L L THE REPU BUC OF UGANDA S 2ON 2na I and elien SuenAud instition (A)0 fin pomting effective public acoountabiity" 9 SION - -n'o t Ur /ae t d Ahrb mak an >8ecwv cont,rito to 1iprovig publitc secountabiity and value for Money Spent" DCG.247/347/01/17 22nd December, 2017 The Rt. Hon. Speaker of Parliament Parliament of Uganda Kampala REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (RCIP) PHASE 5 FOR THE YEAR ENDED 30TH JUNE 2017 In accordance with Article 163 (4) of the Constitution, I forward herewith audited financial statements of the Regional Communications Infrastructure Program (RCIP) Phase 5 for the financial year de Oth June 2017 together with my report and opinion thereon. John F.S. Muwanga AUDITOR GENERAL Copy to: The Permanent Secretary/Secretary to the Treasury Ministry of Finance, Planning and Economic Development The Executive Director, National Information Technology - Uganda The World Bank/IDA The Programme Coordinator RCIP Member of the nternatianal Organisation of Supreme Audit Institutons (INTOSAI) Miember of the Alfca Organisation of Suprere Audit Institutions (AFROSAI) ÿþTHE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (RCIP) - IDA LOAN NO. 5635-UG FOR THE YEAR ENDED 30TH JUNE 2017 OFFICE OF THE AUDITOR GENERAL UGANDA LIST OF ACRONYMS Acronym Meaning ISAl Intërnational Standards of Supreme Audit Institutions G.O.U Government of Uganda NITA-1 i National Information Techno,ogy Authbrity ICT I-information Communication Technology RCIP Regional Comrunication Infrastructure Program RFP Request for Procurement TOR Terms of reférence MTEF Medium Term Expenditure Framework 2 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (RCIP)-IDA LOAN NO. 5635-UG FOR THE YEAR ENDED 30TH JUNE 2017 THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the accompanying financial statements of Regional Communication Infrastructure Program (RCIP)-IDA Loan NO. 5635-UG for the year ended 30h June 2017. The financial statements set out on pages 9 to 30 comprise of Statement of cash receipts and payments, Statement of comparative budget and actual amounts, Cash flow statement, Special designated account statement and Notes to the accounts which contain a summary of significant accounting policies. In my opinion, the Project financial statements present fairly in all material respects the fund balances of the Regional Communication Infrastructure Program-IDA Loan NO. 5635-UG for the year ended 30th June 2017 and the receipts and payments for the year then ended in accordance with the accounting policies stated in note 8 on pages 15 to 20 of the financial statements. Basis of Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of Project Management in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act 2008, the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in Uganda, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, are of most significance in my audit of the financial statements of the current period. I have determined that there were no Key Audit Matters to communicate in my report. Other Matter I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements: * Budget performance - Under absorption The approved project expenditure estimates for the financial year 2016/17 amounted to UGX.20,310,423,595 and a sum of UGX.36,926,157,308 was released for spending during the year. However, only UGX. 1,967,209,705 was spent, representing an absorption capacity of only 9.5%, Refer to AppendixI. Low absorption is likely to attract commitment fees charged on undrawn amounts and also negatively affects implementation of planned activities, Management explained that being a first year of implementation, there were challenges including recruitment of prescribed project staff/consultancies, specifying deliverable requirements, turning around procurements to match the implantation schedule / work plans. I advised the accounting officer to expedite the initial processes to ensure that all planned activities are implemented within the set Project period with a view of minimizing commitment fees. o Inadequate Government counterpart funding A reviewed of the project's Government of Uganda (G.O.U) Counterpart funding budget indicated that the project had budgeted to receive UGX,706,373,741 as counterpart funding. However, only UGX.289,705,051 was released and spent during the year, which represents a counterpart funding shortfall of 61%. Inadequate counterpart funding could lead to slow implementation of activities such as payment of taxes and could attract litigation costs resulting from fines and penalties due to non-payment of suppliers. 4 Management explained that much as only UGX.289,705,051 was received, the entity managed to lobby for a higher MTEF ceiling of UGX.1,914,479,000 for the financial years 2017/18 and 2018/19. I advised management to liaise with Ministry of Finance, Planning and Economic Development to ensure that all budgeted Government counterpart funds are released on time. Delayed recruitment of key staff Section 6(b) of the Financing Agreement requires the project to recruit an environmental specialist on a retainer basis in not later than three (3) months after the effective Date. However, it was noted that one year after the effective date (26t" May 2016) the position was still vacant. Late recruitment of staff can lead to delayed execution of project activities. Management explained that this recruitment had been handled early during the financial year but the best candidate turned down the offer due to failure to reach an agreement over pay, after protracted negotiations. The second candidate also could not accept the offer because this required him to resign his other government post at that time. Management then opted to adopt a seconded specialist from NEMA; which idea was not approved by World Bank. A decision had to be made with consent of World Bank to re- start the process at the beginning of July 2017 through head hunting and another shortlist was generated and candidates interviewed. I advised management to speed up the process of filling the key vacant post in order to avoid delaying the implementation of the project activities. Management Responsibility Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with the provisions of the Public Finance Management Act, 2015 and IDA Project Funding Guidelines. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying 5 appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. In preparing the financial statements, management is responsible for assessing the Project's ability to achieve its core objectives, disclosing, as applicable, matters related to the achievement of its objectives, unless management either intends to close the project or to cease operations, or have no realistic alternative but to do so. Management is responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My objectives as required by Article 163 of the Constitution of the Republic of Uganda, 1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008 are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs), I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. 6 * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern, If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Project to fail to deliver on its mandate. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. I communicate with Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide Management with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with him/her all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with the Management, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. 7 I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. John F.S. Muwanga AUDITOR GENERAL KAMPALA 22nd December, 2017 REPORT OF THE AUDITOR GENERAL ON THE SPECIAL DESIGNATED ACCOUNT STATEMENT OF REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (RCIP)-IDA LOAN NO. 5635-UG FOR THE YEAR ENDED 30TH JUNE 2017 Opinion I have audited the Special Designated Account Statement of the Regional Communications Infrastructure Program (RCIP)-IDA Loan NO. 5635-UG for the year ended 30" June 2017 which are set out on pages 13 of Appendix I respectively. In my opinion, Programme management complied in all material respects with loan rules and procedures and the Special Designated Account Statement for the Regional Communications Infrastructure Program (RCIP)-IDA Loan NO. 5635-UG present fairly in all material respects the accounts transactions and the closing balances as at 30' June 2017. Management Responsibility for the Special Account Statement Project management is responsible for preparation of the special account statement and its fair presentation in accordance with the requirements of the Government of Uganda regulations, and loan (IDA) guidelines. Management is also responsible for designing and implementing internal controls relevant to the preparation of the special account statement that is free from material misrepresentation, whether due to fraud or error and selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility My responsibility is to express an opinion on the special account statement based on my audit. I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs) and IDA guidelines on auditing. Those standards and the loan guidelines require that I plan and perform the audit to obtain reasonable assurance about whether the special account statement is free from material misstatement. I believe that the audit evidence I have obtained provides a re s6nable basis for my opinion. Joh'n.S. Muwanga AUDITOR GENERAL KAMPALA 22ND December, 2017 9 APPENDIX 1 Bud-get Performance Sub-Component Planned Activities FY Budgeted amount Status of Management 2016/17 GXL implementation response 1.1: Undertake Laws Gap Analysis * Assessment of the 525,300,934 Assessment of the Management explained Study & Implementation of existing ICT policies, existing ICT policies, that the Consultant identified gap strategies, standards, strategies, standards, contract was likely to legislation and legislation and be in signed in October regulatory framework. regulatory framework 2017/18 regultorynot yet done. Identification of gaps * To identify gaps and theanizan weaknesses and their with regional harmonization with commitments and regional commitments frameworks not yet and frameworks. done * Review existing laws, 175,099,183 No progress made Activity was affected by policies, strategies and absence of consultant framework, Task force activities, seek approvals, stakeholder engagements, review of reports 1.2: Institutional Strengthening Conduct an ICT skills gap 350,200,000 No activity done Activity affected by and Development assessment for Government delay in approval of to identify training Terms of Reference by requirements and the world bank and Development of a capacity that the Contract was buildingcprogram to address likely to be in place by be10ige n coe deficiencies that will guide November 2017 the Civil Service College, MDAs and local governments on training requirement Training and certification of 175,100,000 Training was not Activity affected by MoICT, NITA-U and PPDA undertaken delays in approval of Officials Terms of Reference by the world bank that the activity was likely to be done early in 2018. Development and 525,300,000 The strategy was not No action taken during implementation of a strategy developed during the year. the year, for institutionalization of the Chief Information Officer role within the Government * 1.3: Developing and supporting a) Development of a 455,260,000 Not undertaken Delayed procurements the execution of awareness and strategic communications affected the activity. partnership building programs and program and tools. Management expects a communications b) Organisation of to sign a contract by knowledge-sharing March 2018. seminars, workshops, conferences and other similar initiatives 2.1: Pre-purchase of international Procure & Install of 2,101,200,000 Procurement and Delay in procurement bandwidth for Government and bandwidth / HUB installation not yet done. affected the activity priority target user groups equipment however it was at contracting stage 2,2: Construction of missing links Procure Contractor and 1,751,000,000 Procurement not completed Delay in procurement of NBI begin to implement Missing affected the activity links .Contract expected to commence in October 2018, Procure Supervisor and 700,400,000 Procurement not completed Delay in procurement begin to supervise Missing affected the activity. 