Local Governments (Financial and Accounting) Regulations, 2007

Section Title Section These Regulations may be cited as the Local Governments (Financial and Accounting) Regulations, 2007.

Section Commencement Section These Regulations shall come into force on the 1st day of July, 2007.

Section Application Section These Regulations shall apply to all financial transactions and business of all local government councils and administrative units and to the management of all public moneys and public property in local governments. Nothing in these Regulations overrules any obligation conferred on a person by the Act or any other law. Where there is a conflict between these Regulations and any earlier regulations, instructions or circular, these Regulations shall prevail.

Section Interpretation Section In these Regulations, unless the context otherwise requires— " accountant " means an officer appointed and posted to a district, city, municipal or division council to be incharge of accounting and financial management of that council ; " Accountant General " means the person designated as such under section 7 of the Public Finance and Accountability Act , 2003; " Act " means the Local Governments Act; " administration " means the entire administrative setup of a district, city, municipality, division, town, subcounty or any other lower council ; " allocated stores " means stores the cost of which is directly charged on the relevant programme, sub-programme and item of expenditure; " bank " means a financial organization or institution registered with the Bank of Uganda to provide banking services under Part VII of these Regulations; " cash in transit " means all forms of monies as defined in these regulations being remitted or transferred from one office or place to another; " chief executive " means chief administrative officer or town clerk and includes assistant administrative officer, assistant town clerk or sub-county chief appointed accounting...

Section Duties of accounting officers at administrative units Section The duties of the assistant chief administrative officer, the town clerk or the parish chief as accounting officers of the county, town board or parish respectively shall include among others— The assistant chief administrative officer in charge of the county shall be the accounting officer of the administrative unit at the county. The parish chief or ward agent shall be the accounting officer of the parish or ward in accordance with these Regulations. The chairperson of the executive committee of the village administrative unit shall be accountable to the village council . to supervise and co-ordinate the preparation of draft annual estimates and submit them to the council for debate and approval by the fifteenth day of June; to carry out financial monitoring duties at the village level and prepare inspection reports on a monthly basis, to be submitted to the district headquarters or sub-county and to co-ordinate the preparation of annual budget estimates; to ensure that the councils prepare an income and expenditure statement at least twice a year and submit it to the chief executive of the district or sub-coun...

Section Duties of the head of finance Section The head of finance shall be responsible to the chief executive for all financial transactions and accounts of the council , and shall be the receiver, paymaster and chief accountant of the council and his or her duties shall among others, be— to manage the financial affairs of the council prudently, efficiently and effectively; to ensure compliance with these Regulations, the accounting manual and all instructions issued by the Minister ; to supervise and co-ordinate the budget desk officers in the preparation of work plans for submission to the chief executive and to the council by the required dates, in accordance with the budget cycle of the local government ; to ensure that the approved estimates of expenditure on votes under his or her control are not exceeded and to keep watch over the expenditure of votes controlled by other officers and warn them if there is a danger of those votes being exceeded; to ensure that no expenditure is incurred before it has been authorized by the council and any other organ of the council authorised to do so; to maintain approved systems of accounting throughout the council in accordance with these...

Section Duties of the head of internal audit Section The duties of the head of internal audit shall include among others— (a) to maintain an efficient and effective internal audit unit able to carry out the functions of the unit; (b) to implement all relevant aspects of the internal audit manual and ensure that the prescribed standards and work programmes are adhered to where applicable; (c) to prepare annual and quarterly work plans for the internal audit unit to ensure optimal deployment of resources to priority audit areas, and to submit the plans to the chief executive for approval; (d) to supervise the conduct of audits, and review the draft audit reports and working papers of the unit staff to ensure that— (i) all audits have been carried out to an acceptable standard following prescribed programs; (ii) all matters arising have been properly dealt with and reported in the correct manner; (e) to prepare internal audit quarterly reports for submission to the council within one month at the end of each quarter; (f) to review the financial and accounting systems of operation in each department and establishment of the administration to ensure that they are adequate, effective and...

Section Duties of a head of department Section The duties of a head of department in respect of financial management include, but are not limited to the following— being vote controller; approval of the department’s commitments; being personally responsible for ensuring that all financial commitments of the department are within the commitment limits set by the head of finance or cash received, and in line with approved work plans; to ensure the availability of these Regulations to staff members, and that staff members are conversant with these Regulations; to submit to the head of finance their financial and progress reports within seven days after the end of each month; being responsible for the production of the department’s annual work plans, budget framework papers, procurement and, investment plans, budget estimates, revenue enhancement plans, rolled capacity and development plans in accordance with the budget cycle and instructions issued by the Minister ; and to produce a quarterly cash flow statement for the approval by the head of finance in the format issued by the Minister or provided in the accounting manual.

