Auditor General Exposes Financial Indiscipline At Uganda’s Embassy in Denmark

The Auditor-General, John Muwanga’s report on the Embassy’s audited financial statements was tabled before Parliament last week. Muwanga’s qualified opinion notes that the finances of the Embassy were not handled well.
Auditor General John Muwanga with his deputy Keto Nyapendi Kayemba.
A new report of the Auditor General has revealed financial indiscipline at Uganda’s Embassy in Copenhagen –Denmark. This is in relation to the utilization of 5.6 billion Shillings total budget disbursed to the Embassy for the financial year 2019/2020.

The Auditor-General, John Muwanga’s report on the Embassy’s audited financial statements was tabled before Parliament last week. Muwanga’s qualified opinion notes that the finances of the Embassy were not handled well.

A qualified opinion means a statement issued by an auditor accompanying an entity’s audited financial statements suggesting that the financial information provided by the entity is limited in scope or a material issue concerning the application of generally accepted accounting principles.

The diversion of 300 Million Shillings meant for refurbishing the residence for the Head of Mission is one of the basis for a qualified opinion by the Auditor General.

The government owns an official residence for the Head of Mission at Copenhagen Embassy, but in the report, the Auditor General noted that the house is being occupied by the Administrative Attaché instead of the Head of Mission.

“During the financial year 2079/2020, the Embassy had planned to refurbish the official residence and 300 million was released by the Ministry of Finance through a supplementary budget for the purpose. However, the refurbishment did not take place and 190 million was returned to the Consolidated Fund while 110 million was diverted. Diversion of funds is contrary to the provisions of the Public Finance Management Act, PFMA 2015,” reads part of the audit report.

Muwanga says that there is a risk that in the subsequent financial year the funds may not be re-voted for the refurbishment of the chancery and residence further delaying their utilization.

“The Accounting Officer explained that the funds for the refurbishment of properties were not utilized due to the difference in Public Procurement and Disposal of Assets (PPDA) regulations between Uganda and Denmark and the bidders had concerns about the General Conditions of Contract in the Solicitation document issued to them, as being general and yet, in Denmark there exists very specific conditions of Contract guiding Consultancy Services for building and construction works. Hence no Danish Firms were comfortable signing the procurement forms provided in the PPDA Document format, which the Uganda Embassy had issued. The Mission, therefore, requested the PPDA for an exception to use the Danish regulations and the consultancy bids were subsequently received and evaluated,” further reads the report.

The Embassy Accounting Officer also blamed the Covid-19 pandemic and the related lockdowns which affected the operations of the Embassy and those of the potential contractors and that selection of a consultant could not progress as desired.

However, Auditor General Muwanga says that this response was unsatisfactory as it did not address the issue of the diversion of the funds. He advises better planning mechanisms to ensure that Government projects are implemented and completed within the planned period in line with regulation 11(2) of the Public Finance Management Regulations 2016 and that any need to reallocate funds for expenditure, should seek the authorization of the Minister of Finance.

Meanwhile, the audit report also observes that the Embassy also rents a separate residence (an apartment) for the Head of Mission and that during the financial year 2019/2020, rent equivalent to 266.99 Million Shillings was paid for the apartment.

“During an interview with the former Accounting Officer for the Embassy, Alex Hope Mukubwa on 21st January 2021, it was explained that the Head of Mission opted to reside in the rented apartment because the official residence was in a state of disrepair and would therefore not provide a befitting image for the Embassy and Government. A decision was made to allow the Administrative Attaché to stay in the Embassy official residence thereby saving an annual rent of DKK.216, 000 equivalent to 121.6 million Shillings,” says Auditor General Muwanga.

The Auditor-General also identified a sum of 300 million that was approved by Parliament as the supplementary budget for the Embassy, out of which 270 million was subsequently released.

However, Muwanga observes that the budget was not accurately disclosed in the "Commentary on the Financial Statements by the Head of Accounts" and in addition, the amount was not disclosed in the "Statements of appropriation accounts".

“Misreporting of the budget figure misleads users of the financial statements. The Accounting Officer explained that the accounts were already consolidated by the Accountant General, and promised that prior year adjustments will be made in the Financial Year 2020/2021. I informed the Accounting Officer that the financial statements are still misstated and should therefore be adjusted in the subsequent financial year,” says Muwanga.

The Auditor-General also notes that 225.08 million Shillings were irregularly diverted from the activities on which they were budgeted and spent on other activities for which money had not been appropriated without seeking and obtaining the necessary approval. The activities to which funds were diverted included salaries for local staff, air tickets, allowances, energy bills and furniture.

“This action affected the implementation of planned activities. Included in the 225.08 million is a sum of 103.9 million that was diverted in the 4th quarter of the financial year. This was done at a time when key staff were away from the Embassy. A review of various correspondences among the Embassy staff and the minutes of the finance committee meeting of 26th June 2020 indicated that the management of the Embassy mischarged funds to utilize all unspent balances at the end of the financial year 2019/ 2020,” reveals the audit report.

The new audit report also noted a review of the sampled documents which revealed that payments to the tune of 29.57 million Shillings had contradicting supporting documentation attached and that payments were not budgeted for or were incurred for activities that are not the responsibility of the Embassy.

The Auditor-General says that there is a risk that public funds were not put to their proper use and that funds could have been lost through payment for activities of no benefit to the government.

Also reported by the Auditor General is the payment of 79.58 million shillings to two staff with no contract appointment letters to justify the monthly salaries paid to them. Muwanga says that payment to staff without contracts amounts to irregular expenditure.

The Uganda Public Service Standing Orders specifies the letter of appointment of an officer recruited locally to the Foreign Service on contract terms.

  The audit report and others were referred to Parliament’s Public Accounts Committee- PAC Central Government for hearings and scrutiny to begin.                    


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