11nks Contract expected to commence in October 11 2018. 3.1: ICT Technical Standards & Procure consultants to 2,053,533,352 Activity not yet Significantly delayed: Frameworks for Electronic Services develop the Enterprise implemented Clearance of ToRs for Delivery Security Architecture the framework by WB framework and design, and still yet to be obtained Development of the Government Enterprise Delay in procurement Architecture for GOU affected the activity. Procurement likely to be completed by December 2017 3.2: Cloud infrastructure in Existing Procure Contractor / 2,591,480,000 Procurement of a Delay in procurement National Data Centre (IaaS) provider and begin to Contractor not yet affected the implement Cloud completed implementation of the Infrastructure for data activity. Management centre expects to sign a contract in August 2017, 3.3: Establish a shared platform to Initiation of procurement of 525,300,000 Activity was not yet done Benchmarking visits improve Government's ability to contractor to design were carried out, deploy e-Services develops, customize and stakeholder commence implementation engagements are on- of the e-payment and going authentication gateway. Delayed procurement No planned activity for the affected the activity. SMS and Mobile gateway Procurement of supplies to be completed by October 2017. 3.4: Information Security as a Initiation of procurement of 822,970,000 Activity not yet done EOls are to be shared Service: Implement elements of contractors to supply and with NITA-U for the National Information Security install enhanced CERT approval. Framework (NISF) environment, carry out Delayed procurement remediation of gaps within affected the activity. MDAs to achieve NISF Procurement expected compliance and remediation to be completed by works, procedure and March 2018. 12 process testing as well as certification of ISO 27001 & PCI DSS 3.5: Whole of government data Initiation of procurement of 1,575,900,000 Activity not yet done Benchmarking visits Integration and sharing Program contractor to design and initial stakeholder develops, customize and engagements have commence implementation taken place. The bid of the application and data document is under integration platform. preparation. Procurement to be completed in 2017/18. 3.6: Shared IT Services: Develop Procure a contractor to 158,928,000 Activity not yet doen Evaluation of supplier shared services to increase the design and begin to bids was completed, Government's efficiency, including implement a unified awaiting WB clearance a UMCS messaging and collaboration Delayed procurement system (UMCS) affected the activity, however, Management expects to sign the contract in August 12017. 2.7: e-Procurement: Implementing Acquire and begin to 35,000,000 Activity not yet doen Evaluation completed. an e-Procurement system at implement e-GP System Contracting underway selected MDAs and likely to be completed in August 2017 Implementation was expected to commence in August 2017. Implement Independent Procurement of Quality Contract award for Quality Assurance assurance Consultant not Quality Assurance yet done consultant to be concluded in the FY 2017/18. Project Management Recruitment of key Project 529,475,000 4 out of 5 key project All recruitment were to resources (Project resources recruited. be completed by 30th Accountant, Procurement Recruitment of September 2017 Specialist, Project Environmental Specialist to Coordinator, Sodal Scientist, be re-done. Environmental Specialist) Procurement of office 68,750,000 Activity was not done Significantly delayed furniture and Laptops for due in part to approval RCIP Individual Consultants of the procurement plan. Delay in procurement affected the activity. Procurement was to be completed by end of Aug 2017 Procure additional office 210,120,000 Activity not undertaken Significantly delayed space to accommodate the due in part to approval RCQP individual consultants of the procurement being recruited plan. In place Not undertaken because of delay in procurement Partitioning of the PDU 25,000,000 Significantly delayed due in Order for partitioning Office to ensure integrity of part to approval of the issued and partitioning the procurement records procurement plan. was to be completed in July 2017. Procurement of filing 27,500,000 Significantly delayed due in Activity was expected cabinets in compliance with part to approval of the to be complete in July World Bank procurement plan. 2017. recommendations Development of a 35,020,000 Not started Implementation monitoring tool for the RCIP expected to commence Performance Indicators in 2017/18. 14 APPENDIX 2 FINANCIAL STATEMENTS 15 Government of the Republic of Uganda National Information Technology Authority-Uganda (N(TA-U) RCIP Financial Statements for the Financial Year ended 301I June 2017 NATIONAL INFORMATION TECHNOLOGY AUTHORITY UGANDA Regional Communications Infrastructure Program (RCIP), Phase 5 - Uganda Project WORLD BANK CREDIT No. 56350 -UG PROJECT FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2017 Page 1 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30t" June 2017 Table of Contents 1.0 STATEMENT OF RESPONSIBILITIES OF THE ACCOUNTING OFFICER ................... -.3 2.0 Commentary by Head of Accounts .....................................4 2.0 GENERAL INFORMATION ABOUT THE REPORTING ENTITY & RCIP PROJECT ............5 11 THE REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAMME, PHASE 5 (RCIP) 2.11 PROJECT OBJECTIVES ......................... . .............................5 2.1.2 PROJECT BENEFICIARIES ............................ .........................5 2.13 PROJECT COMPONENTS .......... ................................... .........7 3.0 STATEMENT OF RECEIPTS AND PAYMENTS....................9.................9 4.0 STATEMENT OF FUND BALANCE .............. ..................................10 5.0 STATEMENT OF CASH FLOWS ...................................................11 6:0 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS ...............12 7.0 DESIGNATED ACCOUNT STATEMENT ................... .....................13 8.0 ACCOUNTING POLICIES ....................................... ........15 7.0 NOTES TO THE FINANCIAL STATEMENTS ..................................21 Page Zof 30 Governument of the Republic of Uganda National Infornation Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Ycar ended 30"' June 2017 L STATEMENT OF RESPONSIBILITIES OF TI-H ACCOUNTING OFFICER The finatncial strtenmes set olt on pages 11 to 27 have been prepared en acctilance wirh t provisns o( the Public linance Managemeint \ct, 2015 (the \C). The finarcml atatements have buen prepared on the nmodified cash bast of 2eoutiog and comply with the geiaciall accepled accoming paetice Eor the public setr. Under the nodified cash basis of accountig, only financi asset and habilities are recognized and preseited iL tese flitancial stttee'nts in order to mce!e the requrements olte Act. le accoidance with the provis10ns of Section 45 and Sehedule 5 of the Public linance Mrlanagement Acr, 2015, I amr tesponsible for and peesonrally iccountable to PaErliamnet f the aetivitics o (le vote to whichl I am ihie ,Iccoutting fficer. Firhiier, I an responsible for the regilatriy and proper ise of the mniiey apprOpnated to) the votet te wlhich I am the Acconunig Office I air also respontble t¯ur ulioizing any conitmlents tmade by the vote and for conro]lng isur ce re ceived, held tr disolsted of by or on cconit of rhe vote. inall I a an:ponsible for piuttog i place effeeive systems of ris]k managenent and inteumal cotrol ln repect to al] resoirces and traNactions of porcitial enviroilnenial and social ipaers of the ptoeci and support for the imlplem'ienration of the safegoard instrum1ents (other tihan the Resettlemcnt A rio P1ln,). Componenc 31 e-Governmzent (USS35 millmon IDA and US$5 nillion GoU This componerit will [inane carrying out a program of activities to set up foundationaL and enabling shared platform for e-Govemment, inieludii (i) development and establisieni of appiopdiate ICT technical standards aid frameworks, data Aodels and procedurnial shees to enable se:nless interoperailiy aeros Governnment WCT systrm, including esablishing and inplenenring a (iovernen Lit nrerp se Arateetture (GA) ([lSr million); (ii) seing up :1 elod-based ifrastrcrome m the exisung amional datacenter (1nfrastrueture as a Service, USS10 nmillion); - (iii) es1ablishing a shared platfo -i to improve Govetnieti's aili iy to depltoy e-Services (11kt[bvirm as a Service, US3S3 nmillion); (iv) suppoaing the implemenation of element> of Ilie National Information Securiry Franmework (NHI) indliding (a) security iniciet anid event managemeIt; (b) distributed denil of service sheler; () traffie eictvltOtn; (d) intrusionn prevetnon systemna fot the national datacEter; (C) secuorCty meident mInag enicilt :Ind respon,ise capabiluies developmeiit involving security certcauons, aEmning of Gioverniment staff, natinwide awareiess camipagn; (f) tifoinatinn sectiiy stitus review, implemientation of the NISV and coniplance review in 15 MIDAs; and (gr) tpdae of tIe narional cyber, securit straegy (UJSS1 million), (v) supporling the esiabliientir and management of a whole- Of GovemtInIent data mnegn±tiit and sharing progrja with the tljecive ro leverige rhle weaIhI of public sector data acoss MDs throgh dataase and system inlegrarion (SS5 milhoi); (vi) developl)ing shiarel services designed to unCrease tIe Gover1nment's efficieicy, iieluding 1 uinified Imessagilng and elii1Eouications system iSS4 mill ian); (vii) implemening an e-Procurement vslem at selected D I (USS15 million); and (viii) tleploving seleCted e-Services deermained in gceordance with lie eritena esablished it seleeion of citizen-centered applicalions (USS3 milion). Tb1c project will fliance die r lq Aed iardware and software as well as technical assistaiiee and aconasulting service, relared ro the implementation of these sub-omponents. Component 4: Project Management (US$3 million IDA and USS3 nillion Gol) This component finanCes projeet manageinent and coordination ineluding procurement, financial management, monitoring & evaluation and environnental and social safeguards nanagement. This will inClIde fuIding consLuhaIICy suipport for the imnplemientaion of the proect, insiutiuinal strengthaening of NITÃ…U. 