of Rwanda www.oag.gov.rw FOR THE YEAR ENDED 30 JUNE 2019 AUDJT REPORT ON FENANCAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 TABLE OF CONTENTS 1. IN T R O D U CT ION............................................ ...... ........................... ........ 2 2. STATEMENT OF MANAGEMENT RESPONSIBILITIES 3. REPORT OF THE AUDITOR GENERAL. 4. FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 8 Office of the Auditor General of State Finances.1 AUDII KILYUKI V1N 1411AINLIAL b I A I LVItNTS FOR THE YEAR ENDED 30 JUNE 2019 1. INTRODUCTION 1.1. Project information The Rwanda Transport Development Agency (RTDA) is the implementing agency of the Rwanda Lake Victoria Transport Program Project (LVTP) Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km). The Project is funded by the World Bank (WB), and aims to facilitate the sustainable movement of goods and people in the Lake Victoria region, whilst strengthening the institutional framework for transport safety. The details of the Project's information are summarized below: Project Start Date: - The project approval date is 25 May 2017 - The project signature of agreement date is 05 June 2017 - The project effectiveness date is 05 Se tember 2017 Project End Date: - The project completion date is 31 December 2023 - The ro*ect last disbursement date is 30 June 2024 Project Manaoer: The Pro'ect Manager is Mr. Leon MUGWIZA Project Budget by donor World Bank: EUR- 75,900,000 Government of Rwanda Government of Rwanda Counterpart: EUR 21,551,851.85 Total cost of the project EUR: 97,451,851.85 Implementing Budget Rwanda Transport Development Agency (RTDA) Agency Line Ministry of the MININFRA project Strategic goalstobjectives The project objective is to improve the efficient and safe of the project movement of goods and people along the regional corridor from the border crossing at Rusumo to the border crossing at Nemba and Rusizi together with upgrades to road asset mana ement and road safety in Rwanda. Main component of the The project objective will be realized by the following projects components: (i) Component 1: Improving the physical infrastructure and (ii) Component 2: Improving the institutional infrastructure and im lementation assistance. General achievement of With regard to Upgrading of Kibugabuga-Shinga-Gasoro strategic goals (66.55 km), the contract was signed on 22nd May 2019 and it was awarded to Hunan Road & Bridge Construction Group Co. Ltd under the design, build and maintenance (DBM). Construction Works have not yet commenced on the road section. Construction works commenced on the establishment of the campsite Boundary wall, the utilities and the Contractor's temporary works units. Design of the Office of the Auditor General of State Fin ances 2 AUDIT REPORT ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 campsite for the Employer's side and Landscaping is under review. The progress of the design phase at the end of August 2019 remains at 50% completed and it is expected to be completed on 17"' November 2019. Expectations The Ngoma-Nyanza road sections, when upgraded, will play a key role in the regional EAC network, by shortening the distance (about 70 km) traversed by all transit traffic from Tanzania (Rusumo border) passing into Burundi and Eastern DRC in the South, and improve the connectivity between Southern Rwanda and the significant potential market in the hinterland of Lake Victoria. It will promote the socio-economic development of the area, by improving the road infrastructure, favoring the public transport, opening a new door to tourism, and being an import-export corridor promoting large-scale agricultural development. 1.2. Funding summary The Project duration is 6 years from September 2017 to December 2023 with an approved budget of EUR 97,451,851.85 as highlighted in the table below: Source of Commitment- Cumulative Cumulatihe Undrai%n Exchange I Undrawn funds Amount Amount balance to rate at 30 balance to received to received to date (30 June June date (30 June date (30 .date (30 June 2019) 2018 2019) June 2019) 2019} (A) (B) (C) (D)= (A)-(B) (E) (F=D*E) (i) Loani: EUR EUR' FRW EUR FRW IDA (World 75,900,000.00 , 5,717,65227 5.915.738,205 70,182,347.73 I 1,020.72 71,636,525,975 (ii) Counter Part Fund: I Government 21,551,851.85 18,849.94 19,240,500 21,533,001.91 1,020.72 21,979,165,710 of Rwanda Total 97451,851.85 5,736,502.21 5,934,978,705 91,715,349.64 93,615,691,685 1.3. Management of the Project Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) is under SPIU/RTDA (Single Project Implementation Unity/RTDA) which has been established in October 2014. The daily activities of SPIlU are coordinated by the SPIU Coordinator who is supervised by the Director General of RTDA. Office of the Ad mitor General of State Finances 3 aUJJ I 1%rI Un i ULi ruIIN^iNLi.AL 1A