THE REPUBLIC OF UGANDA
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF
THE UGANDA BROADCASTING CORPORATION
FOR THE YEAR ENDED 30TH JUNE 2015
OFFICE OF THE AUDITOR GENERAL
UGANDA
TABLE OF CONTENTS
LIST OF ACRONYMS ...................................................................................................... 2
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF UGANDA
BROADCASTING CORPORATION FOR THE YEAR ENDED 30TH JUNE 2015 .......................... 3
1.0
INTRODUCTION ................................................................................................. 6
2.0
BACKGROUND INFORMATION ............................................................................. 6
3.0
ENTITY FINANCING ............................................................................................ 6
4.0
OBJECTIVES OF THE UBC ................................................................................... 7
5.0
AUDIT OBJECTIVES ............................................................................................ 7
6.0
AUDIT PROCEDURES PERFORMED ....................................................................... 7
7.0
CATEGORIZATION AND SUMMARY OF FINDINGS.................................................. 8
7.1
Categorization of findings .................................................................................... 8
7.2
Summary of findings ........................................................................................... 9
8.0
DETAILED FINDINGS .......................................................................................... 9
8.1
Valuation of Property, Plant and Equipment .......................................................... 9
8.2
Trade and other payables.................................................................................. 10
8.3
Cash at bank .................................................................................................... 11
8.4
Trade and other Receivables ............................................................................. 11
8.5
Provision for bad and doubtful debts .................................................................. 12
8.6
Governance and strategic issues ........................................................................ 13
8.7
Diversion of Special Release .............................................................................. 15
8.8
Payment of doubtful outstanding debt obligations ............................................... 16
8.9
Non-remittance of Tax on gratuity ..................................................................... 16
8.10
Unaccounted for advances ................................................................................ 17
8.11
Land Donated To UBC for Radio Station- Nakasongola ......................................... 17
8.12
Emergency procurement –Promotional materials ................................................. 18
8.13
Specific procurement observations ..................................................................... 18
8.14
Budget performance ......................................................................................... 19
8.15
Field Inspections .............................................................................................. 22
9.0
Follow-up of prior year audit recommendations ................................................... 27
1
LIST OF ACRONYMS
Acronym
Meaning
BOD
Board of Directors
FY
Financial year
IFRS
International financial reporting standards
IAS
International accounting standard
IT
Information Technology
MOU
Memorandum of Understanding
NGO
Non-Governmental Organization
PDE
Procurement and disposal entity
PPDA
Public Procurement and Disposal of Public Assets Authority
UBC
Uganda Broadcasting Corporation
UCC
Uganda Communication Commission
UGX
Uganda Shillings
URA
Uganda Revenue Authority
UTV
Uganda Television
VAT
Value Added Tax
WHT
Withholding tax
2
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF
UGANDA BROADCASTING CORPORATION
FOR THE YEAR ENDED 30TH JUNE, 2015
THE RT. HON. SPEAKER OF PARLIAMENT
I am mandated by Article 163 of the Constitution of the Republic of Uganda, 1995 (as
amended), Section 19 of Uganda Broadcasting Act 2005 and Sections 13 and 19 of the
National Audit Act, to audit the financial statements of Uganda Broadcasting Corporation for
the year ended 30th June 2015. These financial statements comprise of the Statement of
Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity,
and Cash Flow Statement together with other accompanying statements, notes and
accounting policies.
Responsibility of the Directors
The Directors are responsible for the preparation and fair presentation of the financial
statements of Uganda Broadcasting Corporation in accordance with the Uganda
Broadcasting Corporation Act and International Financial Reporting Standards for such
internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
My responsibility as the Auditor is to audit and express an opinion on these statements
based on my audit in accordance with International Standards on Auditing. Because of the
matters described in the Basis for Disclaimer of Opinion paragraph, I was not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion.
Part “A” of my report sets out my disclaimer opinion on the financial statements. Part “B”
which forms an integral part of this report presents in detail all the significant audit findings
made during the audit which have been brought to the attention of management and forms
part of my Annual Report to Parliament.
3
PART “A”
Basis for disclaimer of opinion

Valuation of Property, Plant and Equipment
The Corporation did not value its fixed assets in line with IAS 16 which require regular
revaluation of assets. Besides the fixed assets register was not maintained. I was unable to
confirm whether the value of property, plant and equipment of UGX.41,387,636,950
appearing in the financial statements was fairly stated.

