REG faulted for not providing financial statements for audit

During the PAC hearing held virtually on Monday, Auditor General Obadiah Biraro stated that REG needs strong corporate governance that reflects a public company that should currently be listed on the stock exchange, adding that the move is long overdue since it was first planned in 2006.
REG workers upgrade a station at Mukungwa Hydropower plant in Burera District in June 2019. / Photo: Sam Ngendahimana.

Members of the Public Accounts Committee (PAC) on Monday, September 21, 2020, faulted officials from the Rwanda Energy Group Ltd for not providing on time its financial statements for audit by the Auditor General (AG) in 2018/2019.

The move hindered the AG’s work to audit REG. Legally, all public institutions or agencies should provide financial statements two months after a financial year has concluded.

 

While the AG presented his report for the State finances of the fiscal year 2018/2019 to Parliament in May 2020, he is still auditing REG, and the work is expected to be completed by the end of this September.

 

During the PAC hearing held virtually on Monday, Auditor General Obadiah Biraro stated that REG needs strong corporate governance that reflects a public company that should currently be listed on the stock exchange, adding that the move is long overdue since it was first planned in 2006.

 

Financial statements are records or written reports that indicate the financial strength, performance and liquidity of a company.

They are audited by government agencies or auditing firms to ensure performance accuracy, and financing, or investing purposes. In addition, shareholders use them to assess the profitability of their investment in a given company and take investment decisions based on their analysis.

Biraro said that REG’s poor financial management is impeding its listing on stock exchange; profitability as well as effectiveness, pointing out that being effective would make energy affordable to the citizens.

He said that its presence on the stock exchange would make it able to generate income and be financially self-reliant instead of relying on government and donor-funding, rather Rwandans play a role in financing the energy sector through stock exchange,” he said.

“But, you cannot join the stock exchange when you have inconstant poorly made financial statements,” he said.

“Timely financial statements are an effective communication linking shareholders and those who were given responsibility to manage the asset and utilise it,” he indicated.

MP Christine Bakundufite requested valid reasons why financial statements for REG were not available in the audit report of 2018/2019.

“Financial statements contain a lot of information that is needed by a lot of people. We cannot know your assets, and what was done in your institution in 2018/2019 without such documents,” she said.

MP Jeanne D’Arc Uwimanimpaye said “not reporting to the Parliament on how they used the public resources is not a minor issue,” questioning what the external audit which is being carried out in REG is basing on if there were no financial statements.

REG officials said that the reasons that made the Group unable to provide financial statements was because they had to make a valuation of the company’s power network assets valued at about Rwf50.2 billion countrywide which took it up to six months.

Also, they said, the Group was working on the transfer of assets – worth Rwf250 billion – to its utility company [EUCL], which made the Group to request the Auditor General more time to make needed adjustments before he carries out an audit on the agency, according to REG’s Chief Finance Officer, Vincent Nyauma.

“That work required to be done with care so that the financial statements give the real picture of the country [’s energy sector]. We are sorry for not giving them on time. We should not break the law,” said Uwase Patricie, the Permanent Secretary at the Ministry of Infrastructure (MINFRA) while intervening to give explanations for the problem.

MININFRA is the line ministry for REG.

“We want and made a strategy that REG’s performance be improved to move with times and not only lists on the stock exchange, but also continues to be successful,” Uwase said.

Unexplained spending on external auditors

Biraro said that sometimes REG hires auditing firms without informing the Auditor General’s Office, and the Ministry of Finance and Economic Planning, giving an example of an on-going audit where REG has paid about Rwf200 million to the auditor.

He told PAC members that there is an instance when the Office of the Auditor General canceled the opinion of one auditing firm.

“[Ideally], there should be no other auditor for a public entity other than the Auditor General,” he said, but pointed out that hiring auditing firms would be OK if that helped the company to improve its performance.

entirenganya@newtimesrwanda.com

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