The Effectiveness of Cost Recovery Audits in Fostering Financial Accountability in Uganda’s Oil and Gas Sector.

Abstract

This study examined the effectiveness of the cost recovery audits in fostering financial accountability in Uganda’s oil and gas sector. This study was guided by three objectives: to examine whether the cost recovery audits promote financial accountability in the oil and gas sector in Uganda; to examine the level of compliance by IOCs with the national and international legal frameworks and regulatory frameworks; and, to establish the challenges facing cost recovery audits in its attempt to ensure accountability in the oil and gas sector.

The respondents of this study included OAG staff, PAU staff and oil companies’ staff and legislators of the parliament of Uganda. They were on their basis of having crucial roles they play in cost audits and accountability in the petroleum sector in Uganda. A total of 45 respondents formed the sample size of the study. The study employed a cross sectional design and adopted a mixed approach. Questionnaires were used for the purpose of data collection and an interview guide was employed for qualitative data. The response rate was 100% of the targeted sample size. The study therefore provides a crucial insight of how cost recovery audit promotes financial accountability and the challenges faced. Based on the study results, it is recommended that cost recovery audits should be undertaken on a regular basis so as to timely address merging issues in recoverable costs. Recoverable cost audits should be undertaken on a timely basis such as quarterly instead of biannually. It is also recommended that the technical capacity of the Office of the Auditor General should be augmented to undertake recoverable costs audits as recoverable cost audits are critical for effective, efficient and sustainable development of the oil and gas sector.