Section Duties of other public officers Section Each public officer of the administration concerned with the receipt, custody, disbursement or documentation of money, or with stores or other assets shall— comply with these Regulations, the accounting manual, and any other directions or instructions issued by the chief executive , head of finance or Minister ; exercise supervision over the receipt of revenue, ensure its punctual collection and banking and report immediately to the chief executive any defect or difficulty in the procedure for the collection of revenue which comes to his or her notice; exercise strict supervision over all officers under his or her authority entrusted with financial or accounting duties and bring to the attention of the chief executive or head of finance any incompetence, dishonesty or carelessness on their part and take precautions, against the occurrence of fraud, embezzlement or errors and maintain an internal check system; produce for inspection all cash, securities, books of account, records, receipt books or vouchers in his or her charge when required by the Auditor General, chief executive , head of finance , head of internal audit , or inspecto...

Section Pecuniary responsibility of public officers Section In accordance with article 164 of the Constitution, all public officers are personally and pecuniary responsible for the due performance of the financial duties of their offices, for the proper collection and custody of all administration monies , stores, and assets receivable by them or under their authority. If any public officer fails to account satisfactorily for or to produce any part of cash, stores or other items of value entrusted to him or her solely, he or she may summarily be required by the chief executive to make good the deficiency, which may be deducted from any monies due to him or her from the administration . Public officers to whom cash, stores or other items of value are jointly entrusted, such as the holders of keys of strong-rooms, safes and cash boxes, may be required to make good any deficiency jointly and or severally. If at any time revenue of the administration or other funds or stores managed by the administration sustains a loss by reason of the neglect or default of any officer, the officer shall be liable to be surcharged with the amount and any sums due to him or her from the administration...

Section Functions of the local government public accounts committee Section The local governments public accounts committee shall examine the reports of the Auditor General, the head of internal audit and any other reports of commissions of inquiry in accordance with section 88 of the Act . The local government public accounts committee shall produce reports for submission to the council and the Minister .

Section General control of financial transactions of local governments Section The financial transactions of local governments shall be under the general control of the accounting officer and shall be managed by the accounting officer subject to the Act and these Regulations.

Section Functions of the council Section The council shall perform the following functions in relation to financial management— authorise public expenditure, in accordance with section 82(1) of the Act ; exercise general control over public revenue of the council in accordance with the Act , these Regulations and other instructions issued by a competent authority; approve all annual plans and budgets for local government expenditures; approve vote on account; approve supplementary estimates; approve policies; consider reports produced by the Local Government Public Accounts Committee and recommend action where necessary.

Section Functions of the executive committee Section The functions of the executive committee of a council in relation to financial management shall be— to exercise general supervision and control over the council ’s finances and Government conditional grants and ensure that these Regulations are observed; to propose policies and projects for consideration by the council and upon approval by the council , monitor the implementation of the council ’s programmes and projects; at the end of each financial year , to consider and evaluate the performance of the council against the approved work plans and programmes; to review the annual and other accounts of the council together with the audit reports; to review the quarterly internal audit reports after being examined by the local government public accounts committee and report to the council ; to recommend and exercise surcharge powers in accordance with regulation 118; to authorise the writing off of losses in accordance with regulation 117; to approve any re-allocation of the council ’s funds; to approve the annual cash flow budgets; to monitor the implementation of the council ’s policies and programmes; to review periodic performa...

Section Functions of standing committees Section The functions of standing committees of a council in relation to financial management in the specific sectors for which they are responsible include— to review finance related bills for ordinances or bye-laws presented to the council and make appropriate recommendations to the council ; to review monthly revenue and expenditure returns, contracts committee reports and other reports and make recommendations to the council ; to review budgets and plans of their sectors and make recommendations to the council ; to monitor and review the performance of sectors under their functional responsibility; to perform other financial responsibilities that are delegated to it by the council ; and to handle finance related matters referred to it by the council .

Section Duties of the chief executive Section The duties of the chief executive shall include, among others— The chief executive shall be the accounting officer of the council . to ensure that the financial procedures established by the Act , these Regulations, the accounting manual and any instructions issued under the Act and these Regulations are followed and that accounting records are maintained in a form prescribed for accounting purposes; to ensure that the public monies , property and resources for which he or she is responsible as accounting officer are properly managed and safeguarded; to report to the Minister with a copy to the Auditor General, any cases of apparent waste, extravagant administration or failure to achieve value for money in addition to any weakness in financial procedures; to produce when required by the Auditor General or Accountant General or by such public officers as may be authorised by them, all cashbooks, stamps, records or vouchers in his or her charge; to reply promptly and substantively to any queries addressed to him or her by the Minister , Auditor General, Inspectorate of Government and the head of internal audit ; to ensure the appointment...

