REPUBLIC OF RWANDA MINISTRY OF MINISTERE DE AGRICULTURE AND L'AGRICULTURE ET ANIMAL RESOURCES DES RESSOURCES ANIMALES SPIU LWH-RSSP3-FRDP-RCSP Kigali, MRet:f- o 32s ~ /qg09 ~''M 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) Pro*ect 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 21st September to 14h October 2016 and gave a satisfactory opinion. We thank you for your continued support. Best regards. TUMUSHIME Franc spu SPIU 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 pscu1rsp.!ov.rw; lwhiminaLri.av.nv Website: hld ttp://www.wh-rsspmInagri.gny,rw/ LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION PROJECT (LWH) AUDIT REPORT for the year ended30 June 2016 I LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 TABLE OF CONTENTS I. INTRODUCTION ................2........ .................2 2. STATEMENT OF RESPONSIBILITIES ............7.........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 ..........4........41 Appendix 3: Long outstanding payables ...................................43 Appendix 4: Implementation of prior year's matters ...........................45 Office of the Auditor General of State Finances I 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: 20" 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: 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 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 MINAGRI. Office of the Auditor General of State Finances 3 000 O rn -- r- CNr- r_ q* 0. cq' 0W % ci 0\ kn CD% CD kn .t-no n nD 000- 00 0- 'n -- 0n'n 00 r oN n O au wa Q e nu 'oo - r-s Wn no o00 c0i <100 -rt- c - CD C - on e4C 0D00 < 00 o4 CD mt- e ON '00",! on- EEn r-] 00 C> C)CD C>n 0 D00 C>4CD 00- 00 D " u-o z: V cc mON CD cn r-0 00 ONOt t <_ -T 0 00 0 E <0 n .. E. Srj- rÆ'n a coN- o o o o - - ------N-- - 0'C 0 mON 00; '-- .- n r< - ODa-E 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 Pro ject (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 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 No 12/2013 of 12i09/2013 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. Projectt Date .oftA irG rote ice i Office ofthe Autditor General of State Finances 7 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 N' 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 N0 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 a 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!l0/TC of 26/01/2016 relating to financial regulations and Organic Law N' 12/2013/OL of 12/09/2013 on State Finances and Property. Of.ce .. te A r G2016 Office of the A uditor General of State Finances 9 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 REPORT ON COMPLIANCE Mr. KAYISINGA Jean Claude Permanent Secretary of MINAGRI 3.5 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 activities, financial transactions and information reflected in the financial statements of LWH for the year ended 30 June 2016. 3.6 Management's Responsibility for Compliance In addition to the responsibility for the preparation and presentation of the financial statements, the Organic Law No 12/2013/OL of 12/09/2013 on State Finances and Property specifies that management of LWH is also responsible for the following: * Preparation of mid-term plan, annual action plan, and annual budget for funds provided; * Exercising control over the execution of the budget, in compliance with all provisions of the Organic Law and applicable public financial management regulations; * Preparation and submission of reports to the Ministry of Finance and Economic Planning as provided for in the Organic Law and applicable public financial management regulations; * Preparation and implementation of cash flow plans in consultation with the Ministry; * Managing effectively, efficiently and in a transparent manner, all the public funds in accordance with relevant legal provisions; * Establishing and maintaining effective, efficient and transparent systems of internal controls and risk management; * Ensuring proper use of public funds at the disposal of subsidiary entities; * Providing any other information as may be required by the Ministry and Office of the Auditor General of State Finances; * Implementing the Audit recommendations of the Ministry and Auditor General of State Finances; and * Ensuring compliance with all the provisions of the Organic Law, applicable public financial management regulations and other laws relating to public finance. Office of the Auditor General of State Finances 10 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 3.7 Auditor General's Responsibility In addition to the responsibility to express an opinion on the financial statements, Article 166 of the Constitution of the Republic of Rwanda of 2003 revised in 2015, requires the Auditor General to confirm that: * Expenditure incurred was necessary and in conformity with the laws and regulations in force and sound management; * Controls to safeguard the receipt, custody and proper use of public funds were put in place and that the laws and regulations in force were duly observed to prevent misappropriation of public funds; and * LWH acquired and utilized human, material and financial resources economically, efficiently and effectively to prevent squandering of public funds. My responsibility includes expressing an opinion on whether the activities, financial transactions and information reflected in the financial statements are, in all material respects, in compliance with the above provisions of the Constitution implemented through Organic Law N' 12/2013/OL of 12109/2013 on State Finances and Property and other existing laws and regulations relating to public financial management. This responsibility includes performing procedures to obtain audit evidence about whether the entity's expenditure and income have been applied to the purposes intended by the Organic Law on State Finances and Property. Such procedures include the assessment of the risks of material non-compliance. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion on Compliance. 3.8 Unqualified Opinion on Compliance In my opinion, in all material respects, the activities, financial transactions and information reflected in the financial statements comply with the provisions of Organic Law N' 12/2013/OL of 12/09/2013 on State Finances and Property and all relevant existing laws and regulations governing public financial management and there was proper accountability and realization of value for money for public funds. Oe Office of the Auditor General of State Finances 1t LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 4. FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 4.1 STATEMENT OF REVENUE AND EXPENDITURE FOR THE YEAR ENDED 30 JUNE 2016 12 months to 12 months to 30June2016 30June2015 Notes Frw Frw Revenue Operating revenue Fees ,fines, penalties and licenses 2 22,746,023 66,587,113 Transfers from government reporting entities 3 125,000,000 200,000,000 Grants from development partners 4 7,642,235,256 15,808,156,561 Other revenue 5 362,039,220 56,044,250 Net operating revenue 8,152,020,499 16,130,787,924 Loans and borrowings Loans from development partners 6 4,443,569,412 2,872,895,946 Total Revenues (A) 12,595,589,911 19,003,683,870 Expenses Operating expenses Compensation of employees 7 1,112,933,058 1,130,833,941 Use of goods and services 8 1,573,805,679 2,564,941,952 Transfers to reporting entity 9 56,824,827 114,773,474 Grant and other transfer payments 10 10,505,559 54,109,733 Total operating expenses 2,754,069,123 3,864,659,100 Capital payments Capital expenditure 11 8,849,298,268 14,624,091,467 Total expensesfB) 11,603,367,391 18,488,750,567 Surplus/deficit (C=A-B) 992,222,520 514,933,303 Notes on pages 16 to 27 form an integral part of the financial statements. Office of the Auditor General of State Finances 12 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 4.2 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 Notes Balances as at Balances as at 30 June 2016 30 June 2015 Frw Frw Financial Assets Bank balances 12 1,621,017,571 660,836,834 Cash balances 13 85,395 217,784 Accounts Receivable and Advances 14 47,034,237 17,931,308 Less: Financial liabilities Accounts Payable 15 (2,664,209) (5,735,452) Net Financial assets 1,665,472,994 673,250,474 Representing Accumulated surplus from previous years 16 673,250,474 158,317,171 Net deficit/ surplus for current year 992,222,520 514,933,303 Total closing balances 1,665,472,994 673,250,474 Notes on pages 16 to 27 form an integral part of the financial statements. Authorization The financial statements were approved by the management of the project on . . and signed on its behalf by: Prepared by: NTIBAZIYAREMYE Innocent - 1 f Chief Accountant Signature Date Checked by: UWIMANA Josine Head of Finance Checked by: TUMUSHIME Francine 9, Project Coordinator Signature Date Approved by: KAYISINGA Jean Claude Chief Budget Manager Office of the Auditor General of State Finances 13 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 4.3 CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 JUNE 2016 12 months 30 12 months 30 June2016 June2015 Cash flow from operating activities Fees ,fines, penalties and licenses 22,746,023 66,587,113 Transfers from government reporting entities 125,000,000 200,000,000 Grants from development partners 7,642,235,256 15,808,156,561 Other revenue 362,039,220 56,044,250 Net operating revenue 8,152,020,499 16,130,787,924 Payments for operating expenses Compensation of employees 1,112,933,058 1,130,833,941 Use of goods and services 1,573,805,679 2,564,941,952 Transfers to reporting entity 56,824,827 114,773,474 Grant and other transfer payments 10,505,559 54,109,733 Total payments for operating activities 2,754,069,123 3,864,659,100 Adjusted for Changes in receivables (29,102,929 (17,721,308) Changes in payables (3,071,243) (331,539,561) Total Cash Receipts from Operating Activities Net cash flow from operating expenses 5,365,777,204 11,916,867,955 Cash flows from Investing Activities Purchase of capital items (8,849,298,268) (14,624,091,467) Net cash flows from Investing Activities (8,849,298,268) (14,624,091,467) Cash flow from Financing Activities Proceeds from borrowing 4,443,569,412 2,872,895,946 Net cash flow from financing activities 4,443,569,412 2,872,895,946 Net increase/ Decrease in cash and cash 960,048,348 960,08,348 165,672,434 equivalents Cash and Cash equivalent at the beginning of 661,054,618 495,382,184 the year Cash equivalent at the end of the year 1,621,102,966 661,054,618 Notes on pages 16 to 27 form an integral part of the financial statements. Office of the Auditor General of State Finances 14 D * 0 0 0* r- T = V * T - If 0 0 00* 0 \C * 0c 00 t- - - * en C rI n \ C r- C %k= - 41o o t- V) N r N * oC > - r- rl 06 rsa s o n N Wn o CS - oaC4 O o ri o©0 C3 oO >t u - - o- en o t- o,o o oc . - cn o r^ d1 4 ,q &Su-'ci C nlok r n osi r to o r u * e D e n e0 0 0 en CD " CD C7N \v r- C <1C i t CN0 'f-00W 00 V-.M A r rs T*4 - er co a~ el - --- eD 0 0 OC C n \ 00 c C oD CD - 1.0 D CD VI CD CN NT C) CD = C) rn .:: - . CD 0 ' n Cc- OG r4 N 2o5o n t CJm. 0 0D rq CDt v,) r- \0-100f Lclr' z." C7&S rfcýc 0C u{iD Gt oJ m ...nf cm 0 * Cl enS No r-A 0C'0 m 0 .t - - -r - L . - 66 Sca e , >6Se r S flN - - t s . O 0 a el O e 'oo o . o - '~ '. o tt~ '~t- -o.. - Q pro ci c u. n -e 0't n- E 3- 00 CIN CD. fl 0 O0 1*rle S D {n O el 00 n0 C D0 O O tn0 -~ eD *c "'. 