Additional information: 1 Bugiro Municipal Council (BMC) prepares its financial statements in accordance with International Public Sector Accounting Standards (IPSASs) on accrual basis. 2 It is the policy of BMC to depreciate its motor vehicles at 20% per annum and buildings at 5% per annum using reducing balance and straight-line methods respectively. 3 The value of land included under property is Shs 300 million. However, BMC had engaged a professional valuer to value its land since it had not done so for the last 20 years. The land was revalued to Shs 420 million but this was not reflected in the accounts. 4 Grants from development partners include Shs 1.5 billion conditional grant for construction of a modern market and the balance was unconditional. By the end of year, BMC had only met 80% of the financing conditions. 5 During the year, the taxi operators went on a week-long strike protesting the increase in loading and unloading fees in the park and an amount totaling to Shs 5.2 million was not collected during this period. The Municipal Council passed a resolution to waive this amount as uncollectable. Land fees totaling to Shs 8.3 million was prepaid by the year end. 6 During stock and cash count at the year end, it was realised that maintenance materials for works valued at Shs 124 million had not been consumed and cash Shs 14 million was found missing in December 2018. The senior cashier who was in-charge was prosecuted in the courts of law and dismissed. The money was, however, not recovered and is part of staff advances. Efforts by the Council to recover the money were futile as the cashier died without any known estate.

Required: i)Prepare, for the financial year ended 30 June 2019, Bugiro Municipal Council's statement of: ii)Financial performance Financial position (16 marks)

b)In accordance with the relevant International Public Sector Accounting Standard, discuss the: (i) Disclosure requirements for inventories (5 marks)

(ii) Costs excluded from the cost of inventories and recognised as expenses in the period. (3 marks) c)The following transactions of Kanyum Municipal Council took place during the year ended 30 June 2019: Buildings carried at a revalued amount Shs 450 million were disposed of for Shs 430 million. The accumulated depreciation and revaluation surplus were Shs 80 million and Shs 75 million respectively. The Council also acquired furniture and fixtures worth Shs 155 million during the year through part-exchange of old furniture at an agreed amount Shs 28 million and the balance was paid by cheque. At the time of the part-exchange, the old furniture had a cost Shs 62 million with accumulated depreciation Shs 30 million as per the records.

Required: With reference to the above transactions, advise Kanyum Municipal Council on the: (i) Journal entries to be passed (4 marks) (ii) Gain or loss on disposal, if any (4 marks) The following revenue items were extracted from the books of Mayoga Local Government for the year ended 30 June 2019: (d) Details 1 Arrears brought forward at 1 July 2018: Property rates Taxi park fees Land fees Investment income Fines Sundry revenue Local hotel levy 2 Amounts billed and expected during the year: Property rates Taxi park fees Land fees Investment income Fines Sundry revenue Shs 350,000 3,025,867 1,358,000 2,000,000 561,879 2,584,365 52,400 7,500,000 62,540,250 25,238,456 12,560,000 3,245,684 4,500,061

Local hotel levy 3 Amounts collected during the year: Property rates Taxi park fees Land fees Investment income Fines Sundry revenue Local hotel levy 4 10% of the taxi park fees collected remained unspent at year end. All investment income collected was transferred to the Uganda Consolidated Fund.

Required: i)Prepare, for Mayoga Local Government, a statement of outstanding arrears of revenue (by source of revenue) with reference to the Government of Uganda Financial Reporting Templates, 2018. (9 marks)

Question 2 (a) Uganda National Agriculture Authority (UNAA) advertised in the national Gazette inviting bids for works, supplies and consultancy services for the financial year ending 30 June 2021. The process was all smooth until a whistle blower sent a dossier to the Inspectorate of Government questioning the choice of the procurement method (direct procurement) that UNAA had adopted to use as opposed to competitive procurement method. The dossier predicts likely loss to Government if UNAA is allowed to continue with the procurement process. It is also alleged that some bidders were disqualified by UNAA on baseless grounds. The Board of Directors of UNAA is concerned with the allegations raised in the dossier.

Required: With reference to the Public Procurement and Disposal of Public Assets Act, 2015 (as amended) and PPDA Regulations, 2014, advise the board on the: (i) Basic qualifications criteria for all bidders in order to participate in public procurement or disposal. (6 marks) (ii) Factors that determine the choice of procurement method to be used. (4 marks) (iii) Circumstances under which direct procurement method may be used as opposed to competitive methods. (6 marks) (b) The Inspectorate of Government and the Police recently launched parallel investigations into the disposal of public assets by Uganda National Gas Organisation (UNGO). However, they were alarmed by lack of information and records regarding what was disposed of by UNGO over the past financial years.

Required: Prepare memo to advise the management of UNGO on the records of disposal that must be maintained by a Procuring and Disposing Entity (PDE).

Question 3 (a) The Public Finance Management Act (PFMA), 2015 provides for establishment of the petroleum fund and for its overall management. As a specialist in public finance management, you have been invited to make a presentation to the Members of Parliament (MPs) on the Economy and Natural Resources Committee of the Parliament of Uganda.

Required: Advise the MPs on the following: (i) Transfers of petroleum funds to the consolidated fund (5 marks) (ii) Reports on petroleum fund to Parliament (4 marks) (b) The Government of Uganda (GoU) has, over the years, undertaken initiatives to improve the quality of public service outcomes. One of the initiatives and reforms was the introduction of the Integrated Payroll and Pension System (IPPS) in the management of human resource information.

Required: Evaluate the benefits of implementing the IPPS in public finance management. (7 marks) (c) "This is unacceptable behavior, Jude should be reported to the HR for disciplinary action'', protested one of Jude's colleagues as he paced back and forth in the corridors. It was reported that Jude was becoming a habitual late comer who avoided duty at any slight opportunity. The other colleagues have resorted to covering him up since he was their friend. However, of late work, it is becoming too much since one of the staff quit for 'greener pastures'.

Required: With reference to the Code of Conduct and Ethics for Uganda Public Service and the Public Service Commission Regulations, 2009, advise Jude and his colleagues on: (i) Attendance of duty. (5 marks) (ii) The action that will be taken against Jude for absenting himself from duty without reasonable cause.

Question 4 (a) The Ministry of Electricity (MoE) has been constructing Katamba electricity dam so as to increase its power supply in order to match the increasing industrialisation and development needs of the country. MoE has been capitalising interest costs of borrowed capital for construction of the dam. However, during a recent management meeting, it was resolved that these costs should be expensed as this would result in transparent and comparable treatment of finance costs and is in line with the Eastern and Southern African regional practices. The change was to commence during the financial year ended 30 June 2019. MoE capitalised borrowing costs incurred in the financial year ended 30 June 2018 Shs 3.38 billion and Shs 6.76 billion in years prior to 2018. All borrowing costs in prior financial years in respect of the construction of Katamba dam were capitalised. The accounting records for the financial year ended 30 June 2019 show a surplus before interest Shs 25.1 billion and interest expense Shs 4.2 billion. The Ministry had not yet recognised depreciation because the dam was not yet complete ready for use. MoE reported a surplus Shs 15.6 billion during the financial year ended 30 June 2018 with opening accumulated surplus Shs 30.3 billion. The Ministry had Shs 250 billion of contributed capital throughout and no other components of net assets except for accumulated surplus.

Required:

Advise the management of MoE on the: (i) Accounting treatment of the above change in accounting policy in its financial statements in accordance with the relevant IPSAS. (6 marks) (ii) Limitations of retrospective application of changes in an accounting policy. (b) 1 Uganda Road Network Authority (URNA) undertook to upgrade Kyapa road from gravel to class II bitumen road. It is the policy of URNA to compensate project-affected persons (PAPs) for all its projects. During year ended 30 June 2019, URNA acquired a barrow pit for extraction of gravel for construction at a cost Shs 2.5 billion and it is estimated that the cost of restoration of the barrow pit is 15% of its cost whereas construction of an access road will cost Shs 30 million. The extraction of gravel will affect the neighbouring community and it is estimated to cost URNA Shs 3.8 billion. By the financial year end, the gravel extraction had not yet commenced. 2 The Ministry of Community Health in 2017 guaranteed borrowing Shs 1.8 trillion from Exim Bank of India to International Health Corporation (IHC), a private company that specialises in provision of high quality health care services to the public at a fee. This guarantee caused a lot of debate on the consequences of this transaction on the consolidated fund. The amount borrowed was for construction of a high-tech specialised hospital. In May 2019, IHC filed for protection from its creditors due to the deteriorating financial conditions of its parent company which was partly financing the project.

Required: Discuss the accounting treatment of the above transactions for the year ended 30 June 2019 in accordance with the relevant IPSAS. (7 marks) (c) The objective of IPSAS 14: Events after the Reporting Date is to prescribe when an entity should adjust its financial statements for events after the reporting date; and the disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting date.

Required: Discuss the following in accordance with the Standard: (i) Events after the reporting date (2 marks) (ii) Examples of adjusting events after the reporting date (3 marks) (d) In a bid to reduce its budget deficit, the Ministry of Elderly Persons, in January 2014, purchased a debt instrument with five years remaining to maturity for its fair value Shs 10 billion (including transaction costs). The instrument has principal amount Shs 12.280 billion and carries fixed interest rate of 5.1% that is paid annually. The contract specifies that the borrower has an option to prepay the instrument and that no penalty will be charged for prepayment. At the inception, the Ministry was not expected to prepay. The effective interest rate is 10%.

Required: Calculate the amortised cost, interest revenue and cash flows of the debt instrument in each reporting period.