REPORT OF THE AUDITOR GENERAL OF STATE FINANCES FOR THE YEAR ENDED 30 JUNE 2013 Office of the Auditor General of State Finances i TABLE OF CONTENTS TABLE OF CONTENTS .................................................................................................... I FOREWORD BY THE AUDITOR GENERAL ................................................................ 7 EXECUTIVE SUMMARY ............................................................................................... 12 1.1 HISTORICAL BACKGROUND................................................................................................ 13 1.2 MANDATE AND FUNCTIONS OF THE AUDITOR GENERAL ............................................. 13 1.3 OAG VISION, MISSION AND CORE VALUES ....................................................................... 14 1.4 OAG STRUCTURE AND STAFFING ............................................................................................... 14 1.5 STRATEGIC PLAN IMPLEMENTATION ............................................................................... 15 1.6 FINANCIAL MANAGEMENT AT OAG .................................................................................. 21 AUDIT COVERAGE AND AUDIT RESULTS ............................................................... 22 2.1 AUDIT COVERAGE................................................................................................................. 22 2.2 OVERVIEW OF AUDIT RESULTS .......................................................................................... 25 TRACKING IMPLEMENTATION OF PREVIOUS AUDIT RECOMMENDATIONS ........................................................................................................................................... 26 3.1 FOLLOW UP MECHANISMS ON OAG RECOMMENDATIONS ........................................... 26 3.2 STATUS OF IMPLEMENTATION OF PREVIOUS AUDIT RECOMMENDATIONS.............. 27 KEY FINDINGS AND CROSS CUTTING ISSUES FROM THE AUDITS .................. 29 4.1 PERSISTENT ACCOUNTING ERRORS AND WEAKNESSES IN PREPARATION OF FINANCIAL STATEMENTS ................................................................................................ 29 4.2 IRREGULAR AND UNAUTHORISED EXPENDITURE INCURRED BY PUBLIC ENTITIES .............................................................................................................................................. 33 4.3 FINANCIAL MISMANAGEMENT AT EWSA ..................................................................... 35 4.4 LIQUIDITY AND OPERATIONAL PROBLEMS AT ONATRACOM .................................. 39 4.5 CHALLENGES OF SUPERVISION OF GOVERNMENT PROGRAMMES IMPLEMENTED THROUGH DECENTRALIZED ENTITIES .......................................................................... 40 4.6 IMPLEMENTATION OF PROGRAMMES IN EDUCATION SECTOR ............................... 41 4.7 ISSUES AFFECTING THE HEALTH SECTOR .................................................................... 47 4.8 IMPLEMENTATION OF GOVERNMENT SOCIAL PROGRAMMES................................. 54
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REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances
i
TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................... I
FOREWORD BY THE AUDITOR GENERAL ................................................................ 7
4.18 RECOVERY OF FUNDS REPORTED IN FRADULENT CASES ......................................... 80
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances
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ABBREVIATIONS AND ACRONYMS
AFD Agence Française de Développement AFROSAI-E African Organization of Supreme Audit Institutions-English speaking AGF Automobile Guarantee fund AGI Adolescent Girls Initiative BCR Banque Commerciale du Rwanda/Commercial Bank of Rwanda
BNR National Bank of Rwanda BRD Banque Rwandaise de Développement CEPEX Central Public Investment and External Finance Bureau CHUK University Teaching Hospital- Kigali CNLG National Commission For The Fight Against Genocide
CNLS National Commission for the Fight Against AIDS CSR National Social Security Fund CSRP Civil Service Reform Project CTAMS Mutual Health Technical Support Cell EAAPAC East Africa Association of Public Accounts Committees EAPHLN East Africa Public Health Laboratory Networking Project EARP Electricity Access Rollout Program
EASSDP Electricity Access Scale-Up and Sector Wide Approach Development Project
EATTFP East Africa Trade and Transport Facilitation Project EDPRS Economic Development and Poverty Reduction Strategy EIF Enhanced Integrated Framework EWSA Energy, Water and Sanitation Authority FARG Genocide Survivors Fund FER Fond d’Entretien Routier (Road Maintenance Fund) GBEs Government Business Enterprises GMO Gender Monitoring Office GoR Government of Rwanda ICPAR Institute of Certified Public Accountants of Rwanda IDF Institutional Development Fund IFMIS Integrated Financial Management Information System
INTOSAI International Organisation of Supreme Audit Institutions IPPIS Integrated Personnel and Payroll Information System IRST Institute of Technology and Scientific Research ISAE Institute of Agriculture and Animal Husbandry KHI Kigali Health Institute KIE Kigali Institute of Education KWAMP Kirehe Community Based Watershed Management Project LEVEMP Lake Victoria Environmental Management Project LWH Land Husbandry Water harvesting and Hillside Irrigation MDTF Multi Donor Trust Fund
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MHC Media High Council MIDIMAR Ministry of Disaster Management and Refugee Affairs MIFOTRA Ministry of Labour and Skills Development MINADEF Ministry of Defense MINAFFET Ministry of Foreign Affairs MINAGRI Ministry of Agriculture MINALOC Ministry of Local Government MINEAC Ministry of East African Community MINECOFIN Ministry of Finance and Economic Planning MINEDUC Ministry of Education MINICOM Ministry of Commerce MINIFOM Ministry of Forestry and Mines MINIJUST Ministry of Justice MININFRA Ministry of Infrastructure MININTER Ministry of Internal Affairs MINIRENA Ministry of Natural Resources MINISANTE Ministry of Health MINISPOC Ministry of Sports and Culture MINIYOUTH Ministry of Youth, Culture and Sports NBA Non Budget Agency NCDC National Curriculum Development Centre NCHE National Council for Higher Education NDIS National Decentralization Implementation Secretariat NEC National Electoral Commission NHRC National Human Rights Commission NID National Identification Project NIMR National Institute of Museums of Rwanda NISR National Institute of Statistics NPPA National Public Prosecution Authority NUR National University of Rwanda NURC National Unity and Reconciliation Commission OAG Office of the Auditor General of State Finances OCIR CAFÉ Rwanda Coffee Development Authority OCIR THE Rwanda Tea Authority ONATRACOM Rwanda Public Transport Authority OP Payment Order ORINFOR National Office for Information OTR Ordonnateur Trésorier du Rwanda (Central Treasury of Rwanda) PAC Public Accounts Committee PADAB Bugesera Agricultural Development Support Project PAIGELAC Inland Lakes Integrated Development and Management Support Project PAPSTA Support Project to the Strategic Plan for the Agriculture Transformation PAREF Projet d'Appui à la Reforestation PAYE Pay As You Earn
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PDCRE Smallholder Cash and Export Crops Development Project PFM Public Financial Management Reform Basket Fund PHHS TF Post Harvest Handling and Storage Task Force PPF (LISP) Project Preparation Facility of the Livestock Infrastructure Support
Programme PPPMER Rural Small And Micro Enterprises Project PRIMATURE Prime Minister's Office PSCBP Public Sector Capacity Building Project PSGG Project for Strengthening Institutional Framework for Good Governance RAB Rwanda Agricultural Board RBC Rwanda Biomedical Board RCA Rwanda Cooperative Agency RCAA Rwanda Civil Aviation Authority RCE Rukara College of Education RCIPRW Regional Communication Infrastructure Program – Rwanda Project RCS Rwanda Correctional Services RDB Rwanda Development Board RDRP Rwanda Demobilization And Reintegration Programme REB Rwanda Education Board REMA Rwanda Environment Management Authority RHA Rwanda Housing Authority RHODA Rwanda Horticulture Development Authority RIAM Rwanda Institute of Administration & Management RLDSF Rwanda Local Development Support Fund RNP Rwanda National Police RNRA Rwanda Natural Resources Authority RPPA Rwanda Public Procurement Authority RRA Rwanda Revenue Authority RSSB Rwanda Social Security Board RSSP III Rural Sector Support Project Phase III RTDA Rwanda Transport Development Agency RURA Rwanda Utilities Regulatory Agency
SADCOPACs Southern Africa Development Community Organisation of Public Accounts Committees
SEDP Sustainable Energy Development Project SFAR Student Financing Agency of Rwanda SFB School of Finance and Banking SONARWA Société Nouvelle d’Assurances du Rwanda TCT Tumba College of Technology TSC Teachers Service Commission TSDP Transport Sector Development Project UAF Universal Access Fund UBPR Union des Banques Populaires du Rwanda UNAIDS United Nations Programme on HIV/AIDS
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
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UP Umutara Polytechnic USPLS Public Sector Umbrella in Fight Against Aids VUP Vision Umurenge program WDA Work Force Development
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
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Office of the Auditor General of State Finances 7
FOREWORD BY THE AUDITOR
GENERAL
Article 184 of the Constitution of the Republic of Rwanda of 4 June 2003,
as amended to date stipulates that the Auditor General shall submit each
year to each Chamber of Parliament, prior to the commencement of the
session devoted to the examination of the budget of the following year, a
complete report on the state financial statements for the previous year.
That report must indicate the manner in which the budget was utilised, unnecessary
expenditure which was incurred or expenses which were contrary to the law and whether
there was wasteful expenditure or misappropriation.
Accordingly, I now submit to Parliament a report on the audits conducted during the period
from June 2013 to 30 April 2014. The audits mainly covered expenditure incurred by
Government entities for the year ended 30 June 2013. This report presents cross cutting
issues identified during financial audits and performance audits. Individual reports containing
the audit opinion and details of all findings have been issued for each audited entity.
