THE UNITED REPUBLIC OF TANZANIA NATIONAL AUDIT OFFICE

Transcription

1 Public Disclosure Authorized THE UNITED REPUBLIC OF TANZANIA NATIONAL AUDIT OFFICE Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (TIRP) IDA CREDIT N TZ FOR THE YEAR ENDED 30TH JUNE, 2016 The Controller and Auditor General National Audit Off ice 16 Samora Machel Avenue P. 0. Box Dar es Salaam, Tanzania. Telegram: "Ukaguzi" Telephone: /8 Fax: Website: January, 2017 AR/ TIRP /

2 RELi ASSETS HOLDING COMPANY Telephone: Telefax: In reply please quote: Ref. No. CE. 278/393/07 Office of the Managing Director P.O. Box Dar es Salaam TANZANIA Date: 24 January 2017 Task Team Leader, The World Bank, Tanzania Country Office, 50 Mirambo Street, P.O. Box 2054, DAR ES SALAAM. RE: TANZANIA INTERMODAL RAIL DEVELOPMENT PROJECT (TIRP)-IDA CREDIT NO TZ: Sub: Audited Accounts for the year Ending 30 June 2016 Enclosed here with please find copies of Audited accounts of Tanzania lntermodal Rail Development Project - IDA Credit No TZ for the year ended 30 June, 2016 as under for each set: 1. Copy of Management Audit Report for the year ended 30 June 2016, and 2. Copy of Audited Accounts for the year ended 30 June, 2016 Sincerely Yours, Reli Assets Holding Company Limited Mai!!1;,i For MANAGING DIRECTOR Copy to: Treasury Registrar

3 Office of the Controller and Auditor General, National Audit Office, The United Republic of Tanzania (Established under Artjcle 143 of the Constjtution of the URT) The statutory duties and responsibilities of the Controller and Auditor General are enshrined under Article 143 of the Constitution of the URT and further amplified under Sect 10 of the Public Audit Act No. 11 of Vision To be a Centre of excellence in public sector auditing Mission To provide efficient audit services in order to enhance accountability and value for money in the collection and use of public resources. In providing quality services, NAO is guided by the following Core Values:../ Objectivity: We are an impartial organization, offering services to our clients in an objective, and unbiased manner;../ Excellence: We are professionals providing high quality audit services based on best practices;../ Integrity: We observe and maintain high standards of ethical behavior and the rule of law;../ People focus: We focus on stakeholders' needs by building a culture of good customer care and having competent and motivated work force;../ Innovation: We are a creative organization that constantly promotes a culture of developing and accepting new ideas from inside and outside the organization; and../ Best resource utilization: We are an organization that values and uses public resources entrusted to it in efficient, economic and effective manner. We do this by:- Contributing to better stewardship of public funds by ensuring that our clients are accountable for the resources entrusted to them; Helping to improve the quality of public services by supporting innovation on the use of public resources; Providing technical advice to our clients on operational gaps in their operating systems; Systematically involve our clients in the audit process and audit cycles; and Providing audit staff with adequate working tools and facilities that promote independence. This audit report is intended to be used by Tanzania lntermodal and Rail Development Project. However, upon receipt and adoption of the report by the Ag. Managing Director, this report becomes a matter of public record and its distribution may not be limited. i

4 DECLARATION OF THE HEAD OF FINANCE/ACCOUNTING OF TANZANIA INTERMODAL RAIL DEVELOPMENT PROJECT (IMPLEMENTING AGENT - MIS. RELi ASSETS HOLDING COMPANY LTD) The National Board of Accountants and Auditors (NBAA) according to the power conferred under the Auditors and Accountants (Registration) Act. No. 33 of 1972, as amended by Act No. 2 of 1995, requires financial statements to be accompanied with a declaration issued by the Head of Finance/ Accounting responsible for the preparation of financial statements of the entity concerned. It is the duty of a Professional Accountant to assist the Board of Directors/Governing Body I Management to discharge the responsibility of preparing financial statements of an entity showing true and fair view of the entity position and performance in accordance with applicable International Accounting Standards and statutory financial reporting requirements. Full legal responsibility for the preparation of financial statements rests with the Board of Directors/Governing Body as under Directors Responsibility statement on an earlier page. I Raymond G. R Rwiza being the Head of Finance/ Accounting of Tanzania lntermodal Rail Development Project (TIRDP) as implemented by Reli Assets Holding Company Ltd (RAHCO) hereby acknowledge my responsibility of ensuring that financial statements for the year ended 30 June 2016 have been prepared in compliance with applicable accounting standards and statutory requirements. I thus confirm that the financial statements give a true and fair view position of Tanzania lntermodal Rail Development Project (TIRDP) as on that date and that they have been prepared based on properly maintained financial records. Signed by: Position: Financial Mana NBAA Membership No.: ACPA 1912 Date: 13 January 2017 ii

