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Report of the Auditor General on the Financial Statements of the Uganda National Roads Authority for the Year Ended 30Th June 2015

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Report of the Auditor General on the Financial Statements of the Uganda National Roads Authority for the Year Ended 30Th June 2015 THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE UGANDA NATIONAL ROADS AUTHORITY FOR THE YEAR ENDED 30TH JUNE 2015 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS LIST OF ACRONYMS ............................................................................................................................ iv REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF UGANDA NATIONAL ROADS AUTHORITY FOR THE YEAR ENDED 30TH JUNE, 2015 .................................. v 1.0 INTRODUCTION ...................................................................................................................... 1 2.0 BACKGROUND INFORMATION .............................................................................................. 1 3.0 ENTITY FINANCING ................................................................................................................ 1 4.0 MANDATE AND OBJECTIVES OF THE AUTHORITY ........................................................... 2 5.0 AUDIT OBJECTIVES ................................................................................................................ 2 6.0 AUDIT PROCEDURES PERFORMED ...................................................................................... 3 7.0 CATEGORIZATION AND SUMMARY OF FINDINGS ............................................................ 4 7.1 Categorization of Findings ..................................................................................................... 4 7.2 Summary of Findings.............................................................................................................. 4 8.0 DETAILED FINDINGS ............................................................................................................. 5 8.1 Mischarge of Expenditure ...................................................................................................... 5 8.2 Under Stated Infrastructure Assets ...................................................................................... 5 8.3 Nugatory expenditure ............................................................................................................ 6 8.4 Fraudulent Advances to ABC Capital Bank .......................................................................... 8 8.5 Un accounted for Advance - UGX.47.7bn to contractors to pay Project Affected Persons (PAPs) ........................................................................................................................ 8 8.6 Outstanding creditors ............................................................................................................. 9 8.7 Review of Budget Performance – Uncompleted Activities .............................................. 10 8.8 Procurement Irregularities ................................................................................................... 13 8.10 Lack of legally binding agreement between UNRA and Kalangala Infrastructure Services Ltd (KIS) ................................................................................................................. 23 8.11 Improperly Budgeted for Expenditure -Support for KIS ................................................. 24 8.12 Lack of a performance Guarantee on Funds paid for ferry operations (KIS) ............. 25 8.13 Grant Reserves not fairly stated ......................................................................................... 26 8.14 Delayed contract implementation ....................................................................................... 26 8.15 Hire of privately owned Road Equipment ......................................................................... 27 8.16 Late remittance of deducted taxes to URA ....................................................................... 28 8.17 Non - Performing Letters of Credit ..................................................................................... 28 8.18 Payments to the media houses........................................................................................... 29 8.19 Use of un-prequalified service providers in procurements ............................................. 29 8.20 Un accounted for emergency works at 3 UNRA stations ................................................ 29 8.21 Irregular payment of un-defined Allowances - UGX.50,167,506 ................................... 30 8.22 Violation of Sections of the Labour Based Manual .......................................................... 30 8.23 Lack of Procurement Personnel at UNRA Stations ........................................................... 31 8.24 Vehicles not yet boarded off at Mbale Station ................................................................. 32 8.25 Status of Implementation of Prior year Audit Recommendations ................................. 33 9.0 TECHNICAL (ENGINEERING) AUDIT OF A SAMPLE OF ROAD CONSTRUCTION PROJECTS .............................................................................................................................. 36 9.1 CONSTRUCTION OF THE KAMPALA – ENTEBBE EXPRESSWAY (51.4KM) THROUGH DESIGN AND BUILD CIVIL WORKS CONTRACT ........................................................................... 37 ii 9.2 UPGRADING OF KAMWENGE- FORT PORTAL ROAD (66.2KM) FROM GRAVEL TO PAVED (BITUMEN) STANDARD ....................................................................................................... 42 9.3 UPGRADING OF MPIGI – KANONI ROAD FROM GRAVEL TO BITUMINOUS STANDARD (64Km) ................................................................................................................................................ 49 9.4 EMERGENCY REPLACEMENT OF NTUNGWE AND MITAANO BRIDGES IN RUKUNGIRI/KANUNGU DISTRICTS ................................................................................................ 52 iii LIST OF ACRONYMS Acronym Meaning RT. Hon Right Honourable UNRA Uganda National Roads Authority CCCC China Communications Construction Company MTEF Medium Term Expenditure Framework IPC Interim Payment Certificate TSDP Transport Sector Development Project SRIV Stores Requisition Issue Form Voucher GRN Goods received Note RFQ Request for quotation $ United States Dollar KIS Kalangala Infrastructure Services PPP Public Private Partnership LBCs Labour based Contracts USA United States of America FYR Financial Year LC Letter of Credit IGG Inspector General of Government RAFU Road Formation Unit TIN Tax Identification Number URA Uganda Revenue Authority NTR Non Tax Revenue KM Kilometre MoWT Ministry of Works and Transport MoFPED Ministry of Finance, Planning and Economic Development PAPs Project affected persons UGX Uganda Shillings Bn Billion SG Solicitor General PDU Procurement and Disposal Unit GOU Government of Uganda URA Uganada Revenue Authority MDAs Ministry, Department and Agencies PPDA Public Procurement and Disposal of Public Assets Authority IFMS Integrated Financial Management System Rd Road CIID Criminal Intelligence and Investigations Department KCB Kenya Commercial Bank LC 1 Local Council 1 Co. Company Ltd Limited LPO Local Purchase Order GRN Goods Received Note M Million PFMA Public Finance Management Act, 2015 iv REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF UGANDA NATIONAL ROADS AUTHORITY FOR THE YEAR ENDED 30TH JUNE, 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of Uganda National Roads Authority (UNRA) for the year ended 30th June 2015. These financial statements comprise of the statement of financial position, statement of financial performance, statement of cash flows, statement of changes in equity together with other accompanying statements, notes and accounting policies. Responsibility of the Directors The Directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, Section 45 of the Public Finance Management Act, 2015 and the requirements of the Uganda National Roads Authority Act, 2006 and for such internal controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor’s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda, 1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing. Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing audit procedures to obtain evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor’s judgment including the assessment of risks of material misstatements of 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 financial statements in order to design audit procedures that are appropriate in the circumstances but not for purposes of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used
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