This report also covers other activities of the Auditor General’s office for the year ended 30
June 2013 and achievements realized during the year.
Audit coverage
The audit coverage represents the percentage of expenditure incurred by the entities audited
when compared to the total national expenditure for the financial year, as presented in State
consolidated financial statements. The expenditure incurred by entities audited during the
period June 2013 to 30 April 2014 represents 79% of the reported Government Expenditure
for the year ended 30 June 2013, compared to 75% for the year ended 30 June 2012. The total
Government expenditure reported in State consolidated financial statements for the year
ended 30 June 2013 amounted to Frw 1,520,633,876,485 compared to Frw
1,377,747,090,152 for the previous year ended 30 June 2012. This coverage is in line with
PFM coverage target of 78% of expenditure incurred by Government during the year ended
30 June 2013.
The above coverage was achieved, alongside audit of the State consolidated financial
statements and increased number of audits for Government Business Enterprises, including
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 8
EWSA. With its wide span of operations across the country and various activities of the
Development unit, EWSA audit took a significant investment of OAG resources during the
year. The final report was submitted to Parliament and I am aware that PAC is examining this
report in exercise of the oversight duties of Parliament.
Non budget agencies
The office also audited five (5) non- budget agencies per district covering: an administrative
sector, VUP sector, Mutuelle de sante at District level, District pharmacy and one school.
This required more time than is usually spent on audit of districts. The office has also
outsourced audits of 4 District hospitals and 4 Provincial Hospitals to CPA member firms of
ICPAR and their audits are still ongoing. The office will progressively increase coverage of
audit of Non budget agencies in years to come.
Audit of Universities to facilitate formation of One University of Rwanda
The office conducted audits of the seven (7) Public universities to support Government in
preparations to form One University of Rwanda. The former Universities are now constituent
colleges of One University of Rwanda and the audits provided financial closure to their
operations prior to incorporation into the newly created holding entity (the One University).
Value for money audits
In regards to value for money audits, the Office also conducted six (6) value for money audits
during the current year, as listed below:
Topic Status of the report
1 Health Care wastes management Report being finalized and will be submitted to Parliament by 30 May 2014
2 Water Management sector focusing on water production and distribution in Kigali city
Report being finalized and will be submitted to Parliament by 30 May 2014
3 Effectiveness of Boards of Directors Report being finalized and will be submitted to Parliament by 30 May 2014
4 Tax collection system in decentralized entities Report being finalized and will be submitted to Parliament by 30 May 2014
5 Follow up audit of SFAR Bursary/ Loan disbursement and Loan recover
Report being finalized and will be submitted to Parliament by 30 May 2014
6 Follow up audit of Management of Aid Management Report being finalized and will be submitted to Parliament by 30 May 2014
Involvement in PAC activities
OAG continued to work closely with PAC during the year, especially during the month of
November 2013. Progressive submission of reports to PAC during the year also meant that
OAG was engaged throughout the year with PAC regarding completed reports submitted
progressively during the audit cycle.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 9
Overview of audit results
There was notable improvement across board and 32% of all audit reports (45 reports)
obtained unqualified (clean) audit opinion, compared to 28% last year, as shown in table
below:
Type of opinion issued No. of reports Percentage of reports
Disclaimer 1 1%
Adverse 61 44%
Except for 32 23%
Unqualified (clean) 45 32%
Total 139 100%
This trend is positive and shows that public entities are making tremendous efforts to ensure
proper accountability for public funds. These improvements were noted across board, expect
for Government Business Enterprises, Government Boards and Universities, where there
seems to be a declining trend. The majority of audit issues during this audit cycle arose from
these three clusters, alongside some districts which are not showing improvement.
Summary of key cross cutting issues
Despite the notable improvements above, the majority (68%) of public entities still have
fundamental accounting, corporate Governance, financial management, contract management
and value for money issues to address. Some of them had not implemented many of the audit
recommendations made in the previous audit.
• In terms of specific Government sectors, the education sector still faces many challenges
in implementing Government programmes like the one laptop per child, the school based
mentorship programme, school interconnectivity programmes. The Universities still have
challenges with accounting for their resources. Some equipment procured by WDA for
technical and vocational training schools has remained idle for more than 2 years.
• In the energy and water sector, Government needs to undertake a holistic review of
EWSA and address the serious financial management problems identified during the
audits. There are also corporate Governance gaps that need to be addressed to improve
delivery of services at EWSA.
• The health sector is faced with challenges of inadequate follow up on activities at low
level units as illustrated through delayed completion of construction works at Bushenge
hospital which have not been completed after 5 years even though the construction was
responding to a disaster that occurred in 2008. In addition, some equipments delivered to
improve service delivery at different hospitals are idle for long or malfunctioned but not
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 10
fixed timely. In terms of health care waste management, there is no comprehensive legal
framework to guide health care waste management. Incinerators at King Faisal and
CHUK emit smoke which is hazardous. In some district hospitals, incinerators distributed
did not function properly.
• In terms of social programmes rolled out by Government to support the population, there
are cases where these social programmes have not been effectively monitored and
implemented to realise the desired objectives. This was the case with some FARG
programmes which were not realising the intended targets; challenges of recoverability of
VUP loans; and concerns over some delays in delivery of milk in schools under the one
cup of milk per child programme managed by RAB. A major concern from the audit is
the plight of people who have been living in emergency shelters in Rubavu district since
March 2010. There seems to be no programme in place to relocate them or get them
habitable structures.
• In the Agriculture sector, there are concerns over the inadequate tracking of productivity
of seeds distributed by Government under the Crop Intensification Programme
implemented by RAB. The distribution process also has various weaknesses which may
result in misappropriation of seeds earmarked for farmers. The Post Harvest Handling and
Storage Task Force is still having challenges to recover old fertiliser debts from
distributors despite improvements in recoveries for fertilisers distributed during the year.
• In Local Governments, there are concerns of inadequate follow up and lack of
accountability for funds managed by the Non Budget agencies. These entities did not
prepare budget execution reports to track utilisation of funds managed. Non budget
agencies managed revenue of Frw 175,849,296,305 and expenditure of Frw
163,037,470,479 and yet these were not incorporated in financial statements of districts.
These were ultimately omitted from fund balances presented in the state consolidated
financial statements.
• In the Accountability sector, the main concerns relate to: the persistent weaknesses in
preparation of financial statements and many errors noted during the audits; the high level
of wasteful, unauthorised and irregular expenditure totalling Frw 3,207,188,658;
increasing cases of fraudulent transactions where Frw 1,092,490,786 in fraudulent cases
identified since 2011 have not been recovered; and the persistent weaknesses reported in
management of Government assets that resulted in stolen assets worth Frw 660,573,078
and idle assets not in use worth Frw 1,162,132,816. A tourism boat acquired by former
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 11
ORTPN (now RDB) at Frw 308,134,375 in 2008 has remained grounded for 3 years since
May 2011 and requires significant expenditure for repairs and procurement of a new
engine to get it back into operations.
There are concerns over the significant delays in implementation of Government projects
which has necessitated many to seek extensions in order to implement planned activities.
There are also problems in contract management where implementation of forty five (45)
contracts totalling Frw 23,729,538,334 was significantly delayed and nine (9) contracts
worth Frw 908,562,999 were abandoned by contractors. There are concerns over the lack
of value for money in the investment made by Government entities in IT systems.
Specific recommendations have been made in individual reports to address the above
concerns and there is need for the responsible oversight and supervising agencies of
Government to make proper follow up with those entrusted with the fiduciary duty in the
respective implementing agencies.
Acknowledgement
I would like to acknowledge the support from Government (Executive) for initiating and
implementing PFM reforms and taking initiatives aimed at creating a conducive audit
environment necessary to enhance public financial management. We highly commend the
new Organic Law on state finances and property (law no 12/2013/OL of 12/09/2013). I also
acknowledge Parliament of the Republic of Rwanda for its oversight mandate and enacting
enabling laws and regulations to strengthen OAG independence. The passing of the new
OAG law (Law no 79/2013 of 11/09/2013) is testimony to the commitment of Government to
ensure independence of the Auditor General’s office.
I extend my gratitude to Development Partners who have continued to support OAG to build
its holistic capacity to execute its mandate.
Last but not least, special thanks to my staff for their continued exhibition of Professional
resilience and patriotic resourcefulness in ensuring that OAG executes its mandate.
Obadiah R.BIRARO
AUDITOR GENERAL
KIGALI, .………………………………. 2014
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 12
EXECUTIVE SUMMARY
According to Article 183 of the Constitution of the Republic of Rwanda as amended to date,
and Articles 6 and 14 of Law no 79/2013 of 11/09/2013 determining the mission,
organization and functioning of the Office of the Auditor General of State Finances, the
responsibilities of the Office of the Auditor General include the following:
• Auditing and reporting on accounts of all public entities, local administrative entities,
public enterprises, parastatal organizations and projects;
• Conducting financial and value for money, economy and efficiency audits in respect of
expenditure in all institutions referred to above;
• Conducting accountability, management and strategic audits of accounts in the institutions
mentioned above.
Article 184 of the Constitution of the Republic of Rwanda of 4 June 2003, as amended to date
stipulates that the Auditor General shall submit each year to each Chamber of Parliament,
prior to the commencement of the session devoted to the examination of the budget of the
following year, a complete report on the state financial statements for the previous year.
Accordingly, I submit the Annual audit report of OAG covering audits of financial statements
of public entities for the year ended 30 June 2013 and performance audits conducted during
the period.