5 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 AUDIT REPORT ON THE FINANCIAL STATEMENTS To: Ag. Managing Director, Reli Asset Holding Company, P.O. Box 76959, DAR ES SALAAM. RE: REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (TIRP) IDA CREDIT N TZ FOR THE YEAR ENDED 30rn JUNE, 2016 Introduction I have audited the accompanying Financial Statements of Tanzania lntermodal and Rail Project credit No TZ, which comprise of the Statement of Financial Position, Statement of Performance and Statement of Cash-flow for the year ended 30th June, 2016 and summary of significant accounting policies and other explanatory notes set out from page 3 to12 of this report. Responsibility of the Controller and Auditor General My responsibility is to express an independent opinion on the Financial Statements based on the audit. The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSAls) and such other audit procedures I considered necessary in the circumstances. These standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Statement of Financial Position, Statement of Performance and Statement of Cash-flow are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depended on auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, I considered the internal controls relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the com pany 's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

6 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 In addition, Sect. 10(2) of the Public Audit Act No. 11 of 2008 requires me to satisfy myself that the financial statements have been prepared in accordance with appropriate accounting standards and that; reasonable precautions have been taken to safeguard the collection of revenue, the receipt, custody, disposal, issue and proper use of public property, and that the law, directions and instructions applicable thereto have been duly observed, expenditures of public monies have been properly authorized. Further, Sect 48(3) of the Public Procurement Act No. 7 of 2011 and 269 (1) of the Public Procurement Regulations 2013 require me to state in my annual audit report whether or not the auditee has complied with the provisions of the Law and its Regulations. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Unqualified Opinion In my opinion, the Financial Statements present true and fairly, in all material respect, the Financial Position of the Tanzania lntermodal and Rail Project credit No TZ as at 30th June 2016 and its Financial Performance, and its Cash Flow for the year then ended in accordance with International Public Sector Accounting Standc,\rd (IPSAS). Report on other legal and regulatory requirements In view of my responsibility on the procurement legislation, and taking into consideration the procurement transactions and processes I reviewed as part of this audit, I state that Tanzania lntermodal and Rail Development Project has generally complied with the requirements of the Public Procurement Act No. 7 of 2011 and its underlying Regulations of Athumani~ ttuka Ag.CONT~~Lt~ AND AUDITOR GENERAL National Audit Office, Dar es Salaam, Tanzania 13th January,

7 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JOTH JUNE, 2016 STATEMENT OF FINANCIAL POSITION AS AT JOTH JUNE, 2016 NOTE 2015/2016 TSHS NON-CURRENT ASSETS Property, Plant and Equipment 13 66,579, Total Non-Current Assets 66,579, Current Assets: VAT Receivable Cash and Cash Equivalents ,518, ,274, 963, Total Current Assets 5,294,481, TOT AL ASSETS 5,361,061, FUNDS AND RESERVES Accumulated Surplus 5, 353,029, Total Funds and Reserves Current Liabilities: Witholding Tax 14b 5, 353,029, ,032, Total Current Liabilities 8,032, TOTAL EQUITY AND LI ILITIES 5,361,061, Ag. Managing Director 1.3{o I l Date 3

8 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH JUNE 2016 INCOME Revenue from non-exchange Transactions Funds Transferred from IDA TOTAL INCOME NOTES /2016 TSHS 12,203,814, ,203,814, EXPENSES Consultancy Services General and Administrative Costs Finance Expenses Other Expenditure Depreciation TOT AL EXPENSES (b) 6,717,538, ,442, ,951, ,341, ,511, ,850,785, Surplus for the year Ag. Managing Director / g]ot l.2-.ot? Date 4