Section Budgeting Section A local government council shall formulate, approve and execute budgets and plans in accordance with section 77 of the Act .

Section Annual plans and budgets Section The chief executive shall ensure prompt production of annual plans and budgets for the council . The chairperson of a local government shall, not later than the fifteenth day of June of each year , cause to be prepared and laid before the council , estimates of revenue and expenditure and annual plans of the council for the next financial year . The budget estimates shall be based on the objectives to be achieved for the financial year and during implementation efforts shall be made to achieve the agreed objectives or targets, as the programme of the council . The chairperson of the council shall sign the approved estimates on behalf of the council . The approved budget estimates shall be submitted to the Ministries responsible for finance and local government and to the Local Government Finance Commission immediately after approval by the council .

Section Budget desk and duties of the budget desk Section The duties of the budget desk shall include— Each local government council shall have a budget desk composed of officers specified in the accounting manual or the instructions issued by the Minister . coordinating the departments to produce annual plans and budgets for submission to the chief executive . following up the budget cycle issued by the Minister and the chief executive and be responsible for informing the executive committee and the council of the progress of the budgeting process. ensuring that the council departments produces realistic budget estimates and development plans. ensuring that planning is linked to the budgeting.

Section Annual revenue and expenditure estimates Section The annual estimates of revenue and expenditure shall give full information concerning the policy which the council intends to pursue during the year of the estimate in the form of background to the budget and shall contain as much details as is consistent with clarity and conciseness. The descriptive titles in the estimates and explanatory notes of various items shall be framed with accuracy and where an item covers a number of different, though related purposes, a break down of the figure shall be given.

Section Recurrent and development estimates Section The estimates of recurrent and capital development expenditure shall be produced in a format provided for in the accounting manual or the instructions issued by the Minister .

Section Feasibility studies and cost benefit analysis Section Feasibility studies, work plans, cost benefit analysis, environment impact assessment and effects on taxation shall be indicated clearly before any project takes off and explanatory notes shall be provided to show the purpose and need for each project, and what the source of finance is to meet the full cost of the scheme.

Section Vote on account Section Where the estimates are not approved by the local government council before the commencement of the financial year to which they relate, the local government council may pass a vote on account by resolution authorising expenditure on established services provided for in the estimates up to an amount not exceeding twenty five percent of all revenues including central transfers and locally generated revenues for the preceding year . A vote on account shall be valid for a period of three months.

Section Insufficient provisions Section Expenditure for which there is insufficient or no provision in the approved estimates shall not be incurred until a supplementary estimate has been approved. Expenditure shall not be incurred on a service which cannot be completed with the funds authorized for it within a financial year . A commitment involving a supplementary estimate shall not be entered into until the supplementary estimate has been approved by the council .

Section Revision of estimates Section A revision of estimates may fall into one of the following categories— virement, which involves the reallocation of approved funds between votes or items under the same sub-program, excluding any transfer between "employee costs" and "other charges"; re-allocation, which is the re-allocation of approved funds between "employee costs" and "other charges" and between items under different programmes of expenditure with the prior approval of the executive committee ; supplementary estimates, involving additional funds required for recurrent expenditure or capital development purposes and involves an increase in the total approved estimated expenditure for the year . A virement may be approved by the chief executive and subsequently reported to the executive committee but re-allocation shall require the prior approval of the executive committee and clear savings shall be declared by the chief executive before re-allocation in the case of personal emoluments. Supplementary estimates made under subregulation (1) are subject to strict conditions and require prior approval of the council . The details of the procedure for revising estimates shall be se...

Section Virement of warrants Section An application for virement shall be made by the vote controller concerned to the chief executive showing the amount(s) to be transferred and the votes under the same programme of expenditure affected, but virement should not be used— to transfer funds between "employee costs" and "other charges"; to create a new post or alter an approved salary scale; to implement any new policy or principle, or materially alter the pattern of expenditure as approved by council in the estimates. If neither the chief executive or head of finance has any objection, the chief executive shall issue a virement warrant to the vote controller concerned, with copies to the head of finance , head of internal audit and Auditor General. In case of district hospitals, the hospital or medical Superintendent shall be authorised by the finance or management committee of the hospital to issue a virement warrant and send a copy to the chief executive .

