Office of the Auditor General f of Rwanda OAG www.oag.gov.rw GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON FINANCIAL STATEMENTS for The 'Year Ended30 June 2021 in pulic ees op*ecivi - roesinls GREAT LAKES TRADE FACILITATION PROJECT (GLTFF) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 TABLE OF CONTENTS 1. IN T R O D U C T IO N ........................................................................................................ 2 2. STATEMENT OF MANAGEMENT RESPONSIBILITIES ..........................................6 3. REPORT OF THE AUDITOR GENERAL ...................................................................7 4. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2 0 2 1 .. ................................................................ ......... .... ... ... ... ... --- -- ... .................... 9 D ETA ILED A U D IT FIN D IN GS........................................................................................ 29 5. REVIEW OF INTERNAL CONTROL SYSTEM ........................................................30 Office of the Auditor General of State Finances 1 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 1. INTRODUCTION 1.1. Project Information Project details Project name: Great Lakes Trade Facilitation Project (GLTFP) Credit Number 5721 -RW Project start date Date of singing the financing agreement: 15 October 2015 The project effectiveness date: 25 January 2016 Project end date The project completion date: 31 December 2020 On 13 August 2020, it was extended to 30 June 2022. Project budget by World Bank: USD 26,000,000 donor Total cost of the project Loan: USD 26,000,000 to be contributed by World Bank Implementing budget SPIU-MINICOM (Ministry of Trade and Industry) agency Line ministry of the MINICOM project Objective of the The development objective of this project is to facilitate cross- project/strategic goal border trade by increasing the capacity for commerce and reducing the costs faced by traders, especially small-scale and women traders, at targeted locations in the borderlands. Main components of * Improved core trade infrastructure and facilities in border the project/general areas; achievement of a Implementation of policy and procedural reforms and strategic goals capacity building to facilitate cross-border trade in goods and services; * Performance-based management in cross-border administration; and * Implementation support, communication, monitoring and evaluation. Outputs of the * Boarder infrastructure and facilities improved (Rusizi I); project/specific * Development of border markets and logistics platforms achievement of (Nyamasheke and Rusizi 11); strategic goals . Upgrading infrastructure at Kamembe Airport; * Training and capacity building for traders and officials; * Border management reformed; * Functional review of institutional effectiveness and efficiency at the Customs and Immigration; * Project Monitoring and Evaluation (M&E) and systems for monitoring small-scale cross-border trade; * Project communication strategy developed and implemented. Office of the Auditor General of State Finances 2 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 Specific key (1) Improved core trade infrastructure and facilities in achievements of strategic border areas: goals/Outputs of the project as at 30 June * Border infrastructure: 2021 (i) Nyamasheke cross border market: 100% Construction works are completed and the Provisional handover has been done. (ii) Bugarama cross border market; Construction works have been completed and Provisional handover has been done. Upgrading infrastructure at Kamembe Airport: (i) Supply, installation, testing & commissioning of aeronautical ground lighting, fence lighting, power & communications and all civil works (TPI); Progress was at 99.5% of completion as at 30 June 2021. (ii) Supply, installation, testing & commissioning of Automated Weather Observation System (AWOS) and Digital Automatic Terminal Information System (ATIS) (TP3): Progress was at 100 % of completion and Works have been handed over after successful commissioning and testing on 13 May 21 (iii) Supply, installation, testing and commissioning of special airport systems: AMHS & D-AIMS at Kigali and Kamembe International Airport (KGL&KME) (TP4): Works have been completed. (iv) Construction of the perimeter fence at Kamembe International Airport: Construction was completed- (2) Implementation of Policy and Procedural Reforms and Capacity Building to facilitate cross-border trade in goods and services: Capacity building for cross border traders and officials enhanced: (i) 2,661 cross border traders and 298 Border officials trained in this financial year ended 30 June 2021 on cross border traders' complaints management tool, Gender and conflict