kenya national audit office report - world bank · kenya national audit office report of the...

REPUBLIC OF KENYA

KENYA NATIONAL AUDIT OFFICE

REPORT

OF

THE AUDITOR-GENERAL

ON

THE FINANCIAL STATEMENTS OF NATIONAL URBAN TRANSPORT

IMPROVEMENT PROJECT IDA CREDIT N0.5140 - KE (KRC COMPONENT)

FOR THE YEAR ENDED 30 JUNE 2014

KENYA RAILWAYS CORPORATION

101285P

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

ed

11

f

ff

r L

f.

L I

l

l

J

L

I{ EN Y ._~ R ,_l\.I L \V ,_I\. Y S

NATIONAL URBAN TRANSPORT IMPROVEMENT PROJECT (NUTRIP)

IMPLEMENTING ENTITY: KENYA RAILWAYS CORPORATION.

PROJECT GRANT/CREDIT NUMBER: IDA 51400

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED JUNE 30, 2014

Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS)

National Urban Transport Improvement Project (NUTRIP) Credit NO. IDA 51400 Reports and Financial Statements For the financial period ended June 30, 2014

REPORT OF THE INDEPENDENT AUDITORS ON THE NUTRIP PROJECT

VI

' ' '

' I

I ' I

I . 11

1 I I '

I .

I I i I

) I

. 11

11

11

I I " I

. elephone: +254-20-342330 Fax: +254-20-3 11 482 E-Mai l: [email protected] Website: www.kenao.go.ke

REPUBLIC OF KENYA

P.O. Box 30084-00 I 00

NAIROBI

OFFICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL ON NATIONAL URBAN TRANSPORT IMPROVEMENT PROJECT IDA CREDIT NO. 5140 - KE (KRC COMPONENT) FOR THE YEAR ENDED 30 JUNE 2014-KENYA RAILWAYS CORPORATION

REPORT ON THE FINANCIAL STATEMENTS

I have audited the accompanying financial statements of National Urban Transport Improvement Project set out on pages 2 to 9, which comprise the statement of financial assets and liabilities as at 30 June 2014, and the statement of receipts and payments, statement of cash flows, the statement of comparison of budget and actual amounts for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with provisions of Article 229 of the Constitution of Kenya and Section 14 of the Public Audit Act, 2003, and the Credit Agreement No. 5140- KE signed on 26 September 2012 between the International Development Association (IDA) and the Republic of Kenya (GOK) . I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit.

Management's Responsibility for the Financial Statements

Management of the Kenya Railways Corporation and the Project Team leader for NUTRIP are responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 13 of the Public Audit Act, 2003.

Auditor-General's Responsibility

My responsibility is to express an opinion on these financial statements based on the audit and report in accordance with provisions of Section 15 of the Public Audit Act, 2003. The audit was conducted in accordance with International Standards on Auditing . Those standards require compliance with ethical requirements and that the audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of

Pro11101ing ,Jccou111abi/i1y in 1/re Public Sec/or

the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Project as at 30 June 2014, and its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and conform to the Credit Agreement No. 5140 -KE.

Special Account Statement Certificate

The special account statement presents fairly, the ending balance of USD.649,990 as at 30 June 2014 and agrees with the statement of special account activity for the year then ended.

Emphasis of Matter

Delay in Project Implementation

Although the financing agreement for Credit No. 5140-KE between the Republic of Kenya and International Development Association (IDA) was signed on 26 September 2012, an amount of USD.649,990 remained held in the special account as at 30 June 2014. The USD.649,990 (equivalent to Kshs.58,378,509) was transferred to Kenya Railways Corporation NUTRIP bank account on 22 December 2014 and the balance has been confirmed correct.

My opinion is not qualified in respect of this matter.