0 re n o CD oo 0'nrmtý >j ej en cO'0o E - o% *a o fl0%eo a a C au4 ., . u ' - [ C4z ej 0E > 42~C Tz 4: cu ~ ~ 0 ;: ur UC..D di- Vl tj~ ~L4- tt Ot U- rå&- J E LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 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 Ministerial Order No001/16/10/TC of 26 January 2016 relating to accounting standards applicable to public entity. The Financial Statements have been prepared on a modified cash basis of accounting, except where stated otherwise. In the context of Ministerial Order No00 1/ 16/1 0/TC 26 January 2016 relating to Financial Regulations, financial transactions are recognized in the books of account as follows: I 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: I 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 Land Husbandry, Water Harvesting and Hillsides Irrigation Project (LWH). Office of the Auditor General of State Finances 16 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 c) Revenue Cash transfers from Treasury These are budgetary allocations from Central Government and are disbursed directly to the bank account of the institution periodically. The budgetary allocation is mainly used to fund recurrent expenditure of the institution. The receipts are recognized when the cash is received. * Fees, fines, penalties and licenses Fees, fines, penalties and licenses were from amount of guarantees received from various financial institutions who had guaranteed contractors that later defaulted. * Inter-entity transfers from other Government reporting agency These are funds received from MINAGRI and they are in form of budget support. * Other income Other income arose due to exchange gains. * Proceeds from borrowings Borrowings includes external loans received from development partners * Grants and loans from Development Partners These are funds received from donors. These funds are recognized as revenue when the institution receives the cash from the donors. These also include technical assistance from donors. d) Expenditure The main categories of expenditure include salaries and allowances, goods and services and capital expenditure. Expenditure is recognized in accordance with the modified cash basis of accounting. e) Cash and bank balances This comprises the funds within project bank accounts and petty cash. f) Receivables and Advances Receivables mainly relate to amounts due to LWH at the end of the year. Office of the Auditor General of State Finances 17 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 g) Account payables These mainly relate to invoices for goods and services which were outstanding on the date of the closure of the fiscal year. These are recognized as liabilities for that specific fiscal year. h) Foreign currencies Transactions denominated in foreign currencies are translated to the Rwandan Franc at the rate of exchange issued by the National bank of Rwanda (BNR) applicable for the dates of the transaction. At the balance sheet date, book balances denominated in foreign currencies are converted into Rwandan Francs at the exchange rate ruling on that date as issued by BNR. The associated exchange losses/gains are recorded as expenditure/income in the books of account. i) Presentation Currency The financial statements are reported in Rwanda Francs, being the currency of legal tender in Rwanda. 2. Fees, fines, penalties and licenses During the 12 months to 30 June 2016, the project collected Frw 22,746,023 from penalties charged to suppliers for delay in contract execution and sale of tender documents as listed in the schedule below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 142 Sales of goods and services 1,870,000 2,336,088 143 Fines, penalties, and forfeits 20,876,023 64,251,025 Total 22,746,023 66,587,113 3. Transfers from government reporting entities During the 12 months to 30 June 2016, LWH Project received funds amounting to Frw 125,000,000 from MINAGRI as detailed below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 135101 Government 125,000,000 200,000,000 contribution to IDA Total 125,000,000 200,000,000 Office of the Auditor General of State Finances 18 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 4. Grants from development partners During the 12 months to 30 June 2016, the project received funds from GAFSP/USAID as listed in the schedule below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 132 GAFSP 4,317,948,338 8,934,956,232 USAID 3,324,286,918 4,148,308,800 CIDA - 2,724,891,529 Total 7,642,235,256 15,808,156,561 The details are shown in the table below: ID Name of Date Amount in Exch. Rate Amount in RWF account Donor received USD 12 months to 12 Months to 30 June 2016 30 June 2015 Frw Frw 132 Grants Received from Multilateral Donors (International Organizations) GAFSP Withdrawal 12/11/2015 4,139,721.60 738.297559 3,056,346,352 Application N040 Withdrawal 25/11/2015 1,229,699.57 741.0519498 911,271,264 Application N041 Withdrawal 15/12/2015 471,201.71 743.483554 350,330,722 Application N042 S/total 5,840,622.88 4,317,948,338 8,934,956,232 USAID Withdrawal 18/08/2015 846,301.53 724.7482136 613,355,522 Application N019 Withdrawal 28/08/2015 751,697.65 725.9954597 545,729,081 Application N020 i I Withdrawal 01/09/2015 972,154.35 726.3157059 706,090,973 Application ____ ___ N021I_ _ _ _ _ _ _ _ _ _ _ _ NO2e I Office of the Auditor General of State Finances I9 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Withdrawal 28/10/2015 763,852.88 735.775879 562,024,524 Application N022 Withdrawal 10/11/2015 1,213,241.30 737.9371103 895,295,779 Application N023 Withdrawal 21/12/2015 2,405.94 744.4238011 1,791,039 Application N024 S/Total 4,549,653.65 3,324,286,918 4,148,308,800 CIDA 0 0 2,724,891,529 Grand Total 10,390,276.53 7,642,235,256 15,808,156,561 5. Other revenue During 12 months from July 2015 to June 2016, the project received funds from currency exchange and retention of performance guarantee as detailed in the table below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 145 Exchange gain 37,637,921 5,567,334 Other income 324,401,299 50,476,916 Total 362,039,220 56,044,250 6. Loans and technical assistance from development partners During the 12 months to 30 June 2016, the project received funds from IDA as listed in the schedule below: ID Description 12 months to 12 months to account 30 June 2015 30 June 2014 Frw Frw 162102 IDA Credit 4674 -RWA 4,443,569,412 2,872,895,946 Disbursement TOTAL 4,443,569,412 2,872,895,946 