Today's Accountant Magazine April-June 2013 PDF

The Magazine for The Institute of Certified Public Accountants of Uganda (ICPAU)
APRIL-JUNE 2013
The Fiscal and Tax Challenges

ahead of Ugandas Upstream Oil Sector
GRANTS MANAGEMENT
Concepts and their Applicability
HR INSIGHT: DOS AND DONTS OF JOB INTERVIEWS
Why we need to be mindful of Public Funds
APRIL 20 JUNE 13
Contents
Reinsurance: Is it a Worthy Venture
Interview in progress
Internal Auditing in Local Governments: Evolution and Current Challenges
HR Insight: Dos and Donts of Job Interviews
21
Pass Card to Business Policy, Part 14
23 25
December 2012 Examinations Results released
Overview of Students Performance in the December 2012 Examinations
30
Pictorial
17
Impact of population growth on Ugandas economy
10
Effective IT Project Avenues of Business Financing: management Options In Uganda
28
29
12 36 42
Helping SMEs Face Their Challenges and Seize Opportunities
Accountants Bill, 2011 passed
Taxation of Transfers of Oil Assets
39
43
Why we Need to be Mindful of Public Funds
GRADUATES PROFILE
46
48
Exploring Rural Uganda: A Visit to West Nile
Technical Issues in a question & answer form
56
Trusts and their taxation in Uganda
Establishing and A Readers Managing Review of Todays Relationships at the Accountant workplace magazine
66 68
71
51
d an n ts atio us Tr r tax nda i ga e th n U i
Grants Management: Concepts and their Applicability
MEMBERS PROFILE
58
64 69
The Fiscal and Tax Challenges ahead of Ugandas Upstream Oil Sector
Students Disciplinary Corner
75
Todays Accountant Magazine is published by Golf100 Magazines on behalf of The Institute of Certied Public Accountants of Uganda ( ICPAU) The information contained in this publication is given in good faith and has been derived from sources believed to be reliable and accurate. However, neither Golf100 Magazine Ltd, nor ICPAU accept any form of liability whatsoever for its contents including advertisements, editorials, opinions, advice or information or for any consequences from its use. No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording or inkjet printing without prior written permission of the relevant parties.
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| Todays Accountant APRIL- JUNE 2013
READERS COMMENTS
Accounting Standard for Oil and Gas, Grants Management, Planning for Retirement, most popular in January-March issue
Information Systems Audit was very insightful Dear editor, Thank you for the very insightful information, expertise and experience. The magazine is a rich knowledge sharing platform and has tremendously improved in the quality of research. The article on Information Systems Audit provides knowledge and insight into the best practices for IT and information systems, which is a critical area for accountants. May you continue to serve our professional needs for many years to come. Amos Ayebazibwe, ISACA Kampala Chapter Article on retirement will help me make better plans Dear editor, I particularly found the article on Retirement Planning very insightful. As I pursue my CPA course and strive to be a professional, I hope to use the advice therein to make better decisions for a better future. Herman Karugaba, Student I now have more insight into the double entry system Dear editor, I am so grateful for having received Todays Accountant magazine. I appreciate the relevant articles like Planning for Retirement, Insurance Contracts and Understanding the Double Entry System. I have had problems with the double entry system, but the article has denitely given me more insight into the topic. The magazine has improved again. It is very inspiring to me as an ATC student. I look forward to the June 2013 sitting. Long live ICPAU! Okalasa Michael, Entebbe I Hope to contribute to Oil and Gas Financial Reporting Dear editor, I would like to thank the editorial team for the good work that they are doing. I had the opportunity to read the recent magazine for Jan-March and I was impressed with the element of oil and gas. This is because the mineral was discovered in my district. You never know one day I may contribute in its Financial Reporting. Moses Onen, Student In love with Diana Nambis articles Dear editor I love articles by your PR person who was studying at the Leeds University. Livingstone, Brand Active Limited My Leisure time is so much better! Dear editor, Thanks to Todays Accountant magazine, I can now spend my leisure reading some constructive literature. Gerald Kasumba, Student My business was on the brink of insolvency! Dear editor, I personally found the Magazine so helpful in regards to Business plan Implementation. I run a small business but was at the risk of closing it. I guess if I followed a few helpful tips, I can successfully move on. East African integration, especially the common currency and common market will serve to help the current unemployed individuals lling the street to benet and compete favourably without limits. For the regional integration, it would be of utmost importance for the East African citizens to embrace the Swahili language in order to compete favourably. For me this magazine is not just a print of words on a piece of paper. I always look forward to the next issues while holding on dearly to the already received Copy. It is a great publication. Keep up the good work and many thanks to you for the fact that we do not have to pay for such valuable information. Richard Egesa, Student TA has been relevant in my legal practice Dear editor, I am a CPA graduate and a nalist at the School of Law of Makerere University. I am so grateful for the knowledge that I have obtained from the magazine. This knowledge has been of great relevance in my practice. Thank you people and may the good lord give you more wisdom as you pass it over to us. It is my very humble prayer that the institute grants me a quarter-page of the magazine for me to always have a word on the legal issues. This will help my fellow learned accountants to have legal knowledge on what we do in practice. Thanks and I pray that my request is granted. Katirimba Rogers, LLB, Makerere University TA should carry progressing articles Dear editor, The articles are well researched and edited. However, we need to have continuous lessons on specic topics. For example, if the January issue has Grants management I, the April-June should have Grants management 2, and so forth. In that way readers can get comprehensive knowledge on topical issues. Otherwise, topics are short lived at the moment, as each issue carries new topics. Denis Muwanguzi, CPA student Magazine cover, not very impressive Dear editor, The January-March magazine was not very impressive. The cover was not artistic. I think that of October-December 2012 was superb and you could improve. I also suggest that as ICPAU you hint on the prevailing status of aairs in Uganda, like the Bills in parliament; Homosexuality bill, Marriage and Divorce Bill and state your stand since the organisation is recognised to comprise of a large portion of intellectuals. Byron lubega, Student We need an article on ISA Employment Benets Dear editor, I request that the next issue carries an article on the ISA 19, Employment benets. Ssekitooleko Jonathan We need experts to train students on critical topics Dear editor, You are doing a great job to uplift Todays Accountant magazine. The truth is that the last magazine was just good and timely because Uganda is in need of accountants and auditors to manage the latest industry of everyones focus, that is, the energy/oil Industry. Besides, we depend a lot on grants but is the management of these grants satisfactory? How then can we bring on board specialists in these elds to train ICPAU students and those who completed the course? Sharon Akwii, Student
HOW TO REACH US
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Plot 42 Bukoto Street -Kololo P.O Box 12464, Kampala Uganda E-mail: icpau@icpau.co.ug , members@icpau.co.ug , students@icpau.co.ug , technical@icpau.co.ug Tel: +256-41-4540125, +256 031-2262333/2265590 Fax: +256-41-4540389 President Naru Thakkar Email: president@icpau.co.ug Vice President Patrick B Kagoro Email: vp@icpau.co.ug CEO/Secretary Derick Nkajja Email: dnkajja@icpau.co.ug
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Todays Accountant APRIL- JUNE 2013 |
APRIL 20 JUNE 13
CONTRIBUTORS PROFILE
CPA John Bosco Obore
CPA John Bosco Obore is the Institute Bursar at the Uganda Management Institute, a position he took up in February 2013. John Bosco previously worked with the National Forestry Authority as the Internal Audit Manager. He holds a Masters Degree in Business Administration from the University of Birmingham, UK, and a Bachelors Degree in Commerce (Accounting) from Makerere University. He is passionate about public nance management.
Joseph Sanjula Lutwama

Joseph Sanjula Lutwama is an Economist by profession, with a Masters Degree in Economic Policy and Planning from Makerere University. He is currently a Research and Policy Manager at the Capital Markets Authority (CMA) where he undertakes research in various topical issues in the domestic, regional and international capital markets. Mr. Lutwama is also a regular contributor to the Capital Markets Journal, a leading resource on capital markets development in Uganda, published by CMA. Lutwama has 10 years experience in economic policy research and 7 years in capital markets research covering a wide range of issues in the East African region and international markets. Before joining the CMA, he worked as a business analyst at UMACIS Consulting (now DCDM Advisory Services (U) Ltd) where he was involved in a number of consultancies for government and international organizations like the World Bank.
Flavia Mpagi
Flavia Mpagi is an Inspection Ocer (Life) at the Insurance Regulatory Authority of Uganda, a position she held from 2012. Previously, Flavia worked with East African Underwriters Limited from 2007 2011, as a Management Trainee. She holds a Bachelors Degree in Science from the Rhodes University, South Africa. Flavia is a Chartered Insurer and an alumna of Gayaza High School. She enjoys keeping t and healthy, as well as reading inspirational books.
Aguma Mpairwe
Aguma Mpairwe is the Head of Internal Audit at the East African Development Bank. He is a Certied Information Systems Auditor (CISA) and a Certied Internal Auditor (CIA). He graduated from the University of Lincoln in the United Kingdom with a Bachelor of Arts Degree in Business Accounting.
CPA Obed Bampe Tindyebwa

Obed Bampe Tindyebwa is an accomplished accountant and consultant, with more than 13 years experience in the profession. He is a partner at Grand & Noble. Obed holds a Bachelors Degree in Economics. He is a member of the Planning and Development Committee, and the Taxation and Economy Sub Committee of ICPAU. He is also a member of the Panel of Experts at the Daily Monitor.
CPA Stephen Nyanzi

Stephen Nyanzi is a Senior Auditor at BMR Associates Certied Public Accountants and a lecturer with Team Business Institute. He is a member of the Institute of Certied Public Accountants of Uganda.
CPA Peter Kyambadde

Peter Kyambadde is a Senior Tax Manager at KPMG Uganda, with over 18 years experience in tax advisory, training and administration. Peter worked with the Uganda Revenue Authority before joining KPMG. He is a member of ICPAU.
CPA Noah Matovu

Noah Matovu is an Accountant in the Finance & Grants Management department of Uganda Virus Research Institute International AIDS Vaccine Initiative HIV Vaccine Programme. Noah has performed the same role at MEDAIR Emergency and Relief and Cornerstone Development, Uganda. He is also a lecturer at Global Professional Solutions. Noah has a Bachelors Degree in Commerce (Accounting) and a Masters Degree in Project Management. He has done extensive training in Grants management with Infectious Diseases Institute IDI and Kenya Medical Research Institute/Centre for Diseases Control and Prevention KEMRI/ CDC. Noah is a member of ICPAU.
CPA Denis Kakembo

Denis Kakembo is a Tax Manager with Deloitte in Tanzania. Denis is qualied both as a Lawyer and a Chartered Accountant. He oversees indirect tax matters and he is a member of Deloittes oil and gas team. Denis is also a member of ICPAU.
Lilian Bagambe Bernard Sanya

Bernard Sanya is an Oil and Gas professional at Ernst & Young Uganda. He is a UK trained Oil and Gas accounting and tax specialist. He holds a Masters Degree in Oil and Gas Accounting (with Distinction) from Robert Gordon University, Scotland, UK. Lilian Bagambe is the Founder, Director and Managing Consultant at FlexiConsult Ltd, a Human Resource (HR) and Management consulting rm. Her current areas of focus include but are not limited to; recruitment, HR audits and diagnostics, organizational development, assessment centres, transition assistance for retirees and retrenches, and occupational health and safety. She has a wealth of industry experience in HR management, nancial management and audit services. She has worked with various multinationals including Barclays Bank, Lafarge East Africa (Hima Cement and Bamburi Cement) and PricewaterhouseCoopers (PwC). Lilian is a Rotarian from the Rotary Club of Kampala South. She is also the Director and Treasurer of the Board of Directors, MEMPRO, an NGO whose mission and purpose is to mentor and empower young women in Uganda.
CPA DMO Mulagwe

CPA DMO Mulagwe is the Practitioner, DMER Associates. He holds a Masters Degree in Management and Organisational Development. DMO Mulagwe has over 30 years experience in industry, audit and consultancy, in Uganda, Kenya and the United Kingdom. He is a member of ICPAU.
CPA Al Hajj Nnume Yasin Abubaker

CPA Al Hajj Nnume Yasin Abubaker is the Head of the Internal Audit department, Jinja Municipal Council and a partner at MDJ & Partners Certied Public Accountants. He is the Chairman of the Board of Directors of; the Local Governments Internal Auditors Association, Uganda Cooperative Savings and Credit Union [UCSCU] Ltd, and the Jinja Municipal Council SACCO. Al Hajj Yasin is a Certied Public Accountant (CPA) and a Certied Internal Auditor(CIA). He holds a Masters Degree in Management Studies, a Bachelors Degree in Business Studies (Accounting) from the Islamic University In Uganda (IUIU), and a Post Graduate Diploma in Management from the Uganda Management Institute.
CPA Innocent Orone

Innocent Orone is an Examinations Ocer at ICPAU. Previously, Innocent worked with Masaka S.S, initially as a teacher and eventually as Director of Studies. He holds two Masters Degrees; Business Administration, and Commerce, from the Uganda Martyrs University, Nkozi, and Makerere University, respectively. Innocent has a Degree in Education from Makerere University.
Godfrey Neema
Godfrey Neema is the Senior Administrative Ocer at the Institute of Certied Public Accountants of Uganda. He previously worked with Mengo S.S. Mr. Neema joined Mengo S.S as a teacher and steadily sailed through the ranks. By the time he left the school, he was Dean of Students (Senior School). He has a Bachelor of Literature and Social Administration and a Post graduate Diploma in Management.
LETTER FROM THE PRESIDENT

has been shortened and the exams diets re-aligned to oer equal time for students to prepare them. 89 professional accountants from the December 2012 sitting will be graduated in August this year. Still in the jubilant mood, I am proud to inform you that the cry for professionalism is now being heeded, with membership numbers growing all year round. The Mutual Recognition Agreement (MRA) with the other East African Community Institutes of Accountants (EACIAs); Ordre of Professional Accountants of Burundi (OPC), Institute of Certied Public Accountants of Kenya (ICPAK), Institute of Certied Public Accountants of Rwanda (ICPAR) and the National Board of Accountants and Auditors of Tanzania (NBAA) in place, we can now expand our inuence to broader horizons, as CPAs work jurisdiction is no longer limited by Ugandas territorial boundaries. On a sad note, however, the death of Hon. Eriya Kategaya, who presided over the signing of the MRA in September 2011, is a huge setback to the profession. The fallen patriot will forever be held in high regard by the EACIAs for this great function. May his soul rest in eternal peace. In drawing attention to our achievements, I must mention the launch of our stunning logo on 24 January 2011, a function that has remarkably transformed the corporate image and identity of ICPAU. ICPAU has also shown grand generosity in the eld of Corporate Social Responsibility, with the organisation of a charity walk to raise funds for the construction of a dormitory at the Katalemwa Cheshire home, and the donation of a state of the art operating table and mattresses to Entebbe Hospital, thanks to generous contribution from members. As mid year approaches, may I remind you of two key events in our calendar; the International Federation of Accountants (IFAC) SMP Forum, scheduled for 4-6 June 2013, and secondly, ICPAU will play host to the 1st CPA Economic Forum, scheduled for 24-26 July 2013. The SMP Forum is an international event that draws together players from other Professional Accountancy Organistations (PAOs) to deliberate on issues that aect SMPs/SMEs. These are unique events with excellent opportunities for professional growth and networking. Please plan to attend. We are aware that it takes a team to build a reputable organisation of ICPAUs stature. As I wind up my term of oce, I must therefore oer my utmost gratitude to all the stakeholders with whom we have worked tirelessly to accomplish our goals. Special thanks goes to the ICPAU Council members, past Presidents and Secretaries, our patron Minister, Hon. Maria Kiwanuka (incumbent) and Hon. Syda Bumba (former), ICPAU members, students, the Secretariat, and all stakeholders. We are extremely grateful for the nancial, intellectual, physical and spiritual support that you have rendered to the Institute, right from its inception and we hope that your eorts will be rewarded immensely. Finally, having commended ourselves for our great accomplishments, we are often tempted to relapse into comfort zones. However, as we know, accountancy is a highly dynamic profession with fast changing trends. As CPAs, we should uphold and abide by our professional Code of Ethics. There should be a marked dierence between a CPA and an ordinary worker. Corruption, therefore, must know no dwelling in our dealings. As the accounting standards evolve annually, we should be swift enough to adopt and apply them as they are released, lest we risk becoming obsolete. We should endeavour to attend Continuing Professional Development seminars, so that we are continually equipped with relevant knowledge and skills to serve organisations with due diligence. Let us pool eorts together to pioneer a new generation of accountants who uphold the tenets of professionalism with fervor and reverence. For God and my country!
CPA Naru Thakkar ICPAU President

elcome to Todays Accountant magazine! It gives me great joy to usher our readers into this great publication that has undoubtedly progressed remarkably.
The end of a term of service is an extraordinary phase in a leaders regime. It is often approached with mixed feelings, depending on how the leader views his/her mandate. For a tenure well administered, this phase brings immense delight and contentment, whereas the reverse is true for other leaders. Accountability is the core function that drives the routine operation of any organisation. Without a proper accountability framework in place, an organisation cannot sustainably ourish. Serving at the helm of the accountancy regulator in Uganda, is therefore no minor feat. We have had our challenges, no doubt, but overall, we have accomplished the bulk of the goals that we set out to achieve. An Indian by decent, but born and bred in Uganda, and with a profound fondness for this great country, I was deeply honoured when the mantle of ICPAU leadership was conferred upon me, on 5 July 2010, having worked as a professional accountant in the country, since 1965. My tenure now draws to an end and in keeping with the tradition of the Institute the mantle will be handed over to the Vice President in June 2013. I must commend my predecessors for their distinguished service to the Institute. A solid legal framework is central to the ecacy of accountants, given that the eect of the actions and decisions that accountants make is felt in every department of an organisation. The Accountants Bill, 2011, which has been in the making for the past eleven years, was nally passed on 6 February 2013. Those who are conversant with the drawbacks of the Accountants Act, 1992, and those who were passionately involved in the struggle to have the Bill amended can appreciate this accomplishment with awe and contentment. Several years of aggressive research, consultation, and petitioning, and nally our eorts have paid o! We now wait in great anticipation for the President to confer his approval of the Bill, then we can fully applaud ourselves for a job well executed, but that will just be the beginning of ensuring greater sanity in the profession. I am delighted to inform you that for the rst time in the history of the Institute of Certied Public Accountants of Ugandas (ICPAU) examinations process, regional examinations centres were operationalised, the time to release results for examinations
CPA Naru Thakkar, ICPAU President

CEOS COMMENTS
otherwise you end up, say with several lawyers practicing dierent laws or doctors each administering medicine according to his/ her will. Professional Membership of all individuals in responsible positions is useful for homogeneity in a countrys development of a profession and accountancy is not dierent. When passing the Accountants Bill, the Parliament of Uganda recognized this aspect and passed a bill which when enacted will give the Institute more powers to eectively carry out its mandate. We believe that a more empowered ICPAU together with other regulators and employers will go a long way in curbing corruption. On 28 June 2013, the Institute will hold its 19th Annual General Meeting (AGM) in Kampala. I encourage all members of ICPAU in good standing to attend this meeting. A key activity at this years AGM will be the election of Council members. Prior to the AGM, the Institute will host the International Federation of Accountants (IFAC) Small and Medium Size Practices Forum (IFAC SMP Forum), in collaboration with the Pan African Federation of Accountants (PAFA), on 4 & 5 June 2013. This is an international event and its being held in Uganda is a sign of the condence that the international accountancy fraternity has in ICPAU, Uganda and East African economies. Examinations for the June 2013 diet will be conducted from 4 10 June 2013, at the four examinations centres operationalised last year which include, Kampala and three regional centres; Gulu, Mbale and Mbarara. The recent tax gains/wins reported by Uganda Revenue Authority is a sign that Uganda is not short of human capital that can think and do right. We, however, would like to see more entities/individuals brought into the net for tax purposes. ICPAU has been at the forefront of submitting budget proposals for each budget year as part of our role. In order to grow this role, plans are being nalized to have a platform or centre of excellence for tax issues, also as part of our mandate to educate. We encourage our members to participate in the process / plans once called upon. We, however, note arguments and counter arguments about variety, to which I can say that you cannot do that in professional regulation for developing economies, CPA Derick Nkajja, Chief Executive Ocer Todays Accountant.
W
in the development of Uganda.
CPA Derick Nkajja Secretary/ CEO, ICPAU
elcome to another issue of The second quarter of 2013 begins with ICPAUs renewed determination to partner with dierent
stakeholders to realize its mission, which is To develop and promote the accountancy profession in Uganda and beyond. The accountancy profession is a stewardship profession and because the public understands it that way, the expectation is that accountants should do a better job in safeguarding the public resources. It is in this respect that the Institute has stepped up its voice towards regulators and employers, for them to ensure that individuals in top nancial positions for public interest entities are fully registered members of ICPAU. This is the only way the accountancy profession will be able to play its rightful role
APRIL 20 JUNE 13
Impact of population growth on Ugandas economy
A
By CPA Stephen Nyanzi
Senior Auditor, BMR Associates Certied Public Accountants
countrys population has various un-expected connections with a number of factors that act as economic drivers of a countrys economy. One may not talk about a countrys population growth and fail to talk about matters like economic development, environmental degradation and climatic change, human civilization, nutrition and health. The population growth rate in Uganda was estimated at 3.2% per annum, according to the World Bank report published in January 2012. This growth rate has remained constant for 45 years, since 1967, though eorts of control through family planning have been in place. Population experts in their 2011 report by Population Action International (PAI) claim that
high population growth rates in developing countries are a result of high fertility rates among the young people and limited access to contraception. On the contrary, Ugandas Gross Domestic Product (GDP) growth rate average is 1.2% per annum, according to the Uganda National Bureau of Statistics report, January 2012, which implies that population growth rate is more than twice as much as the measureable economic growth rate. The World Bank report, 2011, indicates that the average GDP per capita for Uganda was 247.7 USD and growing at a rate of 39% per annum. The gures for GDP per capita may appear reasonable for a patriotic Ugandan but that performance is just 3% of the worlds expected standard and in reality an average Ugandan earns less than 1USD a day.
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Is the Threat due to Population Growth Rate Real?

Indicators on the ground tend to assent to the above question. The demand for sucient political representation at all levels has actually created a signicant impact on the national economy. Very many new districts have been created and there is still demand by the locals for more. This has created an extra pressure to the central government to meet the nancial demands and maintenance of the local government. Ugandas Parliament and the cabinet have grown too big, partly for the reason of ever growing demands for sucient political representation. There is demand for more social services and infrastructure because of the growing population pressure. Privatization policy was a very wise decision by the government to mitigate this problem but we have to remember that an investors decision is mainly inuenced by prot maximization. Considering that an average Ugandan earns less than 1USD a day many of our people may not aord the social services at market price, so public hospitals, Universal Primary Education (UPE) and Universal Secondary Education (USE) schools shall remain crowded for some time. On the other hand, some investors have taken advantage of this situation to cheat the locals by selling them counterfeit products that can serve the same purpose but with an economic useful life of only three days. The demand for electricity has substantially escalated because of population pressure so the policy of rationing by load shedding may prevail until new power dams have been completed. Land population pressure has sparked o misguided migrations and land disputes among the locals and at worst, land grabbing or other methods of uncivilized human settlement. The disputes between the Bafuluki vs Bagungu, in Masindi and the Balaro pastoralists in Buliasa were a secondary eect of population explosion in those areas. Excessive human activity and settlement on the Mt. Elgon ranges in Bududa district has led to catastrophic landslides. The ght against encroachment on national forest reserves, restricted wetlands and poaching in game parks has become rather expensive for the government and resulted in unprecedented political confusion. Environmental management has become a big problem in Uganda; the rural urban migration caused an increased demand for charcoal leading to dangerous levels of depletion of trees and forests in rural areas. This has led to low soil productivity due to soil erosion, deforestation which may in the end result into global warming. There may not be too many industries in Uganda to cause a risk of air pollution but we have to remember the cumulative eect of the numerous motorcycles that ply the city and other urban areas as BodaBoda. The demand more market stall in city markets has led to urban authorities to establish markets and semi-permanent structures in former green belts of Kampala. The city has extended beyond former renowned boundaries and without proper planning because of increasing demand oce space and accommodation. New slums that have no sanitation facilities have cropped up in Kampala and the demand for refuse disposal has become un-manageable in some areas of the city because of population pressure.
What would be the intervention to mitigate these problems?