'MKTCl1i1ad 1PM),\ to impi-rove teir capacily ito impleient the project, logisries, consumables, office eu(ilieit, as wel is lemiaenIral petng csts anid audts Tis comtpon'ei will fl tmd technical asslsnce (lA) to suppoIt mnottring and evaliiation (Ml&I) and autoiaaoriton of the 'ecountinr sistem. wII all the overimet wIIrl fond Ilie ipIeIImem1ainont of the Reseileinti t Acto Plan> under kis componei, Page 7 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30' June 2017 Project Cost and Financing ProictCOnpPnents PrjectscotUSD IBRD-porfIDA GoUSD 1. Enabling Environment 3 million 3 million 2. Connectivity 36 million 34 million 2 mllion 3. c-Government 40 million 35 million 5 million 4. Project managcment 6 million 3 million 3 million Total Financing Required 85 million 75 million 10 million Page 8 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statcments for the Financial Year ended 30' June 2017 3.0 STATEMENT OF RECIPTS AND PAYMENTS _______Dl\ GOUf .Nol.s_.S$ _GX_FMzkt TOTAL 2017 USS UGX UGX UGX Receip5s 3 310,336,623 36,636,157,308 289,705,051 36,925.862.359 S10,336,623 36,636,157,308 289,705,051 36,925,862,359 llI'ývrn»iit, It)0 (S567:.19) (1,677,209.705) (289,705,051) (1,966.914,756) __________($567,449) (1,677,_ 9,2 28_9 795,051'__191942R Surplus beforc currencv valuhation J9,769.174 3495847_603 - 34,958.947.603 Ilxchiange rate gain on restaIing 1) bqik balance Cä'S 1: 3595.9 S0 170,072,737 170,072,737 5,_rpÃ…isAftcCurrc), Valuation $9,769,174 35,129,020,340 - 35,129,020,340 incs Soika Juincs Kamnanyrc Executivc Director Diirectr Finance and Adninistration Page 9 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 300' June 2017 4.0 STATEMENT OF FUND BALANCE UGX Esuivalent Note US$ UGX Opening Balance as at Ist)Ily 2016 $0.00 Surplus for the year $9,769,173.39 34,958,947,603 Forex gain (Loss) $0.00 170,072,737 Balance as at 30 June 2017 59,769,173.89 35,129,020,340 Represented by: Assets Bank Balances 20 $9,769,173.89 35,129,020,340 Less Liabilities - Net Assets __332_ 12_ 2 ALIZ9_t?M40 iames Sanka james Kamanyire Executive Director Director Finance and Administration Page 10 of 30 Governnent of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statencuts for the Financial Year ended 3011 June 2017 5.0 STATEMENT OF CASH FLOWS AS AT 30"' JUNE 2017 US$ UGX Equalcnt Receeipts from Operatng Activities Disbu-seie from W3 S10,253,897.43 36,636,157,308 Disbursemets from GOU (Cunmterpat)_ $82.725,60 289,705,051 $10,336,623.03 36,925,862,359 Oper'ating expenses -________________________ CoTonce1l 4 (be fleO revaliioin) (567,1493 1) (1,966,914,75() Exchange nie diffe ees gin on rmluation tfhe Dk balance) S.00 170,072>737 Net Cash flow from Operating activities (after evalu ation> (567 449.34) (796,842,019) CASHFLOW FVR OM IN VES TING ACT! VI TIES ___________ _____________________ _______________50.00 _________ CASHFLOW ROM FLNANCING ACT! VI TIES Net Ine-rec in Cash & Cashi iivalen1t S9,769,[73.68 35,129,020,310 Chalh & Cash equivants at the start of the year 50.00 Jamnes Saakti Janes Kamany-ire Executive Director Director Finance and Administraution Page 11 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Ycar ended 301 June 2017 6.0 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS _. .2016/17 Budget 2016/J7 Agtual N) e JUX IcGX VarianceYX Balance B/f - Receipts Component 1 2,206>260,118 1,178,556,102 (1,027,704,016) Component 2 9,105,200,000 13,678,823,850 4,573,623,850 Component 3 9,331,164,749 20,551,758,946 11,220,594,197 Component 4 1,235,848,624 1,227,018,411 (8,830>213) Sub-4,1alIDA Rceipts 21,78,473,491 36,636,157,308 14,757,683,Iz7 GOU Counterpat ceipts 290,000,000 289,705,051 (294,949) Total receipts 22,168,473,491 36,925,862,359 14,757,388,868 Ppvymen1is:roject E.wpenditure Conjpnen_t Component 1 2,206,260,118 - (2,206,260,118) Componcnlt 2 9,105,200,000 328,113,601 (8,777,086,399) Component 3 9,331,164,749 913,092,964 (8,418,071,785) Component 4 1,235,848,624 436,003,140 (799,845,484) ] GOU Counterpart payments 290,000,000 289,705,051 (294,949) Total paynenrts 22,168,473,491 1,966,914,756 (20,201,558,735) Suplus beforc curency vuluation - 34,958,917,602 34,958,947,602 Forcign exchange gain - 170,072,737 170,072,737 ...........4....Y James Saaka James Kamanyire Executive Director Director Finance and Administration Page 12 of 30 Covernnient of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30'1 June 2017 7.0 DESIGNATED ACCOUNT ACTIVITY STATEMENT FOR THE FINANCIAL YEAR ENDED 30 " JUNE 2017 LMNocs US$ GX Equivalents _Opening Bnanrce as au Jufrly 01___ _ $0.00 ____ AddL TotalIDA Replenishmrenats r]> the).\ S___ 9,971..551 95 33,688,888,256 Total_ 11)2k ]ýclýjclli tf) 1C DÃ…$9,97 1,551.95 35,688,888,256 Less, ligible expendiiture fromt the DA driing he Cnr (S202,378.06) (729,940,653) C]osing Bank Balanec as at 30th June 359 ,769jf739 34958947 603 xchaige rate gain onl valuation of D.\ balaince $000 170,072,737 Reconciled Bank Balance as at 30th JLune 20 $9,769,173.89 35,129,020,340 RC1P "Designarted Bank Accourint" as at 301 June 201 is reprsented by 2 two bank accounts as foIlwi 11) .\ Special Bank A /c No. 006550088400000 designated in 1USS n1d i i s the where disbursements from the IDA are deposited und pavntis in USD nade fromn. i ) I trLoct Lcal -A/c No. 006550088000000 denominared in loCal currencV. iTnsfers ie tn e d dCsignated account (for payment of transacrions in local curiency). 1Te Closing balance as at 30']'Jufn 2017 in this accouit was UGX 15,343,721/t s pat of funds ranisferred forn the USS onrt 12h JL)iny 2017at an exciange rate of l USS- 3607.17 A .t rhe repoitrig dae, he pi1t >ct implementation ,anriiigeilents requite any clorig blIanc in the lotal lroject accolnt ir rporied in dollars after converringt at the hisro-ical conriversiio exciange mte ic 3607,17. SIece i o get ie Desjgnared Bank Accou1 baance the amionlt on the loCal pojuct account was converred givinig rise t> an1 eliivaiient of ISS,253.6 7 1erails ar- tabuILted bcl ow CASI & GSI I rUV AlI.1S AS AT 30111 IUNIV 2011 IDA Deigfared Bank A/c No. 006550088100000 5___ 9,6 9202 3,595.90 35,l13,676,619 U:GX I a! Bank A c No 006550088000000 _ 9,425367 3,607 1 15_,3-3721 TOTA L. $9,769, 173 89 35,129,020,340 James Saaka Jamtes IKamtanyvie ExtetCutive DireCtor Director Finance and Admninistration Page 13 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30"1 June 2017 SUMMARY O WITHDRAWAL APPLICATIONS TO THE DESIGNATED ACCOUNT Date Application fercnce Amount USS Echangenic Amount UGX 25/Oct/16 RCIP/02 51,148,566.79 3,459,24 3,973,168,187 27/Jun/17 RCIP/03 S8,822,985.16 3,594-67 31,715,720,069 TOTALS $9,971,551.95 35,688,888,256 Note: Three (3) Withdrawal Applications received ftom World Bank during the financial year as derailed in Note 10. However it is only two of these that represented disbursements to the Designated Account