Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697813631872.pdf (Fiji)
LIST OF WITNESSES WRITTEN EVIDENCES Report of the Auditor General – 2017 Audit Report on Economic Services Sector: (Parliamentary Paper No.

9 of 2019) No.

Witnesses 1.

Ministry of Agriculture 2.

Ministry of Fisheries 3.

Ministry of Forestry 4.

Ministry of Lands and Mineral Resources 5.

Ministry of Industry, Trade and Tourism 6.

Ministry of Sugar Industry 7.

Ministry of Local Government Page No.


3 11 26 50 58 65 78 2016-2017 Financial Year: Volume 4 Economic Services Sector – Government Ministries and Departments 1.

Head No.

30 – Ministry of Agriculture 2.

Head No.

32 – Ministry of Fisheries and Forests 3.

Head No.

33 – Ministry of Lands & Mineral Resources 4.

Head No.

34 – Ministry of Industry, Trade and Tourism 5.

Head No.

35 – Ministry of Sugar Industry 6.

Head No.


37 – Ministry of Local Government PUBLIC ACCOUNTS COMMITTEE Section 32 – MINISTRY OF FISHERIES WRITTEN RESPONSE 1.

What progress has been made to resolve each of the qualification and emphasis of matter paragraphs raised in the audit report?

We have relooked at our 2.

Of the $2.5 million put aside for the salvaging of logs after TC Winston, $301,451 was utilised for this purpose.

At the end of 2017, only $1,896,419 is left in the TMA cash.
Where did the rest go to?

Ministry of Forests to respond.

3.

Revenue Anomalies – 32.12 Has Ministry been able to reconcile the revenue recorded in FMIS to TRS records?

Please provide evidence.

Ministry of Forests to respond.

4.

Unsubstantiated Accounts Receivable (AR) Balances – 32.14 Has Ministry identified all the subsidiary account for Accounts receivable totaling $677,339 as at 31 July 2017?

Ministry of Forests to respond.

5.


Anomalies in the Drawings Account – 32.15 (i) Can the Ministry explain the variance of $924,966 in the Drawings Account?

(ii) What action has been taken to ensure that reconciliations are always up to date?

Ministry of Forests to respond.

6.

Unsubstantiated Operating Trust Account balances – 32.17 Is Ministry able to provide details of Operating Trust Account balances totaling $1,792,396?
The Ministry of Fisheries has rectified this issue and has been registered with VAT.

We have made VAT payments for 2018/2019 for $177,923.04 and $36,949.25 quarterly payment for 2019/2020.

Refer to copies of FRCS Receipts and Fisheries VAT Registration Certificate [Annex 1] 7.

Expenditure Charged to Incorrect Allocation – 32.18 What has the Ministry implemented to avoid re-occurrence of the above issue?

Ministry of Forests to respond.

8.


Anomalies in the Fisheries Main Trust Fund Account - 32.20 (i) Please provide an update on the transfer of the retention trust fund account?

 We have taken remedial steps in reopening the bank account with the new signatories as per minuted submission to the Permanent Secretary’s Office for the reopening and changes to the signatories.
We are closely liaising with Treasury Division of the Ministry of Economy as per email trails attached [Annex 2] on the reopening of the Bank Account that has been dormant for over 3 years.

This will enable the Ministry to re-do a thorough bank reconciliation 1 with OAG, to substantiate the balances.

 We have obtained the Certificate of Balance of the Trust Account for 2017/2018 and 2018/2019 and submitted to the OAG.
[Annex 3] (ii) Is Ministry able provide a detailed listing for the closing balance of $190,095?

 We have located the source documents [2 Trust Revenue Receipts Books which are now with the OAG Book 635301/350 and 635351/400] and attached is a summary of the 2 receipts with the comments [Annex 4]  After reopening the Bank Account and on-line bank access, we will substantiate all the audit issues highlighted will assist the OAG on this.

9.
9.

Variance between Bank Reconciliation and FMIS General Ledger – 32.22 (i) Has the Ministry been able to reconcile its Bank Account?

(ii) What work has been done to reconcile the bank balance and the deferred income balance in FMIS?

Ministry of Forests to respond.

10.

Journal Adjustments Passed without adequate Supporting Document – 32.23 (i) What measures has the Ministry implemented to ensure that journal adjustments are made with proper documents?
(ii) What has happened to those records not provided to audit?

(iii) What action will be taken by the Ministry to ensure that its Officers do not transfer funds from fund 1 to fund 4 and vice- versa?

Ministry of Forests to respond.

11.

Failure to Lodge VAT Returns – 32.24 Has Ministry updated its lodgement of VAT returns?

Ministry of Forests to respond.

12.


Officer Authorizing Payments above Approved Limit – 32.25 (i) If the FMIS has restrictions in place for the approval limits for the LPO’s, how is it that officers continue to approve above their limits?

(ii) What improvement can the Ministry put in place to ensure this is not repeated?

Ministry of Forests to respond.

13.


Procurement Anomalies -32.26 What measures have been implemented by the Ministry to ensure that there is no further breach of payment process as mentioned in the audit report?

Ministry of Forests to respond.

14.

Purchases Made Without Tender Board Approval – 32.27 (i) How were the Companies selected?

2 (ii) Please provide an update on the outcome of the investigation?

Ministry of Forests to respond.

15.


Absence of Risk Management Policy – 32.28 What is the progress on the risk management policy for the Ministry?

The Ministry has drafted a Risk Management Plan but is still undergoing reviews to available for viewing upon request.

finalize the Policy.

A draft is 16.

Non-Compliance with Finance Manual – 32.25 Has the Ministry commenced with the carrying out of the internal control assessment?

Ministry of Forests to respond.

17.


Finance Manual not Signed by Permanent Secretary for Ministry of Forests – 32.31 Does the Ministry has an approved Finance Manual?

Ministry of Forests to respond.

18.

Board of Survey (BoS) Report Not Submitted – 32.31 Please provide an update on the Board of Survey of the Ministry?
The Ministry of Fisheries could not complete the Board of Survey Report due the inadequate staffing of the Corporate Services Division during the inception or set-up of the stand –alone Ministry since its split from the Ministry of Forests.

We have now actively attended to this reporting activity and our 2018/2019 BoS Report is available for viewing upon request as it is a very thick report.

19.
19.

Payroll Variance between FMIS and Payroll Summary Report – 32.33 Has the Ministry able to reconcile its Established and Unestablished staff payroll with FMIS?