Unsupported trade creditors
The Corporation owes UGX.12,010,778,774 to trade creditors. However, the trade creditors
were not adequately supported with source documents like invoices, contracts, completion
certificates, Local purchase orders and agreements. I was therefore unable to confirm the
existence, completeness and valuation of trade creditors in the financial statements.
 Cash at bank
UGX.4,543,501,955 disclosed as cash at bank by the Corporation was not supported by bank
reconciliation statements for the whole year and thus there was no basis to independently
confirm that Cash at bank for the nine (9) bank accounts was fairly stated in the statement
of financial position and statement of cash flow.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis for Disclaimer of Opinion
paragraph above, I have not been able to obtain sufficient appropriate audit evidence to
provide a basis for an audit opinion. Accordingly, I do not express an opinion on the
financial statements.
Report on other legal requirements
Contrary to the requirements of the Uganda Broadcasting Corporation Act and the National
Audit Act; I did not obtain all the information and explanations, which I required for the
purpose of my audit. Accordingly, I am unable to confirm whether proper books of account
have been kept by the Corporation, and whether the statement of financial position and
statement of financial performance are in agreement with the books of account.
John F.S. Muwanga
AUDITOR GENERAL
13th December, 2015
4
REPORT OF THE AUDITOR GENERAL AND
SUPPLEMENTARY INFORMATION
5
PART “B”
DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENT
OF UGANDA BROADCASTING CORPORATION FOR THE YEAR ENDED 30TH JUNE,
2015
This Section outlines the detailed audit findings, management responses, and my
recommendations in respect thereof.
1.0
INTRODUCTION
Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended)
requires me to audit and report on the public accounts of Uganda and all public
offices including the courts, the central and local government administrations,
universities, and public institutions of the like nature and any public corporation or
other bodies or organizations established by an Act of Parliament. Accordingly, I
carried out the audit of Uganda Broadcasting Corporation to enable me report to
Parliament.
2.0
BACKGROUND INFORMATION
The Uganda Broadcasting Corporation (UBC) was established by an act of
Parliament, the Uganda Broadcasting Corporation Act 2005 and the UBC vesting
order 2006. The Uganda Broadcasting Corporation is located in Broadcast House,
Plot 17-19 Nile Avenue-Kampala Capital City. The Corporation’s vision is
“Broadcasting quality programmes for national development” and the mission is “To
educate, inform, guide and entertain the public through maintaining a sustainable
national coverage.”
3.0
ENTITY FINANCING
The corporation was financed by grants from Central Government and locally
generated revenues. Grants totaling to UGX.6,406,979,773 from Central Government
were received, while a total of UGX.8,275,211,726 was received from locally
generated revenue. The total revenue of UGX.14,682,191,499 constituted 77% of its
approved budget estimates of UGX.18,982,000,000. The entity performed poorly on
locally generated revenue during the year.
6
4.0
OBJECTIVES OF THE UBC
The objectives of UBC are:a)
To develop the Corporation into a public national broadcasting centre of
excellence, for a purpose of providing electronic media and consultancy
services that educate and guide the public.
b)
To achieve and sustain comprehensive national radio and television and
coverage.
c)
5.0
To achieve and sustain a common carrier status.
AUDIT OBJECTIVES
The audit was carried out in accordance with International Standards on Auditing
and accordingly included a review of the accounting records and agreed procedures
as was considered necessary. In conducting my reviews, special attention was paid
to establish:a.
Whether the financial statements have been prepared in accordance with
consistently applied Accounting Policies and fairly present the revenues and
expenditures for the period and of the financial position as at the end of the
period.
b.
Whether all funds were utilized with due attention to economy and efficiency
and only for the purposes for which the funds were provided.
c.
Whether goods and services financed have been procured in accordance with
the Government of Uganda procurement regulations.
d.
To evaluate and obtain a sufficient understanding of the internal control
structure of the organization, assess control risk and identify reportable
conditions, including material internal control weaknesses.
e.
Whether all necessary supporting documents, records and accounts have been
kept in respect of all activities, and are in agreement with the financial
statements presented.
6.0
AUDIT PROCEDURES PERFORMED
The following audit procedures were undertaken:(a)
Revenue
Obtained schedules of all revenues collected and reconciled the amounts to the
cashbooks and bank statements.
7
(b)
Expenditure
The Corporation payments vouchers were examined for proper authorization,
eligibility and budgetary provision, accountability and support documentation.
(c)
Internal Control System
Reviewed the internal control system and its operations to establish whether
sound controls were applied throughout the period audited.
(d)
Procurement
Reviewed the procurement of goods and services by the Corporation during the
period under review and reconciled with the approved procurement plan.
(e)
Fixed Assets Management
Reviewed the use and management of the assets of Corporation during the
period audited.
(f)
Corporation’s Financial Statements
Examined, on a test basis, evidence supporting the amounts and disclosures in
the financial statements; assessed the accounting principles used and
significant estimates made by management; as well as evaluating the overall
financial statement presentation.
7.0
CATEGORIZATION AND SUMMARY OF FINDINGS
7.1
Categorization of findings
The following system of profiling of the audit findings used to prioritise the
implementation of audit recommendations:
1
Category
N
o
High significance
2
Moderate significance
3
Low significance
Description
Has a significant / material impact, has a high likelihood of
reoccurrence, and in the opinion of the Auditor General, it
requires urgent remedial action. It is a matter of high risk or
high stakeholder interest.
Has a moderate impact, has a likelihood of reoccurrence,
and in the opinion of the Auditor General, it requires
remedial action. It is a matter of medium risk or moderate
stakeholder interest.
Has a low impact, has a remote likelihood of reoccurrence,
and in the opinion of the Auditor General, may not require
much attention, though its remediation may add value to the