in Bank of Uganda. The other Withdrawal Application (Reference number RCIP/01 dated 31 August 2016 was a re-irnbursement to the NITAU Operational Account for retroactive financing ic eligible project expenditure incurred and paid before project effectiveness,. This amount had been met from NITAU GOU/NTR funds during the financial year 2015/16. Page 14 of 30 Government of the Republfic of Uganda National Information Techxnology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30* Julne 2017 8.0 ACCOUNTING POLICIES These are the speci lie priipiiles, baser, con veoiions, iies and pracices adoj3ted by the Govemminiiei of the Republic of Uganda in prepauing '1nd presenttitig tbe finaidial stateients. The pncipal ccounting poLicies adopted in the preparahion of these financial statements are set out below. [heste poljlicies have been consistently uppljed in all iaterial s unless otherwise stated. 1) General Information A2 required by Secdoi 51(1) of he LPLIi inanc n11gemn1t Act, 2015, each vote siall prepare annua:l irancul statements for audiÃ¥, lnd sulbinit a copy to the Ä ecountant Gneral. 2) Reporting Enity National Jnforrmartioi Technology Authority -Uganda is i teporting entity of the Government of the Republic of LIganda and is donicikd in Ugandi. The principal address oif the entity is: Ph; 7A Pa Cijrts, Rotmy Ame P0. Box 3/5 - Kämpala, Tek 0417-8010381 Fax 0417-801050 EZmaik info@nagg Website: u. 1 n v1' un 3) The Treasury The Treasinv is estaLilisIed by Section 10 of the Public Finance Mianageient ACr, 2015 consisting of: (a) Ilie Minister of 1 inance; (b) the Secretary to the Treasury; (c) the Accountint General; and (d) any other diretorates responsible fot ecoiclliC and fintince iat ters of the Ministry of IFinance, Pliauing and economic Development. 4) The Consolidated Fund Is the Consolidated Fund as stablished by he Ärticle 153 of the Constitution of the Republie of Ugaida. As provided by Section 30 of the Public linnriice [anagement Act, 2015 (the Act), it is the Fund into which all revenues or other nonev rnised or received for the purpose of the Government shIi be paid. 1xcept for recelviblesi into another public fund establishcd for a special purpose (for exatnple the lielroleun luntid) where this is authorized b' an Act of Pariameit, or where a vote, state enterprise (r p)ublic corporatioin shall retain revenue collected or received as authorized through an approprialion by Parliamel o is a Vonetary grant exempted under Sec don 44 of the ACT Page 15 of 30 Governinent of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30 June 2017 Witlidrawads from the Consolidated Fund shall only be done upon the authority of a warrant of expenditure issued by the IMinister of Finance to the Accounrtant General after a gran t of credit has been issuied to the Mvfinister by the Auditor General in the fist instance. The withdrawal can be effected only when: (a) the expenditure has been authorized by an Appropriation Act or a Supplenentary Appropriation Act; (b) is a statutory expenditure; (c) for repaying money received in ettor by the Consolidated Fund; (d) and for paying sums requircd for an advance, refund, rebate or drawback that are provided for in this and other Act of Parianent. 5) The Contingencies Pund Established by Section 26 of the Public Finance Managenent Act, 2015, which in every financial year, shill be replenished with in anount- 0.5% of the appropriated annual budget of the Govermnent of the previous fmancial year without consideration of iny supplementaty budget. The Fund shall provide funding for natural disasters. 6) Classified expenditures Classified expenditures are included under supply of goods and services in the Statemnent of Financial Performance, and are audited separately. The money appropdated for classified expenditure shall only be used for defense and national security purposes. A committee of Parliament comprising the chairpersons of the comnittees responsible for budget; defense and internal affairs; and another mrnember appointed by the Speakeer will be responsible for scrutiny of classified expenditure budget. 7) Basis of preparation of financial staemenmts TIe financial sntements have been prepared in accordance with the requirements of the Public Finance Managementi Act, 2015 [the Act] and comply with generally accepted accounting principles. The Financial Statements have consistendy bcen prepared using the nodified cashI basis of accounting except whcre stated otherwise. The mnod ified cash basis of accounting recognizes revenue wlhen cash is received and ex penses (except for cxpenses approved to be accrued) when paid. Cish basis of accounting has been consistently applied in producing the accounts 8) Going concern consideration The financial statements have been prepared on a going cancern basis. 9) Presentation currency TC pro}ect financial report is presented in US Dolars together with equivalent amounts in the Uganda Shilling (Shs), which is the functional curtency of the Republic of Uganda. tems iniiuded in the financial Page 16 of 30 Government of the Republic of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financiail Statements for the Financial Year ended 3011 June 2017 sre temenIs 9ue measured in Tile curralcy of the primary economnie envirotntent in which tbc entity operates. This makes tbe financial statcimenits more underscndable to tc users. 10) Reporting Period Tbc reporting penod fir these financial stalements is fier 1 july 2016 to 301 June 2017. Prior peOdI coipatative information has been presented in the curreni year's fintancial steemns. Where necess-ry figures iClded iin the prior period financial statements have been redassicd to ensure that the fornar iii whSich tbC infoulmation is reente s nsstent with the format in ie cut c ear's fin,iticad statement. Since RC111 implmctttentation started during the financial year 2016/17, ffbere are no comparative figures stted in these financial seateents. 