9 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE 2016 Cash Flow from Operating Activities RECEIPTS NOTES 201 5/2016 TSHS Cash Received from IDA Credit 12,203,814, Un remitted W. H.T Recovered 8,032, Total Receipts 12,211,846, PAYMENTS Cash Paid for Consultancy Services Cash Paid for General and Administrative costs Cash Paid for Finance Expenses Cash Paid for Vat Loss on Foreign exchange Cash Paid for other expenses Total Payments 6,717,538, ,442, ,407, , 518, ,543, , 341, ,848, 791, Net Cash From Operating Activities 5,363,055, Cash Flow from Investing Activities Purchase of Property, Plant and Equipment Net Cash from Investing Activities Financing Activities Net Cash from Financing Activities lncrease/(decrease) in Cash and Cash Equivalents Cash and Cash Equivalent at the beginning of the year 13 (88,091,896.45) (88,091,896.45) 5,274, 963, Cash and Cash E valent at the end of the year 5.274, "' I Ag. Managing Director f }}'D(/ 2o{7 Date 5

10 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JOTH JUNE, 2016 NOTES TO THE ACCOUNTS 1.0 SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these financial statements are set out below. And these policies shall be consistently applied unless otherwise stated. 1.1 Basis of Accounting The Financial Statements have been prepared in accordance with International Public Sector Accounting Standard (IPSAS). The financial statements are prepared under the historical cost convention Property, Plant and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. Such costs include the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are charged to profit or loss account as and when incurred. Depreciation on property, plant and equipment is computed on a straight line method over the estimated useful lives of the assets. The rates of depreciation used are: Description Useful life Rate (%) Computers Furniture and Equipment 4 years 5 years An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of financial performance when the asset is derecognized. 6

11 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JOTH JUNE, 2016 The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate. 2.0 Functional and Presentation In view of the expenditure of the Project, some transactions are carried out with different functional currencies. A functional currency is the currency of the primary economic environment in which the entity operates (TIRP). Items included in the financial statements of the reporting entity are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The TIRP financial statements are presented in (TZS) and US dollars for the benefit of local and international users such as project financiers (IDA). 2.1 Foreign Currency Translation Transactions and balances: Foreign currency transactions are translated into the functional currency using average of exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation to year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in receipts and payments. The exchange rates used are Central Bank - ruling rate of transactions date. 3.0 RISK MANAGEMENT RAHCO is subject to a number of financial risks which arise as a result of its routine operations. Consequently, RAHCO ensures that risks which faces are dealt with in an appropriate manner. In accordance with relevant aspects of best practice in corporate governance, it has developed risk management strategy, regarding to available guidance on Management of Risk. Steps have been taken to identify and assess risks to meeting objectives, to weigh and prioritize these on the basis of their assessed impact and likelihood, and then to take timely actions to manage or eliminate them through compensating internal controls. NOTES TO THE ACCOUNTS (CONTINUED) RAHCO recognizes that risks arise from many internal and external sources and that a wide range should be considered. The effectiveness of these actions is monitored and reviewed regularly. They also help to identify areas for improving risk-based internal controls and to target the company's programme. 7

12 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JQTH JUNE, Credit Risk Credit risk refers to risk as the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms. Financial instruments which subject RAHCO to credit risk include bank balance, receivables and advances Foreign Exchange Risk Foreign exchange risk or currency risk is a financial risk that exists when a financial transaction is denominated in currency other than that of the base currency of the company as a result adverse movements in foreign exchange rates Contractual Risk Contractual Risk refers to the loss arises from failure of contractors to deliver goods or services to the agreed prices or specifications. 3.4 Environmental and Social Risk Environmental and Social Risk refers to the loss arises from failure to undertake appropriate Environmental and Social Impact Assessment. These may be resulted from failure to gather the following information before project implementation commences: a map of soil types and their erosion potential, climate, weather patterns and stream flows, topography and natural geographic features (including whether site is in a floodplain), the construction schedule, changes to the topography of the site during each stage of the project, a map of existing vegetation identifying areas to be retained, details of areas of cleared land at each stage of the development and period of time that each section will be exposed, nature and location of works that will occur within some meters of a natural waterway or other sensitive environmental area, etc. To ensure the risks mitigation is enhanced; there is a systematic measuring and recording of physical, social and economic variables associated with project impacts before initiation of any project activities to company. One of the key roles of Tanzania lntermodal and Rail Development Project is to gather information from the baseline surveys which will be used to identify gaps and challenges related to environmental and social risk of central railway infrastructure, and device strategies to improve monitoring capacity. 8