Office of the Auditor General of State Finances 20 r,]enoC:rqr-k \C10 0DOGIN'C) -,t -- II oo eoc c-rec s .0 en r -en - NID .5.5 5 - '.oc lo en o -E -n - ms en0- C~t cn- o\ ' - 0 0 0 s oó o .NOt- o: o N r- oo o CD n em r cO o C r r-N eo r_ _ - rr r ; re r - r - r- s rl kn 0 o K Mi o0 t s - cs r- = r-- en n so - oo j 1oco\ r o onor0o ' oroooooo ooo 0 CaO - C3i CL ej -cie - 2 - t- 00 0 W 'tk cw c LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 7. Compensation of employees During 12 months from July 2015 to June 2016, the project incurred compensation of employees' costs as detailed in the table below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 211301 Basic Salary 436,281,947 444,365,786 211302 Transport Allowances 330,324,024 332,386,385 211304 Housing Allowances 275,106,296 280,272,910 211313 Other Allowances/Benefits 3,019,355 4,550,000 Gov Contributions to social 35,720,635 36,455,757 security fund Gov Contributions to health 32,480,801 32,803,103 insurance I I Total 1,112,933,058 1,130,833,941 8. Use of goods and services During 12 months from July 2015 to June 2016, the project incurred goods and services costs of Frw 1,573,805,679 as detailed in the table below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 221 General Services 208,483,534 483,358,479 222 Professional, Research services 745,157,603 1,597,616,538 223 Transport and travel 87,766,901 74,776,161 224 Maintenance, Repairs and Spare Parts 25,391,365 18,950,768 225 Tools and Small Equipments 7,060,586 380,650 226 Training Costs 482,379,101 367,879,496 227 Supplies and services 16,613,140 15,474,900 229 Other Use of Goods& Services 953,449 6,504,960 Total 1,573,805,679 2,564,941,952 9. Transfers to reporting entities During 12 months from July 2015 to June 2016, the project made transfers reporting entities of Frw 56,824,827 as detailed in the table below: Office of the Auditor General of State Finances 22 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 ID Description/Budget agency 12 months to 12 months to account receiving the money 30 June 2016 30 June 2015 Frw Frw 264101 Transfer to RAB 13,059,271 93,903,518 264101 M[NAGRI/Program 4 43,765,556 20,869,956 Total 56,824,827 114,773,474 10. Grant and other transfer payments During 12 months from July 2015 to June 2016, the project transferred Frw 10,505,559 in form of grants and other transfer payments as detailed in the table below: ID Description/Budget agency 12 months to 12 months to account receiving the money 30 June 2016 30 June 2015 Frw Frw 284107 Transfer to Rubengera Sector 10,505,559 14,656,603 /Karongi District* Transfer to Rwabicuma - 20,544,239 Sector/Nyanza District* Transfer to Nyagisozi - 9,617,009 Sector/Nyanza District* Transfer to Mukura Sector/Rutsiro - - District* Busasamana Sector - 9,291,882 Total 10,505,559 54,109,733 *These are funds transferred for expropriation activities in respect of construction of dans and post-harvest infrastructure. 11. Capital expenditure During 12 months from July to June 2016, the project incurred capital expenditure of Fny 8,849,298,268 as detailed in the table below: ID Description 12 months to 12 months to account 30 June 2016 30 June 2015 Frw Frw 231 Acquisition of Office Equipment, 1,982,500 Furniture and other equipments Acquisition of ICT Equipment and 48,953,580 Software Acquisition of motorcycles - 58,000,000 Cultivated Assets 8,798,362,188 14,566,091,467 Total L 8,849,298,268 14,624,091,467 Office of the Auditor General of State Finances 23 -;<レ LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 13. Cash at hand The petty cash balance of Fnv 85,395 as at 30 June 2016 shown in the table below has been reviewed by the Chief Budget Manager and is supported by petty cash count certificates: ID Description 30 June 2016 30 June 2015 account Frw Frw 311101 Petty Cash Head Office 36,900 100 311102 Petty Cas _Nyanza Office 370 200 311104 Pett Cash Gatsibo Office 350 600 311106 Petty Cash Rwarnagana Office 1,700 400 311106 Petty Cash MpyanK Office 75 100,000 311107 Petty Cash Gishwati Office 46,000 70,910 311109 Petty Cash Gicurnbi Office - 41,500 311110 Petty Cash Nyarnagabe Office 4,074 Total 217,784 14. Accounts receivable The following were the accounts receivable as at 301h June 2016: Debtors' name 30 June 2016 30 June 2015 Fnv Frw CORAR - 17,931,308 RSSP 3 47,034,237 Total 47,034,237 1 _ 17,931,308] 15. Accounts payable The following were the accounts payable as at 30 h June 2016: ID Creditor's name 30 June 2016 30 June 2015 account Frw Frw 4121+ 4221 Accounts payable -third parties ASSEPAGEL - I Compensation -B o unc ed Payment 418,757 3,504,031 Entreprise MUGABE Thomas - 1,000,000 Urnudendezo Corneany Ltd 252,450 - Manpowers Nyanza- Bounced Payment - 210,000 L Manpowers Rwamagana- Bounced Payment 1 683,000 812,0001 Office of the Auditor General of State Finances 25 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 ID Creditor's name 30 June 2016 30 June 2015 account Manpowers Kayonza-Bounced payment - 84,000 Manpowers Karongi 13-Bounced payment 56,000 56,000 Manpowers Kamiranzovu-Bounced payment - 20,000 Manpowers Nyamagabe-Bounced payment 51,000 - Manpowers Ngoma-Bounced payment 112,000 - KOABIBIKA-Bounced payment 1,020,966 24,420 ABAGENDANANIGIHE 70,000 - GAKUBA Furgence - 25,000 BNR 36 - Total 2,664,209 5,735,452 16. Fund balance at the beginning of the year These include cash book balances reconciled with bank balances, petty cash balances, accounts payable balances as well as accounts receivable balances. Source of funds As at 1" July As at lVtJuly 2015 2014 Frw Frw Bank balances 660,836,834 495,240,464 Cash balances 217,784 141,720 Accounts receivable 17,931,308 210,000 Accounts payable (5,735,452) (337,275,013 Total 673,250,474 158,317,171 Office of the Auditor General of State Finances 26 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 17. IMPORTANT DISCLOSURES The following are the contingent liabilities that currently exist as at 30 June 