entity. It is a matter of low risk or low stakeholder interest.
8
7.2
Summary of findings
No
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
8.12
8.13
8.14
8.15
9.0
Finding
Valuation of Property, Plant and Equipment
Trade and other payables
Cash at bank
Trade and other Receivables
Provision for bad and doubtful debts
Governance and strategic issues
Diversion of Special Release UGX 400,456,283
Payment of doubtful outstanding debt obligations –
UGX.17,754,400:
Non-remittance of Tax on gratuity – UGX.71,017,500
Unaccounted for advances –UGX.76,856,000
Land Donated To UBC for Radio StationNakasongola
Emergency procurement –UBC/Spls/14-15/0085
Specific procurement observations
Budget performance
Field Inspections
Status of prior year audit observations and
Recommendations
8.0
DETAILED FINDINGS
8.1
Valuation of Property, Plant and Equipment
Significance
High
High
High
High
High
High
High
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Low
The Corporation’s fixed assets (property, Plant and equipment) are reflected as
UGX.41,387,636,950 in the statement of financial position. A review of the
supporting schedules in accordance with International Accounting Standards (IAS)
revealed the following:
 No revaluation of Property and Equipment was undertaken contrary to IAS 16
which requires regular revaluation of assets. Failure to revalue the assets
contravened the applicable Accounting Standards. Furthermore, it was also noted
that impairment reviews were not undertaken by management on the assets
during the year contrary to IAS 36 which requires that assets should not be
carried at more than their recoverable amount. I was therefore unable to confirm
whether the property and equipment disclosed in the financial statements are
stated at fair value.
 The Corporation did not maintain a fixed assets register during the year contrary
to chapter 16.3 and 16.5 of UBC Finance and Accounting Manual to enable me
track the Corporation’s assets. What was in place was a listing of assets without
9
date of acquisition, values/costs attached and as such I could not ascertain with
certainty the value of property, plant and equipment.
 The Corporation had no proof of ownership of some non-current assets like title
deeds to enable verification and confirmation of ownership contrary to Paragraph
16.14 (1) of the Corporation’s Finance and Accounting Regulations manual that
requires the entity to have proof of ownership.
I was therefore unable to determine whether assets of the Corporation are fairly
reflected in the statement of financial position, and whether the assets are owned as
stated.
Management explained that non-compliance to IAS 16 and IAS 39 on regular
revaluations and detailed impairment reviews was a challenge due to the limited
resources at their disposal to engage the technical experts that can guide
Management on methodologies prescribed by the standards, which they anticipate to
address in the future. Management further explained that a detailed listing of all
fixed asset additions and disposals in FY2014/15, 2013/14 and 2012/13 had been
compiled as part of UBC’s effort to create a Fixed Asset Register.
I advised the Accounting Officer to expedite the revaluation process and have an
adequate asset register in place.
8.2
Trade and other payables
It
was
observed
that
the
Corporation
has
outstanding
obligations
of
UGX.30,841,178,841 comprising of trade creditors (UGX.12,010,778,774) and other
creditors
(UGX.18,830,400,067).
However,
all
the
trade
creditors
(UGX.12,010,778,774) were not adequately supported with source documents like
invoices, contracts completion certificates and agreements. It was further noted that
the payables have been increasing for the last consecutive years. There is a risk of
inclusion of non-existent creditors who may be irregularly paid leading to loss of
funds by the Corporation.
Management explained that the supplier related creditors are being renewed to weed
out unsupported balances.
I advised the Accounting Officer to ensure that all documents relating to payables
are properly kept, filed and corroborative evidence should be obtained prior to
10
payments to creditors is undertaken. Furthermore, an invoice register should also be
put in place.
8.3
Cash at bank
It was observed that UGX.4,358,415,377 was disclosed as cash at bank by the
corporation. However a review of the balances revealed that no bank reconciliation
statements were prepared for the whole year and thus there was no basis to confirm
independently that cash at bank for the nine (9) bank accounts held was fairly stated
in the statement of financial position and statement of cash flow contrary to
Paragraph 8.22(iii) of UBC Financial and Accounting Regulations manual 2006 that
requires cash reconciliations to be carried out daily. Without bank reconciliation
statements, I could not confirm the accuracy of the cash and cash equivalent
presented in the statement of financial position.
Management explained that Board of surveys will be implemented to include cash at
end of reporting period as had been done for the inventory count.
I advised the Accounting Officer to ensure that regular bank reconciliations are
undertaken to support the board of survey constituted at every end of the financial
year for confirmation of the balances at hand/bank.
8.4
Trade and other Receivables
A review of the receivables for the year of UGX.20,961,027,331 revealed that there
were inadequate revenue collection measures as evidenced by the gross trade and
other receivables low reduction of 0.1% from last year’s balance.
Failure by management to recover outstanding receivables leads to accumulation of
receivables which may reach unmanageable levels and would require writing off thus
causing financial loss to the Corporation.
Management explained that they had instituted and are implementing revenue
recovery measures as evidenced by demand letters. Discussions are ongoing with
the Clerk to Parliament as part of the recovery effort for the UGX.10.4billion. Finance
and Marketing functions constituted teams to follow up clients with debtors.
Appointment of two debt collection firms have been done whose efforts will soon be
evident.
I await the results of the Accounting Officer’s efforts in this regard.
11
8.5
Provision for bad and doubtful debts
The Corporation’s provisions for the year revealed that Management provided
UGX.287,124,862 for bad and doubtful debts based on a 5% judgment on some
debtors. IAS 37 requires the estimate of provisions to be determined by judgment of
the entity’s management supplemented by the experience of similar transactions.
Section 8.17 of the UBC Finance and Accounting Regulations Manual also requires
any due debt to be subjected to debt recovery procedures as stipulated in the bad
debt management manual. The following were however observed;

