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THE REPUBLIC OF UGANDA UGANDA NATIONAL ROADS AUTHORITY REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT 4 (RSSP– 4) KIGUMBA – MASINDI – HOIMA – KABWOYA ROAD PROJECT ADF LOAN – PROJECT ID NO P-UG-DB0-021 FOR THE YEAR ENDED 3OTH JUNE 2016 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT (RSSP 4) ADF LOAN-PROJECT ID NO P-UG-DB0-021 FOR THE YEAR ENDED 30TH JUNE 2016 .......................................................................... iii 1.0 INTRODUCTION .................................................................................................. 1 2.0 PROJECT BACKGROUND ...................................................................................... 1 3.0 PROJECT OBJECTIVES AND COMPONENTS ............................................................ 2 4.0 AUDIT OBJECTIVES ............................................................................................. 2 5.0 AUDIT PROCEDURES PERFORMED ....................................................................... 3 6.0 CATEGORIZATION AND SUMMARY OF FINDINGS .................................................. 4 6.1 Categorization of Findings .................................................................................... 4 6.2 Summary of Findings ........................................................................................... 5 7.0 DETAILED FINDINGS ........................................................................................... 5 7.1 Compliance with the Financing Agreement and Government of Uganda Provisions .... 5 7.1.1 Inter Project borrowing .................................................................................... 5 7.2 General Standard of Accounting and Internal Control ............................................. 6 7.2.1 Financial Management Manual .......................................................................... 6 7.2.2 Compensation of Projected affected persons ...................................................... 6 7.2.3 Contractor Mobilization ..................................................................................... 8 7.2.4 Consultant Mobilization .................................................................................... 11 7.2.5 Design Review Report ..................................................................................... 12 7.2.6 Lack of an Inventory Register .......................................................................... 13 ii REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT (RSSP 4) ADF LOAN-PROJECT ID NO P-UG-DB0-021 FOR THE YEAR ENDED 30TH JUNE 2016 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the accompanying financial statements of the Road Sector Support Project 4 (upgrading of the Kigumba – Masindi – Hoima – Kabwoya Road Project) for the year ended 30th June 2016. The financial statements comprise of; Statement of financial performance Statements of fund balance Notes to the financial statements including a summary of significant accounting policies adopted. Management’s Responsibility for the financial Statements Management is responsible for the preparation and fair presentation of these financial statements, in accordance with Government of Uganda and African Development Bank Guidelines. This responsibility includes: designing, implementing and maintaining internal controls, relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting policies and making estimates that are reasonable in the circumstances. Auditor’s Responsibility My responsibility is to express an opinion on the financial statements based on my audit. I conducted the audit in accordance with International Standards on Auditing (ISA). Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. 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 judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal controls relevant to the entity’s preparation and fair presentation of the iii financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a reasonable basis for my opinion. Part “A” of this report sets out my opinion on the financial statements. Part “B” which forms an integral part of this report presents in detail all the significant audit findings made during the audit which have been brought to the attention of management. PART “A” Opinion In my opinion, the financial statements present fairly in all material respects Uganda National Roads Authority – RSSP 4 statement of receipts and expenditure, and statement of fund balance for the year ended 30th June 2016 in accordance with the terms and conditions of the ADF funding agreement and the cash basis of accounting under section 9 of the financial statements. Other Reporting Requirements I report based on my audit, that; UNRA complied with the loan agreement covenants. In particular UNRA complied with the Bank’s rules and policies, the loan covenants relating to procurement of goods and services. I have obtained all the information and explanations, and all expenses were eligible. As part of my audit scope and in accordance with International Standards on Auditing. I considered internal controls relevant to UNRA in the preparation and fair presentation of RSSP 4 financial statements in order to design audit procedures that are appropriate. iv The Internal Control structure for RSSP 4 was found to be appropriate other than the matters referred to in this report. John F.S. Muwanga AUDITOR GENERAL KAMPALA 16th December, 2016 v REPORT OF THE AUDITOR GENERAL AND SUPPLEMENTARY INFORMATION PART “B” DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT 4 FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016 This Section outlines the detailed audit findings, management responses, and my recommendations in respect thereof. 1.0 INTRODUCTION Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended), requires me to audit and report on the public accounts of Uganda and all public offices including the courts, the central and local government administrations, universities and public institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I appointed M/s Sejjaaka, Kaawaase & Co, Certified Public Accountants to carry out the audit on my behalf and report to me so as to enable me report to Parliament. 2.0 PROJECT BACKGROUND Government of Uganda (GoU) in line with its transport infrastructure improvement strategy under the 10-year Road Sector Development Program (RSDP) applied for and received a loan of UA 72,940,000 million from the African Development Bank Group (the Bank) towards the Road Sector Support Project 4 (RSSP 4). Proceeds for the loan which were approved on 13th March 2013 are to finance the upgrading of Kigumba – Masindi – Hoima – Kabwoya Road (135 km) to bitumen standard, studies for the upgrading of Kazo-Buremba-Kabagole-Kyegegwa (82km) and Masindi-Bisso (50km), Road Safety Audit, mitigation of HIV/AIDS, STI and TB, monitoring of ESMP implementation and baseline data collection, capacity enhancement, consulting services for technical and financial audits and compensation and resettlement. The United Kingdom Department for International Development (DFID) also extended a GBP 8,901,500 grant towards RSSP 4 on 16 December 2014, the proceeds of which shall be applied under eligible payments for the civil works of the upgrading of the Road (135km). 1 3.0 PROJECT OBJECTIVES AND COMPONENTS The project objectives include:- i) Improve sustainable road access and quality of transport service levels in the western and south western parts of Uganda by reducing road maintenance costs, vehicle operating costs and travel time; ii) Enable the rural people to access socio-economic facilities and contribute to their integration to the rest of the country thereby contributing to poverty reduction; iii) Support regional integration and cross border trade with Rwanda and DRC; and iv) Facilitate the oil exploration and extraction activities The project is being implemented under the following categories, namely; i) Civil works Construction works for the upgrading of gravel surfaced road to bitumen standards from Kigumba to Bulima (69km) and Bulima to Kabwoya (66 km). ii) Consultancy services Studies consisting of; Road Users Charges Management framework for review of the Road Fund; Feasibility study and detailed engineering
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