Ministry of Forests to respond.

20.

Viability of Trading & Manufacturing Account (TMA) – 32.34 Ministry’s TMA showed net loss for the past 8 years.

What has the Ministry done to improve the performance of its TMA operations?

Ministry of Forests to respond.

21.


Trading and Manufacturing Activity Support Initiatives – 32.35 Does the Ministry has any work plan on the utilization of the funds received from Ministry of Economy?

Ministry of Forests to respond.

3 4 PUBLIC ACCOUNTS COMMITTEE QUESTIONS Section 32 – Ministry of Forestry WRITTEN RESPONSE 1.

What progress has been made to resolve each of the qualification and emphasis of matter paragraphs raised in the audit report?
The Ministry has rectified the records in the Statement of Receipts and Expenditure for the year ended 31 July 2017 as follows:  SLG 84 Account has been reconciled and recorded accordingly Report Annexed 4B  We have requested the Ministry of Economy to write off the un-reconciled accountable advances carried forward from the previous years.

Report Annex 3  We have reviewed our Accountable Advance implementation processes as we have implement advance checklist.
For all advance less than $20k this must be approved by the Conservator of Forests and Director Corporate Services.

Advances over $20k but less than $50k must be approved by the Permanent Secretary for Forestry.

Report Annex 11  True Trust Fund Account has been referred to Ministry of Fisheries.

 We have improved our revenue collection strategies on scaling fees for the Native Timber and miscellaneous revenue.
Timber Revenue System (TRS) data have been implemented at HQ Accounts Section whereby data sent from the divisions is reconciled with FMIS GL Account.

Report Annex 2  We have improved on the internal control environment and risk management strategies to curb any anomalies.

Report Annex 10B  Of the $2.5 million put aside for the salvaging of logs after TC Winston, $301,451 was utilized for this purpose.

At the end of 2017, only $1,896,419 is left in the TMA cash.

Where did the rest go to?


The total paid for salvaging of fallen logs from respective sites to Nasinu was breakdown.
Table $646,919.73.Refer below the the for to 1 Name Company of the Total Amount till December 2017 Remarks Kishore Kumar $149,951.87 Hauling of Logs from Dawasamu and Navua New Time Limited $380,235.04 Hauling of logs from Nadarivatu Nadarivatu Sawmillers $116,732.82 Hire of Loaders for Mobilization of Logs In Yard Total $646,919.73 Whilst the Financial Year ended on 31/07/2017, the Operations however continued until December 2017 thus there is a variance of $43,338.73 between the ending Bank Balance figure for audit and Ministry.
Evidence is at Annex 1 3.

Revenue Anomalies Has Ministry been able to reconcile the revenue recorded in FMIS to TRS records?

Please provide evidence.

Yes the Ministry has taken steps to address the issues raised as follows:  TRS Revenue update and TRS Data base has been stored at the HQ Accounts Section to reconcile the revenue input from the divisions daily.

 This is to reconcile the TRS data base inputs from the divisions against FMIS inputs at HQ.
 The Ministry has developed an additional feature to the TRS system which automatically updates the FMIS records at HQ when revenue is entered from divisions by the Data Entry Operator.

Variances can be monitored and corrected before reconciliation is done at the end of the month.

 Staff training is conducted on revenue collection, Timber Revenue System data input guidelines, FMIS users refresher training  The Debtor Register is being maintained and report is annexed.
 Quarterly Revenue inspection is being conducted and report is annexed.

 Close monitoring of revenue and surprise checks on revenue collectors and report is 2 annexed.

Evidence is at Annex 2 4.

Unsubstantiated Accounts Receivable (AR) Balances Has Ministry identified all the subsidiary account for Accounts receivable totaling $677,339 as at 31 July 2017?
The Ministry had requested for write off on these substantial amount to the Ministry of Economy on two occasions; one on 11th Sept 2018 and 2nd February 2019.

 We had the evidence that all the receipts was lodged but due to system failure and incomplete process in the FMIS these amounts was still hanging in the system as outstanding thus the reason for request for write off.
 Currently we had strengthened our revenue collection strategy at HQ against FMIS and reconcile daily with the division revenue lodgments.

 Revenue checklist has been implemented on weekly basis for the divisions to update on their revenue collection.

Report annexed.

 The Debtor’s Register has being maintained and report is annexed.

 Quarterly Revenue inspection is being conducted and report is annexed.

 Close monitoring of revenue and surprise checks on revenue collectors and report is annexed.
Evidence is at Annex 3 5.

Anomalies in the Drawings Account  Can the Ministry explain the variance of $924,966 in the Drawings Account?

 The Ministry has rectified the variances noted between its reconciliation statements and general ledger and adjusted accordingly in FY 2017/2018 and report is annexed.

Evidence is at Annex 4A  What action has been taken to ensure that reconciliations are always up to date?
 The issue has been resolved and the Ministry is now up to date with all its reconciliations and submits by the 15th of each month.

 This has been made possible by the recruitment of a qualified and experienced Senior Accounts Officer (SAO) who is responsible for ensuring that monthly financial reports are submitted on time to the Ministry of Economy and Report is annexed.

Evidence is at Annex 4B 3 6.


Unsubstantiated Operating Trust Account balances Is Ministry able to provide details of Operating Trust Account balances totaling $1,792,396  Operating Trust Fund Account reconciliation has been done and submitted to Ministry of Economy before 15th of every month.

 Ministry has rectified the balance in the Operating trust account and adjusted it accordingly.

 The challenge was in reconciling prior years’ balance for adjustments.

Evidence is at Annex 5 7.


Expenditure Charged to Incorrect Allocation What has the Ministry implemented to avoid re-occurrence of the above issue?

The Ministry has implemented the following measures to avoid charges to incorrect allocation:  Ensure that all transactions are posted to their correct allocation in the FMIS general ledger.

Virement application has been implemented to curb over expenditure.

 Misposting are corrected simultaneously and posted into the FMIS general ledger.
  Adjustments in our cash flow to achieve monthly expenditures  Compost Report is extracted on weekly basis whereby weekly reconciliation is done to avoid incorrect postings and adjustments of negative balances.

 The Ministry has put in place close monitoring of payments and AP user modules.

 All procurement are cross checked with procurement checklists with correct allocation stated to be used.
 Accounts checklist is implemented which provides guidance in procurement, budget allocation balance and approval to process.