This provision should ideally have been well documented in the debt
management manual specifying rates for the various categories of debtors,
however it was noted that while last year a blanket provision was made on all
receivables, the current years provision was only on some debtors. Further, as
noted in the last years audit the same rate was also provided on certain debtors
like cash and salary advances which are within managements full control.

The provision rate of 5% set by management was not backed with experience of
similar transactions as required by IAS 37 given that some transactions have
minimal chances of recovery and specific provisions would have been applied,
that is; Parliamentary commission (UGX.10 billion- without a contract), M and B
(UGX.0.4 billion- whose land UBC has reclaimed), and others.
Bad debts should be written off when all reasonable steps to recover them have
been taken without success.
The blanket provision is inadequate without a proper review and analysis of the
Corporation debtors and as a result the provision may be misleading to the users of
the financial statements.
Management explained that provisions based on Management’s judgment and
experience on similar transactions will be implemented in subsequent reporting
periods given that Finance and Marketing functions are working towards the same
goals in this area.
12
I advised the Accounting Officer to expeditiously review and submit for approval to
the Board the debt management manual with comprehensive provisions for the
different classes of receivables.
8.6
Governance and strategic issues
8.6.1 Lack of Corporate Strategic Plan
A strategic plan provides an organization with purpose and direction and it is a key
requirement for organization survival, however I observed that the Corporation does
not have a Corporate Strategy with the old one (2008-2013) having expired in 2013.
Though the Corporation has a Mission to educate, inform, guide and entertain the
public through maintaining a sustainable national coverage, its doubtable if it can be
achieved without long term plans. Implementing projects without a strategic plan
may lead to uncoordinated implementation of activities as the budget/work plans and
the vital work done are not linked to developments.
Management explained that UBC had engaged the services of a consulting firm that
has been working to put in place an owned and workable Strategic Business Plan and
this has been scheduled for discussion with the Board before end of December 2015.
I await the results of the Accounting Officer’s effort in that regard.
8.6.2 Lack of Credit and Debt Management Policies
Its best practice in corporate entities that debt and credit management policies are
formulated and documented to help the organizations manage and control debt and
its credit. During audit, it was noted that the corporation had not formulated both
the
credit
and
debt
management
policies
despite
my
previous
years
recommendations. This has resulted into major weaknesses as noted below;
(i)
Debtors
The corporation presented a receivables balance of UGX.20,486,267,489. Further
analysis of this balance revealed that there was no approved credit period for
debtors and consequently many debts were never collected. I did not obtain
evidence that management put in the required effort to collect the debts.
(ii)
Creditors
It was observed that the Corporation owes UGX.30,841,178,841 which is a
substantial increase from the previous financial years position. Further, it was noted
13
that the payables have been increasing for the last consecutive years and this could
be attributed to lack of a credit management policy in place.
Management explained that UBC was now running like other businesses and where
best practice has been lacking they had started implementing the same which would
be followed with documentation of the practices, update of manuals and policies to
ensure consistency and objectivity.
I await the results of the Accounting Officer’s efforts in this regard.
8.6.3 Staff without valid contracts and un-updated salary structure
It was observed that 247 members of staff were working at the Corporation without
valid contracts, some having expired as far back as 2009 contrary to Paragraph 2.9.4
of Uganda Broadcasting Corporation Human Resource regulations-2006 that requires