I IVILIN Ib PUK I H- YLAK LINDLDJU JUIL LUl The management that served the project during the year ended 30 June 2019 is as follows: No. Names Position 1. Gu M. KALISA Director General u to 19" November 2018 2. Imena MUNYAMPENDA Ag. SPIU Coordinator up to 18" November 2018: Director General from 19th November 2018 to date. 3. MUSHAKA Jeremie Cor orate Services Division Mana er 4. MIZERO Solange SPIU Coordinator from 03rd December 2018 to date 5. Leon MUGWIZA Road Rehabilitation S ecialist 6. MUCYO Come Director of Finance 7. KAMPIRE Alice Financial S ecialist - SPIU 8. UWABABYEYI Ernerita Monitorin & Evaluation S ecialist 9. Janvier HABYARIMANA Project Accountant Office of the Auditor General of State Finances 4 AUDIT REPORT ON FINANCIAL STATEMENTS FOR THE YLA( ELNU i JU JL.INL LUIN 2. STATEMENT OF MANAGEMENT RESPONSIBILITIES Article 66 of the Organic Law No. 12/2013 of 12/09/2013 on State Finances and Property requires budget agencies to prepare and submit to the Ministry annual financial statements in a period of one month from the end of the fiscal year and submit their annual financial statements to the Auditor General of State Finances not later than 30"' September of the following fiscal year. Article 19 of the Organic Law No 12/2013 further stipulates that the Chief Budget Manager is responsible for maintaining accounts and records of the budget agency, preparing reports on budget execution, managing revenues and expenditures, preparing, maintaining and coordinating the use of financial plans, managing the financial resources for the budget agency effectively, efficiently and transparently, ensuring sound internal control systems in the budget agency and safeguarding the public property held by the budget agency. As Chief Budget Manager, I accept responsibility for the annual financial statements, which have been prepared using appropriate accounting standards applicable to Public entities as determined by Article 99 of the Ministerial Order No. 001/16/10/TC of 26/01/2016 relating to financial regulations. These financial statements have been extracted from the accounting records of Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) and the information provided is accurate and complete in all material respects. The financial statements also form part of the consolidated financial statements of the Government of Rwanda. In my opinion, the financial statements give a true and fair view of the state of the financial affairs of Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga- Gasoro (66.55 Km). I further confirm that Lake Victoria Transport Program (LVTP)-Ngoma- Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) maintained proper accounting records which can be relied upon in the preparation of financial statements. I also confirm that adequate systems of internal control were maintained and operated effcctively during the year to safeguard the assets of the budget agency. Signature: .. ... .......... ................ Imena MUNYAMPENDA Director General/RTDA Date: ................. . LU. ..... 2019 Office of the Auditor General of State Finances 5 CLW&.A A J.tL.i tI %-s _I%I I Irt-I %tjLj OIfm,AivinI I V %L- L ri m. I LAIt. IN jimi .3U JU IN L /Iv 3. REPORT OF THE AUDITOR GENERAL REPORT ON THE FINANCIAL STATEMENTS Mr. Imena MUNYAMPENDA Director General/RTDA 3.1. Opinion As required by Article 165 of the Constitution of the Republic of Rwanda of 2003 revised in 2015, and Articles 6 and 14 of Law n' 79/2013 of 11/09/2013 determining the mission, organization and functioning of the Office of the Auditor General of State Finances (DAG), I have audited the financial statements of Lake Victoria Transport Program (LVTP)-Ngoma- Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) for the year ended 30 June 2019. These financial statements comprise the statement of financial position as at 30 June 2019 and the statement of revenue and expenditure, statement of cash flows and budget execution report for the year then ended, and a summary of significant accounting policies and other explanatory notes. These financial statements are set out on pages 8 to 16. In my opinion, the accompanying financial statements give a true and fair view of the financial position of Lake Victoria Transport Program (LVTP)-Ngonia-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) as at 30 June 2019, and of its financial performance and its cash flows for the year then ended in accordance with the guidelines provided by Ministerial Order no 001/16/1O/TC of 26/01/2016 relating to financial regulations and Organic Law No 12/2013/OL of 12/09/2013 on State Finances and Property. 