The report is presented in five (5) volumes:
Volume I: Executive Summary
Volume II: Report on State Consolidated Financial Statements;
Volume III: Key findings from audit of Local Governments (Districts and City
of Kigali);
Volume IV, PART 1: Key findings from audit of Ministries, and other Central
Administration entities and projects;
Volume IV, PART 2: Key findings from audit of Boards and Government Business
Enterprises; and
Volume V: Key findings from Performance audits and Special assignments.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 13
SECTION 1
REPORT ON OAG ACTIVITIES DURING THE YEAR
1.1 HISTORICAL BACKGROUND
The Office of the Auditor General was established 1998. Its first annual report covering 17
entities audited was issued to Parliament in 2000. The annual report currently has 139 reports
from 127 entities and projects, alongside the audit report on state consolidated financial
statements.
1.2 MANDATE AND FUNCTIONS OF THE AUDITOR GENERAL
Article 183 of the Constitution of the Republic of Rwanda of 4 June 2003, and Articles 6 and
14 of Law no 79/2013 of 11/09/2013 determining the mission, organization and functioning
of the Office of the Auditor General of State Finances (OAG) require the Auditor General to
audit and report to Parliament on the Public Accounts of Rwanda and of all Public offices
including local government organs, public enterprises and parastatal organizations, privatized
state enterprises, joint enterprises in which the State is participating and government projects.
The responsibilities of the Office of the Auditor General include the following:
• Auditing and reporting on accounts of all public entities, local administrative entities,
public enterprises, parastatal organizations and projects;
• Conducting financial and value for money, economy and efficiency audits in respect of
expenditure in all institutions referred to above;
• Conducting accountability, management and strategic audits of accounts in the institutions
mentioned above.
In addition, Article 184 of the Constitution, as amended to date, stipulates that the Auditor
General shall submit each year to each Chamber of Parliament, prior to the commencement
of the session devoted to the examination of the budget of the following year, a complete
report on the state financial statements for the previous year. That report must indicate the
manner in which the budget was utilized, unnecessary expenditure which was incurred or
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 14
expenses which were contrary to the law and whether there was wasteful expenditure or
misappropriation.
1.3 OAG VISION, MISSION AND CORE VALUES
Vision
“To promote an accountable, honest and effective Government administration”.
Mission
“To promote accountability, transparency and best practice in Government operations as a
means to good governance”.
Core Values
The Auditor General and the staff of the Office of the Auditor General, in executing their
responsibilities are committed to live by the office’s core values of:
• Integrity: Being upright and honest;
• Objectivity: To display impartiality and professional judgment;
• Independence: from the audited entity and other outside interest groups;
• Accountability: by providing assurance that activities were carried out as intended and
with due regard for fairness, propriety, and good stewardship;
• Confidentiality: respect of the confidentiality of information acquired in the course of
work; and
• In Public Interest: by making decisions with the public interest in mind.
1.4 OAG structure and staffing
The OAG structure comprises 150 positions by year 2014/2015. Our current staffing level
stands at 123 staff and this is expected to increase to 134 staff in the year 2014/2015. The
staffing level expected in 2014/2015 is below the planned 150 positions due to budget
constraints.
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1.5 STRATEGIC PLAN IMPLEMENTATION
OAG is now in its 3rd year of the implementation of the OAG Strategic plan of 2011/12-
2015/16 operated under OAG PFM Sub-basket fund Project. The Strategic Plan is built
around five pillars, namely:
i. Enhancing the independence of the OAG;
ii. Strengthening institutional capacity in line with its mandate;
iii. Building and strengthening professional audit capacity;
iv. Strengthening OAG’s capacity to engage stakeholders effectively; and
v. Coordination, implementation and monitoring.
The achievements realized on each pillar are herewith elaborated:
1.5.1 Enhancing the independence of the OAG
The main objective of this pillar was the enactment of the new Audit bill to enhance the
independence of the OAG. The office saw its bill enacted into law on 11/11/2013 under the
law no 79/2013. This law enhances the independence and autonomy of the Office and has
enabled OAG to comply with requirements of ISSAI 10,20,3000 and 3100, which are
necessary to attain Level 3: the established level classification of SAIs under AFROSAI-E.
The Office is now planning to embark on institutional review to align its current structure to
the new Audit Act.
1.5.2 Strengthening institutional capacity in line with its mandate
Under this pillar, the Office has planned to continue upgrading its IT infrastructure in
preparation of the automation of the audit and administration process. The major output of
this project is transforming OAG workplace into a paperless environment. The activities done
this year include: acquisition of more laptops, digital cameras (to help in capturing audit
evidence), mobile phones for auditors (to facilitate smooth communication and transmission
of data between the auditors in the field and the office), portable scanners necessary for the
Teammate software users during fieldwork, acquisition of new servers in preparation of
offsite backup and finalizing the tender process for e –archiving.
The Office actively seeks to exploit ICT developments to improve the efficiency of work and
to enhance the security of transfer of information from auditees to Office systems. All staff
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working off site currently have the facility to access directly the Office’s central information
systems, and to process and store information centrally.
1.5.3 Building and strengthening professional audit capacity
Under this pillar, the Office achieved the following:
a. Teammate audit Software
As stated above, the office embarked on the project of automating the audit function.
According to the roadmap drawn last year, this year a pilot group of 6 teams has been
selected to start using the teammate audit software. This annual report contains in total 28
Assignments that have been produced via that system. The overall feedback on the software
from our auditors is positive and a formal evaluation report is being prepared with the aim of
enrolling the remaining OAG audit staff in the system in the next audit year of 2014/2015.
The advantages of using this system are many and include among others:
• Deliver high quality audit work through consistent execution of the audit methodology
• Perform the audit and issue the audit report more efficiently
• Follow best practice to assess and test controls
• Document results & issues consistently
• Review work, regardless of location
b. Graduate recruitment program (GRP)
Due to financial constraints, the Office could not implement its staff structure as indicated in
the Strategic plan, and it only managed to replace the 4 staff who had resigned in the previous
year by recruiting 4 staff through its graduate recruitment program. This program consists of
attracting the best students in Accounting faculties at universities after their graduation and
give them a recruitment test and retain those who succeed.
c. Professional Training and development
During the year, the Office sponsored its staff for professional courses. A total of 102 OAG
students sat for December 2013 professional exams and are now preparing the June 2014
professional exams, as shown in table below:
Professional course Number of staff enrolled
ACCA 60 CIPS 1 CPA 31 CIA 10
102
The Office developed a standard training plan to be followed up to 2016.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
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Office of the Auditor General of State Finances 17
Besides the accounting profession certification courses, the Office has, during the year,
sponsored its staff in different trainings in different areas as planned in the standard training
plan.
d. Outsourcing of the Audits
The Office embarked on the outsourcing of some of the financial audits to CPA audit firms
that are members of ICPAR. This was a means of addressing increasing demand from our
stakeholders. The office started with the Healthcare sector where 4 District hospitals and 4
Provincial Hospitals are being audited by 4 CPA firms that are members of ICPAR. OAG
requires the work to be carried out to the same standards and specifications used by its own
audit teams, and reports on the audits are subject to the normal process of senior management
review.
1.5.4 Strengthening OAG’s capacity to engage stakeholders effectively
During the year, OAG engaged with various stakeholders in order to enhance good
governance and accountability as envisioned by the Vision 2020 and the EDPRS 2. OAG’s
engagement with the stakeholders included:
1.5.4.1. Domestic Relations
I. Induction of the new Parliament
During the year, our country got new members of parliament after the end of the term of the
previous one. With the elections taking place in September 2013, OAG prepared itself for the
task of inducting the new members of Parliament in Public Financial Management. This is
always done with other stakeholders including among others; MINECOFIN and RPPA.
II. Participation in the Public Finance Management working groups
OAG is among key PFM institutions in Rwanda. It operates under the component of External
Oversight and Accountability. During the year, OAG participated actively in all the planned
activities by the PFM Secretariat based in the MINECOFIN.
III. One of University of Rwanda
A law has been passed, merging the various universities in the country into One University.
The Senate then invited the Auditor General to give guidance on PFM issues to the Minister
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 18
of Education and his task force team so as to facilitate a smooth transition. The purpose was
to separate the financial management of the old system from the new dispensation.
IV. Engagement with the Accountability forum of Permanent Secretaries
The AG and the Minister of Justice were invited to be facilitators at the meeting of the
Accountability Forum, a forum of all the Permanent Secretaries organized by the Prime
Minister’s Office. The objective of the meeting was to identify areas relating to PFM where
Ministries were still having problems. The AG led the discussion on the State of
Accountability in the Country, during which he went through the salient issues as raised in
his report to Parliament. One important point that came out of the meeting was consensus on
the need to involve Ministers and all Chief Budget Managers in the implementation of the
AG’s recommendations that are highlighted in audit reports of their respective audited
entities. This will accelerate improvement in financial management that will in the end lead
to achieving unqualified audit opinion.
V. Justice Sector Revenue Generation and Collection
The Auditor General contributed to the Justice Sector debate and discussions on how best the
revenue being generated in the sector can be traced and accounted for. The meeting was
attended by Permanent Secretaries from MINECOFIN, Ministry of Justice and some staff
from the judicial system.
VI. OAG meeting with the press
In January 2014, OAG met the Senior Editors with the aim of explaining to them the process
of an audit from the engagement letter to the signature of the final report all in conformity
with International standards. As the media helps with the interpretation and communication
of the AG’s report, they are therefore critical stakeholders of the OAG. It is therefore
important for OAG to regularly interact with the media.