sensitivity, Entrepreneurship, Business, Planning and I_ financial literacy. Office of the Auditor General of State Finances 3 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 (ii) 191 cross border traders (from Rusizi and Rubavu Districts) trained in regional agreements (COMESA and EAC), trade opportunities, Simpliflied Trade Regime (STR) and taxation system, clearance procedure of goods, different tax heads (Import duty, Excise duty, Withholding tax, and Domestic VAT). * Regional activities under COMESA: MINICOM has participated in below key activities organized by COMESA aiming at strengthening joint border committees, negotiations on simplified trade regime and discussion on standards: (i) Experts meeting from (;LTFP member countries on the COMESA Simplified Trade Regime (STR); (ii) Meeting of experts on border infrastructure from GLTFP member countries; (iii) Induction training of Trade Information Desk Officers (TIDOs) for Bugarama cross border; and (iv) Regional Coordination Committee (RCC) meeting. 12. Funding summary Source of Donor Donor Amount Amount Undrawn Undrawn funds comMitme commitment received to received to balance to balance to nt- date - date- date- date- 30 June 2021 30 June 2021 30 June 30 June 2021 2021 USD Frw 1)SD Frw USD Frw (B) (C) (D) E=(A-C) F= E*987.139896 Loan World Bank 26,000,000 24,364,006,1 86 19,349,872.63 17,575,467,211 6,650,127.37 6,564,606,040 Office of die Auditor General of State Finances 4 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 1.3. Management of the Project The management team that held office during the year ended 30 June 2021 and at the time of audit in November 2021 is: No Name Role Designation Period 1. Yves Bernard Chief Budget Permanent From 14 July 2021 NINGABIRE Manager Secretary 2. SEBERA Michel Chief Budget Permanent From 31 August J Manager Secretary c01 to 14 July 2021 3. NIWESNSUTI SPlU Coordination SPJU Coordinator From 29 July 2019 Richard 4. NYIRAHABINE Directorate of Ag. Financial From 29 December ZA Asterie Finance and Management 2017 Administration Specialist 5. URUJENI Trade Specialist Trade Specialist From 7 October 2019 Hodari Evelyne - 6. UWITONZE Monitoring and M&F Specialist From I I November Marc Evaluation (M&E) 2019 Specialist Office of the A uditor General of State Finances 5 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 2. STATEMENT OF MANAGEMENT RESPONSIBILITIES Article 66 of the Organic Law N4 12/2013 of 12/09/2013 on State Finances and Property requires budget agencies to prepare and submit to the Ministry annual financial statements in a period of one month from the end of the fiscal year and submit their annual financial statements to the Auditor General of State Finances not later than 30*1' September of the following fiscal year. Article 19 of the Organic Law N' 12/2013 further stipulates that the Chief Budget Manager is responsible for maintaining accounts and records of the budget agency, preparing reports on budget execution, managing revenues and expenditures, preparing, maintaining and coordinating the use of financial plans, managing the financial resources for the budget agency effectively, efficiently and transparently, ensuring sound internal control systems in the budget agency and safeguarding the public property held by the budget agency- As Chief Budget Manager, I accept responsibility for the annUal financial statements, which have been prepared using appropriate accounting standards applicable to Public entities as deternined by Article 99 of the Ministerial Order No 001/16/10/TC of 26/01/2016 relating to financial regulations. These financial statements have been extracted from the accounting records of Great Lakes Trade Facilitation Project (GLTFP) and the information provided is accurate and complete in all material respects. The financial statements also form part of the consolidated financial statements of the Government of Rwanda. In my opinion, the financial statements give a trUe and fair view of the state of the financial affairs of Great Lakes Trade Facilitation Project (GLTFP), I further confinn that Great Lakes Trade Facilitation Project (GLTFP) maintained proper accounting records which can be relied upon in the preparation of financial statements. I also confirm that adequate systerns'of internal qontrol were maintained and operated effectively during the year to safeguard the assets of the budget agency. Digitally signed by MINICOM(Permane Signature: - - nt Secretary) -'15t-e:202112-29 11:32:52 +02'00' Yves Bernard NINGABIRE Permanent Secretary of MINICOM Date: 6 .