13 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 NOTES TO THE ACCOUNTS (CONTINUED) 3. 5 Information Communication Risk Information Communication Risk refers to information management, data protection and freedom to access information which lead to difficulties in implementation and development of the project. The mandate on dealing with documents and project information has been vested to management and provide in-house training for handling and managing company's document and information appropriately. There are primary risks arising from financial reporting, which include fraud, loss or embezzlement of assets, improper favoring of a third party at the expense of the company and other risks related to material misstatements in valuation of assets, liabilities, revenue and expenses or deviations from the disclosure requirements. 4.0 FUNDS FROM IDA CREDIT - IDA CREDIT NO TZ The Amount of TZS 12,203,814, was disbursed from the IDA Credit No and only TZS 6,828,247, was utilized leaving a balance of TZS 5,375,566, as of 3Qth June The Credit is neither interest free nor tax exempt and is guaranteed by the Government of Tanzania. The International Development Agency is financing Tanzania lntermodal Rail Development Project at 100%. 5.0 IDA FUNDS The project receipt from IDA during the period under review amounted to TZS 12,203,814, that was a replenishment of IDA to Special Account in order to finance the project implementation. S/No. Date WA No. USO Exchange AMOUNT (TZS) Received Rate RAHC0/01 3,429, ,151,304, RAHC0/02 1,499, ,255, 947, RAHC0/03 824, ,796,562, Total 5, 752, ,203,814,

14 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 NOTES TO THE ACCOUNTS (CONTINUED) 6.0 PAYMENTS - COSULTANCY SERVICES Major part of Component 'D' payments represent amount spent on consultancy services for the Project Implementation Team and other proj ect consultancy Services conducted by CANARAIL INC and CPCS Transoms International Ltd. Payments for the period are analyzed as follows: - Inspection and Capacity Rating of Railway Bridges Preparation of Economic Analysis for the Tanzania lntermodal and Rail Project Manager & Infrastructure Specialist Procurement Specialist Financial Management & Accounting Specialist Office Technical Assistant (OTA) Preparation of Tender Documents for railway track Rehabilitation works and track maintenance contracts Provision of Consultancy Service Total 2015/2016 TSHS. 4, 959,715, , 103, ,878, , 913, ,486, ,022, ,672, , 746, , 717,538, REPORTING CURRENCY These accounts are presented in Tanzania Shillings (TZS) 8 COMPARATIVE FIGURES This is initial reporting period, there are no comparative figures. 9: CASH AND CASH EQUIVALENTS Cash and Cash equivalents are carried in financial position at face value. For the purpose of Cash flow statement, cash and cash equivalents consist of cash at bank. 10

15 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JOTH JUNE, 2016 NOTES TO THE ACCOUNTS (CONTINUED) 10 GENERAL AND ADMINISTRATIVE COSTS Local Travel Postage, Stationery and Photocopy Utilities and Office Expenses Staff Welfare Telephones, Fax& Internet Meeting expenses Publicity (Advertisement) Staff Training Sub Allowance-Local Total 2015/2016 TSHS 6,338, ,052, ,544, , ,399, , ,854, ,276, , 949, ,442, FINANCIAL EXPENSES Bank Charge Exchange Gain or Loss Total OTHER EXPENDITURE Office Rehabilitation Total 13,407, ,543, ,951, ,341, ,341, PROPERTY,PLANT AND EQUIPMENT Total Office Furniture and Fittings Computer and Accessories 10,220, ,871, ,091,

16 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED JOTH JUNE, (b) DEPRECIATION Office Furniture and Fittings Computer and Accessories Total 2015/2016 TSHS 2,044, ,467, ,511, RECEIVABLES VAT receivables 19,518, (b) PAYABLES Withholding Tax Total 8,032, ,032, CASH AND CASH EQUIVALENT Bank of Tanzania - Usd A/ c CRDB - Usd A/c CRDB - Tshs Total 4,087,452, , 747, ,763, ,274, 963,

17 TANZANIA INTERMODAL AND RAIL DEVELOPMENT PROJECT (IDA NO TZ) FOR THE YEAR ENDED 30TH JUNE, 2016 Copy to: Permanent Secretary, Ministry of Transport, P.O. Box 9144, DAR ES SALAAM. Permanent Secretary, Ministry of Finance and Economic Affairs, P.O. Box 9111, DAR ES SALAAM. Senior Financial Management Specialist, International Development Association, Country Office, 50 Mirambo Street, P.0.Box 2054, DAR ES SALAAM. Director General, Surface and Marine Transport Regulatory Authority, P.O. Box 3093, DAR ES SALAAM. 13