Note: This is our record of what transpired in the meeting. Not verbatim.

Meeting with Civil Aviation Authority (CAA)

Discussed in the Committee on Commissions, Statutory Authorities and State Entreprises on November 5th, 2014

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The procession from CAA led by Ms. Samalie Kisekka met with COSASE to answer audit queries that arose in the Auditor General’s (AG’s) report of 2011/12 and 2012/13. The meeting was chaired by Hon Ibrahim SemujjuNganda and the audit queries were being read out by his Vice Chair HonNamayanja. There were some recurring issues that were cited in the report the audit was carried out for example;

The UGX 32 million debt that the Ugandan Government owed CAA since 2007 in rental arrears. The report further noted that there was no documented evidence to confirm that the government was willing to pay this money back. In addition the list of bad debts availed to the Auditor General’s office did not conform to CAA’s finance policies and procedures manual. CAA also did not impose penalties and interest charges on these debts in accordance with the credit management policy. The committee heard that CAA as at 1stOctober had started penalizing and charging interest on these debts.

The Auditor General’s report also noted that CAA did not update its fixed asset register; mostly motor vehicles making it hard to trace them. The information provided for these vehicles was vague for example different cars would be entered with the same details which were unreliable. CAA asserted that at the time of the audit they had not updated the list but currently had adjusted to that effect. The auditor on ground also noticed that some assets whose cost exceeded UGX 1 million and expected life exceeds 1 year were being capitalized contrary to section 7.1.5.2 of CAA’s finance policies and procedures. However the Accounting officer said the same manual allowed for some assets to be capitalized despite costing less and having less expected life. The committee promised to look further into the issue and make recommendations basing on how they see fit. On that same note, depreciation on some fixed assets were understated an amount of UGX 389 million and as a result the net profit/loss overstated by that same amount. CAA blamed the issue on the malfunction of the SUN system depreciation expense computation and assured the committee that the issue had been rectified. The audit report also noted that most of the assets acquired in 2012 were not engraved as the financial policies and procedures of CAA state; management responded that an engraving machine had been procured for the purpose but that that solution was not sufficient. They therefore procured a consultancy firm to value most of the assets, verify, re-categorize where necessary then eventually engrave these assets. They asserted that the process is ongoing. On the issue of some cars especially fire trucks not having number plates, CAA management claimed this was a measure to restrict the unnecessary use of the cars. The accounting officer said personnel had misused the cars to an extent of being driven out for lunch way out of the Airside. Still on vehicles, CAA did avail the Audit office with log sheets that indicated mileage, journey, distance etc; so it was hard to ascertain if the vehicle movements were within CAA’s approved activities. On the query on missing motor bikes there was no clear explanation. The committee requested documented evidence to show these were actually in existence.

The Auditor general’s report also noted that CAA had slow moving and obsolete inventories which have been in the stores for 8 years and also continued to disclose the value of these inventories according to the SUN system rather than the physical inventory count balance. This caused a variance of UGX 18 million. The report also cited that there were variances between inventory balances per inventory cards and the physical inventory balances, by the time the audit was conducted 90% of these balances had not been reconciled.

CAA invoiced its rental debtors late according to the Auditor General’s report therefore leading to delayed payments and as a result, impacts on the inflow of revenue. Management blamed the commercial department for this issue. This led the MPs to wonder why CAA wouldn’t do away with these individuals responsible for crippling the entire billing system and CAA at large. The audit report also noted that at the time it was conducted, revenue Invoices were not filed even when client statements proved that these invoices were issued. CAA claimed this was an issue of misfiling but all these invoices were now in their respective files. There were also un-updated tenancy agreements according to the audit report this posed a risk as there no basis for demanding these monies.

The Auditor General’s report also reported that CAA was still using Human Resource manuals that dated as far back as 1992 and 1998 and yet some guidelines have been amended thus these manuals don’t serve the purpose for which they are intended. UCC also did not update staff files for some variations like salary and benefits. When the audit was conducted salaries on payrolls differed from those in respective files, the auditor on ground could therefore not establish whether these payments were in line with CAA’s Human Resource policies. On this matter CAA management claimed that it may be a case of misplacement during consultancy work but memos were always written in relation to salaries. Staff in CAA were also not appraised during the previous years and they were being promoted without documented performance evaluation conducted on them; all practices against the Collective Bargaining Agreement in the Human resource manual. CAA assured the committee that they were adhering to the CBA regulations now. The report also mentioned instances where staff had been on probation for more than 2 years, this was evidenced in the department of Air Traffic management. But management made the committee aware that most of these employees were fresh graduates and needed to a 2 year training period after which they are evaluated. Also cited was the fact that some staff were enjoying benefits not stated in their contracts, in addition there were no documents indicating the payment of these benefits to staff.

CAA also did not remit Pay as You Earn to URA on time hence posing risk of penalties as a result of filing. Management assured the committee that sometimes it was the system failure at URA which caused these delays. It was also noted that withholding tax was paid up to 3 months after it was withheld, this still poses a result accumulated interest imposed by URA as a result of late payment.

In relation to bank reconciliation statements, an amount of UGX 104 million was reported as an unknown debit by Stanbic Bank. This amount had been outstanding since 2011. The report cautioned CAA and asserted that 10months was quite a long period to be taken before such a transaction to be reconciled.

The audit report also noted that upcountry airfields were not fenced thus easing access of wild animals even up to the runways. The staff at these air fields were prone to attacks and the aircrafts using these fields to accidents. In addition the land was exposed to trespassers who grazed cattle on the fields.

As at June 30th 2013:

The Uganda government owed CAA UGX 48 billion all in rental arrears of different government entities housed in CAA properties. There was no evidence that the government is willing to settle this debt.

There are debtors who owe CAA UGX 28 million and have not met their obligation to the entity for the last 10years. Management is seeking to write off some (untraceable) as bad debts and also hire a debt collector to collect those that are recoverable.

As in the 2012 Auditor General’s report of 2012, the report of 2013 raised a query of a fixed asset register that is not updated. There is a risk of these assets being misappropriated according to the Auditor General.

CAA had also not verified its assets physically as recommended by the finance policies of the entity. The management assured that the exercise would be conducted in 2014.

At the time of the audit, CAA did not have a board of Directors as their term of office had expired in June 2013, management however said the process of recruiting a board was on going.

CAA also developed a 5 year business plan that was approved in September 2012 and supposed to go until 2017 but at the time of the audit, deliverables of 2012/13 were not met thus compromising the entire business plan. Management blamed this on failure of the South Korean government in fulfilling its financial obligation to CAA.

Again, the query of staff enjoying benefits not in their contracts arose in 2013. In this incidence, UGX 275 million was spent on buying furniture for managers’ homes. The committee requested for a list of the managers who will be required to refund this money.

According to CAA Finance Accounting Policies and Procedures all expenditure should be within the budget limits, however it was noted that expenditure exceeded in some items and others were totally not budgeted for.

The chairperson asked the management of CAA to provide documented evidence within the week, he also asserted that satisfying the committee is within CAA’s interests and they should strive to do so.

 

 

 

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