What we should remember is that ghting population growth rate may not be the only remedy for this problem. At times large population comes with its own compensations because some nations that have had high population growth rates still have relatively high economic growth rates. This may be because of increased demand for goods and services, hence large market potentials. High population growth rates may also increase the economic production potential of a nation whose resources are abundant because of a big talent base of skilled and unskilled man power and a wider tax base in economies which survive more on direct taxes. Some Asian countries like China and India have taken advantage of their large population by developing home based small scale production up to export level. This has been because these nations have realized that the cumulative eect of human population can create extra capacity. The real issue here is not setting prohibitive measures towards population growth but putting more eort on creating economic self sustenance at grass root levels. Practically, our government should put more emphasis on technical education and promoting research in improved methods of small scale production. It would actually be a good idea if in addition to UPE and USE, there was also Universal Technical Education (UTE). Good work has been done by the Family Planning Association of Uganda towards controlling the population growth rate, however, this has been more eective among married couples. Family planning has got a cost eect among the poor, and sensitization is still insucient among the less educated youth, and in some societies in Africa contraception still encounters cultural resistance. This therefore means more sensitization is required at grass root levels. Government has done well to ght against child mortality through national immunization programmes against child killer diseases, the ght against malaria and against the spread of AIDS, EBOLA and Marburg, but we should remind ourselves that a healthy population is always accompanied by an accelerated population growth rate. This therefore implies that a healthy nation needs a healthy economic development plan to sustain its people.
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APRIL 20 JUNE 13
Effective
D
By Aguma Mpairwe
Head of Internal Audit, East African Development Bank
Project Management
in many instances, with partially successful outcomes after so much eort. As most organisations are involved in economic activities whose impact has to be recorded, measured and analysed for statutory reporting or decision making, planning and corporate control, the accountant or Chief Finance Ocer (CFO) will often be a key player in implementation of IT projects and it is important that they are comfortable in such roles as Project Manager or Project Sponsor and will be able to deliver successful automation to the organisation whenever this is required.
IT
uring the lifetime of todays nance professional it is more likely than not that one will be involved in, or take the lead in managing the implementation of new Information Technology (IT) systems. The days of manual nancial transaction recording and reporting are long gone and most organisations right from Non-Governmental Organisations (NGOs) to corporate or public sector entities and their nance departments will have to deal with automation and the challenges brought, in particular, by the implementation of such systems. This article considers the challenges presented by implementation of IT systems which I will refer to as IT Projects. IT project management could be dened as, the series of actions designed to bring a disciplined approach to the planning, organizing, and management of organizational resources to ensure successful implementation of IT initiatives. Those that have been involved in such projects may be familiar with the long working hours, detailed analysis of organisational and system requirements, internal anxieties and corporate politics that characterise such projects, only to end up,
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Facts of IT Projects
Defining Success of an IT Project
The Organisational Context
IT projects are varied in scope and complexity and could range from a simple project such as a nance department migrating from one o-the-shelf solution to another, to the more complex implementation of Enterprise Resource Planning (ERP) systems such as SAP or ORACLE, Core Banking systems such as Finacle or Flexcube or implementing public nancial management IT systems such as the Internal Financial Management System (IFMS) project. Such projects will often involve not only setting up accounting and nancial management systems but may also involve integrating existing systems from other functional areas of the organisation, for example, inventory management systems or even Human Resources systems, depending on the level of integration required. The focus of this article is the approach to managing implementation of the more complex systems though many of the principles we set out will be applicable to the implementation of the simpler projects referred to above. Statistics show that in spite of the knowledge gained over the years and use of some of the best skills, consultants and nancial resources, most IT implementation projects are unsuccessful! While the exact failure rate may be dicult to quantify, research from reputable sources such as Gartner and KPMG have revealed project failure rates of over 50% with other sources quoting failure rates as high as 70%.
IT project success is dened by some as achieving implementation of the project in line with 3 key parameters; time, cost and scope. Other models include a fourth dimension of quality, as another parameter. If therefore the project is executed as intended, in terms of planned scope, on time, within budget and in line with quality specications, this would then be considered a successful project.
It is important to put the organisational context within which such projects are introduced into perspective. Many IT projects may be driven by a desire by the management of an organisation to improve business eciency, improve the quality and timeliness of nancial and management reporting or analysis and also improve the general state of automation within the organisation, so as to deliver a better service (especially for service industries). Signicant resources will normally be required for such projects, which in many instances will cost in excess of USD 1 million, and would have to be delivered within fairly short timelines. The organisations Board of Directors or Trustees would normally give the go-ahead, approve the resource to be spent and wait for periodic updates on progress until nal implementation.
Common Mistakes in IT Project Management
Several common mistakes in IT project management have been identified over the years and two things will be interesting to note: 1. Many of the common causes of IT project failure have nothing to do with technical IT (Databases, Networks, Operating Systems or applications design and deployment) but have more to do with the management aspects of the project. In spite of the public knowledge of the common mistakes, most organisations keep making these mistakes anyway, with their stakeholders or taxpayers having to pay the costs and face the consequences!
2.
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The Chief Information Ocer (CIO) magazine has identied the following as some of the common mistakes made:
Failure to choose the right personnel: One common failure is the failure to assign a dedicated team of core sta (a tiger team) available full time to the project without having to do their routine jobs. The demands of complex projects are onerous and may require complete dedication and long working hours, over an extended period.
Inexperienced project managers: The CIO magazine observes that the right project manager should have technical knowledge of the solution being deployed, but also the ability to manage people, meetings and risks, and budget eectively.
Failure to adopt a formalised project management methodology.
Failure to track changes in the scope of a project: We earlier highlighted the fact the project scope is one metric of success. Often, extra requirements, functionalities or work a rounds will be required to t the specic needs of the organisation, and this gradually leads to changed scope. Such requests for change need to be formally documented, reviewed by the project committee and assessed for implications on time and cost of the project and approved. Scope creep is one factor mentioned in some of the worlds most expensive IT project failures.
The Chief Information Ocer (CIO) magazine
Inadequate information on project status: We all appreciate the saying you cant manage what you dont know. Basic management practices such as regular meetings, status reports, action tracking and proper assignment of follow up responsibilities is critical to the success of any project.
Ignoring problems: Problems identied during project implementation should be properly documented, reported and escalated to the right level of project team management or organisational management for attention.
Failure to appreciate dependencies: Dependencies often exist in project management and it is critical to identify what cannot proceed if a particular deliverable or milestone cannot happen as planned. These dependencies may exist within or even outside the project (in the wider organisation).
Inecient change management: Given the potential for IT enhancements to create changes to processes and activities and automate previously manual or semi-manual tasks, there is anxiety among sta that they may lose jobs or inuence as a result of the project. This anxiety need not only be at the level of operational sta but it may also aect managers who may feel their inuence may wane as a result of having fewer sta as compared to peers. All these anxieties must be addressed. Potential for re-deploying sta should be discussed and properly planned, and communication used as a tool to deal with these anxieties.
Ineective communication: Communication is a key aspect of good internal control and good project management. A positive and honest message about the project, any delays, revision in timelines helps manage expectations. It is also important for senior management to honestly communicate any bad news such as delays or cost creep to the Board and get objective approval for changes rather than claim to be able to deliver the project within original timelines and push sta internally to get the project over and done with!
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Structured Methodology
The use of a structured methodology in implementation of IT projects is extremely important. Such an approach helps the thought process, breaks up the project into clear phases which often (though not always) will be sequential and may allow for the assignment of the dierent phases to particular individuals. The project should only proceed to the next phase once formal documented approvals and signos have been obtained for the preceding phase. Several methodologies exit which I will not delve into for the sake of brevity but I would suggest that whichever approach to implementation is chosen, drawing from my experience as well as practices proposed by the US based Information Systems Audit and Control Association (ISACA) in the past (CISA Review Manual 2003, and the Cobit Framework), a methodology involving the following steps covering the entire project should prove eective: Feasibility Assessment: In this phase the project should pass a strategic, business, technical and nancial viability assessment. Benets in these areas should be objectively documented and assessed. One key question that needs to be asked though is whether strategic and business benets could still be achieved with the current technology, in which case the new technology project would not be required! I admit that this may be more easily said than done, for example, technical viability may not always have been tested. Applications may be designed to operate for the rst time in complex new environments and the level of integration with existing systems may not have been tested elsewhere before. Requirements Denition: This phase involves identifying and specifying requirements for the specic systems chosen following the feasibility phase above. This must be user driven. It mainly wishes to hear from the user on matters such as expected functionality, how users will interact with the system (both hardware and software), information criteria the system should meet, for example; availability, reliability, compliance, integrity, condentiality, eciency and eectiveness. It also considers how user requirements should be converted into system requirements (screen look and formats). Requirements must be documented in a structured format and be complete, unambiguous, veriable, modiable, testable and traceable. This avoids scope creep and costly modication in later development phases. System security requirements and provision for audit trails and reports should not be forgotten. Specications should be made for the entire system not just key applications but also hardware, software, networking and operating systems design and technical specications. Vendor Selection and Software Design or Acquisition: A detailed Request for Proposals (RFP) based on the requirements identied above will need to be prepared and sent to prospective vendors in line with the organizations or nanciers procurement policies. Failure to comply with procurement policies may lead to signicant project delays in particular organisations or projects nanced by parties such as the World Bank. Responses to the RFP will then be obtained and scrutinized by the Project team. Concurrent users of similar solutions could be contacted to assess vendor reliability, commitment to training, provision of adequate system documentation and reliability of vendor enhancements or xes. Contract stage: A formal contract should then be signed with the selected vendor(s) covering matters such as specic deliverables and costs, dates for delivery of documentation allowance for a software
escrow agreement if source code is not a deliverable, provision for an adequate acceptance testing period, maintenance agreements, and a payment schedule linked to actual delivery dates. Software Acquisition, Design and Customisation: Software for the solution could be designed in accordance with the requirements specications mentioned above or procured o the shelf and customized to meet the needs of the organisation. Clear and workable systems design has often been cited as a main cause of project failure. O the shelf software may need signicant customisation to meet the needs of the particular organisation. Specically designed application software may require the use of systems analysts and programmers converting user requirements into programme code. User Training: Initial general user training can take place at this stage as the vendor will have obtained some knowledge about the organisation and some customisation could have been done. The core project team could have received training earlier. Testing: This phase will involve validation of the system to be implemented as well as any component subsystems to ensure they perform the functions expected and specied in the requirements
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denition phase. Various testing approaches include; unit testing (of a module or program), interface testing, system testing including recovery testing, security testing, and stress testing, regression testing, integration testing (with other systems), and nal acceptance testing during the implementation phase. Tests will be user designed and performed and must be properly documented beforehand with the identication of any critical success parameters or show stoppers. Test scripts must be approved by the project team prior to commencement of testing. Relevant and adequate resources should be available to conduct the testing and test results should be properly documented. Test results will be submitted to the vendor for issue resolution and following this phase, if all key acceptance criteria have been met, regression tests could be carried out to ensure changes to the program code have not introduced new errors. At this stage, external parties such as regulators or IT auditors could give an opinion to management as to whether the system should be put into production. User re-training: All key system users could undergo further training on the system at this stage, as various aspects of customization or design modication may have taken place following the acceptance testing period which may have changed particular functionalities. Implementation: Following successful user testing of the system, necessary modications by the vendors and appropriate signos by management, data must be migrated to the live environment. By this stage, user procedures manuals should have been developed. This may not necessarily be the responsibility of the vendor as they do not know your business; any initial manuals they may have prepared may not have taken into account the extensive customisations that normally take place during such projects. Successful Data conversion must also be achieved before closure. Care must be taken to screen the data being brought into the production environment from legacy systems to take care of errors and omissions. It has been stated that the data conversion phase itself may be a project within a project.
The plan should contain specic procedures including specic back out procedures in case problems are experienced during the cutover. Final commissioning tests may be carried out in the live environment, but care must be taken to remove such test transactions from production databases or les. Such test transactions may be of nominal amounts to minimize the risk of fraud or misstatement of customer transactions.
Following a successful implementation phase necessary signos will be documented by the project manager and his team of the achievement of the project deliverables. Management signo will also be obtained. Post Implementation review: This will take place and will usually involve an independent party that was not part of the project implementation. Key objectives for review will include whether user needs and management objectives have been met and whether new systems have proven superior performance over set parameters than the systems they replaced.
Complex projects
In managing complex projects such as integrating several separate information systems following a merger of two organisations, each with their own legacy systems and subsystems, it may be advisable to follow a phased approach to implementation with adequate timelines allowed rather that view this as one project.
Project Governance: The Role of the Board and Steering Committee

Every IT project requires an appropriate IT governance structure to support its implementation and ensure the project will add value to the organisation and that the risks arising from the project are properly identied and managed. This will normally come in the form of a Board Committee charged with IT systems oversight, say, an IT Strategy Committee and a Management Committee charged with day to day management of IT projects such as the IT steering Committee. The members of the Board should not perceive IT as too technical and fear to ask probing questions to management. As pointed out at the outset of this article, most causes of IT project failure arise from non-technical, but rather general management issues.
A date is normally set for system migration. Key points to note: Planning for nal implementation cutover should take place early in the project cycle and a formal implementation plan documented. This will be revised as the project progresses.
Use of Consultants or Vendor Staff

Most projects will involve organisations having to deal with a number of consultants or vendor sta. Some organisations may not have dealt with such outsiders before, over long periods. Some advice is, therefore, necessary. In selecting consultants to assist with the implementation, it is very important to ensure that the lead consultant should have had previous experience in the type of implementation you are planning to carry out including, if possible, the specic applications and level of integration and complexity. It will also be necessary to get external references of their performance as consultants on prior projects. Consultants may appear very friendly and supportive at the outset of projects but you need to realise that they work for themselves rst before they work for you. In delivering complex projects that have a core IT solution together with other interconnected subsystems delivered by other vendors, you will need to manage multiple vendors eectively. It is often important
if possible to structure the project to have a lead vendor who will be responsible for delivering the project and thus responsible for ensuring performance of other subsidiary vendors. Timelines will not be endless if your organisations management or project management is weak. There will be time lost on the project and a point will be reached when the consultants/vendors sta will shift their attention from working on your project to returning home to be with their families!
One commentator has stated, when you look at the reasons for IT project failure, it is like a top 10 list that keeps repeating itself all over again. The costs of IT project failure are often very high and include not just nancial loss if a project has to be abandoned but also lost time from project delays or users waiting for xing of defective IT systems, lost eciency, and reputation risks. As an accountant/CFO or key member of a management team in charge of a failed IT project, you may expose yourself to the suspicion (in this part of the world) that you must have eaten something on the project. Do not become another statistic!
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By Godfrey Neema
DOS AND DONTS OF

JOB INTERVIEWS
Todays Accountant January - March 2013 | Todays Accountant APRIL- JUNE 2013 | 17
HR Insight:
Senior Administrative Ofcer, ICPAU
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A
1. General traits organization t. Experiential factors
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HR INSIGHTS: DOS AND DONTS OF JOB INTERVIEWS

Motivation: Applicants willingness to exert the eort required to do the job. Interviewee Performance
job interview is a process in which a potential employee is evaluated by an employer for prospective employment in an organization. This process is aimed at determining whether or not the applicant is suitable for the job, in line with the job specications. Interviews are usually preceded by the evaluation of submitted Curriculum Vitae (CVs) from interested candidates, and shortlisting successful candidates who are then invited for the interview. An interview can be in form of a telephone interview, a handwritten interview, a face to face interaction, or a combination of two or three of the above. Once all candidates have been interviewed, the employer selects the most desirable candidate and begins the negotiation of a job oer. Categories of Job-relevant Attributes
2.
Interviewer evaluations of applicant responses can be inuenced by how an applicant behaves during the interview. Applicants, without realizing it may engage in behaviour that inuences their performance. This behaviour can be acquired through training, or from previous interview experience. These are classied into three categories; social eectiveness skills, interpersonal presentation, and personal and situational factors. Social eectiveness skills: Impression management: Applicants attempt to make sure the interviewer forms a positive impression of them. Social skills: Applicants ability to adapt his/her behaviour according to the demands of the situation, to positively inuence the interviewer. Self-monitoring: Applicants regulation of behaviour to control the image presented to the interviewer. Relational control: Applicants attempt to control the ow of the
In the interview process, the interviewer studies the applicants attributes that are specically relevant to the job for which the person is applying. The job-relevant applicant attributes that the questions purportedly assess are thought to be necessary for one to successfully perform, on the job. These can be classied into three categories; general traits, experiential factors and core job elements. The general traits category refers to relatively stable applicant traits. The experiential category refers to the job knowledge that the applicant has acquired over time, whereas the core job elements category refers to the knowledge, skills and abilities associated with the job.
conversation. Interpersonal Presentation: Verbal expression: Pitch, rate, pauses.
Nonverbal behaviour: Gaze, smile, hand movement, body orientation. Personal/contextual factors: Interview training: Coaching, mock interviews with feedback. Interview experience: Number of prior interviews. Interview self-ecacy: Applicants perceived ability to do well in the interview. Interview motivation: Applicants motivation to succeed in an interview.
Mental ability: Applicants capacity to learn and process information. Personality: Conscientiousness, agreeableness, emotional stability, extroversion, openness to new experiences. Interest, goals, and values: Applicants motives, goals, and person-
Experience: Job-relevant knowledge derived from prior experience. Education: Job-relevant knowledge derived from prior education.
Training: Job-relevant knowledge derived from prior training. Core job elements: Declarative knowledge: Applicants learned knowledge. Procedural skills and abilities: Applicants ability to complete the tasks required to do the job.
The bulk of the job interview process will entail the interviewers asking the candidate questions about his or her job history, personality, work style and other factors relevant to the job. Interviewers may also ask about the weaknesses of the candidate. This is to acknowledge the fact that they are not perfect. However, the interviewer is not really interested in their weaknesses but how they may make up for them. It also displays the skill of self-reection and the pursuit for self-improvement.
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HR INSIGHTS: DOS AND DONTS OF JOB INTERVIEWS

In light of the above, the candidate for the interview must be aware of the under mentioned dos and donts:
Dress appropriately for the occasion. Your personal grooming and cleanliness should be outstanding. Your first impression matters. Know the exact time and location of your interview; know how long it takes to get there, park, find a rest room to freshen up, etc. Arrive early; 10 minutes prior to the interview start time [or earlier if the event or employer instructs you to do so]. Treat other people you encounter, with courtesy and respect. Their opinions of you might be solicited during hiring decisions. When in the interview room, offer a firm handshake, maintain eye contact, and have a friendly expression when you are greeted by your interviewer. Listen carefully to be sure you know your interviewers name and the correct pronunciation. Address your interviewer by their title (Ms., Mr., Dr.) and last name, until invited to do otherwise, even when your interviewer gives you a first and last name. Sit still and upright in your seat; avoid fidgeting and slouching. Respond to all questions and back up your statements about yourself with specific examples whenever possible. Be thorough in your responses, while being concise in your wording. Ask for clarification if you do not understand a question. Treat the interview seriously and as though you are truly interested in the employer and the opportunity presented. Exhibit a positive attitude. The interviewer is evaluating you as a potential co-worker. Behave like someone you would want to work with. Have intelligent questions prepared, to ask the interviewer. Having done your research about the employer in advance, ask questions which you did not find answered in your research. Evaluate the interviewer and the organization she/he represents. An interview is a two-way street. Conduct yourself cordially and respectfully, while thinking critically about the way you are treated and the values and priorities of the organization. Expect to be treated appropriately. If you believe you were treated inappropriately or asked questions that were inappropriate or made you uncomfortable, discuss this with a Career Services advisor or the director. Make sure you understand the employers next step in the hiring process; know when and from whom you should expect to hear next. Know what action you are expected to take next, if any. When the interviewer concludes the interview, offer a firm handshake, while maintaining eye contact. Depart gracefully. After the interview, make notes right away so you do not forget critical details. Write a thank-you letter to your interviewer promptly.
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Interview in progress
Interview DONTs
Do not make excuses. Take responsibility for your decisions and your actions. Do not make negative comments about previous employers or professors (or others). Do not falsify application materials or answers to interview questions. Do not treat the interview casually, as if you are just shopping around or doing the interview for practice. This is an insult to the interviewer and to the organization. Do not give the impression that you are only interested in an organization because of its geographic location. Do not give the impression you are only interested in salary; do not ask about salary and benets issues until the subject is brought up by your interviewer. Do not act as though you would take any job or are desperate for employment. Do not make the interviewer guess what type of work you are interested in; it is not the interviewers job to act as a career advisor to you. Do not be unprepared for typical interview questions. You may not be asked all of them in every interview, but being unprepared will not help you. Do not exhibit frustrations or a negative attitude in an interview, in spite of whatever frustrations you have faced in your job search. Do not go to extremes with your posture; do not slouch, and avoid sitting rigidly on the edge of your chair. Do not assume that a female interviewer is Mrs. or Miss. Address her as Ms. unless told otherwise. (If she has a Doctor of Philosophy (PhD) or other doctoral degree or medical degree, use Dr. [lastname] just as you would with a male interviewer. Marital status of anyone, male or female, is irrelevant to the purpose of the interview. Do not chew bubble gum or smell like smoke. Do not allow your cell phone to sound during the interview; if it does, apologize quickly and ignore it. Do not take a cell phone call. Do not read or look at a text message. Do not take your parents, your pet (an assistance animal is not a pet in this circumstance), spouse, ance, friends or enemies to an interview. They can certainly visit your new city, at their own expense, but cannot attend your interview.

