REPUBLIC OF RWANDA
MINISTRY OF                                                    MINISTERE DE
AGRICULTURE AND                                                 L'AGRICULTURE ET
ANIMAL RESOURCES                                                 DES RESSOURCES
ANIMALES
SPIU
LWH-RSSP3-FRDP-RCSP
Kigali, 1                                     Ref: 3W/
The Task Team Leader
Land Husbandry, Water Harvesting and
Hillside Irrigation (LWH) Project
World Bank, Kigali
RE: Audit Report for Land Husbandry, Water Harvesting and Hillside Irrigation (LWH) Project for the
year ended 3010612016
We are pleased to submit to you hereafter attached the audit report of Land Husbandry, Water Harvesting and
Hillside Irrigation (LWH) Project for the year ended 30/06/2016.
The audit process was carefully carried out by the Office of the Auditor General of the State Finances from 21s
September to 14th October 2016 and gave a satisfactory opinion.
We thank you for your continued support.
Best regards. 
TUMUSHIME Franc
SPIUJ Coordinator
CC:
* The World Bank Country Manager, Kigali
*  Hon. Minister of Agriculture and Animal Resources
* Hon. Minister of Finance and Economic Planning, Kigali
--------------------------------------------------------------------------------------
P.0 BOX 6961 KIGALI
Email: rssp scujirsp.a0v.nr; hwhra:minhzri.gov.nv
Website.: h ttp://m w.Iwh-rssp.minagri.gov.rw/


LAND HUSBANDRY WATER HARVESTING
AND HILLSIDE IRRIGATION
PROJECT (LWH)
AUDIT REPORT
Tor the year ended30 June 2016


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
TABLE OF CONTENTS
1.   INTRODUCTION ......................................... 2
2.    STATEMENT OF RESPONSIBILITIES      ..................  .........7
3.    REPORT OF THE AUDITOR GENERAL........................... 8
4.    FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016......... 12
5.    REVIEW OF REVENUE                          .....................................28
6.    REVIEW OF EXPENDITURE..................................29
7.    REVIEW OF ACCOUNTS PAYABLES         ..................... ..... 31
8.    REVIEW OF COMPLIANCE WITH PROCUREMENT LAWS AND
REGULATIONS ........................................... 32
9.    RESULT FROM PHYSICAL VERIFICATION ...................... 33
10.  IMPLEMENTATION OF PREVIOUS AUDIT RECOMMENDATIONS......... 38
Appendix 1: Lack of supporting document for revenue from sales of tender document . 40
Appendix 2: Delay in payment and declaration of VAT ...................... 41
Appendix 3: Long outstanding payables ................................ 43
Appendix 4: Implementation of prior year's matters.............. ........................ 45
Office of the Auditor General of State Finances                     1


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
1. INTRODUCTION
1.1 Background of the project
Land Husbandry, Water Harvesting, Hillsides irrigation (LWH) Project was established
under the Ministry of Agriculture and Animal Resources in 2009. The summary of the
project implementation phase under this reporting period is as shown in the table of the
project summary section below:
1.2 Basic information
Project     Land Husbandry, Water Harvesting, Hillsides irrigation (LWH) Project
Name
Agreement IDA CREDIT NUMBER 4674-RW
/Project
Number
Parent     MINAGRI
Ministry
Project     i) Date of signature of credit/grant agreement: 201 March 2009
duration/p  ii) Project Implementation period:20/06/2010 to 31/12/2017
eriod       iii) Date of effectiveness: 20/06/2010
iv) Expected closing date: 30/06/2014
v) Extended closing date: 30/06/2017
Reporting   Land Husbandry, Water Harvesting, Hillsides irrigation (LWH) Project
organizati  Kacyiru- Gasabo- Kigali city - P. 0. Box 621 Kigali
on    and
physical
address
Main        The project key activities concern the project implementation phase where
activities  IDA and Government funds were used to carry out the activities outlined
carried     below:
11           out during
the project Component A: Capacity Development and Institutional Strengthening for
implement Hillside Intensification. This component aims at developing the capacity of
ation       individuals and institutions for improved hillside land husbandry, stronger
phase      agricultural value chains and expanded access to finance.
Component B: Infrastructure for Hillside Intensification. This component
EJ                       will provide the essential 'hardware' for hillside intensification to
accompany the capacity development and institutional strengthening
activities of Component A.
Component C: Implementation through the Ministerial SWAP Structure.
Office of the Auditor General of State Finances                         2