VII. OAG interaction with Civil society organizations (TI-Rw)
In the framework of analysis of the Auditor General report for the year ended 30th June 2012,
the Office interacted with the Transparency International Rwanda. The objective of the
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 19
discussion was for OAG to comment on the analysis done before being published. This is the
1st time, OAG is consulted on this exercise conducted for the 2nd time by TI-Rw. The
management of TI-Rw committed to always engage OAG in this activity.
VIII. Engagement with the Local Government Authorities Forum
The Auditor General met the Governors, Mayors and the Executive Secretaries of all the
Provinces and the districts in a meeting organized by the Ministry of Local Government to
discuss on the persistent issues highlighted in Local Government audit reports and how to
overcome them.
1.5.4.2 International Relations
During the year, the Office of the Auditor General maintained its relations with a number of
International Organizations and other SAIs for knowledge and experience sharing. Staff from
the Office (OAG) participated in different relevant activities organized by relevant
organizations and other SAIs to learn and share experiences with them.
A. INTOSAI and AFROSAI-E
I. INTOSAI and IDI
INTOSAI is an organization or association of Supreme Audit Institutions (SAIs) of countries
who are members of the United Nations. IDI is the training arm of the INTOSAI through
which members of INTOSAI share knowledge, skills and information through training. The
Office of the Auditor General subscribes to and is a permanent member of INTOSAI. During
the year, two OAG staff participated in an IDI training workshop in Arusha /Tanzania and
other 2 staff participated in the Working Group on Environmental Auditing that took place in
new Delhi/India.
II. AFROSAI and AFROSAI-E
AFROSAI is a continent wide organization of Supreme Audit Institutions (SAIs) of Africa
and a Regional African continental member of the INTOSAI. Through participating in the
programs and events of AFROSAI, member SAIs share knowledge, information and
experiences on public sector audit issues. The Office of the Auditor General subscribes to and
is a member of AFROSAI.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 20
AG attended the AFROSAI-E Board meeting which took place in May 2013 in Mauritius. In
this meeting, the AGs of the SAI members of AFROSAI-E discussed on the performance of
the organization and agreed on its strategic priorities for the following year as well as their
own SAI performances.
During the year, nine staff attended trainings by AFROSAI in the following areas;
management development programs, audit supervision and review and performance audit
trainings. One staff participated as AFROSAI-E external reviewer for SAI Lesotho and one
staff provided expertise as performance auditor trainer for AFROSAI-E in Mauritius. As
required by AFROSAI, in order to monitor progress in compliance with international
standards the office carried out the ICBF assessment for the year 2012 and the report was
submitted to AFROSAI in time.
SAI Rwanda was among the countries selected in the evaluation of the support provided by
AFROSAI-E conducted by the SAI of SWEDEN in February 2014.
III. Other SAIs
During the year, 2 staff were trained in information system audit in SAI India, 1 senior staff
attended an international auditors fellowship program at the United States Government
Accountability Office.
IV. International Delegations
OAG received different international delegations during the year as follows:
• Delegation from World Bank
• Delegation from AfDB
• Delegation from Global Fund
• Delegation from EU
• Malawi- Minister for Good Governance
V. Audit of East African Community
During the year, the Office sent two (2) Senior audit staff to join other 9 members from other
East African Community SAI’s to conduct the joint audit of the East African Community
(EAC) and its organs, for the year ended 30th June 2013. The Audit report will be issued in
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 21
May 2014.The office also sent an Audit Director to participate in a special assignment
conducted at one of EAC organs.
1.6 FINANCIAL MANAGEMENT AT OAG
For the year ended 30th June 2013, the Office had a total budget of Frw 3,511,779,000
composed of Frw 2,107,722,000 of Government funding and Frw 1,404,057,000 as
contribution from Development partners. It has been executed at the rate of 87.3%. OAG’s
financial statements were audited by a member firm of ICPAR and received an unqualified
(clean) audit opinion. The audit report was submitted to Parliament.
For the year 2013/2014, in which this report has been produced, the Office has a budget of
Frw 3,607,662,404 composed of Frw 2,105,345,205 of Government funding and Frw
1,502,317,199 as contribution from Development partners.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 22
SECTION 2
AUDIT COVERAGE AND AUDIT RESULTS
2.1 AUDIT COVERAGE
The audit coverage represents the percentage of expenditure incurred by the entities audited
when compared to the total national expenditure for the financial year, as presented in State
consolidated financial statements. The expenditure incurred by entities audited during the
period June 2013 to 30 April 2014 represents 79% of the reported Government Expenditure
for the year ended 30 June 2013. The total Government expenditure reported in State
consolidated financial statements for the year ended 30 June 2013 amounted to Frw
1,520,633,876,485 compared to Frw 1,377,747,090,152 for the previous year ended 30 June
2012. This coverage is above the PFM coverage target of 78% of expenditure incurred by
Government during the year ended 30 June 2013.
The proportion of expenditure covered by audits reported within this year’s report of 79% is
higher than that in previous reports, and this has been increasing over the years, as shown in
the graph below:
The above audit coverage was achieved, alongside audit of the State consolidated financial
statements and increased number of audits for Government Business Enterprises, including
EWSA. With its wide span of operations across the country and various activities of the
Development unit, EWSA audit took a significant investment of OAG resources during the
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 23
year. The final report was submitted to Parliament and I am aware that PAC is examining this
report in exercise of the oversight duties of Parliament.
Non budget agencies
The office also audited five (5) non- budget agencies per district covering: an administrative
sector, VUP sector, Mutuelle de sante at District level, District pharmacy and one school.
This required more time than is usually spent on audit of districts. The office will
progressively increase coverage of audit of Non budget agencies in years to come.
Audit of Universities to facilitate formation of One University of Rwanda
The office conducted audits of the seven (7) Public universities to support Government in
preparations to form One University of Rwanda. The former Universities are now constituent
colleges of One University of Rwanda and the audits provided financial closure to their
operations prior to incorporation into the newly created holding entity (the One University).
Value for money audits
In regards to value for money audits, the Office also conducted six (6) value for money audits
during the current year, as listed below:
Topic Status of the report
1 Health Care wastes management Report being finalized and will be submitted to Parliament by 30 May 2014
2 Water Management sector focusing on water production and distribution in Kigali city
Report being finalized and will be submitted to Parliament by 30 May 2014
3 Effectiveness of Boards of Directors Report being finalized and will be submitted to Parliament by 30 May 2014
4 Tax collection system in decentralized entities Report being finalized and will be submitted to Parliament by 30 May 2014
5 Follow up audit of SFAR Bursary/ Loan disbursement and Loan recover
Report being finalized and will be submitted to Parliament by 30 May 2014
6 Follow up audit of Management of Aid Management Report being finalized and will be submitted to Parliament by 30 May 2014
Involvement in PAC activities
OAG continued to work closely with PAC during the year, especially during the month of
November 2013. Progressive submission of reports to PAC during the year also meant that
OAG was engaged throughout the year with PAC regarding completed reports submitted
progressively during the audit cycle.
In terms of entities audited, the number covered by the audits represents 38% of all entities
included in the State consolidated financial statements. This slight decline from 39% last year
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 24
appears to indicate that OAG covered less entities in comparison to prior year. On the
contrary, the office increased coverage, through audit of five (5) Non budget agencies
(NBAs) per district although these NBAs are not counted as separate budget agencies when
computing coverage. In addition, the audits of EWSA and ONATRACOM also took
significant OAG resources, which could have been used to cover more entities of smaller
operations and less complexity. Generally, Government Business Enterprises and Boards take
longer to audit than other clusters of public entities. Increased coverage of the GBEs and
Boards affects coverage of other clusters, as more time is taken on these audits. The total
number of entities and projects audited during this reporting period is 127 out of the 331
entities and projects consolidated.
In terms of clusters, the audits covered all Ministries, all Districts, all Provinces, all Public
Universities, all World Bank projects, alongside increased coverage of Government Business
Enterprises. The audits also covered five (5) out of the 8 Government Boards and other
selected number of high risk Government agencies as shown in the table below:
Summary
Reports from
audited
entities (2013)
Entities
audited
(2013)
No. of
consolidated
entities (2013)
%ge of entities
covered by
audits (2013)
%ge of entities
covered by
audits (2012)
Projects 43 35 153 23% 18%
Other central Govt agencies 34 31 104 30%
44%
Boards 5 5 8 63% 75%
GBEs 5 4 14 29% 9%
Ministries 17 17 17 100% 100%
Provinces 4 4 4 100% 100%
Districts 31 31 31 100% 100%
Total 139* 127 331 38% 39%
* There are more reports than the number of entities audited, because 12 entities were audited for more than
one year.
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 25
2.2 OVERVIEW OF AUDIT RESULTS
The audit of the 127 entities and projects covered during this reporting period resulted in
OAG issuing 139 audit reports (excluding the audit report on the State consolidated financial
statements) because twelve (12) entities were audited for more than one financial year.
Out of the 139 reports covered by this report, 45 reports (representing 32%) had unqualified
audit opinion. This is an improvement from last year where 37 reports (28% of all audited
entities) obtained unqualified (clean) audit opinion. This trend is positive and shows that
public entities are making tremendous efforts to ensure proper accountability for public
funds. These improvements were noted across board, expect for Government Business
Enterprises, Government Boards and Universities, where there seems to be declining trend.