contract employment to be renewable subject to good health and satisfactory
performance. Further, a review of the UBC staff and the salary structure revealed
that the salaries, terms and condition of service of the Corporation were last set in
2005 at the inception of UBC and have become out dated and inadequate contrary to
the UBC act section 8 (d) that mandates the Board of Directors to determine from
time to time the structure staff levels and terms and condition of service of staff. The
salary ranges from UGX.150,000 to UGX.6,500,000 for the lowest paid to the highest
paid officer
Failure to renew employment contracts violates the rights of employees which may
attract litigation expenses. Further, maintaining a strong salary structure is
imperative for any Corporation. If the salary structure gets out of sync with the
overall labor market, UBC may find difficulty in attracting and retaining the desired
staff.
Management explained that UBC was going to address the issues after drawing up
the strategic plan.
I advised the Accounting Officer to ensure that the process is expeditiously handled.
In the meantime, I await the results of management efforts.
8.6.4 Unapproved draft policies
The Corporation has several draft policies developed for the efficient functioning of
the Corporation business however, it was noted that many of them are in draft form
14
and cannot be put to application without board approval. Specifically the critical ones
are the IT /Security policy and the risk and fraud control policies. Others are Internal
Audit Manual, UBC Board Audit Committee Charter, Internal Audit Charter and Staff
structure.
Without an approved IT/information security policy and IT strategic plan that aligns
the IT requirements to the UBC Strategic plan, there is a risk of making investments
in IT that are not well aligned with other business processes and objectives of
the Corporation which could lead to wastage of resources. Further, lack of
documented fraud control policies could result in failure to prevent and/or detect
fraud or taking appropriate action where fraudulent acts have been identified in the
organization.
Management explained that all policies were drawn to the attention of the Board for
their review and comments as well as their subsequent approvals.
I await the outcome of the Accounting Officer’s efforts.
8.7
Diversion of Special Release
During the year under review, Government transferred funds to Office of the Prime
Minister as a supplementary release to UBC for onward remittance to UMEME for
outstanding electricity arrears to the tune of UGX.4 billion.
UGX.5,000,556,117 as at 30th June 2015 was outstanding accumulated electricity
bills for the past periods, however a review of payments to UMEME revealed that
only
UGX.3,599,543,717
was
remitted
to
UMEME
leaving
a
balance
of
UGX.400,456,283 that was diverted to cater for staff salaries and other operational
costs contrary to the supplementary warrant as approved by Parliament. This action
may lead to disconnection of electricity by Umeme which would adversely affect
service delivery.
Management explained that when new managers came in June 2015, UBC had
stalled planned activities in all functions due to lack of funds to implement themAs
such management decided to utilize some funds to bring the UBC brand to visibility
through a stable and clear signal, new studio graphics, improved quality sound on
the radio brands so that internal revenues could be generated through new business
and thus improved cash flows. Management further explained that they agreed to
clear the arrears when the entity cash flows improve.
15
I advised the Accounting Officer to ensure remittance of the balance to Umeme and
abide by Government warranting conditionality for appropriated funds.
8.8
Payment of doubtful outstanding debt obligations
UGX.17,754,400 was to paid to a local agency after an advocate issued a demand
note cum notice of intention to sue UBC on their behalf because of unpaid cleaning
and compound maintenance services at UBC stations of; Kololo, Bugolobi, Kibira and
UBC broadcast house for 13 months. Review of the statement of accounts submitted
by the agency indicating invoice numbers, the month and the respective amounts
shows that the corporation was in debt since December, 2011 but several anomalies
were noted as detailed below;