~ Edward R.O. Ouko, CBS Auditor-General

Nairobi

22 May 2015

2

J

l )

l l l

(- .. National Urban Transport Improvement Project (NUTRIP) Credit NO. IDA 51400

(" Reports and Financial Statements For the financial period ended June 30, 2014

4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2014

CASH BALANCE B/F

RECEIPTS

Government Counterpart funds External Assistance IDA Funds(Transfer from special Account) IDA Direct payments Other Receipts

4

5

6

7

2013 Kshs

2014 Kshs

cumm to date Kshs

l Total receipts

I _j

J

J

PAYMENTS

Training of Staff Bank Charges

TOT AL PAYMENTS

CASH BALANCE C/F

8

The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements Signed;

Projects accountant Date

am leader Date

2


5. STATEMENT OF FINANCIAL ASSETS & LIABILITIES FOR THE PERIOD ENDED 30TH JUNE 2014

FINANCIAL ASSETS

Cash and Cash Equivalents

Bank Balances Cash Balances Cash Equivalents

TOT AL FINANCIAL ASSETS

REPRESENTED BY

Cash and cash equivalent b/fwd Surplus /Deficit for the year Prior year adjustments

NET FINANCIAL POSITION

Note 2014 2013

Kshs Kshs

The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements

Signed;

Pro Jee

3

2 \. 05". 2<)1£"

Date

Date

. .- -.

I I

L

l l l

I

( .National Urban Transport Improvement Project (NUTRIP) Credit NO. IDA 51400

(' Reports and Financial Statements · For the financial period ended June 30, 2014

6. STATEMENT OF CASHFLOW FOR THE PERIOD ENDED 30TH JUNE 2014

RECEIPT FROM OPERA TING INCOME

Transfer from Government Entities Proceeds from Domestic and Foreign Grants Miscellaneous receipts Transfer from Government Entities

PAYMENTS FOR OPERATING EXPENSES

2014

Ksh

(-)

2013

Ksh

(-)

I NET CASH FLOW FROM OPERA TING ACTIVITIES

--) Cashflow from Investing Activities

.l J

J

J

J

Cashflow from Borrowing Activities

NET CASH FROM FINANCING ACTIVITIES

NET INCREASE IN CASH AND CASH EQUIVALENT

Add CASH AND CASH EQUIVALENT B/F

CASH AND CASH EQUIVALENT C/F

The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements

Signed;

~ Al·•S- · z..01!{" ·

Date

Date

4


7. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNT FOR THE PERIOD ENDED 30TH JUNE 2014

RECEIPTS

GOK Counterpart funds

IDA Funds

TOT AL RECEIPTS

PAYMENTS Project Expenditure: Staff training Bank charges

TOTAL PAYMENTS

Note

,., .)

SURPLUS FOR THE PERIOD 3

2014 Budget

Kshs

5

•' '1

·-, I I

,-~

t I

' I

2014 Variance Actual

Kshs Kshs

- I

i ! .

I

I )

I

I

I

'

J _J

I ..J

I .)

National Urban Transport Improvement Project (NUTRIP) Credit NO. IDA 51400

(· Reports and Financial Statements For the financial period ended June 30, 2014

8. ST A TEMENT OF SPECIAL (DESIGNATED) ACCOUNT ACTIVITY FOR THE PERIOD ENDED 30TH JUNE 2014

USD Kshs

OPENING BALANCE lST JULY 2013 650 ,000.00 58,383,000.00

Add

Total Amount deposited by World bank

Total interest earned

Total amount refunded to cover ineligible expenditure

IDA Direct payments

Other Receipts

Total 650,000.00 58,383,000.00

Deduct Total Amount withdrawn

Transferred to project account

Bank Charges

Total

CLOSING BALANCE AS AT 30TH JUNE 2014 650,000.00 58,383,000.00

Cumm to date USD

650 ,000.00

650,000.00

650,000.00

The cumulative figures have been reconciled and agreed to the Banks Loan records as per client connection. The information used to prepare this statement is obtained from the statement of special Account Activity prepared by Treasury and Central bank of Kenya (CBK) and attached as Annex 2 to the financial statements.

6


9. STATEMENT OF SPECIAL (DESIGNATED) ACCOUNT RECONCILIATION FOR THE PERIOD ENDED 30TH JUNE 2014

ACCOUNT RECONCLIATION SATEMENT CDEDIT NO. IDA LOAN NO. 51400 BANK ACCOUNT NO. 6968530013 HELD WITH COMMERCIAL BANK OF AFRICA NAIROBI

I. Amount advanced by the bank

Less

2. Total Amount recovered by the bank

3. Outstanding amount advanced to special account

Represented by:

4. Ending special account balance 30th June 2014

5. Amount claimed but not credited as at 30th June 2014

6. Amounts withdrawn and not claimed

7. service charge 8. Interest earned

9.Total advance to special account period ended 30th June 2014

Notes:

USD 650,000.00

650,000.00

650,000.00

Kshs 58,383,000.00

58,383,000.00

58,383,000.00

I.Amounts in special account had not been transferred to project account due to budgetary and funds flow challenges between The parent ministry -Mo TI and Kenya Railways.

7

J l

J

l

l

l

I l

..J

J j

// -"-,

Natio11a/ Urba11 Tra11sport lmproveme11t Project (NUTRIP) Credit NO. !DA 51400

(-·Reports a11d Fi11a11cial Stateme11ts For thejfoa11cial period emled Ju11e 30, 2014

10. NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30TH JUNE 2014

1. Financial reporting under the international Public sector Accounting Standards.

The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Cash Basis Financial Reporting under the Cash Basis of Accounting. The financial statements comply with and conform to the form of presentation prescribed by the Accounting Standards Board of Kenya.

The financial statements are presented in Kenya Shillings, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Shilling. The accounting policies adopted have been consistently applied to all of the years presented.

The financial statements have been prepared on the cash basis following the Government' s standard chart of accounts. The cash basis of accounting recognises transactions and events only when cash is received or paid out by the Project.

2. Significant accounting policies

a)

3.

a) Basis of preparation

The financial statements have been prepared in accordance with International Public Sector Accounting standards with particular emphasis on cash basis Financial reporting under the cash Basis of Accounting.

b) Cash basis of Accounting

The cash basis accounting recognizes transactions and events only when cash(including cash equivalents) is received or paid by the entity. Cash equivalents are defined as short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Exchange rate differences

Cash receipts and payments arising from transactions in a foreign currency are recorded in the financial statements using the exchange rate as per financing agreement. Cash balances held in foreign currency are reported using the closing rate. Any gains or losses on foreign currency transitions are dealt with in the statement of special account Activity

Budget

The budget is developed on the same accounting basis (cash basis), the same accounts classification basis, and for the same period as the financial statements. There were budgetary issues and funds flow challenges between the line ministry and Kenya Railways.

8

National Urban Transport Improvement Project (NUTRIP) Credit NO. IDA 51400 Reports and Financial Statements For tile financial period ended June 30, 2014

4. Cash balances

Project Account Balances Special/Designated Account Balance

* USD 650,000 Advance.

5. Government counterpart funds

2013 Kshs

58,383,000.00

2014 Kshs

58,383,000.00

The project did not receive any Government counterpart funding during the period since the main project activities had not commenced as at 30th June 2014.

6. Transfer from special account

There were no funds transferred from the Special account during the period ended 30th June 2014.The funds were released by the National Treasury to the Ministry of Transp01i and Infrastructure (MoTI) on the 17th November 2014. The funds were thereafter released and credited by MoTI to Kenya Railways NUTRIP project account on the 22nd December 2014.The amount credited was Ksh 58,378,509/- .Find annexed proof and bank statements.

7. Direct payments There were no direct payments made to any supplier during the period ended 30th June 2014.

8. Nil Activity

There was nil activity for the period ended 30th June 2014 as there were no funds received from the parent ministry of Transport and Infrastructure due to budgetary and funds flow challenges between Kenya Railways and the parent ministry. The first transfer for NUTRIP was received on the 22nd December 2014 in the Kenya Railways Project account.

9. Currency The financial statements are presented in Kenya Shillings (Kshs)

9 '-

kenya national audit office report - world bank · kenya national audit office report of the...

Documents