The majority of audit issues during this audit cycle arose from these three clusters, alongside
few selected districts which are not showing improvement.
Many Districts made notable improvements when compared to previous years and this
resulted in three (3) of the District reports (Kamonyi, Gakenke and Ruhango) obtaining an
“Except for” audit opinion, mainly because of inadequate follow up and accountability for
funds managed by Non Budget Agencies. This is the first time such opinion is being issued
on financial statements of Districts and is a commendable step which shows that Districts are
on track to ensuring full accountability decentralised resources. However, the City of Kigali
and some five (5) districts of Gatsibo, Karongi, Gasabo, Nyarugenge and Ngororero
implemented utmost 60% of previous audit recommendations and hence no major
improvements. There is need for better coordination and supervision of activities in budget
agencies and continued commitment to track implementation of audit recommendations.
Effective audit committees will play a key role in monitoring implementation of audit
recommendations.
Despite the notable improvements above, the majority (68%) of public entities still have
fundamental accounting, corporate Governance, financial management, contract management
and value for money issues to address. Some of them had not implemented many of the audit
recommendations made in the previous audit (See section 3 of this report). The key findings
and cross cutting issues identified during the audits are highlighted in section of 4 of this
report.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 26
SECTION 3
TRACKING IMPLEMENTATION OF PREVIOUS
AUDIT RECOMMENDATIONS
3.1 FOLLOW UP MECHANISMS ON OAG RECOMMENDATIONS
3.1.1 Tracking implementation status of previous audit recommendations at entity
level
Article 69 of Organic Law No. 12/2013 of 12/09/2013 on State Finances and Property
requires each Chief Budget Manager and Directors of public bodies to implement
recommendations of the Auditor General of State Finances aimed at improving the effective
management of finances under their control. Many entities tracked implementation of audit
recommendations through an action plan, whose status was reported to MINECOFIN as an
attachment to the monthly financial statements. This was a notable improvement especially,
since the status tracking reports sent to MINECOFIN were signed by the Chief Budget
managers as evidence of their responsibility.
This good initiative from MINECOFIN to track audit recommendations monthly for all
entities will go a long way in addressing issues raised in audit reports in a timely manner, if it
is properly monitored and followed up. MINECOFIN alongside the office of Chief
Government Internal Auditor should consider setting implementation targets for each entity
and ensure that they are monitored on monthly basis whenever the entities submit their
reports. Any entity failing to reach its targets should be specifically followed up to identify
the causes so that appropriate action is taken to facilitate necessary improvements.
3.1.2 Government Accountability Fora (including forum for Cabinet Ministers)
Different fora were organised by Government where Chief Budget managers and key
stakeholders had an opportunity to discuss the Auditor General’s report and
recommendations. This included the Prime Minister’s Accountability forum that targeted all
Chief Budget Managers and Cabinet Ministers. The different fora adopted various actionable
plans to facilitate Chief Budget Managers to implement audit recommendations and prevent
recurrence of similar issues in future reports. Implementation of the resolutions from the
various fora will improve accountability in Public entities.
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 27
3.1.3 PAC hearings and Parliament resolutions
The Public Accounts Committee of Parliament examined the Auditor General’s report and
held public hearings with officials from audited entities. Their report to the Parliament was
adopted with specific recommendations on how to enhance accountability in public entities.
This has enhanced public participation in accountability process and Chief Budget Managers
and their officials are now more cognizant of public interest in accountability. This has
improved the attitude of Chief Budget Managers towards the audit process and is having a
positive impact on accountability within public entities.
3.1.4 Auditor General’s assessment of implementation of previous Audit
recommendations
An assessment of status of implementation of previous audit recommendations was
performed for each budget agency audited (where applicable) and results of the assessments
discussed to seek further management commitment to address the issues raised. See status of
implementation in section 3.2 below.
3.2 STATUS OF IMPLEMENTATION OF PREVIOUS AUDIT
RECOMMENDATIONS
Overall the level of implementation of prior year audit recommendations remained the same
like last year. Out of 2,329 audit recommendations made to respective entities in the previous
audits, 1,391 audit recommendations (60%) had been fully implemented while 938
recommendations (40%) had not been fully implemented by the time of the current audits, as
shown in the table below:
Total recommendations
made in prior year audits
%ge of
recommendations fully
implemented
%ge of
recommendations not
fully implemented
Projects 224 69% 31% Other central Government Agencies* 705 55% 45% Boards 248 52% 48% GBEs 234 38% 62% Ministries 147 78% 22% Provinces 24 83% 17% Districts 747 67% 33% Total 2,329 60% 40%
* includes Universities
The level of implementation of audit recommendations remained at the same level of 60%
when compared to last year. This was mainly caused by high number of recommendations
not implemented by Boards, Government Business Enterprises (GBEs) and Public
universities. Each of these three clusters implemented less than 55% of audit
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 28
recommendations and account for 48% of all recommendations not implemented, as shown in
Beneficiaries living in incomplete houses in some Districts
The slow pace of rehabilitation and construction of FARG houses has resulted in some
beneficiaries living in incomplete houses due to lack of alternative shelter. See examples in
pictures below:
Examples of the 25 incomplete houses occupied by FARG beneficiaries in Rusatira, Gishamvu and Rwaniro Sectors
(Huye). Photo taken by OAG on 27.03.2014
Some of delays like in Huye District were attributed to contractor failures, with some
contractors abandoning works. Twenty five (25) out of 30 houses (contract was signed in
November 2012) for genocide survivors in Rusatira, Gishamvu and Rwaniro Sectors had not
been completed by the time of audit site visits in March 2014. Huye District management
indicated that the contractor abandoned works. Some of the abandoned works are shown in
picture below:
Two (2) houses left at foundation level in Gishamvu sector. Photo taken by OAG on 28 March 2013
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 58
FARG did not prepare a detailed monitoring report explaining why districts were not meeting
the targeted outcomes and what kind of support is required to expedite the process. FARG
management needs to engage with the Districts to address any challenges responsible for the
slow pace of implementation so that decent housing is urgently provided to the needy FARG
beneficiaries.
4.8.2.3 Services offered to individuals not traced in FARG database of eligible
beneficiaries
In order to keep proper track of beneficiaries, FARG has in place a database for different
categories of eligible beneficiaries identified based on clear guidelines. All those certified as
eligible are included in this database. Previous audits of FARG pointed out cases of errors in
the database and various cases where beneficiaries could not be traced to the FARG database.
The above challenges have not been resolved with FARG database and cases were noted
where individuals benefited from FARG but could not be traced in the database. The audit of
FARG identified 16 beneficiaries who received different FARG services and yet they could
not be traced in the database. See summary below:
Service received from FARG No. of beneficiaries not traced in database
Received Health care services 7
Pig rearing project 3
Received cows 3
Received houses 3
Total 16
The above weaknesses could result in loss of public funds if not addressed timely. The
database of FARG beneficiaries needs to be cleaned and updated with complete information
to facilitate proper tracking and monitoring of beneficiaries. In addition, there is need for
FARG to ensure that only those identified as eligible in their database benefit from their
services to minimize any risk of abuse of the fund. The 16 cases of beneficiaries that do not
appear in the FARG database need to be investigated and concluded before the next audit
cycle.
4.8.2.4 Concerns over cows distributed by FARG to beneficiaries
The contract signed between districts and various contractors relating to the distribution of
cows to genocide survivors required the suppliers to deliver cows which were at least four
(4) months gestating. However, the audits identified that some beneficiaries received cows
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 59
which were not gestating at the time of distribution. Some of the cows were still not gestated
as late as March 2014 and all of them were expected to have delivered calves at the latest by
December 2013, 10 months after distribution in July 2013. It should be noted that
beneficiary Districts accepted all cows supplied as meeting the contract specifications and
paid for at the price of gestating cows agreed in the contract. The cows were distributed to
beneficiaries in various districts across the country.
Concern over Beneficiaries’ ability to manage the cows
There are some indicators noted during the audits that point to likelihood of some
beneficiaries not having the ability to take good care of the cows distributed to them. These
indicators include:
• Some beneficiaries who failed to construct the prescribed sheds for the cows. Some did
not construct them at all, while others constructed substandard ones;
• Some beneficiaries (though isolated), who have sold the cows distributed to them and
utilized the proceeds;
• Some cases where cows reportedly died because the beneficiaries were not able to
properly tend to the cows or feed them properly or lacked funds for veterinary services,
especially for the 50% of Friesian or Jersey.
FARG needs to strengthen supervision controls at district level, to enhance value for money
on cows procured and realization of intended goals of poverty reduction through animal
husbandry. Districts need to appropriately evaluate the capacity of the beneficiaries to
manage the cows distributed so that necessary support is sought from concerned agencies
(like FARG) for those found not to be capable of handling the animals on their own.
Consideration should be given to strengthening of common services like veterinary, water
points, feeding areas etc, to facilitate better care of animals distributed to the vulnerable
people.
For distributed cows which were not gestating, FARG in collaboration with the related
districts should make proper follow up to recover any excess funds paid to the suppliers that
delivered cows which were not gestating as required in the contract.
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 60
4.8.2.5 Delays in transfer of funds for implementation of projects for FARG
beneficiaries
• Audit visits conducted to inspect projects financed by FARG earmarked funds in
Nyaruguru and Huye districts revealed that there were significant delays in transfer of
funds for project implementation. For example, some associations received funds
earmarked to implement activities in the financial year ended 30 June 2013, after year
end, between September 2013 and March 2014.