3.2. Basis of opinion I conducted my audit in accordance with the International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under ISSAls are described in section 3.4 of this report. I am independent of Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) and have tulfilled my ethical responsibilities in accordance with the ethical requirements that are relevant to my audit of financial statements of public entities as determined by the Code of ethics for International Organisation of Supreme Audit Institutions (INTOSAI). I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 3.3. Responsibilities of management for the Financial Statements According to Organic Law N' 12-2013/OL of 12;09/2013 on State Finances and Property, management of Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) is responsible for keeping accounting records and books of account, and preparation of financial statements in accordance with the financial regulations prescribed by the Minister in Ministerial Order n' 001/16.10/TC of 26/01/2016 relating to financial regulations. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial Office of the Auditor General of State Finances 6 AUDIT REPORT ON FINANCIAL STATEMLN I SOR I HL Y EA K LNIh uJU IJUNE iu1V statements, management is responsible for assessing the Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km)'s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Government either intends to discontinue operations of the Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Kin) 3.4. Auditor General's Responsibilities for the audit of the financial statements My objective when conducting an audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion, Misstatements can arise from fraud or error and are considered material if individually or in aggregate, they could reasonably be expected to influence economic decisions of users taken on the basis of these financial statements. An audit conducted in accordance with ISSAls requires an auditor to exercise professional judgment and maintain professional scepticism throughout the audit and involves: * The identification and assessment of the risks of material misstatement of the financial statements, whether due to fraud or error; design and perform procedures responsive to those risks and to obtain sufficient and appropriate audit evidence to provide a basis for the auditor's opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls * Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of internal control. * Evaluating the appropriateness of accounting policies used, the reasonableness of accounting estimates made by management. * Concluding on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km)'s ability to continue as a going concern as welt as evaluating the presentation of the financial statements * Evaluation of the overall presentation, structure and content of the financial statements, including disclosures, and whether the financial statements represent the underlying transac nd events in a manner that achieved fair presentation. B A KIG ... rlv......2019 Office of lte Autditor General of State Finances 7 S"A A t A.XXA JI s A ALI ZfLI PRLZ4I 0 1Il I1911:I 10 A%IL ILLr A LWBAL 1 111100 JU J ULL AU17 4. FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 4.1. STATEMENT OF REVENUE AND EXPENDITURE FOR THE YEAR ENDED 30 JUNE 2019 Description Notes 12 months to 30 12 months to 30 June 2019 June 2018 Frw Frw Revenues Operating revenue Transfers from Treasury 2 19,240,500 Other revenue 3 297,087,062 Net operating reven ie 316,327,562 Loans and borrowings Proceeds from borrowings 4 729,085,750 5,186,652,455 Total revenues (A) 1,045,413,312 5,186,652,455 Expenses Operating expenses Use of goods and sen ices 5 203,956,529 177,918.766 Total o eratino expenses 203,956,529 177,918,766 Total expenses (B) 203,956,529 177,918,766 Surplus/deficit (C=A-B) 841,456,783 5,008,733,689 The notes on pages 12 to 16 form an integral part of the financial statements. Office of the Auditor General of State Finances B AUDITHEPICi UN FINANCIALSIAIWLIVIINlbrUK ItIL YV AI(1ILU tjUJUINvelAULY 4.2. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 Description Notes Balance as at Balance as at 30 June 2019 30 June 2018 Fny Fny Financial assets Bank balances 6 5.121,104,722 5,008,733,689 Accounts receivable 7 729,085,750 - Net financial assets 5,850,190,472 5,008,733,689 Representing Accumulated surplus from previous year 8 5,008,733,689 - Net surplus for current year 841,456,783 5,008,733,689 Total closing balances 5,850,190,472 5,008,733,689 The notes on pages 12 to 16 form an integral part of the financial statements. Office of the Auditor General of State Finances v - t A 1 %.Aw UNy ri aiNtIAbL i IVNILi,i 14U IU 1 YLAI< LOINUL ) JUNL 2019 4.3. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 Description 12 months to 12 months to 30 June 2019 30 June 2018 Fny Fny Cash flows from operating activities Transfers from Treasury 19,240,500 - Other revenue 297,087,062 - Payments for operating expenses Use of goods and services (203,956,529) (177,918,766) Adjusted for Changes in receivables (729,085,750) Net cash flows from operating activities (616,714,717) (177,918,766) Cash flow from financing activities Proceeds from borrowing 729,085,750 5,186,652,455 Net cash flow from financing activities 729,085,750 5,186,652,455 Net increase in cash and cash equivalents during the 112,371,033 5,008,733,689 car Cash and cash equivalents at beginning of the year 5,008,733,689 Cash and cash equivalents at end of the period 5,121,104,722 5,008,733,689 The notes on pages 12 to 16 form an integral part of the financial statements. Office of thecAuditor Generld of-StateFi nan-ices AUDIT REPORT ON FINANCIAL S TAEIVIIN I b UK I lit. V LAK IIJUIJ 3)JUIva. LUI 4.4. BUDGET EXECUTION REPORT FOR THE YEAR ENDED 30 JUNE 2019 Description Budget Actual Difference Performan Frw Fny Frw cc% A B A-B (B/A)*100 Revenue Transfers from Treasury 19,240,500 19,240,500 - 100% Other revenue - 297,087,062 (297,087,062) - Proceeds from borrowings 281,973,833 729,085,750 (447,111,917) 259% Total revenue 301,214,333 1,045,413,312 (744,198,979) - 347% Expenses Use of goods and services 301,214,333 203,956,529 97,257,804 68% Total expenses 301,214,333 203,956,529 97,257,804 68% Explanation of major variances: Other revenue: The variance was due to unplanned exchange gain due to foreign currency fluctuation. Proceeds from borrowings: The variance was due to advances paid during the year ended 30 June 2019 yet it was planned that they will be paid in this fiscal year (2019/2020). Use of,goods and services: The budgeted expenditure for use ofgoods and services was mainly for technical assistance. Hovwever. the main expenditure for the period is the exchange loss due to foreign currency fluctuation as a result of keeping bank account denominated in foreign currency Moreover, there has been a payment ojadvance of Frw 226,716,549 but this did not afect the budget because it was not the expense, but a receivable. The notes on pages 12 to 16 form an integral part of the financial statements. The financial statements of Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km) were approved by management and were signed on its behalf by: Prepared by: HABYARIMANA Janvier Project Accountant Signature Date Checked by: MUCYO Come Finance Manager Signature Date Checked by: MIZERO Solange V 12Wl Project Coordinator Sign ture Date Approved by: Imena MUNYAMPENDA Director General Signature Date Office of the Aiditor General of State Finances 11 'aadaI a sas. VAt L & 4iftlL.4rBA.l 2 Ial 0L111 A hJ A BJ*t A 1A6 I 07l11 LITIJ.Jfl JU JUI.190 ASl 4.5. NOTES TO THE FINANCIAL STATEMENTS 1. Accounting policies a) Basis of preparation The Financial Statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated. However, where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the Financial Statements and to comply with the requirements of Article 66 of the Organic Law on State Finances and Property: Law No. 12/2013 of 12 September 2013 and the Ministerial Order No001/16/10/TC of 26/01/2016 relating to Accounting Standards applicable to Public Entity The Financial Statements have been prepared based on generally Accepted accounting Standards, except where stated otherwise. In the context of Ministerial Order Na001/16/10/TC of 26/01/2016 relating to Financial Regulations, financial transactions are recognized in the books of account as follows: 1) Generally, transactions are recognized only at the time the associated cash flows take place; 2) The expenditure on acquisition of fixed assets is not capitalized. Thus, fixed assets are written-off on acquisition and the wear and tear (depreciation) of those assets is not recorded in the books of account; and 3) Prepaid expenditure/advances are written-off during the period of disbursement. The recognized "modification" is as follows: 1) Invoices for goods and services which are outstanding on the date of the closure of the fiscal year are recognized as liabilities for that specific fiscal year: 2) Loans and advances are recognized as assets/liabilities at the time of disbursement and related interest is recognized only when disbursed. Interest payable on public debt is accrued; and 3) Book balances denominated in foreign currencies are converted into the Rwanda Francs at rates of exchange ruling on that date issued by the National Bank of Rwanda. The associated exchange losses are recorded as recurrent expenditure while the exchange gains are recorded as recurrent revenue. b) Reporting entity The financial statements are for Lake Victoria Transport Program (LVTP)-Ngoma-Nyanza Road Lot 2: Kibugabuga-Gasoro (66.55 Km). c) Presentation currency The financial statements are reported in Rwanda Francs. Office of te Atulitor General of State Finances 12