It was not possible to reconcile this statement with any physical documentation
kept by UBC like invoices, Invoice register, work certification by supervisor and
contract agreement since none of the documents were availed for verification. I
could thus not authenticate the monthly amounts payable of UGX.2,584,200
reflected on the statement submitted for review.

This outstanding liability was not reflected in the financial statements as part of
UBC liability and therefore its payment remains doubtful.
Such payments are risky in nature and cause loss to the corporation.
Management explained that the matter was being investigated by the Internal Audit
team to allow management address the matter.
I await the results of the Accounting Officer’s effort in this regard.
8.9
Non-remittance of Tax on gratuity
UGX.71,017,500 deducted as 30% Income tax from gratuity payments was not
remitted to Uganda Revenue Authority contrary to section 123(1) of the Income Tax
Act that requires a withholding agent to pay any tax that has been withheld within
fifteen days after the end of the month in which the payment subject to withholding
tax was made by the withholding agent. Non-compliance with the tax laws may
result into fines and penalties being imposed on the Corporation by the tax body.
Management explained that the omission will be addressed as soon as funds are
available.
16
I advised the Accounting Officer to ensure timely remittance of the funds to the tax
body as required by the Income tax Act.
8.10 Unaccounted for advances
UGX.76,856,000 advanced to staff in various stations for undertaking Corporation
activities i.e. purchase of fuel for standby generators, field allowances and
operational activities during the year was not accounted for by the time of writing
this report and these majorly involved fuel to the tune of UGX.53,071,000. There
were no fuel requisitions, receipts and consumption statements filed in form of
returns rendering the funds unaccounted. Further, the other funds lacked activity
reports and receipts yet they were cash payments that I found risky. In absence of
the relevant accountabilities, I was not able to confirm whether the funds were
utilized on planned activities. The possibility of misuse could not be ruled out.
Management explained that they had introduced fuel cards which system is going to
improve the control over fuel usage. Management will also enforce policy provisions
so that advances do not remain outstanding for long.
I advised the Accounting Officer to ensure that accountabilities from staff are filled in
the stipulated time and recovery measures should be instituted for those who have
failed to account.
8.11 Land Donated To UBC for Radio Station- Nakasongola
It was observed that Nakasongola District Council offered Land approximately one
acre in Nakasongola Town Council to UBC for development purposes including
establishing fully fledged offices and studios for Buruuli FM.
Physical inspection of the land utilization by Internal Audit revealed that Buganda
Government was habiting the land i.e. had erected temporary premises to host the
Kabaka of Buganda during his visit to the District and no development had been
undertaken by UBC. Further inquiry revealed that Nakasongola District was not
contented that UBC had not taken any action regarding the transfer and proper
usage of the land donated and it was contemplating re-allocating the land to other
purposes and re-allocate UBC another piece of land. UBC stands to lose the above
land if no development is undertaken immediately.
17
Management explained that they are processing the title for the land and
development of the same will be undertaken if resources allow.
I advised the Accounting Officer to expedite transfer of the land to UBC and also plan
for its development.
8.12 Emergency procurement –Promotional materials
Review of procurement file for promotional materials required during launch of signet
at UGX.23,706,200 revealed that emergency procurement was used with unjustified
reasons of delay by UCC to release funds yet the same had confirmed funding of the
activity. This would have necessitated initiation of the procurement as earlier planned
and only awarded the contract upon receipt of funds. Emergency procurement does
not give the entity full benefits of value for money and competition.
Management explained that this would be limited by procurement of back up stocks
for those sensitive items if their cost is within the means of UBC.
I advised the Accounting Officer to plan its procurement activities in time in order to
realize value for money and avoid emergency procurements.
8.13 Specific procurement observations
During audit review of procurement files some anomalies were observed as
highlighted in the table below;
Procurement
details
UBC
Spls/1415/00086
Digital
audio
processor
Euros. 3,520
Audit findings
Recommendations

The PDU should follow
instructions in the bidding
document in order to avoid
delays
and
procurement
review
requests
in
the
procurements.
UBC/Spls/1415/00025
procurement of ABE
Spare parts for VHF
Transmitters
USD
12,760

Inconsistency in dates; the dates
that were indicted on the
planned schedule in the bidding
document were different from
the ones used in issuing
solicitation document though no
contract committee approval was
given for the change.
Record of bids received (form
11) is not signed and witnessed
by any member of contracts
committee contrary to section 59
(7) of PPDA Reg. 2014 that
requires closure of the process
of submission of proposals or
bids to be managed by at least
one member of PDU and be
witnessed by a member of
18
The PDU should always
submit required documents to
CC
for
witnessing
as
stipulated by law.
Contracts committee or the User
department.
UBC/Works/1415/00063
installation of DTT
Gap filler for Ninja
UGX.55,950,671