JVs are done to correct misallocation of purchases.

Evidence is at Annex 6 8.

Anomalies in the Fisheries Main Trust Fund Account (i) Please provide an update on the transfer of the retention trust fund account?

The transfer of Ministry of Fisheries trust account was addressed to Fisheries Finance manager.
(ii) Is Ministry able provide a detailed listing for the closing balance of $190,095?

Ministry of Fisheries will be in a better position to answer this as this trust account is monitored by the Ministry.

4 9.

Variance between Bank Reconciliation and FMIS General Ledger  Has the Ministry been able to reconcile its Bank Account?

 Yes, the TMA FMIS figure is reconciled with Current Bank Balance.

The only item which is yet to rectify is the carried forward balance from 2014/2015 Financial Period.
 The carried forward balance of $106,773.94 from 2014/2015 period have been rectified as per annexed journal voucher.

 What work has been done to reconcile the bank balance and the deferred income balance in FMIS?

 We have carried out the reconciliation for 2016/2017 again in the year 2018 to ascertain the root cause of the problem and thus have acted accordingly to resolve the issue.

Evidence is at Annex 7 10.


Journal Adjustments Passed without adequate Supporting Document (i) What measures has the Ministry implemented to ensure that journal adjustments are made with proper documents?

 The Ministry is closely monitoring all the adjustments, checking all the supporting documents and require justification for the Journal adjustments.

 The documents are then scanned and saved in the Finance share drive whereas the hard copies are filed away.
 What has happened to those records not provided to audit?

 We admit that these records were for the Ministry of Fisheries and our understanding is that it must be with Accounts Section at Ministry of Fisheries.

 What action will be taken by the Ministry to ensure that its Officers do not transfer funds from fund 1 to fund 4 and vice-versa?

 The issue has been resolved and the Ministry is now closely monitoring the processing of Fund 1 and fund 4 and report is annexed.

5 Evidence is at Annex 8 11.


Failure to Lodge VAT Returns Has Ministry updated its lodgment of VAT returns?

 Yes the Ministry’s Operating Fund Account VAT return has been updated and VAT payment has been lodged to FRCA on monthly basis.

 The TMA operation has been running on loss for the past 8 consecutive years therefore could not ascertain monthly VAT return payment accordingly.

Evidence is at Annex 9 12.


Officer Authorizing Payments above Approved Limit  If the FMIS has restrictions in place for the approval limits for the LPO’s, how is it that officers continue to approve above their limits?

The Ministry acknowledges the recommendation and have taken applicable action.

 Approval to release Purchase Order on line above his/her limit has to be obtained from the Ministry of Economy- FMIS Unit.

We cannot release purchase order unless FMIS has given approval to release on line.
Refer annexed for approval given.

Evidence is at Annex 10A  We have strengthened our internal controls in approving Purchase Orders on line whereby only the Director Corporate Services, Conservator of Forests and the Permanent Secretary of Forestry are responsible for releasing Purchase Orders on line for the Ministry.
Refer table below: Name Ms Laite Cavu Ms Sanjana Lal Mr Pene G. N Baleinabuli Corporate Designation Director Services Conservator of Forests Permanent Secretary for Forestry Approving Limits $0 - $20,000 $0 - $20,000 $0 - $50,000 (ii) What improvement can the Ministry put in place to ensure this is not repeated?

The Ministry has taken the following actions to address this: Implementation of procurement and accountable advance checklist.
  Review the procurement delegation approval as per stipulated in the Ministry’s Finance Manual for 2018 - 2019.

6  Approval of minutes for issue of Accountable Advance and Purchase Orders must be approved by CF and DCS for all procurement below $20k and more than $50k approval must be sought from the PSF.

Evidence is at Annex 10B 13.

Procurement Anomalies What measures have been implemented by the Ministry to ensure that there is no further breach of payment process as mentioned in the audit report?
We have strengthened our internal control mechanisms on procurement procedures and put strict measures on all payments :  Procurement checklist has been implemented when enquiring for procurement, including 3 quotes, vendor details, bank account number, TIN ,amount, allocation to be used, purpose for the request and authorizing officer to endorse approving the payment.
 Approval of minutes for issue of Accountable Advance and Purchase Orders must be approved by CF and DCS for all procurement below $20k and more than $20k approval must be sought from the PSF.

 We have reviewed our procurement delegation in the Forestry Finance Manual whereby only the CF, DCS and the Permanent Secretary for Forestry are responsible to release Purchase orders on line as detailed in the above table on question 12.

Evidence is at Annex 6 & 11 14.


Purchases Made Without Tender Board Approval  How were the Companies selected?

 The selection of these two companies was to facilitate the need at the time, when the Ministry of Forestry embarked on a national salvaging operation of damaged trees and its immediate conversion to timber in support of the DISMAC program on Housing Rehabilitation and Reconstruction, after TC Winston.
 Due to the short time frame, taking into consideration its rugged terrain and damaged road and the unwillingness of the companies that were previously approached to cart logs from these two sites, we had no other option but hire these two companies to cart logs from Nakavu and Nadarivatu.

 The Ministry acknowledges that there was no Major Tender approval given to the salvage operation of damaged trees.
It was concerned about the log defects at the two sites after TC Winston, and tried to meet the demands from the public for sawn 7 logs.

 Way forward: the Ministry has appointed a Procurement Advisor who looks after all purchase and services for more than $50k.

 All procurement above $50k are forwarded to Major Tender Board for approval and some are already approved as annexed.

Evidence is at Annex 12  Please provide an update on the outcome of the investigation?
 Investigation is still on going with FICAC.

15.

Absence of Risk Management Policy What is the progress on the risk management policy for the Ministry?

The Ministry has a current Risk Management Policy.

Evidence is at Annex 13 16.

Non-Compliance with Finance Manual Has the Ministry commenced with the carrying out of the internal control assessment?

Yes the Ministry has carried internal control measures that are stipulated in our Finance Manual.
We have implemented the following measures:  Monthly submission of internal control to PSF  Maintain of Journal Voucher Register  Conduct of training to all staff to combat risk areas  Issued warning letters to Officers not complying with control measures.

Evidence is at Annex 10B 17.

Finance Manual not Signed by Permanent Secretary for Ministry of Forests Does the Ministry has an approved Finance Manual?