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All said and done, I wish you the best in your quest for that dream job!
Is it a Worthy Venture?
Reinsurance:
By Flavia Mpagi
Chartered Insurer, Insurance Regulatory Authority
ust as gures are a sixth sense to accountants, one could say assessing risk comes naturally to insurers. When it comes to the business of risk, insurers are your people; be it calculating the possibility, mitigating its occurrence, or pricing of a risk. There are essentially two types of risks insurers deal with; those faced by their clients, and those faced by the insurance companies themselves. In dealing with the risks faced by their clients, insurance companies use the Law of Large Numbers derived from probability theory to determine the chance of an event occurring. If the chance of someone having a car accident is one in one hundred (1/100), then insurance companies collect premiums from 100 people to pay the claim that one driver will incur. This is known as spreading the risk. It is important for insurance companies to meticulously gauge the hazards (items that increase the chance of loss) of a risk before insuring it. Should they fail to conduct the appropriate research into ones business practices or determine an individuals living habits, resulting in a wrongful prediction, the insurance company could lose money. If they do this often enough then the company suers. Essentially then, the Law of Large Numbers means, the larger the number of risks (cars or homes, others) that an insurance company insures, the closer they will be towards predicting the actual results of the chance of an accident occurring. Of course it is still up to chance, but past experience is a good indicator of the future.
The business of insurance, therefore, relies on probabilities, to derive calculated prices of insurance premiums. The total premium paid is always lower than the amount that would be payable by the insurer in case the insured event occurs. Therefore, insurance companies always rely on the total insurance premiums collected from all their clients being sucient, to cover claims, management costs, and reinsurance costs, as well as being enough for prot realization. Sometimes insurance companies do not get the calculation of premiums right and other times they may not get as many clients as needed to pay all the claims incurred in a given period. These are some of the risks faced by insurance companies. In an eort to mitigate these risks, insurance companies are required by law to always retain sucient capital. This is called the minimum paid-up capital. In Uganda, the minimum paid-up capital for either life or non-life insurance companies is one billion shillings, and two and a half billion for reinsurance companies. With the growing development of the industry, the Insurance Regulatory Authority of Uganda (IRA) has proposed an increase in these amounts to three billion, for life insurance companies, and four billion, for non-life insurance companies. Insurers are expected to invest some of this capital. However, to ensure insurance solvency and sucient liquidity to enable companies pay claims as and when they arise, the Insurance Act (Cap. 213), Laws of Uganda, 2000, and the Insurance Regulations, 2002, specify the denitions and calculations
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of assets and liabilities, the margin of solvency expected of insurance companies, the reserves insurance companies are expected to hold and how insurance funds should be invested. For example, Section 48(2) of the Act species that life insurance funds should be invested as follows; 30% in government securities and 70% in other such investments, as shall be approved by the Commission (IRA). The Authority ensures that insurers uphold and enforce these laws and regulations. Further to handling the risks faced by insurance companies and protecting the capital they hold, insurers are required to insure with other insurance companies. This is called reinsurance, and it also enables the principal insurer to pay claims as they arise. Reinsurance is thus the practice of insurers transferring portions of their risk portfolios by purchasing insurance policies from either another insurance company or reinsurance companies. This is done in order to reduce the likelihood of having to pay a large obligation resulting from an insurance claim. Like individuals, insurance companies access their own level of risk, and take out insurance policies payable by insurance premiums. Companies that accept risks from other insurance companies are called reinsurance companies or reinsurers. Most insurance companies will need reinsurance. It could ultimately mean the dierence between survival and failure. Reinsurance oers the following benets; Reduction of an insurers exposure to any particular risk, to an amount which he could retain on his own account. This will be his net retained line. Reduction of the insurers acceptance of a doubtful or undesirable risk. Increased market capacity by spreading the risk over the international market. Levelling out uctuations to iron out the peaks and troughs in the prot margin of the original underwriter. Obtaining reciprocity; exchange of business for comparable business from another underwriter. This enables insurers to participate in risks which are not otherwise available to them, leading also to further spread of risks.
Securing protection against catastrophe losses when a major share of these is ooaded to a reinsurer.
Like anywhere else in the world, insurers in Uganda are highly dependent on reinsurance services. In 2011, the premium ceded on account of life and non-life insurance increased to UShs 115.99 billion, accounting for 39.12% of total gross written premium income. Compare this to UShs 93.08 billion that accounted for 38.79% of total premium written in 2010. This scenario can be attributed to low capitalization which results in low retentions and high demand for reinsurance. An important ratio to consider in the business of insurance is the reinsurance retention ratio. This is the net premium (Gross premium collected Reinsurance premium) expressed as a percentage of the gross premium. The retention ratio is thus a measure of how much of the risk is being carried by an insurer rather than being passed to reinsurers. According to statistics, the classes with the highest retention ratio included motor (91.95%), burglary (77.98%) and workers compensation (72.99%) which collectively accounted for around 47.39% of total premium income written. In eect, insurers retained more from classes that had low risk exposure and ceded more to reinsurance companies from classes that had a high risk exposure to protect their portfolios. When Peter replaced the shock absorbers on his car, he could not believe the improvement in comfort he derived. Experts agree that vehicle shock absorbers, although invisible to bystanders, will reduce the eect of travelling over rough ground thus leading to improved ride quality and increased comfort. Reinsurance has often been compared to the shock absorbers on a car. While they do not make the road smoother by any means, passengers feel the bumps less because these are absorbed by the devices tted to the car. Similarly, reinsurance does not reduce losses, but merely smoothens out the negative eects that these losses place on the insurer. Assessing clients risks and advising them on how to mitigate these would not make insurers experts in this eld if they could not mitigate their own risks. The vehicle the industry uses to accomplish this is reinsurance. Simply put, it is that safety net that provides an insurer peace of mind, thus allowing them to better develop and grow their product. The net result of which is a stronger and better appreciated industry.
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Evolution and Current Challenges
Internal Auditing in Local Governments:
By CPA Al Hajj Nnume Yasin Abubaker

Head, Internal Audit department, Jinja Municipal Council
Special investigations
Revenue collection
Stores audit
Assets utilization
Payroll accounting verication
The Importance of Delving into the Past

We study history in order to learn what happened, why and how it happened in order to understand the current events. If mistakes happened in the past, we learn to avoid them. We also appreciate the past events that shaped the current ones.
arithmetic check to conrm that the amounts on the individual vouchers added up to the amount on the cheque. The internal auditors initials on the vouchers and the audit trails on the cheques assured the treasurer that everything was in line with the laid down procedures. This had popularly come to be known as prepayment audit and consumed a considerable amount of the time of internal auditors. Concerning revenue collection, internal auditors helped the treasurer in monitoring revenue collection. Internal auditors ensured that revenue collectors accounted for all the money collected and all the used receipts. Before the main cashier received cash from the revenue collectors, the internal auditor had to rst verify and conrm the amount being handed over. They also regularly assessed revenue centres to establish the minimum collectable amount. Internal auditors monitored revenue collection to ensure that all revenue budgeted for was actually collected. They further ensured that all cash received by the main cashier was banked intact. Stores audit: Internal auditors witnessed all deliveries to the various stores [stationery, mechanical, medical]. Deliveries were veried in their presence and delivery notes signed, certied correct. At regular intervals, internal auditors veried the usage of the goods, by the user departments, in an eort to nd answers to the question: How well have the goods delivered to the stores, as witnessed and veried by ourselves, been put to good use?
The Evolution of Local Government Internal Auditing

Until 1993, internal auditing in Local Governments in Uganda was a section in the nance department. This was part of the colonial legacy that was left behind at the time this country attained its independence in 1962. The practice then was that the internal audit function reports to the Treasurers (the then heads of nance). Internal auditors audited and compiled reports to the treasurer. Within this arrangement, internal auditors performed several functions and provided some kind of assurance to the treasurer. In case of payments, no voucher was paid without going through the internal auditor who checked for matching of details on the requisition and those on the voucher to conrm that the payee was genuine, the item being paid for was budgeted for, and that the right expenditure item was charged. In case one cheque was to be used to pay several vouchers, the internal auditor did the
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Assets utilization: Deployment of council plants, machinery and motor vehicles, servicing records, parking of vehicles at parking yards at the prescribed time were some of the concerns of internal auditors. Verication of payroll accounting: This involved the following: Conrming the numbers of sta on the payroll Fishing out ghost employees Conrming that the hourly rates used to compute wages for support sta was commensurate with the standing orders. The enactment of the Local Governments Act, 1997, introduced some changes. The Law then required each district, city, municipal or town council to provide for an internal audit department. It also required reporting direct to the council, and introduced the Local Governments Public Accounts Committees to consider both internal and external audit reports and make recommendations to council. However, the Financial and Accounting Regulations, 1997, that were issued to operationalise the Act maintained prepayment audit as part of the statutory duties of the head of internal audit. This has remained the status under the current Local Governments Act Cap. 243, with the exception that internal auditors are no longer doing preaudit of payments but instead they are required to adopt risk based auditing. It is worth appreciating that despite the challenges faced by local government internal auditors in this country, the level at which it is now is regarded as the best in the East African Community. This is based on the fact that, over and above the improved reporting level, independence and legal recognition, the Local Governments Internal Audit Manual, 2007, that generally guides internal auditing in local governments heavily draws from the International Professional Practice Framework [international Internal Auditing Standards, Position Papers, Practice Advisories and Guides]. This implies that internal auditing in local governments is steadily moving towards fully adopting the current denition of internal auditing. For ease of reference, internal auditing is currently dened as an independent objective assurance and consulting activity designed to add value and improve an organisations operations. It helps an organisation to accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the eectiveness of risk management, control, and governance processes. What has been the driving force behind local government internal audit metamorphoses? Two factors have been cited. The nature of work and reporting arrangement made internal auditors deeply involved in the implementation process and their independence, as reected in the above denition, was questionable. Questions were being raised as to what moral authority they (internal auditors) had to query payments which they had passed at the prepayment audit stage in case such payments later turned out to be fraudulent. The ubiquitous corruption at the advent of decentralisation necessitated strengthening the internal audit activity in local governments by making the function independent from that of nance and improving the reporting arrangement. The adoption of decentralisation had promotion of good governance (read good corporate governance) as one of its objectives which globally recognized internal audit as one its four pillars.
Respective heads of section/department authorized overtime and checked the arithmetic accuracy of the grand total that was transferred from the payroll to the salary/wages cheque. Internal auditors, when the situation warranted, carried out special investigations which manifested in two major areas; suspected misuse of stores and impropriety in revenue collection. Regarding schools, the main concern for internal auditors was school fees collection and the expenditure of the collected fees, whereas for hospitals and health centers, the utilization of drugs and other medical supplies were among the key issues of concern. Internal auditors performed all these in recognition of the then denition of internal auditing; an Independent appraisal function established within an organisation to examine and evaluate its activities, as a service to the organisation. The objective of internal auditing is to assist members of the organisation in the eective discharge of their responsibilities. To this end, internal auditing furnishes organisations with analyses, appraisals, recommendations, counsel and information concerning the activities reviewed. The audit objective involves promoting eective control at a reasonable cost.
The objective of internal auditing is to assist members of the organisation in the effective discharge of their responsibilities.
The Effect of Decentralisation

The adoption of decentralisation as a system of governance marked the beginning of the change in internal audit in Local Governments. The Local Governments (Resistance Councils) Statute, 1993, required each district, city and municipal council to provide for internal audit. It is important to note that while provision for internal audit was made a statutory requirement, the wording of the statute required providing for internal audit but not an internal audit department, which, by implication was the intention of section 27. The Statute, however, changed the reporting arrangement; from being responsible to treasurers, internal auditors thence reported to the Resistance Council. Internal auditors empowered the nance committees to consider internal audit reports, but not the Local Governments Accounts Committee which was only mandated to consider Auditor Generals Reports. It should be noted that even with the enactment of the Local Governments (Resistance Councils) Statute, the nature of work virtually remained the same as stated above. Despite the shortcomings in the laws as highlighted above, making the establishment of internal audit a statutory requirement was a stepping stone towards improving internal auditing in local governments to a level which is currently being seen as the best in the East African Community. 24
The Current Challenges

Despite the eorts by the Ministry of Local Government to provide basic tools and techniques to make internal audit more vibrant, there are issues that require urgent attention to further enhance performance of the internal audit function. The Auditor Generals report for the nancial year 2010/2011 to Parliament observed that some internal audit departments are weak, while others are poorly staed and nanced. The full adoption of risk based auditing is yet to be achieved. There are still challenges in full adoption and use of the internal audit manual. The quality of the Local Government Public Accounts Committees (equivalent of audit committees) at the districts who examine the reports is wanting in some aspects. Embracing risk based auditing is the responsibility of all stakeholders but most stakeholders think it is the role of the internal auditor. Several factors underlie these challenges, but that discussion is beyond the scope of this article.
Overview of Students Performance in the December 2012 Examinations

By CPA Innocent Orone,
Examinations Ofcer, ICPAU
s part of its mandate to regulate and maintain the standard of accountancy Uganda, ICPAU conducts examinations for the Certied Public Accountants of Uganda (CPA(U)) and the Accounting Technician Certicate of Uganda (ATC(U)) courses. This function is executed by the Public Accountants Examinations Board (PAEB) on behalf of the Council. The examinations comprise computational, essay/discursive, multiplechoice and scenarios questions. The markers are required to prepare comments on each question and ultimately each paper. General observations on candidates performance We have noted some factors that have impacted the performance of our candidates and we are calling upon candidates to take keen interest in these aspects. These include the following among others: 1 Preparation for examinations. This is evidenced in areas 1 like: i) Registration. Candidates have ample time to register for examinations from date of release of examinations results up to the closure of registration for examinations, which is almost a duration of three months. Candidates who register early enough get adequate time to cover the syllabus, do assignments, engage in adequate discussions and make consultations. Such candidates have always performed well. Some candidates, however, register for studentship and examinations at the close of registration. By this time, some of them have not started reading yet they only have two months to examinations. In most situations, they begin panicking and lose focus. ii) Reading culture. Good reading culture is signicant for good performance. Candidates who have made the best use of recommended reading materials have excelled in examinations and a good number of them have consistently received prizes. Candidates who depend on handouts only, ignoring the recommended textbooks and current issues in the environment have tended to exhibit shallow knowledge when answering questions. For instance, for Audit Theory, question 2 (a) most of the candidates did not perform well. They exhibited ill-preparation and general lack of knowledge in payroll details. iii) Continuous Assessment. These assessments expose candidates to their areas of weakness and they work on them early enough. Continuous assessment builds candidates condence and prepares them psychologically for examinations. Reports from dierent tuition providers show that candidates are not willing to do assignments and tests. On average, less than 25% of the candidates attempt mock examinations. Therefore, candidates cannot detect their areas of weakness early enough and work on them. They prefer to die once by waiting for the
nal examinations. Candidates who have sought our guidance, done exercises and mock examinations have performed well.
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Use of past papers. Past paper questions guide candidates when revising. They help candidates to remove fear and gain condence but not to act as substitutes to textbooks and other reading materials. Candidates who have read widely tend to make the best use of these past papers since they are able to try out what they have read and ll the missing gaps during their reading. They simply act as an eye opener leading to good performance. Concentrating on past papers in anticipation that some of the questions will re-appear in examinations makes candidates perform poorly. They read retrospectively by rst going to past papers and then notes later. The danger of this is that a narrow part of syllabus is covered and yet these questions may not be set again in the same way. Attitude towards computational questions. Candidates who are good at computations have always excelled in such areas. They, however, need also to concentrate on theory to show that they know what they are computing, and have ability to interpret their gures and attach meanings. For instance, in CPA 6: Management Accounting and Finance; Question 2 Part b (i), (ii) & (iii) of the question required candidates to demonstrate knowledge on contract costing. Majority of candidates correctly prepared the contract account but failed to explain why prots should be computed on incomplete contracts and included in nancial statements. Candidates who have poor attitude towards computational
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questions tend to perform poorly. They exhibit high levels of inability in answering computational questions and yet these carry many marks. For instance, CPA Paper 5, Quantitative Techniques, Question 1 was popular. 81% of the total candidates attempted it but only 21% scored above 10 marks out of the 20 allocated to it. Most candidates identied examples of quartiles, but could not compute sample standard deviation, determine the percentage in the required given interval and obtain the control limits required. In CPA paper 16, - Integration of Knowledge, question B5, was the worst attempted part of the entire examinations. Less than 20% of the candidates attempted the question, yet of these only 10% scored a pass. Candidates demonstrated limitations in knowledge of nancial project evaluation. 4 4 Syllabus coverage. ICPAU examinations are set from the entire syllabus. In CPA Paper 11; Taxation, candidates endeavoured to cover the syllabus, leading to a marked improvement in performance in the November 2012 examinations compared to June 2012 diet. Most candidates attempted the required number of questions and were able to give relevant advice where necessary. For papers where the syllabus coverage was inadequate, candidates performance exposed this. For instance, CPA paper 6: (Management Accounting and Finance), the Finance part is given less coverage and in ATC 12: Introduction to Financial Reporting, the candidates were ill- prepared in the area of public sector and the accounting standards. Inadequate syllabus coverage is also result of candidates attempt to spot examinations. Preparation for examinations needs a wide coverage of the syllabus as well as ability to articulate issues. Candidates who take this approach perform well since they have a broader view of the subject content and ability to apply issues as required. For instance, In CPA 10: Management Decision and Control; Question 2 Part (b) required candidates to explain why managers should be involved in setting of their budgets. This part was very well done by the candidates and they explained the reason adequately. Part (c) required candidates to explain the dierence between exible and xed budgets. Candidates were able to adequately state the dierences. Of the candidates that attempted this question, 78 obtained above 10 marks. Some candidates however, have a tendency of trying to spot the likely questions to come in a given examinations diet from day one of their lectures. Consequently, they do not cover the syllabus adequately which makes them out spotted. 5 5 Time management. Good time management facilitates early preparation for examinations, reduces stress and makes a candidate generally ready for examinations. Candidates who have observed this have performed well. Unfortunately, there are some candidates who have not observed this. This is evidenced by candidates not attempting the required number of questions, registering for examinations on the last day, arriving late for examinations and some candidates waste time rewriting
questions. This behavioural trend puts the candidates at a disadvantage. 6 6 Interpreting questions. Understanding the terminology used in examinations is the gateway to good question approach and performance. Candidates who have mastered this technique tend to excel and minimize cases of misring. It is unfortunate to note that there are cases where the candidates do not understand the requirements of the question. For example, whereas question 1 of CPA 12: Corporate Financial Management, required candidates to make a projection for four years and develop a pro-forma statement of comprehensive income and statement of nancial position, some candidates produced eight nancial statements for each individual year, which was time wasting. Also in CPA Paper 8, question 3, 83.8% of the candidates attempted it and registered a pass rate of 38.24%. 90% of the candidates could not interpret the question correctly and instead explained the requirements with regard to the central government business transacted by the national parliament and not necessarily with regard to local governments. 40% of the candidates confused commitment control system for cash accounting system and therefore lost the marks for this section and expressed lack of awareness of the local government public accounts committee or knowledge of its roles. In CPA 15: Auditing and Other Assurance Services; Question 3 was the least popular among all the questions in these examinations. Indeed, the very few who attempted it demonstrated a lack of understanding of the question and how to audit opening balances hence performing very poorly. Candidates mistook auditing opening balances for substantive audits. In most of the cases candidates were giving the substantive audit tests for all the balance sheet items which the examiners did not ask for. This is an indication that some candidates did not understand the key words of the questions like explain, discuss, assess, elucidate, provide a solution, report, list, briey explain, and so on, leading to poor question approach. Knowing the level of skills being tested at each Level of
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the syllabus. Level I of CPA tests knowledge whereas level III and IV test knowledge, technical and conceptual skills. The way candidates should present their work in examinations should exhibit this. For instance, CPA 16: Integration of Knowledge, Question A2 required candidates to comment on how CSL could attract more customers in the face of competition as the growth of the economy slows. It was a very well attempted question, with most candidates proposing good strategies that can be used to attract more customers. Candidates demonstrated maturity and high level of analytical skills. Good reference was made to the case study. However, some candidates have failed to know the level of skills being tested at each level of the syllabus. Some of our candidates are only good at regurgitating book knowledge. For CPA Paper 14, Business policy and Strategy, a good number of candidates exhibited poor analytical skills and inability to apply theory to the case studies, in both the December and June 2012 examinations diet. Some candidates still discussed the concepts generically as opposed to using the concepts to analyze the case studies. This was especially noted in the compulsory question. 8 8 Observing instructions. Good observation of the given instructions enables candidates to make the right choice of questions, plan their work well, number it and complete within the time allotted. However, some candidates answer more than the required number of questions, preventing them from concentrating on the required questions. For instance, in ATC 3: Business Mathematics and Statistics; and CPA 2: Economic Environment of December 2012. Listening skills. Good listening skills facilitate accurate receiving of messages during the communication process. It facilitates understanding and ensures no communication breakdown 10
occurs. It ensures good relationship between candidates and invigilators and no party can easily become frustrated or irritated. Some candidates, however, do not follow what they are told in the examinations room. For instance, fastening answer booklets, in case a student has used more than one, stopping to write when it is time up, and standing up but not leaving the examinations room until they are told to so. Failure to listen has resulted in some candidates leaving the examinations room without indicating the numbers they have attempted and generally displaying very disorganized work, hence poor performance.
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Overload. Some candidates tend to overload themselves. For example, registering for six or seven papers at level I, or all the ve papers at level II. This overstretches them, leading to failure to adequately prepare for examinations. The tendency of some candidates to undermine some Papers like Business law, Audit Theory, Professional Ethics & Values and so on. Some candidates feel that these papers are theoretical and demand less time of concentration yet these papers demand candidates to demonstrate and apply a good level of technical knowledge and current issues. Candidates are reminded that current issues are crucial to these papers and questions on topical matters will be regularly tested as well as display of thorough understanding of the content of the papers. Candidates in some cases are technically incorrect. They respond to the questions in the papers as if it is a general paper, forgetting that each paper has its own language. For instance, candidates tend to mix Audit Theory and Professional Ethics and Values. Training as an Accounting Technician or a Certied Public Accountant requires a lot of hard-work. It takes time, eort and determination. It needs one to be focused, committed and informed, with a clear strategy.
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Pass Card to Business Policy

The Marketing Environment
Part 14
The marketing environment does not signicantly dier from the normal business environment. Just like the latter, it comprises of both the internal and external aspects. External variables include: The macro factors that aect the economy as a whole. These variables can generally be assessed with the guidance of the PESTLED model (recall what was discussed in part three of these series under scanning of the environment). The internal environment aspects which are generally controllable by an entity (see part four of the series).
This article shall focus on the environmental variables that specically relate to marketing aspects and less attention shall be paid to the general environmental variables noted above.
Whats in it for the Marketer?