The procurement was cancelled
however there are no written
details of the cancellation and
accounting officers’ approval
contrary to regulation 53(3) e of
the PPDA (contracts) regs, 2014.
Audit got the information from
the Ass. Procurement officer that
the procurement was cancelled
and it is the contract manager
held responsible for cancellation
report.
The
contract
managers
should always provide full
details of any proposed
termination of a contract
To the PDU and obtain the
approval of the accounting
officer prior to termination.
The Corporation may be exposed to a risk of procurement review requests as a
result of non-adherence to PPDA guidelines and regulations.
Management explained that UBC is now enforcing strict compliance to Procurement
regulations as the PPDA audit reports for the past periods had a number of repeat
issues that they want eliminated.
I await the results of the Accounting Officer’s efforts in this regard.
8.14 Budget performance
Uganda Broadcasting Corporation’s budget estimates rely on Government grants and
internally generated revenue to finance capital and operational expenditure in order
to achieve the Corporation Objectives. Section 13.6 (4) of the UBC finance and
accounting regulations manual lays responsibility of preparing a balanced budget to
the Managing Director and Finance manager and this involves matching the
proposed activities with UBC’s medium term plans.
Review of the budget performance for the year under review revealed that some
targets were partially or not achieved mainly as a result of under collection of
anticipated revenues. Details of the collections and unimplemented activities are as
below;
19
(i)
Under-collection of revenue
Revenue
Radios/TVs
Budgeted
15,136,000,000
Outputs
4,316,979,688
Shortfall
-10,819,020,312
Government
Grants
1,000,000,000
6,406,979,773
5,406,979,773
Rental
Income
Total
2,786,000,000
3,593,302,145
807,302,145
18,922,000,000
14,317,261,606
(4,604,738,394)
(ii)
Unimplemented activities
S/N
Planned activity
1
Establishment of
studio complex
2
Renovation
Broadcast house
3
Remarks
Inadequate
marketing of
UBC brand
Supplementa
ry budget for
electricity
arrears
Outputs
a
Studio
complex
commissioned
of
Repair of toilets and
plumbing system
Upgrade
satellite
uplink and downlink &
5 live U camera and
an OB van
Repair of walkways,
roadways
and
parking
Complete erection
of
fence
at
Broadcast House
Upgrade
satellite
uplink at BH
Upgrade
downlinks
wide
Amount
(UGX)
1,151,500,000
100,000,000
1,236,000,000
all
country
Remarks
Installation
not
completed in the
year. By the time
of
audit
in
December
Management
stated that it’s
almost complete
Not implemented
during the year.
Parking yard was
undertaken
in
November under
2015/16 budget.
Not implemented
due to lack of
funds
Purchase of MPEG4
encoder for OB van
satellite uplink
Software upgrade
for OB van satellite
uplink
4
Field cameras for TV
&
Radio
postproduction equipment
Purchase of SSPA
for OB van satellite
uplink
Purchase
of
Tricaster
Reequipping TV EFP
20
700,000,000
Not implemented
and ENG units
5
Network renovations
6
Specialized computers
and Other equipment
at
transmission
stations
Purchase of two 12
channel HD/SD SDI
vision mixers for TV
studios
Renovation
and
equipping 16 FM
Transmitters
Purchase of satellite
flyaway
850,000,000
Not done
879,000,000
None
of
the
outputs
were
implemented
400,000,000
Satellite
equipment
not
procured, only TV
and Radio spares
procured
250,000,000
Not implemented
400,000,000
Not implemented
during the year
but
Moroto installed in
November, 2015
Purchase of two
pairs of microwave
links for OB van
Construction of a
75M tower for Moru
in Gulu
Extension of power
to
Kapchorwa
station
7
Maintenance of TV
and
Radio
studio
equipment, satellite
8
11 Motor vehicles and
18 Motor cycles
9
Installation
Installation
Installation
Installation
of
of
of
of
Moyo
Moroto
Kotido
Kitgum
Purchase of two
double
cabin
pickups
Procurement of TV
spares
Procurement
Radio spares
of
Procurement
of
satellite equipment
Procurement
of
Motor vehicle and
Motor cycle
Installation
of
Ministry of Health
project Equipment
at these sites
Because of the noted shortcomings Service delivery is affected and the Corporations
objectives are not met.
Management explained that UBC went through a bad year of negative reputation in
2014/15 with the result that revenues had to dip and consequently planned activities
were not fully implemented due lack of resources.
I advised the Accounting Officer to always plan adequately and undertake activities
as planned.
21
8.15 Field Inspections
Field inspection of various UBC sites was conducted for purposes of verifying the
Corporations undertakings in relation to its core objectives of achieving and
sustaining comprehensive national radio and television coverage. Despite existence
of UBC infrastructure in the inspected areas, several shortcomings that hindered
service delivery by the entity were noted as highlighted below;
•
Poor state of assets especially buildings both residential and non-residential.
•
Encroached Land
•
Un-renewed contracts of staff and contract gratuity arrears
•
Unutilized Obsolete equipment
•
On and off transmission due to electricity cutoffs. This is caused by the delay
from head office to release funds for electricity and In addition the available
generators lack fuel to run them.
•
Lack of imprest funds to the stations for maintenance of facilities.
•
Lack of facilitation for Corporation night watchmen with guarding implements
like bows and arrows, gumboots, warm clothing, rain coats, uniforms and
torches.
The photos below refer:
No. Project
OBSERVATIONS
Butebo
Station

Radio






PHOTO EVIDENCE
The main structure housing
the equipment has a falling
roof
Some parts of the roof of the
radio studio have collapsed
The control room has been
vandalized
Expired batteries are still in
the transmitter house yet they
are emitting bad gas and
have not been disposed of
pending the recommendation
of the board of survey
The engine (Generator) was
last switched on 10 years ago.
The generator uses 18 litres
per hour and the station
cannot afford to fuel it.
Staff contracts have not been
renewed for the current year
The contract gratuity has not
22
Above: This dilapidated Transmitter hall
houses the Transmitter System for eastern
region. The Transmitter system is the engine of
the radio station.