2016 Disclosure Brief Description 30 June 2016 30 June 2015 Frw Frw Pending The Joint Venture CHEON KWANG legal DEVELOPMENT and EXERT proceedings ENGINEERING GROUP failed to execute related to the contract within the time frame agreed construction upon - 21/07/2014 to 20/07/2015. of 14-meter Consequently MINAGRI/LWH cancelled high dam the contract on 08th September 2015 and and 267 ha the former filed a case to the Rwanda irrigation in commercial court of Nyarugenge seeking Rwamagana for appointment of an independent District valuator. The valuation of work executed was done by the valuator appointed by the Rwanda commercial court as requested by the contractor and was estimated at 812,132,069 Frw. Further, the Joint Venture launched a case to the arbitration court in Kenya where the claimant's claim was dismissed Recently, he Joint Venture launched an appeal in Commercial High Court of Rwanda which has been concluded in November 2016 and also lost the case. The Ministry of Justice and MINAGRI agreed that the above valuation is the basis to retender for completion of abandoned works. It was not able to claim damages suffered resulted f-om the cancellation of this contract until the decision of the court. However, the peiformance guarantee amount Frw 323,776,299 was recovered from ECOBANK. For the next steps, MINAGRI/LWH will continue to work closely with MINUJUST on this issue and make follow zip as appropriate Office of the Auditor General of State Finances 27 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 5. REVIEW OF REVENUE 5.1 Lack of supporting document for revenue from sales of tender document Observation The Article 12 of Ministerial Order no. 001/08/10/MIN of 16/01/2008 establishing regulations on public procurement and standard bidding documents states that the procuring entity may charge a fee for the tender document. The fee of the tender document shall only be equivalent to the cost for preparing, photocopying and binding it. The fee for a tender document shall be an amount not exceeding one hundred Rwandan francs (Frw 100) per page. There will be an additional fee for photocopying drawings and sending the tender document to the bidder if it is necessary. My review of revenue from tender document for LWH for the year ended 30 June 2016 revealed that LWH has set prices applicable for tender documents as follows: from 0 to 50 pages (Frw 5,000), from 51-100 pages (Frw 7,500); from 101-200 pages (Frw 10,000), from 201 pages and above (Frw 20,000) and these fees are paid by bidders to account no 1000005254 opened in BNR. However, I noted that Frw 100,000 recorded as sales of tender document during the year under review was not supported by any document (payslip) and not recorded in the register. See the appendix 1 for details: Risk There may be misallocation and misstatement of revenue Recommendation Management should ensure record of pays lips of tender document sold and proper keeping Management comment Noted The project started to implement the above recommendation since July 2016 and will continue to observe this. Office of the Auditor General of State Finances 28 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 6. REVIEW OF EXPENDITURE 6.1 Delay in payment and declaration of VAT Observation Article I of the law No38/2012 of 20/12/2012 modifying and complementing law No 25/2005 of 04/12/2005 on tax procedures as modified and complemented to date states that the value added tax on public tenders is withheld by a public institution which awarded the tender. A public institution which awarded the tender has the responsibility to file a tax declaration in accordance with the form prescribed by the Commissioner General of Rwanda Revenue Authority and pay the tax withheld within fifteen (15) days following the end of the month in which the winner of public tender submitted the invoice. The public institution which fails to withhold Value Added Tax or which withheld value added tax and failed to pay the tax withheld to the Tax Administration must pay the tax not withheld or not paid, fines and interest as provided for by this law. Contrary to the above legal requirements, LWH delayed to declare and pay Value Added Tax amounting to Frw 61,322,331. The delays ranged from 6 to 72 days. Refer to the appendix 2 Risk Non-compliance with the law n*38/2012 of 20/12/2012 modifying and completing law no25/2005 of 04/12/2005 on tax procedures as modified and complemented to date may cause LWH to be penalized by RRA and hence incur unnecessary expenditure. Recommendation Management should ensure that VAT computed on invoices received is declared and paid within the time stipulated in the VAT law. Management Comment After the Invoice is submitted, its verification and approval by the project manager indicated in the contract starts. In virtue of art 10 (1) of the law no 37/2012 of 9/11/2012 establishing the value added tax the supplier/contractor is paid only when the invoice is correct, fully and well supported and the art 10 (2) of the same law is applied if the beneficiary was requested to correct and/or sufficiently support the invoice. In case of itorks, when the attachments and the quantities of executed works do not agree and corrections to be made are minor, and/or there was an omission to enclose a support document the invoice is not turned back to the contractor. The latter is requested to make adjustment/correction required and/or bring the missing support document. The payment process is suspended till all requirements are observed. This also applies to goods and services. For the highlighted cases, the contractors/suppliers were requested to correct/support their invoices by SMS, telephone etc. Office of the Auditor General of State Finances 29 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 The project has taken the measures to continue the sensitization of the suppliers and contractors to submit correct, fully and well supported EBM invoice