• The money transferred to the projects was also less than that disbursed by FARG to the
districts. For example, each project was entitled to receive Frw 1,000,000 but only Frw
600,000 had been received by each association by the time of audit visits in March 2014.
For ten (10) projects visited in Mata and Kibeho sectors in Nyaruguru District, and seven
(7) projects in Kinazi and Rusatira sectors in Huye District, projects had not received Frw
6,700,000 (39%) out of the 17,000,000 earmarked by FARG for their activities.
• In Gasabo District, two (2) associations in Nduba Sector and two (2) associations in
Rusororo sector had not received funds from the district for their activities. These
associations had ultimately not started their operations. See table below for projects not
yet started by these associations:
Name of Association Sector Project
TWIYUBAKE SHA Nduba Planned to keep pigs
TWIYUBAKE SHANGO Nduba Planned to keep pigs
ABIZERA association Rusororo rearing goats RUSORORO survivors association Rusororo rearing goats
The above cases are all indicators of inadequate follow up of FARG activities in Districts,
hence the need for FARG management to enhance follow up of activities in Districts to
ensure that all financed projects are implemented in the required time frame.
4.8.3 VUP loan repayment rate at VUP sectors is below agreed rate and timing
As noted in previous reports, there are still challenges in the recovery of loans given to
beneficiaries of Vision Umurenge Program (VUP) in districts. A report of RLDSF on loan
recoveries shows that out of the Frw 12,038,173,507 expected to be recovered from loan
beneficiaries as at 30 June 2013, only Frw 7,858,014,708 was recovered as at that date. This
represents 65% which is still low and likely to hamper Government’s efforts to realize the
intended objectives. For new loans disbursed during the year ended 30 June 2013, the
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 61
recovery rate was at 43%, indicating that most of the recoveries made during the year related
to old loans, as shown in the table below:
Particulars Amount
disbursed
Amount supposed to
be repaid back as at
30 June 2013 (a)
Amount repaid
back as at 30 June
2013
Rate of
repayment
(b) b/a
Frw Frw Frw %
Year ended 30 June 2013 3,592,317,386 464,837,795 201,030,423 43 Year ended 30 June 2012 4,202,089,892 2,988,353,833.00 1,660,821,114.00 56 Year ended 30 June 2011 5,391,854,898 4,190,694,684 2,794,716,745 67 Year ended 30 June 2010 4,308,124,701 4,394,287,195 3,201,446,426 73 Total 17,494,386,877 12,038,173,507 7,858,014,708 65%
Analysis of performance per district revealed that 15 districts (50%) across the country had
recovered less than the overall average recovery rate of 65% realised country wide, as
summarised in table below:
No. of districts with
below average
recoveries
Total number of
district per province
%ge of districts with
below average
recoveries
City of Kigali 3 3 100% Eastern 3 7 43% Northern 3 5 60% Southern 2 8 25% Western 4 7 57%
15 30 50%
In Rulindo District, average recovery over the last three years stood at 43% of all loans
disbursed and this recovery rate stood at 50% for Gicumbi; 52% for Gisagara; 54% for
Ngororero; 55% for Gasabo; 56% for Nyamagabe; 57% for Bugesera and Karongi; 58% for
Nyarugenge and Musanze districts.
The recovery rate is worse if only loans disbursed in the financial year ended 30 June 2013
are considered. Districts have put more effort on recovering loans disbursed in previous years
and less attention is being given to recovery of newly disbursed loans. Only 43% of loans
disbursed during the year ended 30 June 2013 had been recovered. Seven (7) districts of
Ngororero, Gatsibo, Gakenke, Burera, Musanze, Karongi and Gasabo, had recovered less
than 25% of loans they disbursed during the year, as shown in the table below:
There is need for Chief Budget Managers to apply the appropriate procurement methods in
award of tenders. In addition, Chief Budget Managers should ensure that all necessary
documents are kept to support each tender awarded. Without complete procurement
documents, it is difficult to ascertain whether the procurement process complied with the six
(6) fundamental principles of transparency, competition, economy, efficiency, fairness and
accountability required of all public procurements in Article 4 of law no 12/2007 of
29/03/2007 on Public procurement.
4.11.2 Weaknesses with contract management in public entities
The problem of delayed completion of construction works still persists in many public
entities, where works and services contracted are not completed within the contract period.
Delays ranged from 1 month to almost 5 years and in some cases like in Rusizi and
Nyamasheke, construction works at some sites were abandoned. The problem of poor
contract management was more apparent at EWSA, MINISANTE and in districts where
construction works for roads, school buildings, sector buildings and other structures were not
done timely. There were forty six (46) instances noted where contracts worth Frw
23,771,011,119 were delayed. Additional nine (9) contracts worth Frw 908,562,999 were
abandoned, as shown in the table below:
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 70
Entity
No. of instances of
delayed contracts
Contract amount
(Frw)
A Delayed contracts
1 RDRC 1 230,595,444 2 WDA 1 2,420,436,060 3 NUR 2 238,779,417 4 MINISANTE 1 2,873,299,921 5 NAEB 1 62,000,000 6 EWSA 4 10,235,614,852 7 City of Kigali 1 490,915,508 8 Gasabo District 2 321,088,315 9 Gatsibo District 16 2,843,882,224
10 Nyabihu District 1 34,417,031 11 Nyamasheke District 1 145,625,074 12 Ruhango District 4 938,452,137 13 Rusizi District 2 288,072,999 14 RAB 3 295,319,051 15 Huye District 1 896,049,008 16 Muhanga District 1 232,387,914 17 Ngororero District 1 1,066,483,060 18 Nyaruguru District 1 87,500,000 19 Musanze District 1 41,472,785 20 KFH 1 28,620,319
Sub-total 46 23,771,011,119
B Delayed and abandoned contracts
1 RSSP III 2 295,528,000 2 Musanze District 1 41,472,785 3 Nyamagabe District 1 17,108,250 4 Rusizi District 4 504,044,364 5 MINICOM 1 50,409,600
Sub-total 9 908,562,999
Total 55 24,679,574,118
For the nine (9) abandoned contracts, a total of Frw 606,076,480 had been paid to the
contractors by the time of abandoning the works. These delays and abandonment of works
imply that Government programmes were not realised within envisaged timeframes and this
has had negative impact on service provision to the population. For these abandoned
contracts, management was unable to determine the value of work done at the time of
abandonment of works by contractors.
For the case of EWSA, the delays are in respect of construction of seven (7) micro hydro
power plants worth Frw 10,235,614,852 which had been delayed for over 4 years. Works
were expected to be completed by 30th June 2009 but by the time of audit in September 2013,
works at some power plants had not been completed. For MINISANTE, the delays are in
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 71
respect to construction of Bushenge Hospital. Construction works have delayed for over 3
years, and were not complete by the time of issuing the report of MINISANTE in April 2014.
Increased cost of supervision of works due to delayed works
Due to delayed completion of works, many public entities incurred extra supervision costs for
the additional time required to supervise delayed works. This has ultimately increased costs
of construction works. Such cases were noted with EWSA (for power plants), MINAGRI
Livestock Single Project Implementation unit (for development of Gashora Marshland); RDB
where the entity had a supervision contract at the time when there was no fencing ongoing at
the Akagera National Park.
Public entities need to pay close attention to the capacity of contractors when engaging them
for civil works to minimize cases of delayed works. In addition, there is need for proper
follow up of construction works to ensure that the contract terms are adhered to. In the case
of abandoned works, there is need for proper evaluation of works done so that clear steps can
be taken to have the works completed. Entities where works were abandoned need to report
such cases to RPPA for possible sanctions against the contractors. Legal action should be
considered against such contractors who abandon contracted works.
There is also need to pay due attention in design of contracts for supervising companies to
allow for flexibility in case of stalling of construction works. A clear linkage needs to be
made between construction works and supervision fees, to minimize additional expenses
incurred on supervision. The construction contracts should also be designed to ultimately
meet the cost of supervision for any delays caused by the contractor.
4.12 DELAYS IN IMPLEMENTATION OF GOVERNMENT
PROJECTS AND PROGRAMMES
The audits identified various cases of low budget absorption by Government projects, which
resulted in seeking of project extensions in order to implement many of the planned project
activities. Most of the projects obtained extensions requested, but such delays in
implementation of government projects and programs implies that beneficiaries have to wait
longer to enjoy the benefits envisaged from the projects. Such cases were noted at LVEMP II
(REMA); CEDP, EIF, G 4 C TAP (MINICOM); WDA/SDP (WDA) and EATTFP (RTDA).
Other cases were noted where projects had not commenced as envisaged, as shown below:
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
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Office of the Auditor General of State Finances 72
• At RTDA, management failed to utilize a grant of USD 20,000 obtained to support the
development of a policy for non- monotorised Transport (NMT) in Rwanda. The first
disbursement was received in January 2012 and final installment in May 2013 but no
activity had been implemented by April 2014. The grant expired on 31stDecember 2013
and RTDA is required to refund these funds to the donor.
• At EWSA, Government secured funding in March 2009 to support a project for
Multinational Interconnection of Electrical Grid of Nile Equatorial Lake Countries aimed
at facilitating electricity transmission and interconnectivity between Rwanda and
neighbouring countries. The project closing date is 31 December 2014 but works had not
commenced by the time of auditing EWSA in September 2013. The process of
expropriating people affected by the project had not been finalised after 5 years since
commencement of the project. Project implementation cannot start prior to finalisation of
the expropriation process. Government was considering extension of closure date for this
project.