been paid for the previous 2
contracts
The only water pump which
the station had is broken
down
Above: The radio studio being used as a store
Above: The inside roof of the
radio studio
Above: The sorry state of the control room
Above: These expired batteries
remain in the control room and
they are now emitting a bad gas.
Above: The 50kw medium wave Transmitter
which is idle due to lack of diodes. These costs
less than one million according to the Engineer.
Above: Sorry state of the staff
23
quarters
Above: A water pump which has broken down
Opuyo
UBC
FM/TV Station



The staff don’t have contract
renewals and were told to just
continue with work
The station land is about 6
acres but has been heavily
encroached
with
illegal
structures on it. A large piece
is being used for cultivating
sorghum and maize.
The land within the staff
quarters is the only land
fenced. The rest is in the
open
Above: Part of UBC land measuring 6 acres
which has been encroached on. In the
background is maize plants and sorghum
planted by the encroachers on the land.
Above: The newly reconstructed
satellite dish and mast at Opuyo
UBC Station. The new system
waits commissioning.
Dakabella

The
entire
station
is
vandalized with an empty
structure
Above: The structure of Dakabella Radio
station. The station is not active.
24
Above: The inside of the building
shows the vandalized windows
and doors. The building has no
single equipment for the radio.
Ombaci
transmission
site




Transmission has been on
and off due to power cutoff
for late payments.
No
imprest to cater for such
emergencies by fuelling the
generator
Bushy compound.
The in charge is being
accommodated
in
old
buildings
which
require
renovation.
The night watchmen had no
facilitation
of
guarding
implements like bows and
arrows,
gumboots,
warm
clothing, rain coats, uniforms
and e torches.
Above: Transmitter not functioning due to lack
of eletricity
Above: Generator not running due to lack of
fuel
Above: Bushy compound
25
Above & Left: Dillapidated building
Giligilii
Transmission
Site


The 10 KW Medium Wave
transmitter was delivered in
1980s but had never worked
because with the current
technology transmitters use
transistors and the one at
station has valves instead.
The Corporation 3 night
watchmen had no facilitation
of guarding implements like
bows and arrows, gumboots,
warm clothing, rain coats,
uniforms and torches
Above: Non-functional transmitter
Above: A non-functional
regulator
automatic voltage
Management explained that findings that require resources will be identified and
addressed, and appropriate updates given on status.
I advised the Accounting Officer to ensure the following;
•
Staff Quarters and the transmission Houses should be reconstructed or
rehabilitated where they are found to be in a fairly stable state.
•
The land should be fenced, surveyed and titled to avoid encroachment and
resulting encumbrances.
26
•
Operational imprest funds should be availed to the in charges for maintenance of
facilities.
•
Staff contracts should be renewed and all contract gratuity arrears cleared for a
motivated workforce manning sensitive equipment.
9.0
Follow-up of prior year audit recommendations
A review of the previous year’s audit recommendations was done and the status is
shown below;
Audit Issue(fyr:2012/2013)
Recommendation
Current Status
Valuation of property, plant
and
equipment
–
unrevalued fixed assets
Management to expedite the
revaluation
process
and
the
updating of the fixed assets
register.
Repeated
Unsupported
Trade
other payables
and
Management was advised to ensure
that all documents relating to
payables are properly kept and filed
for future reference.
Repeated
Unsupported
Trade
other receivables
and
Management
debt ledgers
update
Not repeated
Management advised to ensure that
all documents relating to foreign
exchange gains/losses are properly
kept and filed for future reference
Awaited outcome of line Ministers
efforts
Not repeated
Management advised to ensure
strict adherence with the provisions
under the Income Tax Act and
NSSF Act.
Management advised to develop
and implement a manual that
prescribes procedures for handling
sales for its staff, develop a credit
and discount policy, consider
procurement of software that will
aid the monitoring of UBC airwaves,
ensure all sales persons indicate the
VAT charged to all advertisers on
time orders. Furthermore, as an
immediate control measure of
invoicing advertisers, the Sales
Administrator should be given
partial rights to the pastel
accounting system so that he/she
updates time orders electronically
Management to ensure all assets
are engraved, records of equipment
kept, infrastructure maintained,
Repeated and
increased
Foreign currency translation
gains
Absence of Board/Directors
and Senior Management
Outstanding Statutory
deductions
Sale of Television and Radio
airtime
UBC non-current assets at
up-country stations
27
advised
to
Not repeated
Repeated
Repeated
Hire of staff who have
reached retirement age
land surveyed and land titles
obtained
Management advised to comply
with the Act and recruit young staff
with requisite skills and have a
succession plan in place
28
Repeated
APPENDIX 1
FINANCIAL STATEMENTS
29