on time to speed up their payments and monitoring each payment process rigorously to avoid payment delays. Office of the Auditor General of State Finances 30 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 7. REVIEW OF ACCOUNTS PAYABLES 7.1 Long outstanding payables Observation Included in the financial statement of LWH for the year end 30 June 2016 are account payable balances totaling Frw 1,984,988. This amount includes bounced/returned payments relating to payments to different people that were involved in activities of LWH as casual workers, and compensation amounts paid to people whose assets were affected by activities of LWH. Some of the payments bounced due to issuing wrong account numbers for beneficiaries. My review of accounts payables revealed that these returned payments had not been cleared/paid for periods ranging from 123 to 781 days by the time of audit (October 2016). In addition, there was no evidence of any follow up done by the project management to ensure that the beneficiaries are paid the due amounts. For more details refer to the appendix 3. Risk Delayed settlement of returned payments is an indicator of inadequate follow up by management. Not paying the target beneficiaries casts the project into bad light and could result in sabotage of the project activities. Recommendations LWH management should make a proper follow on the returned payments to identify and resolve the anomalies to ensure that all target beneficiaries of the payments are settled. Management comment Most of these transactions are concerned with the errors made by BNR and/or the amounts that bounced back due to wrong account numbers supplied The project is in regular consultation with the BNR to investigate the origin of the issue and once found, it will be immediately addressed. Office of the Auditor General of State Finances 31 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 8. REVIEW OF COMPLIANCE WITH PROCUREMENT LAWS AND REGULATIONS 8.1 Noncompliance with procurement procedures Observation Article 43 of law No. 12/2007 of 27/03/2007 on public procurement stipulates that before the expiry of the bid validity period, the procuring entity shall simultaneously notify the successful and the unsuccessful bidders of the provisional outcome of the bid evaluation. The notification shall specify that the major elements of the procurement process would be made available to the bidders upon request and that they have seven (7) days in which to lodge a protest, if any, before a contract is signed with the successful bidder. Contrary to this provision, I noted that during the year under review, LWH awarded a tender worth Frw 29,580,000 for supply of Lime for Rutsiro site to VERICOM Ltd. The review of this tender revealed that LWH provisionary notified the successful bidder and there is no evidence provided to show that four unsuccessful bidders were also notified. Risk Without notification to all unsuccessful bidders I cannot confirm that transparence was exercised in awarding the tender. Recommendation LWH should comply with procurement laws in place. Management comment As usual, notification to both successful and unsuccessful bidders were issued though only the successful bidder and one unsuccessfud bidder picked their letters and acknowledged receipt. However, on this particular tender some of unsuccessfid bidders refused to pick their notification letters even after the front office (receptionist) staff called them many times. Bidders who picked their notification letters is enough evidence that due process regarding notifications procedures were actually followed. We will continue using post-office or e-mail addresses provided by bidders during the tendering process to ensure that delivery and acknowledgement of receipt of notifications is properly documented. Office of the Auditor General of State Finances 32 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 9. RESULT FROM PHYSICAL VERIFICATION 9.1 Management of contract signed between LWH and ECORWAPI Ltd Observation On 15* June 2015, SPIU-LWH/RSSP signed a contract worth Frw 203,189,809 with ECORWAPI Ltd for the construction works of 2 medium storages, 2 drying grounds and two toilets in Rutsiro District (Rusebeya site and Nyabirasi site) for a period of six months. On 14 January 2016, ECORWAPI Ltd was awarded an extension period of 4 months ending 14 May 2016. However, I conducted a field visit at Rusebeya site on 51h October 2016 and noted that some works had not been completed, namely: * Construction of drying ground, * Construction of a toilet, * Construction of retaining wall in stone masonry with concrete copying, * Lateritic soil compacted at 15 cm thick, * Supply and fixing 3 sliding metallic doors, * Drainage canal in stone masonry with cement and sand mortar and fence of galvanized wire mesh (good quality) with 40*60*2mm tubes on unreinforced concrete foundation of 40*40*60 cm had. In addition, on 61h October 2016 1 conducted a field visit at Nyabirasi site and noted that some works had not been completed, namely: finalization works including mainly lateritic soil compacted at 15 cm thick and painting of inside walls and columns are not yet completed. Further, I noted that from the beginning of the contract execution up to the time of my audit in October 2016, LWH had paid to the contractor an amount totaling to Frw 132,768,174 (First invoice of Frw 22,791,511, the second invoice of Frw 47,079,523 and the third invoice of Fn 62,897,140). It is worth to note that on 07 September 2016 LWH applied penalties of Frw 10,159,490 on the third invoice as the maximum of 5% of the contract amount as stipulated in the contract. With the current status of works completion, the project was not deriving any value for money from the amount already paid. The photos below show the status of works at the time of audit. Photo 1: Construction works of a medium storage, one drying groung and a toilet still ongoing