Section Re-allocation warrant Section An application for re-allocation shall be made by the vote controller concerned to the chief executive showing the amounts to be transferred from one sub-program to another and the votes affected but reallocation should not be used— to create a new post or alter an approved salary scale; to implement any new policy or principle, or materially alter the pattern of expenditure as approved by the local government council in the estimates. The chief executive , after consultation with the Head of Finance, shall submit the application for re-allocation to the Executive Committee where the head of the department and chairpersons of standing committees concerned shall attend to explain or clarify the reasons for the re-allocation. If the executive committee approves the re-allocation, the chief executive shall issue a re-allocation warrant to the vote controller concerned, with copies to the head of finance , head of internal audit and Auditor General.

Section Supplementary provisions Section If new or additional funds are required over and above the approved budgetary provisions, which cannot be met by virement reallocation, the vote controllers concerned shall apply to the chief executive for a Supplementary provision. An application for supplementary estimates must quote savings from another vote, or identify additional revenue or external funds which shall cover the cot of the additional requirements. After consultation with the head of finance , the chief executive shall submit the application for supplementary estimates to the executive committee where the vote controller and Standing Committee concerned shall attend to explain or clarify the reasons for the supplementary estimates and after scrutinizing the application, the executive committee shall make recommendations and submit the application for supplementary estimates to the council for approval. On approval by the council , the chief executive shall issue a supplementary provision warrant to the vote controllers concerned with copies to the head of finance , head of internal audit and Auditor General.

Section Amendment to the vote book Section When a virement, re-allocation or supplementary estimates warrant has been issued, the vote book must be amended to reflect the corresponding increases and decreases and the approved estimates are thereby formally amended. Re-allocation of donor funds shall not be effected except with the agreement of the donor concerned.

Section Unauthorised excesses Section On the final adjustment of accounts at the end of the financial year , the schedules and explanations of vote controllers shall be submitted by the accounting officer to the Auditor General. Where there is unauthorized excess expenditure, the vote controller must then show cause to the executive committee why they should not be surcharged with any excess in respect of their departments within 30 days of notification by the head of finance and the schedules and explanations of vote controllers shall be submitted by the accounting officer to the Auditor General along with annual accounts for audit, within the statutory period. Unauthorised excesses may be surcharged against the officers responsible in accordance with the provisions relating to loss of public monies , stores and other assets .

Section Authority for revenue collection and expenditure Section On approval of the complete estimates by the local government council , the council may collect the revenue, incur the expenditure and generally put into operation the provisions of the estimates. The chairperson of the council shall sign the approved estimates of which summaries shall be published throughout the jurisdiction of the council , in a local newspaper, as well as distribution to all lower local government notice boards by the fifteenth day of the second month after the approval of the estimates by the council . The Minister may issue instructions on sharing of revenue collected by councils and receipts from central Governments.

Section Revenue collection responsibilities of the head of finance Section The head of finance is responsible for ensuring that revenue collectors, defined under these regulations, carry out their duties properly to ensure that all revenue due to the council is promptly collected in the approved manner and banked intact.

Section Revenue registers Section In respect of the various forms of revenue, including taxes, rates, fees, rents and other income, prescribe revenue registers shall be used to show details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears. All arrears carried forward at the end of each accounting period shall be duly brought forward at the beginning of the next accounting period. Details of the format of all accounting documents shall be found in the accounting manual.

Section Revenue collector Section A revenue collector shall be any officer, cashier, sub-accountant or an officer in an established post, authorized in writing by the chief executive to collect revenue. No officer may act as a revenue collector unless he or she is in an established post, except in cases of emergency where written authority of the Head of Finance must be obtained and reasons for appointing that officer shall be forwarded to the accounting officer. In the case of an appointment at a sub county or district level, the Accounting Officer at the subcounty or division level shall liaise with the head of finance of the district or municipality when appointing revenue collectors.

Section Loss of receipt forms Section If any unused receipts, tickets, licences or other forms or documents are lost, the loss shall immediately be reported to and investigated by the head of internal audit and the relevant police authority, and shall be reported to the officer who issued them, with a copy to the head of finance , and chief executive , and advertisements shall be placed in the local press warning the public of possible fraudulent use. If an issued receipt is lost and the payer applies for a duplicate, a "certified true copy" may be furnished but a new receipt form must not be used.

Section Legal tender Section A local government council shall accept only the nationally accepted legal tender, issued by the Central Bank.

Section Grants from Government Section An unconditional grant shall be considered as part of local government revenue and shall be integrated in the local government budget, to be spent on priorities determined by the council taking into consideration national priority programme areas, in accordance with section 83 of the Act . Conditional grants from the Government shall be part of local government revenue but planned for, recorded and accounted for according to the grant conditions. Conditional grants shall be budgeted following an agreement between Government and the local governments and accountability and reporting for conditional grants shall be agreed with the responsible line ministry or donor. Equalisation grants shall be handled in accordance with the procedures agreed upon with the central Government.