 Yes, we are currently using the 2018 – 2019 Finance Manual.
 The Finance Manual for 2019 – 2020 has been reviewed and vetted by the Policy Unit of the Ministry of Economy.

It is currently undergoing minor amendments before it is endorsed and distributed to all staffs.

Evidence is at Annex 11 8 18.

Board of Survey (BoS) Report Not Submitted Please provide an update on the Board of Survey of the Ministry?

The Ministry had conducted the Board of Survey for 2017 – 2018 and 2018 – 2019 and complied with Fiji Procurement Office Regulation.
 Approval for disposal and write off of unserviceable items and equipments has been obtained from the Ministry of Economy.

 The Procurement Advisor had already started updating the Ministry’s assets in the FMIS assets module and work closely on all our tender applications with Fiji Procurement Office - Major Tender Board.

 The Ministry will ensure that the Board of Survey is conducted on annual basis to ensure the proper recording of assets is carried out and its.

Evidence is at Annex 14 19.


Payroll Variance between FMIS and Payroll Summary Report Has the Ministry able to reconcile its Established and Unestablished staff payroll with FMIS?

Yes, currently the Ministry has reconciled the payroll with the FMIS.

 Currently, the weekly reconciliation are thoroughly checked against the P2P, payroll against FMIS general ledger.

 Causes of variance is the payment of Project Officers from project allocation and payment of FNPF.

20.
20.

Viability of Trading & Manufacturing Account (TMA) Ministry’s TMA showed net loss for the past 8 years.

What has the Ministry done to improve the performance of its TMA operations?

 The Ministry has moved all the staffs wages to SEG 2  We have appointed a Business Manager for the swift Operations of the TMA operation.

 We have further assured that there is prompt supply of logs for continued  operations by engaging a contractor through a tender process.
In order to improve our production efficiency, we have alternatively bought two portable sawmill which has enable us to boost daily production.

Evidence is at Annex 15 21.

Trading and Manufacturing Activity Support Initiatives 9 Does the Ministry has any work plan on the utilization of the funds received from Ministry of Economy?
Yes the Ministry has a work plan for the TMA Initially the funds were not injected by Ministry of Economy but was a transfer from Ministry of Forestry’s budgetary allocation to FUND 4 (TMA).

The transfer was done to Ministry of Economy’s approval dated 16/05/2016.

The Ministry intends to utilize the funds to assist the following Maritime Pine schemes.

 Gau Scheme  Kadavu Schemes  Lakeba Scheme Assist in the market of sawn timber and logs for the Maritime Pine Schemes.
Evidence is at Annex 15 10 MINISTRY OF LANDS AND MINERAL RESOURCES Management Responses towards Public Accounts Committee (PAC) Issues on AFS 2016/2017 Auditor General Report Issue Title Audit Recommendations Management Responses Issue No.

1.

What progress has been made to resolve the qualification matter Paragraphs raised in the Audit Report ?

2.

Variances between Crown Land Lease System & FMIS Has the Ministry been to resolve the variance in the CLLS and the FMIS ledger ?

Please provide evidence.


 The Ministry has strengthened its internal processes through daily verification and reconciliation of revenue received together with Cash Analysis against the CLLS revenue records.

 Concerning RFA, the Ministry has strictly adhered to the appropriate procedures in the issuance and clearance of Accountable Advance.
 The Ministry has strengthened its internal processes through daily verification and reconciliation of revenue received together with Cash Analysis against the CLLS revenue records.

 The variance was due to: i.

The expired leases not updated to the CLLS for those agencies that make one-off payments for large listings of lessees such as FSC, Post Fiji and Housing Authority.
Payment was received in bulk from FSC but upon updating this payment to the individual account (Oracle System) it shows that their lease has been expired.

The inconsistency in the timeframe for processing the renewal of leases.

ii.

Mitigation Actions i. ii.

Activate expired leases accounts in CLLs for the purpose of receipting and deactivate them at the end of the process; Review of SOPs to ensure consistent and timely renewal of leases.
1 3 Committing current year budgetary allocation for subsequent years expenditure 4.

Significant Arrears of Revenue What measures has been taken by the Ministry implemented to prevent the above?

i) ii) What strategies has the Ministry implemented to reduce significant arrears of revenue?

How successful is this team that was tasked with the collection of the arrears?

 The Ministry has ensured that all expenditures incurred are cleared within the same financial year.
 All payments are facilitated through Electronic Fund Transfer (EFT).

 This is monitored through monthly reconciliation.

i.

       ii.
The strategies undertaken by the Ministry are as below: Waiver of interest incentive Site visits to lessees and conducting awareness on rental payments Issuance of notices and flyer on rental Accepting undertaking with lessees to clear rental arrears within a respective period Media publicity Options on mode of payments to lessees Draft Debt and Revenue Management Policy formulated The team has been successful as they are enforcing the abovementioned strategies and this has resulted in an increase in rental collection.
5.

Rent of $0.10 being charged on active leases.

i) ii) What is the progress from the Valuation Team on renewal of those leases mentioned in the report?

a) The leases do not have a re-assessment clause hence the $0.10 will continue till expiry.

Ministry can only wait for the lease to expire and a renewed leases to include reassessment claus.

Can the Ministry provide a timeline on the completion of this exercise?

b) Timeline depends on the expiry of the lease.


c) Missed re-assessments will await the next re- assessment date.

2 6.

7.

8.

9.

Anomalies in Operating Trust Fund Account balances What work has the Ministry done to clear the dormant accounts?

The Ministry has carried out relevant verifications and has formalised request to Ministry of Economy to transfer all carry forward balances as revenue to government.
Failure to Lodge VAT returns Has the Ministry sorted out on the discussion regarding the lodgement of VAT Returns ?

The issue on VAT has been sorted out and the Ministry is paying VAT on revenue to FRCS.

Expenditure charged to wrong allocation What strategies has the Ministry put in place to avoid mis postings of expenditure?

Absence of Risk Management Policy What is the progress on Risk Management Policy?
The Ministry is ensuring that all relevant expenditures are charged from the relevant budgetary allocations.

In cases where relevant funds are not available, proper processes such as Virements and period cash flows are pursued to meet the cost.

The Ministry is currently drafting the Policy and should be finalised by Year 2020.
3 MINISTRY OF LANDS AND MINERAL RESOURCES SUPPLEMENTARY RESPONSE TO PUBLIC ACCOUNTS COMMITTEE (PAC) 2016 – 2017 AUDIT REPORT Item No (a) What is the NLTB payment regarding in the PAC Question Audit Report and also provide details of why was this amount ($893,807) not paid on time and provide the list of all Land Bank investments?