at Rusebeya site. Photo taken by OAG on P October 2016. Office of the Auditor General of State Finances 33 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Photo 2: Construction works of drying ground at starting stage at Rusebeya site. Photo taken by OAG on 5' October 2016. Photo 3: Construction works of a toilet at starting stage at Rusebeya site. Photo taken by OAG on 5" October 2016. Photo 4: Construction works of retaining wall at Rusebeya site not yet started. Photo taken by OAG on 5'h October 2016 Office of the Auditor General of State Finances 34 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Risk The delays in execution of works will ultimately delay attainment of the project benefits envisaged from the contracted works. No value for money is being derived from the amounts already paid to the contractor. Recommendation The project management should engage the contractor to devise mechanism of expediting works as soon as possible and if not possible the contract should be terminated. Management comment As regards to the contract management, the contractor has been penalized with maximum penalties and since May 2016 four warning letters have been issued to him in different time intervals to increase the pace and finish all remaining works in line with the requirements of the contract. Furthermore, the contractor did not abandon the sites. He continued the works even after the audit visit (6' October 2016). The reported none completed works are as of now completed. Only the retaining wall (i 120) and its related works (drainage canal and galvanized wired fence) are remaining. These can take less than one month to be completed as the overall works progress is at 98.9%. 9.2 Management of contract signed between LWH and Service Technique du Batiment (STB) Ltd 9.2.1 Delay in execution of works for post-harvest infrastructures - Provisional hand over done before completion of works Observation On 15 June 2015 a contract worth Frw 203,177,571 was signed between LWH and Service Technique du Batiment (STB) Ltd for Construction works of 2storages, 2 drying grounds and 2 toilettes in NYAMAGABE district. The execution period was 6 months for effective from the date of receipt of notice to proceed (13 October 2015). However, on 12 October 2016, 1 conducted field visit in NYAMAGABE district and noted that construction works of plastering of inside walls and columns at TARE site were still ongoing while the provision handover of works already took place on 22"d September 2016. See photographs below: Office of the Auditor General of State Finances 35 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Photo 5: Ongoing works of plastering of inside walls and columns at TARE site Photo 6: Ongoing works of plastering of inside walls and column at TARE site It is worth to note that from the beginning of the contract execution up to the time of my audit in October 2016, LWH had paid to the contractor an amount totaling to Frw 35,837,657 Risk Delayed execution of construction works and pronouncing the provision acceptance without reservation while works were still on-going portray weaknesses in contract management. As a result, the intended objectives are not achieved on time. Recommendation Management should perform adequate monitoring and evaluation of the progress of execution of construction works so as to realize intended objectives on timely basis. Penalties should be charged to the concerned contractor in accordance with the contract. Office of the Auditor General of State Finances 36 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Management comment During the provisional reception of 22/9/2016, the contractor showed that the plastering (gutera karabasasu) on a wall of 661 m2 and painting (514m2) of columns can take less than 3 days. Therefore, the reception team has underestimated this period of 3 days and pronounced, unprofessionally, the reception without reservation in the core statement. Three weeks after the reception (12/10/2016), when the field visit was being conducted, the project was informed that "the contractor is still doing plastering and painting works ". In response to this, on 171' Oct. 2016, the project wrote to the contractor a letter rejecting the reception done on 22/9/2016 and requesting him to issue another request for provisional reception after finishing the remaining works. The latter requestedfor the new reception on 261h October 2016. To countercheck his request and avoid the mistake made before to happen, on 3rd November 2016, a new team was sent to field to see whether the works are completed or not. Its report shows that all works are 100% completed, and the project has carried the new provisional reception on 06/12/2016 Office of the A uditor General of State Finances 37 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 10. IMPLEMENTATION OF PREVIOUS AUDIT RECOMMENDATIONS Observation According to Article 69 of the Organic Law No 12/2013 of 12/09/2013 on State finances and property, each Chief Budget Manager is responsible for implementing the recommendations of the Auditor General of State Finances aimed at improving the effective management and use of public funds. Contrary to this provision, an assessment of the status on the implementation of previous audit recommendations still reveals that most of my previous recommendations were not implemented, only 20% of my previous recommendations were fully implemented and 80% were partially implemented. See details in the table below: Number 1. Total no. of findings raised in previous report: 5 2. No. of recommendations that have been fully implemented as at time of current audit: 1 3. No. of recommendations that have been partially implemented as at time of current audit: 4 4. No. of recommendations not implemented as at time of current audit: 0 5. Percentage of previous findings partially implemented (no.3)/no. 1 80% 6. Percentage of previous findings not implemented (no. 4)/no. I 0% 7. Percentage of previous findings fully implemented (no. 2)/no. I 20% For details, see appendix 4. Risk Failure to fully implement previous audit recommendations implies that some of the highlighted weaknesses still persist as previously indicated. This impairs the desired improvement in financial management and operations and may negatively affect the ability of LWH to effectively carry out its activities. Recommendation Management should take adequate actions geared towards full implementation of audit recommendations. Management comment Management is committed to implement the remaining recommendations. Office of the Auditor General of State Finances 38 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 APPENDICES Office of the Auditor General of State Finances 39 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Appendix 1: Lack of supporting document for revenue from sales of tender document Amount in Date Description Frw 17/12/2015 Histl7/12 Sales of Tender Documents UI CONSULTANTS LTD 10,000 TENDER N 283/W/015/LWH Hist02/07 Sales of Tender Documents ALICOMEC LTD TENDER 02/07/2015 22F05WH5,000 272/F/0 15/LWH 03/07/2015 Hist03/07 Sales of Tender Documents MUSSU SUPPLY LTD TENDER 5,000 272/F/015/LWH 03/07/2015 Hist03/07 Sales of Tender Documents EDECON CONSULTANTS LTD 5,000 Hist.03/07 Sales of Tender Documents EDECON CONSULTANTS LTD 03/07/2015 TEDR22FOSLH5,000 TENDER 272/F/015/LWH 03/07/2015 Hist03/07 Sales of Tender Documents EDECON CONSULTANTS LTD 5,000 TENDER 273/F/015/LWH 03/07/2015 Hist.03/07 Sales of Tender Documents EDECON CONSULTANTS LTD 5,000 TENDER 275/F/0 15/LWH 09/07/2015 Hist.09/07 Sales of Tender Documents BAZIRABAGIRA Celestin Ese 5,000 TENDER 273/F/0 15/LWH 15 Hist.20/07 Sales of Tender Documents A.F.V.S.C Ltd TENDER 5,000 282/F/0 I 5/LWH 20/07/2015 Hist.20/07 Sales of Tender Documents SOSO Ltd TENDER 5,000 276/F/0 I 5/LWH HistOI/12 Sales of Tender Documents DIDADA SUPPLY LTD TENDER 01/12/2015 N 0415/G 5000 Hist03/12 Sales of Tender Documents ECOMEM .CO. LTD TENDER N 03/12/2015 288/F/015/LWH 5000 HistO4/12 Sales of Tender Documents RINDIRO BUSINESS COMPANY 04/12/2015 LTD TENDER N0515/G 5000 HistO7/12 Sales of Tender Documents GLOBOCOM RWANDA LTD 07/12/2015 TENDER NO 3415/G 5000 Hist.09/12/015 Sales of Tender Documents KML INTEGO Company LTD 09/12/2015 TENDER NO 3415/G 5000 Histl l/12 Sales of Tender Documents EDECON CONSULTANTS LTD 11/12/2015 DAO NO 0515/G 5000 Histl 1/12 Sales of Tender Documents EDECON CONSULTANTS LTD 11/12/2015 DAO NO 0415/G 5000 15/07/2015 Hist.15/07 Sales of Tender Documents J & D COMPANY Ltd TENDER 5,000 275/F/015/LWH 15/07/2015 Hist.15/07 Sales of Tender Documents SOCOGET Ltd TENDER 5,000 275/F/015/LWH Total ofStateFinan4100,000 Office of the Auditor General of State Finances 40 〕馴 幷 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Appendix 3: Long outstanding payables Delays in DATE DESCRIPTION AMOUNT settlement by in FRW time of audit October 2016) 01/07/2016 WUA ABAGENDANANIGIHE 70,000 123 'IF2195/15-16 Repayment- Manpower in LHW 429,000 124 qgoma-SACCO ITEGANYIRIZE MUSHA Hist.27/06/2016 Bounced- Manpower in LHW 27/06/2016 Ngoma on 0 1 - I 5/05/2016-UW IMANA Florence- 12,000 127 Ref.PF1983/15-16 Hist.8106/016 Bounced- Manpower in LH 08106/2016 Nursery Nyamagabe on 0 1 - 15/05/2016- 51,000 146 Ref.PF]925/15-16-IMBEREHEZA CY. Hist. 1/06/016 Bounced- Manpower in LHW 06/06/2016 Ngoma on 16-30/041016-BAMPORIKI 6,000 148 Angel ique-Ref.PF 1856/15-16 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Dam& Road Construction Kayonza- 10,712 210 Ref.PC34/1546 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Darn& Road Construction Kayonza- 10,644 210 I-Ref.PC34/15-16 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Dam& Road Construction Kayonza- 13,350 210 Ref.PC34/15-16 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Dam& Road Construction Kayonza- 5,125 210 Ref.PC34/15-16 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Dam& Road Construction Kayonza- 5,856 210 Ref.PC34/15-16 Hist.4/016 Bounced- Compensation of Assets 05/04/2016 Affected by Dam& Road Construction Kayonza- 76,690 210 Ref.PC34/15-16 Hist.4/016 Bounced-Compensation of PAPs 05/04/2016 Crops Affected by Dam Reservoir Construction - 1,200 210 Ref.PC32/15-16 in MUYANZA 31/12/2015 PC24/15-16 Compensation of Assets Affected by 27,600 306 Canal Construction at G8 11/12/2015 PC 18/15-16 Compensation of Assets Affected by 13,020 326 Canal & Road Construction At K4 11/12/2015 PC 18/15-16 Compensation of Assets Affected by 10,040 326 Canal & Road Construction At K4 17/11 = 201 5 PC 16/ t 5-16 Compensation of Assets affected by 2,475 350 Canal Platform & Dam Res.at K4 PC02115-16 Compensation of Assets affected by 29/07/2015 Canal Constr.at Rw34 159,810 461 1 1 Off ke of th e A udifor Ge n eral of State Fin an ces 43 LAND HUSBANDRY WATER HARVESTING AND HILLSIDE IRRIGATION AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2016 Hist.24/07/2015 Bounced Payment of 01/07/2015 BANYURWANIKI-Supply Hangar Construction 1,020,966 489 Materials-Ref.76/15-16 25/06/2015 PC93/14-15 Compensation of Assets Affected by 24,500 495 Canal & Road Construction At K4 12/09/2014 PC30/14-15 Compensation of assets affected by 25,200 781 irrigation works at Gatsibo 8 12/09/2014 PC30/14-15 Compensation of assets affected by 9,800 781 irrigation works at Gatsibo 8 1,984,988 Office of the Auditor General of State Finances 44 J3 cl .0 CN2 z 6z o cl 9 i2 r= 16 E, o 0 r4 E c .< -m o E ä .22 2o.E _ -- = E ",x > 1za to >- U-c- tt -O0ó- -on,VEs.Ji-u ES=. m- E:i u .. > cn E aj = E- ' co c u - -Z 52 h = 8g:2. E = ä - . - X -- C3 C3 - 2 ä 0> > . . ES E ci4 ffi E Eu © § E -E ro - -c .um2 'C5 E j ca~2 1- - . 0. C s - . o o -- S-j o 3 o_ - 8 E 8 Ca ä se .-.E- E flL t-l 0 0 0 ejt - e es &e%' e-2 at>~~~ ~~ $-iu..v u~>.lO-I aj an -o E 7vVB' 3f rVxbp_8i 8 Co=o0 -- -- OW - u O' >)00% ti u 0 U Cm Ul Jc ci~iy; >m4l zI cmj0 an C5 1 w t 5 c 〕不 ―꺼■――■■■■―I―■―■■」 〕屆 ―六 【. l 仁