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
This component aims at ensuring that Project activities are effectively
managed within the new SWAp (Sector Wide Approach) structure for
Ministerial implementation of programs and projects at MNAGRI.
1
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LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
1.4 Project achievements
Activity                         Expected  outputs Cumulative achievement
by the end of the of the project by 30 June
project           2016
Farmers who benefited from  the            120,000                280,666
project                                                   (Women: 139,258)
Superficies  treated  with  land         19,940 ha               16,343 ha
husbandry technologies in the rain-
fed
Superficies  treated  for  hillside       2,368 ha                1,356 ha
irrigation
Increasing productivity revenues in  From USD 469 to            USD 2,867
the project intervention areas in the  USD 2500/Ha
rain fed areas
Increasing productivity revenues in  From USD 492 to            USD 2,575
the project intervention areas in the  USD 2800/Ha
hillside irrigated areas
Total production market                       70%                  75.62%
Beneficiaries of men to access formal         90%             Males 81.8%
financial services
Beneficiaries  women  to  access              85%           Females 79.8%
formal financial services
Reduction of sediment                        50%                    88.8%
1.5 The project structure
The Project has a Steering Committee which has a general oversight role over LWH
implementation. It is comprised of the following members:
1. Permanent Secretary/MINAGRI (Chairman)
2. SPIU Coordinator as Secretary
One representative from each of the following:
3. The Ministry of Local Government
4. The Ministry of Natural Resources
5. The Ministry of Infrastructure
6. The Ministry of Education, Science &Technology
7. The Ministry of Finance and Economic Planning
8. Rwanda Cooperative Agency
9. Rwanda Agriculture Board
10. National Agriculture Export Development Board
Office of the Auditor General of State Finances                         5


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
11. The Private Agribusiness Sector
The day to day management is headed by the Project Coordinator nominated by the
Ministry of Agriculture and approved by the World Bank.
The project also has the following Departments:
*     Finance
*     Monitoring and evaluation
*     Procurement
*     Commodity chain
*     Engineering and Land Husbandry
I
g         Office of the Auditor General of State Finances                            6


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
2. STATEMENT OF RESPONSIBILITIES
Projects are established by parent Ministries/Agencies primarily to implement the
development budget of these Ministries/Agencies. From the legal and administrative
point of view, the Projects are therefore run under the parent Ministries/Agencies.
However, for financial accountability purposes, the projects have their own set of
financial statements that accommodate the specific nature of their activities. As recipient
of funds from budget agencies, the projects are bound by the provisions of the Organic
law N* 12/2013 of 12/09/2013 on State Finances and Property.
Article 66 of the Organic Law N* 12/2013 of 12/09/2013 on State Finances and Property
requires budget agencies to submit annual reports which include all revenues collected or
received and all expenditures incurred during the fiscal year, as well as a statement of all
outstanding receipts and payments before the end of the fiscal year.
Article 19 of the Organic Law N" 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 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.
The Chief Budget Manager accepts responsibility for the annual financial statements,
which have been prepared using the "modified cash basis" of accounting as defined by
Article 99 of the Ministerial n* 001/16/10/TC of 26/01/2016 relating to Financial
Regulations.
These financial statements have been extracted from the accounting records of Land
Husbandry Water Harvesting and Hillside Irrigation (LWH Project) 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 the opinion of the Chief Budget Manager, the financial statements give a true and fair
view of the state of the financial affairs of Land Husbandry Water Harvesting and
Hillside Irrigation (LWH Project). The Chief Budget Manager further accepts
responsibility for the maintenance of accounting records that may be relied upon in the
preparation of financial statements, ensuring adequate systems of internal financial
control and safeguardin  asse          et agency.
Signature ..... ......
Mr. KAYISI GA Jean Claude
PS MINAGRI and Chairperson, Project
Date..               .
Office of the Auditor General of State Finances


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
3. REPORT OF THE AUDITOR GENERAL
REPORT ON THE FINANCIAL STATEMENTS
Mr. KAYISINGA Jean Claude
Permanent Secretary of MINAGRI
3.1 Introduction
In accordance with Article 165 of the Constitution of the Republic of Rwanda of 2003
revised in 2015, and Articles 6 and 14 of Law n0 79/2013 of 11/09/2013 determining the
mission, organization and functioning of the Office of the Auditor General of State
Finances (OAG), I carried out an audit of the accompanying financial statements of
LWH for the year ended 30 June 2016. These financial statements comprise the
statement of financial position as at 30 June 2016, 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 12 to 27.
3.2 Management's Responsibility for the Financial Statements
According to Organic Law No 12/2013/OL of 12/09/2013 on State Finances and
Property, management of LWH 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.
3.3 Auditor General's Responsibility
My responsibility as Auditor General is to express an opinion on these financial
statements based on my audit. I conducted my audit in accordance with International
Standards of Supreme Audit Institutions (ISSAls). Those standards require that I comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, internal
control relevant to the entity's preparation and presentation of financial statements is
considered 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.
Office of the Auditor General of State Finances                          3


LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION
AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016
An audit also includes evaluating the appropriateness of accounting policies used, the
reasonableness of accounting estimates made by management, as well as evaluating the
presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a
basis for my opinion.
3.4 Audit opinion
In my opinion, proper books of account have been maintained and the financial
statements give a true and fair view of the financial position of Land Husbandry, Water
Harvesting, Hillsides irrigation Project (LWH) as at 30 June 2016, and of its financial
performance and its cash flows for the year then ended in accordance with the guidelines
provided by Ministerial Order N' 001/16/10/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.
Office of the Auditor General of State Finances                         9