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The Republic of Uganda Report of the Auditor

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The Republic of Uganda Report of the Auditor THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF ROAD SECTOR SUPPORT PROJECT 3 (RSSP-3) FOR THE TWENTY TWO (22) MONTH PERIOD ENDED 20TH MAY 2016 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS 1.0 INTRODUCTION .................................................................................................. 6 2.0 BACKGROUND INFORMATION ............................................................................... 6 3.0 PROJECT OBJECTIVES .......................................................................................... 7 4.0 AUDIT OBJECTIVES ............................................................................................. 8 5.0 AUDIT PROCEDURES PERFORMED ........................................................................ 8 6.0 CATEGORIZATION AND SUMMARY OF FINDINGS ................................................... 9 6.1 Categorization of findings ..................................................................................... 9 6.2 Summary of Findings .......................................................................................... 10 7.0 DETAILED FINDINGS.......................................................................................... 10 7.1 Road works on a Section Measuring 8.9 kms not undertaken ................................ 10 7.2 Claim of interest for unpaid certificates ................................................................ 11 7.3 Interim certificate and retention money certificate not paid ................................... 11 7.4 Funds re- allocated to and from other projects ..................................................... 12 ii REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT 3 (RSSP-3 FOR THE TWENTY TWO (22) MONTH PERIOD ENDED 20TH MAY 2016 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of Road Sector Support Project 3 (RSSP 3) for the twenty two (22) month period ended 20th May 2016. The financial statements comprise of; Statement of receipts and expenditure; Statement of fund balances; Notes to the financial statements, including a summary of significant accounting policies used. Project Management’s responsibility for the financial statements The Management of UNRA (the RSSP-3 implementing agency) are responsible for the preparation of the financial statements, in accordance with Government of Uganda and African Development Bank Guidelines. This responsibility includes: designing, implementing and maintaining internal control 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 accounting 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. Those standards require that the audit is planned and performed to obtain reasonable assurance as to 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers the internal controls relevant to the entity’s preparation and fair presentation of the financial statements 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 the iii entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimate made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence obtained is sufficient and appropriate to provide a 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 project financial statements present fairly in all material respects the financial position of Uganda National Roads Authority Road Sector Support Project 3 as at 20th May 2016 and of its receipts and expenditure for the year then ended in accordance with the accounting policies set out under section 7.0 of the financial statements and the terms and conditions of ADF funding. John F.S. Muwanga AUDITOR GENERAL KAMPALA 28th December 2016 iv REPORT OF THE AUDITOR GENERAL AND SUPPLEMENTARY INFORMATION v PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE ROAD SECTOR SUPPORT PROJECT 3 (RSSP 3) FOR THE TWENTY TWO (22) MONTH PERIOD ENDED 20TH MAY 2016 This Section outlines the detailed audit findings, management responses, and my recommendations in respect thereof. 1.0 INTRODUCTION Under Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended), and the National Audit Act, 2008, I am required to audit and report to Parliament on the public accounts of Uganda and of 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 carried out the audit of the Project to enable me report to Parliament. 2.0 BACKGROUND INFORMATION Uganda has a ten year rolling Road Sector Development Programme (RSDP). The programme covering the development and maintenance of national, district, urban and community access roads, guides investment in the sector. The programmes dealt with under the framework are: Road Sector Support Project 1, Road Sector Support Project II, Road Sector Support Project III and Road Sector Support Project IV. The Road Sector Support Project-3 (RSSP-3) is funded by African Development Bank (AfDB) following a request by the Government of Uganda to finance the upgrading of the Nyakahita-Ibanda-Kamwenge road from gravel to bitumen standard. The loan Agreement for RSSP-3 between the Republic of Uganda and AfDB was signed on 21st April 2010, under Project ID No.P-UG-DB0-020 and Loan No. 2100150020793. Under the Agreement, AfDB committed Eight Hundred Thousand Units of Account (UA 80,000,000) (the credit) equivalent to 277 billion Uganda shillings. Expected outputs of the project are a 143-kilometre new bitumen road with a six- metre carriage way and 1.5 metres of shoulders on either sides between Nyakahita, Ibanda and Kamwenge. The project was also to produce feasibility and detailed 6 engineering design studies for Kayunga-Galiraaya – 83 kilometres, and Hoima- Butiaba-Wanseko – 111 kilometres. The Project was implemented by the Uganda National Roads Authority and was expected to be completed by 1st March 2014. 3.0 PROJECT OBJECTIVES The objective of the Project is to improve road access in rural areas of Kiruhura, Ibanda and Kamwenge districts and western Uganda in general by upgrading the Nyakahita-Ibanda-Kamwenge road from gravel to bitumen standard. In addition, the project was to assess the feasibility of investing in the Kayunga-Galiraya and Hoima- Butyaba-Wanseko roads. The project starts at Kazo located approximately 201 Km from Kampala, capital of Uganda, along the Nyakahita – Ibanda road. The project ends at Kamwenge town, district chief town. The Kazo - Kamwenge road traverses the districts of Kiruhura, Ibanda and Kamwenge, all located in the South Western part of Uganda. The Project consists of the following Sections: LOT1: Nyakahita – Kazo (68 km) The Kazo- Kamwenge with a length of 68 km, contracted to China Communications Construction Company Limited (CCCC) supervised by J. Barrow. Lot 1 starts at approximately 201km away from Kampala–Mbarara Road at Nyakahita traversing through Kiruhura district and finally reaches Kazo. The existing gravel road, designated as a link road, was constructed to the standards of Class B gravel road. The project road is categorized as a Class II Bitumen road. LOT2: Kazo- Kamwenge (75 km) The Kazo- Kamwenge with a length of 75 km, contracted to China Railway Seventh Group (CRSG) Limited supervised by SNC- Lavalin. Lot 2 starts from 68 km away from Nyakahita traversing through Ibanda and finally reaches Kamwenge. The existing gravel road, designated as a link road, was constructed to the standards of Class B gravel road. The project road is categorized as a Class II Bitumen road. 7 4.0 AUDIT OBJECTIVES The audit was conducted in accordance with International Standards on Auditing and included a review of the accounting records, accounting policies used and agreed procedures as was considered necessary. The audit was carried out with regard to the following objectives; a. To express an opinion as to whether the financial statements for the year ended 30th June 2015 present fairly in all material respect the receipt and payments of the project as well as the cash position and are in conformity with generally accepted accounting principles. b. To establish whether the special account has been maintained in accordance with the provisions
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