{fice of the Audlitor General of Stote finances6 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 3. REPORT OF THE AUDITOR GENERAL REPORT ON THE FINANCIAL STATEMENTS Mr. Yves Bernard NINGABIRE Permanent Secretary of MINICOM 3.1. Opinion As required by Article 165 of the Constitution of the Republic of Rwanda of 2003 revised in 2015, 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), I have audited the financial statements of Great Lakes Trade Facilitation Project fr the year ended 30 June 2021. These financial statements comprise the statement of financial position as at 30 June 2021 and the statement of revenue and expenditure, statement of cash flows and budget execution report for the year then ended, and a summary of significant accounting policies and other explanatory notes- These financial statements are set out on pages 9 to 28. In my opinion, the accompanying financial statements give a true and fair view of the financial position of Great Lakes Trade Facilitation Project (GLTFP) as at 30 June 2021, and of its financial performance and its cash flows for the year then ended in accordance with the guidelines provided by Ministerial Order N' 001/16/1 0/TC of 26/01/2016 relating to financial regulations and Organic Law No 12/2013/OL of 12/09/2013 on State Finances and Property. 3.2. Basis for opinion I conducted my audit in accordance with the International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under ISSAIs are described in section 34 of this report. I am independent of GLTFP and have fulfilled my ethical responsibilities in accordance with the ethical requirements that are relevant to my audit of financial statements of public entities as determined by the Code of ethics for International Organisation of Supreme Audit Institutions (INTOSAI)- I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 3.3. Responsibilities of management for the Financial Statements According to Organic Law No 12/2013/OL of 12/09/2013 on State Finances and Property, management of GLTFP is responsible for keeping accounting records and books of account, and preparation of financial statements in accordance with the financial regulations prescribed by the Minister in Ministerial Order no 001/16/10/TC of 26/01/2016 relating to financial regulations. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the GLTFP's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Governent either intends to discontinue operations of the GLIFP. Office of the Auditor General of State Finances 7 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 3.4. Auditor General's Responsibilities for the audit of the financial statements My objective when conducting an audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Misstatements can arise from fraud or error and are considered material if individually or in aggregate, they could reasonably be expected to influence economic decisions of users taken on the basis of these financial statements. An audit conducted in accordance with ISSAls requires an auditor to exercise professional judgment and maintain professional scepticism throughout the audit and involves: * The identification and assessment of the risks of material misstatement of the financial statements, whether due to fraud or error; design and perform procedures responsive to those risks and to obtain sufficient and appropriate audit evidence to provide a basis for the auditor's opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. * Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of internal control. * Evaluating the appropriateness of accounting policies used, the reasonableness of accounting estimates made by management. * Concluding on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the GLTFP's ability to continue delivering on its funding objectives within the remaining project duration. * Evaluation of the overall presentation, structure and content of the financial statements, including disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieved fair presentation. KAMUHIRE Alexis AUDITOR GENERAL o KIGALI .......... ............ 2021 Office of the A iditor General of State Finances 8 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4.L CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2021 Deseription Notes Year ended Vear ended 30- une2021 30June 2020 Frw Frw Revenuc Proceeds from borrowings 2 8.403,208,757 3,258,993,890 Total revenue (A) 8,403,208,757 3,258,993,890 Expenses 1 Use_ f goods and services 3 743,986,408 1,227,703,753 Capital exenditure 4 9,162,198,548 2,155,893,380 Other Transfers to non-reporting entities 5 32,270,118 0 Total expenses (B) 9,938,455,074 3,383,597,133 Öther gain's_ Exchange_gain(C) 6 129,576,011 103,439,907 Surplus for the year (D=A+C-B) (1,405,670,306)1 (21,163,336) These financial staternents should be read in conjunction with the accompanying notes (including accounting policies). The notes on pages 14 to 28 form an integral part of the financial statements. Office