Management Responses i) The NLTB Payment – refers to the Budgetary Allocation known as iTaukei Land Lease to State.
The allocated budget is to cater for payment lease rental to iTLTB of active iTaukei Land being leased to State.

The Budgetary allocation also caters for other land classification being leased to state such as the ones owned by various Church groups and including annual lease payment to DO Rotuma for 3 leases to State and Rabi Council for 2 leases.

ii) Lease Rental payments are usually executed to iTLTB twice in a year (Beginning of the Year and Mid-Year).
Payment is usually facilitated on time however savings in budgetary allocation was due to a number leases being expired hence payment was withheld until the leases are renewed.

iii) A total of 119 land parcel has being designated under the Land Bank till to date and reflected in the table below.
COUNT TOTAL COUNT YEAR DESIGNATED iTAUKEI LAND DESIGNATED BUY BACK LAND DESIGNATED STATE LAND 2011 18 11 1 30 1 | P a g e (b) Where exactly are Vunamasei and Yako Sub- divisional projects located as highlighted in the Audit Report?
2 2012 2013 2014 2015 2016 2017 2018 2019 2020 18 13 14 6 0 18 5 5 3 TOTAL 100 13 1 0 0 0 0 1 0 0 3 6 21 13 14 6 0 19 5 5 6 119 i) Vunamasei Subdivision The Vunamasei subdivision project is located along the Legalega road and is approximately 1 kilometer from the main Queens road.

It is located close to the Nadi International Airport which is also approximately 1 kilometer away.

It is approximately 2.5 kilometers from the Namaka Commercial Centre and approximately 8 kilometers from the Nadi Town Centre.
Please refer to Appendix 1. ii) Yako Subdivision The Yako subdivision project is located approximately 6 kilometres off the main Queens road.

It is located on the sea side, approximately 3 kilometres away from Nabila village.

It is approximately 14 kilometres from the Nadi Town Centre.

Please refer to Appendix 2.

2 | P a g e Appendix 1 - Vunamasei Subdivision The Vunamasei subdivision project is located along the Legalega road and is approximately 1 kilometre from the main Queens road.
It is located close to the Nadi International Aiport which is also approximately 1 kilometre away.

It is approximately 2.5 kilometres from the Namaka commercial centre and approximately 8 kilometres from the Nadi Town centre.

Please refer to the map below for locality map.

Appendix 2 - Yako Subdivision The Yako subdivision project is located approximately 6 kilometres off the main Queens road.

It is located on the sea side, approximately 3 kilometres away from Nabila village.
It is approximately 14 kilometres from the Nadi Town centre.

Please refer to the map below for locality map.

Management Comments to Standing Committee on Public Accounts 2017 Audit Report on Economic Services Sector Ministry of Local Government Head 37 2017 1 Part A: Financial Statements Section 37.1 Audit Opinion 1.

Why didn’t the Ministry maintain the journal vouchers to support the adjustments recorded in the General ledger?
The Ministry had maintained the journal vouchers to support adjustments recorded in the general ledger.

During the 2017 Internal Audit of the Ministry the original records were taken up by the Internal Auditors of Ministry of Economy for auditing and were later returned to the Ministry on 20/8/2018.

This was after the 2017 Agency Financial Statement of the Ministry were endorsed by Auditor General.
On 21st August 2018, the Ministry had written a letter to the Auditor General to review the accounting records which could eliminate some of the audit queries raised on the missing accounting records for journal vouchers (Refer Annex 1).

Currently the Ministry has recruited 1 out 4 of Accounts Personnel in Accounts Section to increase the staffing capacity to effectively and efficiently provide the financial support services to avoid such anomalies in future.
The Ministry has also implemented in house Capacity Building Training, Coaching and Mentoring programs to educate staffs on procedures and processes pertaining to accounting records.

Ministry of Local Government has already upgraded the Head of the Finance team from Senior to Manager level during 2018-19 budget.

2.

Why were the journal vouchers provided to the Auditors?

What is the status of the payment vouchers now?


Similar to question one, the payment and journal vouchers were with Ministry for Economy Internal Audit staffs for internal audit purpose.

The Payment and Journal vouchers were returned to the Ministry after the completion of the external audit.

At present, the subject payment and journal vouchers are stored at the Finance Section which can be made available for verification.

3.

How was the error in posting occurred?


Who post the entries in the general ledger and is the officer fully competent for this role?

The posting of misallocation of expenditure occurred as result of the input of data by the Temporary Relieving Clerical Officer during the vouchering process to facilitate the payment.

We agree that payment relating to Naboro Landfill Subsidy was captured under Naboro Landfill Stage 2 Construction.

We acknowledge that there was a misposting in the journal.
2 The Ministry has now finalized the recruitment and onboarding of the Accountant position who commenced on the 26th of August, 2019.

The Assistant Account Officer will commence from the 11th September, 2019.

The addition of the two new personnel will ensure that the finance team will provide efficient and effective services.

The final two of the four advertised positions [Senior Accounts Officer and Assistant Accounts Officer] will be on board by end of October, 2019.

4.
4.

The variance between the general ledger and the bank reconciliation for the Environment Trust fund is significant?

How was this allowed to happen?

Has the variance rectified?

The variance of $1,033,867.93 between Trust Revenue Account and Bank Account resulted when Department of Environment was merged with other Ministries over the years.

No accurate reconciliations were carried out.

The variance occurred due to mispostings and adjustments of previous years.
In 2018, as a way forward, the Ministry with the assistance from FMIS Division of Ministry of Economy had under took the reconciliation exercise from the inception of the Environment Trust Fund Account.

The said account was reconciled and adjusted and the unsubstantiated variances that had resulted from previous years misposting had been submitted via a Memorandum for Book Entry Adjustment to Ministry of Economy on 14/10/2018.
On 16th August 2019, the Ministry for Local Government obtained confirmation from Ministry of Economy that request for book entry adjustment is in progress.

(Refer Annex 2).

5.

What is the status of the reconciliations for the various accounts which is highlighted in the Auditor General’s Report?
In 2018, Ministry of Local Government with the assistance from Financial Management Information System [FMIS] -Ministry of Economy had undertaken the reconciliation exercise of the four underlined accounts and the status is as follows: 1.

Drawings Account - Reconciliation has been completed.

2.

Trust Fund Account - Reconciliation has been completed.

3.

Operating Trust Account - Reconciliation has been completed.

4.

RFA Account - Reconciliation has been completed.


The unsubstantiated variances arising from previous years misposting has been submitted to Ministry of Economy for book entry adjustment on the 14th October, 2018.

3 Section 37.2 Statement of Receipts and Expenditure 6.

Provide details of capital grants which Ministry has paid out.

What is the monitoring role of the Ministry to ensure grants are used for its intended purposes?

Is there a dedicated Team to monitor the use of Capital Grant?
The Ministry disbursed [operating and capital grants] to National Fire Authority and Municipal Councils as follows: No.
Year Council Project Fund Disbursed in FJD$ Swimming Pool project 750,000.00 2016/17 2016/17 2016/17 2016/17 2016/17 2016/17 2016/17 2016/17 2016/17 Lautoka City Council Nasinu Town Council Suva City Council Lautoka City Council Ba Town Council Nausori Town Council Tavua Town Council Sigatoka Town Council Valelevu Ground Upgrade Drainage Work Drainage Work Drainage Work Drainage Work Drainage Work Drainage Work Lami Town Council Drainage Work 4 350,000.00 106,892.00 68,763.00 144,100.00 50,000.00 38,137.00 20,000.00 50,977.25 10 2016/17 11 2016/17 12 13 2016/17 2016/17 14 2016/17 15 2016/17 16 2016/17 17 2016/17 18 2016/17 19 2016/17 Labasa Town Council Savusavu Town Council Nadi Town Council Levuka Town Council Nasinu Town Council Rakiraki Town Council Lautoka City Council Nasinu Town Council Rakiraki Town Council Nausori Town Council Drainage Work Drainage Work Drainage Work Drainage Work Drainage Work Drainage Work 20,500.00 20,000.00 105,115.00 50,000.00 199,615.71 20,000.00 Swimming Pool project 1,000,000.00 Laqere Market Market Rt.
Cakobau 1,000,000.00 1,800,000.00 50,000.00 20 2016/17 Nadi Town Prince 5 21 2016/17 22 2016/17 23 2016/17 Council National Fire Authority National Fire Authority Suva, Nadi & Lautoka Councils Charles Park Capex Projects Hydrants Vacuum Trucks TOTAL CAPITAL PROJECTS FUNDING 150,000.00 3,000,000.00 200,000.00 540,000.00 9,734,099.96 The Ministry sets up Memorandum of Agreement [MOA] in between the Ministry and the Implementing Agency [Councils and National Fire Authority] for all projects.
The Memorandum of Agreement, vetted by the Solicitor General Office, establishes project scope and milestones.

Based on the agreement, Request to Incur Expenditure [RIE] is prepared and funds released.

Project Reports are received by a team of officers which include Senior Accounts Officer and Senior Administration Officer - Local Government.

Site visits and some Project Committee meetings are attended by the Staffs with the Construction Implementation Unit- Ministry for Economy staffs.
Acquittals are received quarterly.

Quarterly project performance reports are forwarded to the Ministry of Economy.

The Director of Local Government has two dedicated staffs, Senior Accounts Officer and Senior Administrative Officer, who monitor the progress of Grants disbursed and work closely with the Manager Finance on Project Management.

6 Section 37.3 Appropriation Statement for 2017 7.


Why was there significant lapse in appropriation for capital construction, Special expenditure and operating grants?

These amounts were appropriated so why wasn’t it utilized?

The capital projects implementation program did not progress as per expectations given that the Statutory Authorities during the fiscal year had a challenge in recruiting Project Management Team and Contractors.
This was due to heavy concentration on re-construction works post Cyclone Winston.

All funds released during 2016/17 to Municipal Councils and National Fire Authority has been fully utilized and acquittals forwarded to the Ministry of Local Government.

Major Projects, such as Namaka Municipal Market, Govind Park Stadium, Rakiraki Municipal Market, and Laqere Municipal Market are ongoing capital programs spread over 3 to 5 years national budget.

8.
8.

Are the significant lapse in appropriation due to inefficiency of the Ministry to utilize these funds?

Ministry of Local Government acknowledges historical lack of capacity.

Ministry of Local Government has been providing support in within its capacity to drive Government investment programs under its Budget allocation.
Post 2017/18 Ministry has aligned its major capital programs under the Construction Implementation Unit to ensure that the Government procurement fiscal policy is aligned to Capital Construction works.

As previously noted, the Ministry is addressing resources and staffing capacity during this fiscal year.
The Director of Local Government has two dedicated staffs, Senior Accounts Officer and Senior Administrative Officer, who monitor the progress of Grants disbursed and work closely with the Manager Finance on Project Management.

7 Section 37.4.1 Environment Trust Fund Account 9.

Provide an update on the Waste and Environment Impact Assessment for which the Ministry has used $2,358,548.

A.

The total payment incurred are for the operation of Naboro Landfill only.
Payments are for contractors - HG Leach and community levy.

The details of the payments are as follows: B. Update on $2,345, 548 utilization are as follows: The operation of the Naboro Landfill facility is an important aspect in the Ministry’s delivery of quality service to its customers.

As per agreement in place, HG Leach shall place a high degree of emphasis on the quality of service delivery, both as Operation Contractor and the Ministry’s on site agent.
The main objectives of having a Contractor in place for the operation of the landfill are: 1.

A safe operation for both customers and staff.

2.

An easily accessible, readily available facility for landfill customers.

3.

A well organized and tidy operation which presents a professional image to landfill customers.

4.

Maintenance and enhancement of the quality of the environment.

5.

A well-managed operation complying with internationally accepted best practice in landfill management.

6.
6.

A high degree of refuse compaction, thus prolonging the life of the landfill.

The Naboro Landfill Trust hold all gate fees collected from the Naboro Landfill.

These funds are then used to pay the Contractor on site.

The nominated contractor submits monthly operational claims to cover cost of operating the landfill on behalf of the Department of Environment.

These claims are aligned to the Operation Contract signed between the Department and the Operator, HG Leach (Fiji) Ltd.
Monthly claims usually cover cost of compacting waste on site, treatment of the leachate (maintenance of Aerators), maintenance of Wash Pad and Access Road and opening of landfill outside normal operational hours (Public Holidays and after hours for special disposal).
8 MonthPayeeAmountParticulars of the paymentAug-16HG Leach Ltd$220,771.16Being payment for operational contract for Naboro Landfill for the month of June 2016Sep-16HG Leach Ltd$223,313.11Being payment for operational contract for Naboro Landfill for the month of July 2016Nov-16HG Leach Ltd$158,228.15Being payment for operational contract for Naboro Landfill for the month of August 2016Feb-17HG Leach Ltd$348,316.53Being payment for operational contract for Naboro Landfill for the month of September & October 2016Mar-17HG Leach Ltd$161,987.23Being payment for operational contract for Naboro Landfill for the month of November 2016Jun-17HG Leach Ltd$160,847.58Being payment for operational contract for Naboro Landfill for the month of December 2016Jun-17HG Leach Ltd$156,021.60Being payment for operational contract for Naboro Landfill for the month of January 2017Jun-17HG Leach Ltd$161,155.78Being payment for operational contract for Naboro Landfill for the month of February 2017$1,590,641.14Jun-17Itaukei Land Trust Board$16,572.61Being payment for 3rd quarter community Levy for Naboro LandfillAug-16Itaukei Land Trust Board$63,937.25Being payment for 2nd quarter community Levy for Naboro Landfill$80,509.86$1,671,151.00Note, sum of $687,397 is void payment which is reflected under the receipts sum.
C. Brief on COMMUNITY LEVY On May 24, 2011 Cabinet (Annexed to the attached signed Agreement) approved the payment of Community Levy at a rate of $0.78 VEP per tonnage to the ancestral landowners of the Mataqali Bativudi in the Province of Rewa that own the land on which the Naboro landfill is situated.
The Community Levy Agreement (Attached) was signed between the Ministry of Local Government, Housing and Environment (Ministry) and the iTaukei Affairs Board (iTAB) on October 8, 2014 to set up a working framework to enable transparent, accountable and timely pay-out of community levy to the ancestral landowners.

The Agreement stipulates that Community Levy payment is disbursed quarterly by the Ministry and the iTAB will then facilitate community levy payment to the ancestral landowners.
From 2018/19 period, the Environment Trust Fund Account is being handled by the Ministry of Waterways and Environment.

(Refer Annex 3) Part B: Assessment of Financial Governance.

Section 37.7 Quality of Draft Financial Statement 10.

Auditor General has rated the quality of the draft financial statement as ineffective.

Please advise the Committee what measures the Ministry has taken to improve the quality of the draft financial statements for auditing.
The Ministry had prepared draft financial statement based on the figures extracted from FMIS system after the closure of accounting period.

Due to shortage of staffs in the Accounts Section then, the adjustments for misallocation of expenditures and variances were not cleared from the underline accounts on a timely basis which had resulted in ineffective draft financial statement.
The Ministry has now finalized the recruitment and onboarding of the Accountant position who commenced on the 26th of August, 2019.

The Assistant Account Officer will commence from the 11th September, 2019.

The addition of the two new personnel will ensure that the finance team will provide efficient and effective services.

The final two of the four advertised positions [Senior Accounts Officer and Assistant Accounts Officer] will be on board by end of October, 2019.
The other measures that the Ministry has taken onboard are as follows: 1.

Identify the anomalies in all underline reconciliations and undertake the adjustment exercise to ensure the reconciliation report are true & fair 2.

Provision of FMIS training for Accounts Personnel 3.

In house capacity building training to motivate staffs on procedures and processes pertaining to reconciliations.

4.

All underline reconciliations are to be prepared on a monthly basis 5.
All reconciliations prepared are verified and signed copy of the reconciliation is submitted to Ministry of Economy 6.

Closely monitor the works of the subordinates to ensure the procedures and processes are adhered to at all times.

9 Part C: Significant Matters 37.10 Late submission of Draft Agency Financial Statements 11.

Has the Ministry improved on the timeliness for submitting the draft financial statements for audit?
When was the draft financial statements sent to office of the Auditor General for auditing for FY 2017/2018?

The Ministry expects with the recruitment of the new accounting team in the Finance department to effectively and efficiently provide timely financial support services and strictly adhere to the Closing of Accounts as per Circular to avoid any delay in submitting the draft financial statements for audit.

The Ministry submitted the 2017-2018 Draft Financial Statements for Auditing on 22/2/2019.
The Ministry is on track to meet the timeline for this financial year.

37.14: Stale cheques not journalized 12.

Has this issue been rectified and existing in 2017/2018 FY?

The Ministry had rectified the issue for Main Trust Account Stale cheques in 2018 accounting period except from Cheque number 327 which is included in the book entry adjustment.
The status of the cheques are as follows: Date Cheque Number Amount Remarks 22/3/2012 194 2,941.50 04/04/2012 197 13,800.00 30/05/2016 327 16,719 01/06/2012 191 18,394.58 10 Presented in the Bank Statement on 23/3/2012 Presented in the Bank Statement on 13/4/2012 The stale cheque amounting to $16,719 has been included in the Book Entry adjustment submission which submitted to Ministry of economy of 14/10/2018 Presented in the Bank Statement on 17/07/2013 244 19,950.00 04/04/2012 196 24,624.95 30/03/2012 195 40,073.40 05/11/2012 199 79,040.88 16/3/2012 192 176,586.70 $392,131 24/1/2012 Presented in the Bank Statement on 18/7/2013 Presented in the Bank Statement on 12/4/2012 Presented in the Bank Statement on 02/4/2012 Presented in the Bank Statement on 21/5/2012 Presented in the Bank Statement on 19/3/2012 As a way forward to alleviate this problem, the Ministry is in a process of recruiting 4 Accounts Personnel in Accounts Section to increase the staffing capacity to effectively and efficiently provide the financial support services to avoid such anomaly.
Ministry of Environment and Waterways is now managing this Trust Fund.

(Refer Annex 4) 11 37.16: Variance in Payroll Records 13.

Has the variance been rectified amounting to $133,121?

The Ministry has rectified the variance of $133,121, in the payroll records.
The reason for the variance in the payroll report was that four Special Administrators were paid from Personal Emolument vote under Department of Local Government however, the expenditures for salary including the FNPF were not journalized to Special Administrators vote.
(Refer Annex 5) Accounting Records General Ledger Amount – SEG 1 _ Established Staff Less Payroll Report (2,497,214) Less Payroll expenditure adjustment not accounted in payroll report Total Variances Less Identified Variances - Wages recorded in SEG 1 Less Identified Variances - Travel Allowance recorded in SEG 1 Unidentified Variances 133,121 Less Identified Variances - Salary for 4 Special Administrators recorded in SEG 1 Variances Amount in $ 3,084,324 -2,497,214 -319,000 268,110 -68,835 -66,154 133,121 220,255 -87,134 37.19 Absence of Fixed Assets Register 14.
Is there a fixed asset register maintained by the Ministry now?

Yes, the Ministry had established the Fixed Asset Register in 2017 and records the fixed assets of the Ministry as and when procured and does adjustments accordingly once the uneconomical assets are boarded.

Manager Finance has adopted to fiscal instructions policy in maintaining Fixed Asset Register.

37.21 Main Trust Journals Not approved 15.

Are the journals being approved now?


Yes, with the recruitment of the Manager Finance, all journal vouchers now prior to the adjustments are endorsed before it is posted into the FMIS system.

12 37.22 Anomalies in the Operating Trust Fund Account 16.

Has the issue of overdrawn balance been rectified with Ministry of Economy as discussed in you management comments?

The overdrawn balance in the Operating Trust Fund had eventuated due to non-reconciliation of underline operating trust accounts.
In 2018, as a way forward Ministry with the assistance from FMIS Division of Ministry of Economy had undertook the reconciliation exercise on Operating Trust Fund Account.

The said account was reconciled, adjusted and the unsubstantiated variances that had resulted from previous years misposting had been submitted via a Memorandum for Book Entry Adjustment to Ministry of Economy on 14/10/2018.
(Refer to 2) On 16th August 2019, the Ministry obtained confirmation from Ministry of Economy that request for book entry adjustment is in progress.

(Refer to 2) 37.23 Anomalies in the Operating Trust Fund Account 17.

Update on the issues highlighted by the Office of the Auditor General relating to Drawings Account.

The Board of Survey for Drawings Account was not performed in 2016-2017 accounting period.
As part of the Audit implementation, the Ministry has commenced work in progressing 2016-2017 Drawings reconciliation.

It is anticipated that the Board of Survey for Drawings Account shall be completed and submitted to the Permanent Secretary before end of November, 2019.

In 2018, Ministry assisted by Ministry of Economy had undertook the reconciliation exercise Drawings Account.
The said account was reconciled and adjusted and the unsubstantiated variances that had resulted from previous years misposting had been submitted via a Memorandum for Book Entry Adjustment to Ministry of Economy on 14/10/2018.

(Refer to 2) On 16th August 2019, the Ministry obtained confirmation from Ministry of Economy that request for book entry adjustment is in progress.

(Refer to 2) 13 37.26 Inappropriate use of Advance Account 18.
What actions has been taken against the officers who have misuse the advance accounts?

The Ministry has taken active role to recover the outstanding advances as per table 37.25.

The status of the advance are as follows: Date Cheque/ EFT No.

Amount ($) Payee EDP Position Purpose of Request Remarks Status Outstandi ng Balance ($) 9/06/16 3214 500 46742 Senior Accounts Officer The funds provided will be used for personal commitments due to financial constraints.
500  Advance given not for official purpose  No salary deduction 30/9/16 3340 300 92787 Clerical Officer 10/03/16 3342 600 46742 14/10/16 3404 300 46742 Senior Accounts Officer Senior Accounts Officer 25/10/16 3429 1,000 26/10/16 3436 300 94012 Assistant Accounts Officer Senior Accounts Officer 46742 14 Officer requested funds for personal use and stated that funds will be paid back from pay 22/2016 Description in the payment voucher unclear Officer requested for funds for personal commitments due to financial constraints.
Description in the payment voucher unclear.

There was no 300 600  Advance given not for official purpose  No salary deduction 300 1,000 300  No evidence of approval.

 Payment voucher Recovered sum of $470 the from officer’s salary from Pay 19/16 to 26/16.

Remaining balance of $30 yet to be recovered.

The reminder letter will be issued to the officer on 4/9/2019.

Fully recovered via RR#488469 dated 24/10/16 Fully recovered via RR#488485 dated 23/12/16 Not Recovered.
The reminder letter will be issued to the officer on 4/9/2019.

Fully recovered via RR#488480 dated 22/12/16 Not recovered.

The reminder letter will be issued to the officer on 4/9/2019.

Date Cheque/ EFT No.

Amount ($) Payee EDP Position Purpose of Request Remarks Status Outstandi ng Balance ($) 11/10/16 3483 300 46742 Senior Accounts Officer 30/09/16 42802 300 64929 IT Officer 21/10/16 42937 1,500 90909 N/A supporting documents indicating purpose and approval.
Officer requested for funds for personal commitments.

Officer requested funds to assist officer financially as officer's contract remain pending with the Minister.

Officer requested funds for personal commitments.

not certified.

 No deduction input was made in the subsequent pays 23-26 of 2016 300  Advance given not for official purpose.

 No salary deduction 300 1,500 to Not recovered.

The reminder letter will be the issued on officer 4/9/2019.
Partially recovered sum of $200 via RR#488484 dated 23/12/16.

The remaining balance to be recovered from the officers pay from 20/2019 Activate the deduction from Pay 19/2019 Actions to be taken are: Person Action Taken Funds Recovery Senior Accounts Officer Person has been terminated $1400 remains as outstanding balance.

During September, 2019 legal action shall be taken.
Secretary to Deputy Secretary The Ministry shall be writing to Ministry of Civil Service to seek opinion on appropriate actions that shall be taken.

MLG - Finance has spoken to the Staff and informed that direct deductions shall commence from Pay 19.

The person shall be given a 15 warning letter during the month of September, 2019.

IT Officer The Permanent Secretary Ministry of Waterways and Environment shall be informed on the situation.
MLG Finance shall be speaking with Accountants Ministry for Waterways and Environment for recovery.

37.27 Anomalies in Payments 19.

Has all the issues highlighted in the Auditor General’s Report for anomalies in payments been addressed?

All staffs employed in payments during 2016/17 are no longer in employment.

Improved vigilance via recruitment of staffs at senior level shall ensure that we minimize such anomalies.
Ministry shall be preparing a financial risk management plan which shall be signed by the Permanent Secretary and implemented before 31st January, 2020 [mid of fiscal year 2019/20].

16