11) Appropriation The initial apprived budget is the originl! forecst as presenred and approved by 1o.liarent. A revised hudget the mrtithal approved budget adjusted by t supplemetary or reallcations/r . 12) Reveuc Reveanue representis cash and grants in kind received by the entitv during the financial year and comlprise;. taxes, transfers from tie Consolidated Fuad, trnstifers from the Contingency 1und, gratis received and non-tms revenie. Revenes are recognized is follows; Tax revenues Tax revetnue is recognized when received. Taxes are levied with [ie uthotity of Parlin lt subject ro Artiele 152 of the Constitutioa of the Republic of Uganda. Payment of tax does not niecessarily result iio an entitlement to the taxpayer to receive eqtuiett value of services or benefits. ii) Grants Grntrrs tme recived bs the entity eith ter as cash or ini- kind ;\A Iljrnt (iid sistanice) are recogttized as income wIen received. 1 n-kinid rceCipts (dtnations) are recognized at fair value. ii) Transfers received TI,ansfLIer recered include; traIsfers recived frot the Donots, Cousolidated Flund, i ransfets received from the Contingeey l und an:d transfets reeeived frot other gov erinment uit. ,ll tattsfers are recognized wieni received hy the .\ceolnting Oftieers iv) Non-Tax Revenue Ncn) ax Reventte tinludcs: intirest/gaits associaird frot ownerrhip rf shares, proceeds fromJ Ire of ssets, sale of desigiated goods and scvices, and fines/peaies. Non-lax Itevenume, whether direcrly Cflleered by the enrtay or collected by snother entiry tn its behalI is tcognized whAen recrived. 13) Expenses Genetally, expeoditre is recognized wheu it is incurred and settled withirt the fnancial year. Qualirving tunseuLled expeodnure is recogttized in the Stateient of jitUancial position as payables. 14) Property, Plant and Equipment (physieal assets or fixed assets) l>moperty, plant and equtipment (PP) principally cr es buildmgs dats, roads and iighways. hvdropOwer rtas. plit, vehcles, euttipmen, and any othfer itnfrastrtture assets bit does not iielude lmd and tegenterative natural tesoutrces ce as foes ad inmneal rtsourees. Page 17 of 30 Government of the Republic of Uganda National Information Teclhnology Authority-Ugandn (NITA-U) RCIP Financial Statements for the Financial Year ended 301i June 2017 Acquisitions of PPE are recorded in the asset register en receipt of tbe item t cost and expensed fully through the Statement of Financial 1Performance. Cast of the item is defimed as the total cost of acquisition. Where the cest of the PP: cannot be determined accutely, the PP is stated at fair valuC. Subsequent repairs and maintenance costs of PPE are also expensed as goods and services consumed in the Statement of Financial Perforrmance. Pra ceeds fram disposal of property, pIlant and equipmenr are recognized as non-tax rev enuc in the period in which it is received. 15) Translauion of ransactions in foreign currency Foreign currency transactions are translated into Uganda Shillings using the exchange rares prevailing et the dates of the transacdons (spo rates). These iesot into realized gains/losses wiEch are recognized in the Statement of Finnncinl >erformancc. Forcign currency assets and labilities held by the entity at yeaend are transitlaed into Uganda Shillings using the period closing rate for reporting purposes resulting inta unrealized gains/losses. The unrealied gains/lesses are recognized in the statenent of changes in Equity through the revaluation reserve. 16) Revaluation Gains/Losses Unrealized gains or losses aising from changes in the value of investrnents, marketable sceuritiEs held for investnent purposes, and from changes in the values af property, plant and equipmcnt are not recognized in the financial statermcms. 17) Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statemenm, cash and eash equivalents coniprise cash on hand, deposits held at cal with banks, other short- tern highly liquid investments, and bank overdrafts. In the statenent of financial position bank overdrafts are ineluded in borrowings. 18) Unspent casli balances In accordance with the requirement of the Public Finance Managerment Act, 2015, unspent cash balances by Government entities at the end of the financial year arc returned through the Single Ireasury Account to the Consolidated Pund in the course of the financial year. EZscrow Account balances are to be recognized in the Financial Position of the responsible entity' and expensed through the Financial Perfarmance in the period wlhen funds are utdlized. However, RCIP funds were retained in the designated account as at 30h june 2017 since the above requirement does not apply externally funded projects. 19) Receivables (i) Advances and other receivab les Receivables are carried at historical cost and are written down by recavered receipts or write -o of unrecovetable amounts (bad debts are written-off with the approval of Padiament, when identified in the Statement of Changes in iEjuity). (ii) Letters of credit Procurement of goods and services through letters of credit wlich are cash covered are recognized in the sratement of appropriation when the letter of ecredit is opened. Outstanding letters of credit at pedod-end are treated as receivable and cxpensed chrough the Statement of Financial lerformancce in the period when the geods and services are delivered. 20) Inventorics Comprise consumable supplies expensed in the period when acquired. Inventories that qualify for recogniton must be initially reflccted at cost. Where they are acquired at no cost, or for noninal considerntion, thel eost shall be their fair value at the date of acquisition. 