relevant IPSAS, illustrate events that are 'adjusting'
- and 'non-adjusting' after the reporting date. (11 marks)
- (c) You are the director, finance of Uganda Farmers Authority, a public sector entity that prepares its financial statements in accordance with IPSAS. Your staff are uncertain about the meaning, examples and the relevant IPSAS applicable to 'bearer plants', and thus need your guidance in this
Advise your staff on the key aspects mentioned above in relation to 'bearer plants'. (5 marks)
(a) Mabagalo Municipality is one of the recently formed administrative units by government in a move to bring services closer to the people. There has been a move by councilors to cause the transfer of the town clerk and the impeachment of the mayor which has paralysed work at the municipality. The councilors accuse the duo of causing financial loss to the municipality, abuse of office and misconduct, which accusations they vehemently deny. They are further accused of applying the divide and rule approach and failure to provide Council with approved budgets and work plans. Other accusations include failure to digitalise local revenue collection and failure to set up a tax tribunal so that concessions can be reached for people to pay property tax. It is estimated that these standoffs have cost the municipality over Shs 200 million in uncollected revenue.
You have recently been recruited as the Municipal Treasurer and the Council Speaker needs advice to present to Council on the next course of action from an informed point of view.
Write report to the Council Speaker highlighting statutory functions of the following in a local government as per the Local Government Institutional Framework:
- (i) Mayor.
- (ii) Executive Committee.
- (iii) Town Clerk.
- (iv) Local Government Public Accounts Committee.
(b) You are the revenue officer in Abiritong District Local Government and you have received an inspector from the ministry to review your adherence to performance standards. This was a week after external auditors visited your district in a bid to ascertain the existence of projects reported in your financial statements. The newly appointed Accounts Assistant is wondering what role she can play during the inspection and audit exercise.
Describe the duties of accounts staff during the above inspections and external audit. (5 marks)
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