• At MINAGRI (Livestock Single Project Implementation Unit), there were delays in
works to develop Gashora marshland and install equipment at the milk collection centres
built across the country to facilitate milk producers. An addendum was signed extending
installation of equipment at the milk collection centres. The works at the marshland had
stalled and contract was terminated due to non-performance.
• At EATTP (RTDA), project implementation started in 2007 and is expected to end on 30
September 2014. However, out of USD 15,000,000 allocated to the project throughout its
implementation period, only USD 8,107,878 representing 54.05% had been utilised as at
30 June 2013. Funds allocated to some of the project activities like ‘Improvement of
corridor security and transport policy (comprising mainly installation of National Cargo
Tracking Systems)’ and ‘Border crossing improvement/joint border posts (construction of
Gatuna One Stop Border Post)’ had not been utilised. Status of implementation of these
two activities had remained the same since June 2012 and budget utilisation stood at 0.3%
and 4.0% respectively as at 30 June 2013 same as at 30 June 2012.
The delayed implementation of Government projects and programmes is an indicator of lack
of appropriate preparedness on part of Government agencies to implement the approved
projects. There is need for Government agencies to undertake appropriate review of their
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 73
readiness for project implementation and put in place necessary structures and appropriate
measures to facilitate timely implementation of Government projects and programmes.
4.13 LACK OF VALUE FOR MONEY ON INVESTMENT IN
IT/COMPUTER SYSTEMS
The Government is making significant investments in IT system for the purpose of improving
competitiveness and efficiencies in service delivery and productivity. However, some of the
IT systems acquired are not effectively utilised and others are redundant or not functionally
configured to deliver the desired outcomes. Examples are provided below:
• At EWSA, the entity acquired an integrated IT system “ORACLE” to enhance
accountability and improve efficiencies in service delivery. As at the time of the audits,
USD 1.1 million had been invested in the system but it was not fully functional as some
modules were not operating and financial statements generated through this system were
found to be unreliable with significant omissions and errors. The entity also continues to
operate various key stand-alone systems especially those related to billing outside the
ORACLE integrated system.
• At NUR, the University completed the development of a Management Information
System (MIS) in September 2012 in order to resolve problems related to poor
performance of existing systems, lack of systems integration and the absence of reliable
systems. However, at the time of auditing NUR in October 2013, it was noted that some
components of the installed MIS modules were not operational and yet all the required
modules had been successfully installed and were live by September 2012. Management
did not provide justifiable reasons to explain why these components were not operational
for approximately 1 year after the successful installation of the modules. NUR spent Euro
1,744,000 on the development of this system. The MIS was developed after failure of an
ORACLE system previously acquired by the University.
• At RDB, Government spent USD 1,754,932 to roll out an electronic Document Tracking
and Workflow Management System (DTWMS) in selected government institutions, to
ease the tracking and long term preservation of documents through streamlined and
automated processes within the public sector. DTWMS was installed in 55 Government
institutions and 4,069 users were trained on how to use this system. However, there are no
measurable performance targets and expected outputs for each of the key objectives of the
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Office of the Auditor General of State Finances 74
DTWMS to facilitate proper assessment of performance of DTWMS. There are some
institutions like MINAGRI, MINICOM and MINISPOC which did not process any
documents through the system throughout the year. Even for those using the system, the
level of utilisation is still low, as noted in Nyagatare, Rutsiro, Rusizi and Karongi
districts, MINIRENA and MIDIMAR.
• At MINECOFIN, the Government acquired 50 licenses (30 licenses in September 2011
and additional 20 licenses in August 2013) for Internal audit management software
(TeamMate) for Government internal Auditors from Ministries, Districts and other
Agencies to improve the efficiency and effectiveness of internal audit function of various
budget agencies in Rwanda. However, many Internal Auditors trained had never used the
system up to December 2013 and a few who are still not using the system todate. The
Ministry had incurred USD 203,470 to acquire, install and train users of the system as of
April 2014.
The above cases are an illustration that Government is not obtaining value for money on
investments made in IT systems and there is need to put the systems installed to better use in
order to enhance efficiency in service delivery. A detailed review of IT investments should be
undertaken by RDB/IT and recommendations to facilitate efficient acquisition and utilisation
of systems in public entities across the country.
4.14 WEAKNESSES IN MANAGEMENT OF FIXED ASSETS AND
STOCK ITEMS IN PUBLIC ENTITIES
4.14.1 Inadequate tracking and monitoring of Government assets and stock items
As highlighted in my previous reports, fixed assets registers maintained by some entities did
not have adequate information to facilitate proper tracking of the fixed assets. In some cases,
fixed assets were not coded and no physical verification had been carried out. In addition,
most Government assets are not insured, and there are no title deeds for Government
properties. It is therefore difficult to ascertain the right of ownership in case disputes in
ownership arise. Government property can be misappropriated in absence of proper
monitoring and title deeds.
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 75
4.14.2 Reported cases of stolen assets and stock items
Weaknesses in controls over assets materialised during the year, resulting in various cases of
stolen assets or failure to account for some assets in the register. Cases were noted where
weaknesses in controls over fixed assets resulted in loss of assets worth Frw 660,573,078.
Public entities need to strengthen controls over management of assets and stock items to
minimise instances of stolen items. In addition, efforts should be made to recover the stolen
items.
4.14.3 Idle equipment and materials in public entities
There are some budget agencies which acquired assets and other equipment but have not put
them to use for long. Cases of idle equipment and materials worth Frw 1,162,132,816 were
noted in seven (7) public entities, alongside those highlighted in the health sector and WDA.
See table below:
Item
number Entity Item
Cost of the
equipment/service
(Frw)
Rationale for idle equipment
1 NAEB Spares and machinery
444,020,775
Stock of spare parts and machinery which have not been utilized for long. There were no movements on stock cards of these items for over 2 years as NAEB no longer owns factories. These stock items are only tying down funds with no indication of when they will be utilised or sold. The stock items and machinery are prone to becoming obsolete if no immediate measures are undertaken to utilise or sell them. Value for money may not be realized from these spares.
2 ISAE Milk processing equipment
10,647,144
ISAE incurred expenditure of Frw 10,647,144 for transportation relating to the milk processing plant equipments. The equipment supplied was the donation from NUFFIC (Netherland Organisation for International Cooperation in higher Education). These equipment were delivered by C.VAN’T RIET TECHNOLOGY B.V on 3rd November 2010. During the audit visit on 26/9/2013, the milk processing plant is not operating. Management took a decision to conduct an architectural study aiming at transforming the building to allow installation of equipment but works had not been completed. Key equipments for milk processing supplied were still missing some accessories such as boiler, the reception tank.
3 NUR Laboratory equipment
16,268,647
An equipment called Leica RM 2265 fully Motorized Rotary microtome acquired by NUR from Wagtech International Ltd at cost of GBP 19,469.42 equivalent to Frw 16,268,647 for Biology department is not functioning since delivery. This was due to the fact that the laboratory technicians are not able to use it. The staff who had been trained on how to operate this equipment left NUR and no efforts were made to train other staff so as to operate the equipment.
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 76
Item
number Entity Item
Cost of the
equipment/service
(Frw)
Rationale for idle equipment
4 IRST Biodiesel plant 187,920,000
IRST acquired a bio-diesel plant at a cost of Frw 187,920,000. However, IRST ceased to produce bio-diesel in May 2012 and the plant has been redundant to date. This was due to the fact that among the chemicals used in production of bio-diesel, two of potassium methylate and karifisher reagent could not be got through normal procurement procedures (national and international open competitive tendering). In addition, owing to stoppage of bio-diesel production, other raw materials (palm oil and methanol) which had been purchased were disposed of at a loss of Frw 7,272,700.
5 Kirehe District
Construction materials-FARG activities in Kirehe District
9,676,250
Construction materials (cement, iron sheets and nails) were supplied for rehabilitation of houses of Genocide Survivors in Nyamugali, Muhama, Nyarubuye, Kigina, Nyabitare and Kirehe sectors, but were still stores at sectors by time of audit visit on 28th January 2014.
7 MINALOC Laptops at MINALOC
493,600,000
There are 1,000 laptops (worth Frw 493,600,000) in a MINALOC store that were supplied on 23 February 2010 by DIDADA Supply S.a.r.l for distribution to Executive Secretaries of cells. MINALOC rejected the laptops when it was discovered at the time of checking that they did not meet the technical specifications. MINALOC had only paid an advance Frw 98,720,000 which is not yet recovered. The high court of Kigali ruled in favour of MINALOC but the supplier appealed against the ruling in the Supreme court. These computers, though not accepted by MINALOC have been idle in the MINALOC store for the past 4 years.
Total 1,162,132,816
The above cases imply that Government is not realising the benefits related to the acquisition
of these assets and hence no value for money. There is need for better planning and due care
in procurement of assets so that they are put to appropriate use when acquired.
4.15 TOURISM BOAT ACQUIRED BY RDB AT MUNEZERO ON
LAKE KIVU GROUNDED FOR 3 YEARS
In December 2008, RDB (the former ORTPN) acquired a modern tourism boat worth Frw
308,134,375 (€ 328,000) to cover the gap of high-end tourists to ensure ease of connection
between Rubavu District and Rusizi District, and other districts along Lake Kivu. The boat
was the only modern high end tourist boat within the country to address the tourists’ needs in
the Western Province.