21) Investment properties Page 18 of 30 Government of the Republie of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Ycar ended 30b June 2017 linvtetnmenlt property pyrireipally couprises land, office, commercal and residential buildings, and other physicll assets. whiel is bekh for long- rein rental incomle and is not occupied internally, Investnenr property is treated ts a Ion- teri investment iiid is carried at cost. 22) Investments lvestmni ts ci classified into trtee gropings, namely invesLments held for trading; investrmenits eld- to<-miauttriy; ind investments available-for-salc. Investmlents that tre acquired principally for the purposes of genciatilg profit fron shormern fltuations in price are elssificd as "trading investmens, and are, rHiere fÃ¥re. curreti assets and are treated as nloiietarv as sets. Investmets wilh fied maturities and there is an Intention and a)lit- to hold them ro maturity dates are classißed is "Investments held-to-maturity", and are, tierefotc, nattcurret assets and tiented as non1- monetary assets. lnecstmieits motendeci a liie hld for an indeflnite period of time, whicl imae be ski in response to liqruidity needs or chtanges mi intierest vinues, are classifGed as "investmienis available-for-sale", and te tlerefore non- cu etre assets and regarded as non tmonctar assets 1 loweer, if there is an explessed intention to sell these - -. widi:i 12 mnths, tienl thmese are treated as c irret assets aNd are omonetary assets Appropnate clissitficton tf investmnents at tie timie otf purclIse and te-evaalttion of stich1 designanan are cartied ont on a tegular basis but any resulring reclasstficau ns are atre and cannet be made frorn "trading Mnvestments ro "1nmestmnrs held tO aitury" All invesinents in -ie balanre sheet are carned at Iitorical cost. Non-financial assets are measured at iet wortl Vor investmens quoked in foeign currency, the htncal cost is trinslated m thle closing rae. 23) Projeets expenditure Govemrnenr projects are a series of uinderraikings of a repornTng entity with specific objectives and a defined time frame and cotild le cither: (a) CblyI futded by a Gavernmen; (b) jointly fiunded by Vernment and a developinent partner; (c) fully fulded by a developiment partner through ether budget stpport or priect support; aid (d) 1u1ly Inded by develpr nti partner iltirougli provisi oii f phvsical items rather than unds. Fully or party hovenment finded project expienditure is recognit.ed in 1he siaeteent of financial performance of the repirting eiiiy t the e tenr nf funding recei ved from GOverrnment 24) Borrowings bor roiings are i indill recorded in tIle Staitement f f Iimancial Position ilie balance sheetj at east ter tf any rainsaction cots paäd. ntetest exlpetns Imd any othile expene a lorrowings are reogtized in tlIe Statenent of tanicial l>erfoumatice wlli they fall due. 25) Employec benefits Fmploye benefits itClude salries, pensois and ilhei uelared-employmei casts lmployee benefias are recognized wlen incured. No provision is made far acerted leave (r reimbursable dutry allowatices Pior RCIP, ellplotyee benefin, are classified a ng consultancy Ees; and liere was n accried expenses under tis category. 26) Contingent lirrblities Contingem liabilities tre disclosedI in a menmoraidum stateme n (Staremtietit of u t,standing C omnrnients) af ie entitv whenl iis probable thar in tuitflow of eonnmic benefits or service poreltial will dow from tle entity or when ian outflow yee cost. Note 9: Goods and Services lNacodteure ona goods and services di a lhe year pnnepally comprise t ol]owiag: 30L June 2017 30 June 2016 Shs Shs General exSpenses Commnaunieitimua-__________ U tilt ;md propny apens - Supplet aild Senc-ee- Page 23 of 30 Government of the Republie of Uganda NationaI Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30 June 2017 11,1- { -NIril -CflIin i ili,it - Toal transfers Note 13: Social Benefits Soedm b((iefits [paid duang ute year comp1 >ti. 30-1 .I__. 20 17 3 0 1 J Ln e 20 16 Shs Shs P-ens ons Jup]oyer SIeial btmeie i Note 14: Other Opert,injExpenses Teecomnprise: 301 June 2017 30'1 June 2016 Shs Sis P-me typenses other t mtee Aliscellaneous othier expenes ceu scclbeous OLthlea cpcses- capiml '2,To! oilher opermning expenses - Note 15: Foreign Excli-nge Gains and Losses D)ung the year, foc eign exchange losseKsucn gsins were as ollows 30'1 June 2017 30t Jun 2016 Shs Slis Reabed los (gatm) (.) I 0,072,37 UÃ¥n/ tahzed loss (gatn) (SCIH) Ne foreign exchange (gains)/ losses 170,072,737- Note 17: inance ers ts 30 June 2017 30" jinc 2016 Schedu 1Sl. Juersrs n exiemttal debt (enh boto igs) - Page 25 of 30 Government of the Republic of Uganda National Information Technology Autlority-Uganda (NITA-U) RCIP Financial Statements for the Financial Year ended 30111 June 2017 Total finance cost Note 18: Transfers to the Treasury These comprise tiansfers back to the Consolidated lund of unspent balai ces from the respective xp end iture accounts, tinsfers of Non tax cevenue collecred, , unspent salarics, among oliters 30,1> June 2017 3011 Jurine 2016 Shs Sig Non Ta resenue Unspe nt Sa]Or y balan ces- Fspenditure account balances- Total for the year. Note 19: Investment Properties Note 20: Cash and cash equivalents 30L> June 2017 301 June 2016 Shs .Shs DOMESTIC Rcvenu acc ou t ts Eaxpendimrue accoLInts Projcr accoun- Collection accounat Cash in tmnsit Cash st hand- Inprest Orictrs- S t7armsh and bak balancej- dwati FORIG.N Revenue Accounts -- Project A econts 35,113,676,619: Exzpcpndirurie accoujag 15,343,721 Collection accoutsts- Cash in transir CasÃ¥ at land- Impres ts Page 26 of 30 Government o the Republie of Uganda National Information Technology Authority-Uganda (NITA-U) RCIP Financial Statements for the Financial Ycar ended 30'l' June 2017 30-- -June 2017 30 Jutin 2016 Sha Shs 35,129,020,340 .Szb-lapsb and ak b?a, »s- onvn 33,129,020,340 Tota/ east a,n brk ba/lars The Bank of Uganda exchange rAtes as at 30' june 2017 weie applicd in converring the Projecr bank balances o Uganda Shillings. Note 21: Receivables Comp1rise the following receivables at the end of the period net of any pmovision [or receivabies doubu [^ul of ICCOVeI V. 3011 Jme 2017 30' June 2016 Shs Shs ?DOMESTIC - iLonn (slhm n-erm)