INVESTIGATION: Rugunda Writes to Kadaga as Auditor General Blocks Internal Audit for 12 Years

The Auditor General John Muwanga has been ordered to re-audit URA (Photo by: Nixon Segawa/ChimpReports)

The Auditor General John Muwanga is in the eye of the storm after it emerged his office has quietly suffocated attempts to audit it for the last 12 years.

Nexia Johnson & Johnson Certified Accountants, no rx a consortium of independent accounting and consulting firms in 2012 won by International Competitive Bidding a long-term contract to audit the Office of The Auditor General and The Treasury.

This was after many years of the two key government institutions going unaudited.

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Many thought this would breathe fresh life into the two institutions that manage and ensure accountability of trillions of shillings of the Ugandan taxpayers.

On August 1, salve 2012, a contract was eventually signed with the first draft of the audit being submitted to Parliament in February 2015.

The reputable audit firms discovered “non- accountability for colossal amounts of money” to the tune of billions of shillings.

The draft report also exposed what auditors described as “non-accountability by Office of Auditor General (OAG) for many accounts in Bank of Uganda, misreporting and limited capacity in OAG to spot impropriety”.

Interestingly, this report has never seen the light of day.

The Auditor General’s role is to audit and report on the public accounts of Uganda and of all public offices including the courts, the central and local government administrations, universities and public institutions of a similar nature, and any public corporation or other bodies or organisations established by an Act of Parliament.

The AG is also mandated to conduct financial, value for money audits and other audits such as gender and environment audits in respect of any project or activity involving public funds; classified expenditure; Government investments; treasury memoranda and carry out procurement audits.

According to the National Audit Act, 2008, the accounts of the Office of the Auditor General “shall, in each financial year, be audited and reported upon by an auditor appointed by Parliament.”

It further states that “Notwithstanding anything to the contrary in any law in force, the Office of the Auditor General shall, within three months after the end of its financial year, prepare and submit to the auditor appointed under subsection (1), financial statements of the Office of the Auditor General.”

The auditor is allowed access to all books of accounts, vouchers and other records of the Office of the Auditor General and is entitled to any information and explanation required in relation to those records.

The law further provides that audited accounts shall be submitted to the Auditor General not later than six months after the end of the financial year to which they relate.

“The Auditor General shall, as soon as possible, but in any case not later than one month after receipt of the report of the auditor under this section, submit the report to the Speaker of Parliament. A copy of the report shall also be submitted by the Auditor General to the Secretary to the Treasury,” reads the Act.

Rugunda writes to Kadaga

ChimpReports understands Nexia Johnson & Johnson carried out an audit of the Auditor General’s office as required by law before submitting a draft report to Parliament on February 26, 2015.

Yet, the Clerk to Parliament, Jane Kibirige, has never tabled this report for discussion.

This investigative website has learned that the matter has since been brought to the attention of Prime Minister Ruhakana Rugunda who has expressed alarm at the new developments which have exposed OAG’s financial indiscipline.

In a letter dated July 14, 2016, under the title ‘Outstanding Audit of the Office of the Auditor General’, Rugunda told Speaker Rebecca Kadaga about a letter from Nexia Johnson & Johnson Certified Accountants which raised serious concerns about accountability at OAG.

Rugunda said in his letter that OAG had never been audited since 2005 as required by the Constitution.

One of the concerns was the “The failure by the Clerk to Parliament to present the draft Audit Report (of the OAG) and Confidential Note to the Parliamentary Commission.”

He said the first set of draft audit reports were reportedly submitted on February 26, 2015 “and the key issues included non-accountability by OAG for many bank accounts in Bank of Uganda, misreporting, and limited capacity in OAG to stop impropriety.”

Rugunda went ahead to cite the “lack of cooperation from the OAG and Parliament (the procuring entity) since 2011 which delayed procurement of the audit consortium by four years.”

The third issue was the collapse of the audit consortium as a result of the two audit firms in the consortium “being compromised by the OAG which contracted them to do other work yet they were already auditing OAG.”


Rugunda's letter to Kadaga  was copied to the clerk, Jane Kibirige

Rugunda’s letter to Kadaga was copied to the clerk, Jane Kibirige

Rugunda then made his case to Kadaga: “The purpose of this letter is to request you to consider the tabling of this matter in the next meeting of Parliamentary Commission so that the clerk to Parliament can explain the position of the Draft Audit Report and Confidential Note from the Audit in question.”

Rugunda further suggested that as a way of “concluding this long overdue audit, there may be a need for the Parliamentary Commission to formally consider the Draft Audit report and Confidential Note and agree on a way forward.”

Contacted, Kibirige expressed surprise at how we obtained this confidential information.

She added: “I have not seen the letter (from Rugunda). When I read it, i will make comments.”

Pressed to explain whether indeed she had received the draft audit report from Nexia Johnson & Johnson, Kibirige could not confirm or deny this development.

“I will confirm when i get details,” she observed before hanging up the phone.

We were unable to speak to Muwanga when we filed this story on Thursday morning.

OAG Tricks   

However, ChimpReports is informed that when the Auditor General’s office learned about Rugunda’s letter, officials visited Parliament, pleading for mercy.

“The Auditor General’s office is determined to ensure the audit report is not officially tabled before Parliament due to its damaging contents,” said a source.

“How can one audit other government institutions but is afraid of an internal audit?” the source wondered.

Sources say the draft report exposing rot in the Auditor General’s office could be kept under wraps as the OAG has since filed a criminal case against Nexia Johnson & Johnson under registration number GEF 235/2015.

The audit firm told Rugunda that it was compelled to close its offices and has since suffered reputational loss in damages to image of the firm and network.

The development comes against the backdrop of Muwanga’s involvement in the controversial authorization of the Shs 6bn payout to URA lawyers and top government shots in Heritage Oil & Gas tax dispute.


Experts say the consistent allegations of ineffectiveness could cause problems to the current Auditor General.

According to Article 163 (10) of the Constitution, the Auditor General may be removed from office by the President only for— inability to perform the functions of his or her office arising from infirmity of body or mind; misbehavior or misconduct; or incompetence.

It will be recalled that the AG fell short of detecting the fraud in the Office of the Prime Minister until then Permanent Secretary Pius Bigirimana blew the whistle.

The audit process was seemingly subdued at several levels starting with procurement, then unavailability of funds.

The attempt in 2010 only led to the recruitment and signing of contract in 2014! The process was challenged in 2015 after draft had been submitted.

Officials we talked to said the draft report identified misuse of funds of material size and thus qualified as opinion at the time.

“For 12 years, the AG’s office has been un-audited. Then what is basis of our credibility judgement of OAG?” wondered an expert who preferred anonymity so as to speak freely.


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