Firm, Electricity Bosses Clash over Audit report

Audit firm KPMG East Africa Limited has clashed with top bosses at the Rural Electrification Agency (REA) over an audit report.

The acrimony stems from REA bosses’ request to add some responses in a ‘draft report’ the audit firm has been working on after a thorough probe.

However, KPMG insists that the additional responses cannot alter the final report in anyway—after all that chapter was closed a year ago. The report had implicated some REA bosses.

GENESIS OF THE AUDIT

Sometime back, the World Bank under the Energy for Rural Transformation (ERT) II provided USD10million funding for procurement of electricity connection materials. The materials were intended to support the connection of about 70,000 rural households.

In 2019, curious to know what was surrounding the project after hearing a lot of negative whispers, the World Bank would hire KPMG to do an audit on this project.

Just like the other components under the ERT II, the connections component of the project was allegedly mismanaged, hence causing serious financial losses to the Government. This was revealed through an audit carried out by KPMG.

The same issues were also revealed in the Financial Year 2018 – 2019 report of the Auditor General.

CURRENT ROW

In her letter dated 19th August, 2020, Joan Mutiibwa the Acting CEO of REA asked KPMG to edit their report after it had been issued and closed off over a year ago.

Apparently, she forwarded to KPMG responses from one of the REA bosses- Godfrey K. Werikhe for inclusion in the report.

The manager in question and his colleague are currently under probe by the Rural Electrification Board on allegations of fraud and mismanagement of electricity projects under the ERT II project.

The President in March 2020 directed the Police’s Criminal Investigations Department of Police to arrest and prosecute the duo.

In her letter to KPMG, she requests the firm to review and consider the responses and comments for inclusion in the report.

“Please find attached additional responses/comments to the draft report on the audit of connection materials as provided by the Deputy Executive Director-Technical Operations under which the departments that managed these materials are supervised. You are requested to review and consider the comments accordingly. I look forward to having a meeting on the same after your review and consideration,” the letter reads.

KPMG HITS BACK

In their letter dated 24th August 2020, KPMG responds to REA taking note of the request made by Mutiibwa on behalf of the managers. KPMG responded that the audit was completed, and final reports issued after going through the exit meeting with REA leadership and they also received confirmation of management comments on 5th July 2019.

KPMG rather looked surprised that they were being asked to change a report which was concluded over a year ago.

“We refer to your letter dated 19 August 2020, with subject ’Additional responses to the draft report on audit of connection materials under the Revolving Fund’. The responses provided by the deputy executive director Godfrey .K. Werikhe, have been noted. We wish to bring to your attention the fact that the audit was completed and the final report issued.

This followed the submission of the first draft report on 21 February 2019 and four months later, a final draft report on 27th June 2019.

During the four months, we engaged (on the draft report) with teams from both REA and Service Providers and received comments and clarifications to the draft report. An exit meeting with senior leadership of REA was held on 4th July 2019 during which the final position on the report was reached and confirmation of management comments received on 5th July 2019.

The final audit report was thereafter issued on 8 July 2019 to mark the closure of the audit. Important to highlight is the fact that an audit is performed for a given period and report issued at a particular time covering that period. Implementation of audit recommendations is a responsibility of the auditee as is the case for the revolving fund materials audit.

Nevertheless, we have studied the additional responses and provided clarifications in the attachment to this letter to further guide REA in the implementation of recommendations arising from the audit.

The clarifications provided do not in any way change the final report issued on the closure of the audit… We trust that you will find this communication to be in order,” wrote Edgar Isingoma on behalf of KPMG.

“The big question is why REA CEO is forwarding responses at a time when the audit has already been closed with some officials even under probe? Whose interests is she serving?” an insider posed a question.

Before being appointed the Acting CEO, REA, Mutiibwa was managing the five-year Energy for Rural Transformation (ERT) III project which became effective in 2015. After many years of failing to move the project and to disburse funds, the Government decided to hire a Project Management Specialist.

Government was at risk of losing financing under the project by 2020 project closure due to slow implementation of the project. COVID-19 recently came in as a saviour to enable the World Bank to extend the project until 2021.

Prior to the ERTIII, Mutiibwa managed the ERTII project. She took over after Medard Muganzi the then Project Manager was sucked by the Rural Electrification Board for mismanaging the Solar PV project under the ERTII. Several lines were commissioned during the time she was Project Manager – ERTII.

Mary Goretti Kitutu, Minister of Energy and Mineral Development in recent media engagements informed the public that she was making big changes in REA.

This was after she had appointed Mutiibwa as the Acting CEO of REA. Sources say the two have developed a good rapport and the new CEO is seen almost every morning in Amber house for possible guidance on how to run things at REA.

In her memo dated 23rd July, 2020, Mutiibwa informed REA staff that the Minister had instructed that for any media engagements, permission had to be sought from her. Of recent, it’s only the Minister that speaks on behalf of REA.