Section Donor’s funds Section Donors’ funds shall be treated according to the conditions attached and agreed upon, and without prejudice to the foregoing— Local governments that receive donor funds shall ensure that those funds are spent solely on the objectives and activities specified in the agreements between the donor and the central Government or between the donor and the respective local governments. unconditional donors grants shall be integrated into the local government revenue, as part of the general fund. other donor funds shall be treated and utilised according to the agreement and separate accountability statements shall be submitted to the donors in accordance with the terms agreed upon, which shall include the format of reporting where necessary, and in accordance with these Regulations and the Local Government Act and copies of the statement shall be given to the Auditor General, the Minister and the Resident District Commissioner. Rules of reallocation and supplementary estimates as specified in Regulation 32 and 33 shall apply to donor grants except where agreed otherwise. Local governments shall make progress reports on how donor funds are utilised and regular fi...

Section Remittance of shared revenue collections by local governments Section The chief executive of a lower local government shall ensure that a higher local government ’s share of revenue collected is remitted promptly. The chief executive of a higher local government shall ensure that revenue collected by the higher local governments is remitted to lower local governments.

Section Risk management and internal control Section The head of finance is responsible for advising on risk management and effective systems of internal control . The arrangements need to ensure compliance with all applicable legislation and regulations, and other relevant statements of best practice. The arrangements shall ensure that public funds are properly safeguarded and used economically, efficiently, and in accordance with the statutory and other provisions that govern their use. It is the responsibility of heads of departments of the council to establish sound arrangement, consistent with guidance given by the Head of Finance, for planning, appraising, authorising and controlling their operations in order to achieve continuous improvement on economy, efficiency and effectiveness and also for achieving their financial performance targets.

Section Establishment of internal audit units Section Every district, city, municipal or town council shall have an internal audit unit whose responsibilities are set out in section 90 of the Act and detailed in the audit manual. All internal audits shall be carried out in accordance with the requirements of the Act and the internal audit manual and shall be considered as statutory audits required by law.

Section Relationship between head of internal audit and head of finance Section The head of internal audit shall submit reports direct to the council , but there shall be harmony and co-operation with the chief executive and head of finance and his or her staff shall report on the systems and operations of the administration whether efficient or effective or economical or free from fraud and other malpractices and are in accordance with these Regulations.

Section Internal audit reviews Section In addition to the duties set out in Regulation 12 and as set out in the internal audit manual, the head of internal audit shall carry out regular reviews to ascertain whether the administration receives value for money in all its activities.

Section Special investigations Section The head of internal audit shall be prepared to carry out special investigation when called upon to do so, and where the Auditor General is unable to do so, as set out in the internal audit manual.

Section External audit Section The council ’s accounts will be scrutinised by the Auditor General. The Auditor General shall have rights of access to all documents and information necessary for reaching an audit opinion.

Section Computers and information systems Section All council transactions must be processed through the accounting information systems of the council as specified by the Minister from time to time, and which shall progressively include computerized accounting and control systems. To ensure satisfactory standards and control, these systems may only be used with the approval of the Minister .

Section Computer and information security Section The chief executive shall designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council . All employees have a responsibility to ensure that they do not cause the loss , unauthorized destruction or disclosure of data held on information systems or computers operated by the council . Each head of department shall be responsible for ensuring that information and communications technology policies are implemented within their department. All officers and members should comply with the requirements of, and control over the use of e-mail and the internet and software piracy guidelines as set out in the auditing and accounting manual.

Section Insurance policy and principals Section The Minister shall issue guidelines regarding insurance policy and principals for the local governments.

Section Preliminary loss report Section The head of the department in which a loss has occurred shall make, immediately on discovery of the loss , a preliminary report to both the head of internal audit and the head of finance and a copy shall be sent to the accounting officer. Action on a loss discovered by the board of survey shall be initiated by the head of finance , in consultation with the accounting officer. The head of internal audit shall promptly carry out an assessment of the situation in respect of each preliminary loss report, and if he or she suspects that theft or fraud has occurred, he or she shall request the relevant police authority to investigate. No head of department shall withhold a report on any loss , either known or suspected, even if restitution has been or is to be made.

Section Minor losses Section If the preliminary internal audit assessment reveals that a minor loss has occurred, as defined in the accounting manual, and not involving fraud or negligence, the procedures set out in the accounting manual shall be followed.