of the Auditor General of State Finances 9 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4.2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 Deseription Notes Balance as at Balance as at 30 June 2021 30 June 2020 Frw Frw Assets Current assets Bank balances 7 963,293,370 1,483,391,452 Advance payments 8 275,689,837 1,549,257,263 fota] current assets 1,238,983,207 3,032,648,715 Total assets (A 1,238,983.207 3,032,648,715 Eguity and lia bilities Current liabilities Accounts payable 9 24,725,019 420,393,924 Total current liabilities (B) 24,725,019 420,393,924 Equity/Net assets(A-B) 1214,258,188 2,612,254,791 Accumulated opening balance 10 457,896,466 457,896,466 Accumulated surplus from previous years 257,630,324 1,663,300,630 Prior year adjustimets 1 498,731,398 4911057,695 Total net assets/Equity 1,214,258,188 2 ,6 1 2 ,2 5 4 ,7 9 1 These financial statements should be read in conjunction with the accompanying notes (including accounting policies). The notes on pages 14 to 28 form an integral part of the financial statements. Office of the 4 uditor General f Stäte Fi nces 10 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4.3. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021 Deseription 12 Months to 12 Months to 30 June 2021 30 June 2020 Frw Frw Cash flows fron operating activities Otler revenue (exchange gain) 129,576,011 103,439,907 Payments for operating expenses Use of goods and services (743,986,408) (1,227,703,753) Other transfers to non-reporting entities (32,270,118) 0 Adjusted for . .. . Changesin reeivables 1,273,567,426 (1,549,257,263) 8es~39 gi r.eia (35668,905) 415345 Changes in payables 503435 Adjustment during the period 7,673,703 472,267,410 Total payments for operating activities Net cash flows from operating expenses (A) 238,891,709 (1,783,750,264) Cashflows from investing activities Capital expenditure (9,162,198,548)1 (2,155,893,380) Net cash flow from investing activities (B) (9,162,198,548) (2,155,893,380) Cash flows from financing activities Proceeds from borrowings 8,403,208,757 3,258,993,890 Net cash flow from financing activities(C) 8,403,208,757 3,258,993,890 Net inerease in cash and cash equivalents (520,098,082) (680,649,754) (D=A+B+C) Cash and cash equivalents at the beginning of the 1,483,391,452 2,164,041,206 year,(E) e f y31 , Cash and cash equivalents at the end of the year 963,293,370 1,483,391,452 (F=D+E) These financial statements should be read in conjunction with tlie accompanying notes (ineluding accounting policies). The notes on pages 14 to 28 form an integral part of the financial statements. Office of the Auditor General of State Fintuces 11 GREAT LAIS TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4.4. CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/ EQUITY FOR THE YEAR ENDED 30 JUNE 2021 Deseription Accumulated Movement during Total surplus/deficit the year 2019/2020 2018/2019 201912020 Frw Frw Frw Changes in net assets items 2,161,150,717 451,104,074 2,612,254,791 Accumulated opening 457,896,466 - 457,896,466 balance Accumulated surplus from 1,684,463,966 (21,163,336) 1,663,300,630 previous __ _. __ _ Cumulative adjustments 18,790,285 472,267,410 491,057,695 ..~~ ~ ~ ... ...>. .. , --. - - . ..... .. -.. - -. - Aceumulated Movement during Total surplus/deficit the year 2020/2021 2019/2020 2020/2021 Changes in net assets items _ 2,612,254,791 _ (1,397,996,603) 1,214,258,188 Accumulated opening 457,896,466 - 457,896,466 balance Accumulated surplus from 1,663,300,630 (1,405,670,306) 257,630,324 previous Cumulative adjustments 491,057,695 7,673,703 498,731,398 The notes on pages 14 to 28 form an integral part of the financial statements. Oqffice of the Auditor General of State Finanes 12 GREAT LAKES TRADE FACILITATION PROJECT (GLTFP) AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 4.5. CONSOLIDATED STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS Deseription Budget Actual Variance Performance A B A-B (%) D=B/A FRn _Frw Frw RECEIPTS Other revenue- i 0l 129,576,011 (129,576,011) exchange gamns Proceeds from 8,617,518,156 8,403,208,757 214,309,399 98% borrowings otal revenue 8 617 518 156 8 532.784,768 84,73 8 99% EXP ENDITURF Use of goois and 1,084,828,535 743,986,408 340,8422 69% Transfer to non 32,270,118 (32,270,1 18) reportinigentljcs _ Total payments Opertingbaance i Capital expenditure 7,532,689,621 9,162,198,548 1,629,508,927 122% Total expenditure 8,617,518,156 9 938,455,074 (1,320,936,918)11% The notes on pages 14 to 28 form in integral part of the financial statements. Explaination for major variances: (0) Ofher revenu: Thi is fo-eign exchange gain because the Profect bank account is in USD. It was 1701 budgeted before as this cannot be reliably estikmaed (ii) Goods and services (69%): COTVID-19 Pandemic