The role of the marketer is to understand the marketing environment so as to identify areas for improvement, key challenges as well as opportunities that could be exploited. In other words, a review of the marketing environment should lead to a marketing SWOT analysis, which is eventually followed by the generation of strategic interventions. Our discussion of the environment shall be split into the internal and the external marketing environment.
The External Marketing Environment

As noted already, this relates to the variables that are outside the organisation. Key players in this area include the consumers, customers, competitors and suppliers, each with a varying degree of inuence on marketing decisions.
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| Todays Todays Accountant Accountant APRIL- JUNE January 2013 - March 2013
Customers Vs Consumers
Customers make the purchase decision while consumers are the end users of the product. The implication for the marketer is that he must understand the target group so that appropriate marketing messages can be designed. It is also important to distinguish between organizational and individual buyers since each of them have their own characteristics. For example, organizational buyers buy in bulk while individual buyers usually buy in small quantities. Organisational buyers have formal purchase decision making processes while individual buyers often buy on impulse. Consequently, a price reduction strategy may work for individual buyers, say, during the Christmas festivities, but this is unlikely to work for an organizational client. The distinction between customers and consumers can also be demonstrated by an advert for childrens play items. You are unlikely to get good results by targeting the message to adults. Instead, such a message should be targeted to the children (consumers) who in turn will ask their parents (customers) to buy for them the items. Equally important is the need to understand that customers are of dierent types, depending on how fast they make their purchase decision. Everett M. Rogers classied customers into ve groups depending on how quickly
they adopt a new product; the innovators, early adopters, early majority, late majority and the laggards. Following one another, the above groups reect the duration that customers take in making a purchase decision following receipt of information about a new product. The innovators (sometimes called brand switchers) are usually the rst to purchase a product soon after its introduction, followed by the early adopters and the early majority as the product grows and the late majority as the product matures. The laggards are the last to make their purchase decisions about a product, with some of them doing so as the product declines. Laggards are individuals who may, for example, wait for a clearance sale so as to buy a product. As a marketer, knowledge of the consumer characteristics is important so that appropriate marketing communications are designed.
Competitors/Suppliers
Competitors have a major inuence on a companys marketing operations. This is mainly manifested through pricing strategies, distribution mechanisms and quality of output. Suppliers, on the other hand, aect the availability, quality and pricing of inputs. Suppliers are critical to the value creation process because they are the source of inputs.
In the next article, we shall look at some of the tools that can be used to analyse the external marketing environment.
December 2012 Examinations Results Released

December 2012 was 46.8% compared to 44.5% in the June 2012 examinations. 89 candidates completed the CPA(U) course. The Chairman of PAEB noted that although there was a decline in the performance of ATC(U) papers, it still remained good. The overall pass rate was 54.5% in December 2012 compared to 57.2% in June 2012. 45 candidates completed the course. The December 2012 examinations were held at four regional examinations centres; Kampala, Gulu, Mbarara and Mbale. The Institute took services nearer to the students with a hope that training institutions will emerge where the examinations centres are located. PAEB has gone a long way in conducting examinations. The pioneer CPA(U) students sat their first examination in December 1997. The first person to complete the course did so in 2000. So far, 1,046 professional accountants have been produced by ICPAU. On the other hand, the Accounting Technician course was established in 2001. A cumulative total of 1,382 have completed the course.
he Public Accountants Examinations Board (PAEB) of the Institute of Certified Public Accountants of Uganda (ICPAU) released the results of the December 2012 examinations on 7 January 2013. This was in response to a request by tuition providers to equalize the examinations diets. PAEB has been widely applauded for this achievement. While releasing the results, CPA Patrick Kagoro, the Chairman of PAEB encouraged accountancy training institutes to utilize the ample time available to adequately prepare students for the June 2013 examinations. Following the requests from training institutions, we have released the examinations results early so that they have ample time to prepare for the next examinations diet scheduled for June 2013, CPA Kagoro said. Kagoro also expressed gratitude to examiners, moderators, markers, invigilators and the Secretariat for their respective roles in the December 2012 examinations. The December 2012 examinations results show improved performance in CPA(U) papers. The pass rate for
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Students activities
1
riting exams
A candidate w
1, 2,3& 4. Candidates writing their exams at the Northern region examinations centre in Gulu.
WHAT:
December 2012 Exams
WHERE:
Gulu, Mbale, Kampala
WHEN:
26 November - 1 December 2012
5.Candidates at the Eastern region examinations centre in Mbale.
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Students activities
6
Mr. Simon Oola, the G overnance over the in and Relati vigilation of ons Mana the examin ger at ICPA ations at th U presided e Eastern region cen tre.
6. IT practical exams at the Northern region exams centre 7. Theoretical exams at the Northern centre. 8. Candidates at the Eastern region centre.
9. IT practical exams at the Kampala examinations centre.
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Accountancy Trainers Workshop
1
ICPAU (R s Manager at e Examination th e, ar ga an o Nt e workshop. Mr. John Bosc point during th emphasizes a )
WHAT:
Accountancy Trainers Workshop
WHERE:
Grand Imperial Hotel
WHEN:
29 January 2013, 27 February 2013
1. Mr. Simon Oola (L) and CPA Derick Nkajja, the ICPAU Chief Executive, listen intently. 2. Some accountancy trainers listen intently. 3. Trainers note down salient points during the workshop. 4. Some accountancy trainers at the workshop.
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Mr. Joseph Kibuuka, the Executive Director of Top Performance Ltd, presenting a paper on training approaches and methodologies.
4
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Exams Release
WHAT:
December 2012 exams release press conference
WHERE:
Hotel Africana
WHEN:
7 January 2013
1. L-R: CPAs Henry Lwetabe (ICPAU Council member), Derick Nkajja (CEO) and Naru Thakkar (ICPAU President). 2. CPAs Naru Thakkar (L) and Patrick Kagoro (ICPAU Vice President) display the December 2012 examinations results. 3&4. Delegates at the press conference.
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CPD Seminars
WHAT:
West Nile CPD seminar, Internal Auditors seminar, Taxation seminar and Financial Management for SAACOs seminar
WHEN:
January March 2013
WHERE:
Desert Breeze Hotel (Arua), Hotel Africana (Kampala)
tation livered a presen o SAACO (L) de nd ale az er at W on er, titi ac anag s Nabende, a pr ukye, General M t is CPA Nichola CPA Pius Twim gh Ri . Os AC rting for SA eteme & Co. on financial repo Nabende, Nabw
1.Some participants at the West Nile region CPD seminar during the tea break. 2. CPA Ronald Akankwasa of Destiny Consult (L) receives a certificate in honour of the presentation he delivered at the Taxation seminar.
3. Some participants at the Internal Auditors seminar. 4. Participants chat with CPA Honourable Nandala Mafabi, Leader of Opposition in Parliament, after his presentation at the SAACOs seminar.
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CPD Seminars
WHAT:
Practitioners seminar, Financial Management for SAACOs seminar
WHEN:
February 2013
WHERE:
Hotel Africana
CPA Honourable Nandala Mafabi (L) receives a certificate in honour of his presentation on Building Successful Cooperative Societies.
1. Some practitioners at the practioners seminar. 2. Mr. Earl Steyn, Managing Director, Data Prime Solutions delivering a presentation on Improving Audit performance. 3. CPA Mark Omona, the Technical Manager ICPAU (L) sets the laptop for Mr. Punet Chawla, the Assistant
General Manager, Jubilee Insurance. 4. Jubilee Insurance were sponsors at the Practitioners seminar.
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Avenues of Business Financing: Options In Uganda
C
By Joseph Sanjula Lutwama
Research and Policy Manager, Capital Markets Authority
apital is the most talked about word for anyone thinking of starting a business or someone already in business. You can always hear any Ugandan businessman saying that capital is one of those things hard to come by in Uganda. For the most part of last year, it was almost next to impossible to get a loan from a commercial bank in Uganda. The interest rates charged on loans were very high, in the range of 29-35%. It would almost be suicidal to take out a loan at such high interest rates. No wonder most banks tightened their credit taps making it dicult for anyone to get a loan or else they would be certain to default. The conditions have since changed but at 19% or 20% the interest rates are still considered very high for a typical business in Uganda. With such high interest rates, how then can businesses in Uganda navigate the challenges of raising capital? There are many opportunities for raising capital that Ugandan businessmen and budding entrepreneurs can exploit. The challenge is that we are reluctant to explore these
opportunities. We are either looking at accumulating our savings or dashing to the bank for loans to nance business start-up or growth. Lately the moneylender has also become a popular source of business nancing although many Ugandan business persons and entrepreneurs will tell you that nance from moneylenders has cost them their businesses and properties. Moneylenders, unlike banks provide quick access to funds but this comes at a very high cost. In certain instances, a typical moneylender will charge you an interest as high as 20% per month, which comes to 120% per annum when annualised. It only takes a miracle to survive losing your assets to the moneylender at such high interest rates. We do not have to rely only on moneylenders, banks or even on our often not enough savings to build sustainable businesses that will stand the test of time. We can exploit many other funding options available in Uganda. However, care must taken to use the appropriate funding option for the dierent stages of business development. Dierent stages of development call for dierent funding options.
Types of Business Financing Options & Stages of Business Development
Internal Financing Lease Financing Bank Debt Financing
Corporate Bond Financing Equity Financing
There are ve broad options of businesses nancing in Uganda; Internal Financing, Bank Debt Financing, Equity Financing, Corporate Bond Financing and Lease Financing. Each of these business nancing options has unique characteristics (See table 1) which will inform the nancing strategies of any businessperson or intending entrepreneur at the dierent levels of development of their business (See gure 1).
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Table 1: Characteristics of the Dierent Business Financing Options in Uganda

Internal Financing Description Bank Debt Financing Lease Financing An agreement in which one party gains a long-term rental agreement and the other party receives a form of secured longterm debt Interest Medium-Term to Long-Term Medium Not Required Not Required Required Corporate Bond Financing These are loans advanced from the public (especially by institutional investors such as the National Social Security Fund), through the Uganda Securities Exchange (USE) Interest Medium-Term to LongTerm Low Not Required Not Required Not Required Equity Financing This is financing through sale of shares (equity ownership) through Private Equity Funds or the Uganda Securities Exchange Dividends Long-Term Low Required May be Required Not Required
Sourced from retained These are loans earnings or business advanced by savings commercial banks, Credit Institutions, Micro-Deposit Taking Institutions and Micro-Finance Institutions Retained Earnings Short-term Low Not Required Interest Short-Term to Medium-Term High Not Required Not Required Required
Cost Suitable Business Growth Strategy Risk to Business Ownership by Financing Provider
Involvement in Business Not Required by Financing Provider Security Not Required
Figure 1: Business Financing & Stages of Business Development

Stages of Business Development Conception Start-Up Phase Funding (Ush) Growth Maturity Decline
Sales
Cash Flow Profits Time
Personal Savings Friends Family Government Business Angels
Personal Savings Friends Family Business Angels Government
Bank Debt Private Equity Business Angels USE GEMS1 Leasing
Bank Debt USE MIMS2 Corporate Bonds Leasing
Bank Debt USE MIMS Corporate Bonds Leasing
Conception
1 2
Avenues of Business Financing in Uganda
USE Growth Enterprise Market Segment USE Main Investment Market Segment
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Conception
This is the stage in the business development cycle when the business idea is conceptualised. At this stage, funding options are available mainly from family, friends, business angels and personal savings. In some instances, government can provide research and development support at this stage as is the case with the Uganda Industrial Research Institute (UIRI). UIRI promotes innovation and product development.
Start-Up Phase
In the Start-Up phase, the entrepreneur is certain of the business concept and what they require is funding for production capacity and sales. At this stage, the entrepreneur will still rely on family, friends, business angels and personal savings, as they have not yet developed a good track record to access external nancing from commercial banks or even the capital markets. A bank in most cases will require collateral and a track record that clearly shows that the business has sucient cash ows to meet their interest obligations. Yet in the start-up phase, the business is yet to generate any cash ows. However, business angels who are keener on the growth potential of the business concept will be in position to provide business nancing at this stage. While business angels are more organised in the more developed countries and thus easily accessible, in Uganda they operate more informally. It takes one to be in their network to access their funding.
Maturity Phase
It is in the maturity phase that the business now has stable sales, strong prots and a substantial market share. Such businesses are the favourites for Banks as they are less risky and the probability of default is very small. Banks usually provide these businesses capital at very favourable interest rates. These companies can also be able to access long-term capital either in the form of equity or corporate bond oerings through the Uganda Securities Exchange. These can be Initial Public Oerings (IPOs) or Secondary Oerings. Most of the companies that are currently listed on the Uganda Securities Exchange fall in this category.
Decline Phase
At this stage of business development, the sales of the business begin to fall and prots decline as competition levels increase. The business thus needs to reposition or reinvent itself to survive in the market. The business can venture into a new line of business organically or through mergers and takeovers. These it can nance through bank debt or through IPOs or Secondary Oerings at the Uganda Securities Exchange. The framework of business nancing and business development is not as distinct as presented in real practice. Some of the stages overlap and in some cases, businesses skip some of the stages. However, the framework helps us understand that it is critical for any entrepreneur to know the level of development at which their business is and source for the appropriate type of nancing. Finally, irrespective of the source of funding any entrepreneur needs to adhere to best practices in corporate governance and nancial reporting. Corporate governance and nancial reporting are critical indicators of transparency and sustainability. They enable any nancier, whether family, friends or an established nancial institution to make proper assessment of the viability of the business before providing funding. Unfortunately many businesses in Uganda are not very keen on adopting best practices in corporate governance and nancial reporting.
Growth Phase
In the growth phase, the business is now established and looking for capital to fund growth and expansion. The business is now in position to access bank nancing since it has some cash ow track record and assets it can pledge as collateral in the bank. The business at this stage can also access equity nancing from the Uganda Securities Exchange Growth Enterprise Market Segment (GEMS), which provides an opportunity for long-term nancing for businesses that may not have a prot track record but with a potential for growth. Private Equity Funds can also provide risk equity capital or mezzanine nance (a combination of equity and debt nancing) at this stage to businesses with a growth potential. Unfortunately, there are not many Private Equity Funds in Uganda. Nevertheless, there are East African Private Equity Funds mainly based in Kenya that can provide such nancing to Ugandan businesses especially those that have growth prospects beyond Uganda.
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Taxation of Transfers of Oil Assets

This article will run in two parts; Part I will discuss the various approaches commonly used in the oil and Gas industry, in regard to the taxation of transfers of oil assets and the policy implications of each alternative. Part II will critically examine the approach adopted in Uganda, in regard to the taxation of licence interest transfers.
Part 1 By Bernard Sanya
Oil and Gas professional, Ernst & Young, Uganda The sale of oil and gas assets provides one of the highest returns for an exploration and production (e&p) company especially when the disposal is made in the period immediately following successful exploration eorts. For instance, Heritage Oil Plc, one of the rms rst licensed to explore for oil and gas in Uganda sold its assets at USD 1.45 billion1 in a farm out transaction having spent up to USD 150 million on exploration activities prior to the disposal, registering a return of USD 9 for every USD 1 invested. Heritage, indeed, deserved such a huge return given the risk it took to venture into a green eld with virtually no exploration record at a time when Fina Exploration B.V, an e&p rm, which had been licensed to explore for oil in the entire Albertine Graben had relinquished its licence declaring Uganda as a no oil zone. The conrmation of commercial reserves in 2006, following Heritage and Tullow Oil Plcs successful exploration eorts, put Uganda in the spotlight as a new oil frontier in the region, and in Africa. It also attracted a lot of public interest and raised great expectations in the exploration and production activities in the Albertine Graben. The magnitude of the gains on disposal, as demonstrated above, makes it almost impossible for the rms to conclude the transactions without attracting a lot of public interest especially in a new oil region like Uganda, with often very high public expectations. More so, transfers of such assets normally require the approval of the host government. The key issue that arose in the Heritage farm out transaction was whether the gains were subject to any taxes in Uganda. Uganda Revenue authority (URA) taxed the transaction while Heritage argued that no tax was due on the transfer of the licence interests. Heritage appealed to the Tax Appeals Tribunal (TAT) against the assessment and TAT ruled in favour of URA. The merits of this case are outside the scope of this article and shall not be explored any further. The transaction, however, underlined the importance and need for clarity in the policies that govern the taxation of transfers of oil assets. The policy option adopted by the government in regard to the taxation of transfers of license interests has a bearing on the ability of the host government to attract investments in the development of its oil elds. Policy options that increase the cost of transactions could frustrate government eorts in attracting competent players in the industry. A good starting point is the industry best practice. However, there seems to be no international best practice or industry standard on the tax treatment of disposals of oil and gas assets. Research indicates that various countries adopt dierent approaches. Broadly, there are three approaches commonly used in the industry in regard to the taxation of transfers of licence interests. These include: a) Ignore the gains/losses on disposals of licence interests for tax purposes. b) Tax the gain on disposal but allow equivalent tax deductions to the purchaser. c) Tax the gains on the seller but restrict deductions on the purchaser.
Heritage Oil Plc press release of 27th July 2010 Todays Accountant APRIL- JUNE 2013 |
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APRIL 20 JUNE 13
ensure that inecient rms easily exit to create room for competent players, thus enabling ecient eld development and production.
Tax the gain on disposal but allow equivalent tax
. deductions to the purchaser
Under this option, the gain on disposal is taxed on the seller and corresponding deductions are allowed to the purchaser of the asset. Illustration - Kingsher Plc Kingsher Plc acquired an exploration and production license, having paid a signature bonus amounting to $200,000. The company discovered oil reserves and conrmed commerciality after spending $200 million on exploration and appraisal activities. To raise nances and enlist expertise in developing the eld, Kingsher Plc farmed down 50% of its license interests to another upstream company for a consideration of $1 billion. Let us assume that gains attract tax at 30%. Kingsher would be subject to tax amounting to $299,970,000 on the gain on disposal. The gain on disposal is the consideration received less the cost base of the asset disposed, which ordinarily is the signature bonus. In this case, the gain amounts to $999,900,000 ($1bn - (50 %* 200,000)). Exploration expenditure for which no tax relief has been received does not form part of the cost base of the asset as it is inherited by the purchaser and claimed as deductions, as though the disposal never occurred. Certain tax jurisdictions specically disallow deductions of any costs incurred which are recoverable under any insurance, contract or indemnity. Under this approach, the purchaser is allowed deductions for $999,900,000 (the amount of the sellers gain on disposal) as well as the $100 million (50%*$200m) exploration expenditure for which no tax relief was granted to the seller. The purchaser, therefore, obtains deductions amounting to $1,099,900,000 which result into tax savings of $329,970,000 (30%*$1,099,900,000). The seller ends up receiving $700,030,000 ($1bn - $299,970,000) for an asset they had valued at $1bn while the purchaser eectively pays $670,030,000 ($1bn -$329,970,000) for the transaction. Clearly, the deal, if implemented in this form, is tilted in favour of the purchaser. To remove the eect of tax, the seller may adjust the selling price of the asset to a level that will ensure that it retains the intended value of the asset ($1bn) as though the disposal was not subject to tax. To achieve this, Kingsher will have to set the price of the 50% license interest at $1,428,528,571, thus increasing the cost of the transaction by $428,528,571. This is likely to discourage licence transfers which could limit the ability of the host government to attract players with competences necessary for ecient eld development. In addition, while the government receives taxes amounting to $299,970,000, from the seller, it ends up paying $329,970,000 to the purchaser, over a period of time. It appears as though the purchaser grants government a loan which it pays overtime, with the excess accounting for the interest on the loan! Unfavourable as it may appear, this option creates signicant cash ow advantage to the government as the tax on the seller is immediate, while deductions to the purchaser are spread over a period of time. The cash ow advantage is even more severe where the disposal is made during exploration or development, as deductions are not normally permitted until commencement of commercial production.
Each of these approaches is discussed below.

. Ignore the gains on disposal
Here, transfers of licence interests are ignored for tax purposes. This is, perhaps, the most preferred option for oil companies. It has no tax implications on both the seller and the purchaser. The entities are therefore in position to negotiate the real commercial value of the licence interests without worrying about any tax exposures. In economic terms, the consideration paid should represent the present value of future earnings that would accrue to the seller from the interests, had the disposal not occurred. Therefore, provided the government is guaranteed a fair share of future revenues, through the taxation of eld activities, it does not need to worry about taxing the transfers. This option is administratively convenient and enables rms with resources and expertise to farm in and develop the resources eciently. This, however, may not be tenable especially in new oil provinces like Uganda where stakeholder expectations are often very high and unrealistic. Norway and Botswana are some of the countries that adopted this policy option. Apparently, both countries have benetted from their oil resource wealth. Although analysts have attributed this success to transparent management practices adopted by these countries in the management of their natural resources, policy choices such as these
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Tax the gains on the seller but restrict deductions
.on the purchaser
Under this approach, the sellers gain is taxed while little, if any, tax relief is granted to the purchaser. In our example above, while the seller (Kingsher) pays taxes amounting to $299,970,000 on the gain on disposal, only restricted deductions are allowed to the purchaser of the asset. Uganda appears to have adopted this option; under the Ugandan tax law, the purchaser is allowed deductions for the exploration costs attributable to the asset at the time of disposal, for which no deductions were allowed to the seller ($100 million), as well as deductions for the depreciation of any allowable capital expenditure attributable to the asset at the date of disposal on the same basis as the seller, had the disposal not occurred. In this case, there were no capital expenses at the time of disposal. This option, the transferor is taxed but no deductions are allowed to the transferee for the gain that is taxed on the transferor, as is the case under option 2 above. This policy option is particularly attractive to host governments, as it generates more taxes than all the other options. It could, however, also provide fertile ground for
the industry players to seek other tax ecient options of transferring the interests without necessarily exposing themselves to tax. The decision on the most appropriate option for the host government to adopt is often not an easy one, yet it is critical in attracting competent players who can develop the elds eciently. The best approach for host governments is to adopt options which provide sucient revenues, without necessarily discouraging the sector players from undertaking transactions as and when they deem appropriate, without worrying about the tax exposures. A good option should provide a balance between the often conicting objectives of government and the sector players. It should meet governments need for revenues but also cater for the interests of the investors in the sector. Therefore, an option that provides the government with an upfront piece of the pie, without necessarily discouraging the transactions with excess taxes would be ideal for a new oil zone. In part II of this article, we shall critically discuss the taxation of transfers of licence interests in Uganda. The views expressed in this article are those of the writer and do not necessarily reect those of Ernst & Young.
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APRIL 20 JUNE 13
Accountants Bill, 2011 passed

Before the 1990s, there was no legal framework regulating the accountancy profession in Uganda. Those training in accountancy courses had to either pursue the United Kingdom (UK) or Kenyan courses. In 1969, a process to enact an indigenous law to govern the accountancy profession was initiated. This culminated into the enactment of the Accountants Act No. 5, in 1970. However, due to the political upheaval of the time, the Act did not attain Presidential assent and therefore it never materialized into law. With the stabilization of the political climate in the late 1980s, the process for a legal framework was restarted, and the Accountants Act, Cap. 266 was enacted in 1992, thus creating the Institute of Certied Public Accountants of Uganda (ICPAU) and its governing Council. However, the 1992 Accountants Act was not without aws, and in 2001, eorts to amend some sections of the Act were initiated. In May 2001, ICPAU reviewed the Act and proposed amendments to the Minister for Finance. The Minister then forwarded the proposed amendments to the Uganda Law Reform Commission (ULRC), which held a meeting with ICPAU in December 2001, to form a task force that would execute the mission. The task force comprised representatives from the ICPAU Council and Management, representatives from the Ministry of Finance, the Parliamentary Committee on Finance, Planning and Economic Development, ICPAU members in Parliament, the Auditor General, ULRC, as well as experts from other public/private sector entities. With intensive research and study, involving comparison with the accountancy law in other countries, and coupled with consultation with ICPAU, recommendations were made in the sections that had been highlighted for amendment, hence the Accountants Bill, 2004. Several amendments were made to the 2004 Bill, which saw the formation of the Accountants Bills; 2007, 2010, and nally, the Accountants Bill 2011, which was read in Parliament, for the rst time, on 7 February 2012, and thereafter referred to the Parliamentary Committee on Finance, Planning and Economic Development, for scrutiny. The 2011 Bill, however, featured a contentious clause which ignited rigorous lobbying by stakeholders of the profession. The clause in question, excluded all accountants except those in public practice, from being subject to the Act. This would have limited ICPAU membership to the few accountants in public practice. Signicant in the struggle to have the clause amended were, the Minister for Finance, Hon. Maria Kiwanuka, Minister of State for Finance (General Duties), Hon. Fred Omach, Minister of State for Finance (Planning), Hon. Matia Kasaija, the Auditor General, CPA John Muwanga, the Accountant General, CPA G.O.L. Bwoch and his technical team, Hon. Timothy Lwanga, ICPAU members in Parliament: Honourable CPAs; Nandala Mafabi, Henry Musasizi, David Bahati, and Sempala Mbuga, the Parliamentary Committee on Finance, Planning and Economic Development, and the ICPAU governing Council and management. After several consultations, meetings, and further lobbying, the clause was nally adjusted to provide for all accountants in the various sectors of the economy. With the clause adjusted along with several others, the Parliamentary Committee on Finance Planning and Economic Development presented its recommendations to Parliament on 14 December 2012 and secured Parliaments approval on the amendments. The Bill was nally debated and passed in Parliament on 6 February 2013, and now awaits Presidential assent. With graft crippling our country and undermining accountability, the passing of the Accountants Bill is timely. As accountants, we can now be condent that once the Bill becomes law, we can have a rm grip on the nancial management processes in Uganda. ICPAU is grateful to all accountants and other stakeholders who played a vital role in the passing of this Bill. May I reiterate our special thanks to the Minister for Finance, the Ministers of State for Finance, the Auditor General, Accountant General and ICPAU members in Parliament, for a job well done! CPA Naru Thakkar, ICPAU President
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Helping SMEs
Their Challenges and Seize Opportunities
Face
Managing Partner, Grand and Noble
By CPA Obed Bampe Tindyebwa
n Ugandas economy, Small and Medium Sized Enterprises (SMEs) play a very crucial role especially in terms of jobs and wealth creation. There is no universal denition of SMEs but eorts have been made to contextualize what constitutes SMEs. According to a Business in Development (BiD) Network report, Investing in Small and Medium Sized Enterprises in Uganda, 2008, a small enterprise is an enterprise employing a maximum of 50 people, annual sales/revenue turnover of maximum, Ushs 360 million, and total assets of maximum, Ushs 360 million, while a medium enterprise is an enterprise employing more than 50 people, annual sales/revenue turnover of more than Ushs 360 million and total assets of more than Ushs 360 million.
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According to the Organisation for Economic Co-operation and Development (OECD) Policy Brief, June 2000, Small & Medium-sized Enterprises: Local Strength, Global Reach, SMEs account for over 95% of rms and 60%-70% of employment and generate a large share of new jobs in OECD economies. They have specic strengths and weaknesses that may require special policy responses. As new technologies and globalisation reduce the importance of economies of scale in many activities, the potential contribution of smaller rms is enhanced. However, many of the traditional problems facing SMEs; lack of nancing, diculties in exploiting technology, constrained managerial capabilities, low productivity, regulatory burdens become more acute in a globalised, technology-driven environment. Despite the obvious challenges/constraints experienced by SMEs, the main ones highlighted above, SMEs have several advantages which make the sector very strategic. The following advantages have been mentioned in the existing literature on SMEs.
Innovativeness: Though they are less likely to carry out research and development, compared to large rms, SMEs are innovative. They create or re-engineer products to meet new market demands and adopt new approaches to increase productivity. SMEs easily build relationships with their customers, enabling them to better understand their markets, and customers tastes and preferences, thereby oering better customer service. Flexibility: SMEs have lean and less rigid structures than big companies, hence response time is short. There is quick decision making and increased exibility, generally, as well as increased worker commitment, arising from workers ability to contribute to the decision making process. This makes workers feel more useful, which also contributes to increased worker productivity. Due to their exibility, SMEs can easily adapt to changing market conditions, and are best suited to withstand business cycles, especially downturns, which have undesirable eects. With economic uncertainties and other related challenges associated with business slumps, big companies have been badly aected whereas small rms seem to be very resilient. SMEs are many and are spread out across the country, which facilitates distribution of income/wealth. Many start-ups will come up as SMEs and some graduate to become big companies, while others tend to remain small due to several factors, the majority in this category being owner-managed shops and services rms. In Uganda, SMEs therefore form the backbone of the economy, as they provide a reasonable number of locally made products, greatly contribute to employment and wealth creation, and act as a training ground (incubation facility) for upcoming entrepreneurs. It is important to emphasize that SMEs thrive in a situation where they co-exist with larger companies which create opportunities through forward and backward linkages, and where governments provide a conducive environment that enables favourable competition and easy market access. With a fast growing economy and prospects for commercial oil production in the near future, Uganda avails great opportunities for SMEs, especially in the expansion of market size.
So how can SMEs be helped to meet their challenges and seize opportunities?
There are two approaches to the above situation. SMEs need to undertake internal transformative changes to ensure that they address managerial, technological and information gaps. In this digital era, SMEs can no longer aord to remain indierent to the above important attributes. There is need for SMEs to embrace continuous improvement in management. Management of a business encompasses a number of activities like planning, organizing, controlling, directing and communicating. The cardinal rule of SMEs business management is to know exactly where the business stands at all times. However, it has been noted that most business, for instance, do not practice any form of planning. If you do not know where you are going, you will surely never get there. The high rate of business failures in Uganda has been attributed more to poor management than to any other factor.
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Improvement in management skills: This can be attained through personal study, group learning and other schemes like mentorship. The quest for more knowledge, skills and experience has never been as important as it is in todays business world. SMEs must start to appreciate the importance of professionalism in dierent aspects of business management. For instance, most businesses have serious challenges when it comes to issues of nancial management and human resource management. Whereas professional services may at times be considered expensive, SMEs need to explore possibilities of engaging cost eective models like out-sourcing or contracting aordable external professionals to address some of the above issues. Embracing Technological Changes: SMEs should make sure that they keep abreast with technological changes and information requirements. It is a fact that changes in technology usually take a faster pace. Technology changes have the capacity of, for instance, rending a whole sector irrelevant - things like oppy discs are now history; creative ways of conducting business, like e-commerce have take precedent. Many business processes and functions have been computerized and SMEs must cope with this reality. For instance, most banks have embraced e-banking, with e-statements. Uganda Revenue Authority (URA) adopted e-tax and almost all tax returns and other processes are now done online, while the Lands Ministry is in the process of computerizing land titles. Marketing has also been given a new face with increased use of social media platforms like facebook, twitter, LinkedIn and others.
What this means is that SMEs must step up eorts to cope with such changes. This calls for continuous review of business processes and informational requirements to keep pace with such changes. Learning should therefore be continuous and SMEs must wake up to this reality and adopt structured learning as part of their routine business activities. The above trend surely creates great opportunities for Information Technology (IT) companies, professional rms and professionals, generally to position themselves, to help SMEs cope with the existing challenges in the above areas. The family business model: Whereas family businesses face challenges, with attitude change, family business model can make wonders. The model can enhance capital and human resources mobilization. There is need for attitude change such that graduates and professionals can work in their family businesses for a pay instead of being on the streets or working for others. They should be made to understand that working for their family business is strategic in the long run as it adds to their family wealth, though it may look unattractive in the short run. This would greatly enhance the management capacity of SMEs, when entrepreneurs mix with young blood, equipped with knowledge albeit with limited experience. The business focus of such graduates can be improved and proper succession and survival of many SMEs will be ensured, among other benets. There would also be fewer incidences of fraud and other nancial vices, under normal circumstances.
Improving SMEs access to nance, information, key infrastructures and international markets: Government should provide an enabling environment to allow entrepreneurship to ourish. It should be clearly understood that whereas innovative rms can ourish without much government help, sustainable development of SMEs sector needs strong government intervention to be able to realize meaningful contribution. 1. Roads and Power. There is need for stable and cheap sources of power to promote SMEs. Whereas Uganda appears to have come out of severe load shedding problems, power taris are so high that they are stiing any meaningful business for both SMEs and big companies. The government must look into the issue of power taris if SMEs are to survive and realize their full potentialities. The other main issue is the road network. Our road network is underdeveloped and most of the roads including those in towns and municipalities where most SMEs are located are pathetic. This makes transport a big challenge thus resulting into increased transport costs. The government should make more eorts in xing our road network for SMEs to ourish. Access to nance: Whereas the number of banks has increased, their penetration is still not encouraging. Lending to SMEs is still not appreciated due to perceived risks by banks, according to their lending policies. Whereas micronance institutions have tried to bridge the gap, the interest rates they charge are too high yet SMEs need cheap nance to enable them grow. Even bank interest rates are still too high for most businesses to be able to make prots. No wonder, the rate of loan defaults is reportedly increasing, especially following the economic hard times we are emerging from. Government must put in place mechanisms of regulating interest rates not only through Central Bank Rate (CBR) but also through interest rate capping. This way, SMEs can have chance of accessing money at a lower cost. Government should enhance capital raising mechanisms to promote venture capital schemes and to popularize SMEs listing. In Uganda the idea of listing on the stock exchange, as way of nancing companies, has not been given due attention. Many big companies, mainly owned by foreigners, have not been
enthusiastic regarding listing on the stock exchange. The companies have limited local ownership and repatriate most of the prots hence as a country, we do not benet from them a lot. If most of them were listed, SMEs would possibly follow suit, for those that could qualify under simplied rules. Government needs to come up with laws limiting the amount of shareholding that can belong to foreign shareholders for subsidiaries of foreign companies operating in Uganda. Firms in strategic industries like banking, telecommunications, power, pensions, and insurance should have a certain percentage, for example, 40%, listed and oered to Ugandans, to broaden corporate ownership. Such a policy would be a plus for local investors and the SMEs sector, specically. Taxation: SMEs face challenges complying with required regulation. The Companys Act requirements usually seem enormous for small companies. The taxes imposed are so many and extremely burdensome for startups. In respect of accounting, the International Financial Reporting Standards (IFRS) for SMEs was developed to address the complex reporting requirements, though in Uganda, its rate of adoption needs to be assessed. Government needs to come up with a comprehensive policy targeting SMEs as this is a crucial sector. A policy to grant SMEs start-ups a 5-year grace period from income taxes, for instance, would be a good relief and very worthwhile.
3.
2.
The SMEs sector has not been given due and deliberate attention by government, despite its signicance to the countrys economic development. Government seems to have mainly focused on big investors, mainly foreign investors, who have been pampered with tax holidays, free land allocations and several concessions, yet the most local investors including SMEs have not beneted from the government investment incentive schemes. We need to appreciate that most of the successful businesses start small and grow with time and it is for this reason that a policy to deliberately nurture start-ups should be formulated to encourage local entrepreneurship and the SMEs sector in general. Such a policy would yield great benets for Uganda especially in the medium and long term.
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Why we Need to be Mindful of Public Funds
T
By CPA John Bosco Obore
Institute Bursar, Uganda Management Institute
o begin with, let us understand what we mean by public funds. Public funds refers to money that has been appropriated by Parliament and consented to by the President for use in each nancial year. It includes all government reserves and any other money that is in the government coers. It is usually money that government collects through the tax system, any other budget support and/or donor funded projects. Public funds also include all money received by government from any other legitimate sources for the benet of its citizens and society as a whole. In each government nancial year, which usually runs from 1st July to 30th June of the subsequent year, government prepares a budget which is basically estimates of income and expenditure and work plans for purposes of delivering services to its citizens. This budgeting process is bottom up and in the case of Uganda it is output-based. All key stakeholders get involved in the budgeting process by providing their wish lists to relevant organs of government. Budget conferences are held and sector review meetings are conducted. Budget framework papers are then discussed and sector priorities identied. Once priorities have been agreed upon in a particular nancial year, then these become key deliverables/output that government must deliver on. All these processes are performed at all levels of governments including local governments, municipalities, town councils and/or boards. In so doing, citizens get empowered to determine how to allocate resources to what is critical in specic nancial years. Because of this level of participation, government, therefore, becomes accountable to its citizens, for those agreed upon deliverables/output for which Parliament appropriated funds. It is at this point that the appropriated funds become public funds because whatever is going be done with the funds is to the benet of all the citizens and/or the public, hence the terminology, public funds. And, besides, when government levies taxes, nes, penalties and all other sources of government revenue, it is always done under the cover that government shall provide services to its citizens to justify such levies and the need for government participation in nation building. Again, since government raises its revenue from the public, based on appropriate laws and given the fact that government provides services for the benet of its citizens who are generally the public, all the funds
mobilized/raised and utilized by government become public funds. You should not, however, forget the fact that governments exist because of public interest. It is the public and/or citizenry that desire that there be government so as to have an organized society and therefore whatever government does is and should be in the interest of the public that desired that the government should exist. Government therefore exists in trust for the citizens. From the above analysis, we therefore realize that public money is important because: Virtually all government activities require some money. ii. There is not enough of it, the reason why activities have to be prioritized, through participation. iii. It has often been taken compulsorily from citizens through taxation. iv. It is managed by people to whom it does not belong. It therefore becomes apparent that resources are scarce and demands for resources always exceed the amount available, hence the need to understand that in the public sector: a. Money is a constraint (the amount available is limited). b. There are multiple objectives, a majority of which are welfare related. c. There is diverse ownership. Governments world over are very big institutions with a multitude of objectives. This problem is aggravated when governments are elected for a particular period of time. Some of these elected governments develop their manifestos, some of which may not necessarily be in conformity with national development priorities. In such a circumstance, there will be conicting priorities. When such a situation arises, government manifestos take precedence over national priorities and consequently stiing national development. An elected government will want to fulll some of its promises made during campaigns and this is likely to cause postponement of national priorities. It is because of this that money becomes a key input and a constraint at the same time. Since parliament appropriates funds for respective nancial years, these funds may not be enough to handle both national priorities and manifesto promises. i.
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It therefore becomes a constraint. According to modern bureaucracy, there are three key relationships that evidently exist in as far as public funds are concerned namely; 1. 2. 3. The principal, who in this case is the public. The agent, who in this case is the civil servant. The authority delegated, which in this case is service delivery.
The public is the principal because it is the reason why government exists and it was from the public that government raised its revenue. Also, the services that government delivers are for the public, who are entitled to quality services. The public is the principal because they are the electorate and it is their power which government holds in trust for the citizens. Any government world over fears to be given a vote of no condence. The agents, on the other hand, are employees who perform duties for which government was set up, for a consideration called salary. The salary comes from revenue which was raised from the public and therefore the public has a right to hold civil servants accountable for their actions because they are paid for the services they render and, besides, they entered into a performance contract. Sometimes, principals have a number of reasons for seeking agents to exercise some of their authority. These include the burden of time involved in the function, a desire to avoid particular sorts of activity, and the lack of required skills or knowledge. A number of factors show that this may not be an easy relationship. As professional accountants in the public sector, who fall in the category of agents, it is imperative that we understand the above contractual relationship very clearly. Failure to grasp the issues embedded in the above concepts results into lack of accountability. Accountability is dened to include the responsibility for carrying out a task but crucially includes the requirement to report, explain and justify ones actions. In addition, accountability implies some ability by those to whom the account is presented, to take action, such as replacing a poorly performing manager or not re-electing an unsatisfactory politician. As professional accountants and in light of the above issues, we need to exercise maximum care while performing our duties as custodians of public funds. Ethical conduct must be at the very back of our minds while we exercise our duties. Otherwise, we will fall prey to being replaced because we will not have upheld the denition of accountability.
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Graduates Profile
CPA SETH NAHABWE As a student, humility was a virtue that he carried along in everything he did. He accepted to learn and listen to lecturers advice.
Q. Who is Seth Nahabwe? A. Seth Nahabwe is a CPA graduate.

I work with the Uganda Revenue Authority (URA) as a Tax Auditor, Domestic Taxes Department, where I have been for the past four years. Previously, I was a Teaching Assistant at Kyambogo University, where I worked for one year. I recently established Nahash, a CPA training centre, and business consultancy rm. I am married with one child.
A. I developed a strong passion for teaching from my rst job at Kyambogo University where I worked as a Teaching Assistant. In addition to lling the training gaps existing in the current professional training system in Uganda, teaching requires me to do constant research and this keeps me up to date in recent developments in the accounting profession. I also have a desire to make a foot print in as many peoples hearts as possible and I feel a lot of joy when a candidate calls to say they have made it in the exams because of me. I am glad to inform you that at Nahash, of the rst 3 Business Policy students that we handled, 2 were sitting the paper for their last time and they passed. Each time a student call me and says, If it were not for you, I wouldnt have made it, I get even more inspired to continue oering training and mentoring them.
Q. You started a training centre 7 months after you completed CPA. What inspired you to start the centre?
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Q. What process did you go through to establish Nahash? A. Initially, I called a few friends whom I knew were doing the course, to
attend classes. I then embarked on the registration process, which I did concurrently with the training, and in September 2012, I obtained the Certicate of Incorporation. I am yet to submit the company prole to ICPAU. We currently have 5 lecturers and we are located at Old Kampala S.S.
Passing Integration of Knowledge involved a lot of hard work, having condence and thinking strategically. I also give credit to my trainers, who guided us. I specically had one very good tutor who gave me a lot of guidance through administering tests, which I willingly did. I sat for my rst test during my rst lecture. Because of this I gained a lot of condence and a lot of positive criticism from my lecturer, which helped me to correct many of my mistakes, in terms of question approach and solutions to questions. As a result, I gained condence in myself and I was able to correct my mistakes, unlike in the past, when we went into the exam and got shocks head on. Tests also helped to prepare us in time management, and therefore training institutes should be encouraged to administer tests. As a student, humility was a virtue that I carried along in everything I did. I accepted to learn and listen to lecturers advice. I also took examiners comments seriously and worked on correcting my mistakes, a thing many students ignore. Knowing the learning outcomes and working towards achieving them also guided my learning.
Q. How did the centre perform in the November 2012 examinations?
A. For the December 2012 sitting, we had 7 students, most of whom were doing more than one Paper. 3 students sat for Financial Accounting (Paper 1); 2 passed, one failed. 3 sat for Quantitative Techniques (QT) and all passed. All the 3 students who sat for Business Policy passed. Q. What mechanisms do you have in place to ensure the quality of
your lecturers?
A. I insist on hiring only qualied facilitators; we all embrace time management and syllabus coverage. Having been in the system, I already knew some people who were good at the job. For example, I had taught with my colleague who teaches QT, while at the University. We roll out Papers as and when we get very good facilitators. We have actually not had the other Papers at Level 2 Advanced Financial Accounting and Professional Ethics & Values, because we have not yet identied the right trainers for those Papers. Q. Entrepreneurship is a eld that many young adults are hesitant
to venture into. How would you advise students and current CPAs to look into this seemingly scary yet lucrative venture?
Q. How would you advise students against the misconception that CPA is very hard to pass? A. Students have to believe in themselves. The perception that CPA is hard
should be erased from their minds. The problem is that students do not want to attend class and yet it is from class that one gets these concepts from the practical aspect, that is, what the examiner requires. In my opinion CPA is like any other course, except that students do not give it the time and eort that it requires.
A. My current job at URA involves checking out the compliance of several businesses to the relevant tax laws. I have discovered that most businesses are doing pretty well and each time I attempt to discuss with proprietors about how they have made it, most of them reveal that they started small but their level of growth rate cannot be matched with that of someone in employment. Therefore we must engage in some business if we need real life success. The biggest step in becoming a successful entrepreneur is in starting. People should not shelve their bright ideas and talents as they wait for enough capital to start. Let them start small, use what they have today to get what they need tomorrow. Once you have started something, along the way, you must nd a way to progress. Your biggest challenge at the start may be to create demand from even the rst client for your product but one year later, your biggest challenge will be meeting the overwhelming demand from the clients. For instance, I started the consultancy branch of Nahash with one client and I was the only employee, while I was still doing CPA, but now I have been compelled to hire other people because of the bulk of the work after only 2 and a half years. It is also important to build relationships with clients, through trustworthiness and excellence in service. Q.
You were the top student in Integration of Knowledge, during the December 2011 sitting. How did you achieve this?
Q. How has your exceptional performance in the CPA course contributed to your professional growth and development? A. My exceptional performance has enabled me to build pride and condence in myself. But also, after excellence comes a sense of responsibility. People look up to you and expect you to excel even higher. As a top student in Integration of Knowledge I feel motivated to keep the banner high, so as not to disappoint the profession. The other benet that comes along with excellence is that people believe in you. Everywhere you go people have trust and condence in you to perform. As a result of the skills that I acquired from my training, I am very ecient at my work place. Even in my consultancy, all the brilliant ideas I have sprung from the knowledge I obtained while doing CPA. Practical skills have helped me a great deal. If you can apply at least 5% of what you learn in class, at your job, you can be sure to succeed.
Q. Have you accumulated any other accolades? A. Yes I have. At Bachelors level, I received Certicates of recognition from the Vice Chancellor, for all the years I was at the University, given that I attained a Grade Points Average (GPA) of above 4.6, in all semesters. I also received a Certicate of Recognition for being the best candidate in my Masters class. Q. In light of the fraud that has been unearthed in the various public entities, and given that you are employed in the public sector, as a CPA graduate, how do you plan to promote nancial discipline and accountability?
A. Integration of Knowledge in my opinion is the easiest Paper because it is application. However, I also had the privilege of doing most of the Papers, which most students do not have; I was exempted from only two Papers, and therefore did all the rest. I had a good foundation; everything I did in Level II and III was revision, so I was simply building on what I had already learnt. The assumption of, I covered this at the university did not aect me.
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A. My training sessions involve counseling to students and I have always emphasized the fact that the costs of lack of integrity are much greater than the misconceived benets. I do not wait for the professional ethics class to be able to say this. I encourage them to use their wisdom for the right things and in the right way. During my work, I also receive several oers for bribes especially from non compliant tax and for most of them the liability arises from use of incompetent tax consultants. However, I have always encouraged them to pay and thereafter hire competent consultants and follow the right procedure so that they do not nd themselves in situations where they feel compelled to oer bribes. Q. Given your busy schedule, what do you do to achieve a work-life
balance?
A. Yes, I am a member of ICPAU. I registered in July 2012. Q. There are a number of graduates who are reluctant to register for
membership. What inspired you to become an ICPAU member even before you graduated?
A. ICPAU membership comes with several benets; a lot of communication from the Institute, networking opportunities, and continuing professional development opportunities, but most of all, like I said earlier, I now carry myself as an accountant, and therefore, I needed to take all the necessary steps to become a professional accountant. Q. Where do you see yourself 10 years from now? A.

A. I nish work at 5.00pm and I switch o to take on other duties, such as

family or Nahash. I also take advantage of weekends when I am free to spend time with my family and friends. Sometimes I drive together with my family to meet a client, depending on the prole of the client.
Q. Give us a brief account of your education background and other qualications. A.

I studied both my O and A levels at Munteyera High School, between 1997 and 2002. At A level, I took History, Economics, Geography and Divinity (HEG/D). Thereafter, I pursued a Bachelors Degree of Arts in Economics from Kyambogo University and attained a First Class. While in my second year at Kyambogo University (2004), I enrolled for a Diploma in Transport Management, from Makerere University and completed it in 2006 with a First Class too. In August 2009, after I had worked with URA for about 6 months, I enrolled for a Master of Science in Development Economics, at Uganda Martyrs University, Nkozi. In the same year I enrolled for CPA, which I completed at the same time with the Masters, in 2011.
I see myself as a top manager of an organisation with a regional inuence. I cannot wait to apply this wealth ofnancial accounting, analysis and reporting expertise at a strategic level. With CPA(U),I am now an all roundprofessionalwhose expertise isjust optimal to create value anywhere but more easily and greatly where I am also in the driving seat. This I am condent I will achieve whether in URA or outside URA. I see myself running a vibrant audit rm, and tax consultancy will denitely be one ofour products. I would like to see Nahash Accountancy and Management Training Ltd at the level where it can operate and add value in the accounting and management training world without me. I have a great passion for the manufacturing sector and within 10 years, I hope to be running a successful cosmetics manufacturing rm. Overall, I would like to make history as a successful professional accountant, educationist, and industrialist ofmy generation.
Q. What inspired you to join the Accounting profession? A. Initially my ambition was to be an economist. However, the nature of my job made me realize that accounting skills were a mandatory requirement for me. I realized that I needed the skills if I was to be ecient at my job and enrolled right away. Right now, I carry myself as an accountant. Q. What inuenced your decision to pursue the CPA(U) course, over other professional accountancy courses? A. In the beginning it was the cost because it was much cheaper than the other professional courses available. However, as we progressed in the course, I discovered that the course content for CPA and that of other professional accountancy courses was basically the same, as we were following the same International Accountancy Education Standards guidelines, but most importantly, CPA content was more localized and therefore more relevant. Q. Are you already a member of ICPAU, if not what is hindering you
and when do you expect to register?
Q. What word of advice do you have for the current and future CPA
students? A. As students go to class they should think about how they can apply whatever they are learning immediately they leave the class. Students should be hardworking. They should love CPA and even when they fail, they should not be discouraged. They should also not undermine going to class; students should swallow their pride and listen to their trainers. They should take tests when administered by lecturers, since the more tests they take, the more condence they build in themselves. Through tests, students are also able to discover their mistakes and correct them before they go into the nal exam. Most importantly, students should not undermine the syllabus content and examiners comments. All Papers have learning outcomes, therefore students should have these at the back of their minds, as they study, so that they go to the exams knowing what is expected of them.
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Trusts and their taxation in Uganda

By CPA Peter Kyambadde
Senior Tax Manager, KPMG Uganda What is a trust? In common legal systems, a trust is a relationship where property (real or personal, tangible or intangible) is held by one party, for the benet of another. Under the Income Tax Act (ITA) section 2 (www) a trust means any arrangement aecting property in relation to which there is a trustee. A trust conventionally arises when property is transferred by one party, to be held by another party, for the benet of a third party, although it is also possible for a legal owner to create a trust of property without transferring it to anyone else, simply by declaring that the property will henceforth be held for the benet of the beneciary. A trust is created by a settlor who transfers some or all of his property to a trustee, who holds that trust property for the benet of the beneciaries. According to Section 2(xxx) of the ITA a trustee to includes: a. Any person appointed or constituted as such by act of the parties, by will, by order or declaration of any court, or by operation of the law. b. An executor, administrator, tutor, or curator. c. A liquidator or judicial manager. d. Any person entrusted with the administration or control of property subject to a trust. e. Any person acting in duciary capacity. f. Any person having either in a private or ocial capacity, the possession, direction, control or management of any property of a person under a legal disability; g. Any person who manages assets under a private foundation or other similar arrangement.
ir he t d an n in s t tio a us Tr taxa and g U
Note: A trustee may be either a natural person, or an articial person (such as a company or a public body), and there may be a single trustee or multiple co-trustees. There may be a single beneciary or multiple beneciaries. The settlor may himself be a beneciary.
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In the case of the self-declared trust, the settlor and trustee are the same person. The trustee has legal title to the trust property, but the beneciaries have equitable title to the trust property (separation of control and ownership). The trustee owes a duciary duty to the beneciaries, who are the benecial owners of the trust property. The trust is governed by the terms under which it was created. The terms of the trust are usually written down in a trust deed. The terms of the trust must specify what property is to be transferred into the trust (certainty of subject matter), and who the beneciaries of that trust will be (certainty of objects). Terms may also set out the detailed powers and duties of the trustees (such as powers of investment, powers to vary the interests of the beneciaries, and powers to appoint new trustees). The trustee is obliged to administer the trust in accordance with both the terms of the trust deed and the governing law. Types of Trusts There are two basic types of trusts, living trusts and testamentary trusts. a. b. A living trust or an inter-vivos trust is set up during the persons lifetime. A Testamentary trust is set up in a will and established only after the persons death, when the will takes eect. Living trusts can be either revocable or irrevocable. An irrevocable trust is a trust that cannot be modied or terminated without the permission of the beneciary. The grantor, having transferred assets into the trust, eectively removes all of his or her rights of ownership to the assets and the trust.
of Uganda: provides particularly for testamentary trusts. d. Income Tax Act, Cap. 340, of the Laws of Uganda: provides for taxation of trusts and trustees.
Taxation of Trusts in Uganda

The principles of taxation of trusts are highlighted under section 71 of the ITA and these are: 1. Subject to principle (5) below, the income of a trust is taxed either to the trustee or to the beneciary of the trust. Separate calculations of chargeable trust income shall be made for separate trusts, regardless of whether they have the same trustee or not. Income derived or expenditure or losses incurred by a trust retain their character as to geographic source and type of income, expenditure, or loss, in the hands of the beneciary. A trust is required to furnish a trust return of income within six months after the end of the year of income of the trust. A settlor or a qualied beneciary trust: a. Is not treated as an entity separate from the settlor or qualied beneciary, respectively. The income of such a trust is taxed to the settlor or qualied beneciary and the property owned by the trust is deemed to be owned by the settlor or qualied beneciary, as the case may be. 6. The trustee of an incapacitated persons trust is liable for tax on the chargeable trust income of the trust.
2.
3.
4.
5.
b.
The Law on Trusts in Uganda

There are various laws that have been set up to regulate trusts in Uganda. These laws include: a. Trustees Incorporation Act, Cap. 165, of the laws of Uganda; specically provides for the incorporation of trusts. Trustees Act, Cap. 164, of the laws of Uganda; provides for investment by trustees. Succession Act, Cap. 162, of the Laws
Section 70 (d) of the ITA denes a qualied beneciary as: i. trust in relation to which a person, A other than a settlor, has a power solely exercisable by that person, to vest the corpus or income of the trust in that person; or ii. A trust whose sole beneciary is an individual or an individuals estate or appointees, but does not include a trust whose beneciary is an incapacitated person.
b.
c.
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Resident Trust dened According to section 11 of the ITA, a trust is resident trust for a year of income if: a. b. c. The trust was established in uganda; At anytime during the year of income, a trustee of the trust was a resident person; or The trust has its management and control exercised in Uganda at any time during the year of income. In eect, where any of the three listed aspects does not appear in the structure of the trust, such trust is treated as a non resident trust and is charged tax on incomes from sources in Uganda only.
Rates of Income Tax Charged Section 8 (1) of the ITA provides that a trustee of a trust is charged to tax at the corporate tax rate - currently 30% on the chargeable trust income for the year of income. Section 8 (2) of the ITA provides for a trustee of a trust which is an estate of a deceased taxpayer, who at the time of death was a resident individual to be charged to tax at the individual tax rates. Section 8(3) of the ITA provides for the taxation of a trustee of an incapacitated person and it is to the eect that such a trustee is charged tax at the individual tax rates.
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Current resident individual tax rates Annual chargeable income

Not exceeding Ushs 2,820,000
Rate of tax
Nil
Exceeding Ushs 2,820,000 but not exceeding Ushs 4,020,000 10% of the amount by which chargeable income exceeds Ushs 2,820,000 Exceeding Ushs 4,020,000 but not exceeding Ushs 4,920,000 Ushs 120,000 plus 20% of the amount by which chargeable income exceeds Ushs 4,020,000 (a) Shs 300,000 plus 30% of the amount by which chargeExceeding Ushs 4,920,000 able income exceeds Shs 4,920,000; and (b) where the chargeable income of an individual exceeds Shs 120,000,000, an additional 10% charged on the amount by which chargeable income exceeds Shs 120,000,000. Income Tax rates for non resident individuals Annual chargeable income Not exceeding Ushs 4,020,000 Rate of tax 10%
Exceeding Ushs 4,020,000 but not exceeding Ushs Ushs 402,000 plus 20% of the amount by which chargeable in4,920,000 come exceeds Ushs 4,020,000 (a) Shs 582,000 plus 30% of the amount by which chargeable Exceeding Ushs 4,920,000 income exceeds Shs 4,920,000; and (b) where the chargeable income of an individual exceeds Shs 120,000,000, an additional 10% charged on the amount by which chargeable income exceeds Shs 120,000,000.
Chargeable Trust Income

Chargeable trust income is dened under section 70 of the ITA to mean: i. The gross income of the trust for that year calculated as if the trust is a resident tax payer; less ii. The total amount of deductions allowed under the ITA for expenditures or losses incurred by the trust in deriving that income; The allowable deductions are provided for under sections 22-38 of the Income Tax Act.
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Taxation of trustees and beneciaries

Section 72 of the ITA provides for the taxation of trustees and beneciaries. It provides that; Any amount derived by a trustee for the immediate or future benet of any ascertained beneciary, other than an incapacitated person, with a vested right to such amount is treated as having been derived by the beneciary for the purposes of this Act. Where any amount to which the above provision applies is included in the gross income of the beneciary for the year of income, the beneciary shall be allowed a deduction in accordance with the ITA for any expenditure or losses incurred in that year by the trustee in deriving that income. A trustee of a trust that is a resident trust for the year of income is liable for tax on the chargeable trust income of the trust for that year. A trustee of a trust that is non-resident for the year of income is liable for tax on so much of the chargeable trust income for that year as attributable to sources in Uganda.
Taxation of estates of deceased persons

Section 73 provides for taxation of estates of deceased persons. It provides among others that; Any amount derived by a trustee as executor of the estate of a deceased person shall, to the extent that the commissioner is satised that such amount has been derived for immediate or future benet of any ascertained heir or legatee of the deceased, be treated as having been derived by such heir or legatee for the purposes of the ITA. Where any amount referred to above is included in the gross income of the heir or legatee for the year of income, the heir or legatee shall be allowed a deduction in accordance with the ITA for any expenditure or losses incurred in that year by the trustee in deriving that income. The trustee of an estate of a deceased person is responsible for the tax liability of the deceased taxpayer arising for any year of income prior to the year of income in which the taxpayer died.
Responsibility for the Tax liability

Section 71 (7) of the ITA provides that: Trustees are jointly and severally liable for a tax liability arising in respect of chargeable trust income that is not satised out of the assets of the trust. Further section 71 (8) of the ITA provides that: Where a trustee has paid tax on the chargeable trust income of the trust under sections 72 and 73, that income shall not be taxed again in the hands of the beneciary. An irrevocable trust meant for charity is exempt organisation. Section 2 (bb) of the Income Tax Act provides that: Exempt organisation means any company, institution or irrevocable trust: i) which is: (A). An amateur sporting association (B). A religious, charitable (emphasis ours), or educational institution of a public character (emphasis ours), or (C). A trade union, employees association, an association established for the purpose of promoting farming, mining, tourism, manufacturing, or commerce and industry in Uganda; and ii. Which has been issued with a written ruling by the commissioner currently in force stating that is an exempt organisation; and iii. None of the income or assets of which confers, or may confer, a private benet on any person.
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TECHNICAL ISSUES
IN A QUESTION & ANSWER FORM
The ICPAU Technical Staff receives a number of inquiries from members and the general public on various accountancy matters. Compiled below are some of the recent questions posed and responses provided by the technical team.
Congratulatory Message Our long time client has requested us to submit a congratulatory message to be published in the press. The message is not aimed at marketing our rm but instead is a show of support to our client. Please let us know whether we should proceed to publish this message in the newspaper supplement where all other stakeholders are going to do the same? Accountants are forbidden from advertisement of their professional services. The ICPAU Code of Ethics also discourages any action by members of the Institute aimed at bringing their names (or their rms) to the notice of the public in a way tending to reect adversely on the profession. Statement 6 of the ICPAU Code of Ethics describes some acceptable and non acceptable means of publicity. Congratulatory messages are not specically described under this statement. However, the ICPAU Disciplinary Committee has in the past ruled that such messages bring undue attention to the rm & its professional services. Practice Management Course I am preparing to apply for a Certicate of Practice for 2013. I am informed that ICPAU has introduced a Practice Management Course that is mandatory for all practicing accountants. What do you mean by the ICPAU Practice Management Course? Where is it oered? The Practice Management Course will be conducted by ICPAU. The Course will cover: the regulatory environment governing accountancy practice; it will introduce key aspects of practice management; and explain how a rm can be managed as a business. The course is aimed at preparing accountants for their audit practice roles and responsibilities. The dates for the Practice Management Course will be announced during the course of the year. Preparation of Accounting Records
Q A
Can an auditor provide both accounting and audit services for its audit client?
A self-review threat is created if an auditor provides an audit client with accounting and bookkeeping services (such as preparing accounting records or nancial statements) and subsequently audits the nancial statements. An auditor may not provide any accounting and booking keeping services for any public interest clients. The auditor may, however, provide accounting and bookkeeping services to an audit client that is not a public interest entity, where the services are of a routine or mechanical nature, so long as appropriate safeguards are in place and the self-review threat created is reduced to an acceptable level. The ICPAU Code of Ethics also cautions that, in all cases in which a practice is concerned in the preparation of accounting records of an audit client, particular care must be taken to ensure that the client accepts full responsibility for such records and that objectivity in carrying out the audit is not impaired.
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Job Adverts in the Newspapers
Q A
We are in the process of developing a newspaper advert, to be published in the local press, for positions at our audit rm. Would you please advise us of any requirement by ICPAU regarding such adverts?
A. We draw your attention to the paragraph 4.6 (xiii) of the ICPAU Code of Ethics which states that Particular care is necessary in preparing advertisements for sta which are to appear in the non-professional press, otherwise such notices can often be criticized as constituting an advertisement of the member or his rm and/or of their professional services he provides. The following guidelines should therefore be observed: a. The name of the member or rm should not appear with undue prominence or frequency; b. The duties to be performed may be described in reasonable detail but should not be capable of being regarded as constituting an advertisement of the services provided by the member or his rm. Mandatory Rotation of Audit Firms One of the authorised audit rms has been our external auditors for the last three years and their contract is coming to an end. We are about to begin the process of identifying an audit rm to be appointed as our external auditors for the next three years and we seek your professional advice as to whether the current auditors are eligible for appointment. The subject of auditor rotation has been explored and discussed by the Institute for some time now. The disadvantages of mandatory auditor rotation are that it may result in increased costs for the incoming auditor to learn the business and it puts limited incentive for the auditor to make long-term investments in a client, in terms of developing specialized skill set for the nature of clients business. All of this results in a higher risk and audit fees for the client. It is even suggested that a number of audit failures occur in the rst two years of the auditors period of service due to the learning curve required to understand the clients industry. However, it is also argued that if audit rms remain with the same client for too long, their independence comes under threat from too much familiarity with their client. The IFAC (IESBA) Code of Ethics requires the audit rms to change engagement partners every seven years, but the rm can serve for periods longer than seven years (if reappointed by those charged with governance). Within the present regulatory framework, your current auditors are eligible for re-appointment.. Who is an Accountant? Our organisation is in the process of recruiting an individual for the position of Financial Accountant. One of the requirements for the position was that the individual should be a fully qualied accountant. Some of the applicants for the position had completed professional accountancy courses but had not registered as ICPAU members (they did not hold membership certicates). We request for your advice as to whether these are fully qualied accountants or whether they should be shortlisted as per the above requirements. The Accountants Act, 1992, denes an Accountant to mean a Certied Public Accountant or an Associate Accountant registered under the Act. A Certied Public Accountant is a person enrolled as a full member (of ICPAU) under section 6 and registered under section 8 of the Act. ICPAU encourages employers to recruit members of ICPAU for nance positions in their organisations. This is not only good practice but a measure of sound risk management by an entity. Being a professional accountant is not just about passing accountancy examinations, but requires an individual to display a commitment to behave as expected of their profession. This can only happen if one is a member of a professional body, for which ICPAU is one for all accountants in Uganda. For any technical inquiries or advice, please email the ICPAU Technical Sta at technical@icpau.co.ug.
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Concepts and their Applicability

The initial stage of grants management is important to ensure adequate implementation and/or proper monitoring. To form a sound foundation, grants should have clear and strong objectives prior to soliciting applications. All participants in the grant have to share a common understanding of the projects purpose and expectations. However, participants often have dierent interpretations which prevent project objectives from being implemented. Therefore, project objectives need to be developed in a timely manner to focus on the eort of all participants and clarify expectations.
Grants Management:
By CPA Noah Matovu
Accountant, Uganda Virus Research Institute
Getting Started In line with the focused direction, grantees must be aware of the following grants management concepts and their applicability: cofunding, Budgets, Prior Approvals, Sub-granting, Maximizing Cost Recovery and Financial Sustainability, No - Cost Extension and Progress/ Performance Reports.
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Co-funding This is where the total sum of funding for the grant does not come from one donor. Some projects may require grantees to share the cost of the project, whereas for others grantees may share voluntarily. In some instances applicants submitting proposals for funding are required to apply for cofunding from other parties to promote integration and synergy in research. Cofunding can be in cash or in kind and can be through the donor institution or directly to the project. Each donor has its cofunding rules which the grantee should comply with. In circumstances where the donor deals directly with the grantee then the beneciary must disclose this to other donors when such cofunding has been secured. It is critical that its expenditure items are correctly and separately identiable from the costs incurred and funded from other donors. This is to ensure that there is no risk that any of the budgeted expenditure items are reported twice to dierent donors. Where such multiple funding exists in a project, it should be discussed with the donors on how best to manage the situation across the project so as to minimize the risk of double accounting.
Types of Co- funding
Cash through Donor: In this type of cofunding, the donor institution receives funds from dierent sources and allocates them to grantees in line with the set requirements. Cash through donor co-funding is administered and audited by the donor institution that disburses the funds to grantees.
Cash Paid Directly to Grantees: Here, the donor institution provides cash funding directly to the grantee. In such circumstances donors like European & Developing Countries Clinical Trials Partnerships - EDCTP will apply the following policies: a- The head of the organization must submit to EDCTP a signed letter from the other donor institution stating the amount committed to the grant, the duration of this support and the activities supported. b- These values are included in EDCTPs annual member states certicates that are submitted to the European Commission. c- Grantees are not required to submit nancial reports to EDCTP on the use of cash received directly from non EDCTP sources.
In-kind Contribution Directly to Project: In this type of cofunding, the donor or an interested party makes a non cash contribution directly to the project. Examples of non cash contribution include sta time and eort, oce space or use of existing machinery for a new grant etc. The EDCTPs policy in relation to this type of cofunding is :a- These contributions will only be considered if they can be attributed specically to the cofunded project. General contributions that are not linked to specic identiable activities in the co funded project will not be eligible as cofunding. b- In-kind contributions that are used at the discretion of management or used for purposes other than the cofunded project will not be eligible. c- Grantees must complete and send to EDCTP the blue tab budget worksheet supported by a signed letter from the other cofunding donors stating the fair value of the contributions.
d- The obligation to audit funds from this type of cofunding rests with the donor institution (these funds will be outside the scope of EDCTP audit).
Changes to the Level of Cofunding

The head of organization is required to inform the project funders of any changes in the level of co funding by providing a letter from donor institutions attesting to the amended amounts. The donor whose level of funding has not changed is not obligated to cover any decits resulting from a failure by the grantee in securing the co funding stated in their application. At times the cofunding requirement is published in the funding opportunity announcement or continuation guidance, and will specically state the percentage or amount of project costs that an organization contributes in order to be eligible for funding. A co-funded proposed budget must mention specic costs or contributions that will meet the co funding requirement, the source of the cost or contribution and how the valuation was determined.
d- The obligation to audit inkind contributions rests with the other donor institution (these funds will be outside the scope of EDCTP audit).
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Valuation of Inkind Contribution The Grantees Financial Reference Guide for Managing United States Centers for Disease Control & Prevention (CDC) grants states that:For project volunteers, their rates must be consistent with established rates paid for similar work by the grantee or sub- grantee for contracted employees. If the grantee or subgrantee does not have employees performing similar work, rates used must be consistent with rates paid for similar work in the labour market in which the grantee competes for the kind of services involved. In either case, a reasonable amount of fringe benets may be included in the valuation. When an employer other than the grantee or subgrantee or costtype contractor furnishes free of charge the service of employee in the employees normal line of work, these services shall be valued at the employees regular rate of pay. If a third party donates supplies, the contribution shall be valued at the market value of the supplies at the time of donation.
Valuation of Equipment, Building and Land Donated by Third Party If a third party donates the use of equipment or space in building but retains titles, the contribution shall be valued at the fair rental rate of the equipment or space. If a third party donates equipment, buildings or land and the title passes to the recipient, the treatment of donated property depends upon the purpose of the grant or sub grant as follows: a) If the purpose of the grant or subgrant is to assist the recipient in the acquisition of property, the market value of that property at the time of donation may be counted as cost sharing. b) If the purpose of the grant or subgrant is other than to assist in the acquisition of property, upon donors approval, the market value of the equipment at the time of donation and fair rental of land will be counted as cost sharing.
BUDGETS
In grants management, a budget is a quantitative statement prepared for the purpose of attaining given objectives. Budgets concern targets relating to income and expenditure, but may also concern planned activity levels, for example, the number of samples to be tested in the laboratory or the number of study patients to be recruited. Eective Budget development Before preparing a budget, it is best practice to know the funders rules and cost principles, in addition to being aware of the budget risks, such as ination, exchange rate uctuations and salary increments, and manage them where possible. In developing a budget, it is wise to start with proposals and work plans. Typical elements in budget development include; determining the activities and their frequencies, the people who will do these activities, their salaries and related fringe benets, research subject costs, and institutional charges, among others. Overhead costs like recruitment, advertisement, taxes and shipping must be identied and budgeted for as well.
In this entire process, dierent parties will have dierent objectives. For example, the donors main concern will be cost eectiveness, paying for value delivered, and compliance, while the grantees will mainly be concerned with full cost recovery and the intangible benets. Budgetary control The rst requirement of a good budgetary control system is to set up accounts for data collection on inputs and outputs at the lowest distinct level of activity. These accounts are called cost centres. Individual managers will be responsible for one or more of these cost centres and together such costs form a responsibility centre. Responsibility centres provide the basis for budgetary control by dening the area of responsibility of individual managers. These individual managers are often referred to as budget holders and are made responsible for achieving their budget objectives. A budgetary control feature within a nancial management system allows for the comparison of actual expenditure against budget at any time. When a comparison of planned and actual budget is made at periodic intervals, they will provide an early warning mechanism
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for areas where supplementary funds may need to be sought. An accepted level of variance will be agreed upon but any excessive variance (positive or negative) should be investigated. Identifying the cause of variation will allow the grants management team to take timely and appropriate action. It should also be noted that some variances like increased cost resulting from a rise in interest rates and/or ination may be unavoidable outside the organizations control. Budgetary control reports must be prepared to provide sucient information to enable budget holders to isolate the nature of variance from the budget, but must not contain so much information that may overwhelm the recipient. At the lowest level of responsibility centre, the individual manager will require information on either each grant element or detailed activity that makes up the overall project, such as salaries, project consumables and others.
Virement of funds The process of meeting overspendings in one area by underspending from another is known as virement. The need for virement is derived from the recognition that some degree of exibility will be required to deal with unexpected events during the project implementation phase. Overspending may be a result of increased demand for products/services or increased costs of project consumables. Dierent donors have dierent rules regarding virement of funds. Some donors give the head of the project the power to move funds between the dierent budget headings without prior approval whereas other donors permit the head of the project to move funds only after prior approval. Virement of funds occurs for reasons such as; absorption of surplus from savings made in some budget heads to ensure that resources across every part of the organization are fully utilized.
Prior Approvals In most cases, grantees need to request and report deviation from budget and organizations plans before revisions are made. The primary reasons for prior approval are; to ensure that post award changes retain a close connection with the project, as approved by the donor, and to avoid inappropriate costs which may be disallowable. Grantees shall obtain prior approval from the donor for change in scope of work, transferring substantive programmatic work to a third party and carryover of unobligated funds from one budget period to another within an approved grant period. Other prior approvals may be required by the terms and conditions of the award and specic organizational legislation or regulation. Failure to obtain prior approval when required may result in reputation risk for the organization. Sub-granting Sub-granting involves a formal agreement transferring a portion of the project work to another organization under a sub-grant or collaboration. This plays an important role in meeting project objectives. At any point during your award, you may need to involve collaborators with core competences who will play an active role in your project. Sub-granting allows another organization to perform some activities for your grant under your supervision. They enable collaborations between a grantee and the sub-grantee. There is need to have an agreement in place before paying a sub grantee using donor funds, because the grantee is fully responsible for all actions of the sub-grantee related to the award, and all contacts with the donor As a grantee, you (not the sub grantee) are accountable to the donor for the; overall project performance, spending of grant funds by all parties, reporting requirements, human subjects assurances, and all other obligations for the grant. If there is a problem with a sub-grantee, the donor will expect the grantee to take care of it. A subgranting agreement will describe each partners responsibilities and how everyone will meet the core project objectives, the administrative, nancial, and reporting requirements of the grant. The grantee should ensure that the objectives are smooth and that there is orderly collaboration.
Key areas that must be addressed in the subgranting agreement include the following: Name of organization head and the list of responsibilities for other project personnel responsible for the grant activities. Conict of interest of the collaborating organization. Rules for owning and handling project data. List of donor requirements and compliance documents.
Plans for managing the project; reimbursing sub-grants costs, foreign exchange rates, payment schedules, accounting methods, handling travel reimbursement, salaries, and fringe benets, and sharing inventions and patents, should be taken into account. Usually, the donor does not cover costs associated with currency uctuations after the initial award. Basic rules to keep in mind include: The grantee determines the sub-awards budget. Sub-awards have the same allowable and unallowable costs as the grantee. Your sub-grantees cannot enter into sub-contracts with any third parties, but they can make purchases and hire consultants who do not aect the direction of your project. Sub-grantees do not have any budget authority that donor has not provided in your Notice of Award.
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Changing a Sub-award Changes to a sub-grant follow the same rules as changes to your grant. If the change request needs donor approval, ask the responsible sta to send the following information to the donor in time: new grant number, name of the head of the project, title of the project, name of the organization, and contact information, reason for the change and whether it results in a change in scope or specic aims. In the process of making sub-awards, it is always advisable for the grantee (the prime) to identify red ags in the sub-granting organizations. These red ags will help in determining whether the sub-grant should be approved. In addition to identifying red ags, you may also need to arrange for an annual audit if your institution sends a signicant amount to the subgrantee. Vetting sub-award applications may include questions such as: Will funds be deposited in a separate bank account? Are there written accounting procedures? Is there an inventory system in place? Can the accounting system separate or track all drawdowns and grant expenditures? What performance measures are in place to determine if the grant objectives are being met?
What data will be collected to measure progress in meeting performance measures? Is there a management risk assessment process to identify & mitigate potential risk? What is the records retention policy? Does the potential sub-grantee maintain timesheet documentation for personnel costs?
Risk and Mitigation in Sub-granting Granting agencies should fully utilize an eective risk assessment model so that they can properly monitor of donor funds. The risk assessment should investigate red ags such as inadequate separation of cash related duties, inadequate internal controls, inadequate nancial management systems, prior grant mismanagement and prior fraud. At times this can be achieved by carrying out an onsite assistance or onsite review to sub-grantees with risk factors. If a sub-grantee is designated as high risk, the grantee will require periodic submission of supporting documentation for reported expenditures and achievements verication. A funds recovery clause should be included in the grant agreement. This clause usually states that all transactions that violate laws pertaining to fraud, compliance, conict of interest, bribery, or similar misconduct of donor funds, will lead to these funds becoming disallowable and therefore refunded to the donor.
Maximizing Cost Recovery and Financial Sustainability implications and their actions. Build an institution rather than a project oriented view of cost across all sta. Diversify your funding sources because some funders support more of certain costs than others. Strike a balance between volume (which often creates economies of scale) and cost recovery (which create sustainability). Take budgets very seriously; know your drivers of cost recovery, nd a place for them in the budget and defend them before the donor as much as possible.
Full cost recovery is a common challenge in grants management mainly because of lack of capacity. Full cost documentation is a complex process that often requires a high standard of nancial management and reporting skills. To achieve maximum cost recovery, it is wise to do the following: Analyze and understand your cost structures, (which items/ departments/activities are cost centers and which ones are actual revenue centers or both). Build a business-like attitude within your grants management team. Build a cost recovery awareness plan into all decision making processes and transactions. Educate and inform other departments about cost recovery
Financial sustainability can be achieved through carefully managing donor funds and complying with all donor and national regulation. Where possible, an organization can provide fee-based services, such as, training courses, data fax services, IT services and clinic use fee. These will generate revenue for the organization. Introduce employees to the concept of time sheets and make them aware of how critical they are in sta cost recovery and sustainability. Devote resources and develop tools for quantifying and tracking potential versus actual salary recovery, both in terms of time and in nancial gain or loss, at individual and department level. An organization should maintain a portion of unrestricted net assets to sustain operations in case of unanticipated nancial shortage (either less revenue or more costs than anticipated). This will help the organization to avoid cash ow stress which may lead to bad crisis-based decisions, distraction from your mission, disruption of programmes, and inability to react fast to crises.

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No-cost Extension A no-cost extension gives the head of the project extra time to complete the scope and objectives of the project without additional funds being provided by the donor. While donors expect the head of the project to complete the project by the stipulated end date, occasionally extra time is needed. However, requests should not be made for the sole purpose of spending remaining funds during the nocost extension period. In the event that a request is not approved, costs incurred after the end date would not be allowable. Individual donors have dierent requirements for nocost extension, so it is wise to submit your request in time. This will give donors time to review and
Progress/ Performance Reports Grantees are required to submit progress/ performance reports either annually, semiannually or quarterly. The grant agreement will stipulate the frequency of the report to be submitted. Progress reports should generally contain a comparison of actual accomplishment with the goals and objectives established for the period, reasons why established goals were not met, and appropriate analysis and explanation of cost overruns or high units costs. When a performance report is submitted to the donor, the donor performs an analysis of the scal and technical/programmatic information to ensure that the overall grant objective is met. At this point, donors are also interested in making compliance and completeness tests. The donors may withhold the last installment of funds due to felonious reports, failure to show satisfactory progress, inadequate stewardship of donor funds, or failure to meet the terms and conditions of the award. Unobligated Cash Balances. This is a portion of funds awarded by donors, which has not been obligated by the grantee at the close of the budget period. At the point when the grantees are required to submit a report of expenditure, unobligated funds may be carried forward to the budget period immediately following the one in which the annual nancial status report is due. The carryover may be used as an oset (reduction) on the new funding (for example, the budget and activity for the budget period remains as previously approved); or addition to the full level of previous approved funding (activities remaining from the prior budget are added to those of the current budget period and the budget is increased accordingly). Grant management concepts provide a solid foundation for a successful grants management process. If they are well applied, they demonstrate the importance of carefully planning, documentation and playing by the rules to ensure that the goals of the grant are met and are satisfactory to all stakeholders. This article is based on: i. Guidelines for nancial management in European & Developing Countries Clinical Trials Partnerships (EDCTP) grants. Grantees nancial reference guide for managing Centre for Diseases Control and Prevention (CDCP) grants & cooperative agreement.
process your request before the end date of the project. The fact that funds remained at the expiration of the grant is not, in itself, sucient justication for an extension without additional funds. Valid reasons for requesting for a nocost extension may include; additional time needed to assure completion of the original approved project scope and objectives, additional time needed to repeat tests to obtain results, and recover time lost due to illness/injury of key project sta, among others. At times the terms and conditions of the award may prohibit project extensions. Most requests for nocost extension require the following: Proof that work in the approved proposal is not completed The requested new expiry date Reasons why the work was not completed during the original award period Balance of unobligated funds A budget for work to be completed during the extended period, including the percentage to be funded by the donor
ii.
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Members Profile
CPA KATIMBO-MUGWANYA EDWARD: An accomplished accountant prepared to approach retirement with poise and contentment, assured of comfort and bliss upon exit from formal employment
Retirement is one of those phases in life that many people do not want to contemplate. The prospects of retirement send a shiver down some peoples spines while others cringe at the mere mention of the word, because of failure to recognize the inevitability of it, and plan in advance. CPA Katimbo-Mugwanya Edward, an accomplished accountant, who sailed through the ranks in the profession to become one of Centenary Banks nest Finance Managers, however, is one of those few people who have approached retirement with poise and contentment, assured of comfort and bliss upon exit from formal employment. Having served as a professional accountant, for over 38 years, with diligence, steadfastness and hard work, CPA Katimbo is prepared to take his leave from formal employment.
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A devout member of the Buganda Kingdom and Minister in charge of Projects, CPA Katimbo-Mugwanya is passionate about farming. He therefore plans to retire into full time farming, maintaining his service in the Buganda Kingdom, and sitting on the Board of Directors of Nsambya Hospital. CPA Katimbo has well established mixed farms of; cows, sheep, chicken, pineapples, cassava, potatoes, bananas, coee, and trees like eucalyptus and pine, in two places, Kakinga and Bussi island on Lake Victoria. The veteran accountant acknowledges that income from farming is not often lucrative but he is determined to pursue the trade assiduously. You do not hope to become a billionaire out of farming. Some do, but with the levels of mechanisation that we have, it is dicult to earn supernormal prots. However, it keeps you busy, it is interesting, its good exercise, and gives you some money, CPA Katimbo arms. Preparedness for retirement requires a blend of a host of factors, from educational, to employment, personal initiative, and external stimulus, among others. CPA Katimbo mastered these attributes to not only perform satisfactorily, but excel in all his tasks, and now boasts of a career well pursued. CPA Katimbo-Mugwanyas career in accountancy dates as far back as the 1970s when he enrolled for a Bachelor of Commerce at the University of Nairobi, Kenya. Despite the fact that professionalism in accountancy had not yet gained ground in Uganda, at the time, CPA Katimbo felt that his University Degree was not sucient to enable him further his career to boundless levels. Therefore, in 1975, having worked for 6 months in Uganda, with Gill and Johnson, he enrolled with Deloitte in London as a student accountant, studying for the qualication of the Institute of Chartered Accountants of England and Wales (ICAEW). As a student accountant, he was engaged in rigorous training, coupled with plenty of private study and progressive assessment. After completing the course, and having worked with Deloitte, London for one year, as a qualied accountant, CPA Katimbo longed to return home, having been in a foreign land for over 4 years. However, the prevailing political situation in Uganda at the time, marred by anarchy and strife, did not favour his wishes. When the political turmoil did not abate, CPA Katimbo decided to return to Nairobi, where he worked with Deloitte-Kenya, in the hope that calm would return to Uganda. When the instability in Uganda persisted, CPA Katimbo resolved to return to England in 1984. While in England, he worked as a temporary accountant for 5 months, meanwhile seeking permanent employment. In October 1985, as luck would have it, CPA Katimbo was oered a job in the National Audit oce of England, as Senior Auditor. He later returned to Uganda, the political upheaval having stalled, and was hired by Bank of Uganda as Deputy Chief Accountant. While at the Central Bank, CPA Katimbo sailed through the ranks to become Chief Accountant, Executive Director - Banks, and ultimately, Executive Director - Finance, at the time of leaving the Bank. CPA Katimbo recollects two major contributions to Bank of Uganda, at the time. In his words, he found a big accountability challenge at the Bank; there were no accounts for 5 years. His foremost task, therefore, was to get the Banks accounts up to date, with the help of the Chief Accountant, a role he diligently executed. He was also at the core of streamlining the regulation of banks and micro-nance institutions. In 2005, CPA Katimbo joined Centenary Bank as General Manager, Audit, a position he held up to 2010, when he was transferred to the Finance Department,
still holding the same rank. As General Manager, Finance, he was expected to give guidance and leadership, manage the Banks resources and budgets, participate in key decision making processes, and most importantly, work with the Chief of Treasury to ensure that the Banks liquidity position remained stable and robust. Central to his tasks as General Manager, Finance, was his role in Centenary Banks exceptional performance in the Financial Reporting (FiRe) Awards, which were inaugurated in 2011, to promote the best practices of nancial reporting, in compliance with International Financial Reporting Standards (IFRSs); Centenary Bank has attained 2 accolades in the Awards; the Gold Award and the Silver Award, in 2011 and 2012, respectively. CPA Katimbo attributes the Banks success in the Awards to good planning, teamwork, determination to abide by the tenets of good nancial reporting, an excellent nancial reporting framework due stringent regulation by the Central Bank, remarkable presentation attributes, and compliance with IFRSs. He attributes his personal success to hard work, relevant training, and continuous learning. In the social aspects of life, CPA Katimbo has built himself, acquired several assets, educated all his children through the best education systems, and established lucrative investments. Although CPA Katimbo is a renowned procient accountant, he confesses to having a dierent childhood ambition. I never set out to be an accountant in the rst place. I always wanted to be an engineer. In A level, my focus shifted to Medicine, because I thought it was a better profession; doctors are people who are well respected. However, in S.5, when we started dissecting rabbits and frogs I got disoriented, and given the numerous years of training in Medical School, accountancy seemed more lucrative. The prospects for doctors were also not very good. Accountants were role models. I was inspired by people like the lake Ssebagereka, CPA Katimbo narrates. CPA Katimbo describes accountancy as a unique profession whose skills pervade every facet of business, nance and management. Accountancy gives you a good prole and oers good practical management skills. It imparts skills relevant in employment, management, and in personal endeavours; nobody is not aected by business in any way, so nancial skills are crucial, CPA Katimbo asserts. Having been groomed within the parameters of strict discipline and professionalism and having exuded utmost integrity and outstanding performance at work, CPA Katimbo implores the Institute of Certied Public Accountants ICPAU to manage the reputation of accountants. He advises that all accountants should be made ICPAU members, who must abide by the Code of Ethics, and impunity be wiped out totally. According to CPA Katimbo, ICPAU should work with government to ensure that the professions nomenclature is streamlined and does not give a false impression of what it is; thus there should be a clear-marked distinction between professional accountants and clerks, cashiers, among others. We should address this nomenclature problem. ICPAU should ensure that CPAs project the right image. We have the numbers. Now we must concentrate on the quality. We must ensure that the quality of CPAs is maintained at international standards, CPA Katimbo advises. CPA Katimbo attended St. Marys College, Kisubi for his O and A levels. His priorities for work each day include; securing the needs of his family, getting acquainted with current aairs, maintaining favourable working relations with colleagues, and, continuously interacting with friends. With such a rich prole, there is no doubt that CPA Katimbo-Mugwanya is ready for retirement, a prospect we must all prepare for.
Todays Accountant APRIL- JUNE | 65 | Todays Accountant April2013 - June 2013
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Establishing and Managing

Relationships at the workplace
By Lilian Bagambe
Managing Consultant, FlexiConsult Ltd
A
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relationship is simply dened as the way two or more people behave towards each other. This implies that the behavior could be either healthy or unhealthy. Business exists to satisfy consumer needs. Healthy relationships have become a license to do successful business in todays world. It therefore makes business sense to invest in an environment that promotes good relationships at the workplace. Indirectly, the consumer needs get satised, business is successful and the cycle goes on. Good and strong relationships are based on trust in any facet of life, and the workplace is no exception. The consumer (customer/client/patient) today is demanding for more than just a quality product/service and now requires a relationship with their service provider, based on trust. Can you deliver consistently and on the terms promised? Are you exible with payment terms? This relationship management process is a chain which begins with the relationships at the workplace, and is the engine which then drives the other relationships in
the business chain. Although rarely seen by the customer, workplace relationships do impact signicantly on the level of service delivery at the front, and therefore, business performance. Let us use the analogy of a bank. The back oce operations support the front oce delivery of service to the consumers. Without the back-oce, the front oce cannot deliver on even the most sophisticated products. The back-oce, therefore, is the engine for the banking operations. These must be ecient and eective. If, for example, new products have been introduced and launched into a market, and the back-oce processes have gaps in what they can support, there will be a product disaster! Customers lose condence and we all know what that means in business. Workplace relationships are not any dierent. The relationships with customers and suppliers are greatly hinged on the workplace relationships. Where these are healthy, the workforce is highly motivated and able to deliver excellent service and be innovative, which directly impacts business performance.
Manager/Subordinate Relationships
Workplace
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Subordinate/Manager Relationships
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Employee to Employee
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MANAGING
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This, from the business perspective, is the single most important case for why business must invest in relationship management at the workplace. Some of the basic ways of doing this are; creating good communications channels which are open or having training in this area, including team building exercises, and the list goes on. From the people perspective or the sta, typically relationships at the workplace are either up/down and vice versa (manager/subordinate) or lateral (employee to employee). Healthy relationships at the workplace enhance workow, reduce stress and are great for career progression and generally good for employee motivation. A few reasons to establish and manage workplace relationships: Manager/Subordinate Relationships At managerial level, the key competence required is getting things done through people and less of the technical expertise. For this to happen there must be some level of trust which is the foundation of the relationships. Trust is earned through consistency, transparency and allowing contributions from the team for overall success. It cannot be demanded. The pay-o of establishing and managing such healthy relationships with your subordinates is one of the most powerful retention strategies for your team. Research has shown that employees leave people, and not necessarily organizations, like we have been made to believe. Therefore, the rate of sta turnover in your department is an indicator of how you manage your relationships and therefore the impact you have on a business as a Manager. You may want to check and invest wisely. Talk to them, listen,
take on board their views and be seen to be doing something about them. Surbordinate/Manager Relationships On the other hand, if you are the employee, healthy relationships with your managers/leaders are fundamental for your career growth, less stress at work and general motivation. Again trust is the foundation. Can your manager trust you to deliver consistently, trust you with information or even trust you to step in for him in his absence? As an employee, be careful not to burn your bridges. Many of us think it is justiable to behave badly and insubordinately because the manager has done something not acceptable to us. The reality is you are the net loser because the same manager determines your progress in your career. He either determines your promotion or even if you decide to leave, this very manager will be asked for a reference on you. Therefore, make sure you are on good terms. It costs very little to be polite and civil to people even when you have to be rm. Employee to Employee For harmony and peace at the workplace, relationships must be nurtured. The people with whom you have created relationships with will always have your back. Also, when you need favours, it helps to have had a healthy relationship. In summary, man is not an Island. However, be careful to forge the right relationships that are constructive at the workplace.
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A Readers Review of Todays Accountant magazine

It is quite a while ago since I last had a break to look at literature in depth and detail. Because of its attractive presentation and looming challenges to the profession, I literally studied Todays Accountant magazine of October-December 2012. The main objective was to see if the magazine really addresses the current challenges facing the accountancy profession. My simple observation is that, yes the magazine has very good academic articles some, and others are probably work experiences. After reading, I rst wondered as to who benets most from all these articles. Is it the student, the, practicing or the general accountant? That apart, how does a non-accountant benet from a magazine of an institute of professionals so important in society? I must say that I respect all those that take time to write for this magazine. But to achieve my objective, I looked at the writings of our dear President and the Chief Executive Ocer (CEO) of the Institute. Their messages are very good summaries of the current situations they wrote about but, are they focusing on the challenges in the profession? While the president rightly congratulates Uganda on the 50th independence anniversary, the CEO reects on the Institutes developments in the last 50years. The CEO says that with about 10 professional accountants in 1962 Uganda had a very poor culture of accountability and a very low level of professionalism, but that, as we close the rst 50 years of independence Uganda has over 1600 accountants registered and a substantial number of unregistered accountants. Unfortunately, the CEO forgets to contrast the prevailing high level of stealing public funds in almost every sector of the economy with the situation that was almost free of public funds thieves, in the 1960s. As an accountant, the CEO wishes to see the profession developing in line with the expected growth of the economy resulting from the expected oil revenues and to see the budgets of public sectors being dully executed under the watch of eagles eyes of members of ICPAU. The CEO concludes by wishing to see the accountant playing a more involving role in the economy of the country; a role that will make the accountancy profession visible and lead to growth of the profession. The president, on his part, calls upon all sectors of the economy to embrace professional accountants if Uganda is to move forward. All these are very good wishes for the profession but, are we, as accountants, living and making ourselves and the profession positively visible in society? In an article titled, OPM (Oce of the Prime Minister) The axe should fall hard and fast article in the Sunday Vision of December 23rd 2012, Mr. Ofwono Opondo says: For starters, it is the nance ministry, particularly the treasury department, that posts all accountants, internal auditors and procurement ocers to ministries and government departments, and they are the ones who have been conniving to cover each others backs. These ocers are answerable and report to the treasury. The Auditor Generals oce is not as innocent either as it rst appears because, its ocers have been closing the loopholes for the thieves in the ministries, while annually issuing near-clean nancial bills of health. Strong words indeed. Now, this is a very serious threat to the accountancy profession; especially so when the Institute appears to be paying a deaf ear to all that goes on in society, in respect of corruption, which I call theft of public funds. Is it really enough for the Institute to wait for the courts of law to send its members to jail and then come
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vacillatingly to remove the same from the list of members? The Institute should nd a way of convincing the public that it is out to produce and regulate professionals that are not aiding theft as Mr. Ofwono Opondo is alleging. Going back to the magazine, the president referred in-passing to the 17th Annual Seminar which I was fortunate to attend. Surely, is this all that the public should know about what took place in that seminar? The lead article, of the magazine, The 17th Annual Seminar: Political and Monetary Integration of East African Community (EAC): A Reality or a Dream is summarized in ve paragraphs. To me, this is not doing justice to the keynote address of the seminar and the views raised in the discussions that followed this presentation. This, being a topical current matter, the Institute and the accountancy profession would have gained a lot from informing the public more of the views that were raised on this matter. Added to the keynote address were other very important topics that were covered in the seminar. Issues on oil, environment, medical insurance and benets from regular health checks are but a few issues that one would wish to see in the magazine if it is to attract readership beyond the accountants. In the same Sunday Vision of December 23rd 2012, Dr. Solomon Nkesiga the Vice Chancellor of Bishop Stuart University wrote about the oil curse. He believes that Uganda is not moving away from this curse that has befallen a number of African oil producing countries. I remember the seminar had a good debate on the oil issue with very interesting revelations which would bring the accountancy profession in the public eye if properly reported. I therefore wish to see the accountancy profession in Uganda addressing itself to the public issues of the day, sensitive or political as they may appear to be. At the end of the seminar an idea was oated to see how the views generated in an assembly of over seven hundred top most CPAs should be followed up to make the seminar of national importance and go beyond the personal gain of CPD hours given to participants. I would love to ask, whom does the accountancy magazine address? There is no mention in the magazine of what has been worked on as a result of ideas that were generated in the seminar. I even wonder who of us have put in practice what we covered in the seminar. If this has not happened, then this is a national loss of over 700 x 3 x 8 very expensive man hours by the country. I am sure that something will be done to salvage the situation before the 18th Annual Seminar. Let me end on a positive note. I thank CPA Charles Lutimba, Technical Ocer ICPAU, for a good accountability of the teams visit to Scotland. How I wish you had done the same for the 17th Annual Seminar. However, you forgot to tell the readers the benets of the visit to the members of the Institute. Anyway it is never too late; maybe we will know that later. Thank you too CPA Obed Bampe Tindyebwa. Land matters in Uganda are very poorly handled. Some people are seeing land as a time bomb that may explode anytime. I think land value taxation and political pronouncements may not be a solution to land grabbing (stealing) which should be dealt with in courts of law like all other crimes.
By CPA DMO Mulagwe,

Practitioner, DMER Associates
Editors comments: ICPAU has been consistent in the messages about who an accountant is and how public interest entities must employ members of ICPAU if the accountancy profession is to curb corruption.
The Fiscal and Tax Challenges
ahead of Ugandas Upstream Oil Sector
By CPA Denis Kakembo,
Tax Manager, Deloitte Consulting Limited
n international business magazine recently published a commentary drawing comparisons between Ugandas and Ghanas upstream oil sectors. The commentary noted that though Ghana and Uganda made commercial discoveries of hydrocarbons at nearly the same time in 2006, Ghana had already joined the class of oil producing countries by the end of 2010. Ugandas upstream oil sector is presently grappling with various challenges which cast doubt regarding whether the country would have produced its rst commercial barrel of crude oil by the end of 2015. A lot of work in terms of establishing the physical, regulatory and scal infrastructure to support the oil sector remains to be done. The hold up in the progress of Ugandas upstream sector has been costly. For example, many multinational oil eld service support companies that intended to make Uganda their regional hub to serve the oil and gas industry in the region have reconsidered their position and xed their headquarters in Dar es Salaam and Nairobi. Uganda has therefore lost out on the employment opportunities and capital injection into the economy, which would result from such investment. In this article, I focus on the scal challenges that have the potential to further disrupt the operations of the upstream oil sector in Uganda. Unless these challenges are addressed and tax laws and processes aligned to normal oil and gas industry practices, the anticipated investment in Ugandas oil sector may further be delayed.
have been benchmarked against the best practices of upstream oil and gas industry, is not clear, which is nonsense. Contrary to the published reports, however, it is, in fact, likely that approximately 80% of the prots from oil projects will pass to the Government. This, however, has encouraged mistrust and suspicion to the extent some Ugandans believe crude oil is already being covertly produced and exported from Uganda. All stakeholders in the upstream oil and gas sector, including the Government, CSOs and oil companies, have a duty to address Ugandans responsibly, to manage their perceptions and expectations. The expectation of accelerated economic growth as a result of oil production must be moderated by some dose of reality. The message to the population, by the Government and other stakeholders involved in the upstream oil sector, must emphasize that Ugandas economy will not be transformed overnight as a result of oil production. The population must be sensitized, encouraged to work hard and empowered to tap into the various business opportunities created by the upstream oil industry. Ugandas oil and gas resources belong to the state. However, they cannot be exploited without the participation of experienced and well capitalized companies such as Tullow Oil, Total or China National Oshore Oil Corporation (CNOOC). These companies will not invest unless they can be certain of fair and predictable returns. Ill-informed public opinion in other parts of the world has encouraged governments to assert control over their natural resources, through abnormal tax increases and other conscatory measures, in a bid to generate more revenues to match the unreasonably high expectations of the population. Abrupt tax increases and other measures taken by the governments to assert greater control over natural resources often derail investment in the sector.
Managing Public Perception and Expectations

Some Civil Society Organizations (CSOs) have predicted gloom and doom. Reports have been published insinuating that the terms of the oil contracts between the Government and the oil companies are disproportionately favourable to the oil companies. Whether the ndings of these reports
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Precedence of Oil Contracts and Local Tax Legislation

The Production Sharing Contracts (oil contracts) signed between the Government and the oil companies provide tax incentives and exemptions that are not always recognized by the Uganda Revenue Authority unless the same are replicated in the local tax legislation. There is urgent need for Government to dene the legal status of the oil contracts, in relation to the national tax legislation, to enable investors take concrete investment decisions on the basis of a rm and denite tax regime. Investors are reluctant to invest billions of dollars in the sector unless they have clear and rm parameters for appraising their investment, which in part is enabled by certainty in the tax regime.
Taxation of Expatriate Workers

Foreign workers are a common feature of the upstream oil industry which demands high levels of expertise and experience not yet available in Uganda. They are often assigned to local oil companies by international placement or employment agencies. They may, for example, work for 14 days or 28 days on an oil eld and have an equal amount of time o to spend in their home countries. This is a customary practice in the upstream oil industry, in part to manage the scarcity of skilled labour required in the industry. Many times the individual required may be unwilling to relocate to the country on a permanent basis but is willing to work on the basis of the commuting arrangement as described above. The income tax, social security and immigration laws do not directly address the peculiar circumstances of such commuters. To facilitate operational planning for the oil companies there is need to align these laws to the customary oil and gas practices or issue administrative practice notes to specically cater for the upstream oil sector.
Managing Value Added Tax aspects for the Upstream Oil and Gas Industry
The upstream oil and gas sector is characterized by peculiar features presently not addressed specically by the Value Added Tax (VAT) legislation. The VAT legislation, for example, does not provide explicit guidance on how the various activities within the upstream joint operations must be addressed for VAT purposes. Oil companies have recently been deregistered for issues regarding non compliance with VAT. This implies that all the VAT expenses incurred in their set up operations must be absorbed as a cost by the oil companies. While it may be argued that most of these costs are recoverable by the oil companies when oil production commences, the inability to recover VAT incurred during the set up operations will signicantly aect the cash ows of the oil companies and may even impact the viability of long term capital intensive projects, such as, pipeline and renery construction. The inability to recover excess input VAT immediately amounts to an interest free loan to the government and the cost of nancing this will signicantly erode the investors returns.
Tax Incentives to Promote Local Content

Governments of oil producing countries usually look beyond the revenues that are generated from the sale of crude oil. They also aim to maximize national value creation through the employment of locals and engagement of local companies to provide services to the oil companies. This is the key part of Ugandas strategy for the industry and is exclusively supported by the international oil and gas companies in Uganda. Rather than only contemplate legislation to compel the oil companies to expedite production, governments can also consider the option of providing tax incentives to the oil companies that promote local content. While progress is presently seen to be made on the front of establishing the regulatory infrastructure to control the upstream oil sector, it is not the same case with tax matters. It will be very absurd to realize that even after the long wait to produce the rst commercial barrel of oil, the tax issues bedeviling the sector will not have been addressed. Indeed continuing uncertainty is likely to delay development further. This is the time to start giving comprehensive considerations to some of the tax issues highlighted in this article to reach a win-win position for all the stakeholders, ensuring that the tax rules result in fair and predictable shares for both the Ugandans and the international oil and gas companies who are taking massive nancial risks. There is need to avoid procrastination and ensure that critical matters are addressed before the last minute. The views expressed in this article are those of the author, not necessarily those of Deloitte Consulting Limited.
Importation Taxes on Subcontractor Equipment

Oil companies rely heavily on subcontractors who undertake most of the oil eld activities and services. The subcontractors use sophisticated equipment, most of which is imported. Though the customs law provides exemption to oil companies on most of their imports for exploration, development and production activities, the law does not explicitly guide whether this exemption is extended to the subcontractors as well. Subcontractors will transfer the cost of the importation taxes to the upstream oil companies if their equipment for exclusive use for upstream oil activities is not exempted from importation taxes. This again has the potential to erode the investors returns.
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Exploring Rural Uganda:

A Visit to West Nile
By Diana Naisuna Nambi
Relations Ofcer, ICPAU
ack in the days, Village life is better than Town life was a popular motion during primary school debates. Pupils in favour of village life cited the availability of food and fuel in form of wood, as the key attraction to rural areas. On the other hand, the opposers of this motion fronted easy access to markets for commodities, a good transport network, security and social amenities such as hospitals and schools. On a recent visit to the West Nile region, I could not help but recall the primary school days due to the dierence between life in Kampala and that in the districts that I went to. One must cross the River Nile before getting to Maracha, Koboko and Yumbe districts. But the three districts have something else in common; the fact that life there is pretty slow. The slowness is exhibited in the Hospitality, Energy, Water and Education sectors, with Transport and Business developing at a faster pace.
Hospitality
The nature of service in hotels and restaurants across the three districts requires that patrons have sucient time at their disposal. Orders take more than fteen minutes to be delivered. After prompting the waiters/waitresses to speed up in vain, the logical thing to do is to sit, relax and wait. Fortunately, the food is often well-prepared, thus, one can easily disregard the long wait. In Yumbe district, accommodation is a big problem, since the best hotels are way below acceptable standards. Regardless of this, the sta here happily go about their work. Moving into Koboko, there is a marked improvement, as the number of hotels increases and the quality of service improves. While one would assume that every district in Uganda has at least one hotel, it is shocking to nd out that in Maracha district, there is none. Apparently, the only hotel, which operated without a registered name got out of business last year. As a result, visitors have to reside at the Maracha district hospital or move to Arua, which is about an hours drive away. Alternatively, they can drive for an hour and a half to Koboko district then return to Maracha the next day. While the absence of hotels in Maracha district is bad news for travellors, it presents a great investment opportunity in the hospitality industry. The restaurants in Yumbe and Koboko oer a variety of food sweet potatoes, rice, matooke, yams, millet bread, goat stew, chicken, beans and groundnuts, among others. These are served generously, as per the needs of local patrons. Many visitors, however, will eat half of the food, much to the surprise of the waiters/waitresses. Cooking oil is a major ingredient of the food. Accordingly, all foods are overly fried, despite the fact that today, several people fancy boiled foods for health reasons. During the early hours of lunch, one is more likely to be served the top layer of the sauces, which is usually dilute and contains the most oil. To give the locals an aura of other cultures, some restaurants have taken on names like Buganda. It is nearly impossible to nd basic items such as serviettes at the restaurants. When a patron insists on having some, however, they can get a few that are sliced half-way. At a restaurant in Koboko, though, a waitress casually informed us that serviettes would be purchased during the following week. Unknown to her, some patrons would be out of that district by then.
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APRIL 20 JUNE 13
Transport
Thanks to the ongoing road works commissioned by the Uganda National Roads Authority, Yumbe, Koboko and Maracha districts have an impressive road network. The highways under construction are wide enough to accommodate about four lanes. As motorists speed o, clouds of dust engulf the air, inconveniencing pedestrians, other motorists and people with settlements by the roadside. At some point, motorists must drive with full lights on lest they collide with caterpillars or knock people crossing the road. Orange trucks branded CICO are conspicuous since they move quite fast while sprinkling water onto the road or transporting construction materials from one place to another. At sections where the road is almost complete, the men and women at work, a combination of Ugandans and Chinese, bigheartedly apply layers of tarmac, which is an assurance that the highways will last several years before pot holes encroach on them. By the roadside, materials that include stones and culverts are deposited for easy reach by the constructors. The West Nile region is blessed with a number of rivers such as Kochi, Kaya and Kechi. As a result, the road construction company (CICO) has had to assemble massive bridges along the Maracha-Koboko-Yumbe highway. Indisputably, the amount of materials
apportioned to a single bridge could be sucient to thoroughly repair several roads in Kampala. With some sections of the highway being inaccessible to motorists, human trac lights control the ow of vehicles. It is common to see a woman or man waving a green or red ag, signaling motorists to drive on or stop, respectively. Away from the highways, the feeder roads across the districts are generally in good condition, with rm, graded surfaces. Despite the fact that most drivers literally y along the roads, there will still be chicken or goats gracefully crossing over, perhaps oblivious of the danger that they are exposed to. In some areas, such as the stretch to Kei town at the Yumbe-Juba border, the road gets bumpy and impassable using small-bodied vehicles. Getting a at tyre is a reality due to stones, bones and other sharp objects along the feeder roads. As the motorists x their tyres, children in the area gather to witness the event, as they chew on mangoes or ght over empty mineral water bottles. Some bridges are undergoing repair, having broken down due to heavy rains. While pedestrians and cyclists may be able to maneuver through the repair works, motorists have no choice but to use alternative routes, which increases a journey of three kilometers to over ten. In extreme cases, one is required to drive around Ojapi hills or Mt. Liru before getting to their destination.
Business
peers, which possibly makes the journey less hectic. On Wednesdays and Saturdays, traders converge at Nyadri livestock market in Koboko district to exchange goats, chicken, sheep and cattle. Savings and Credit Cooperatives (SACCOs) have rmly established themselves in the region, with some catering for specic groups such as teachers and the disabled. These institutions have modest oces, with about two to ve sta. Centenary and Stanbic banks have a presence in Koboko district but are yet to extend to Yumbe and Maracha. Customers, therefore, have to travel to Koboko and Arua in order to access banking services. These commercial banks are overseen by the Bank of Uganda currency centre in Arua yet despite this, some crafty people have managed to sneak counterfeit notes into the region. At a grocery shop in Maracha, a trader had on display, punched counterfeit notes held together by a string. Surprisingly though, this same man intentionally or accidentally issued a counterfeit 5,000/= note to a customer who had purchased a box of mineral water. When the customer asked for a replacement, the trader quickly provided a genuine note without complaint. In places such as Oraba, at the Uganda-Southern Sudan border, it is possible to get foreign currency from the traders seated under large umbrellas, right before the Uganda Revenue Authority check point. Fuel is a commodity sold by many people, due to cheap supplies from border areas. Its dealers only have to display a few litres in mineral water bottles, which signals availability to potential buyers. As one of the locals revealed, this fuel is much cheaper than that sold at real fuel stations.
Across the three districts, business booms in the trading centers while the countryside is relatively quiet. Traders can be seen taking their produce to the market, at the back of pickups or trucks. As the drivers of these carriages over-speed, the traders are often uncomfortable, some threatening to fall o. Nonetheless, they can aord to giggle with their
72
Water
Much as the West Nile region has several rivers, it faces scarcity of fresh water. Communal boreholes are popular water sources, often lined with jerricans throughout the day. Water is usually fetched by women, who have to perform other chores too. Thus, a number of jerricans remain unattended at the boreholes, especially in the mornings. At sunset, the women can be seen walking back home in pairs, with their water. Due to water scarcity, some facilities like hotels have dry taps yet requisite equipment have been installed. Such hotels have taken a strategic decision to pump and treat water from the rivers. While this water is brown in colour after being treated, the hotel managers give patrons assurance of its safety.
Energy
Hydroelectricity is so far a dream for people in Yumbe, Koboko and Maracha districts, yet this has not stopped them from engaging in simple and complex businesses alike. The owners have adapted to the situation, which denes the kind of service oered to customers. For example, radio stations charge a high price for talk shows because they have to fuel their generators. In hotels, eggs and bread are oered for breakfast because they do not necessarily need to be refrigerated. Additionally, power is carefully rationed, with generators running from 7:00pm 11:00pm each day. Solar power also prevails as evidenced by several panels charging under the hot sun. The panels vary in size and are found at dierent places, including oces, shops and the smallest homesteads. Large panels are sophisticated; they can change direction depending on where the sun is facing. The locals are optimistic that when a dam is constructed on River Kochi in Yumbe district soon, their power woes will belong to the past.
People
Across the three districts, people are very courteous. They smile warmly and for them, greeting is never complete without a handshake. These people like to keep life simple; therefore, on a good day, women and men will wash clothes or bath in the same rivers from which they draw water used to cook food. Despite their courtesy, these people get infuriated and can ght when provoked. For visitors to these districts, it is easy to conclude that women are the beasts of burden because they are engaged in a cocktail of chores daily. As the men make merry with their friends, the women have to clear plantations, fetch water, collect rewood, prepare food and sweep the compound, among other duties. As I learnt, a man in West Nile cannot do chores such as fetching water. Women in other parts of Uganda may not tolerate this lifestyle but those in West Nile have accepted their position in society and life goes on.
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APRIL 20 JUNE 13
Education
In Yumbe, Koboko and Maracha districts, secondary schools register a low turn up of students at the beginning of rst term. While the majority of schools administer beginning of term examinations that account for 50% of the rst term marks, students will still not show up. This worrying trend, teachers attribute to the students unwillingness to clear school compounds, which are normally bushy after a long holiday. Additionally, most parents lack school fees as the term starts, because they are civil servants whose salaries are often delayed. When they eventually report, the students will arrive at school at about 9:00am in the morning, to sit on their tiny desks and benches. At assembly time, they will sing the national and school anthems very slowly, as though they are almost running out of breath. The national anthem is standard. However, the school anthems vary, with some heaping praise on the founders of the schools and others highlighting the motto and core values. Patriotism is vividly expressed as all schools have the Uganda ag ying alongside a school ag. Notably, specic students
are assigned the duty of hoisting the ags in the mornings and removing them in the evenings, as a safety measure. It is a tradition for guests to register in a visitors book. Even the humblest of schools usually has this book, kept in the head teachers oce. This oce has several other items a box of chalk, reams of paper, text books, motto, vision and mission statements, teaching timetables and charts of sta responsibilities for the year. As well, parents walk in to enquire about admissions as new students t on their uniforms. Some of the schools are located by the roadside, with others being deep in the village. One must drive several kilometers to get to them. Additionally, there is a contrast between structures at dierent schools. Some buildings were purposely constructed to facilitate training of students but others have been conveniently converted into classrooms. Therefore, it is possible to nd teachers conducting lessons in shop-like structures. In the same vein, while some schools can aord plastic carpets for administrative oces, others have mud and wattle oors. On this mud and wattle note, I will end my story and further reect on the motion, Village life is better than Town life.
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STUDENTS DISCIPLINARY CORNER
JOYCE ACHELAT DE-REGISTERED FOR IMPERSONATION

The Public Accountants Examinations Board (PAEB) revoked the ATC(U) certificate, ATC(U) Results Notification and de-registered Joyce Achelat Reg. No 03529 from the CPA(U) course. We were informed that her actual name was Hellen Awiat. Hellen Awiat alias Joyce Achelat registered for the ATC(U) course in 2002 as a government sponsored student under Tororo District Local Government. She completed the course in December 2005. She went on to register for the CPA(U) course in 2006. She was invited together with the real Joyce Achelat, owner of the documents, to respond to the complaint. She acknowledged that she used Joyce Achelats papers to register for ICPAU courses. The PAEB decided to cancel Joyce Achelats (Reg. No. AT/00513) final ATC(U) Results Notification Serial No. AT122500111 issued on 06-022006 and the ATC(U) Certificate No. A00245. Additionally, Joyce Achelat Reg. No. 03529 has been de-registered from the CPA(U) course ceased to be a student of the Institute.
FRANC KAMYA DE-REGISTERED FOR FORGERY

Franc Kamya- Reg. No. CP/07569 registered as CPA(U) student on 13 July 2010. He sat for Level one examinations in December 2011 and thereafter never sat examination again. He forged an Examinations Results Notification where he purported to have started the CPA(U) course in June 2010 and completed it in June 2012. Kamya used the forged document to obtain employment in an audit firm. His conduct and performance did not demonstrate that he had completed the CPA(U) course. The firm approached the Institute to confirm his status. Kamya has consistently failed to appear before the students disciplinary committee. PAEB decided to de-register Franc Kamya from the CPA(U) course and thus he is no longer a student of the Institute.
75
Institute of Certied Public Accountants of Uganda

Members admitted between December 2012 February 2013
NAME Judith Kyomugisha Ben Beverton Nahabwe George David Ochieng Stephen Nyanzi Christine Mayengo Andrew Kayomba Deborah Mirembe Ntuhe Betty Bainomugisha Florence Ajarova Margaret Kobusinge Faridah Namubiru Winnie Akware Steven Ssesanga Catherine Akello Tonny Kisitu Muwanga Rogers Katirimba Jeffrey Bangirana Collins Jackson Muhwezi Charles Kakooza Denis Turyamureeba Godfrey Lukenge Robert Lubega MEMBERSHIP REG.NO. FM1821 FM1822 FM1823 FM1824 FM1825 FM1826 FM1827 FM1828 FM1829 FM1830 FM1831 FM1832 FM1833 FM1834 FM1835 FM1836 FM1837 FM1838 FM1839 FM1840 FM1841 FM1842 ADMISSION DATE 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 27 FEBRUARY 2013 S/NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.
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The Magazine for The Institute of Certified Public Accountants of Uganda (ICPAU)

The Fiscal and Tax Challenges

HR INSIGHT: DOS AND DONTS OF JOB INTERVIEWS

Why we need to be mindful of Public Funds

Internal Auditing in Local Governments: Evolution and Current Challenges

HR Insight: Dos and Donts of Job Interviews

Overview of Students Performance in the December 2012 Examinations

Impact of population growth on Ugandas economy

Effective IT Project Avenues of Business Financing: management Options In Uganda

Accountants Bill, 2011 passed

Taxation of Transfers of Oil Assets

Why we Need to be Mindful of Public Funds

Technical Issues in a question & answer form

d an n ts atio us Tr r tax nda i ga e th n U i

Grants Management: Concepts and their Applicability

Students Disciplinary Corner

INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF UGANDA (ICPAU)

GOLF100 MAGAZINE LTD

ADVERTISING Lynn Eiyo

CONSULTING DIRECTOR John Mwalimu

DESIGN & GRAPHICS Stephen Segawa

Todays Accountant APRIL- JUNE 2013 |

Joseph Sanjula Lutwama

CPA Obed Bampe Tindyebwa

CPA Stephen Nyanzi

CPA Peter Kyambadde

CPA Noah Matovu

CPA Denis Kakembo

Lilian Bagambe Bernard Sanya

CPA DMO Mulagwe

CPA Al Hajj Nnume Yasin Abubaker

CPA Innocent Orone

| Todays Accountant APRIL- JUNE 2013

LETTER FROM THE PRESIDENT

CPA Naru Thakkar ICPAU President

CPA Naru Thakkar, ICPAU President

CPA Derick Nkajja Secretary/ CEO, ICPAU

Todays Accountant APRIL- JUNE 2013 |

Impact of population growth on Ugandas economy

| Todays Accountant APRIL- JUNE 2013

Is the Threat due to Population Growth Rate Real?

What would be the intervention to mitigate these problems?

| Todays Accountant APRIL- JUNE 2013

Defining Success of an IT Project

The Organisational Context

Common Mistakes in IT Project Management

Todays Accountant APRIL- JUNE 2013 |

Failure to adopt a formalised project management methodology.

The Chief Information Ocer (CIO) magazine

| Todays Accountant APRIL- JUNE 2013

Project Governance: The Role of the Board and Steering Committee

Use of Consultants or Vendor Staff

DOS AND DONTS OF

Senior Administrative Ofcer, ICPAU

HR INSIGHTS: DOS AND DONTS OF JOB INTERVIEWS

conversation. Interpersonal Presentation: Verbal expression: Pitch, rate, pauses.

| Todays Accountant APRIL- JUNE 2013

HR INSIGHTS: DOS AND DONTS OF JOB INTERVIEWS

Todays Accountant APRIL- JUNE 2013 |

| Todays Accountant APRIL- JUNE 2013

Chartered Insurer, Insurance Regulatory Authority

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Evolution and Current Challenges