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However, in May 2011, the boat’s propeller got damaged during one of the boat cruises and
sunk in the lake. The boat has since been grounded. Procurement of the spare parts to replace
the damaged propeller was poorly handled and delayed for over one and half years up to 4th
December 2012 when it was installed. Upon fixing the propeller, management realised that
the boat could still not operate because other parts of the boat had become damaged during
the period it was grounded, and required other spare parts to fix them. These other spare parts
were acquired on 12 April 2013 at a cost of Frw 2,418,661 (€ 2,883) and installed on the boat
one month later on 10 May 2013.
Despite the repair costs incurred to fix the propeller and other spare parts, grounding the boat
for such a long time, had significantly affected the functioning of the engine and test drive
conducted by management on 16th July 2013 found out that the engine power was not as
strong as it initially used to be and was consuming more fuel than normal. The boat is still not
functioning and has ultimately been grounded for about 3 years since 21 May 2011 up to 27
May 2014, the time of conducting my current audit. For these 3 years the boat has been
grounded (idle), RDB has not only lost potential tourism revenue from the boat cruises but
also promotion of tourism activities in the country has been negatively affected.
I understand that management has contacted RPPA requesting for a no objection to use single
source procurement method to purchase a new boat engine. This will require RDB to incur
additional costs to put the boat back in operation. Such additional significant costs could have
been avoided, if RDB had taken timely steps to fix the propeller when it got damaged within
reasonable time after May 2011. RDB needs to speed up the procurement process for the new
engine to resume the boat cruises and boost tourism activities in the country.
4.16 WEAKNESSES IN MANAGEMENT OF REVENUE
GENERATED BY PRISONS
A review of management of revenue generated through prisons identified the following:
• Lack of appropriate information in production reports: Prisons under Rwanda
Correctional Services (RCS) produce various products from agriculture, handcraft, and
artisanal products but the monthly and annual reports do not contain information on stock
quantities for the opening balance, production during the period, quantities sold and
closing balance of items in stock. The reports prepared only show the value of sales,
without reconciling them to quantities sold and quantities in stock, hence lack of proper
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 78
accountability for production made at different prisons. Some of these sales were not
banked timely and others were utilized at source.
• Inconsistencies in tariffs set by different prisons for different products sold: RCS did
not have documented procedures to guide them in setting tariffs at which to sell a variety
of items such as agriculture products; handcrafts, arts products etc. In addition, there is no
evidence that RCS top management was involved in checking the reasonableness of
tariffs applied by different prisons during the year, implying that revenue realized from
sale of such products at different prisons cannot easily be tracked.
• Lack of standardized prices for hiring out services of prisoners: RCS generates
revenue by offering prisoners to provide services at a fee to interested customers.
However, management did not avail policy documents that provide guidelines for setting
standardized prices to be charged for hiring out services of prisoners. As a result, different
prisons determined contract prices differently without any consistent basis of determining
the contract price. For example, some contract prices were determined on the basis daily
rate per prisoner, while others were determined on the basis on outputs to be delivered in
the contract. In other cases, there was no basis for determining the contract price. The
rates charged by RCS varied from contract to contract and from prison to prison. There
was no guidance on which rates should be applied on which contract or on which
services.
• Failure to record and track invoices: RCS signed contracts with other Government
entities and private persons for construction of roads, buildings etc and issued invoices to
these customers. However, the entity did not maintain an invoice register for monitoring
the invoices issued, paid and those outstanding. Invoices amounting to Frw 437,278,582
outstanding as at 30 June 2013 were omitted from RCS financial statements.
• Lack of accountability for Receipt books: RCS did not maintain a stock card of receipt
books purchased and those handed over to production unit. The opening stock balance for
receipt books is not known and hence final closing stock balance could not easily be
established. In addition, there was also no evidence of reconciliation of the revenue
collected using receipt books and amount reported and deposited on bank account. The
production reports from prisons do not indicate any references to receipt books used in
revenue collection. Used receipt books are kept at prisons are not returned to RCS
headquarters for accountability before issue of new receipt books.
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 79
• Revenue collected in Canteens at prisons not properly tracked and accounted for:
There were irregularities noted in management of rental income from canteens at the
different prisons. Management of RCS did not maintain a statement of account for each
of the canteens to monitor and track actual balance outstanding at any reporting date. Any
outstanding balances at the beginning of the year and at year end are not known and no
reconciliations were provided by management to confirm whether all outstanding
balances from canteens had been recorded as debtors in financial statements as at 30 June
2013.
For example, some rental income for June 2012 of Frw 5,527,550 was recorded during
the year and had not been recovered by the time of audit in November 2013. There was
also a difference of Frw 5,441,832 between revenue from rental income from canteens in
the books of account and expected rental income from contracts. This difference would
have increased if the missing contracts for July 2012 (for Remera, Butare and Gitarama
prisons) and August 2012 (for Remera prison) had been provided. A case at Huye prison
shows that rental income from the canteen of Frw 2,000,000 for four (4) months of April,
May, June and July 2011 was diverted and utilised to settle bills for staff meals and had
not been recovered as at November 2013.
There is need for management of RCS to strengthen controls over management of
internally generated revenue at different prisons and ensure that all revenue generated is
properly accounted for, to supplement Government funding of prisons’ activities.
Appropriate guidelines and policies should be put in place, to ensure consistence in
management and accountability of revenue generated at different prisons.
4.17 NON COMPLIANCE WITH TAX AND SOCIAL SECURITY
LAWS AND REGULATIONS
The problem of non compliance with existing tax laws and CSR regulations has persisted and
many entities did not remit the required taxes and pension contributions as required by the
law. Some institutions did not deduct the required taxes from suppliers or PAYE from staff
while others deducted but failed to remit amounts withheld to Rwanda Revenue Authority or
RSSB by the fifteenth day of the following month as required by law. In some cases, the
withholding tax was remitted late. A total of Frw 592,061,304 was not deducted by public
entities during the current year compared to Frw 564,571,091 in my previous report. An
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FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 80
amount of Frw 2,702,538,125 was deducted but not remitted, when compared to Frw
52,286,870 in previous year. Analysis of the taxes not deducted and/or not remitted is
elaborated below:
Taxes
• An amount of Frw 77,192,016 was not deducted as 18% VAT from suppliers. In addition,
an amount of Frw 15,346,418 deducted was not remitted to Rwanda Revenue Authority
by some entities.
• An amount of Frw 2,178,337 was not deducted as 3% withholding tax from suppliers. In
addition, an amount of Frw 1,903,650 deducted was not remitted to Rwanda Revenue
Authority by some entities.
• An amount of Frw 83,671,357 was not deducted as 15% withholding tax from service
providers.
• Pay As You Earn (PAYE) amounting to Frw 214,063,845 was not deducted while Frw
2,220,936,341 was deducted but not remitted to RRA.
CSR
• An amount of Frw 214,955,749 relating to social security contributions (CSR) was not
deducted. In addition, social security contributions (CSR) amounting to Frw 464,351,716
were deducted but not remitted to RSSB.
This continued failure to remit taxes to RRA and social security contributions to RSSB
attracts a lot of penalties and ultimately results into diversion of Government resources. There
is need for public entities to ensure full compliance with the existing tax and social security
laws and regulations.
4.18 RECOVERY OF FUNDS REPORTED IN FRADULENT
CASES
The issue of misappropriation of public funds has persisted in some entities. A total of Frw
1,092,490,786 in fraudulent activities had not been recovered by the time of audits this year.
This unrecovered balance includes amounts for fraud cases identified during the audits, and
outstanding recoveries from previously reported fraudulent cases, as shown in table below:
Fraud cases Amount not recovered
Frw
REPORT OF THE AUDITOR GENERAL OF STATE FINANCES
FOR THE YEAR ENDED 30 JUNE 2013
Office of the Auditor General of State Finances 81
Fraud cases identified during the 2013/2014 audit cycle 532,675,121 Fraud cases identified in previous audit cycle and not recovered 22,725,312 Fraud cases identified over 2 year ago and not recovered 537,090,353
1,092,490,786
Fraud cases identified during the 2013/2014 audit cycle
The fraudulent cases of Frw 532,675,121 reported during the year were identified in eight (8)
public entities of EWSA, Rwanda National Police, ONATRACOM, NUR, Rwanda Housing
Authority (RHA), Rubavu, Musanze and Rusizi Disricts. Like was the case last year,
fraudsters are exploiting weakness in controls in Non budget agencies to divert public
resources for personal gain. Two of the fraudulent cases identified this year occurred at the
branch for EWSA (Frw 115,500,000) and at the health centre in Musanze District (Frw
44,128,333). The case at Rwanda National Police (Frw 294,896,986) points to abuse of
power at BNR where funds were transferred to a beneficiary different from one in payment
authorisation documents handed to the bank by Rwanda National Police officials. Other cases
involved failure to account for physical assets and cash in the custody of various officials at
the public entities. There is need to enforce the controls stipulated in Government financial
management policies manuals to minimise future cases of fraud. Chief Budget Managers
should ensure that due care is taken to review all the necessary support documents before
approval of payments.
Fraud cases identified in previous audits
An assessment of status of recovery of reported cases of fraud in previous reports shows slow
progress in recovery. Out of Frw 650,936,302 reported as funds misappropriated in
fraudulent cases over the past two years, only Frw 98,500,872 had been recovered and/or
accounted for and the remaining balance of Frw 552,435,430 (85% of funds
misappropriated) was yet to be recovered/accounted for, as shown in table below: