Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697812738461.pdf (Fiji)
EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 1 Audit Report on Whole of Government Financial Statements and Annual Appropriation Statements 2016 PARLIAMENT OF FIJI PARLIAMENTARY PAPER NO.
99 OF 2017 EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 1 Audit Report on Whole of Government Financial Statements and Annual Appropriation Statements 2016 CONTENTS Volume 1: Audit Report on the Whole of Government Financial Statements and Annual Appropriation Statement Part 1: Part 2: Volume 2: 1.

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Whole of Government Financial Statements and Annual Appropriation Statement for the Republic of Fiji for the Year Ended 31 December 2015 Report of the Whole of Government Financial Statements and Annual Appropriation Statement Office of the President Office of the Prime Minister Office of the Attorney General Ministry of Finance Ministry of i-Taukei Affairs Ministry of Immigration, National Security and Defence Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Elections Office Judiciary Parliament Independent Commissions Office of the Director of Public Prosecutions Ministry of Justice Fiji Correction Services Ministry of Communication Department of Information Technology and Computing Services Public Service Commission Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Higher Education Institutions Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Housing and Environment Ministry of Infrastructure and Transport Peacekeeping Missions VOLUME 1 Volume 1: Audit Report on the Whole of Government Financial Statements and Annual Appropriation Statement Part 1: Part 2: Whole of Government Financial Statements and Annual Appropriation Statement for the Republic of Fiji for the Year Ended 31 December 2015 Report of the Whole of Government Financial Statements and Annual Appropriation Statement Part 1: and Whole of Government Financial Annual Statement Appropriation Statement for the Republic of Fiji for the Year Ended 31 December 2016 Part 2: Report on the Whole of Government Financial Statements and Annual Appropriation Statement
 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Table of Content 1.0 FINANCIAL POSITION OF GOVERNMENT .................................................................................................................... 4 1.1 Financial Performance 2016 ............................................................................................................ 4 1.2 2016 Appropriation Act ..................................................................................................................... 4 1.3 Operating Results ............................................................................................................................. 5 1.4 Treasury Bills .................................................................................................................................... 5 1.5 Consolidation of Accounts of Controlled Entities ............................................................................. 6 1.6 Delay in Submission of Agency Financial Statements by Ministries and Departments ................... 6 1.6 Audit Opinion of all Ministries and Departments financial statements ............................................. 8 2.0 CASH AND CASH EQUIVALENTS ................................................................................................................................ 15 2.1 Increase in Unpresented Cheques ................................................................................................. 16 2.2 Anomalies in Drawings and Clearing Accounts ............................................................................. 18 2.3 Anomalies in Cash at Bank Balance .............................................................................................. 19 2.4 Impact of Error and Omission on Cash at Bank Balance ............................................................... 20 2.5 Prior Years Issues
 .......................................................................................................................... 21 3.0 INVESTMENTS ............................................................................................................................................................... 26 3.1 Composition of Government Investments ...................................................................................... 26 3.2 Return on Investments ................................................................................................................... 27 3.3 Analysis of Dividends and Investments.......................................................................................... 28 3.4 Dividends Remitted per Entity ........................................................................................................ 28 3.5 Inoperative Entities ......................................................................................................................... 30 3.6 Misplaced Share Certificates ......................................................................................................... 31 3.7 Non Submission of Annual Reports and Audited Accounts ........................................................... 32 3.8 Investment records not updated (Recurring Issue) ........................................................................ 33 4.0 TRUST FUND ACCOUNT .............................................................................................................................................. 34 4.1 Weaknesses in Internal Controls ................................................................................................... 34 4.2 Overdrawn Trust Accounts ............................................................................................................. 36 4.3 Variances noted in the Main Trust balances .................................................................................. 37 4.4 Account Balances Contrary to the
 Nature of Operating Trust Account ......................................... 38 4.5 Impact of Misstatement and Inadequate Evidence on Trust Fund Balance .................................. 38 5.0 REVENUE ....................................................................................................................................................................... 40 5.1 Weaknesses in Internal Controls for Revenue ............................................................................... 40 6.0 EXPENDITURE ............................................................................................................................................................... 42 6.1 Overview of 2016 Government’s Budgeted and Actual Expenditures ........................................... 42 6.2 Overall Utilisation by Standard Expenditure Groups (SEG)........................................................... 43 6.3 Government Budget for 7 Months Period....................................................................................... 45 6.4 Payment Anomalies ....................................................................................................................... 45 6.5 Expenditure Classification .............................................................................................................. 47 7.0 BORROWING FUND ACCOUNT ................................................................................................................................... 49 7.1 Trends in Government Borrowing by Category .............................................................................. 50 7.2 Borrowings over the 15 Year Period .............................................................................................. 52 7.3 Loan Repayments .......................................................................................................................... 52 7.4 Domestic Bonds
 ............................................................................................................................. 53 7.4.1 Borrowings and Interest Payments ................................................................................... 54 7.5 Overseas Borrowings ..................................................................................................................... 56 7.5.1 Yearly Overseas Borrowings ............................................................................................ 56 Whole of Government Financial Statements and Annual Appropriation Statement Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 7.5.2 Overseas Borrowings Outstanding & Interest Paid .......................................................... 57 7.5.3 Revaluation of Overseas Borrowings................................................................................ 58 7.6 Treasury Bills .................................................................................................................................. 59 7.6.1 Treasury Bills Over a 15-year Period ................................................................................ 61 7.6.2 Treasury Bills Management .............................................................................................. 62 7.7 Ways and Means ............................................................................................................................ 62 7.8 Financial Flexibility ......................................................................................................................... 63 7.9 Financial Vulnerability .................................................................................................................... 64 7.10 Financial Sustainability ................................................................................................................... 70 8.0 TERM LOAN RECEIVABLE
 ........................................................................................................................................... 72 8.1 Unsubstantiated Term Loan Receivable Balance .......................................................................... 72 8.2 Concessional Loan to Public Rental Board not reflected in the Term Loan Receivable Account in 2011 – 2015 ................................................................................................................. 73 8.3 Failure to Submit Loan Agreements for Audit Verification ............................................................. 75 9.0 REVOLVING FUND ACCOUNT ..................................................................................................................................... 78 9.1 9.2 9.3 9.4 9.5 Accounts Receivable ...................................................................................................................... 78 9.1.1 Weaknesses in Internal Control ........................................................................................ 78 Prepayments and Advance Account .............................................................................................. 80 9.2.1 Weaknesses in Internal Control ........................................................................................ 80 Impact of Misstatement on Prepayments and Advance Balances ................................... 82 9.2.2 Inventory ......................................................................................................................................... 83 Accounts Payable ........................................................................................................................... 84 9.4.1 Weaknesses in Internal Control ........................................................................................ 84 Impact of Misstatement and on Accounts Payable Balance ............................................. 86 9.4.2 Follow up on Previous Years Issues
 .............................................................................................. 88 10.0 11.0 EQUITY ........................................................................................................................................................................... 90 ARREARS OF REVENUE .............................................................................................................................................. 92 11.1 11.2 11.3 Fluctuating trend of arrears of revenue for the last 5 Years........................................................... 92 Anomalies in Statement of Arrears of Revenue ............................................................................. 92 Follow Up On Previous Year Issues .............................................................................................. 95 12.0 APPENDIX 1.0 APPENDIX 2.0 CONTINGENT LIABILITIES ........................................................................................................................................... 98 APPROPRIATION STATEMENT .................................................................................................................. 100 CASH APPENDIX ......................................................................................................................................... 102 Appendix 2.1: Details of Variances for Overseas Bank Balances ....................................................... 102 APPENDIX 3.0 TRUST FUND APPENDIX ............................................................................................................................ 103 Appendix 3.1: Weaknesses in Internal Control .................................................................................... 103 Appendix 3.1.1: Details of Trust Funds Reconciliations Not Prepared ........................................ 103 Appendix 3.1.2: Inadequate Listing of Beneficiaries .................................................................... 103
103 Appendix 3.1.3: Details of Trust Funds Balances with No Supporting Documents ..................... 105 Appendix 3.1.4: Trust Accounts Reflected Under old Head ........................................................ 106 Appendix 3.2: Account Balances Contrary to Operating Trust Nature ................................................ 122 APPENDIX 4.0 EXPENDITURE APPENDIX .......................................................................................................................... 124 Appendix 4.1: Ministries Having Used High Budget Percentage within 7 Months .............................. 124 Appendix 4.2: Details of Non-Submission of Audited Accounts .......................................................... 126 Appendix 4.3: Anomalies in Capital Expenditure ................................................................................. 126 Appendix 4.4: Details of Expenditures without Proper Authorisation .................................................. 127 Appendix 4.5: Details of Unbudgeted Expenditures ............................................................................ 128 Whole of Government Financial Statements and Annual Appropriation Statement Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Appendix 4.6: Expenditures from Nil Budget Allocation ...................................................................... 129 Appendix 4.7: Lack of Supporting Documentation............................................................................... 130 Appendix 4.8: Fixed Asset Register Not Updated ............................................................................... 130 Appendix 4.9: Details of incorrect postings .......................................................................................... 131 Appendix 4.10: Details of tender not called and competitive quotations not obtained ........................ 132 Appendix 4.11: Accountable Advance Balance as at 31/07/2016 ....................................................... 132 Appendix
132 Appendix 4.12: Provisional Tax Not Withheld ...................................................................................... 133 APPENDIX 5.0 REVOLVING FUND ACCOUNT APPENDIX ................................................................................................ 134 Appendix 5.1: Dormant Accounts ........................................................................................................ 134 Appendix 5.2: Accounts Balances Contrary to its Nature (Debit Balances) ........................................ 134 Appendix 5.3: Accounts Receivable Control Issues Raised From Ministries and Departments ......... 135 Appendix 5.4: Weaknesses in Internal Control - Prepayments and Advance Account ....................... 136 Appendix 5.5: Accounts Payable Control Issues Raised from Ministries and Departments ............... 138 Appendix 5.6: Details of Other Weaknesses in Accounts Payable Internal Controls .......................... 139 by Ministries/Departments ................................................................................................................... 139 APPENDIX 6.0 ARREARS OF REVENUE APPENDIX ......................................................................................................... 140 Appendix 6.1: Aging of Arrears of Revenue Over 5 years ................................................................... 140 APPENDIX 7.0 REVENUE APPENDIX .................................................................................................................................. 141 Appendix 7.1: Weaknesses in Internal Control .................................................................................... 141 Whole of Government Financial Statements and Annual Appropriation Statement Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 1.0 FINANCIAL POSITION OF GOVERNMENT The financial statements for the Government of the Republic of Fiji have been drawn up in accordance with IPSAS under the ‘cash-basis of accounting’ and the provisions of
 the Financial Management Act 2004.
1.1 Financial Performance 2016 The performance of the Fiji Government for the year 2016 is provided in Table 1.1.
Table 1.1 Government Performance in 2016 Item REVENUE Operating Receipts Investing Receipts TOTAL REVENUE EXPENDITURE Operating Capital Value Added Tax TOTAL EXPENDITURE NET DEFICIT Debt Repayment GROSS DEFICIT Net Deficit As A Percent of GDP NOMINAL/PROVISIONAL GDP Original Budget 2016 Revised Budget 2016 ($’000) ($’000) Actual Results 2016 ($’000) Variance1 2016 Variance ($’000) (%) 2,770,093.7 358,637.4 3,128,731.1 2,770,093.7 358,637.4 3,128,731.1 1,433,248.4 67,559.8 1,500,808.2 1,336,845.3 291,077.6 1,627,922.9 2,024,870.5 1,340,573.1 49,092.9 3,414,536.5 (285,805.4) 159,630.7 (445,436.1) (2.9%) 9,691,109[n] 2,033,999.8 1,330,033.8 50,502.9 3,414,536.5 (285,805.4) 159,630.7 (445,436.1) (2.9%) 9,691,109[n] 1,144,303.6 590,689.0 21,689.8 1,756,682.4 (255,874.2) 91,250.8 (347,125.0) (2.6%) 9,852,704.1 889,696.2 739,344.8 28,813.1 1,657,854.1 (29,931.2) 68,379.90 (98,311.1) (0.3%) (161,595.1) 48 81 52 44 56 57 49 10 43 22 10 (2) Source: Schedule 2 of the Financial Statement of the Government of Fiji Financial Statements Original Budget 2015 is sourced from the 2015 Budget Book.
[n]: Nominal GDP Figure [Source: Republic of Fiji Budget Estimate 2016] 2016 Actual GDP figure was provided by Macroeconomic committee The actual gross deficit for the year was $347.1 million which was $98.3 million less than the original forecast of $445.4 million.

The reduction in gross deficit is attributed to the change in financial year from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The actual revenue and expenditure stated for the period ended 2016 reflect transactions for a seven- month period whereas the budget is for a 12 month period.

1.2 2016 Appropriation Act There were thirty eight appropriation heads in the 2016 budget.2 The expenditure under the various Ministries/Departments and variances noted are detailed in Appendix 1.

Against a revised budget of $3,414,536,487; in a budget saving of $1,657,854,072 or 49%.
the government spent $1,756,682,415; resulting 1Variance = Actual Revised less Results Budget 2 Schedule 1 (Section 2) of the 2015 Appropriation Act 2015 Whole of Government Financial Statements and Annual Appropriation Statement Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The expenditure stated for the period ended 2016 reflect transactions for a seven-month period whereas the budget is for a 12-month period, thus the significant savings percentages.

Under the Lending Fund appropriation of $62.8 million, there was an outstanding balance of $267.6 million at the beginning of 2016 which increased by the end of the financial period with the inclusion of the Public Rental Board loan of $10.9million.
However, there were also recoveries of $5.1 million during the year with major collections being from students under the loan scheme of $0.3 million and recovery from i-Taukei Affairs Board of $0.2 million, Fiji Pine Commission of $1.2 million and Housing Authority of $3.3 million.

1.3 Operating Results A net deficit totalling $255.9 million was recorded in 2016 as shown in Table 1.1 compared to the forecasted net deficit of $285.8 million; an improvement by $29.9 million or 10%.
The net deficit for 2016 as a percentage of GDP was 2.6%, a reduction of 0.3% from the budgeted net deficit of 2.9%.

1.4 Treasury Bills Domestic loans were raised in accordance with the approved budgets while the excess borrowings were in the form of Treasury Bills.

The outstanding Treasury bills at the beginning of the year totalled $143.3 million.

Treasury Bills raised during the year amounted to $211.8 million and $163.8 million was outstanding as at 31 July 2016.
Table 1.2 details the loans raised by government to finance its budget deficits over the last 10 years.
Table 1.2 Original Budget Deficit vs. Loans Raised Details Gross Deficit Domestic Loans Overseas Loans Treasury Bills Loans Deficit % Excess Borrowings % 2007 ($) 2008 ($) 2009 ($) 2010 ($) 2011 ($) 2012 ($) 2013 ($) 2014 ($) 2015 ($) 2016 ($) (118%) (234%) (37%) (231%) (251%) (88%) (3%) (71%) (213%) (32%) The 2016 budget funding programme3 appropriated $445.4 million (equal to the forecasted gross deficit) in loan funds to finance the gross deficit.
However, a total of $587.6 million was raised in loan funds resulting in excess borrowing of $141.8 million or 32% in 2016.
3 2016 Budget Estimate - Page 8 Whole of Government Financial Statements and Annual Appropriation Statement Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 1.5 Consolidation of Accounts of Controlled Entities A controlling entity, other than a controlling entity identified in paragraphs 1.6.7 and 1.6.8, should issue consolidated financial statements which consolidates all controlled entities, foreign and domestic, other than those referred to in paragraph 1.6.6.4 Entities identified in paragraphs 1.6.7 and 1.6.8 include those that are wholly owned controlled entities provided users of such financial statements are unlikely to exist or their information needs are met by the controlling entity’s consolidated financial statements and those that is virtually wholly owned provided the controlling entity obtains the approval of the owners of the minority interest.
Entities under paragraph 1.6.6 are those that operates under severe external long-term restrictions which prevent the controlling entity from benefiting from its activities Audit noted that the whole of government financial statements for 2016 included only the accounts of government Ministries and Departments and did not consolidate the financial statements of other controlled entities.
The controlled entities for government include the State Owned Entities such as Government Commercial Companies, Commercial Statutory Authorities and Statutory Authorities.

Recommendation While the Ministry of Economy has indicated in Note 2.2 to the accounts that consolidation is not mandatory, consideration should be given to consolidate the accounts of controlled entities to promote greater accountability and transparency.
Ministry’s Comments 1.6 Delay in Submission of Agency Financial Statements by Ministries and Departments The annual financial statements required to be included in the annual report for a budget sector agency must be prepared in the manner and times required by the Finance Instructions, and contain the particulars required by or under the Finance Instructions.5 The draft financial statements must be submitted to the Auditor-General by 31 March in the following year, or within such other time as agreed by the Permanent Secretary with the Auditor- General.6 In the definition of “financial year”, deleting “a year ending on and including 31st December or such other date” and substituting “a 12-month period beginning on and including 1 August and ending on and including 31 July, or such other dates”.7 4 Handbook of International public Sector Accounting Pronouncements Volume 2 – 1.6.5 5 Finance Management Act 2010 – Section 50(1) 6 Finance Instructions 2010 – Section 70(3) 7 Finance Management (Amendment) Act 2016 – Section 2(e) Whole of Government Financial Statements and Annual Appropriation Statement Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Due to the change in the government financial year as per the Financial Management (Amendment) Act 2016, Ministries and Departments were required to submit their annual agency financial statements to the Auditor General by October 31, 2016.
However, audit noted that only three out of the total of 35 agencies complied with this legislated deadline.

The remaining 32 entities submitted their accounts between 2 December 2016 and 21 April 2017 which was up to 6 months after the due date.

Refer to Table 1.3 for details.
Table 1.3 Submission dates of Ministries and Departments Agency financial statements for 31/07/16 Ministry/Department Head No Office of the President Office of the Prime Minister Attorney General and Solicitor General Ministry of Economy Ministry of iTaukei Affairs Ministry of Immigration, National Security and Defence Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Judiciary Parliament Office of the Director of Public Prosecutions Ministry of Justice Ministry of Justice (Fiji Corrections Service) Ministry of Communications (Information, Technology & Computing Services) Ministry of Communications (Information & Communication) Ministry of Civil Services Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Urban Development and Environment Ministry of Infrastructure and Transport Date AFS Received 31/01/17 23/12/16 28/02/17 10/02/17 29/03/17 31/01/17 30/01/17
 21/01/17 13/09/16 26/01/17 02/12/16 09/09/16 23/12/16 01/02/17 22/02/17 17/02/17 19/12/16 19/12/16 06/02/17 22/12/16 23/12/16 22/12/16 12/04/17 18/04/17 02/02/17 19/09/16 08/03/17 30/01/17 04/04/17 14/12/16 06/02/17 28/12/16 18/04/17 21/04/17 Whole of Government Financial Statements and Annual Appropriation Statement Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry/Department Head No 49 Peacekeeping Missions Date AFS Received 22/12/16 Furthermore, the Whole of Government Financial Statements was submitted for audit on 7 April while the revised financial statements was submitted via email on 1 May 2017.
The delay in the submission of Agency Financial Statements across Ministries and Departments contributed to the delay in the finalising of the audit of Whole of Government Financial Statements for the year ended 31 July 2016.

Recommendation The Ministry should take proactive measures in ensuring that all Accounting Heads work towards preparing and submitting their annual financial statements before 31 January so that audit reports can be issued prior to 30 April each year.
Ministry’s Comments Prior to the change in financial year, we understand that most of the government ministries and agencies had submitted their AFS by the due date.

When this was first initiated in the early 2000’s, there would have been a good number of agencies who also were not able to meet the deadline then.

While not condoning the delay, we can only conclude that the new dates and format (from twelve to six months) contributed to this delay.
For the next financial year, we anticipate to see a vast improvement in this area, similar to the previous experience.
1.6 Audit Opinion of all Ministries and Departments financial statements The annual financial statement for a budget sector agency must – (a) be signed by the chief executive officer of the agency or by a person specified for that purpose in the Finance Instructions; and (b) be audited by the Auditor-General and be accompanied by his or her audit opinion.8 The Auditor General’s audit opinion on the annual financial statements as at 31 July 2016 of all Ministries and Departments are presented in Table 1.4 below.
Table 1.4 Audit opinions of Ministries and Departments annual financial statements for 31/07/16 Ministry / Department Head No 1 Office of the President Audit Opinion Qualified 2 Office of the Prime Minister Unqualified Basis of Qualification Prior year balances in the Revolving Fund Account totalling $776,847 were cleared by posting to various expenditure allocations without adequate supporting documents being provided to audit thus overstating expenditure of the Office in the current period by the same amount.
The Mahogany Industry Council Trust Fund Statement of 8 Financial Management Act 2010 – Section 50(2) Whole of Government Financial Statements and Annual Appropriation Statement Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry / Department Head No Audit Opinion and Emphasis of Matter Unqualified Unqualified Unqualified Qualified Attorney General and Solicitor General Ministry of Economy Ministry of iTaukei Affairs Ministry of Immigration, National Security and Defence Ministry Productivity Relations of Employment, Industrial and Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Qualified Unqualified Unqualified Unqualified Qualified 11 Judiciary 12 14 Parliament Office of the Director of Public Prosecutions Unqualified Unqualified Qualified 15 Ministry of Justice Basis of Qualification includes Trust Receipts Receipts and Payments for License fees of $1,110,987.
The Office did not perform monthly reconciliations between the logs harvested/ sold by Fiji Hardwood Corporation Limited and fees collected for Licenses; the Council is yet to determine the total accounts receivable as at 31 July 2016 the the operating An unreconciled variance of $94,197 exists between the Integrated Border Control Management Systems (IBMS) which records the Department of Immigrations operating revenue and the amount posted in the FMIS General Ledger, As a result, I was unable to substantiate the correctness of revenue balance of $7,197,414 recorded in the financial statements for the period ended 31 July 2016 Drawings Account balance of $206,037 include stale cheques totalling $97,416 which was not journalized at financial year end.
As a result the Drawings Account balance and expenditure of the Ministry is overstated by $97,416.

A variance of $501,308 existed between the Judiciary Trust Fund Cash at bank balance of $25,779,288 in the FMIS general ledger which includes Suitors, Maintenance and Sundries Trust accounts and the Judicial Trust Fund Bank Reconciliation balance of $25,277,980 as at 31 July 2016.
Furthermore, the Trust Fund reconciliation for Suitors, Maintenance and Sundries Trust accounts were not carried out since May 1992. listing of 1.

Un-substantiating opening balance for Official Receiver Liquidation Trust $647,508 and the Official Receiver Account Trust Bankruptcy 2.

Ministry did not maintain detailed the beneficiaries of the Trust Accounts.
Consequently, audit was not able to substantiate the completeness of the closing balances of $617,248 and 219,630 reflected in the the Official Statement of receipts and payments Receiver Liquidation Trust and the Official Receiver Bankruptcy Trust.

Without further Qualifying the opinion expressed above, I draw *FICAC is conducting a fraud investigation on the Official attention your for Whole of Government Financial Statements and Annual Appropriation Statement Page 9 $176,520.
to: REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry / Department Head No Audit Opinion Basis of Qualification Receiver and operations of the Trust accounts.
The impact, if any, of the outcome of the fraud investigation on the financial statements for the period ended 31 July 2016 cannot be presently determined 15 16 16 of (Fiji Justice Ministry Corrections Service) Ministry (Information, Computing Services) Ministry (Information & Communication) of Communications & Technology of Communications 17 Ministry of Civil Services 18 Ministry of Rural and Maritime Development National Disaster Management and 19 Republic of Fiji Military Forces Unqualified Unqualified Unqualified Qualified Unqualified Qualified The Ministry of Civil Service under Budget Head 17 recorded Miscellaneous Revenue of $1,002,443 for the period ended 31 July 2016.
This could not be verified as the Ministry was not able to provide appropriate audit evidence to support the balances.

1.

Total receipts include VAT on revenue of $29,852.

This amount is VAT Refunds due from FRCA, based on the client’s own calculations.

Such amounts are only recognised under the accrual basis of accounting, and not under the cash basis of accounting.

Consequently, the receipts are overstated in the financial statements.

Trading and Manufacturing Activities Account 2.


Total sales include revenue of $36,570 collected for 2015.

The amount was directly deposited in the bank account in 2015 and was recorded in the FMIS general ledger in 2016.

Consequently, the sales are overstated in the financial statement.

3.

There was no independent verification carried out for the Inventory account balance of $25,363.

Consequently, audit could not substantiate the completeness of Inventory.

included 5.
included 5.

The Engineers Project Trust Fund Account Statement of Receipts and Payments for RFMF Engineers Project Fund Account was not the Agency Financial Statement contrary to Section 71(1) (g) of the Finance to $387,487..

Instructions.
Total Payments amounted Transactions from this account were not recorded in the FMIS general ledger contrary to Section 15 of the Finance Instructions 2010. in Without further qualifying the accounts, attention were drawn to the following matters:  The RFMF did not carry out a board of survey to verify the existence and condition of assets under its authority contrary to Section 49 of the Finance Whole of Government Financial Statements and Annual Appropriation Statement Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry / Department Head No Audit Opinion Basis of Qualification  Instructions 2010.
Internal controls in the critical areas of the RFMF’s operations were generally found to be weak and if not addressed promptly may result in financial losses in the near future.
20 21 Fiji Police Force Ministry of Education, Heritage and Arts Unqualified Unqualified Qualified 22 Ministry of Health and Medical Services Qualified & Emphasis of Matter 23 Department of Housing in Included 1. the Miscellaneous State Revenue of $844,360 is License & Other revenue of $679,454.93 posted thus overstating Miscellaneous State Revenue by the same amount.

in error 2.
in error 2.

Main Trust Fund Accounts-Net adjustments totalling $875,569 relating to prior year trust fund receipts and payments were made in the current year’s general ledger for the (1) Cardiology Services Trust Fund and (2) Sahyadri Trust Fund Accounts to reconcile the ending cash balances held against the two trust fund accounts.

The details of the prior year adjustments were not provided.

3.
3.

Proper monthly reconciliation of the cash at bank balance, cash general ledger and cash book for these trust fund accounts were not carried out for all the seven months period ending 31 July 2016.

Moreover, attention was also drawn to the following; 1.

The total retention sums deducted from contractual progress payments for capital works made by the Ministry were neither transferred to a separate operating trust fund account nor were they recognised as capital expenditures during the period.
The Ministry was also unable to provide reconciliation for all the retention monies as at 31 July 2016.

The City Wide Informal Settlement Upgrading Trust Fund account for the Department had a closing balance of $7,269 for period ended 31 July 2016.

The Department did not maintain proper records including cash books.

Proper bank and trust reconciliations were also not performed for the trust account.
As a result, I was not able to ascertain the accuracy and correctness of the amount reflected in the trust account.

Emphasis of Matter Without further qualifying the opinion expressed above, I draw attention to the following: The Department did not carry out an annual board of survey to verify the existence and condition of all assets under its authority contrary to Section 49 of Finance Whole of Government Financial Statements and Annual Appropriation Statement Page 11 Matter of Instructions 2010.
The last survey was carried out on September 2016 for the financial period 1 January 2015 to 31 December 2015.

Emphasis * The accounts provide disclosure for additional funds of $19.9 million distributed by the ministry for Tropical Cyclone Winston Rehabilitation Programs.

The assistance, sourced from Budgetary Head 50 under the Ministry of Economy, was paid to all social protection program recipients.
The ministry's involvement in the Help for Home Initiative was restricted to distribution of hardware cash cards according to pre-determined lists provided to the ministry $457,469.
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry / Department Head No Audit Opinion Basis of Qualification Unqualified EOM 24 Ministry of Women, Children and Poverty Alleviation 25 Ministry of Youth and Sports Unqualified Qualified 30 Ministry of Agriculture Qualified 32 Ministry of Fisheries and Forests both overstated 1.

The Ministry transferred $457,469 of excess cash from TMA operations to the Consolidated Fund Account with the Ministry of Economy.
The journal entry passed to effect the transfer had a nil effect on the general ledger.

As a result, this amount was still reflected in the Consolidated TMA the cash amount of Balance Sheet.

Consequently, $559,372 and TMA Surplus Capital Retained of $1,125,622 in the Consolidated TMA balance sheet as at 31 July 2016 are by for adjustments 2.

Appropriate supporting documents amounting to $318,494 to the cash account for the Trust Account were not provided to audit.
In addition, a variance of 354,402 existed between listing of beneficiaries of the Trust Account and the amount recorded in the general ledger.

As a result, I was unable to ascertain the accuracy and completeness of the closing balance of $684,162 reflected in the Trust Statement of Receipts and Payments.

1.

Unreconciled variance of $224,312 between the fishing license fees of $405,640 and FMIS GL balance of 629,952.

Consequently, I could not confirm the accurracy and completeness 2.
There was no independent audit verification carried out for the Raw Materials of $16,792 and Finished Goods of $1,229 in the TMA Balance Sheet.

Consequently, I could not confirm the accurracy and completeness of inventory amount.

the detailed revenue of 3.

There is an unreconciled variance of $113,993 between the opening FMIS general ledger balance of $79,641 and the opening balance of the Trust Account Statement of Receipts and Payments of $193,634.
In addition, the adjustment of the $113,993 passed during the year were not supported with appropriate supporting documents.

As a result, I was not able to ascertain the accuracy and completeness of the Main Trust Fund account balance.

33 Ministry of Lands and Mineral Unqualified Whole of Government Financial Statements and Annual Appropriation Statement Page 12 amount.
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Head No 34 35 36 Ministry / Department Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Audit Opinion Unqualified Unqualified Unqualified Qualified 37 Ministry of Local Government, Urban and Development Environment Qualified 40 Ministry of Transport Infrastructure and 49 Peacekeeping Missions Unqualified with EOM Basis of Qualification The Environment Trust Fund account for the Ministry had a closing balance of $2,781,989 for period ended 31 July 2016.
The Ministry did not maintain proper records including cash books.

Proper bank and trust reconciliations were also not performed for the trust account.

As a result, I was not able to ascertain the accuracy and correctness of the amount reflected in the trust account.
Without further qualifying the opinion expressed above, draw attention to the following: The Ministry did not carry out an annual board of survey to verify the existence and condition of all assets under its authority contrary to Section 49 of Finance Instructions 2010.

The last survey was carried out on September 2016 for the financial period 1 January 2015 to 31 December 2015.

1.
1.

Several Trading and Manufacturing Accounts (TMA) did not disclose cash at bank account in the TMA balance sheet as at 31 July 2016.

However significant amount of receipts and payments were recorded in the TMA profit and loss statements.

Separate cash account general ledgers were not maintained for these TMAs.

In addition, Consolidated TMA balance sheet had cash at bank balance of $3,766,112 while consolidated bank reconciliation balance was $2,493,936 as at 31/07/16.
A variance of $1,272,176 was noted.

2.

A variance of $210,188 existed between the subsidiary records of debtors totalling $210,188 and the FMIS accounts receivable nil balance as at 31 July 2016.

The Ministry did not reconcile the two records.

I was not able to ascertain the correctness of nil accounts receivable balance stated in the Consolidated TMA balance sheet as at 31 July 2017.
The Peacekeeping Missions did not carry out a board of survey to verify the existence and condition of the assets under its authority contrary to Section 49 of the Finance Instruction 2010.

Out of the 35 Ministries and Departments for which audit reports were issued, 19 Ministries had unqualified audit opinion, 13 audit opinions were qualified and three audit opinions were unqualified but had emphasis of matter in the audit reports.
Apart from other issues, four audit reports were Whole of Government Financial Statements and Annual Appropriation Statement Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 qualified due to issues relating to Trading and Manufacturing Accounts and nine on matters relating to Trust Fund Accounts.
Recommendations  The Ministry of Economy should consider carrying out a review of the Trading and Manufacturing Account (TMA) across government with a view to determine their relevance and need considering that they were set up many years ago and may have outlived their purpose.

 The Ministry of Economy should also consider carrying out a review of the Trust Fund Accounts to determine the manner in which funds held would be utilised hence managing government’s liability at manageable levels.
Ministry’s Comments Whole of Government Financial Statements and Annual Appropriation Statement Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 2.0 CASH AND CASH EQUIVALENTS A bank account for public money, other money or trust money must only be established with the approval of the Chief Accountant, who must inform the bank of the agency officers authorised to operate on it.
All agency bank accounts must be kept in the name of the agency or the official title of a unit within the agency.9 The cash and cash equivalents balance decreased from $224,036,753 in 2015 to $218,496,898 in 2016.

However, there were increases in Trust Fund Account and Trading & Manufacturing Account bank balances by 11.6% and 37.4%, respectively.

Overseas and Domestic cash also increased by 0.4% and 28.8%, respectively.
The decrease in total cash was mainly attributed to the increase in unpresented cheque by $54,973,899 or 100.1% in 2016.

Table 2.1 shows changes in net cash.
Table 2.1 Cash at Bank Balance as at 31 July 2016 Account Overseas Agencies Domestic Account Trust Fund Account Trading & Manufacturing Account (TMA) Unpresented Cheques Net Cash 2016 Balances ($) 47,411,540 145,705,229 119,788,149 15,462,371 (109,870,391) 218,496,898 2015 Balances ($) 47,221,823 113,160,579 107,297,355 11,253,488 (54,896,492) 224,036,753 Variance ($) 189,717 32,544,650 12,490,794 4,208,883 (54,973,899) (5,539,855) % Change 0.4 28.8 11.6 37.4 100.1 (2.5) A graphical presentation of the account balances for the past five years is provided in Figure 2.1.
Figure 2.1 Cash and Cash Equivalent Balances: 2012 - 2016 m ) $ ( t n u o m A 250.0 200.0 150.0 100.0 50.0 - (50.0) (100.0) Overseas Agencies Domestic Account Trust Fund Account TMA Bank 2012 2013 2014 2015 2016 Year 9 Finance Instructions 2010 – Section 32(1) & (4) Whole of Government Financial Statements and Annual Appropriation Statement Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Cash balances in Domestic and Trust Fund Accounts make up majority of the government’s cash holdings at year end.
2.1 Increase in Unpresented Cheques The Drawings Accounts balances (credits) for Ministries and Departments represent the total value of cheques that were issued but were not presented to banks as at 31 July 2016. Review of the unpresented cheques balances over the past five years provided in Table 2.2 and Figure 2.2 indicate that it accounted for a significant portion of the domestic cash holdings of Government as at 31/7/16.
Table 2.2 Unpresented Cheques Year Unpresented Cheques Cash at Bank ($) ($) 2012 2013 2014 2015 2016 * Includes the cash balance of Trust Fund Account 107,360,277 203,957,283 75,572,051 282,316,760 137,976,858 180,529,168 54,896,492 278,933,246 109,870,391 218,496,898 % of Unpresented Cheques Against Total Cash at Bank 53 27 76 20 50 Domestic Cash Holding ($) 106,660,817* 126,382,089* 71,312,510 113,160,579 145,705,229 % of Unpresented Cheques against Domestic Cash Holdings 101 60 193 49 75 Figure 2.2 Percentage of Unpresented Cheques against Cash at Bank and Domestic Cash Holdings e g a t n e c r e P 250 200 150 100 50 0 2012 2013 2014 2015 2016 Unpresented Cheques Against Total Cash at Bank Unpresented Cheques against Domestic Cash Balance Whole of Government Financial Statements and Annual Appropriation Statement Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 The unpresented cheque balance increased by $54,973,899 or 100% in 2016 compared to 2015.
The unpresented cheque balance for Ministry of Infrastructure and Transport accounted for 36.5% of the total unpresented cheque balance as at 31/7/16 which is significant.

Refer to Table 2.3 for details.
Table 2.3 Ministries/Department with Significant Unpresented Cheque Balances Ministry/Department Infrastructure and Transport Energy Education Industry, Trade & Tourism Treasury - CAT Ministry of Women Fiji Military Forces Transport Ministry of Sugar Ministry of Agriculture Treasury CG Local Government Rural and Maritime Ministry of Health Others Total Amount ($) 40,068,677 17,896,772 13,400,106 7,037,461 6,260,593 4,736,033 2,921,253 2,909,004 2,641,683 1,829,999 1,488,516 1,185,832 1,116,493 1,026,042 5,351,927 109,870,391 % of Total 36.4 16.3 12.2 6.4 5.7 4.3 2.7 2.6 2.4 1.7 1.4 1.1 1.0 0.9 4.9 100 The large unpresented cheques balances indicated that spending for some Ministries and Departments are concentrated towards the end of the financial period which affects the cash flows for the beginning of the following year.
Recommendations  Ministries and Departments should:  be encouraged to properly plan their expenditures in order to avoid the accumulation of unpresented cheques at year end; and  monitor end of year purchases to ensure that bulk spending at year end is avoided.

Explanations and justification for large spending should be obtained from Accounting Heads.

 Ministry of Economy should also use cash flow forecasting as a tool for monitoring the spending of Ministries and Departments during the year.
Ministry’s Comments With the change of the fiscal year, we had to reconfigure the FMIS and this included its total shutdown.

All ministries and departments were then required to write manual cheques.

Where EFT would have significantly reduced the high UP list, the cheques took more than three days to clear, thus the slippage to the next financial year.
With the FMIS now configured to the new fiscal year, we anticipate a lesser UP listing Whole of Government Financial Statements and Annual Appropriation Statement Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 2.2 Anomalies in Drawings and Clearing Accounts The Drawings Accounts balances (credits) for Ministries and Departments represent the total value of cheques that were issued but were not presented to banks as at 31 July 2016.
All Bank Lodgement Clearance (BLC) Accounts must be reduced to zero balance.10 All Consolidated Fund transactions should be cleared and adjust all misallocations to the Inter-departmental Clearance Accounts.11 The following anomalies were noted from audit review of Drawings and Clearing Accounts as at 31 July 2016:  Drawings Account reconciliation was not signed and reviewed by a Senior Accounts Officer for Ministry of Local Government and Department of Housing which had general ledger balances of $1,185,832 and $8,875, respectively;  Bank Lodgement Clearance and Inter-Departmental Clearance accounts totalling $11,315 were yet to be cleared;  Drawings Accounts totalling $4,603 were dormant from the previous year; and  Debit balances existed in the Drawings and clearing accounts totalling $2,138.The effect of this is the understatement of general ledger balance as at 31/07/16 by the same amount.
The audit findings indicate the lack of supervision and monitoring by the senior officers in the respective Ministries and Departments.

Recommendations  Ministries and Departments should ensure that: o the clearing accounts are cleared at the end of the financial year; and o the dormant accounts are investigated and necessary action taken to clear the carried forward balances from previous years.
 Ministry of Economy should closely monitor the month-end Drawings Account reconciliations submitted by Ministries and Departments and provide regular feedback.

Errors and omissions noted should be addressed in subsequent reconciliations.

Ministry’s Comments The Ministry will be closing off the dormant accounts in this financial year.

The Ministry of Economy will be closely monitoring the monthly drawings account reconciliations.
10 Finance Circular No.4/2016 – 2016 Closing of Accounts Procedures, Clause 4.2.4 11 Finance Circular No.4/2016 – 2016 Closing of Accounts Procedures, Clause 4.1.1 Whole of Government Financial Statements and Annual Appropriation Statement Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 2.3 Anomalies in Cash at Bank Balance All bank accounts shall be reconciled monthly.
The bank reconciliation shall list the outstanding cheques and other reconciling items and be signed and dated by the responsible officer.12 The following anomalies were noted from audit review of the domestic and overseas cash balances:  The Ministry of Foreign Affairs Remittance Between Chest reconciliation had a balance of $1,801,081 while the general ledger had nil balance as at 31 July 2016.
The variance was due to the differences in closing and opening balances;  The Fiji Consulate General Sydney was transferred from the Ministry of Foreign Affairs to the Ministry of Industry, Trade & Tourism in April 2016.

However, as at 31 July 2016, a balance of $919,009 was still appearing under the Ministry of Foreign Affairs in the general ledger;  The Fiji Embassy in Beijing RMB cash account had a debit balance of $1,513 in the general ledger, which was carried forward from 2015.
However, the bank reconciliation reflected an overdrawn balance of $133,832 as at 31 July 2016 for which satisfactory explanations were not provided;  The Trading and Manufacturing Account (TMA) bank reconciliation was not prepared for Ministry of Agriculture.

As such, audit was unable to substantiate the TMA cash balance of $7,877;  The Trust Fund bank reconciliation was not prepared for Department of Housing.
As such, audit was unable to substantiate the trust fund cash balance of $7,269;  Ministry of Economy fixed term deposit had a variance of $1,997 between the FMIS general ledger and bank confirmation.

This led to understatement of domestic bank general ledger balance by the same amount; and  There was no foreign exchange gain or loss accounted for in the reconciliations and general ledger for overseas missions and crown agents London account.
The audit findings indicate the lack of supervision and monitoring by accounting officers in the respective Ministries and Departments.

Recommendation Ministry of Economy should ensure that Ministries and Departments strictly comply with section 32(6) of Finance Instructions 2010 which requires that all bank accounts must be reconciled on a monthly basis and errors or omissions are adjusted on a timely basis.
12 Finance Instructions 2010 - Section 32.6 Whole of Government Financial Statements and Annual Appropriation Statement Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Ministry’s Comments Ministry of Local Government ($7,269) had not submitted their trust reconciliation.

We are also working with the above Ministries and Ministry of Foreign Affairs, with regards to their overseas mission accounts.
2.4 Impact of Error and Omission on Cash at Bank Balance The Cash at Bank balance of $218,496,897 as at 31 July 2016 was misstated in view of the following errors and omissions.
Table 2.4 Errors and Omissions in Statement of Cash at Bank Errors and Omissions Variance in Drawings Account Ending Balance EFT payments and stale cheques included in unpresented cheque listings Variance between Domestic Bank Reconciliation and the FMIS General Ledger Variance between TMA Bank Reconciliation and the FMIS General Ledger Variance between Trust Bank Reconciliation and the FMIS General Ledger Variance between Overseas Bank Reconciliation and the FMIS General Ledger Total Errors and Omissions Amount ($) 114,341 2,698,547 (1,997) 1,433,777 (43,256) 2,567,391 6,768,803 The impact of the errors and omissions on cash at bank totalling $6,768,803 or 3.1% of the total cash at bank balance in the 2016 accounts is substantial and reflects the existence of weak controls in cash management.
Recommendations  Ministry of Economy in consultation with Ministries/Departments should ensure that bank balances are reconciled.

 The errors and omissions highlighted above should be investigated and rectified.

Ministry’s Comments The Ministry of Economy has been assisting other ministries and departments in preparing their reconciliations as we also have an interest in reducing/eliminating these anomalies and errors.
Whole of Government Financial Statements and Annual Appropriation Statement Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 2.5 Prior Years Issues The following anomalies were raised in the audit report for the year ended 31 December 2015.

There was no evidence to indicate that corrective action was taken to resolve the issues as at 31 July 2016.
Issues Recommendations Drawings Account Variance Variance of $297,294 exists between departments’ drawings reconciliations and general ledger balance for some and ministries departments.

 Ministry of Economy and the individual ministries and departments should investigate and rectify the total variance so that correct balances are reflected at year end.
 Ministry of Economy should closely monitor month end drawings reconciliation and ensure that agencies appropriately address errors and discrepancies in their monthly reconciliations before next reconciliations are due.

Management Proposed Action/Comments Issue on Drawings Account variance is noted.

Some of especially the Ministries Fisheries and Forest were not their able to charges due lack of budgetary provisions for 2015, hence the variance in their Drawings account reconciliations.
regularize to Current Status Open.

The variance of $114,341 was noted between following Ministries and Departments drawings reconciliation and general ledger balance.

Refer to Table below for details.
Ministry/Department Variance ($) GL (Overstated)/ Understated Lands and Mineral Resources MOIT - Energy MOIT - MET MOIT - W&S MOIT - GSS MOIT MOIT - Energy Agriculture Labour & Employment Civil Service MOE - Treasury CG MOE - Pensions MOE - BOS MOE - Treasury main a/c WBC Industry, Trade & Tourism MOE - Customs Justice Total (179) GL overstated (769) GL overstated (85,602) GL overstated 1,653 GL understated (1,100) GL overstated (23,630) GL overstated 2 GL understated (598) GL overstated 5,498 GL overstated (6,420) GL overstated 46 GL understated (857) GL overstated 25 GL understated (273) GL overstated (28) GL overstated 3 GL understated (2,112) GL overstated (114,341) GL overstated Whole of Government Financial Statements and Annual Appropriation Statement Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendations Management Proposed Action/Comments Current Status Included in the unpresented cheque listings, are the stale cheques and electronic fund transfer payments totalling $57, 322.
 Board of Survey of the unpresented cheques should be carried out at the end of the year.

on the non- Comments performance of BoS exercise on the various Agencies are noted.

However, the Ministry of Economy will be reviewing the need to continue with the BoS exercise now that the payment process has been automated via the FMIS.

The BoS exercise was aimed to monitor issuance of cheques and to ensure that no manual cheques are issued after the closing date.
With the FMIS in place, this is no longer a requirement as the system keeps proper of periodic control transactions that are being processed; payments done after the closing date will be processed accordingly under the new period budget.

Open.

The stale cheques and electronic fund transfer totalling $2,698,549 was included in following Ministries and Departments unpresented cheque listing.
Total Stale Cheques/ EFT Payments ($) % of Upresented Cheques Total Unpresented Cheques ($) 206,037 13,400,106 184,921 1,026,042 17,896,772 5,419 61,977 13,217 172,317 448,880 33,079 1,488,516 244,799 1,116,493 Ministry/ Department Employment Education Justice Health - HQ Energy DPP iTaukei Affairs Civil Service Health West Lands Foreign Affairs MOE - Treasury CG Fisheries and Forest Rural and Maritime - HQ Rural and Maritime - Central Rural and Maritime - Eastern Total Whole of Government Financial Statements and Annual Appropriation Statement Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendations Management Proposed Action/Comments Current Status Open.
The drawings board of survey was not conducted for following Ministries and Departments.

Allocation Ministry/Department 1-22101-22999-530301 1-37101-37999-530301 1-23101-23999-530301 Health - HQ Local Government Department of Housing Total General Ledger Balance ($) 1,026,042 1,185,832 8,875 2,220,749 Open The general ledger is overstated by a sum of $2,567,391.

Refer to Appendix 2.1 for details.

Open.

The balance as at 31/7/16 was $116,158.

Comments noted.
Comments noted.

FMIS is currently working with these Ministries resolving in anomalies their various cash at bank accounts.

Issue should for financial year ending Jan- December 2016. resolved be in and Ministries The Departments did not carry out the board of survey for the unpresented cheques.

were Anomalies in Cash at Bank Balance Variances noted between the overseas bank reconciliation FMIS general ledger.

The general ledger is overstated by a sum of $1,619,790.
and should The responsible Ministries and strictly Departments comply with section 32(6) of Finance Instructions 2010 which requires that all bank accounts must be reconciled on a monthly basis.

A sum of $600,331 in the scholarship recovery bank account was still reflected in the Ministry of iTaukei Affairs general ledger as at 31/12/15 despite the transfer of the administration of scholarships to the TSLB in 2014.
Whole of Government Financial Statements and Annual Appropriation Statement Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendations Management Proposed Action/Comments Current Status Variances $1,627,016 were between Reconciliation general ledger totalling noted the TMA Bank and FMIS Variances $1,351,354 were between Reconciliation general ledger.
totalling noted the Trust Bank and FMIS Two Trust cash accounts total balance of with a $1,027,504 not were recorded in the FMIS general ledger.

Open.

The variance totalling $1,433,777 was noted between the TMA Bank Reconciliations and General Ledger.

Refer to Table below for details.


Ministry/Department Fiji Correction Services Infrastructure and Transport Infrastructure and Transport Health Agriculture (4-30351-30999-540201) Public Enterprise Ministry of Economy Fisheries and Forests Fiji Military Forces Total Variance ($) GL (Over)/ Understated 15,860 over-stated 772,666 over-stated 499,510 over-stated 8,958 over-stated (7,877) Under-stated 9,295 over-stated 152,537 over-stated (17,016) under-stated (156) under-stated 1,433,777 Open.
The variance totalling $43,256 was noted between the Trust Bank Reconciliations and General Ledger.

Refer to Table below for details.

Ministry/Department Judiciary Ministry of Local Government Total Variance ($) GL (Over)/ Understated 501,308 Over-stated (544,564) Under-stated (43,256) Open.

One trust account was not recorded in the FMIS Ledger.

Refer to table below for details.


Ministry/Department RFMF – Engineers Project Account Variance ($) 194,515 Whole of Government Financial Statements and Annual Appropriation Statement Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Recommendation The Ministry should ensure that corrective actions are taken to resolve recurring issues.
Ministry’s Comments While the onus is on each accounting head to ensure correctness and compliance to regulations, it is noted that this is not always the case.

In spite of this, the Ministry of Economy continues to assist when requested in terms of reconciliation preparation and training.
Whole of Government Financial Statements and Annual Appropriation Statement Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 3.0 INVESTMENTS Section 55(1) (b) of the Financial Management Act 2004 empowers the Minister to invest public money and other money within the meaning of the Act in securities issued by a statutory authority.

Government’s investments in 2016 totalled $445,303,32113 comprising of shares held in 25 entities; a decrease of $11,136,571 or 2% compared to 2015.
The investments of the Government for the last five years are shown in Table 3.1 and Figure 3.1 below.
Table 3.1 and Figure 3.1: Total Government Investments: 2012 – 2016 Year 2012 2013 2014 2015 2016 Total Investments ($) 426,197,586 495,975,041 548,888,805 456,439,892 445,303,321 ) $ ( s n o i l l i M 600 500 400 300 200 100 0 Total Investments ($) 2012 2013 2014 2015 2016 The decrease in government investments in 2016 is attributed to the reduction in the fair value14 of governments’ investment in Amalgamated Telecom Holdings (ATH) and the adjustment to the value of shares held in the International Bank for Reconstruction and Development to correctly reflect the current value of the shares in the Statement of Assets and Liabilities.
3.1 Composition of Government Investments The composition of Government Investments for 2016 is shown in the Figure 3.2 below: Figure 3.2: Composition of Government Investment Fully Commercial Company (Not Profitable) 17% Fully Commercial Company (Profitable) 74% International Financial Institutions 5% Semi Commercial (Agro based) 3% Dormant Companies (in Liquidation) 1% The major component of Government Investments as at 31 July 2016 consisted of profitable fully commercial companies amounting to $327,786,256 or 74% of total investments.
Fully commercial companies that were not profitable accounted for $76,213,213 or 17%; international financial institutions accounted for $21,007,309 or 5%; while semi-commercial (agro-based) companies accounted for $15,814,933 or 3%.

The remaining 1% or $4,481,610 of government investments was for companies in liquidation.
13 excludes Investments in TMA balance 14 From $1.25 reduced to $1.10 per share Whole of Government Financial Statements and Annual Appropriation Statement Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Governments investments in the Economic Services sector entities comprises majority of government investments totalling $235,366,475 or 53%.
Investments in the Infrastructure sector entities make up 45% or $202,556,386 whilst the remaining 1% or $7,380,460 comprises of governments investments in Social Services sector entities.

Refer to Figure 3.3 below for the composition of government investments by sector.
Figure 3.3: Composition of Investment by Sector Infrastructure Service Entities 45% Social Service Entities 2% Economic Service Entities 53% 3.2 Return on Investments Return on investment is a performance measure used to evaluate the efficiency of Government investments.

An initial measure that corporatized entities are operating as successful businesses is 10% after tax return on shareholders’ funds.
Once the expectations of annual returns are established, the 10% baseline should be revised based on corporate plan targets.15 Government’s return on investment over the past five years from Government Commercial Companies and Commercial Statutory Authorities is highlighted in Table 3.2 and Figure 3.4 below.
Table 3.2 and Figure 3.4: Return on Investments 2012 – 2016 Year 2012 2013 2014 2015 2016 Total Government Shareholding ($) Dividends On Investment ($) 426,197,586 10,524,101 495,975,041 11,980,221 548,888,805 456,439,892 24,816,121 33,243,215 445,303,321 36,230,778 Return On Investments (%) 2 2 5 7 8 ) % ( e t a R 15 10 5 - Expected Baseline (%) Return on Investment (%) 2012 2013 2014 2015 2016 Our analysis of governments return on investments indicates that the overall average rate of return on investment has steadily increased from 5% in 2014 to 7% in 2015 and on to 8% in 2016.
Over the five years period, an overall average rate of return on investments of 4.8% has been recorded with the highest overall average of 8% attained in 2016.

Collectively, the 10% baseline as required by the 2003 Corporate Governance Policy Framework has not been achieved.
15 Corporate Governance Policy Framework – December 2003, Part II, Section 22 Whole of Government Financial Statements and Annual Appropriation Statement Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 3.3 Analysis of Dividends and Investments The forecast for dividend revenue in 2016 was $32.86 million16 while actual dividend revenue received for the year totalled $36.23 million resulting in a favourable variance of $3.37 million or 10%.
The movement of dividend received over the past five years is shown in Table 3.3.
Table 3.3: Investments and Dividends Received 2012 – 2016 Year Total Government Shareholding Dividends on Investment 2012 2013 2014 2015 2016 ($) 426,197,586 495,975,041 548,888,805 456,439,892 445,303,321 ($) 10,524,101 11,980,221 24,816,121 33,243,215 36,230,778 Percentage Change in Dividend (%) (1) 14 107 34 9 Number of Dividend Paying Entities 6 6 6 5 4 Number of Entities Holding Government Investments 25 26 24 24 25 Percentage of Dividend Paying Entities (%) 24 23 25 21 16 Refer to Figure 3.5 for the graphical analysis of dividends collected over the 5 year period: Figure 3.5: Total Dividends Remitted: 2012 – 2016 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Dividends on Investment ($) 2012 2013 2014 2015 2016 Over the past 5 years, the number of entities paying dividends to Government averaged 9 compared to the average of 25 companies in which investments have been made.
The low average number of entities remitting dividends to Government indicates the high number of non-performing portfolios and thus warrants stringent review of the investments, in order to receive maximum returns.

3.4 Dividends Remitted per Entity An initial measure that corporatized entities are operating as successful businesses is 10% after tax return on shareholders’ funds.
Once the expectations of annual returns are established, the 10% baseline should be revised based on corporate plan targets.17 All Government Commercial Companies and Commercial Statutory Authorities pay at least 50% of the net earnings to the Government as dividends in consultation with the Minister for Public Enterprises, Minister of Economy, and relevant Minister.18 16 2016 Budget Estimates 17 Corporate Governance Policy Framework – December 2003, Part II, Section 22 18 Corporate Governance Policy Framework – December 2003, Part II, Section 26 Whole of Government Financial Statements and Annual Appropriation Statement Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 A total of $36.2 million was received by government as dividends in 2016 from three19 government commercial companies and a20 minority owned company.
In addition to dividends received from the above companies, the government also received a sum of $28.5 million as dividend from Reserve Bank of Fiji.

For details of dividends remitted to government in the past five years refer to Table 3.4.
Table 3.4: Details of Entities that remitted Dividends from 2012 – 2016 Value of Investments as at 31/07/2016 ($) 5,600,000 50,000 Percentage of Dividend to total Investment s value --- --- Dividend for 2016 Dividend for 2015 Dividend for 2014 Dividend for 2013 Dividend for 2012 ($) ($) ($) ($) ($) --- --- 1,249,574 --- --- 119,526 --- 113,574 --- 74,276 765,000 1,191,846 --- 120% --- 1,424,941 528,768 --- 401,006 3,300,000 235,530 1,226,124 496,117 --- 29,993,490 9% 2,616,854 3,719,191 3,698,979 3,654,877 2,821,102 92,300,180 **91,207,658 --- 33% 2% --- 30,000,000 2,188,983 --- --- 17,528,344 10,217,338 --- --- 10,000,000 7,296,610 --- --- - 6,566,949 ---- 183,167 1,020,640 4,377,966 1,734,000 --- 221,108,174 16% 36,230,778 33,243,215 24,816,121 11,980,221 10,524,101 Description Post Fiji Limited UTOF (Management) Limited Air Terminal Services Yaqara Pastoral Company Ltd Fiji Ports Corporation Limited Airports (Fiji) Limited ATH Limited FINTEL* Pacific Forum Line(2006)* Dividends from Investments *government shares in these companies have been sold **measured at fair value The above table shows that Yaqara Pastoral Company Limited and Airports (Fiji) Limited have met the 10% required dividend remittance in accordance with Public Enterprises Corporate Governance Policy Framework.
A graphical representation of budgeted and actual dividend revenue remitted by Government entities over the five-year period is outlined below in Table 3.5 and Figure 3.6.
Table 3.5: Budgeted vs. Actual Dividend Revenue Descriptions Actual Dividends Budgeted Dividends % of Budgeted Dividends collected 2016 ($) 36,230,778 32,860,165 110% 2015 ($) 33,243,215 41,290,000 81% 2014 ($) 24,816,121 36,121,700 69% 2013 ($) 11,980,221 38,281,000 31% 2012 ($) 10,524,101 27,356,500 38% 19 Fiji Ports Corporation Limited, Airports Fiji Limited and Yaqara Pastoral Company Limited 20 Amalgamated Telecom Holdings Limited Whole of Government Financial Statements and Annual Appropriation Statement Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Figure 3.6: Budgeted vs. Actual Dividend Revenue ) m $ ( t n u o m A 50 40 30 20 10 - Budget Actual 2012 2013 2014 Year 2015 2016 3.5 Inoperative Entities Included in the “Equity Investments” ($445,303,321) are entities that are in liquidation.
Refer to Table 3.6 for details.

Table 3.6: Details of Inoperative Entities Entity Status Air (Fiji) Limited Fiji Daily Post Company Limited National Trading Corporation Limited In Liquidation In Liquidation Ceased Operation Total equity investments in inoperative entities Action No.
Liq 88/09 Liq 47/10 - Status Since 2009 2010 Amount ($) 171,804 951,620 3,358,186 4,481,610 The inoperative entities have been disclosed in the Notes pertaining to Investments over the years despite the substantial action21 on winding up taken by the Office of the Official Receiver.

The above findings indicate that Equity Investments is overstated by $4,481,610.
Recommendations The Ministry should: review investment in non-performing companies;   adjust the inoperative entities from its investments; and  carry out a review of the Corporate Governance Framework for state-owned entities which was last prepared in 2003.

Ministry’s Comments 21 Air (Fiji) Limited – Action No.

Liq 88/09 and Fiji Daily Post Company Limited – Action No.
Liq 47/10 Whole of Government Financial Statements and Annual Appropriation Statement Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 3.6 Misplaced Share Certificates The Minister may invest public money and other money within the meaning of the Financial Management Act in securities issued by a statutory authority.22 A share certificate confirms of legal ownership of the number of shares held by shareholders in a particular entity.
The audit noted that the share certificates for investments totalling $14,684,473 were misplaced by the Ministry of Economy.

These share certificates were also not available with the Ministry of Public Enterprise.

Refer to Table 3.7 for details.


Table 3.7: Details of Misplaced Share Certificates Entity Rewa Rice Limited Airports Fiji Limited Unit Trust of Fiji (Management) Limited International Bank for Reconstruction and Development International Finance Corporation Food Processor Fiji Limited Total Total No.
of Shares owned by Government Shares without Share Certificates Total Value of Shares without Share Certificates ($) 753,112 92,300,180 50,000 987 287 687,680 2 5,225,136 25,000 876 159 343,840 4 5,225,136 25,000 8,760,000 330,493 343,840 14,684,473 During the audit, confirmations were sought from entities in which government had investments to verify control or rights over government’s shares.

Details are reflected in Table 3.8.

Table 3.8: Status of Confirmation for Shareholding of Government No.
Names of Entities that did not provide confirmations Amount ($m) 1.

Post Fiji Limited 2.

Unit Trust of Fiji (Trustee) Ltd 3.

Unit Trust of Fiji (Management) Ltd 4.

Fiji Airways 5.

Viti Corps Company Ltd 6.

Yaqara Pastoral Company Ltd 7.

Copra Millers Fiji Ltd 8.

Yaqara Group Ltd 9.

Daily Post 10.

Air Fiji Ltd 11.

National Trading Corp Ltd Total 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

5.60 0.80 0.05 13.30 6.00 1.20 6.40 0.09 0.90 0.20 3.30 37.84 No.
Names of Entities that provided confirmations Amalgamated Telecom Holdings Limited Airports (Fiji) Limited Fiji Broadcasting Corporation Ltd Fiji Ports Corporation Limited Food Processors Fiji Limited Fiji Hardwood Corporation Fiji Pine Ltd Asian Development Bank Fiji Rice Limited Pacific Fishing Company Limited International Finance Corporation Air Terminal Services Fiji Sugar Corporation Ltd International Bank for Reconstruction Development Amount ($m) 80.30 92.30 --- 30.00 0.70 90.00 61.00 10.50 1.50 14.70 0.60 0.80 15.10 10.00 407.50 In the absence of share certificates, the verification of government’s control or rights over the shares held cannot be confirmed.
Moreover, the absence of independent confirmations for investments worth $37.8 million or 8.5% of the total investment of $445.34 million entails that investments cannot be assured to be fairly stated.
22 Financial Management Act 2004 , Section 55(1)(b) Whole of Government Financial Statements and Annual Appropriation Statement Page 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 The above findings indicates poor maintenance of government investment records by both the Ministry of Economy and the Ministry of Public Enterprise.
Recommendations  The Ministry of Economy through the Ministry of Public Enterprise should ensure that all investment records of government are properly maintained and kept in a secured location.

 The respective Ministries should also liaise with the companies for share certificates to be provided as evidence of shareholding and investments made.
Ministry’s Comments 3.7 Non Submission of Annual Reports and Audited Accounts Within 5 months after the end of the current financial year of a Government Commercial Company or Commercial Statutory Authority, its Board shall give to the Public Enterprise Minister, its relevant Minister and the Minister for Economy its annual report and the audited consolidated financial statements accompanied by the auditor’s report23 The audit noted that only 6 out of the 25 companies in which Government held investments submitted their 2016 audited financial statements.
Refer Table 3.9 below for details.
Table 3.9: Details of the Latest Audited Accounts of Entities Entities Fiji Airways Limited Airports (Fiji) Limited Amalgamated Telecom Holdings Limited Fiji Hardwood Corporation Pacific Fishing Company Limited Post Fiji Limited Unit Trust of Fiji (Trustee) Limited Unit Trust of Fiji (Management) Limited Fiji Ports Corporation Limited Air Terminal Services Fiji Broadcasting Corporation Limited Fiji Pine Limited Fiji Sugar Corporation Limited Yaqara Group Limited Copra Millers of Fiji Limited Food Processor Fiji Limited Rewa Rice Limited Viti Corps Company Limited Yaqara Pastoral Company Limited Year of Latest Audited Accounts 2015 2016 2016 2008 2016 2015 2016 2016 2013 2015 2015 2016 2015 NA 2015 2008 2015 2006 2014 The audited accounts of government commercial companies and commercial statutory authorities contain information that is necessary for an informed assessment of its operations and those of its subsidiaries, including a comparison of its performance with its statement of corporate intent.
23 Part 5, Division 4.

Section 103 (a-c) of the Public Enterprise Act of 1996 and the Public Enterprise (Amendment) Act 28 of 2002 Whole of Government Financial Statements and Annual Appropriation Statement Page 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 As most entities did not submit their latest financial statements and annual reports, their performance cannot be monitored and the viability of their business operations cannot be assessed.
Thus, it is not possible to assess their financial performance which could limit Government from making essential and sound decisions in regards to the operations of these entities.

Recommendation Ministry of Economy should work with the Ministry of Public Enterprise to ensure that Annual reports and annual financial statements are promptly submitted by state-owned entities.
Ministry’s Comments 3.8 Investment records not updated (Recurring Issue) Recording involves keeping accurate records of what has happened, what is owned and what is owed.

24 The investment records are maintained and amended by Ministry of Economy when share certificates are received and proper verifications are undertaken to confirm the increase or the reduction in shares numbers and value when sold.
The Ministry of Economy records show a total share capital of $2 with the Fiji Broadcasting Corporation Limited, which is confirmed by its share certificates.

The audit noted a variance of $200,000 between the Ministry’s record and the investment confirmation received from the Fiji Broadcasting Corporation Limited.
Variance between the Ministry’s records and the entities in which shares are held has been a recurring issue which denotes lack of follow up action and inadequate record keeping, leading to possible misstatement of investments.

Recommendation The Ministry of Economy should liaise with the Fiji Broadcasting Corporation Ltd and update the records of government investments accordingly.
Ministry’s Comments 24Ministry of Economy Finance Manual 2015 – “The Purpose of Accounting” Page 4 Whole of Government Financial Statements and Annual Appropriation Statement Page 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 4.0 TRUST FUND ACCOUNT Section 25 of the Financial Management Act (2004) states that trust moneys should be accounted separately from the public monies and should be kept in a separate bank account.
The Trust Fund Account consists of Main Trust Funds and Operating Trust Funds.

Main Trust refers to an obligation enforceable in equity which rests on a person (the trustee) as owner of some specific property (the trust property) to deal with that property for the benefit of another person (the beneficiary) or for the advancement of certain purposes.

Major accounts in the Main Trust Fund include tender deposits, bonds, aid monies from overseas agencies, etc.
Operating Trust Fund Accounts facilitate transactions relating to the Ministries and Departments administrative role as an employer.

These transactions include deductions from employees’ salaries/wages with regards to contributions to the Fiji National Provident Fund, housing loan repayments, insurance premiums and other deductions for onward payment to the respective payees.
The Trust Fund Account had a balance of $143,329,585 as at 31 July 2016, an increase of $9,550,980 or 7% from 2015.25 Figure 4.1 shows the trend in the Trust Fund Account balances over the last 4 years.
Figure 4.1: Trust Account Balances: 2013 - 2016 200,000,000 150,000,000 100,000,000 50,000,000 ) $ ( t n u o m A 0 2013 2014 2015 2016 Year The closing Main Trust Account balance increased by $12,799,060 or 11.9% compared to the balance of $107, 789,102 in 2015 as a result of increase in revenue collected for the Mahogany Industry Council Fund, rural housing deposits, proceeds from sale of forfeited assets, retention monies withheld for the capital project and grant assistance.
Although there was a write-off of $12,837,685 trust fund balances in 2015, the trust funds have significantly increased by $9.6 million within the seven months.
4.1 Weaknesses in Internal Controls The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.26 25 31 December, 2015 26 Finance Instruction 2010 – Section 59 Whole of Government Financial Statements and Annual Appropriation Statement Page 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.27 All Permanent Secretaries and Head of Department are required to submit monthly reconciliations to the Ministry of Economy by the 15th of each month.28 Audit review of controls pertaining to trust fund accounts for Ministries/Department noted the following weaknesses:  Reconciliations for the operating trust and main trust balances of $1,502,735 were not prepared during the year.
Refer to Appendix 3.1.1.

Moreover, the reconciliations prepared by the Ministries/Departments were not submitted to the Ministry of Economy in timely manner;  Listing of beneficiaries for the Trust Account of $26,739,044 were not maintained.
Refer to Appendix 3.1.2;  Supporting documentation for the tender and security deposits, journal adjustments, balances in the trust reconciliations and cash for administration contributions for foreign mission totalling $2,237,416 were not provided for audit verification.

Refer to Appendix 3.1.3;  Trust fund accounts amounting to $1,882,154 are still reflected under the old appropriation head and has not been transferred to the new program.
Refer to Appendix 3.1.4;  A total of $4,102,398 and $12,837,685 was written off for dormant and unreconciled trust accounts in 2013 and 2015, respectively.

However, as at 31 July 2016, there were still 413 dormant trust accounts amounting to $5,198,313.

Refer to Appendix 3.1.5; and  Other weaknesses in trust fund internal controls as detailed in Appendix 3.1.6.
 Although substantial value of transactions were being processed through Trust Fund Accounts, Standard Operating Procedures were not prepared and used by a number of Ministries and Departments including Office of the Prime Minister, Fiji Corrections Service and Ministry of Health and Medical Services.

Hence, inconsistencies were noted in the operation of the accounts.
The above findings indicate the ineffective controls and lack of supervisory checks in the operation and administration of Trust Fund Accounts.

Consequently, audit could not substantiate the accuracy and the completeness of the Trust Fund Accounts closing balance of $143,329,585.
Recommendations  The Ministry of Economy should ensure that Ministries and Departments:  prepare and submit the monthly trust reconciliations to the Ministry on a timely basis;  strengthen the controls in the receipts and payment of trust monies;  maintain supporting documents and provide them for audit verifications; 27 Finance Instruction 2010 – Section 58(2) & 58(3) 28 Finance Circular No.2/13 Whole of Government Financial Statements and Annual Appropriation Statement Page 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017  perform monthly reconciliations between the Trust Liability Account in General Ledger (SLG 89) and the manual records/listings of beneficiaries; and  prepare SoPs for operation of all Trust Fund Accounts.
 The Ministry of Economy should ensure that trust fund account balances are transferred to new Appropriation Heads when there are changes in Ministerial portfolios.

Ministry’s Comments The Ministry of Economy is also concerned with the outcome of the audit findings wherein some agencies are not adhering to basic requirements in the utilization and reporting of the stated true trust fund accounts.
Where previously reconciliations received here at the ministry were recorded in our data base as being received after which we would check them, we are now verifying these upon receipt and if not in order it is returned immediately.

Also to avoid numerous trips from the agencies to the MoE, we have also suggested that they send a soft copy for our verification and clearance before a proper reconciliation is sent.
4.2 Overdrawn Trust Accounts Trust money is to be accounted separately from the public money and other money,29 and by convention should always have credit balances.

Thus, the trust fund accounts should not at any time be overdrawn.30 Trust Fund Accounts for the following Ministries/Departments were overdrawn as at 31 July 2016.
Table 4.1 Overdrawn Trust Fund Ministries/Departments Department of Housing Fiji Corrections Service Fiji Police Force Ministry of Agriculture Ministry of Economy Ministry of Health and Medical Services Ministry of Infrastructure and Transport Ministry of Local Government, Housing and Environment Ministry of Public Enterprise Ministry of Sugar Office of the Director of Public Prosecutions Republic of Fiji Military Forces Total 2016 ($) 180 10,261 25,980 24,884 119,079 8,712 962,085 60,833 961 2,132 84 152,411 1,367,602 The findings indicate the responsible officers in the respective Ministries and Departments are not carrying out their roles and responsibilities diligently.
Recommendations  Ministries/Departments should carry out proper reconciliation of the Trust Fund Accounts.

29 Section 25(1) of the Financial Management Act 30 Finance Circular No.

4/98 of 30/03/98.

Whole of Government Financial Statements and Annual Appropriation Statement Page 36 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017  Overdrawn Trust Fund Accounts should be investigated and errors identified and rectified accordingly.
Ministry’s Comments Each of the twelve agencies that have debit balances in their trust account have been requested to urgently explain and take corrective actions 4.3 Variances noted in the Main Trust balances Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at ministry/department level but most importantly at whole of government level.
The Principal Accounts Officer must verify all the reconciliations before signing and submitting it to Ministry of Economy.

The audit noted the following variances from the review of the trust accounts:  Variances amounting to $800,013 existed between the Main Trust Cash and Trust Liability balances at Whole of Government level.

Refer to Table 4.2 for details.


Table 4.2 Variance between Trust Fund Cash and Main Trust Fund Liability Account Trust Fund Cash Note 11 ($) 119,788,149 Trust Fund Liability Account Note 19 ($) 120,588,162 Variance ($) (800,013)  Variances were noted between Ministry’s Operating Trust Account Reconciliation statement and FMIS general ledger.

Refer to Table 4.3 for details.


Table 4.3 Variances between FMIS Ledger and Operating Trust reconciliation Ministries/ Departments Civil Service Reconciliation Statement ($) FMIS General Ledger ($) 624,739 667,660 Variance ($) (42,921) The above findings indicate that proper supervisory checks were not carried on the reconciliations prepared.

Recommendation Ministry of Economy must ensure that the Trust Fund Account balances are reconciled to the FMIS general ledger.
Any variances noted should be investigated and necessary adjustments made to the relevant records.

Ministry’s Comments The Ministry of Economy will not entertain the submission of incorrect reconciliations.

It will be returned immediately.

At the same time we continue to offer to help by running training sessions.
Whole of Government Financial Statements and Annual Appropriation Statement Page 37 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 4.4 Account Balances Contrary to the Nature of Operating Trust Account Trust Money is not payable into the Consolidated Fund.
Trust money is to be accounted for separately from public money and other money.31 Audit review of the Operating Trust Account noted that sponsorship monies received from various sponsors, receipts for the Ratu Sukuna Biography, performance bond, and refundable deposits of totalling $5,705,621 were deposited or retained in the Consolidated Fund Account instead of a separate bank account.

Refer to Appendix 3.2 for details.


The findings indicate poor maintenance of trust monies which can be susceptible to financial mismanagement as independent bank reconciliations cannot be performed to substantiate these balances.

Recommendation Ministry of Economy should ensure that trust monies are treated separately from public funds and recorded in the Main Trust Fund Account with separate bank accounts.
Ministry’s Comments In liaison with the agencies concerned, they have indicated their commitment to move the monies out from the consolidated fund account to separate bank accounts.
4.5 Impact of Misstatement and Inadequate Evidence on Trust Fund Balance The Trust Fund balance of $143,329,585 as at 31 July 2016 has been misstated in view of the following errors and omissions: Table 4.4 Details of misstatement and inadequate evidence Errors and Omissions Reconciliations not prepared Inadequate listings of beneficiaries Lack of supporting documentation for tender and security deposits, journal adjustments and no cash for administration contributions for foreign mission.
Variance between Trust Fund Cash and Trust Fund Liability Account Variances between FMIS Ledger and Ministry’s reconciliation Overdrawn balances Total Overstated/ (Understated) ($) 1,502,735 26,739,044 2,237,416 800,013 42,921 (1,367,602) 29,954,527 The net impact of the misstatements and unsubstantiated balances totalling $29,954,527 or 21% of the total trust fund balance in the 2016 accounts is substantial.
As such, audit could not ascertain the accuracy and the completeness of trust fund account balances as at 31 July 2016.

31 Financial Management Act 2004 – Section 10(2) & 25(1) Whole of Government Financial Statements and Annual Appropriation Statement Page 38 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Recommendations  Ministry of Economy in consultation with Ministries/Departments should ensure that trust fund balances are properly reconciled.
The errors and omissions highlighted above should be investigated and rectified.

 Supporting documents should be maintained properly and provided for audit verifications.

Ministry’s Comments The Ministry of Economy will vigorously engage the agencies much more so that there is some improvement in this area.
Whole of Government Financial Statements and Annual Appropriation Statement Page 39 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 5.0 REVENUE The total forecasted revenue by government in 2016 was $3,128,731,000 which comprised of $2,802,953,800 in operating revenue and $325,777,200 in investing revenue.32 No forecast was provided for revenue generated from government Trading and Manufacturing Activity operations.
However, the actual revenue collections by government in 2016 from its normal operations totaled $1,500,808,19233 thus recording a shortfall of $1,627,922,876 or 52% of the total estimated revenue collections.

The key contributing factor to the shortfall of revenue was the change in the government financial year.

The actual revenue collection is for seven months while the budgeted is for 12 months.

Table 5.1 shows the actual revenue collected over the last five years.
Table 5.1 Revenue by Type over the Last 5 years Year 2012 2013 2014 2015 2016 Investing Revenue – Actual ($) 86,043,083 59,894,427 80,723,992 255,471,928 67,559,756 Operating Revenue – Actual ($) 1,854,766,943 2,038,833,496 2,290,281,755 2,544,762,858 1,433,248,436 Total Actual [a] ($) 1,940,810,026 2,098,727,923 2,371,005,748 2,800,234,786 1,500,808,192 Investing Revenue – Budgeted* ($) 35,819,200 75,744,230 513,955,962 551,026,138 358,637,411 Operating Revenue – Budgeted* ($) 1,906,987,800 2,032,634,700 2,207,821,990 2,571,412,262 2,770,093,657 Total Budgeted* [b] ($) 1,942,807,000 2,108,378,930 2,721,777,950 3,122,438,400 3,128,731,068 Variance [a-b] ($) 1,996,974 9,651,007 350,772,202 322,203,614 1,627,922,876 *Source: FMIS General Ledger In addition, government also recorded revenue of $14,154,922 from operation of Trading and Manufacturing Accounts as at 31 July 2016.
5.1 Weaknesses in Internal Controls for Revenue The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.34 Audit review of internal controls relating to revenue for Ministries/Department noted the following weaknesses, the details of which are listed in Appendix 7.1.1 and Appendix 7.1.2.

 Balances of $1,532,412 were incorrectly posted to revenue allocations.
 Variance of $534,779 was noted between the Ministry’s records and the general ledger.

 Over/under statement of revenue by 229,464.

 Delays in banking of $66,879.

 Ministry of Sugar received $8,141 in Board sitting allowances for the Director of Sugar for attending board meetings for which official government receipts were not issued.

 Ministry of Agriculture TMA did not maintain the gazetted list of fees and charges for revenue collected from TMA sales.
The fees list provided for audit was prepared by the Revenue Clerk at the Ministry’s headquarters who indicated that the list was prepared after enquiring from the respective revenue collectors in the stations.
32 National Budget Book 2016 33 Excludes revenue from TMA Operations 34 Finance Instruction 2010 – Section 59 Whole of Government Financial Statements and Annual Appropriation Statement Page 40 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The above findings indicate the control weaknesses and lack of proper supervisory checks in the operation and administration of government revenue.
Consequently, audit could not fully substantiate the accuracy and the completeness of the revenue balance of $1,514,963,112.

Recommendations Ministries and departments should strengthen the controls of receipts of public monies.

Ministry’s Comments The Ministry of Economy continues to stress upon the accounting heads the importance of their role in both revenue and expenditure management.

Internal controls are reviewed every now and then.


One of the areas highlighted by the Internal Auditors of MoE that needs proper monitoring is revenues.
This is communicated to the accounting heads during our monthly meetings Whole of Government Financial Statements and Annual Appropriation Statement Page 41 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 6.0 EXPENDITURE 6.1 Overview of 2016 Government’s Budgeted and Actual Expenditures A total of $3,414,536,487 was approved in the 2016 budget to be utilised for the year ending 31 December 2016.
Under the 2016 Appropriation Act 2015, a sum of $3,090,840,32035 was approved to be issued from the consolidated fund to be applied to the ordinary services of the government for the year ended 31 December 2016.

Included in this, is a sum of $38,142,450 for recurrent and non-recurrent loans under the Lending Fund Account.36 The government incurred a total expenditure of $1,585,839,718 for the ordinary services for the period ending 31 July 2016.
In addition, $170,842,697 was incurred by government in the payment of pensions and debt servicing bringing the actual total expenditure for the government to $1,756,682,415 as at 31 July 2016.

Detail of government expenditure is reflected in Table 6.1.
Table 6.1 Overview of the 2016 Budget and Actual Expenditure for the period ending 31/7/2016 Original Budget Virements ($) 1,705,531,334 ($) Revised Budget Amount ($) Expenditure Actual Expenditure 2016 ($) Savings % Decrease ($) 9,129,331 1,714,660,665 Operating37 973,460,885 741,199,780 1,340,573,046 (10,539,256) 1,330,033,790 Capital38 590,688,998 739,344,792 49,092,943 1,409,925 50,502,868 Value Added Tax39 21,689,835 28,813,033 43% 56% 57% 42,343,300 276,995,864 3,414,536,487 --- --- --- 42,343,300 Pension, Gratuities and Compassionate Allowances40 20,754,067 21,589,233 51% 276,995,864 Interest on Loans41 150,088,630 126,907,234 46% 3,414,536,487 Total Government Expenditure 1,756,682,415 1,657,854,072 49% The Government incurred expenditure totalling $1,756,682,415 against a revised budget of $3,414,536,487 resulting in savings of $1,657,854,072.
The significant savings was primarily due to the budget being for twelve months while expenditures were only for the seven months up to 31 July 2016.

Majority of the government spending were on the Operating Expenditure which accounted for 55 % while Capital Expenditure accounted for 34% of the total expenditure.

The remaining 11% was for other payments.

Refer to Figure 6.1 for percentages of types of expenditures.
35 For all Heads of Appropriation listed in the Schedule 1& 2 of the Appropriation Decree except Head 51 & Head 52 36 Act No.
16 of 2015 37 SEG 1,2,3,4,5,6 & 7 38 SEG 8,9 & 10 39 SEG 13 40 SEG 11 41 SEG 12,14 & 15 Whole of Government Financial Statements and Annual Appropriation Statement Page 42 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Figure 6.1 Total Expenditure Incurred by Type – 31/7/16 Operating Expenditure 55% Capital Expenditure 34% Interest on Loans 9% Pensions, Gratuities and Compassionate Allowances 1% Value Added Tax 1% In addition to the total expenditure, the Trading and Manufacturing Account (TMA) as a trading arm of the Government incurred a total expenditure of $8,595,227 for the period ending 31 July 2016.
6.2 Overall Utilisation by Standard Expenditure Groups (SEG) Majority of the government spending were on capital grants and transfers, established staff and operating grants and transfers which accounted for 29%, 26% and 17% of the total expenditure, respectively.

The remaining 28% was for other payments.

Refer to Figure 6.2 for percentages of utilisation by categories of expenditure groups.
Figure 6.2 2016 Government Actual Expenditure by Standard Expenditure Group Value Added Tax 1% Charges on Account of Public Debt 0% Pensions, Gratuities & Compassionate Allowances 1% Interest Payment on overseas loans 1% Interest Payment on domestic loans 7% Established Staff 26% Unestablished Staff 2% Capital Grants and Transfers 29% Travel and Communications 1% Maintenance and Operations 3% Capital Purchase 1% Capital Construction 3% Special Expenses 3% Operating Grants and Transfers 17% Purchase of Goods and Services 5% Whole of Government Financial Statements and Annual Appropriation Statement Page 43 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Furthermore, summarised in Table 6.2 is the approved budget expenditure allocation and utilisation in 2016 compared to financial year 2015.
Table 6.2 Budget Utilisation For 2016 2016 Budget 31/12/16 ($) 829,237,347 Actual 31/07/2016 ($) 458,175,830 Standard Expenditure Group Savings ($) 371,061,517 Established Staff 48,044,773 28,140,510 19,904,263 34,555,647 19,784,237 14,771,410 73,418,297 43,854,666 29,563,631 139,195,898 79,845,472 59,350,426 486,568,275 295,386,734 191,181,541 and Government Wage Earners Travel Communications Maintenance and Operations Purchases Goods Services Operating Grants and Transfers of and 103,640,428 48,273,436 1,714,660,665 973,460,885 42,343,300 20,754,067 276,995,864 150,088,630 319,339,164 170,842,697 160,743,778 54,938,745 741,199,780 and 21,589,233 55,366,992 Special Expenditure Total Operating Expenditure Pensions, Gratuities Compassionate Allowance Interest on Loans Total Un-allocable Operating Expenditure Capital Construction 126,907,234 148,496,467 105,805,033 2015 Budget Actual Savings ($) 799,641,464 ($) 781,720,316 ($) 17,921,148 43,736,828 45,089,205 - Capital Purchase 60,696,080 45,820,326 14,875,754 1,104,588,912 512,102,957 592,485,955 1,330,033,790 590,688,998 739,344,792 Capital Grants and Transfers Total Expenditures
 Capital 1,110,479,818 911,998,695 198,481,123 1,320,192,804 1,045,016,389 275,176,415 50,502,868 21,689,835 28,813,033 Value Added Tax 74,298,459 55,558,866 18,739,593 3,414,536,487 1,756,682,415 1,657,854,072 TOTAL EXPENDITURE BUDGET SAVINGS / 4,029,903,414 2,981,792,328 1,048,111,806 The budget savings increased by $609,742,266 or 58% in 2016 as compared to 2015 due to the change in financial period from 31 December to 31 July as required in the Financial Management (Amendment) Act 2016.
Whole of Government Financial Statements and Annual Appropriation Statement Page 44 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 6.3 Government Budget for 7 Months Period In respect of each year ending on 31 December or on such other day as Parliament prescribes, the Minister responsible for finance must cause to be laid before Parliament an annual budget, reflecting estimates of revenue and of capital and current expenditure for the year.42 At least once in every year, the Auditor General shall inspect, audit and report to Parliament on the public accounts of the State.
In the report, the Auditor General must state whether in his or her opinion expenditure has been applied for the purpose it was authorised.43 The audit noted that the Parliament of the Republic of Fiji passed the:  2016 Appropriation Act 201544 - to appropriate a sum of $3,090,840,320 for the ordinary services of the government for the year ending 31 December 2016; and  The Financial Management (Amendment) Act45for the change in financial year (from 31 December to 31 July) Despite the change in the financial year, it was noted the 2016 Appropriation Act 2015 was not amended to agree with the change in the financial year.
Ministry of Economy also did not place controls to ensure that budget forecasts for only seven months were utilised.

As such, Ministries and Departments continued using the budget for the year ending 31 December 2016.
Audit review of the budget spending noted that some Ministries and Departments had utilised 75 - 100 % of the budget for each Standard Expenditure Groups as at 31 July 2016 indicating that they took advantage of the situation where a separate appropriation was not made for the seven-month period.

Refer to Appendix 4.1 for details.


Without the appropriation for the period ending 31 July, 2016, it was not possible to ascertain that expenditure incurred in excess of the seven-month period was properly authorised.

Recommendation The Ministry must ensure that in any change of financial period, the Appropriation Act is amended to be aligned with the change in financial year.

Ministry’s Comments This was done via Act No 10 of 2016, effective 28 April 2016.
6.4 Payment Anomalies At least once in every year, the Auditor General shall inspect, audit and report to Parliament on the public accounts of the State.
In the report, the Auditor General must state whether in his or her opinion expenditure has been applied for the purpose it was authorised.46 42 Constitution of the Republic of Fiji – Section 144 (1) – Annual Budget 43 Constitution of the Republic of Fiji – Section 152 44 Dated – 19th November 2015 45 Dated – 27th April 2016 46 Constitution of the Republic of Fiji – Section 152 Whole of Government Financial Statements and Annual Appropriation Statement Page 45 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.47 Audit review of the expenditures incurred by the Ministries/Department noted the following anomalies:  Audited accounts were not always submitted for grant payments totalling $245,074,878 to various entities.
Refer to Appendix 4.2 for details.

 Capital projects were not properly monitored resulting in numerous anomalies in projects totalling $38,331,063.

Refer to Appendix 4.3 for details.

 Expenditures were not always properly authorised ($16,886,144) and budgeted ($5,272,698).

Refer to Appendix 4.4 and Appendix 4.5 for details.

Furthermore, expenditures amounting to $619,636 were posted to various SEGs against a zero revised budgeted provision.

Refer to Appendix 4.6 for details.


 Supporting documentations for procurements totalling $17,881,268 were not provided for audit verifications.

Refer to Appendix 4.7 for details.

 Equipment worth $2,940,133 were not updated in the Fixed Asset Register.

Refer to Appendix 4.8 for details.

 Incorrect posting of expenditure to various allocations amounted to $2,055,750.

Refer to Appendix 4.9 for details.


 Tenders were not always called and competitive quotes not obtained for procurements amounting to $2,039,322.

Refer to Appendix 4.10 for details.

 Outstanding accountable advance (SAG 57000) of $1,700,879 was not cleared for the period ending 31 July 2016.

Refer to Appendix 4.11.

 Journal vouchers raised by the Office of President for clearance of the outstanding accountable advances amounting to $832,42548 were not adequately supported.
 A variance of $620,099 was noted between FMIS general ledger and actual expenditure of the Foreign Missions.

 Provisional tax of $281,785 was not withheld on payment made for contract service.

Refer to Appendix 4.12 for details.

The above findings indicate the ineffective controls that exist across government.

Consequently, audit could not substantiate the accuracy and the completeness of the expenditure balance of $1,756,682,415.
Recommendations Ministries/Departments must ensure: 47 Finance Instruction 2010 – Section 59 48 Balance carried forward from previous years Whole of Government Financial Statements and Annual Appropriation Statement Page 46 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017       that all capital projects are properly planned and adequate arrangements made to implement the projects as quickly as possible when funds are provided; ensure that supporting documents are maintained and provided for audit verifications; that assets with a value in excess of $2,000 is recorded in the fixed asset register; that all advance accounts are cleared within the 7 days deadline.
Outstanding balances should be recovered from officers concerned through salary deduction; to comply with the changing requirements of FRCA for Provisional Tax deductions for all contract payments; and regular evaluation of internal control is carried out and corrective action is taken to address the any weaknesses identified.

Ministry’s Comments The decision to implement capital projects on time lies within the various Permanent Secretaries.

That includes planning and up to implementation.


We have no other powers as the Chief Financial Officer of an agency is the PS.

However, we continue to provide regular updates and advice to Ministries/Departments regarding their funding utilization.

On another note, Ministries are required to provide acquittals when requesting for release of funds.

This is part of the RIE Checklist.


The Ministries and Departments have to adhere to Procurement Regulation 2010, Finance Instructions and agency’s Finance Manual for its procurement of goods, services and works.

This has already been highlighted in Accounting Heads meeting.

It is the prerogative of Ministries and departments to update the fixed asset register as they need to maintain the list of assets the particular ministry/department holds.
However, Ministry of Economy through its FMIS user group and accounting heads meeting have also stressed the importance of keeping an up to date fixed asset register.

There is an Accountable Advance Policy in place and the issue of clearances is documented in all Ministries and Departments Finance Manuals duly endorsed by the respective Heads of Ministries and Departments.
The Permanent Secretaries under the Financial Management Act are also responsible for the effective system and effective internal controls in their various ministries and departments.

Changing requirements of FRCA are highlighted in accounting heads meeting that is held on monthly basis and respective accounting heads are responsible to adhere to all requirements of FRCA.

Furthermore, FRCA also makes presentations on the new changes in the accountings heads meetings.
As per Part 10 of Financial Instructions, section 59 (2), the prerogative is with the accounting heads to make recommendations to Permanent Secretaries for the effective design and operation of internal controls across the agency.
6.5 Expenditure Classification The budget papers for a financial year (the “budget year”) comprise budget estimate that specify the appropriation categories for each head appropriation in the Bill.49 49 Financial Management Act 2004 Section 13 (2)(b)(i) Whole of Government Financial Statements and Annual Appropriation Statement Page 47 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The Public Service Commission was allocated $5,502,530 under Head 13 Independent Commission 2016 budget.
The total budget allocated was recorded under SEG 6 – Operating Grants and Transfers and the actual expenditure incurred as at 31 July 2016 was $2,193,373.

Moreover, total expenditure of $398,656 was also incurred under SEG 1 of Head 13 without an approved budget.

The Ministry of Civil Service administered the allocation for Public Service Commission Budget Head 13 and it was used to cater for payment of salaries, allowances and other related payments for all permanent secretaries in the civil service.
No grant was paid from the allocation.

The classification of the budget allocation for the Public Service Commission (Head 13) under SEG 6 – Operating Grant and Transfers may be inappropriate as the budget was used for payment of salaries and allowances of appointed Permanent Secretaries in Government.

Recommendation The operating expenditure allocation in Head 13 Public Service Commission should be classified appropriately to relevant Special Expenditure Groups (SEG).
Ministry’s Comments The recommendation is agreed TO BY Ministry of Civil Service.
Whole of Government Financial Statements and Annual Appropriation Statement Page 48 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 7.0 BORROWING FUND ACCOUNT The Minister may, on behalf of the State, borrow money: (a) (b) (c) by raising loans of such amounts as may be necessary for the purpose of funding the budget deficit from time to time and any standing or other appropriations; by raising loans of such amounts and for such purposes as the House of Representatives may authorise by resolution; and by means of overdrafts or advances, but so that the total amount outstanding by way of overdrafts and advances under this paragraph does not at any one time exceed $20 million or such greater amount as the House of Representatives may determine by resolution; on such terms and conditions as the Minister thinks fit and whether within or outside Fiji.50 Public debt in 2016 totalled $4,502,423,786.
This comprised domestic borrowings of $3,079,850,613 which made up 68% of total debt; overseas borrowings of $1,258,728,393 amounting to 28%; and Treasury Bills of $163,844,780 which made up the remaining 4%.

These are illustrated in Figure 7.1 below.

Figure 7.1 Composition of Public Debt in 2016 Treasury Bills 4% Overseas Loan 28% Domestic Debt 68% Overseas Loan Domestic Debt Treasury Bills The government also receives short term advances from the Reserve Bank of Fiji referred to as Ways and Means.
These advances are raised to meet immediate cash needs of government.

During the year, Government had utilised $84,000,000 of this facility through the Reserve Bank of Fiji.
50 Section 59 (1) Financial Management Act, 2004 Whole of Government Financial Statements and Annual Appropriation Statement Page 49 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 7.1 Trends in Government Borrowing by Category The total public debt at the end of each year from 2002 to 2016 and its composition for the last 15 years are summarised in Table 7.1 below.
Table 7.1 Government Debt (2002 – 2016) Year Domestic Bond ($) Percentage of Total Borrowing (%) Treasury Bills ($) Percentage of Total Borrowings (%) 10 13 6 6 5 5 2 3 2 2 3 3 3 3 4 Overseas Loan ($) Percentage of Total Borrowing (%) Total ($) The government bonds mature between 3 to 15 years.
In contrast, the term of Treasury Bills which constitute 4% of the borrowings ranges between 14 days to 245 days.

Over the last 15 years, the percentage of overseas borrowings constituted an average 18% of the borrowings.

A graphical representation of the outstanding government borrowings position is provided in Figure 7.2.
Figure 7.2 Public Debt Trends 2002 – 2016 Treasury Bills Overseas Loans Domestic Loans Total Borrowings m ) $ ( t n u o m A 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Whole of Government Financial Statements and Annual Appropriation Statement Page 50 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Public debt has been increasing over the years and in 2016, a further increase of $281,271,919 or 7% was noted when compared to the debt of $4,221,151,867 owed in 2015.
The rise in the national debt level was due to increases in domestic debt by $243.4 million, overseas debt by $17.3 million and treasury bills by $20.6 million.

Figure 7.3 shows the relationship between actual revenues and expenditures over the last 15 years.
Figure 7.3 Revenue vs Expenditure 4,000 3,000 2,000 1,000 0 t n u o m A ) m $ ( 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Revenue Expenditure The government expenditure51 of $1,847,933,171 exceeded revenue of $1,500,808,190 during 2016 resulting in a gross deficit of $347,124,981 for the period ended 31 July 2016.

Figure 7.4 shows the gross deficit financed from borrowings.
Figure 7.4 Deficit Financed From Borrowings 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ) m $ ( t n u o m A 400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700 -800 -900 -1000 Surplus/(Deficit) 51 Included debt repayment of $91,250,756 Whole of Government Financial Statements and Annual Appropriation Statement Page 51 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 7.2 Borrowings over the 15 Year Period The composition of government debt over the last 15 years is summarised in Table 7.2 Government borrowed a total of $587,622,330 in 2016 which decreased by $481,379,223 or 45% from a total of $1,069,001,553 borrowed in 2015.
This was primarily due to the transactions for 2016 being for the seven month period ended 31 July 2016.

Of the total amount borrowed in 2016, 14% or $80,667,618 was borrowed from Overseas, 36% or $211,787,728 were from Treasury Bills and 50% or $295,166,984 was borrowed through domestic bonds.

Tabulated below are the total amounts borrowed by government from 2002 to 2016.
Table 7.2 Government Borrowing Composition - 2002 – 2016 Year Domestic Bonds Amount $’000 299,000.0 291,000.0 449,218.2 319,967.0 356,778.6 100,536.3 341,266.9 404,239.8 452,734.1 81,470.5 192,102.0 172,822.0 233,405.8 257,356.1 295,167.0 % Change 31 (3) 54 (29) 12 (72) 239 18 12 (82) 136 (10) 35 10 15 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Overseas Borrowings Amount $’000 26,196.7 28,745.3 9,267.7 8,641.3 283,258.7 19,855.8 20,802.8 25,476.8 61,949.5 569,043.1 136,428.7 99,466.3 120,241.3 478,804.8 80,667.6 % Change 156 10 (68) (7) 3,178 (93) 5 22 143 819 (76) (27) 21 298 (83) Treasury Bills Total Amount $’000 437,465.8 580,634.6 189,256.7 326,951.1 528,715.4 685,889.2 391,725.9 253,821.7 687,313.1 411,970.9 306,664.5 138,122.1 306,883.4 332,840.6 211,787.7 % Change 3 33 (67) 73 62 30 (43) (35) 171 (40) (26) (55) 122 8 (36) Amount $’000 762,662.5 900,379.9 647,742.6 655,559.4 1,168,752.7 806,281.3 753,795.6 683,538.3 1,201,996.7 1,062,484.5 635,195.2 410,410.4 660,530.5 1,069,001.6 587,622.3 % Change 15 18 (28) 1 78 (31) (7) (9) 76 (12) (40) (35) 61 62 (45) Domestic borrowing increased by 15% in 2016 from the total of $257,356,129 borrowed in 2015 while overseas borrowing decreased by 83% in 2016 from a total of $478,804,784 borrowed in 2015.
Treasury bills raised in 2016 decreased by 36% from $332,840,640 raised in 2015.

7.3 Loan Repayments There is an annual obligation for the Government of Fiji to redeem the borrowings which become due for payment.

The terms and conditions of the borrowings are stipulated in the Loan Agreements between the Government of Fiji and the Lending Agency.

The repayment of the borrowings of the Government of Fiji over the past 15 years is represented in Table 7.3.
Whole of Government Financial Statements and Annual Appropriation Statement Page 52 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Table 7.3 Repayment of Borrowings per Year 2002 – 2016 Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Domestic Bonds Overseas Borrowings Interest Principal Interest Principal ($) ($) ($) ($) Treasury Bills Principal ($) 417,637,927 500,141,175 339,194,733 317,920,558 523,422,114 686,040,488 468,333,380 220,653,349 710,064,626 416,019,281 265,852,974 147,577,053 280,578,002 318,168,240 191,198,800 Interest ($) 2,362,073 2,597,656 4,310,352 2,392,788 5,746,278 10,514,012 566,620 1,971,651 4,295,961 2,081,244 850,851 967,595 921,998 2,831,760 2,417,936 Total Repayment ($) 645,854,008 737,530,379 614,793,350 643,786,808 855,321,754 1,088,897,778 840,754,892
 678,939,009 1,159,390,078 1,178,947,358 776,045,330 587,347,969 746,927,616 1,286,113,338 432,538,185 Principal repayments for domestic bonds declined by $67,380,000 or 57%, principal repayments for overseas borrowings declined by $518,630,940 or 93% and treasury bills declined by $126,969,440 or 40%.
Overall, the total principal debt repayments declined by $712,980,380 or 72% in 2016.

Principal payments for 2016 for government borrowings totalled $282,449,555 whilst interest payments amounted to $150,088,630.

Refer to Table 7.4 for details.


Table 7.4 Total Principal and Interest Repayments in 2016 Description Domestic Bonds Overseas Borrowings Treasury Bills Total Principal Repayment ($) 51,805,000 39,445,755 191,198,800 282,449,555 Interest Repayment ($) 125,058,218 22,612,476 2,417,936 150,088,630 The interest repayment on Domestic Borrowings for 2016 was $125,058,218 compared to $22,612,476 for Overseas Borrowings and $2,417,936 for Treasury bills.
The interest rate on domestic borrowings ranged from 1% to 6% whilst interest rates for overseas borrowings ranged from 1% to 3%.

7.4 Domestic Bonds The total domestic bonds as at 31 July 2016 amounted to $3,079,850,613 or 68% of total Government borrowings.

This is inclusive of $10,112 as unamortised premium.

Table 7.5 shows the amounts that are owed by the Government of Fiji to bond holders.
Whole of Government Financial Statements and Annual Appropriation Statement Page 53 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Table 7.5 Composition of Outstanding Government Bonds Bond Holder Amount ($) FNPF Insurance Companies Commercial Banks RBF Trust Fund (excluding UTOF) Unit Trust of Fiji Others Total 2,161,406,500 580,066,000 135,120,000 82,708,000 29,919,950 21,770,000 68,850,050 3,079,840,500 Percentage of Outstanding Debt (%) 70 19 4 3 1 1 2 100 Fiji National Provident Fund (FNPF) held 70% of the bonds as at 31 July 2016; Insurance Companies 19%; Commercial Banks 4%; RBF 3%; the remaining 4% of the bonds were held by Trust Fund, Unit Trust of Fiji and others.
The composition of outstanding government bonds is shown in Figure 7.5 Figure 7.5 Compositions of Outstanding Bonds as at 31/07/16 Trust Fund (excluding UToF) 1% RBF 3% Unit Trust of Fiji 1% Others 2% Commercial Banks 4% Insurance 19% FNPF 70% 7.4.1 Borrowings and Interest Payments Details of outstanding borrowings over the past 15 years with the total interest paid and its budgetary provision is shown in Table 7.6.

Interest payments are made every six months.
Whole of Government Financial Statements and Annual Appropriation Statement Page 54 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Table 7.6 Domestic Borrowings Outstanding, Interest Paid, and Budgetary Provisions Year Domestic Borrowings ($m) % Increase /(Decrease) 15 12 18 7 8 (5) 7 7 10 (5) 0.2 0.4 2 5 9 Interest Paid ($m) 95.3 102.0 108.6 120.2 129.5 148.0 147.4 165.3 190.7 213.2 210.5 207.5 209.4 210.3 125.1 % Increase/ (Decrease) 8 7 6 11 8 14 (0.4) 12 15 12 (1) (1) 1 0.4 (41) Budgetary Provision ($m) % Change 102.0 110.0 121.5 124.0 127.7 148.2 151.4 156.7 190.6 225.4 211.7 208.3 209.5 210.5 219.3 10 8 10 2 3 16 2 4 22 18 (6) (2) 1 1 (4) Total domestic borrowings outstanding increased by $243.4 million or 9% in 2016 compared to 2015.
Interest paid on domestic borrowings decreased by $85.2 million or 41%.

The Government had allocated $219.3 million in the 2016 Budget for interest payments of which $125.1 million was paid during the year.

The interest expense and the principal repayments over the past 15 years are shown in Figure 7.6 below.
Figure 7.6 Interest and Principal Repayments on Domestic Bonds 300.0 250.0 ) m $ ( t n u o m A 200.0 150.0 100.0 50.0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Principal Whole of Government Financial Statements and Annual Appropriation Statement Page 55 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 7.5 Overseas Borrowings The total outstanding overseas borrowing of Government as at 31 July 2016 was $1,258,728,393 which represents 28% of the total outstanding borrowings.
Majority of the overseas borrowings obtained were to finance capital projects.

7.5.1 Yearly Overseas Borrowings Figure 7.7 shows the trend of the yearly cash overseas borrowings over the past 15 years.

Figure 7.7 Yearly Overseas Borrowings 2002 - 2016 m ) $ ( 600 500 400 300 200 100 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year There were marked increases in overseas borrowing in years 2006 and 2011.
In 2015, overseas borrowings increased again due to issuance of $US150 million, $US250 million and $US200 million in global bonds.

However in 2016, there was a sharp decline in borrowing trend due to no issuance of bonds by the Government The Government borrowed a total of $80,648,873 from overseas which were mainly direct disbursements as shown in Table 7.7.

Overseas loan repayments totalling $62,058,231 were made in 2016, which comprises of $22,612,476 in interest and $39,445,755 in principal payments.
Refer to Table 7.7 for the details of overseas borrowings made in the year 2016.
Table 7.7 Overseas Loan Disbursements for 2016 Loan Road Upgrading Project Buca Bay/Moto Nabouwalu/Dreketi Sigatoka / Serea Roads Post Cyclone Winston Emergency Cash ($) Capitalisation of Interest ($) Direct Disbursement ($) Total ($) --- --- 4,448,110 65,447,380 10,335,086 4,448,110 65,447,380 10,335,086 Whole of Government Financial Statements and Annual Appropriation Statement Page 56 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Loan Post Cyclone Winston Emergency Development Policy Operation Housing Project 2014 ADB/ Transport Infrastructure Investment (Sector) Project Total Cash ($) --- Capitalisation of Interest ($) 259,825 Direct Disbursement ($) Total ($) 259,825 158,472 158,472 --- 418,297 80,230,576 80,648,873 Borrowings in relation to the Road Upgrading Project comprised of 99.5% or $80.23 million of the total overseas borrowings by Government as at 31 July 2016.
The funds obtained for this project were to be used for road upgrading, rehabilitation, and the management of road assets and sector resources.

The composition of the overseas Borrowings is illustrated in Figure 7.8 Figure 7.8 Composition of Overseas Borrowings Post Cyclone 0.3% Housing 0.2% Road Maintenance 99.5% 7.5.2 Overseas Borrowings Outstanding & Interest Paid Table 7.8 provides details of overseas borrowings outstanding over the past 15 years with the total interest paid each year.
Table 7.8 Overseas Borrowings Outstanding, Interest Paid and Budgetary Provision Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Overseas Borrowings ($m) 193.5 174.1 168.7 164.1 416.7 397.1 476.0 527.2 548.5 832.1 % Increase/ (Decrease) (6) (10) (3) (3) 154 (5) 20 11 4 52 Interest Paid ($m) 9.3 7.2 6.1 5.5 5.7 22.2 20.8 24.4 22.9 43.1 % Increase/ (Decrease) (5) (23) (15) (10) 4 289 (6) 17 (6) 88 Budgetary Provision ($m) Variance ($m) 10.0 9.4 7.0 6.7 6.4 23.4 24.8 29.1 28.2 45.1 (6) (6) (26) (4) (4) 266 6 17 (3) 60 Whole of Government Financial Statements and Annual Appropriation Statement Page 57 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year 2012 2013 2014 2015 2016 Overseas Borrowings ($m) 935.5 1,081.0 1,254.3 1,241.4 1,258.7 % Increase/ (Decrease) 12 16 16 (1) 1 Interest Paid ($m) 46.3 51.9 53.8 77.4 22.6 % Increase/ (Decrease) 7 12 4 44 (71) Budgetary Provision ($m) Variance ($m) 51.4 57.6 63.4 91.6 48.2 14 12 10 44 (47) In 2016, the outstanding overseas borrowings increased by 1% compared to 2015.
A sum of $48,195,096 was provided in the 2016 Budget Estimates (revised) for interest expense of which $22,612,476 was actual interest payment made in 2016.

The principal and interest payments are illustrated in Figure 7.9 Figure 7.9 Interest Payments vs.
Principal Repayments Principal Repayments Interest 600.00 500.00 400.00 ) m $ ( t n u o m A 300.00 200.00 100.00 0.00 2002 2003 2004 2005 2006 2007 2008 2009 Year 2010 2011 2012 2013 2014 2015 2016 Principal repayment for overseas loans in 2016 amounted to $39.4 million while interest payment totalled $22.6 million.

This is a decrease by $55 million or 71% compared to 2015.
7.5.3 Revaluation of Overseas Borrowings Overseas borrowings are revalued at year end using the RBF exchange rate as at 31/07/16 which has an effect on public debt balance outstanding at year end.

Revaluation may result in increase or decrease in the public debt balance based on the exchange rate prevailing at the end of the year.

Table 7.9 outlines the amounts attributed to overseas borrowings due to revaluation over a 15 year period.
Whole of Government Financial Statements and Annual Appropriation Statement Page 58 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Table 7.9 Revaluation of Overseas Borrowings & Unrealised Exchange Gains/Loss Year Revaluation Increase/ (Decrease) Overseas Borrowings ($) (18,905,125) (31,859,534) (3,554,545) (534,342) (17,120,505) (21,844,864) 70,352,312 46,988,862 22,885,617 1,537,285 14,895,650 65,295,314 65,340,835 70,666,171 (24,319,154) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ($) 193,505,881 174,125,752 168,665,379 164,050,924 416,729,200 397,103,384 475,994,415 527,248,475 548,461,798 832,147,104 935,530,587 1,081,097,414 1,254,277,326 1,241,407,387 1,258,728,393 Unrealised Exchange (Gain)/Loss as a % of Overseas Borrowings (10) (18) (2) (0.3) (4) (6) 15 9 4 0.2 2 6 5 6 (2) The value of the overseas borrowings decreased by $24,319,154 or 2 % due to floating exchange rates52 for the seven months up to 31 July 2016.
7.6 Treasury Bills The Government through the Reserve Bank of Fiji (RBF) floats Treasury bills to raise funds in the domestic market to meet its short term needs.

Treasury bills are sold at a discount on face value of which the investor will receive face value upon maturity.

During the period, the government raised $213,200,000 in Treasury bills of which $211,787,728 constituted net borrowings by the government whilst $1,412,272 represented discounts, as summarised in Table 7.10.
Table 7.10 Treasury bill Holders for Bills Issued in 2016 Bank Face Value Commercial Banks Others Total 212,500,000 700,000 213,200,000 % of Total 99.7 0.3 100 Discount ($) 1,397,392 14,880 1,412,272 % of Total 99 1 100 Net Receipts ($) 211,102,608 685,120 211,787,728 % of Total 99.7 0.3 100 Of the total Treasury bills issued in 2016, 99.7% were purchased by commercial banks and the remaining 0.3% was purchased by other entities and individuals.

This composition is graphed below.


52 In a floating rate system, the exchange rate is determined directly by market forces, and is liable to fluctuate continually.

Whole of Government Financial Statements and Annual Appropriation Statement Page 59 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Figure 7.10 Composition of Treasury Bills Borrowed for 2016 Others 0.3% Commercial Bank 99.7% The Treasury bills have maturity periods ranging from 14 to 245 days.
Table 7.11 details the total Treasury bills raised in the year together with their maturity dates and discount.
Table 7.11 Maturity of Treasury bills issued in 2016 Maturity in Days 14 28 56 91 182 245 Total Face Value Discount ($) 20,500,000 20,500,000 34,000,000 72,500,000 41,000,000 24,700,000 213,200,000 ($) 3,451 10,830 50,936 206,947 622,171 517,937 1,412,272 Treasury Bill Cost ($) 20,496,549 20,489,170 33,949,064 72,293,053 40,377,829 24,182,063 211,787,728 The discount increases as the maturity date increases.
Refer to Figures 7.11 and 7.12 for these details: Fig: 7.11 Discount Expense Based on Maturity Dates Fig 7.12: Treasury Bills Issued by Maturity 700000 600000 500000 400000 300000 200000 100000 0 Discount 245 Days 11% 182 Days 19% 91 Days 34% 14 Days 10% 56 Days 16% 28 Days 10% 14 28 56 91 182 245 Whole of Government Financial Statements and Annual Appropriation Statement Page 60 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 7.6.1 Treasury Bills Over a 15-year Period Treasury bills issued and redeemed over the last 15 years is summarised in Table 7.12.
Table 7.12 Treasury Bills 2002 – 2016 Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Balance Brought Forward ($) 176,604,613 196,432,453 276,925,838 126,987,822 136,018,388 141,311,687 141,160,433 64,552,990 97,721,294 74,969,800 70,921,393 111,732,963 102,278,056 128,583,452 143,255,852 Issues Redemption Outstanding ($) 437,465,767 580,634,561 189,256,716 326,951,124 528,715,414 685,889,234 391,725,937 253,821,653 687,313,133 411,970,874 306,664,544 138,122,146 306,883,399 336,000,000 213,200,000 ($) 417,637,927 500,141,176 339,194,733 317,920,558 523,422,114 686,040,488 468,333,380 220,653,349 710,064,626 416,019,281 265,852,974 147,577,053 280,578,003 321,327,600 192,611,072 ($) 196,432,453 276,925,838 126,987,821 136,018,388 141,311,688 141,160,433 64,552,990 97,721,294 74,969,801 70,921,393 111,732,963 102,278,056 128,583,45253 143,255,852 163,844,780 Treasury bills raised by Government over the last 15 years have fluctuated significantly.
Similarly, the government deficits/surplus has also fluctuated over past 15 years.

The trend for Treasury bills issued, redemptions, bills outstanding at the end of the financial year and the yearly deficit/surplus are shown in Figure 7.13.
Figure 7.13 Graphical Illustration of Treasury Bills 2002 - 2016 800 600 400 200 0 -200 -400 -600 ) $ ( t n u o m A 2002 2003 2004 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Issues Redemption Outstanding Budget Deficit 53 Excludes discount of $2,016,548.07 Whole of Government Financial Statements and Annual Appropriation Statement Page 61 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 In 2016, a budgeted gross deficit of $445.4 million was recorded, with treasury bills outstanding totalling $163.8 million.
7.6.2 Treasury Bills Management Treasury bills are short-term financial instruments used by Ministry of Economy to cover shortfalls during the year.
The analysis of budgeted revenue and expenditure as provided in the Budget and the Treasury bills raised for the year are as follows: Table 7.13 Revenue Variance vs. Treasury Bills Raised Revenue 2007 ($m) 2008 ($m) 2009 ($m) 2010 ($m) 2011 ($m) 2012 ($m) 2013 ($m) 2014 ($m) 2015 ($m) 2016 ($m) Budgeted Revenue* Operating Receipts & Investing Loan Receipts Total Actual Revenue Operating Receipts & Investing Loan Receipts Total Revenue Variance Treasury Bills raised Excess/((shortfall) 1,430.00 371.00 1,801.00 1,411.50 370.20 1,781.70 1,522.40 522.50 2,044.90 1,496.50 497.50 1,994.00 1,745.70 734.50 2,480.20 1,391.3 118.90 1,510.20 (290.80) 685.89 395.09 1,454.9 345.60 1,800.50 18.80 391.73 410.53 1,412.80 405.40 1,818.20 (226.70) 253.82 27.12 1,536.50 463.00 1,999.50 5.50 687.31 692.81 1,801.30 693.40 2,494.70 14.50 411.97 426.47 1,942.80 338.40 2,281.20 1,937.10 192.20 2,129.30 (151.90) 306.66 154.76 2,108.40 398.90 2,507.30 2,721.80 385.40 3,107.20 3,122.40 891.90 4,014.30 3,128.7 445.4 3,574.1* 2,098.40 173.10 2,271.50 (235.80) 138.12 (97.68) 2,371.0 353.60 2,724.60 (382.60) 306.88 (75.72) 2,943.5 801.8 3,745.3 (269.00) 336.00 67 1,500.8 305.5 1,806.3 (1,767.8) 213.2 (1,554.6) *The budgeted revenue was for 12 months.
However in 2016 the actual revenue was for seven months due to the change in the financial year resulting in significant shortfall.

The operating and investment receipts should pay for operational costs of Government which include standard expenditure groups 1 - 7, 11 & 12 and capital development programs.

Treasury bills are raised to cover operational deficits provided that they are no more than the estimated operating and investing receipts to be collected during the year.
Government revenue and borrowings from domestic and overseas markets were not sufficient to meet the actual expenditure hence a total of $213.2 million was raised through Treasury bills in 2016.

7.7 Ways and Means The Ways and Means is a short term advance facility provided by the RBF for Government where advances are given to Government for a day to meet immediate cash deficits.

The Ways and Means are replenished by Government during the year and are therefore not reflected as part of borrowings.
An analysis of Ways and Means balances for the past 15 years is illustrated in Figure 7.14.
Whole of Government Financial Statements and Annual Appropriation Statement Page 62 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Figure 7.14 Ways and Means Balances 2002 - 2016 ) m $ ( t n u o m A 400 350 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Government utilised this facility and borrowed $84,000,000 in 2016 compared to $55,500,000 utilised in 2015.
7.8 Financial Flexibility Financial Flexibility is an indicator of the degree a Government can increase its financial resources or revenue to respond to increasing financial commitments either by expanding the revenue or increasing its debt burden.

Table 7.14 contains data for total revenue and debt repayments of Government for a period of 15 years.

The revenue derived by the Government includes a significant portion which is derived from borrowings.
The flexibility analysis includes revenue data and loan components.
Table 7.14 Comparison of Revenue and Debt Repayments Year Revenue ($) Debt Repayments ($) Interest Bite % Whole of Government Financial Statements and Annual Appropriation Statement 47 53 38 42 42 72 50 38 58 48 36 27 31 46 Page 63 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Revenue ($) Debt Repayments ($) Interest Bite % 2016 1,500,808,190 432,538,185 29 Debt repayment comprises the principal and interest components of the domestic and overseas borrowings as well as the Treasury Bills redemption.
The Interest Bite represents the percentage of Debt Repayments to Total Revenue.

Figure 7.15 Percentage of Debt Repayments to Total Revenue e g a t n e c r e P 80% 70% 60% 50% 40% 30% 20% 10% 0% Interest Bite 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years In 2016, the financial flexibility measure was 29% indicating that the total debt repayment was equivalent to 29% of the revenue received by the Government during the year compared to 46% during 2015.
Hence, 71% of revenues collected were available for government programs in 2016 compared to 54% during 2015.

7.9 Financial Vulnerability Financial Vulnerability is the measure of the degree of dependence of Government on sources of borrowing outside its control or influence.

A measure of vulnerability is the comparison of Overseas Borrowings to the total Government debt.

Table 7.15 compares Overseas Borrowings to total Government Debt for a period of 15 years.
Table 7.15 Comparison of Overseas Borrowings and Government Debt Year Outstanding Overseas Borrowings ($) 2002 2003 193,505,881 174,125,752 Government Debt % ($) 1,891,033,984 2,133,770,240 10 8 Whole of Government Financial Statements and Annual Appropriation Statement Page 64 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outstanding Overseas Borrowings ($) 168,665,379 164,050,924 416,729,200 397,103,384 475,994,415 527,248,475 548,461,798 832,147,104 935,530,587 1,081,097,414 1,254,277,326 1,241,407,386 1,258,728,393 Government Debt % ($) 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 2,886,805,555 3,130,061,918 3,382,723,748 3,530,451,273 3,678,829,200 3,824,939,969 4,083,194,826 4,221,151,867 4,502,423,786 7 7 15 15 16 17 16 24 25 28 31 29 28 In 2016, overseas borrowings made up 28% of outstanding government borrowings which decreased by 1% when compared to 2015.
Figure 7.16 Percentage of outstanding overseas loans to total government debt e g a t n e c r e P 35% 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2009 Years The overall trend indicates an increasing reliance by Government on overseas borrowings from 2006.

There were sharp increases in 2006, 2011 and 2014 followed by a slight decreases in reliance in 2015 and 2016.
Another measure of Financial Vulnerability is the comparison of overseas borrowings to Gross Domestic Product (GDP).

Table 7.16 compares overseas borrowings to GDP over a period of 10 years.
Table 7.16 Comparison of Overseas Borrowings and GDP Year Overseas Borrowings Nominal GDP 2007 2008 ($) 397,103,384 475,994,415 ($) 5,440,100,000 5,614,900,000 % of Overseas Borrowings /GDP 7 8 Whole of Government Financial Statements and Annual Appropriation Statement Page 65 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Overseas Borrowings Nominal GDP 2009 2010 2011 2012 2013 2014 2015 2016 ($) 527,248,475 548,461,798 832,147,104 935,530,587 1,081,097,414 1,254,277,326 1,241,407,386 1,258,728,393 ($) 5,614,100,000 6,024,400,000 6,768,500,000 7,109,500,000[r] 7,715,700,000[r] 8,435,900,000[r] 9,210,800,000[p] 9,852,704,113 % of Overseas Borrowings /GDP 9 9 12 13 14 15 13 13 [r]: GDP Revised Figure [p]: GDP Provisional Figure Source: Macroeconomic Committee Figure 7.17 Overseas Borrowings as a Percentage of GDP e g a t n e c r e P 16% 14% 12% 10% 8% 6% 4% 2% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Moreover, the comparison of the domestic debt to GDP is another measure of Financial Vulnerability.
Table 7.17 compares Domestic Borrowings to GDP for a period of 10 years.
Table 7.17 Comparison of Domestic Borrowings and GDP Year Domestic Borrowings Nominal GDP 2007 2008 2009 2010 2011 2012 2013 2014 ($) 2,196,208,150 2,346,258,150 2,505,092,150 2,759,292,150 2,663,382,087 2,631,565,650 2,641,564,500 2,698,317,500 ($) 5,440,100,000 5,614,900,000 5,614,100,000 6,024,400,000 6,768,500,000 7,109,500,000[r] 7,715,700,000[r] 8,435,900,000[r] % of Domestic Borrowings/ GDP 40 42 45 46 39 37 34 32 Whole of Government Financial Statements and Annual Appropriation Statement Page 66 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Domestic Borrowings ($) Nominal GDP ($) % of Domestic Borrowings/ GDP 2015 2016 2,836,488,629 3,079,850,613 9,210,800,00054[p] 9,852,704,113 31 31 [r]: GDP Revised Figure [p]: GDP Provisional Figure Source: Macroeconomic Committee Domestic Borrowing as a percentage of GDP remained stagnant at 31% in 2015 and 2016 due to increases in Domestic Borrowing and Nominal GDP.
Figure 7.18 Domestic Borrowings as a % of GDP e g a t n e c r e P 46% 44% 42% 40% 38% 36% 34% 32% 30% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Figure 7.18 shows that the Domestic Borrowing as a percentage of the GDP has been decreasing over the years and indicates the nation’s capability to meet its internal debt obligations when due.

Table 7.18 shows the comparison between Tax Revenue and the GDP.
Table 7.18 Comparison of Tax Revenue and GDP Year 2006 2007 2008 2009 2010 Tax Revenue ($) 1,227,220,772 1,230,363,366 1,243,057,337 1,209,223,648 1,302,130,578 GDP ($) 5,325,700,000 5,440,100,000 5,614,900,000 5,614,100,000 6,024,400,000 % of Tax Revenue/GDP 23 23 22 22 22 54 Excludes Treasury Bills outstanding at year end Whole of Government Financial Statements and Annual Appropriation Statement Page 67 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year 2011 2012 2013 2014 2015 2016 Tax Revenue ($) 1,512,378,397 1,616,297,515 1,879,243,556 2,117,742,442 2,359,863,231 1,314,519,968 GDP ($) 6,768,500,000 7,109,500,000[r] 7,715,700,000[r] 8,435,900,000[r] 9,210,800,000[p] 9,852,704,113 % of Tax Revenue/GDP 22 23 24 25 26 13 [r]: GDP Revised Figure [p]: GDP Provisional Figure Source: Macroeconomic Committee Table 7.18 shows that the Tax Revenue as a percentage of GDP in the last 10 years has been between 22% - 26%.
In 2016, this percentage decreased to 13% due to change in the financial year from 12 months in 2015 to seven months in 2016.

Figure 7.19 Tax Revenue as a % of GDP e g a t n e c r e P 26 24 22 20 18 16 14 12 10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Another measure of Financial Vulnerability is the comparison of tax revenue to total borrowings.

Table 7.19 compares tax revenue to debt for a period of 10 years.
Table 7.19 Comparison of Tax Revenue and Total Borrowings Year Tax Revenue ($) 2007 1,230,363,366 2008 1,243,057,337 2009 1,209,223,648 2010 1,302,130,578 2011 1,512,378,397 Total Borrowings ($) 2,734,471,967 2,886,805,555 3,130,061,918 3,382,723,748 3,530,451,273 % of Tax Revenue/Debt 45 43 39 38 43 Whole of Government Financial Statements and Annual Appropriation Statement Page 68 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Tax Revenue ($) 2012 1,616,297,515 2013 1,879,243,556 2014 2,117,742,442 2015 2,359,863,231 2016 1,314,519,968 Total Borrowings ($) 3,678,829,200 3,824,939,969 4,083,194,826 4,221,151,867 4,502,423,786 % of Tax Revenue/Debt 44 49 52 56 29 The tax revenue as a percentage of debt has significantly decreased in 2016 compared to 2015 due to the amounts for 2016 being for seven month period ending 31 July 2016.
This indicates that 29% of total government debt can be met from tax revenue in 2016.

Figure 7.20 Tax Revenue as a Percentage of Debt 60% 55% 50% 45% 40% 35% 30% 25% 20% e g a t n e c r e P 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years The ability of tax revenue to meet the debt over the 10 year period was on a declining trend since 2007, and gradually increased from 2010 to 2015 due to increase in tax collections during these years.
However, a sharp decrease in 2016 was due to the change in accounting period from 12 months in 2015 to seven months in 2016.

The revenue collected is for seven months only.

Table 7.20 shows the comparison of gross surplus/ (deficit) to GDP.
Table 7.20 Comparison of Gross Deficit (Surplus) and GDP Year Gross Surplus/ (Deficit) GDP 2007 2008 2009 2010 2011 ($) (334,935,764) 120,093,824 (93,167,378) 99,398,751 49,027,101 ($) 5,440,100,000 5,614,900,000 5,614,100,000 6,024,400,000 6,768,500,000 % of Gross Surplus (Deficit) /GDP (6.2) 2.1 (1.7) 1.6 0.7 Whole of Government Financial Statements and Annual Appropriation Statement Page 69 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Gross Surplus/ (Deficit) GDP 2012 2013 2014 2015 2016 ($) (136,880,612) (37,583,667) (554,256,802) (859,086,199) (347,124,981) ($) 7,109,500,000[r] 7,715,700,000[r] 8,435,900,000[r] 9,210,800,000[p] 9,852,704,113 [r]: GDP Revised Figure [p]: GDP Provisional Figure Source: Macroeconomic Committee % of Gross Surplus (Deficit) /GDP (1.9) (0.5) (6.6) (9.3) (3.5) Figure 7.21 Gross Deficit as a Percentage of GDP e g a t n e c r e P 4% 2% 0% -2% -4% -6% -8% -10% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years In 2016, the gross deficit as a percentage of GDP improved to 3.5% when compared to 2015.
7.10 Financial Sustainability Financial Sustainability is defined as the ability of Government to maintain existing programs and meet existing creditor requirements without increasing the burden on the economy.

It is measured by the ratio of Government debt to the Gross Domestic Product.

The total Government debt as a percentage of GDP as at 31 July 2016 was 46%, indicating debt sustainability relative to the production of goods and services.
Table 7.21 Total Government Debt to GDP Year Government Debt % of Growth GDP % Growth ($) 2,734,471,967 2,886,805,555 3,130,061,918 2007 2008 2009 ($) 5,440,100,000 5,614,900,000 5,614,100,000 (4) 6 8 2 3 (0.01) Public Debt as a % of GDP 50 51 56 Whole of Government Financial Statements and Annual Appropriation Statement Page 70 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Year Government Debt % of Growth ($) 3,382,723,748 3,530,451,273 3,678,829,200 3,824,939,969 4,083,194,826 4,221,151,867 4,502,423,786 2010 2011 2012 2013 2014 2015 2016 [r]: GDP Revised Figure [p]: GDP Provisional Figure Source: Macroeconomic Committee GDP ($) % Growth Public Debt as a % of GDP 8 4 4 4 7 3 7 6,024,400,000 6,768,500,000 7,109,500,000[r] 7,715,700,000[r] 8,435,900,000[r] 9,210,800,000[p] 9,852,704,113 7 12 5 9 9 9 7 56 52 52 50 48 46 46 Table 7.21 shows that in 2016, percentage growth in Government debt was 7% while the percentage growth in the economy was also at 7% indicating an unchanged debt burden (46%) on individuals in 2016.
Figure 7.22 Government Borrowings as a Percentage of GDP e g a t n e c r e P 60% 55% 50% 45% 40% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years The Government needs to maintain adequate resources to fund existing programs, commence new projects as well as meet existing creditor obligations in order to maintain the level of borrowings at a sustainable level.
Whole of Government Financial Statements and Annual Appropriation Statement Page 71 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 8.0 TERM LOAN RECEIVABLE The Minister may, on behalf of the state, make loans of public money from the consolidated Fund on such terms and conditions as the Minister thinks fit and whether within or outside Fiji.55 The total outstanding loans owed to Government as at 31 July 2016 was $273,329,671, an increase of $5,757,788 or 2% compared to the year 2015.
The significant increase noted in 2016 was attributed to the subsequent recording of $10.9 million to Public Rental Board to recover the debt related cost and fees associated with the Chinese Concessional Loan entered on 28 July 2010.

The Term Loans Receivable balances for the past five years is graphed and tabulated below.
Table 8.1 and Figure 8.1: Trend of Term Loan Receivables Balances for the Past five years Year 2011 2012 2014 2015 31-Jul-16 Balance Outstanding ($) 70,377,340 67,813,754 198,915,267 267,571,883 273,329,671 ) m $ ( t n u o m A 300 250 200 150 100 50 - Balance Outstanding ($) 2011 2012 2013 2014 2015 31-7-2016 Years Moreover, majority of the government entities that had signed the loan agreements in 2015 would commence with the loan repayment of loans from 2020.
8.1 Unsubstantiated Term Loan Receivable Balance The Accounting Head is responsible for the safekeeping and proper maintenance of all accounting records or documents.56 Recording involves keeping accurate records of what has happened, what is owned and what is owed.57 It was noted that details and balances of the monies owed to government under the Term Loan Receivable Account totalling of $1,463,143 could not be substantiated as relevant records were not maintained by the Ministry of Economy.
Moreover, reconciliations were not prepared by the Ministry of Economy which is responsible for maintaining these loans and advances to reconcile the loan recoveries, additional money lent and the loan balances to the FMIS general ledger balances.

There was no evidence to indicate that the Ministry of Economy had taken appropriate action on the outstanding reconciliations.

Details of monies lent by government that could not be substantiated are provided in Table 8.2.
55 Financial Management Act 2004, Section 61 (1) 56 Ministry of Civil Service Pro-Forma Finance Manual – Section 18.1.3 57 Ministry of Economy Finance Manual 2015 – “The Purpose of Accounting” Page 4 Whole of Government Financial Statements and Annual Appropriation Statement Page 72 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Table 8.2: Unsubstantiated Lending Fund Balances Type of Loan Public Service Student Loan Scheme Opening Balance ($) 1,809,545 Amount Lent ($) Amount Recovered ($) --- 346,402 Balance ($) 1,463,143 The above anomalies increase the risk of erroneous loan balances being shown in the accounts of Government.
Recommendations  The Ministry of Economy should ensure that relevant records are maintained for all loans given by Government;  Amounts reflected in the financial statements should be substantiated with appropriate supporting documents; and  The Ministry of Economy should prepare periodic reconciliations of monies lent and recovered.

Ministry’s Comments The Ministry of Economy has just taken over the administration of the Loans Recovery Unit which was previously based at PSC.
While noting the challenges (such as record keeping and staff shortage) that came with the unit, the ministry has continued to address this area by diverting additional staff to the unit now and then.

Records are being updated and this is still a work in progress.

According to the report, the sum of $1.46m is still outstanding.

In working with the two staff from PSC, the Ministry of Economy has since taken considerable effort in trying to identify the recipients who make up this amount.
The Ministry has also convened meeting with BSP wherein issues relating to non-narrated bank deposits make it difficult to update the correct recipient.

Reconciliations of amounts received over the counter or by direct bank transfers are being done on a monthly basis.
8.2 Concessional Loan to Public Rental Board not reflected in the Term Loan Receivable Account in 2011 – 2015 Recording involves keeping accurate records of what has happened, what is owned and what is owed.58 Government is the principal borrower of the Housing Authority and the Public Rental Board loans amounting to FJD43.7M (CNY138, 560,329) and FJD 11.34m (CNY36, 000,000) respectively from the EXIM Bank of China which is On-Lent to these entities.59 The audit noted that Cabinet60 on 1 February 2011 approved that the Public Rental Board (PRB) reimburse Government for all debt related costs and fees associated with the Chinese Concessional Loan.
However, the loan receivable was not recorded in the Lending Register or the FMIS general ledger for the past five years (2011-2015).
58 Ministry of Economy Finance Manual 2015 – “The Purpose of Accounting” Page 59 2016 Budget Book - Lending Fund Account-Note 2-Page 343 60 Cabinet Decision CP(2011) dated 1 February 2011 Whole of Government Financial Statements and Annual Appropriation Statement Page 73 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Explanation provided by the Ministry indicated that the non-disclosure was due to the financial instability of the entity.
However, as shown in Table 8.3 and 8.4, the Public Rental Board was financially stable in the past four years.

Table 8.3: Debt Ratio for the 4 year period Year Total Liabilities (A) ($) 2016 2015 13,612,933 14,170,370 Total Assets (B) ($) 35,239,378 35,434,598 Debt Ratio (A/B) 0.39 0.40 2014 13,828,176 30,618,946 0.45 2013 4,745,982 9,076,368 0.52 Commentary PRB has a debt ratio of 0.39.

Thus indicating that PRB has 2.5 times as many assets as it has liabilities.
This is a relatively low ratio and implies that PRB will be able to pay back its loan.

PRB has a debt ratio of 0.45.

Thus indicating that PRB has 2.2 times as many assets as it has liabilities.

This is a relatively low ratio and implies that PRB will be able to pay back its loan.

PRB has a debt ratio of 0.52.

That means that PRB has 1.9 times as many assets as it has liabilities.

This is a relatively low ratio and implies that PRB will be able to pay back its loan.
Table 8.4: Debt to Equity Ratio for the 4 year period Year 2016 2015 2014 2013 Total Liabilities (A) ($) 9,274,604 Total Assets (B) ($) 21,626,446 10,014,712 21,264,228 10,014,712 16,790,770 1,014,712 4,330,386 Debt Ratio (A/B) 0.43 0.47 0.60 0.23 Commentary For every dollar by owned by shareholders, the Public Rental Board owes $0.43 to creditors.

For every dollar owned by shareholders, the Public Rental Board owes $0.47 to creditors.
For every dollar owned by shareholders, the Public Rental Board owes $0.60 to creditors.

For every dollar of owned by shareholders, the Public Rental Board owes $0.23 to creditors.

The anomaly was corrected through an audit adjustment of $10,887,097 to the Term Loan Receivable balance as at 31 July 2016.

The above anomaly indicates that the Term Loan Receivable balance was understated for the past five years.
Recommendation The Ministry should ensure that loans to Government entities are recorded in the Lending Register in the year in which the loan agreement became effective.

Ministry’s Comments The Debt Management Unit has ensured that loans to Government entities are recorded in the register of lending.
In regards to PRB, It should be noted that the Agreement with PRB is not a loan agreement but a cost recovery agreement, whereby the Board is required to reimburse Government for all debt related costs and fees.

Due to PRB weak financial position during 2011-2015, they were not able to consistently reimburse government for payment it made on its behalf.
Whole of Government Financial Statements and Annual Appropriation Statement Page 74 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 PRB commenced with repayment in 2016, thus we are in a firm position to record the outstanding loan with EXIM Bank of China as Term loan receivables at the end of July, 2016.

8.3 Failure to Submit Loan Agreements for Audit Verification A loan of public money can only be made in accordance with an appropriation of the money concerned.
It must be evidenced by an instrument signed by the Minister.61 In the exercise of his duties under this Act, the Auditor General may call upon any officer for any explanation and information he may require or send for and have the custody of any records, books, accounts, vouchers or documents for such time as he may require them.62 The loan agreements for the loan receivables of $3.6 million was not provided for audit verification as at the date of audit.63 Refer to Table 8.5 for details.
Table 8.5: Loan Agreements Not Made Available For Audit Verification Entity I-taukei Affairs Board Rewa Rice Ltd Balance Outstanding as at 31/7/16 ($) 1,700,000 1,900,000 In addition, the loan agreements for the loan receivables of $5.09 million are currently being vetted by the Solicitor General’s Office.

Refer to Table 8.6 for details.


Table 8.6: Loan Agreements Currently Vetted by Solicitor General’s Office Entity Corps Viti Company Limited National Trading Corporation Ltd Date Amount Lent Amount Lent64 ($) 3,700,000 1999 Balance Outstanding as at 31 December 2012 ($) 3,189,667 Movement (2012 - 2016) Balance Outstanding as at 31/7/16 Remarks ($) --- ($) 3,189,667 No movement 2001 2,900,000 2,900,000 1,000,000 1,900,000 since 2011.
Interest of 5% applies for late payment 2003, Cabinet In March endorsed that NATCO wind up liabilities and all assets and including loan be the $2.9m transferred to Food Processors the Cabinet to Ltd.

Contrary approval, was $1m transferred to Batiri Orchards Ltd to complete the pending issues liquidation.
No on NATCO repayment since 2007. the 61 Clause 61 s. (3) Financial Management Act 2004 62 Audit Act, 1998 section 7(1) (2) 63 26/4/2017 64 Report of the Auditor General of the Republic of Fiji – September 2013 (page 43) Whole of Government Financial Statements and Annual Appropriation Statement Page 75 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Entity Date Amount Lent Amount Lent64 ($) Balance Outstanding as at 31 December 2012 ($) Movement (2012 - 2016) Balance Outstanding as at 31/7/16 ($) ($) Remarks Despite the Cabinet decision in 2003, the winding up has now taken 13 years and is yet to be finalised.
Total 5,089,667 Moreover, the loan accounts of Rewa Rice Ltd, Viti Corps Company Ltd and National Trading Corporation Ltd accounts have been inactive since 2007, 2011 and 2014, respectively and there is uncertainty for recovery.

In the absence of loan agreements, the term and conditions of the loans is not known hence recovery is uncertain.
Recommendations The Ministry of Economy should:     locate the loan agreements for I-taukei Affairs Board and Rewa Rice Limited; ensure that the loan agreements between Viti Corps Company and the Government is finalised on a timely basis; ensure that the liquidation of National Trading Corporation Ltd is completed and an amicable decision reached on the repayment of loan; and review the operations of Rewa Rice Ltd and Viti Corps Company Limited and, determine the ability of the entities to repay the debts owed to Government.
Ministry’s Comments Rewa Rice This is a call on the Government Guarantee when Rewa Rice defaults on its loan obligations.

There was no loan agreement as a call on the guarantee becomes loan to the default entity as required by law under the Finance Act 1981 and Financial Management Act 2004.

Government paid a total of $1.9 million loan on behalf of the company in 1998.

The sum of $1.9 million should be repaid by Fiji Rice to Government as it is still appearing in the Lending Fund Account.
The Ministry of Public Enterprise is currently in the process of restructuring the entity to make it profitable and sustainable.

ITaukei Affairs Board The loan agreement cannot be retrieved; however our records reveal that the loan was given through an agreement.

This is the balance in the FMIS and ITaukei Affairs Board is committed in repaying this loan.

Moving forward, a revised loan agreement will need to be developed with existing terms and conditions.
The revised draft loan agreement for Viti Corps is currently being vetted by SG’s Office.

Whole of Government Financial Statements and Annual Appropriation Statement Page 76 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The liquidation of NATCO and the review of the operations of Rewa Rice Ltd is the responsibility of the Ministry of Public Enterprise.
Whole of Government Financial Statements and Annual Appropriation Statement Page 77 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 9.0 REVOLVING FUND ACCOUNT The Revolving Fund Account (RFA) include accounts receivable, prepayments, accounts payable, accrued income, deferred income, inter-departmental clearance accounts and imprest accounts.

Audit review of RFA across Ministries and Departments revealed several anomalies as detailed below.
9.1 Accounts Receivable An accounts receivables (or debtor) generally arise after a sale of goods or services where payment is not immediately received by government.

It is important to have in place a stringent credit policy and debt recovery procedures to counter the risk of losses of irrecoverable debts.65 The accounts receivable balance as at 31 July 2016 was $2,445,653, a decrease of $75,643 or 3% from 2015.66 The accounts receivable balance for the past 6 years is shown in Table 9.1 and Figure 9.1.
The decreasing trend over the years was the result of write-offs made in 2014 and 2015.
Table 9.1 and Figure 9.1: Trend of Accounts Receivables Balance Year 2011 2012 2013 2014 2015 201667 Outstanding Balance ($) 22,331,900 21,252,166 18,712,196 14,134,452 2,521,296 2,445,653 ) m $ ( 25 20 15 10 5 0 2011 2012 2013 2014 2015 2016 9.1.1 Weaknesses in Internal Control The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.68 All Permanent Secretaries and Head of Department are required to submit monthly reconciliations to the Ministry of Economy by the 15th of each month.69 Accounts which are overdue must be promptly followed up in accordance with the debt recovery procedures in the Finance Manual.70 Audit review of internal controls pertaining to accounts receivables for Ministries and Departments noted the following weaknesses: 65 Ministry of Economy, Finance Manual 2015 Part 9 66 31 December 2015 67 7 months only 68 Finance Instructions 2010 - Section 59 (2) 69 Finance Circular No.2/2013 70 Finance Instructions 2010 - Section 41 Whole of Government Financial Statements and Annual Appropriation Statement Page 78 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017  Despite the write-off of debts undertaken by the Ministry of Economy in previous years, there were still 13 dormant receivable accounts totalling $719,088.
Refer to Appendix 5.1.

 Three accounts receivable allocations had credit balances totalling $46,296 contrary to the nature of the account.

Refer to Appendix 5.2.

 The reconciliations for the accounts receivable balances of $16,066 were not prepared during the year 2016.

Refer to Appendix 5.3.

 There was a variance of $237,888 between the FMIS general ledger and the reconciliations prepared by the Ministries and Departments.

Refer to Appendix 5.3 for details.


The above findings indicate that controls in the operation and administration of the accounts receivables accounts were generally weak.
Recommendations The Ministries/Departments should ensure that:  outstanding amounts are recovered within the financial year to reduce the risk of these being written off;  dormant and accounts with credit balances are investigated and rectified ; and  reconciliations are done on a timely basis, reconciled to FMIS general ledger and variances rectified.
Ministry’s Comments Due to the re-occurring issues highlighted in the Auditor General’s report and lack of improvement from Accounting Heads in re-solving those issues, FMIS have now come up with some strategy for those ministries/departments involved.

i. ii.

iii.

iv.

FMIS will not be accepting any reconciliation that has transactions which are contrary to the nature of the account.
These reconciliations will be returned whereby ministries/department’s need to make amendments and only submit to FMIS when accounts are in order.

All imbalance reconciliations (FMIS GL balance not equal Reconciliation balance) will be returned immediately for correction.

Non-resolving issues will be highlighted and forwarded to IAGG for their investigation which includes non- clearance of Accountable Advances.
Problematic ministries/department will be highlighted via officials memos to their respective PS’s on a regular basis from now onwards.
NB: with the current recruitment of new officers to the reconciliation team, they will be individually responsible and monitoring particular accounts in details to highlight the problems and follow up with Accounting Heads or their respective PS’s Whole of Government Financial Statements and Annual Appropriation Statement Page 79 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 9.2 Prepayments and Advance Account Prepayments and advances comprise of unrecouped accountable advances paid to civil servants to facilitate official trips and accommodation for both domestic and overseas trips.
The prepayments and advance account had a balance of $1,700,879 as at 31 July 2016, a decrease of $1,905,086 or 53% from 2015.71 Table 9.3 and Figure 9.2 shows prepayments and advances for the past 6 years.

The decreasing trend over the years was the result of write-offs in 2014 and 2015.
Table 9.3 and Figure 9.2: Prepayments and Advance Balance for Past Six Years Year 2011 2012 2013 2014 2015 201672 Outstanding Balance ($) 11,911,283 13,687,618 4,274,677 1,673,840 3,605,965 1,700,879 ) m $ ( 15 10 5 0 2011 2012 2013 2014 2015 2016 9.2.1 Weaknesses in Internal Control The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.73 Travelling advances must be recouped within 7 days of the completion of travel by submission of a voucher with documents to support the claim.74 Where a travelling advance is not cleared within 7 working days of the completion of travel, recovery must be made from the concerned officer’s salary within 6 fortnights.75 All Permanent Secretaries and Head of Department are required to submit monthly reconciliations to the Ministry of Economy by the 15th of each month.76 Audit review of controls pertaining to prepayments and advances for the Ministries and Departments noted the following weaknesses:  Reconciliations for prepayments and advance balances amounting to $5,326 were not prepared during the year.
Refer to Appendix 5.4.1 for details;  The closing balance for prepayment and advance account of $141,672 could not be substantiated due to errors in the July 2016 reconciliation.
Refer to Appendix 5.4.1 for details; 71 31 December 2015 72 7 months only 73 Finance Instruction 2010 – Section 59 74 Finance Instruction 2010 – Section 44 (3) 75 Finance Instruction 2010 – Section 44 (5) 76 Finance Circular No.2/2013 Whole of Government Financial Statements and Annual Appropriation Statement Page 80 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017  Procurement of goods and services totalling $62,444 was incorrectly facilitated from prepayments and advance account.
Refer to Appendix 5.4.1 for details;  Advances totalling $3,737 was directly charged to expenditure account instead of being facilitated through the advance account.

Refer to Appendix 5.4.1 for details;  Journal adjustments to clear outstanding advance balance totalling $872,081 could not be substantiated due to lack of supporting documents.

Refer to Appendix 5.4.1 for details.

 Accountable advance totalling $7,933 were retired to the wrong allocations.
Refer to Appendix 5.4.2 for details;  Despite the write off of debts undertaken by the Ministry of Economy in previous years, There are still 10 dormant prepayments and advance account totalling $123,558 as at 31 July 2016.

Refer to Appendix 5.1 for details.

 Eight prepayments and advance accounts with credit balances totalling $33,121 were noted contrary to the nature of account.
Refer to Appendix 5.2 for details; and  Other weaknesses in prepayments and advance accounts are highlighted in Appendix 5.4.3.

Non-preparation of reconciliations, credit accountable advance balances, unsubstantiated balances and inadequate supporting documents to journal vouchers indicates the existence of weak controls and lack of proper supervisory checks.

Failure to retire advances within the financial year has resulted in the understatement of expenditure.
On the other hand, clearance of prior years’ advances from current year’s budgetary allocation would misrepresent the expenditure in the Statement of Receipts and Payments.
Recommendations The Ministries/Departments should ensure that:    travel advances are recouped within 7 days of the completion of the travel or recovery must be made from the salary of officers concerned; the prepayments and advance reconciliations are prepared in a timely manner; the retirement of accountable advances are adequately supported; and  dormant accounts, credit balance accounts and unsubstantiated balances are investigated and rectified.
Ministry’s Comments Accounting Heads are always reminded in the Accounting Heads meeting the importance of proper control over Accountable Advances and are also reminded to seek clarification with Treasury or Policy unit as and when the need arises.
Whole of Government Financial Statements and Annual Appropriation Statement Page 81 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 The issue of Accountable Advances is very well covered in respective Ministries and Departments Finance Manuals and FMs have been duly endorsed by respective PS’s and Heads of Departments.
Section 59(1) of the Finance Instructions states that each agency must have in place a cost effective system of internal control which: (a) Safeguards money and property against losses; (b) Avoids or detects accounting errors; and (c) Avoid unfavorable audit reports.

Permanent Secretaries given their roles as Chief Accounting Officers for their respective departments must ensure that proper internal controls are maintained at maintained at all times.
Accountable Advance Retired to Wrong Allocations The Ministries should be answerable to this as responsibility of the use of advance account lies on them.

Going forward one FMIS officer has been assigned to specifically monitor 57 and make sure that all accounts remain in debit, any credit balances will be investigated and adjusted accordingly by officer upon clearance from the Ministry concerned.

Dormant Prepayments and Advance Accounts These dormant accounts include balances from 2013, 2014 and 2015.
MoE through FMIS carried out 3 consecutive write-off exercise for those three years.

Ministries had the opportunity to clear off dormant accounts which were unaccounted but some failed to take advantage of this opportunity.

FMIS therefore undertook this exercise by working on submitted documents from Ministries and also those within our scope of understanding.

Ministries should be answerable to this.


9.2.2 Impact of Misstatement on Prepayments and Advance Balances The Prepayments and Advance balance of $1,700,879 as at 31/7/16 was misstated in view of the following errors and omissions.

Refer to Table 9.4 for details.


Table 9.4: Details of Misstatement Errors and Omissions Journal vouchers not adequately supported Credit Balances in advance account Total Amount ($) 872,081 27,755 899,836 The impact of misstatements totalling $899,836 or 53% of the total prepayments and advance balance in the 2016 accounts is substantial.

As such, audit could not ascertain the accuracy, existence and the completeness of the prepayments and advance account.
Recommendation Ministry of Economy in consultation with Ministries/Departments should ensure that prepayments and advance balances are properly reconciled and errors and omissions highlighted above are investigated and rectified.
Ministry’s Comments Journal vouchers not adequately supported Whole of Government Financial Statements and Annual Appropriation Statement Page 82 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Ministries should have policies of internal controls which ought to accommodate the provision of providing supporting documents for JVs.

Credit Balances in advance account Prepayments with Credit Balances ($) Comments (470) FMIS had identified this postings were made in period 06 & 07/2016.
Department to initiate adjustment in 2017.

(5,453) FMIS had identified that this allocation had credit balance in 2015 and balances had accumulated until 2016.

Department to initiate adjustment in 2017.

(4) FMIS had identified that this was due to misposting passed in period 07/2013.

Department to initiate adjustment in 2017.

(21,828) FMIS has visited them to hear their side of the story on this credit figure.

Department to initiate adjustment in 2017.


(27,755) Allocation 1-32201-77101- 570301 1-06201-70999- 570301 1-40201-81101- 570301 1-25101-25101- 570301 Total 9.3 Inventory Inventory purchasing, storage and recording should be efficiently managed to ensure that there is a sufficient level of inventories when needed, while minimising the cost of holding inventory and the risk of stock becoming obsolete or damaged.
The inventory account had a balance of $3,971,882 as at 31 July 2016, an increase of $386,319 or 11% from 2015.77 Inventory is measured at cost.

Table 9.5 and Figure 9.3 shows inventory balance for the past 6 years.
Table 9.5 and Figure 9.3: Inventory Balance 2011 - 2016 Year 2011 2012 2013 2014 2015 201678 Outstanding Balance ($) 6,989,761 7,205,274 3,672,544 4,053,032 3,585,563 3,971,882 ) m $ ( 8 7 6 5 4 3 2 1 0 2011 2012 2013 2014 2015 2016 77 31 December 2015 78 7 months only Whole of Government Financial Statements and Annual Appropriation Statement Page 83 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 9.4 Accounts Payable A liability is defined as present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.79A liability shall be classified as current when it satisfies any of the following criteria: (a) (b) (c) (d) It is expected to be settled in the entity’s normal operating cycle; It is held primarily for the purpose of being traded; It is due to be settled within twelve months after the reporting date; or The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.80 The accounts payable had a balance of $678,877 as at 31 July 2016, a decrease of $70,031,292 or 99%.
Table 9.7 and Figure 9.4 shows accounts payable for the past six years.

Table 9.7 and Figure 9.4: Account Payable Balance for the Last 5 Years Year 2011 2012 2013 2014 2015 201681 Ending Year Balance ($) 23,515,677 675,870 47,633,541 648,811 70,710,169 678,877 ) n o i l l i m $ ( 80 60 40 20 0 2011 2012 2013 2014 2015 2016 The significant decline in accounts payable from 2015 was due to clearing of outstanding payments to Fiji Roads Authority amounting to $69,895,490 from SLG 84 account.
9.4.1 Weaknesses in Internal Control Agencies must ensure that all commitments and invoices are promptly and accurately recorded in the accounting system to meet management and external reporting needs.82 Audit review of accounts payable for the seven months ended 31 July 2016 revealed the following anomalies:  Funds totalling $36,767 in SLG 84 was allocated to Ministry of I-taukei Affairs for the purchase of new office equipment.
However, the Ministry used $12,794 to pay National Employment Center employees’ wages.

 A variance of $100,519 was noted between the Ministries and Department’s reconciliation and the FMIS general ledger.
79 IPSAS 1 Section 1.7 80 IPSAS 1 Section 80 81 7 months only 82 Finance Instruction 2010 - Section 53 Whole of Government Financial Statements and Annual Appropriation Statement Page 84 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017  The Ministry of Local Government, Housing and Environment did not provide reconciliations for Fund 9 SLG 84 account which had balance of $10,127.

 Supporting documentation for accounts payable totalling $134,083 were not provided for audit verification.
Refer to Appendix 5.5  There are four dormant accounts payable account amounting to $27,763.

Refer to Appendix 5.1  There five accounts with debit balances totalling $77,393 which was contrary to the nature of the account.

This has understated accounts payable by the same amount as at 31/07/16.

Refer to Appendix 5.2.

 Other weaknesses in accounts payable is detailed in Appendix 5.6 The findings indicate lack of proper recording, reconciliation and clearance of SLG 84 accounts.
Recommendations The Ministries/Department should ensure that:  Accounts with debit balances are investigated and rectified;  Accounts payable are settled on a timely basis;  Balances in SLG 84 accounts are cleared; and  Supporting documents are maintained properly and provided for audit verifications.

Ministry’s Comments Spending or non-spending of SLG 84 are at the discretion of ministry and departments which are to be returned to the Ministry of Economy at the end of the financial year.
Ministries and departments are to explain the variance in the reconciliation reports, hence the objective of any reconciliation report.

This Ministry of Housing is to be questioned as to why the report was not submitted.
These balances are withholding tax payable to FRCA and to nil off once payment is made to FRCA Ministry to be questioned to provide explanation of the missing payment documents Ministry to transfer balance to active and correct withholding tax account before account is deactivate and payments to be made to FRCA.

Ministry to do reconciliation and transfer credit to these allocations to nil off the debit balance.
Whole of Government Financial Statements and Annual Appropriation Statement Page 85 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 9.4.2 Impact of Misstatement and on Accounts Payable Balance The Accounts Payable balance of $678,877 as at 31/7/16 has been misstated in view of the following errors and omissions: Table 9.8: Details of Misstatement Account Area Supporting documents not provided Reconciliations not prepared Variance between FMIS Ledger and Ministry’s Reconciliation Unauthorized Use Debit Balances Total Amount ($) 134,083 10,127 34,671 12,794 77,394 269,069 The impact of misstatements totalling $269,069 or 40% of the total accounts payable balance in 2016 accounts is substantial.
As such, audit could not fully ascertain the accuracy and the completeness of accounts payable account.

Recommendations  Ministry of Economy in consultation with Ministries/Departments should ensure that accounts payable balances are properly reconciled and errors and omissions highlighted are investigated and rectified.

 Supporting documents are maintained properly and provided for audit verifications.
Ministry’s Comments Supporting documents not provided PSs through their Accounting Heads are responsible for maintaining proper documentations of all underlying transactions as per section 59(1) of the FI.

Reconciliations not prepared FMIS did not receive any submissions from MLGEH despite constant follow ups and this was basically due to staffing issue following the suspension of all of the Ministry`s accounts officers.
Going forward, the team had a meeting with DS Julia Korovou last week wherein we had agreed to assist in the updating of all of their reconciliations.

At this point in time, only two clerical officers are manning the whole operation i.e.

for Local Government & Environment (Head 37) and Housing (Head 23).

Variance between FMIS Ledger and Ministry’s Reconciliation Details of the full variance are provided in a separate table below.
Variance between FMIS ledger and Reconciliation – Details of $87,062 are as follow: Housing Youth and Sports 11,185.24 No Submission received by FMIS due to staffing constraints 2,702 Reconciliation submissions are in order.

However OAG queried that Ministry failed to deduct provisional tax of 5% on contractual payment of $54,045 – this is an accounting and not a reconciliation issue – Youth and Sports should be held responsible.

No reconciliations received from the Agency.


Fisheries and Forest 20,784 Whole of Government Financial Statements and Annual Appropriation Statement Page 86 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE - 2017 Unauthorized Use Budget Division receives acquittals on project funds.
Whilst we receive reconciliation submissions from the Ministry, we are in no position to correctly ascertain whether funds were used for the purpose it was given as we do not have access to the detailed payment vouchers.

Hence Budget should advise Ministry for reversal of the same.

Debit Balances The Ministries should be answerable to these overdrawn accounts.

We had in so many occasions raised this issue with the Ministries and had requested for adjustments of the same.
Going forward, one officer has been assigned to specifically monitor all 84 funds and make sure that all accounts remain in credit, any debits balances will be investigated and adjusted accordingly by officer upon clearance from the Ministry concerned.
Overdrawn Balances - Details of the $77,394 are as follow: 1-37101-37999-840602 46,393.70 1-10101-10999-840602 2,198.10 1-19101-19999-840602 1-20101-20999-840602 249.13 17,997.42 1-23101-23999-840602 10,555.24 FMIS had identified that this was due to miss- posting of $46,393 passed in 2016, Department to initiate adjustments in 2017 FMIS had identified that this was due to miss- posting of $2,198.10 passed in 11/2016, Department to initiate adjustments in 2017 Dormant balance, Department to initiate adjustments in 2017 Dormant balance plus some movements in 2017, Department through the assistance of FMIS to review process and initiate adjustments in 2017 FMIS had identified that this was due to miss- posting of passed in 2016, Ministry to initiate adjustments in 2017 Whole of Government Financial Statements and Annual Appropriation Statement Page 87 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 9.5 Follow up on Previous Years Issues During the 2016 audit, the status of the matters reported in the previous year was followed up.
These matters have remained outstanding as actions are yet to be taken by the Ministries to resolve them.

The status of the outstanding issues is set out in Table 9.5 below.

Table 9.5 Recurring Issues Issues Recommendations Management’s Proposed Action/Comments The Ministry of Economy is developing on working policy with to accounting for inventory.
regards Current Status Open Non Disclosures of Accounting Valuing adopted Policies Inventory as per - Inventory in IPSAS 12 The Whole of Government financial statements only showed the ending balances of inventories.

It failed to the accounting policies disclose adopted inventories in measuring including the cost formula used.
Non Compliance Finance Instruction 2010 on Valuation of Inventories to The audit noted that there was no assessment of net realizable value of the inventories held by Government as at 31/07/16.

Discussions revealed that inventories are recorded at cost.

Unsubstantiated Inventory Balance and Inventory Ineffective Management System The audit noted that $35,351 or 1% of the total inventory disclosed in the financial be cannot substantiated its accuracy and completeness.
statement for listing The stock the inventory was not provided for audit verification.

to support In addition, the government lacks an effective inventory management system.

Currently all stores uses tally cards to update inventory movements the year.
Any obsolesce and in  The Ministry of Economy should consider drafting and adopting clear accounting policies, valuation methods, write off policies, provisions for obsolesce and developing supporting schedules that can provide accurate information on the value of inventory at any given time.

 The Ministry should disclose on the financial statement the valuation methods for and accounting policies adopted accountability and transparency purposes and for the benefit of users of the financial statement.
The Ministry must work towards ensuring that an assessment of net realizable value or current replacement cost is done to certify that the future economic benefits to be realized from the sale, exchange, distribution or use are accurately determined.

Open Once proper accounting policy for inventory is in place, it should be able to address valuation the methodology accordingly.

Open The Ministry of Economy is in the process of trying to FMIS introduce for Inventory Module TMA’s.
the The Ministry should consider:  establishing a programme of regular stock takes and for entities that hold significant balances provide inventory assurance that balances held in inventory at any given time are accurate; of to  training stock taking staff so that they are adequately skilled to identify evidence of obsolescence or damage;  acquiring an effective computerised inventory management system interfaced with purchasing, accounts payable and accounts receivable systems to ensure that all inventory movements are reflected in the general ledger.
Whole of Government Financial Statements and Annual Appropriation Statement Page 88 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendations Management’s Proposed Action/Comments Current Status damage will only be determined after the stock take at year end after which the general ledger is then updated.

Ministry’s Comments Non-financial asset policy has just been endorsed by PS Economy and we will be happy to provide a copy of the policy to OAG should they require.
The policy approved by Permanent Secretary of Economy is for non-financial assets and its scope covers inventory measurement and valuation as well Please note that Inventory Module is not available on FMIS and has not been introduced for TMAs.

The AMMU team is currently working on rectifying current issues before a detailed assessment can be undertaken on the pros and cons of an inventory module.
Whole of Government Financial Statements and Annual Appropriation Statement Page 89 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 10.0 EQUITY Net assets/equity is the residual interest in the assets of the entity after deducting all its liabilities.83 The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.84 The following anomalies were noted from an audit review of the Equity account as at 31 July 2016:  The net assets/equity had a debit balance of $3,704,413,827.
Figure 13.1 shows that net equity has been increasing since 2014.

Figure 13.1: Equity Balance Trend Analysis ) $ ( I S N O L L M I 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - (500) (1,000) 2008 2009 2010 2011 2012 2013 2014 2015 2016 TOTAL EQUITIES  Included in the net equity balance of $3,704,413,827 is an amount of $2,815,628,62585 which was brought forward from 2012.

The accuracy and valuation of the $2,815,628,625 equity balance cannot be ascertained as the balance was not supported.
This was included as a qualification in the 2012 audit report.

In addition, supporting documents was not provided for Fund 1 “TMA Accumulated Surplus” (SLG 94) of $3.5 million.

 Supporting documentation for the “Adjustments of errors underlying account” balance of $893,663 was not provided for audit verification.

 The transfer of excess cash of $457,468.71 from the TMA operations to the Consolidated Fund Account (CFA) was not recorded in the Ministry of Agriculture Equity General Ledger (SLG 94).
The above findings indicate that FMIS General Ledger balances was not properly reviewed by the Ministry of Economy to ensure the correctness of the Equity balances disclosed in the Statement of Changes in 83 IPSAS Section 1, Paragraph 7 84 Finance Instruction 2010 – Section 59 85 Schedule 3 Statement of Changes in Equity for the year ended 31 December 2012 – Opening Balance,1 January Whole of Government Financial Statements and Annual Appropriation Statement Page 90 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Equity.
As such, audit could not ascertain the existence, valuation and completeness of the Equity balance of $3,704,413,827.

Recommendations The Ministry of Economy should ensure that:   Proper checks are made and correct balances are posted in the respective General Ledger allocations; and Proper records are maintained for all account balances.

Ministry’s Comments The Ministry of Agriculture’s TMA team has been advised to pass adjusting entries to reflect the movement in equity.
The Asset Management and Monitoring Unit (AMMU) will strongly monitor all excess cash remittances to ensure that the correct postings are passed.

The FMIS unit is responsible for the closing of Accounts every end of the financial year and one of the process is the closing of the book which involves the transfer of profit and loss to equity.

The processes are as follows:    Download of each Fund 1, 4 & 9 Balance Sheet items by head level to identify whether it is a loss or profit.
When there is a credit in BS: the balance will be credited to SRG 199101 and debit to SLG 910101 of the respective Head and vice versa for debit (Each individual Ministries should have an Equity account).

Journals used for the extraction and postings are available here in FMIS for their view.

Apart from profits and loss, we also use equity accounts to adjust prior years` stale cheques and errors.
Whole of Government Financial Statements and Annual Appropriation Statement Page 91 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 11.0 ARREARS OF REVENUE The importance of revenue in the budgetary process is significant since it determines the level of possible spending.

Thus, it is essential that the revenue collection process is monitored, including debt collection and the existing credit policies applied.

Outstanding amounts due to government are classified as ‘arrears of revenue’.
Arrears of revenues generally arise when credit is extended for supply of goods and services.

Arrears of revenue for the government comprise of unpaid taxes by individuals and businesses, as well as revenue owed to Ministries and Departments in the form of fees, fines, licenses and charges.

11.1 Fluctuating trend of arrears of revenue for the last 5 Years The arrears of revenue as at 31 July 2016 was $163,930,966, an increase of $12,504,410 or 8% from 2015 arrears of revenue of $151,426,556.
Figure 11.1 shows the trend of debts owed to government over the last 5 years.
Figure 11.1 Arrears of Revenue from 2012 to 31st July 2016 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 ) $ ( t n u o m A - 2012 2013 2014 2015 31/07/2016 The high level of arrears of revenue is attributed to a substantial amount of outstanding tax arrears owed to Fiji Revenue and Customs Authority and the increasing amount of fees and charges due to Public Utilities (Water Authority of Fiji) and Ministry of Infrastructure and Transport.
11.2 Anomalies in Statement of Arrears of Revenue “Financial year” means a 12 month period beginning on and including 1 August and ending on and including 31 July.
“Quarter” means a period of 3 months ending with the month of October, January, April or July.86 Within one month after the end of each quarter, each agency with accounts receivable must submit a quarterly report on outstanding and overdue debts to the Ministry of Economy.87 86 Financial Management (Amendment) Act 2016 Section 2(1) 87 Finance Instruction 2010 Section 43 Whole of Government Financial Statements and Annual Appropriation Statement Page 92 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Subject to this or any other Act, the Minister of Economy may write off losses in respect of public money, state assets and agency assets.88 The Minister may delegate under this Act the Minister’s power to write off losses to the responsible authority for a budget sector agency.89 The audit noted the following anomalies in the disclosure of arrears of revenue:  Contrary to the Financial Management (Amendment) Act 2016, majority of the quarterly arrears of revenue report submitted to the Ministry of Economy were as at 30th June, 2016 instead of 31st July, 2016.
Refer to Table 11.1 for details.
Table 11.1: Quarterly arrears of revenue report as at 30th June 2016 Government Agencies Agriculture Auditor-General Communications Fiji Revenue & Customs Authority - Customs Fiji Revenue & Customs Authority - IRD Fisheries & Forests Government Printing and Stationery Department Health Information Technology & Computing Services Industry and Trade Judicial Education Overseas Peacekeeping Missions Police Public Utilities(Water Authority of Fiji) Solicitor General` s Office Total Arrears of Revenue Amount ($) 27,209 147,115 7,539,752 10,254,926 69,292,149 11,559 644,892 398,212 995 2,616 13,461,155 9,621 1,784,424 4,446 32,936,249 2,998 136,518,318  A total of $777,106 was written-off by the Ministry of Agriculture without the prior approval from the Ministry of Economy.
In addition, there was no evidence provided by the Ministry to confirm that the Minister of Economy had delegated the powers to the Ministry to write off the arrears of revenue.

 Contrary to the Finance Instructions, three Ministries and Department did not submit the quarterly arrears of revenue report to the Ministry of Economy.

Refer to Table 11.2 for details.
Table 11.2: Details of quarterly reports not submitted to Ministry of Economy Government Agencies Ministry of I-taukei Affairs Ministry of Defence, National Security and Immigration Ministry of Local Government, Housing and Environment Town Planning Fees Revenue Type Registration License security industry 88 Financial Management Act 2004 Section 34(1) 89 Financial Management Act 2004 Section 36(1) Whole of Government Financial Statements and Annual Appropriation Statement Page 93 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017  The quarterly arrears of revenue reports were not prepared in accordance with the standard format reporting requirements stated in the Finance Manual.
Consequently, supporting documentation was not sufficient to substantiate the outstanding amount.

Refer to Table 11.3 for details.

Table 11.3: List of Government Agencies No Government Agencies Communications Education Fiji Revenue & Customs Authority - Customs Fiji Revenue & Customs Authority - IRD Economy(Pensions Office) Health Information Technology & Computing Services Solicitor General` s Office Fisheries & Forests 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Lands 11.


Overseas Peacekeeping Missions Amount ($) 7,539,752 9,621 10,254,926 69,292,149 110,545 398,212 995 2,998 11,559 20,778,013 1,784,424 The above findings indicate non-compliance with the requirements stipulated in the Financial Management (Amendment) Act 2016, Finance Instructions 2010 and Finance Manual.
As such, audit could not ascertain the accuracy and the completeness of the arrears of revenue disclosed in Note 32 of the Whole of Government Financial Statements.

Recommendations  Ministries and Departments should prepare and submit quarterly reports in accordance with the instructions stipulated in the Financial Management (Amendment) Act 2016 and Finance Manual.
 The Debt Cash Flow Unit of the Ministry of Economy should continuously monitor the submission of quarterly reports by the agencies and ensure that reports are prepared in accordance instructions stipulated in the Financial Management (Amendment) Act 2016 and Finance Manual.

 The Ministry should ensure that effective controls are put into place to avoid accumulation of arrears of revenue and ensure that Minister’s approval are obtained prior to writing off arrears.
Ministry’s Comments Ministries and Departments have been advised on the change in financial year and to submit their quarterly arrears of revenue report in line with the new financial year.

In 2016-2017 financial year, most Ministries/Agencies are submitting their quarterly arrears of revenue report using the new financial year.

The Ministry of Economy continues to monitor the arrears of revenue by way of ensuring quarterly reports are submitted on time and Agencies implement strong recovery mechanism.
In addition MOE meets with agencies to verify status of arrears, recovery tools and reconciliation of accounts are undertaken on quarterly basis.

Agencies are also reviewing their costs recovery procedures and are allocating resources accordingly in an effort to reduce arrears and further minimize escalation of arrears.

The responsibility of respective Chief Accounting Officers in each ministry that is Permanent Secretary is to ensure the reduction of arrears on annual basis.
MOE only supports request for write-off from Minister and Cabinet when all recovery avenues have been exhausted.

Whole of Government Financial Statements and Annual Appropriation Statement Page 94 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 11.3 Follow Up On Previous Year Issues During the 2016 audit, the status of the matters reported in the previous year was followed up.

These matters have remained outstanding as actions are yet to be taken by the Ministries to resolve them.
The status of the outstanding issues is set out in Table 11.4 below.

Table 11.4: Details of Outstanding Issues Issues Recommendation their debt to ensure  Ministries and Departments should recovery review that all strategies avenues recover debts are exhausted and irrecoverable debts are reduced.

to Status Open Proposed Action/ Comments (i) Debt owed to Ministries and Departments for more than five years have reduced by $3,401,315 or 9 percent.
The Arrears of Revenue owed to Ministries and Departments for more than 5 years have decreased.

 The Ministry for Economy should consider providing provision for doubtful debts into the accounts as it moves to accrual accounting as a matter of prudence in the financial reporting of government funds.

(ii) The Ministry for Economy-Pension, and Judiciary, Agriculture Infrastructure had more than 50 percent of the total arrears aging more to Appendix 6.1 for details five years.
Refer than The following anomalies were noted: Although (i) The audit noted that debt owed to Ministries and Departments for more than five years amounted to 37,584,996 or 25% of the total Ministries/ arrears.

Departments have indicated in the past that write offs would be pursued, this is yet to occur.

Resource constraints have also been indicated as one of the reasons contributing to delay in recovery of arrears.
some (ii) The Ministry for Economy-Pension, Judiciary, Agriculture and Infrastructure had more than 50% of their respective total arrears aging more than five years.

Entities having about 25% to 50% of total arrears included the Fiji Police Force (43.8%), Water of Authority (36.9%), Ministry of Infrastructure Economy-FRCA (35.5%), Ministry Customs (31%) and Ministry of Lands and Mineral Resources (30.4%).
of Significant Balances owed by Ministries and Departments Audit review of the Arrears of Revenue for Ministries and Department revealed continuous increase and significant balances from Ministry of Communication, Education, Health Government Printing and Peace Keeping Economy-Pension,  Ministries and Departments should review the debt recovery strategies to to ensure recover debts are exhausted and irrecoverable debts are reduced.
that all avenues  The Ministry should consider A slight reduction in the arrears of revenue for the Ministry of Economy- Pension, Communication, ITC Services, Education, Government Printing and Lands.

However the arrears of revenue for Communications, Government Printing and Peacekeeping were still The Debt Management Unit monitors arrears of revenue by way of ensuring quarterly reports are submitted on time and Agencies implement recovery actions that are robust and effective.
In most cases, MOE meets with agencies to verify status of arrears, recovery tools and reconciliation of accounts are Whole of Government Financial Statements and Annual Appropriation Statement Page 95 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendation Status Audit also noted that Income Tax, VAT and Custom arrears for Fiji Revenue & Customs Authority totalling $64,960,501.94 or 43% followed by Public Utilities (Water Authority of Fiji) of $29,023,661 or 19% and Lands of $ 26,980,319 or 18% which had decreased but the arrears of revenue was still substantial.
for doubtful providing provision debts into the accounts as it moves to accrual accounting as a matter of prudence financial in reporting of government funds.

the substantial.
the substantial.

Moreover, there was an increase in arrears of revenue for  FRCA by $14,585,573 or 22%  Public Utilities by $3,912,588 or 13%  Ministry of Infrastructure and Transport by $4,682,331 or 7,327% The Debt Cash Flow Management Unit of the Ministry of Economy confirmed that the increase in the arrears of revenue was due to the following: Proposed Action/ Comments undertaken on quarterly basis.
Agencies are also reviewing their costs recovery procedures and are allocating resources accordingly in an effort to reduce arrears and further minimize escalation of arrears.

The role of the Permanent Secretaries is to ensure the reduction of arrears on annual basis.

In the past, PS’s performance to reduction in arrears of revenue and how effective the recovery tools are – Table 5 of the ACP.
MOE only requests for approval for write off from Minister if the arrears are over 5 years and when Agencies have exhausted all avenues of recoveries.
is also link  Cyclone Winston and the early April Floods had its impact on businesses and its cash flows and FRCA supported in the business recovery, financial economic taxpayers, aged constraints by debts-recovery of aged debts place pressures on the staffing of the resources and the economic implications of recovery actions by carefully the considered the Government economic and social policy directives.
office in line with tax is  Accumulated Water & Sewerage Departments’ arrears that were into account.
A draft taken for write off Cabinet paper is amounting currently in its reviewing stages which will then be submitted to Ministry of Public Enterprises for submission and presentation to to $19 million Whole of Government Financial Statements and Annual Appropriation Statement Page 96 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendation Status Proposed Action/ Comments line Minister the Cabinet meeting.
for the next Ministry’s Comments The Arrears of Revenue owed to Ministries and Departments for more than 5 years have decreased.

The Debt Management Unit monitors arrears of revenue by way of ensuring quarterly reports are submitted on time and Agencies implement recovery actions that are robust and effective.

In most cases, MOE meets with agencies to verify status of arrears, recovery tools and reconciliation of accounts are undertaken on quarterly basis.
Agencies are also reviewing their costs recovery procedures and are allocating resources accordingly in an effort to reduce arrears and further minimize escalation of arrears.

The role of the Permanent Secretaries is to ensure the reduction of arrears on annual basis.

In the past, PS’s performance is also link to reduction in arrears of revenue and how effective the recovery tools are – Table 5 of the ACP.
MOE only requests for approval for write off from Minister if the arrears are over 5 years and when Agencies have exhausted all avenues of recoveries.

.
Whole of Government Financial Statements and Annual Appropriation Statement Page 97 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 12.0 CONTINGENT LIABILITIES The Government under the authority of the Parliament provides a guarantees for the financial liability of entities in respect of loans or otherwise.90 A contingent liability is a potential liability that may or may not become due, depending on whether a possible event occurs, such as a claim for compensation, an indemnity or other legal claim.91 The Government’s total contingent liabilities fluctuated over the last 5 years.
A total of 15 entities were covered under Government guarantee as at 31 July 2016.

Table 12.1 and Figure 12.1 below shows the total contingent liabilities for past five years.

Table 12.1 and Figure 12.1: Government Guarantee 2012 - 2016 Year 2012 2013 2014 2015 2016 Number of Entities on Govt.
Guarantee 15 14 14 15 15 Total Contingent Liabilities ($) 2,155,254,122 2,191,273,681 2,547,156,387 868,317,120 1,259,153,085 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 ) $ ( t n u o m A Years The total contingent liabilities as at 31 July 2016 was $1,259,153,085.

The contingent liabilities increased by $390,835,965 or 45% compared to the balance of $868,317,120 in 2015.
This was due to the additional guaranteed loan of $122,027,197 given to Fiji Development Bank, Fiji Electricity Authority, Fiji Sugar Corporation and Pacific Fishing Company Ltd.

Contingent liabilities may arise due to either explicit legal obligation or an implicit constructive obligation.
Included under other explicit contingent liabilities are International Agencies whose membership subscriptions represent callable capital of which the government subscribes for shares as its membership contributions/capital holdings with these institutions.

The agencies would call on this callable capital if Fiji is proven not to be complying with the articles of agreement or if Fiji fails to honour its loan commitments under respective agreements with these institutions.

Refer to Table 12.2 for details.
90 Financial Management (Amendment) Act 2016 – Section 19 91 Finance Instructions 2010 – Section 2 Whole of Government Financial Statements and Annual Appropriation Statement Page 98 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Table 12.2: Composition of Contingent Liabilities Contingent Liabilities Explicit Contingent Liabilities Other Explicit Contingent Liabilities Implicit Contingent Liabilities Total Contingent Liabilities 2016 ($) 787,351,602 436,128,392 35,673,091 1,259,153,085 2015 ($) 824,476,209 7,627,527 36,213,384 868,317,120 Increase/ (Decrease) ($) (37,124,607) 428,500,865 (540,293) 390,835,965 Government explicit and implicit contingent liabilities decreased by $37,124,607 and $540,293 respectively in 2016 compared to 2015.
The Explicit Contingent Liabilities cover both domestic and overseas loans.

Domestic loans accounted for $ 717.9 million or 91.2% of total liabilities while overseas loans accounted for $ 69.5 million or 8.8% of total liabilities as at 31/07/2016.

The only government entity with overseas borrowings guaranteed by government is Fiji Sugar Corporation.
Whole of Government Financial Statements and Annual Appropriation Statement Page 99 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 1.0 APPROPRIATION STATEMENT Head No.
Ministry/Department Appropriation92 Immigration, National the Director of Public Office of the President Office of the Prime Minister Attorney General and Solicitor General Ministry of Economy Ministry of iTaukei Affairs Ministry of Security and Defence Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Judiciary Parliament Independent Commissions Office of Prosecutions Ministry of Justice Ministry of Communications Ministry of Civil Services Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Higher Education Institutions Ministry of Agriculture Ministry of Fisheries and Forests Ministry Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Urban and Mineral Lands of Revised Amount ($) 3,428,146 15,499,425 18,278,344 84,142,136 11,464,415 Actual Expenditure 2016 ($) 1,784,193 5,964,744 8,469,240 45,624,908 6,033,591 Savings/( Over-spent) ($) 1,643,953 9,534,681 9,809,104 38,517,228 5,430,824 ($) 3,428,146 15,499,425 18,278,344 84,142,136 11,464,415 9,241,159 9,241,159 4,356,762 4,884,397 17,284,164
% Appropriation Act 2015 – Schedule 2 Whole of Government Financial Statements and Annual Appropriation Statement Page 100 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Head No.
Ministry/Department Appropriation92 Revised Amount ($) ($) Actual Expenditure 2016 ($) Development and Environment Ministry of Infrastructure and Transport 40 41 Water Authority of Fiji Fiji Roads Authority 43 Peacekeeping Missions 49 Miscellaneous Services 50 Pensions, Gratuities and Compassionate Allowances Charges on Account of Public Debt Total 52 51 122,232,205 250,444,383 635,675,337 78,972,274 224,135,946 122,232,205 250,444,383 555,675,337 78,972,274 304,135,946 58,631,803 101,123,170 186,015,975 41,760,365 217,293,888 42,343,300 42,343,300 20,754,067 21,589,233 276,995,864 3,414,536,487 276,995,864 3,414,536,487 150,088,630 1,756,682,415 126,907,234 1,657,854,072 Savings/( Over-spent) % ($) 63,600,402 149,321,213 369,659,362 37,211,909 86,842,058 52 60 67 47 29 51 46 49 Whole of Government Financial Statements and Annual Appropriation Statement Page 101 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 2.0 CASH APPENDIX Appendix 2.1: Details of Variances for Overseas Bank Balances Allocation Description 1-08103-80102-510106 1-08103-80101-510107 1-08103-81001-510202 1-08103-80501-510401 FIJI CONSULATE GENERAL SYDNEY FIJI HIGH COMM.
CANBERRA FIJI HIGH COMM.
LONDON FIJI EMBASSY TOKYO DOM CASH FIJI HIGH COM WELLINGTON FIJI HIGH COMMISSION BEIJING 1-08103-80701-510502 1-08103-80201-510504 1-08103-80201-510506 BEIJING RMB AC 1-08103-80201-510507 BEIJING VISA AC 1-08103-80301-510601 1-08103-81101-510801 FIJI MISSION BRUSSELS FIJI HIGH COMMISSION UN 1-08103-81102-510802 WASHINGTON 1-08103-80301-510901 ADIS ABABA CASH AC 1-08103-80405-510901 ABUDHABI MISSION -ACCOUNT 1-08103-80406-510901 1-08103-80601-510901 BANK IN KULAR LUMPUR 1-08103-80801-510902 CLOSING BALANCE FOR PNG FIJI EMBASY KOREA 1-08103-80401-510903 1-08103-80402-510905 1-08103-80403-510905 1-08103-80401-510908 1-08103-80401-510909 1-08103-80401-510910 FHC NEW DELHI FIJI EMBASY INDONESIA FIJI EMBASY BRAZIL JAKARTA RUPIAH ACCOUNT INDIA IND RUPEE AC INDIA RENTAL AC Balance as per Bank Reconciliation ($) 0 1,807 63,589 1,186,943 520,569 136,144 (133,832) 11,799 304,554 285,509 157,670 154,494 636,661 376,578 445,503 209,391 105,886 259,255 209,170 21,715 39,013 65,386 General Ledger Balance ($) 919,009 337,725 239,215 1,202,394 606,110 359,805 1,513 19,026 358,009 333,771 109,747 148,564 856,413 455,044 435,163 168,461 60,143 184,308 400,906 186,223 33,184 93,560 Variance General Ledger overstated/ understated ($) (919,009) (335,918) (175,626) (15,451) (85,541) (223,661) (135,345) (7,227) (53,455) (48,262) GL overstated GL overstated GL overstated GL overstated GL overstated GL overstated GL overstated GL overstated GL overstated GL overstated (219,752) (78,466) 47,923 GL understated 5,930 GL understated GL
 overstated GL overstated 10,340 GL understated 40,930 GL understated (191,736) (164,508) 45,743 GL understated 74,947 GL understated GL overstated GL overstated 5,829 GL understated GL overstated (28,174) 1-04102-04202-510201 CROWN AGENTS LONDON 1-00000-00000-510000 Total Overseas Bank Balances (12,297) 5,045,507 104,605 7,612,898 (116,902) GL overstated (2,567,391) GL overstated Whole of Government Financial Statements and Annual Appropriation Statement Page 102 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 3.0 TRUST FUND APPENDIX Appendix 3.1: Weaknesses in Internal Control Appendix 3.1.1: Details of Trust Funds Reconciliations Not Prepared Ministries / Departments Office of the Prime Minister Anomalies in Trust Funds Mahogany Industrial Council Trust Fund The Trust Fund Account Statement of Receipts and Expenditure includes trust receipts of license fees of $1,110,987.
The Office did not perform monthly reconciliations between the log harvested/sold by the Fiji Hardwood Corporation Ltd and the fees collected from Licensees.

Department of Housing Operating Trust Amount ($) 1,110,987 347,420  No reconciliation was provided and as such balance of $340,151 could not be substantiated.

City Wide Trust Account  The reconciliation for the City Wide Squatter Trust of $7,269 was not prepared and submitted to the Ministry.
Operating Trust Accounts  No operating trust reconciliation provided to audit to substantiate balance of 44,328 Ministry of Local Government, Housing and Environment $44,328.
Total Appendix 3.1.2: Inadequate Listing of Beneficiaries Ministries/ Departments Allocation Description 9-07101-07003-895002 Workmen’s Compensation Ministry of Employment, Productivity and Industrial Relations 9-07101-07004-895003 Wages Dispute 1,502,735 Remarks – Inadequate Listing FMIS GL Amount ($) 902,274 A total of $7,957 cannot be substantiated as there was lack of records of its beneficiaries.
185,254 A total of $22,966 cannot be substantiated as there was lack of records of its beneficiaries Judiciary 9-11101-11043-895027 Maintenance - Suva 9-11101-11044-895027 Maintenance - Nausori 9-11101-11047-895027 Maintenance - Sigatoka 9-11101-11048-895027 Maintenance - Nadi 9-11101-11049-895027 Maintenance - Lautoka 9-11101-11050-895027 Maintenance - Ba 9-11101-11051-895027 Maintenance - Labasa 9-11101-11052-895027 Maintenance - Savusavu 9-11101-11053-895027 Maintenance - Taveuni 842,043 85,413 79,875 92,126 149,813 129,084 36,859 29,256 15,642 still Reconciliation was in progress and updated to May 1992 and as such total balances of $24,818,411 could not be substantiated to its beneficiaries.
Whole of Government Financial Statements and Annual Appropriation Statement Page 103 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries/ Departments Allocation Description 9-11101-11057-895027 Maintenance - Levuka 9-11101-11077-895027 Maintenance - Nasinu 9-11101-11040-895028 Sundries - Nasinu Court 9-11101-11054-895028 Sundries - Suva Court 9-11101-11055-895028 Sundries - Nausori Court 9-11101-11056-895028 Sundries - Navua Court 9-11101-11057-895028 Sundries - Levuka Court 9-11101-11058-895028 Sundries - Sigatoka Court 9-11101-11059-895028 Sundries - Nadi Court 9-11101-11060-895028 Sundries - Lautoka Court 9-11101-11061-895028 Sundries - Ba Court 9-11101-11062-895028 Sundries - Labasa Court 9-11101-11063-895028 Sundries - Savusavu Court 9-11101-11064-895028 Sundries - Taveuni Court 9-11101-11040-895029 Suitors Fund - Suva 9-11101-11041-895029 Suitors Fund - Lautoka 9-11101-11042-895029 Suitors Fund - Labasa Prisoners Trust Fund Account 9-22101-22003-895055 Sahyadri Trust Account 9-30101-30065-895012 Retention Funds _ LWRM 9-15101-15999-895061 Liquidation Trust 9-15101-91991-895062 Bankruptcy Trust 9-32301-76068-895005 Fisheries Fiji Corrections Services Ministry of Health and Medical Services Ministry of Agriculture Ministry of Justice Ministry of Fisheries and Forest TOTAL Remarks – Inadequate Listing FMIS GL Amount ($) 37,419 33,967 688,012 1,471,914 167,167 16,391 9,756 188,440 611,133 630,317 315,117 249,660 78,121 55,913 16,080,819 2,658,414 65,740 440,360 Details of the balance
 of not made $440,360 were available for audit verifications.
66,147 No patient register or database to record all patients assisted since inception on 17/09/12.

Thus there is no listing for the amount of $66,147.

684,162 A variance of $354,402 was noted between list of companies – subsidiary records and FMIS general ledger.

The subsidiary records were not updated.

the 617,249 219,630 The Ministry did not maintain a detailed the listing beneficiaries totalling $836,879.
of 191,922 The listings of the one third contributions trust for balance of $191,922 were not maintained by the Ministry.
the 28,125,409 26,739,044 Whole of Government Financial Statements and Annual Appropriation Statement Page 104 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 3.1.3: Details of Trust Funds Balances with No Supporting Documents Ministries / Departments Ministry of Agriculture Anomalies in Trust Funds LWRM Trust Account  Journal adjustments of $318,494 were made to clear the Trust Account Bank Reconciliation in order for it to match with General Ledger.
However, there were no supporting documents for these adjustments.

Amount ($) 318,494 Ministry of Lands and Mineral Resources Lands Trust Account  No Supporting documents for journal postings amounting to $167,474.61 in the 167,475 FMIS General Ledger.

Ministry of Infrastructure and Transport Operating Trust Account  Details of Security Deposits totalling $13,209 and Tender Deposits totalling $951,202 were not provided to audit.

Also, there was no evidence provided on actions taken to clear amounts.
964,411 Ministry of Fisheries and Forest Department of Fisheries - 1/3 Subsidy Scheme Main Trust Fund  Retention payment of $1,823 in Trust Statement of Receipts and Payments could 1,823 not be substantiated.
Ministry of Foreign Affairs Operating Trust Account  The Operating Trust account only had book entries and no actual cash was held by 785,213 the Ministry for the following: Allocation Description 1-08103-80101-863101 1-08103-80102-863101 1-08103-80201-863101 1-08103-80401-863101 1-08103-80701-863101 1-08103-81001-863101 1-08103-81102-863101 Total Admin Contributions Foreign Mission Admin Contributions Foreign Mission Admin Contributions Foreign Mission Admin Contributions Foreign Mission Admin Contributions Foreign Mission Admin Contributions Foreign Mission Admin Contributions Foreign Mission Amount ($) (239,444.54) (330,157.99) (49,269.33) (3,261.14) (131,018.25) (23,961.59) (8,100.51) (785,213.35) Total 2,237,416 Whole of Government Financial Statements and Annual Appropriation Statement Page 105 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 3.1.4: Trust Accounts Reflected Under old Head Ministries / Departments Allocation Trust Account Description 2016 ($) Comments Ministry of Lands and Mineral Resources 1-33101-33999- 899988 Miscellaneous Fund Open Item 11,803 Lands still using that allocation for direct deduction of Crown Lease.
Amount shown should be adjusted to the Land rent Account.
Incorrect Recording Ministry of Local Government, Housing and Environment Ministry of Infrastructure and Transport 1-37301-37999- 895011 1-40101-40999- 861923 1-40501-96991- 861923 1-40501-95991- 861924 1-40501-96991- 861933 1-40501-97991- 861933 1-40501-96991- 861104 1-40501-97991- 861104 1-40501-96991- 861106 1-40601-84999- 861106 1-40501-96991- 861202 1-40501-97991- 861202 1-40502-95212- 861202 1-40501-96991- 861204 1-40501-97991- 861204 1-40501-97991- 861501 1-40501-96991- 861525 1-40501-97991- 861525 1-40501-96991- 861532 1-40501-96991- 861537 1-40501-96991- 861606 Environment Trust 128 Uniform Deduction - Transport Payroll Deduction Agriculture Payroll Deduction - Central Finance NUPW Credit Union 251 374 467 49 NUPW Credit Union 20 208 PD Rent H/A Unest 208 PD Rent H/A Unest 390 PD Gov Water Rates Chrgs 390 PD Gov Water Rates Chrgs 241 PD CMLA 365 210 73 759 175 241 PD CMLA 2,276 241 PD CMLA 50 244 PD - LICI 286 Payroll Deductions- LICI 286 PD Fiji Public Service Ass 316 PD Service Worker Cu 316 PD Service Worker Cu YYY PD Public Employee Union Carpenters Finance Fiji Ltd 346 PD Maintenance - 133 37 530 90 19 176 40 to The Ministry was yet the closing credit transfer balances as at 31/12/15 for various operating trust fund accounts from Programs 5, 6 and 7 to new Programs 3, 4 and 5 as opening balances as at 01/01/16.
Whole of Government Financial Statements and Annual Appropriation Statement Page 106 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Departments Allocation 1-40501-97991- 861899 1-40501-96991- 861911 1-40501-96991- 861920 1-40501-96991- 861934 1-40601-84999- 861920 1-40601-91991- 861920 1-40601-84999- 862102 Trust Account Description Lautoka 440 PD Fixed Rent 385 PD Sports & Social 501 PD Employees FNPF NUPW Welfare 501 PD Employees FNPF 501 PDE Employees FNPF JC Retention Money 2016 ($) Comments 97 30 4,098 61 23,288 154,365 1,681,904 TOTAL 1,882,154 Whole of Government Financial Statements and Annual Appropriation Statement Page 107 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 3.1.5: Dormant Accounts No.
Ministries/Departments Allocation FUND 1 - OPERATING TRUST Office of the President Office of the Prime Minister Office of the Attorney General Ministry of Economy 1-01101-01101-861102 1-01101-01101-861202 1-01101-01101-861511 1-01101-01101-861533 1-01101-01101-861535 1-01101-01101-861537 1-01101-01101-861923 1-01101-01101-861926 1-02101-02999-861101 1-02101-02999-861102 1-02101-02999-861104 1-02101-02999-861202 1-02101-02999-861206 1-02101-02999-861306 1-02101-02999-861511 1-02101-02999-861535 1-02101-02999-861537 1-02101-02999-861602 1-02101-02999-861915 1-02101-02999-861923 1-02101-02999-861924 1-02101-02999-861926 1-02101-02999-861927 1-02102-02999-861202 1-02102-02999-861204 1-02102-02999-861306 1-02102-02999-861307 1-02102-02999-861511 1-02102-02999-861537 1-02102-02999-861601 1-02102-02999-861927 1-02201-61999-861202 1-02201-61999-861511 1-02201-61999-861926 1-03101-03101-861901 1-04601-63999-861101 1-04601-63999-861206 1-04601-63999-861309 1-04601-63999-861525 1-04601-63999-861536 1-04601-63999-861901 1-04701-64101-861309 1-04701-64101-861922 2016 ($) (3.11) (40.46) (136.01) (298.01) (27.01) (312.24) (17.00) (70.25) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (3.08) (0.01) (1.19) (0.02) (0.01) (0.01) (0.01) (0.01) (0.01) (88.51) (0.01) (0.01) (0.01) (0.01) (1,119.55) (1,271.18) (15,647.02) (28,191.43) (376.43) (18,579.17) (73.30) (0.01)
 Whole of Government Financial Statements and Annual Appropriation Statement Page 108 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Ministry of iTaukei Affairs Ministry of Defence, National Security and Immigration Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Judiciary 1-05101-05101-861101 1-05101-05101-861201 1-05101-05101-861206 1-05101-05101-861536 1-05101-05101-861701 1-05101-05101-861902 1-06201-70999-861101 1-06201-70999-861202 1-06201-70999-861204 1-06201-70999-861501 1-06201-70999-861536 1-06201-70999-861537 1-06201-70999-861599 1-06201-70999-861901 1-06201-70999-861915 1-06201-70999-861926 1-06201-70999-861933 1-06201-70999-861934 1-06201-70999-895001 1-07101-07101-861101 1-07101-07101-861104 1-07101-07101-861206 1-07101-07101-861209 1-07101-07101-861306 1-07101-07101-861533 1-07101-07101-861535 1-07101-07101-861537 1-07101-07101-861609 1-07101-07101-861924 1-08101-08101-861309 1-08101-08101-861501 1-08101-08101-861533 1-08101-08101-861923 1-08101-08101-861925 1-08101-08101-861926 1-08101-08101-863201 1-08103-80201-863101 1-08103-80401-863101 1-08103-81001-863101 1-08103-81102-863101 1-09101-09101-861204 1-10101-10999-861901 1-11101-11999-861101 1-11101-11999-861105 1-11101-11999-861202 1-11101-11999-861204 2016 ($) (24.00) (9.40) (4.68) (111.62) (90.00) (480.62) (30.13) (0.05) (0.07) (0.03) (76.08) (62.10) (31.02) (738.48) (60.19) (6.59) (0.01) (0.01) (2,303.51)
 (1,362.48) (5.00) (1,248.86) (0.01) (5.00) (79.34) (26.00) (20.91) (30.00) (36.00) (516.50) (13.50) (33.00) (457.80) (254.00) (76.80) (95.71) (49,269.33) (3,261.14) (23,961.59) (8,100.51) (19.60) (263.95) (0.01) (0.01) (0.01) (0.01) Whole of Government Financial Statements and Annual Appropriation Statement Page 109 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation 1-11101-11999-861206 1-11101-11999-861209 1-11101-11999-861306 1-11101-11999-861307 1-11101-11999-861511 1-11101-11999-861525 1-11101-11999-861533 1-11101-11999-861535 1-11101-11999-861536 1-11101-11999-861537 1-11101-11999-861706 1-11101-11999-861901 1-11101-11999-861902 1-11101-11999-861911 1-11101-11999-861926 1-11101-11999-861927 1-11101-11999-861931 1-11101-11999-861932 1-14101-14999-861929 1-15101-15999-861924 1-15101-15999-861926 1-15101-15999-861927 1-15201-71999-861511 1-15201-71999-861716 1-15201-71999-861909 1-15201-71999-861915 1-15201-71999-861924 1-15201-99011-861202 1-15201-99011-861204 1-15201-99011-861536 1-15201-99011-861602 1-15201-99011-861908 1-15401-73999-863201 1-17301-02999-861101 1-17301-02999-861106 1-17301-02999-861308 1-17301-02999-861309 1-17301-02999-861923 1-17301-02999-899988 1-17305-02999-861701 1-18101-68999-861104 1-18101-68999-861106 1-18101-68999-861309 1-18201-91991-861525 Office of the Director of Public Prosecutions Ministry of Justice Fiji Corrections Service Ministry of Civil Service Ministry of Rural and Maritime Development and National Disaster Management 2016 ($) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (12.00) (0.01) (1.60) (0.01) (195.00) (80.00) (1,587.59) (0.01) (10.00) (26.33)
 (874.79) (30.00) (131.83) (194.15) (212.39) (13.84) (1,340.00) (10.00) (12,499.24) (4,491.89) (2,804.63) (428,940.66) (0.83) (376.74) (430.60) (20.00) Whole of Government Financial Statements and Annual Appropriation Statement Page 110 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts 1-18201-92991-861306 1-18201-92991-861933 1-18201-93991-861933 1-18203-93991-861532 1-18204-94991-861920 1-19101-19999-861105 1-19101-19999-861106 1-19101-19999-861202 1-19101-19999-861207 1-19101-19999-861307 1-19101-19999-861308 1-19101-19999-861402 1-19101-19999-861515 1-19101-19999-861521 1-19101-19999-861523 1-19101-19999-861535 1-19101-19999-861603 1-19101-19999-861606 1-19101-19999-861607 1-19101-19999-861608 1-19101-19999-861609 1-19101-19999-861611 1-19101-19999-861612 1-19101-19999-861702 1-19101-19999-861707 1-19101-19999-861709 1-19101-19999-861715 1-19101-19999-861716 1-19101-19999-861864 1-19101-19999-861908 1-19101-19999-861910 1-19101-19999-861914 1-19101-19999-861915 1-19101-19999-861924 1-19101-19999-861925 1-19101-19999-861926 1-19101-19999-861932 1-20101-20101-861299 1-20101-20101-861702 1-20101-20101-861814 1-20101-20101-861917 1-20101-20101-861918 1-20101-20101-861922 1-21101-21999-861521 2016 ($) (146.01) (10.00) (20.00) (48.41) (1,239.81) (4,827.01) (1,327.01) (69,593.60) (61.66) (32,126.51) (20,634.44) (738.44) (1,990.01) (300.01) (1.00) (3,716.01) (50.01) (1,960.01) (1,240.01) (505.01) (510.01) (260.01) (30.01) (326.01) (185.01) (69.51) (328.01) (3,323.51) (64.01) (3,253.66) (19,417.01)
 (40.01) (470.01) (11,379.66) (100.01) (15,503.04) (2,075.66) (1,500.00) (210.00) (2,840.33) (31,454.35) (797.84) (280.00) (80.00) Whole of Government Financial Statements and Annual Appropriation Statement Page 111 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Ministry of Agriculture 1-21101-21999-861525 1-21101-21999-861706 1-21101-21999-861922 1-21101-21999-861930 1-21101-21999-861999 1-21102-21999-861901 1-21201-21999-861901 1-21201-21999-861920 1-21901-21999-861920 1-22101-22999-861107 1-22101-22999-861201 1-22101-22999-861207 1-22101-22999-861511 1-22101-22999-861538 1-22101-22999-861599 1-22101-22999-861601 1-22101-22999-861609 1-22101-22999-861612 1-22101-22999-861915 1-22101-22999-861927 1-22101-22999-895011 1-23101-23999-861902 1-23101-23999-861923 1-23301-85999-860101 1-24101-24999-861923 1-25101-25101-861105 1-25101-25101-861505 1-25101-25101-861511 1-25101-25101-861533 1-25101-25101-861535 1-25101-25101-861536 1-25101-25101-861537 1-25101-25101-861538 1-25101-25101-861923 1-30101-30101-861104 1-30101-30101-861106 1-30101-30101-861107 1-30101-30101-861206 1-30101-30101-861399 1-30101-30101-861602 1-30101-30101-861603 1-30101-30101-861606 1-30101-30101-861607 2016 ($) (3,866.29) (14,431.82) (80.07) (95.08) (30.00) (206.51) (205.01) (1,696.98) (584.38) (102,544.34) (42.20) (23.31) (461.35) (43.39) (2,092.32) (188.01) (46.01) (60.01) (1,892.63) (80.01) (111.45) (126.29) (54.00) (94.53) (158.70) (0.01) (0.14) (0.01)
 (0.01) (0.91) (0.01) (1.01) (0.01) (162.67) (244.50) (74.51) (25.00) (76.48) (1,836.42) (45.01) (74.01) (15.00) (60.00) Whole of Government Financial Statements and Annual Appropriation Statement Page 112 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Industry, Trade and Tourism 1-30101-30101-861611 1-30101-30101-861706 1-30101-30101-861915 1-30101-30101-861920 1-30101-30101-861923 1-30101-30101-861929 1-30101-30101-861931 1-30101-30101-861934 1-30101-30101-863201 1-30101-30999-861402 1-32201-77101-861106 1-32201-77101-861599 1-32201-77101-861910 1-32201-77101-861911 1-32201-77101-861999 1-32203-77101-861307 1-32203-77101-861308 1-32203-77101-861933 1-32207-77101-861901 1-33101-33101-861101 1-33101-33101-861106 1-33101-33101-861206 1-33101-33101-861309 1-33101-33101-861501 1-33101-33101-861601 1-33101-33101-861604 1-33101-33101-861706 1-33101-33101-861913 1-33101-33101-861923 1-34101-34101-861106 1-34101-34101-861202 1-34101-34101-861204 1-34101-34101-861206 1-34101-34101-861306 1-34101-34101-861501 1-34101-34101-861511 1-34101-34101-861525 1-34101-34101-861532 1-34101-34101-861533 2016 ($) (50.00) (10.00) (569.00) (8,426.28) (377.63) (170.00) (87.50) (108.00) (16.36) (10,856.00) (993.33) (939.38) (207.43) (2.00) (205.60) (0.01) (0.01) (47.83) (915.91) (0.01) (0.63) (33.36) (2,769.23) (620.00) (0.03) (25.40) (0.01) (10,592.98) (3,417.28) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.02) (0.01) Whole of Government Financial Statements and Annual Appropriation Statement Page
 113 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Housing and Environment Ministry of Infrastructure and Transport 1-34101-34101-861537 1-34101-34101-861716 1-34101-34101-861915 1-34101-34101-861926 1-34501-31999-861202 1-34501-31999-861920 1-35101-35101-861301 1-36301-73999-861901 1-36301-73999-863201 1-36401-36401-863201 1-37101-37999-861309 1-37101-37999-861923 1-37101-37999-861924 1-37201-37999-861901 1-37301-37999-895011 1-40101-40999-861923 1-40101-40999-861924 1-40104-40401-899988 1-40104-42101-899988 1-40501-95991-861924 1-40501-96991-861104 1-40501-96991-861106 1-40501-96991-861202 1-40501-96991-861204 1-40501-96991-861525 1-40501-96991-861532 1-40501-96991-861537 1-40501-96991-861606 1-40501-96991-861911 1-40501-96991-861920 1-40501-96991-861923 1-40501-96991-861933 1-40501-96991-861934 1-40501-97991-861104 1-40501-97991-861105 1-40501-97991-861202 1-40501-97991-861204 1-40501-97991-861501 1-40501-97991-861525 1-40501-97991-861536 1-40501-97991-861537 1-40501-97991-861599 1-40501-97991-861899 1-40501-97991-861901 2016 ($) (0.01) (0.01) (0.01) (0.01) (60.00) (22,737.13) (218.18) (90.00) (218,052.59) (1,896.73) (2,564.63) (393.00) (144.01) (278.88) (128.15) (251.25) (2.40) (75.00) 25.00 (466.78) (364.77) (72.99) (175.06) (285.87) (529.99) (19.49) (175.99) (39.99)
 (29.99) (4,098.01) (374.49) (48.98) (60.97) (210.00) (491.58) (2,276.08) (133.46) (36.91) (90.00) (8.99) (39.47) (20.00) (97.38) (0.02) Whole of Government Financial Statements and Annual Appropriation Statement Page 114 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation Water Authority of Fiji Peacekeeping Missions Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Infrastructure and Transport 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 FUND 4 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 1-40501-97991-861911 1-40501-97991-861933 1-40502-95212-861202 1-40601-41999-895014 1-40601-84999-861106 1-40601-84999-861920 1-40601-84999-862102 1-40601-91991-861920 1-41201-85999-860101 1-41201-85999-861920 1-49102-49102-861864 1-49102-49102-861924 1-49102-49102-861926 1-49103-49103-861864 1-49103-49103-861926 4-30351-30999-863201 4-30451-30999-863201 4-32251-77999-861901 4-40251-93011-861104 4-40251-93011-861106 4-40251-93011-861202 4-40251-93011-861204 4-40251-93011-861308 4-40251-93011-861501 4-40251-93011-861532 4-40251-93011-861599 4-40251-93011-861609 4-40251-93011-861706 4-40251-93011-861911 4-40251-93011-861915 4-40251-93011-861920 4-40252-91011-861102 4-40252-91011-861104 4-40252-91011-861202 4-40252-91011-861204 4-40252-91011-861533 4-40252-91011-861599 4-40252-91011-861616 4-40252-91011-861716 4-40252-91011-861901 4-40258-91011-861901 4-40258-93011-861101 4-40258-93011-861104 2016 ($) (0.01) (20.00) (50.00) (72.78) (758.50) (23,288.08) (1,681,904.09) (154,365.28) (1,161,883.81) (71.95) (12.00) (4,413.00) (1,321.20) (60.00) (506.41) 24,883.93 (2,770.80) (15.03) (130.00) (16.00) (256.57) (394.97) (35.00) (2.25) (2.48) (10.00) (52.50) (5.12) (7.00)
 (45.00) (994.88) (96.20) (7.31) (15.08) (1.99) (60.00) (32.01) (25.00) (60.00) (236.40) (517.49) (113.16) (856.74) Whole of Government Financial Statements and Annual Appropriation Statement Page 115 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation 4-40258-93011-861105 4-40258-93011-861106 4-40258-93011-861202 4-40258-93011-861206 4-40258-93011-861307 4-40258-93011-861308 4-40258-93011-861501 4-40258-93011-861525 4-40258-93011-861532 4-40258-93011-861537 4-40258-93011-861599 4-40258-93011-861609 4-40258-93011-861706 4-40258-93011-861901 4-40258-93011-861911 4-40258-93011-861915 4-40258-93011-861923 4-40262-91011-861101 4-40262-91011-861102 4-40262-91011-861106 4-40262-91011-861202 4-40262-91011-861204 4-40262-91011-861206 4-40262-91011-861209 4-40262-91011-861307 4-40262-91011-861501 4-40262-91011-861505 4-40262-91011-861511 4-40262-91011-861522 4-40262-91011-861525 4-40262-91011-861533 4-40262-91011-861534 4-40262-91011-861535 4-40262-91011-861536 4-40262-91011-861601 4-40262-91011-861701 4-40262-91011-861702 4-40262-91011-861716 4-40262-91011-861901 4-40262-91011-861911 4-40262-91011-861915 4-40262-91011-861920 4-40262-91011-861923 4-40262-91011-861924 2016 ($) (72.00) (146.50) (713.94) (9.25) (130.00) (166.00) (9.40) (60.00) (34.84) (6.16) (140.00) (593.00) (35.84) (335.25) (220.05) (385.00) (31.87) (52.13) (212.20) (79.01) (1,070.22) (1,805.48) (4,146.48) (51.36) (0.01) (1,948.31) (15.00) (44.50) (740.00) (12,760.42) (2,674.35) (112.00) (2,145.61) (1,374.82) (184.00) (343.00) (10.00) (15.01) (457.71) (62.80) (45.00) (14,882.69) (0.01) (5,575.25)
 Whole of Government Financial Statements and Annual Appropriation Statement Page 116 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
Ministries/Departments Allocation 391 392 393 394 FUND 9 - MAIN TRUST 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 Fijian Elections Office Judiciary Director of Public Prosecutions Ministry of Rural and Maritime Development and National Disaster Management Department of Housing Ministry of Industry, Trade and Tourism Total 4-40263-93011-861101 4-40263-93011-861106 4-40263-93011-861202 4-40263-93011-861601 9-10101-10001-891301 9-11101-11042-895029 9-14101-14999-899901 9-18101-68034-895018 9-18101-68036-895020 9-18101-68039-895011 9-18101-68999-895031 9-18401-68011-895020 9-18401-68012-895020 9-18401-68016-895016 9-18401-68018-895016 9-18401-68019-895020 9-18401-68020-895020 9-18401-68020-895050 9-18401-68021-895020 9-18401-68022-895020 9-18401-68026-895020 9-23101-23999-895001 9-34401-80002-895036 2016 ($) (20.00) (10.00) (25.36) (35.00) (578,555.56) (65,739.77) (49,805.63) (6,417.32) (12,007.35) (1,160.96) (7,322.81) (5,585.74) (5,737.95) (1,114.43) (1,907.86) (26,476.88) (34,977.21) (3,202.43) (5,655.25) (4,494.40) (14,679.01) (7,269.30) (22,590.47) (5,198,313.11) Appendix 3.1.6: Details of Other Weaknesses in Trust Funds Internal Controls by Ministries/Departments Ministries / Departments Anomalies in Trust Funds Office of the Prime Minister Mahogany Industrial Council Trust Fund  There is no policy on the usage of trust funds;  No independent monitoring carried out on the operation and the billing process of the Fiji Hardwood Corporation Limited (FHCL) to Licensee;  The
 rates used by FHCL to levy license fee Licensee is not gazetted or approved by the Mahogany Industrial Council.
 The fees collected are not categorized according to the purpose the fees were received in the Trust Statement of Receipts and Payments in the Agency Financial Statement.

Department of Immigration Main Trust Account Whole of Government Financial Statements and Annual Appropriation Statement Page 117 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Departments Anomalies in Trust Funds  Untimely preparation of trust account reconciliations.
Instance were noted where preparation of reconciliations were delayed by 7 months.

 Reconciliations were not check for accuracy and completeness by the Senior Accounts Officer.

Ministry of Employment, Productivity and Industrial Relations Main Trust Accounts  A variance of $921 exists between bank reconciliation and cash book reconciliation for the combine trust accounts Workers Compensation Trust Account, Wages Dispute Trust Account and OHS Consultancy.
Ministry of Justice and Fiji Corrections Service Ministry of Civil Service Ministry of Justice – Liquidity Trust and Bankruptcy Trust  Audit noted that in 2016 the Liquidity Trust & Bankruptcy Trust totalling $836,879 were being reflected in the FMIS general ledger for the first time.

Previously, the ministry has been maintaining manual cash book, bank statements and cash at bank reconciliations only.
However, audit noted that these main trust ledger balances were made up of just one bulk posting each into the two accounts without details of receipts and payments made during the period.

 Also, there was no opening balance for the current period or carried forward balance over the years reflected in the FMIS Ledger.
 Furthermore, the description of the general ledger for both bank accounts states “generated account” without actually differentiating between the bankruptcy or liquidity trust cash at bank ledger account.

Fiji Corrections Service – Prisoners Cash Trust Fund  Absent of policy guidelines for receipts and payments of money into the Trust Fund Account except for draft job placement policy.
 The portion of the prisoners’ income which is to be transferred to government through the consolidated fund account cannot be ascertained by audit.

Operating Trust Account  The operating trust fund balance as at 31/07/16 was $667,660.28.

Out of these $52,038.39 or 7.8% posting was made in 2016.

The remaining of the balance (92.2%) was carried forward from 2015(former PSC) and was not regularized.

 The Payroll Deduction PSC Bond Quarters balance as at 31/07/16 amounted to $85,911.78.
However, the bond amount was not transferred to TMA Liabilities account.

The TMA account administration moved to the Ministry of Economy with effect from 01/01/16.

 The Ministry’s Operating Trust Fund account has 108 sub accounts and out of these 75 sub accounts are inactive.

These accounts were inherited from the former PSC.

 Monthly Operating Trust Reconciliations were not prepared on time as January to July reconciliations were prepared in the month of September.
Ministry of Rural and Maritime Development and National Disaster Management Main Trust Accounts  The monthly bank reconciliations for the main trust fund account held with Westpac Banking Corporation and Bank of South Pacific was not prepared in a timely manner.

Fiji Police Force Operating Trust  The operating trust fund account had a credit balance of $2,365,702.07 as at 31/07/16.
The ending balance comprised of significant previous year’s uncleared balances carried forward to 2016 as follows: Whole of Government Financial Statements and Annual Appropriation Statement Page 118 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Departments Anomalies in Trust Funds Account No.
Description 1-20101-20101-863201 1-20101-20101-861517 1-20101-20101-861902 1-20101-20101-861917 VAT From Provision Of Goods & Services 307 PD Police Service Credit Union 204 PD Deposit A/C Recoverable 437 PD Improved Forestry Total Amount ($) 956,088.32 748,208.86 85,245.69 31,454.35 1,820,997.22 Ministry of Health and Medical Services Operating Trust Funds  The audit review of the individual balances noted that the following operating trust account balances have been carried forward from the previous year without any or minimal movement noted during the year as follows: Allocation Particulars 1-22101-22999-861106 1-22101-22999-861107 1-22101-22999-861309 1-22101-22999-863201 390 PD Govt Water Rates Charge 391 PD Gov Quarters Electricity 388 PD PSC Scholarship Loan VAT on revenue Balance as at 31/12/15 ($) 33,891.68 Balance as at 31/07/16 ($) 33,925.68 102,544.34 102,544.34 Increase / (Decrease) ($) 34.00 --- 70,239.37 71,559.67 1,320.30 684,573.43 882,257.01 197,683.58  The majority of the trust fund account balance of $2,275,294 as at 31/07/16 was made up of the outstanding FNPF deductions, VAT on revenue and Government quarters electricity which have credit balances of $940,251, $882,257 and $102,544 respectively which comprises 85% of the total balance.
Retention Funds  The audit noted that the Ministry did not maintain a Trust Fund bank account to deposit retention sums deducted from the progress payments made to the Contractors for capital works.

Instead the Ministry retains the retention fund allocation within its budgetary allocation.

On the lapse of authority the funds are returned to the Ministry of Economy and requested again in the following year’s budget submission.
Main Trust Funds  The Ministry maintains the following trust funds accounts with different bank accounts: Trust Funds CWM Hospital Staff Amenities Cardiac Force Fiji Children Overseas Treatment Cardiology Services Sayhadri Trust Total Balance as at 31/07/16 ($) 25,316 1,022 228,434 888,768 66,147 1,209,687 Audit review of the above main trust fund records revealed the following anomalies:    the Ministry did not have approved Standard Operating Procedures for all the 5 trust funds administered by them; the monthly trust fund reconciliation was not prepared; and the monthly bank reconciliations was not prepared.
Whole of Government Financial Statements and Annual Appropriation Statement Page 119 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Departments Anomalies in Trust Funds Sahyadri Trust Account  The Ministry did not maintain a cashbook details for receipts and payments for the period ended 01/01/16 to 31/07/16.
 The monthly reconciliation of the cash at bank balance, general ledger and cash book for the Sahyadri Trust Fund Account for all the seven months period ending 31 July 2016 was not carried out on a timely manner.

 Given the lack of timely reconciliation errors were not detected on time resulting on an unreconciled variance between the Bank statement and Ledger account.
Trust related payments the consolidated bank account of government instead of the trust thus the excess bank balance of trust monies at the end of the year.

This was corrected after 31 July 2016. totalling $822,889.60 were drawn on  The Statement of Receipts and Payments for the Sahyadri Trust Fund Account had receipts and payments of $1,055,106 and $1,047,969 respectively.

In contrast, the bank statement for the period 01/01/16 to 31/07/16 had total receipts of $731,797 and the total payments of $21.
 No supplementary agreement was entered into by the Ministry and the Sahyadri Specialty Pacific Hospital Ltd on the approved fees and charges as required under the Section 5 of Joint Venture agreement.

 As at the date of audit93 $105,554 was owed by patients to government after having undergone surgery in 2016.

It was noted no concerted effort was made by the Ministry to recover the outstanding amount from the concerned patient/relatives.
 The Ministry does not maintain a patient register or centralized database to keep proper records of all patients that have undergone surgery since 17/09/12.

 The Ministry did not maintain the proper cash book and bank reconciliation since its inception 17/09/12.
Cardiology Services Trust Account  The total receipts of $1,159,912 as per the Cardiology Services Trust Statement of Receipts and Payments include prior year’s net receipts of $865,767 which was not previously recorded in the Financial Management Information System (FMIS) general ledger.

 The Ministry did not maintain a cashbook to record the details for receipts and payments for the period ended 01/01/16 to 31/07/16.

The records on receipts and payments were maintained in the excel format.
 The monthly reconciliation of the cash at bank balance, general ledger and cash book for the Cardiology Services Trust Fund Account for all the seven months period ending 31 July 2016 was not carried out on a timely manner.

Fiji Children’s Overseas Treatment Fund Trust Account  Government official local purchase orders were not issued for various procurements made, however orders were place through emails.

 Three competitive quotations were not obtained.


 Payments were made on the strength of quotations and invoices and delivery dockets were not attached to confirm that the quantity of items ordered and paid for have been delivered in full.
Ministry of Agriculture LWRM Trust Account  Retention monies deposited in the Trust bank account totalling $930,621 were not receipted 93 09/02/17 Whole of Government Financial Statements and Annual Appropriation Statement Page 120 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Departments Anomalies in Trust Funds Ministry of Fisheries and Forest since July 2014.
 Monthly Bank Reconciliations within 5 days after the end of each month and the reconciliation was not prepared in accordance with standard format documented in the Finance Manual.
Department of Fisheries - 1/3 Subsidy Scheme Main Trust Fund  No Receipts and Payments disclosed in the Agency Financial Statement on Fisheries Main Trust Fund despite movement in trust cash and liability in general ledger of $112,281 and $113,585 respectively  A variance of $113,993 was noted between Trust Cash audited 2015 balance and 2016 opening balance.
Ministry of Lands and Mineral Resources Lands Trust Account  Monthly Bank Reconciliations were not prepared within 5 days after the end of each month and the reconciliation was not prepared in accordance with standard format documented in the Finance Manual Mining and Non Mining Trust Account  Stale Cheque of $46,228.39 and Voided Cheques of $34,692.15 in Unpresented Cheque Listing.
 Monthly Bank Reconciliations were not prepared within 5 days after the end of each month and the reconciliation was not prepared in accordance with standard format documented in the Finance Manual.

Ministry of Sugar Operating Trust Funds  Reconciliations not prepared monthly for Jan to May.

Only 1 reconciliation was prepared from January-May, 2016.

 No reconciliation was provided for June to July 2016.

 Reconciliations not checked by Accounts Officer and not signed by Director Sugar.
Ministry of Local Government, Housing and Environment Department of Environment – Trust Account  Monthly Bank Reconciliations were not endorsed and verified by Senior Accounts Officer for its correctness.
Whole of Government Financial Statements and Annual Appropriation Statement Page 121 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 3.2: Account Balances Contrary to Operating Trust Nature Head Ministries/Departments Allocation Description 2 Office of the Prime Minister 1-02101-02101-899988 Sports Trust Account 2016 ($) 577,456 1-02101-02999-899988 Miscellaneous Fund Open Item 62,795 Remarks These are sponsorship monies received from various sponsors that is receipted by OPM for payment to the respective organization being sponsored.
97.5% of the sum receipted is paid to the sponsored organization whilst 2.5% is withheld and maintained in the trust for minor sporting bodies and will be utilized at the discretion of the Hon.

PM.

The OPM does not have a separate bank account for this but the fund is deposited into the CFA.

This trust was used specifically to retain proceeds from the sale of books namely “The 3 Legged Stools” and “Ratu Sukuna Biography”.
6 Ministry of Immigration, National Security and Defence 1-06201-70999-895001 Immigration Trust 2,304 Balance carried forward from previous year.
8 Ministry of Foreign Affairs 1-08103-80101-863101 1-08103-80102-863101 1-08103-80201-863101 1-08103-80401-863101 1-08103-80701-863101 1-08103-81001-863101 1-08103-81102-863101 Admin Contribution Foreign Mission 239,445 330,158 49,269 3,261 131,018 23,962 8,101 Public Service Commission 1-17301-02999-899988 Miscellaneous Fund V Open Item 2,805 1-21101-21999-895052 Performance Bond 129,831 These are balances of administrative fees in FMIS Operating Trust Account.
These are only book entries and there is no actual cash held by the Ministry.

PSC has ceased operation; however, account still has balance carried forward.

Performance bond held by the Ministry from contractors for capital projects undertaken.
1-22101-22999-895011 Health Trust 111 Balance carried forward from 2014 1-23301-85999-860101 Security Deposits 1-23101-23101-860103 Tender Deposits 95 Security Deposits held by the Ministry 326,321 Tender deposits held by the Ministry Ministry of Youth and Sports 1-25101-25101-899999 Miscellaneous Fund 8,985 Refundable deposits held by the Ministry from suppliers for capital projects undertaken.
Ministry of Infrastructure and Transport 1-40301-99991-862102 1-40601-84999-862102 1-40301-99991-860101 Security Deposits JC Retention Money JC Retention Money 1,505 Retention money held by the Ministry 1,681,904 Retention money held by the Ministry 13,209 Security Deposits held by the Ministry Ministry of Education, National Heritage, Culture and Arts Ministry of Health and Medical Services Department of Housing 17 21 22 23 25 40 Whole of Government Financial Statements and Annual Appropriation Statement Page 122 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Head Ministries/Departments Allocation Description 41 Water Authority of Fiji TOTAL 1-40301-99991-860103 Tender Deposits 1-41201-85999-860101 Security Deposits 2016 ($) 951,202 Tender deposits held by the Ministry 1,161,884 Security Deposits held by the Ministry 5,705,621 Remarks Whole of Government Financial Statements and Annual Appropriation Statement Page 123 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 4.0 EXPENDITURE APPENDIX Appendix 4.1: Ministries Having Used High Budget Percentage within 7 Months Office of the Presiden t Office of the Attorney General Foreign Affairs Judiciar y Rural and Maritime Fiji Military Forces Education , Heritage & Arts Health & Medical Services Women Children & Poverty All Youths & Sports Agricultur e Fisheries & Forests Lands & Minerals Sugar Public Enterpri se Local Govern-ment Peacekeeping Mission Established Staff R/Budget Actual % Utilized 407,621 380,706 93
 Government Wage Earners R/Budget Actual % Utilized 130,604 111,735 86 Travel and Communication R/Budget 888,284 Actual 866,953 % Utilised 98 Maintenance & Operation R/Budget Actual % Utilized 280,800 265,878 95 Purchase of Goods & Services R/Budget 125,616 Actual 118,421 % Utilised 94 Operating Grants & Transfers R/Budget Actual % Utilized 1,522,827 256,531 1,297,563 198,841 85 78 2,932,358 2,213,025 75 1,376,0 98 1,130,7 37 82 461,687 391,996 85 1,498,89 0 1,228,96 9 82 1,019,496 871,284 85 850,677 729,762 86
 5,128,01 1 3,990,94 6 78 Whole of Government Financial Statements and Annual Appropriation Statement 5,955,234 4,801,264 81 148,936 118,901 80 201,030 123,758 150,819 119,031 75 96 1,164,661 972,395 83 8,911,024 3,564,931 804,524 7,454,528 2,716,499 690,517 84 76 86 Page 124 2,009,347 2,009,347 100 6,055,0 46 4,620,0 00 76 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Office of the Presiden t Office of the Attorney General Foreign Affairs Judiciar y Rural and Maritime Fiji Military Forces Education , Heritage & Arts Health & Medical Services Women Children & Poverty All Youths & Sports Agricultur e Fisheries & Forests Lands & Minerals Sugar Public Enterpri se Local Govern-ment Peacekeeping Mission Special Expenditure R/Budget Actual % Utilised Capital Construction R/Budget Actual % Utilised Capital Purchase R/Budget Actual % Utilised Capital Grant R/Budget Actual % Utilised Value Added Tax R/Budget Actual % Utilised Whole of Government Financial Statements and Annual Appropriation Statement Page 125 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 4.2: Details
 of Non-Submission of Audited Accounts Head Ministry Description 3 5 21 30 34 37 Office of the Attorney General Ministry of I Taukei Affairs Ministry of Education, Heritage and Arts Ministry of Agriculture Ministry of Industry, Trade and Tourism Ministry of Local Government, Housing & Environment The Fiji Human Rights Commission accounts has not been audited since 2008 - 2016; total grant provided since 2008 to 2016 Legal Aid Commission has not submitted audited accounts to Office of the Attorney General
 since 2014; total grant provided since 2014 to 2016 The Ministry has been providing grant to ITaukei Affairs Board for which audit has been pending since 2003.
Total grant provided since 2003 to 2016 Backlog of audited accounts of higher institutions not submitted to Higher Education Commission Backlog of audited accounts since 2015 of statutory authorities not submitted to Ministry (Fiji Museum , Fiji Arts Council, Fiji Higher Education Commission) Non-submission of annual audited accounts of Agriculture Marketing Authority for 2010, 2011, 2014, 2015 and 2016 Backlog of audits for various authorities receiving operating grant from the Ministry since 2013 to 2015 Municipal councils namely, Nadi Town Council, Lami Town Council, Savusavu Town Council, Tavua Town Council, Ba Town Council, Sigatoka Town Council, Lautoka City Council, Suva City Council and National Fire Authority failed to provide AFS for the grants received from the Ministry.
Total Appendix 4.3: Anomalies in Capital Expenditure Head Ministry Description 2 Office of the Prime Minister Ministry of Rural and Maritime Development and Disaster Management Republic of Fiji Military Forces Ministry of Education, Heritage and Arts 18 19 21 Advance payment of $146,000 was made to Water Authority of Fiji for water supply works project to be carried out at Natutale Primary School and Wauosi Nursing Station.
No work was done as at 21/11/16 and the project commencement date and completion date was not mentioned in the contract.

Awarded 11 projects to RFMF in 2015; 7 of these projects are incomplete Anomalies in MOU; important clauses such as defect liability period, variations, payment structure, project commencement and completion dates not included.
Vessel RFNS Kikau still inoperative despite the expenses made for the Life Expectancy Program Delayed damages not claimed by the Force Building grants not monitored by the Ministry for construction of classrooms and school facilities 1,882,394 18,600 306,000 Whole of Government Financial Statements and Annual Appropriation Statement Page 126 Amount ($) 4,701,367 9,504,868 145,969,149 1,505,000 2,310,183 9,628,647 29,478,612 41,977,052 245,074,878 Amount ($) 146,000 425,428 182,499 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Head Ministry Description 25 37 40 Ministry of Youth & Sports Capital grant given to Fiji Sports Council not monitored since 2015 Ministry of Local Government, Housing & Environment Ministry of Infrastructure and Transport Capital project budgeted from 2014 to 2016 has not completed 4,021,250 Grid Extension Projects yet to commence; advance payment done for 79% of work over four years since 2013 to 2016 Poor Monitoring of Bua / Macuata Solar Home System Projects Lack of monitoring for contract works carried out by FEA Total 20,480,840 141,777 7,063,072 38,331,063 Appendix 4.4: Details of Expenditures without Proper Authorisation Head Ministry Anomalies 8 12 18 20 21 22 24 30 32 35 Ministry of Foreign Affairs Parliament Ministry of Rural and Maritime Development and Disaster Management Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Ministry of Women, Children and Poverty Alleviation Ministry of Agriculture Ministry of
 Fisheries and Forests Ministry of Sugar Overpayment of per-diem allowance Inconsistent rate used in calculating travel allowances Travel made without Cabinet Approval Over-payment of per-diem allowances Rations purchased was more than what was required Purchase of family packs not authorised Approval not obtained from Chief Accountant for advance payment Excess supply compared to LPO for which payment was facilitated No LPO issued Loss due to condemned / damage Goods No LPO issued Fiji Teachers Registration Board staffs paid through Ministry’s budget allocation although the authority’s operation is totally autonomous from the Ministry Unauthorized procurement Procurement without approved RIE from other allocations Procurement above delegated authority Ministry of Economy approval not attached to payment Local Purchase Orders not issued Local Purchase Order not signed by personnel’s Local Purchase Orders not issued Payment of ineligible subsistence allowance to EDP # 93439 the authorised Funds for rehabilitation was used for cane planting program, no approval documents produced.
Total 4,600,000 16,886,144 Whole of Government Financial Statements and Annual Appropriation Statement Page 127 Amount ($) 3,663,203 Amount ($) 24,934 36,003 10,099 4,270 503,726 2,593,374 23,324 456,655 33,520 21,337 7,257 214,739 71,347 62,397 535,318 6,947,335 270,727 48,888 407,510 13,384 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 4.5: Details of Unbudgeted Expenditures Head Ministry Anomalies 1 4 6 7 10 13 16 19 24 Office of the President Ministry of Economy Ministry of Immigration, National Security and Defence Ministry of Employment, Productivity and Industrial Relations Fijian Elections Office Independent Commissions Ministry of Communication Republic of Fiji Military Forces Ministry of Women, Children and Poverty Alleviation 30 Ministry of Agriculture 32 40 Ministry of Fisheries and Forests Ministry of Infrastructure and Transport Numerous procurement of goods through RFA where there was less budget provision Non-clearing of container on Procurement Office; penalty for delay of 253 days Incorrect VAT payment to FRCA January – June 2016 time from wharf by Fiji Advance payment for Utility Bills - August, 2016 Payment made for Electricity Bill on behalf of Ministry of Civil Services but this was not reimbursed to MEPIR Expenses not budgeted Over-expenditure compared to budget Unbudgeted Expenditure; payment of established staff salary (SEG 1) Overtime payment despite having no budget allocation Penalty payment of International Telecommunication Union Payment to TMA Plant
 Pool for Adopt a School Program interest on over-due accounts of Diversion of funds to cater for DISMAC operations Outstanding overtime for period 2016 paid in early 2017 in procurement of rice harvester machin; Anomalies procurement relates to 2015 Diversion of funds from capital expenditure to cater for operating expenses Unbudgeted Expenditure Unplanned travel cost; the people travelling was changed from five to three so loss of payment on taxes and fees and additional costs incurred Payment to TMA from fund 1 without cabinet approval.
Unbudgeted expenditure.
Payment of out-standing account from 2013 Total Amount ($) 48,531 48,985 254,920 44,902 16,094 119,652 339,051 398,656 24,158 1,032 20,000 440,966 329,900 37,000 551,925 67,757 13,613 2,500,000 15,556 5,272,698 Whole of Government Financial Statements and Annual Appropriation Statement Page 128 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 4.6: Expenditures from Nil Budget Allocation Allocation Description 1-04101-04401-130101 Value Added Tax Input Tax 1-13101-13999-010101 Pe-Salaries 1-13101-13999-010303 Allow-Acting 1-15101-92992-010306 Allow-Housing 1-15101-92995-010306 Allow-Housing 1-15101-92995-010601 Relieving Staff 1-15101-93992-010306 Allow-Housing 1-15201-71999-010329 Allow-General 1-22101-22101-010306 Allow-Housing 1-22201-81201-010306 Allow-Housing 1-22201-83101-010306 Allow-Housing 1-22201-83201-010306 Allow-Housing 1-22201-84201-010306 Allow-Housing 1-22201-84201-020201 Fnpf-Urban Hospitals 1-22202-81701-010306 Allow-Housing 1-22202-81801-010306 Allow-Housing 1-22202-81901-010306 Allow-Housing 1-22202-81904-010306 Allow-Housing 1-22202-83302-010306 Allow-Housing 1-22202-83401-010306 Allow-Housing 1-22202-83501-010306 Allow-Housing 1-22202-83601-010306 Allow-Housing 1-22202-84101-010306 Allow-Housing 1-22202-84401-010306 Allow-Housing 1-22202-84601-010306 Allow-Housing 1-22202-84701-010306 Allow-Housing 1-22202-84702-010306 Allow-Housing 1-22202-84901-010306 Allow-Housing 1-22203-81101-010306 Allow-Housing 1-22203-83101-010306 Allow-Housing 1-22203-84101-010306
 Allow-Housing 1-32207-91021-080705 Establishment Of Sample Plots 1-49103-49103-059111 Printing Of Examination Papers 1-50101-50999-050199 Description Lookup Failed Total Actual Expenditure ($) Whole of Government Financial Statements and Annual Appropriation Statement Page 129 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 4.7: Lack of Supporting Documentation Head Ministry Anomalies 2 8 Office of the Prime Minister Ministry of Foreign Affairs Visa card expenses not acquitted Absence of acquittals and receipts for overseas travels 17 Ministry of Civil Services 30 32 37 Ministry of Rural and Maritime Development and Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Ministry of Women, Children and Poverty Alleviation Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Local Government, Housing & Environment Lack of supporting documents for the redundancy payments made to former PSC employees Absence of delivery dockets Missing payment voucher The commitment ledger was not maintained and acquittals were not submitted Absence of meal claim forms Anomalies in competitive quotes Agreement not signed for Fiji Higher Education
 Commission 2016 Grant Missing Payment Vouchers Payments processed without payment vouchers LPO's not raised in engaging aeromedical service and written confirmations not received for engagement of other optional aeromedical services Payment processed on photocopied invoices Payment processed without contracts being signed Missing payment vouchers Missing invoices or delivery dockets Verbal quotes obtained for purchases above $1,000 Contracts not signed with suppliers Non-submission of capital construction works supporting documents for audit verifications; Fisheries Office and Standard Grade VI (6) Staff Quarters Payment vouchers were missing for audit verifications No acquittals submitted from recipients of grants; namely Lami Town Council, Nadi Town Council, Savusavu Town Council, Sigatoka Town Council, Tavua Town Council and Ba Town Council.
Amount ($) 6,521 7,176 177,824 4,803,132 17,576 9,570 5,850 10,384 931,086 613,065 945,968 143,848 1,407,425 1,480,422 2,697,467 143,146 18,795 96,388 247,140 118,485 4,000,000 Total 17,881,268 Appendix 4.8: Fixed Asset Register Not Updated Head Ministry Anomalies 15 (A) Ministry of Justice Inventory and Fixed Assets Register not updated 18 19 Ministry of Rural and Maritime Development and Disaster Management Republic of Fiji Military Forces Fixed Asset Register not updated Fixed Asset Register not updated Whole of Government Financial Statements and Annual Appropriation Statement Amount ($) 57,066 75,086 1,436,471 Page 130 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Head Ministry Anomalies 24 30 32 Ministry of Women, Children and Poverty Alleviation Ministry of Agriculture Ministry of Fisheries and Forests Fixed Assets Register not updated Fixed Asset Register not updated Purchase of Furniture not recorded in FAR Total Appendix 4.9: Details of incorrect postings Head Ministry Anomalies Understatement of VAT; mis-posting to SEG 9 instead of SEG 13 Misallocation of expenditures Capital purchase expenditure mis-allocation; understated SEG 9 Anomalies noted in expenses classification in the Financial Statement Misallocation of expenditure Office of the Director of Public Prosecutions Fiji Corrections Service Mis-posting of expenditures resulting in the understated of water, sewerage and fire services expenditure by $ 32,379 and an overstated of Electricity and Repair and Maintenance
 expenditures by $7.200 and $25,180 respectively Operating Expenditure paid from SEG 1 - Established Staff allocation Misallocation of expenditure 4 7 8 10 14 15 (B) 17 18 20 24 30 33 35 40 Ministry of Economy Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Fijian Elections Office Ministry of Civil Services Ministry of Rural and Maritime Development and Disaster Management Fiji Police Force Ministry of Women, Children and Poverty Alleviation Ministry of Agriculture Ministry of Lands and Mineral Resources Ministry of Sugar Ministry of Infrastructure and Transport Misallocation of Capital Purchase Mis-statement of social protection program expenditure GL overstated as payments not made but recorded in GL since the cheque was held back Double posting in general ledger Accountable advances was incorrectly charged to personal emoluments allocation.
Payment of VAT from SEG 13 for Operating Grants Amount ($) 157,375 248,877 965,258 2,940,133 Amount ($) 24,526 33,607 237,977 180,328 59,455 64,759 131,505 496,226 391,839 38,705 146,300 189,739 4,720 56,064 Total 2,055,750 Whole of Government Financial Statements and Annual Appropriation Statement Page 131 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 4.10: Details of tender not called and competitive quotations not obtained Head Ministry Anomalies 3 7 18 19 20 21 24 25 Office of the Attorney General Ministry of Employment, Productivity and Industrial Relations Ministry of Rural and Maritime Development and Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports 30 Ministry of Agriculture Tender not called for procurement of more than $50,000 Cost-benefit analysis not done on engagement of Independent European Commission (AISA) Competitive quotes not obtained to the the approval of Contractor was engaged prior Government Tender Board Breach of Government Tender Board Approval as purchase was made from non-approved suppliers Splitting contracts into subcontracts to avoid the tender process Purchase of T-shirts in excess of tendered amount Purchases without quotation Tender not called and 3 competitive quotations not obtained for the construction of classrooms and school facilities Competitive quotes not obtained Anomalies in construction of Valelevu Training Centre.
Total project is estimated $140,000 yet tender was not called.
First phase payment has been done Overseas purchase of livestock - tender waiver was obtained to facilitate the payment process Anomalies competitive quotes was not obtained Total rice harvester machine; in procurement of Amount ($) 118,200 248,863 23,074 283,352 13,854 333,010 16,375 7,745 494,000 18,780 37,845 407,224 37,000 2,039,322 Appendix 4.11: Accountable Advance Balance as at 31/07/2016 Head Ministry / Department Balance ($) 1 2 Office of the President Office of the Prime Minister Ministry of Economy Ministry of iTaukei Affairs Ministry of Immigration, National Security and Defence Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Fijian Elections Office Judiciary Parliament Office of the Director of Public Prosecutions 3 3,521 26,637 33,225 (3,039) 348 93,410 2,162 1,961 38,670 (1) Whole of Government Financial Statements and Annual Appropriation Statement Page 132 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Head Ministry / Department Balance ($) 15 30 32 33 34 35 36 37 40 Ministry of Justice Ministry of Rural and Maritime Development and Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry
 of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Housing & Environment Ministry of Infrastructure and Transport TOTAL (SAG 57) Appendix 4.12: Provisional Tax Not Withheld Head Ministry 6 19 22 32 Ministry of Immigration, National Security and Defence Republic of the Fiji Military Forces Ministry of Health and Medical Services Ministry of Fisheries and Forests Total (4,661) 63,663 36,070 247,527 261,154 43,892 177,399 40,172 (21,828) 9,498 445,720 128,443 9,535 2,588 30 61,202 3,578 1,700,879 Amount ($) 974 57,690 210,332 12,789 281,785 Whole of Government Financial Statements and Annual Appropriation Statement Page 133 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 5.0 REVOLVING FUND ACCOUNT APPENDIX Appendix 5.1: Dormant Accounts No.
Allocation Ministries/Departments 2016 ($) 2015 ($) Accounts Receivable 4-15252-91151-560101 Fiji Corrections Service 4-15255-91151-560102 Fiji Corrections Service 4-15255-91151-560103 Fiji Corrections Service 4-15256-91151-560102 Fiji Corrections Service 4-15258-91151-560101 Fiji Corrections Service 4-15258-91151-560102 Fiji Corrections Service 4-15259-91151-560101 Fiji Corrections Service 1-32201-77101-560102 Ministry of Fisheries and Forests 1-32201-77101-560202 Ministry of Fisheries and Forests 1-32301-78999-560102 Ministry of Fisheries and Forests 4-32251-77999-560102 Ministry of Fisheries and Forests 4-22251-22999-560103 Ministry of Health and Medical Services 4-19151-19999-560101 Republic of Fiji Military Forces Total Prepayments 1-36501-66101-570101 Ministry of Public Enterprise 1-20101-20999-570101 Fiji Police Force 1-08103-80401-570301 Ministry of Foreign Affairs 1-08103-80406-570301 Ministry of Foreign Affairs 1-08103-81001-570301 Ministry of Foreign Affairs 1-10101-10999-570301 Fijian Elections Office 1-20102-20101-570301 Fiji Police Force 1-40103-40301-570301 Ministry of Infrastructure and Transport 1-40201-81101-570301 Ministry of Infrastructure and Transport 1-22101-22999-570302 Ministry of Health and Medical Services Total Accounts Payable 1 2 3 4 4-40251-91011-840401 Ministry of Infrastructure and Transport 4-40258-91011-840401 Ministry of Infrastructure and Transport 1-40104-40491-840602 Ministry of Infrastructure and Transport
 1-40601-41999-840602 Ministry of Infrastructure and Transport Total 20,841 4,810 450 2,634 3,179 2,672 855 641,909 1,894 33,536 5,745 274 289 719,088 30 114,921 1,437 1,669 146 2,162 432 500 (4) 2,265 123,558 (27,053) (90) (120) (500) (27,763) 20,841 4,810 450 2,634 3,179 2,672 855 641,909 1,894 33,536 5,745 274 289 719,088 30 114,921 1,437 1,669 146 2,162 432 500 (4) 2,265 123,558 (27,053) (90) (120) (500) (27,763) Appendix 5.2: Accounts Balances Contrary to its Nature (Debit Balances) No.
Allocation Ministries and Departments Accounts Receivable (Debit by Nature however credit balances) 1 2 1-04601-63999-560203 Ministry of Economy 1-04701-64101-560203 Ministry of Economy Whole of Government Financial Statements and Annual Appropriation Statement 2016 ($) 2015 ($) (128) (132) (128) (132) Page 134 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 No.
3 Allocation Ministries and Departments 1-23101-23999-560203 Total Department of Housing Prepayments (Debit by Nature however credit balances) 1-33301-79101-570101 Ministry of Lands and Minerals 1-15101-15999-570101 Ministry of Justice 1-32201-77101-570301 Ministry of Fisheries and Forests 1-06201-70999-570301 Ministry of Defence, National Security and Immigration 1-14101-14999-570301 Office of the Director of Public Prosecutions 1-40201-81101-570301 Ministry of Infrastructure and Transport 1-25101-25101-570301 Ministry of Youth and Sports 1-15101-15999-570304 Ministry of Justice Total Accounts Payable (Credit by Nature however Debit balances) 1-37101-37999-840602 Ministry of Local Government, Housing and 1-10101-10999-840602 1-19101-19999-840602 1-20101-20999-840602 1-23101-23999-840602 Total Environment Fiji Elections Office RFMF Fiji Police Force Department of Housing 2016 ($) (46,036) (46,296) (39) (47) (470) (5,453) (1) (4) (21,828) (5,279) (33,121) 46,394 2,198 249 17,997 10,555 77,393 2015 ($) (46,036) (46,296) --- (15) --- (9,903) --- (4) (8,297) --- (18,219) --- --- 249 11,391 (630) 11,010 Appendix 5.3: Accounts Receivable Control Issues Raised From Ministries and Departments Anomalies Noted Amount Reconciliations not prepared Variance between FMIS General Ledger and Reconciliation ($) 27,700 ($) 27,700 ($) 5,745 5,745 24,225 24,225 Ministries/ Departments Fiji Corrections Fisheries and Forest Lands and Mineral Resources Housing Ministry of Infrastructure and Transport to
 substantiate A variance of $27,700 exists between the overall TMA ledger balance against the TMA Debtors listings Ministry did not maintain adequate accounting records and supporting documents the balance.
The Department had an Unreconciled balance of $24,225 in the general ledger as a result of misposting and reversals not properly done for double postings.

No reconciliations prepared.

raised in the Local Government DAM.

The Ministry did not post debtors totalling $210,188 the FMIS general ledger.
The FMIS had a zero accounts balance receivable schedules had a balance of however Issue into the (46,036) (46,036) 210,188 210,188 Whole of Government Financial Statements and Annual Appropriation Statement Page 135 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries/ Departments Anomalies Noted Amount Reconciliations not prepared $210,188.
($) ($) Variance between FMIS General Ledger and Reconciliation ($) Total 221,822 (16,066) 237,888 Appendix 5.4: Weaknesses in Internal Control - Prepayments and Advance Account Appendix 5.4.1: Prepayments and Advance Control Issues Raised from Ministries and Departments Ministries/Departments Prepayments and Advances Controls Weaknesses Measured in Monetary Values Reconciliation not prepared Unsubstantiated Balance ($) ($) Goods Procured from Advance Account ($) Recording Anomalies ($) Office of the President Ministry of Justice Ministry of Rural and Maritime Ministry of Education Ministry of Agriculture Fiji Police Force TOTAL GRAND TOTAL 5,326 5,326 9,498 132,174 141,672 Inadequate supporting documents ($) 832,425 39,656 48,531 13,913 3,737 62,444 3,737 872,081 1,085,260 Appendix 5.4.2: Retirement of Accountable Advance Incorrectly Recorded Ministries / Departments Ministry of Women, Children and Poverty Alleviation Ministry Infrastructure Transport Ministry of Sugar of and Anomalies Incorrect recording of retirement of advance totalling $2,256 between Department of Social Welfare and Department of Women advance accounts.
Amount ($) 2,256 The Ministry incorrectly cleared the accountable advance to the revenue allocations.

957 Several accountable advances issued for meals, subsistence and payment of airfare were charged to personal emoluments.
Total 4,720 $7,933 Whole of Government Financial Statements and Annual Appropriation Statement Page 136 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 5.4.3: Details of Other Weaknesses in Prepayments and Advance Account Internal Controls by Ministries and Departments Ministries / Department Office of the President Anomalies in Prepayments  The office raised journal vouchers totalling $832,425 to clear the outstanding balance.
Bulk of this balance was carried forward from previous years.

The journal vouchers were not adequately supported with source documents.

The clearance of previous year balance of $776,847 from the current year budgetary allocation would misrepresent expenditure in the Statement of Receipts and Expenditure.

Ministry of Foreign Affairs  The Ministry had an outstanding accountable advance of $99,457.12 as at 31/07/16.

Some of these accountable advances were outstanding from previous years.
 Out of the $76,315 advance paid and reviewed by audit, $41,858 or 55% was neither recorded in the Advance register nor retired.

 Ministry continues to issue advance to staff that have not cleared their previous advances.

 The misposting totalling $7,244 from prior years are yet to be cleared from the advance account.

 Audit noted that the Ministry did not prepare and maintained any Advance (SAG 57) Reconciliation for the year 2016.
Although the account had a nil ending balance, it was noted that postings were made to and from the account during the year.

 Audit noted that outstanding accountable advance balances were not subsequently cleared.

The outstanding balance as at 31/07/16 was $62,516.

Also, the Manager Finance did not initiate any recovery through salary deduction from the concerned officer's outstanding advance not retired within seven days.

 The accountable advance register was not updated during the year.
 The accountable advance reconciliations were not prepared in a timely manner.

 Audit noted that the total advances of $39,242.31 was not cleared within seven days, as a result the expenditures has been understated.

 Verification of the General Ledger (FMIS) records revealed that allocations 1-20101- 20999-57010 and 1-20102-20101-570301 had debit balances of $114,921 and $432 respectively which had been carried forward from previous years.
The audit was not provided with the breakdown details of these balances, as a result the corrections of the above balances could not be substantiated.

 A review of advances issued during the year revealed that advances totalling $43,082 were not retired within seven days of the completion of travel without interest charged.

 The advance totalling $224,947 have not been retired as at 31/07/16.
The aging of the outstanding accountable advances indicates that $170,077 of the advances were outstanding for more than 30 days.

 Review of advances noted that advances totalling $8,126 were partially retired.

Advance of $1,316 was not acquitted out of $8,126 advance issued.

 A review of advances issued during the year revealed that advances totalling $15,409 were not retired within seven days of the completion of travel without interest charged.
 The advances totalling $73,160 were approved for payment even though the officers had not cleared their previous advances totalling $21,822.
Ministry of Civil Services Ministry of Rural and Maritime Development Disaster Management and Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports  Audit noted that the Ministry had an outstanding accountable advance totalling Ministry of Agriculture $12,987 accumulated from 2011.

 The Advance Reconciliations were not prepared on time.
 The Advance Register was neither updated nor was it properly detailed.

 The opening advance balance as at 01/01/16 was $10,029 out of which $6,967 or 69.5% were outstanding from 2013.

Ministry of Fisheries and Forests  The monthly reconciliations for prepayments for the month of Jan-July, 2016 were not submitted to the Ministry of Economy on a timely basis.
Whole of Government Financial Statements and Annual Appropriation Statement Page 137 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Department Ministry of Sugar Anomalies in Prepayments  The advance totalling $443,496.77 was not cleared within the stipulated seven days, hence causing expenditure for the year ended 31 July 2016 to be understated.

 Travel advances were not acquitted with proper source documentation.
 Several advances were still outstanding and acquittals records were not provided at all and are yet to be recovered from the Officer as at date of audit on 27/01/17.

 Request for travel and claims were not properly justified and scrutinized hence additional claim of refunds were made to the officer upon return to the office.

 Advance Register was not updated.

 Advance Reconciliations not prepared monthly.

Two reconciliations were only prepared for advance account (Jan - Apr 2016 & May - Jul 2016).
Reconciliations were not signed by Accounts Officer and Director Sugar.

 Prepaid Expenditure Reconciliations not prepared monthly from Jan - May.

Three reconciliations were only prepared for prepayments account (Jan - May 2016, June 2016 & July 2016).

Reconciliations were not signed by Accounts Officer and Director Sugar.
Appendix 5.5: Accounts Payable Control Issues Raised from Ministries and Departments Ministries / Department Anomalies in Accounts Payables Amount Variance between Ministry's Reconciliation and FMIS ($) 52,391 Absence of supporting documents ($) ($) 52,391 Republic of Fiji Military Forces Department of Housing Ministry of Fisheries and Forests of Ministry Local Government, Housing and Environment FMIS Audit noted a variance of $52,391 between the reconciliation statement general and for Accounts ledger Payable (SLG 84).
that no Audit noted Reconciliation was provided for Accounts Payable (Fund 1 – SLG 84) of $10,555.

Audit noted a total of $20,784 in accounts payable (SLG 84) in the Ministry’s Reconciliation was not in FMIS.
there Furthermore, were missing accounts payment payable vouchers totalling $118,485 recorded 10,555 10,555 20,784 20,784 118,485 Whole of Government Financial Statements and Annual Appropriation Statement Page 138 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministries / Department Anomalies in Accounts Payables Amount ($) Variance between Ministry's Reconciliation and FMIS ($) 16,789 Absence of supporting documents ($) 15,598 15,598 of Ministry Public Enterprise and Government Printing for of not Reconciliation was not signed and checked.
Appropriate supporting to documents substantiate the payable accounts $15,598 balance made were audit available verification.

The payable accounts to balance previous for which records were not traceable or currently maintained the department.

Therefore, accounts payable could not be substantiated.
relate years by Total 217,813 100,519 134,083 Appendix 5.6: Details of Other Weaknesses in Accounts Payable Internal Controls by Ministries/Departments Ministries/Departments Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Education, Heritage and Arts Anomalies Monthly reconciliations for accounts payable for the month of Jan-July, 2016 were not submitted to Ministry of Economy on a timely basis.
Only one reconciliation was prepared for accounts payable for the 7 months.

Reconciliations for accounts payable were not prepared in a timely manner with withholding tax payable not actually prepared.

Two payees have multiple vendor identification in the FMIS general ledger which poses risk of double payments and misappropriation of funds.
Whole of Government Financial Statements and Annual Appropriation Statement Page 139 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 6.0 ARREARS OF REVENUE APPENDIX Appendix 6.1: Aging of Arrears of Revenue Over 5 years Agencies Economy (Surcharge) Judiciary Ministry of Agriculture Police Ministry of Lands and Mineral Resources Water Authority of Fiji Ministry of Infrastructure Sector Fiji Islands Revenue & Customs Authority - IRD Health and Medical Services Over 5 years ($) 549,356 9,901,397 14,913 1,993 7,687,865 12,149,007 1,929,655 8,746,991 5,134 Total arrears ($) 849,993 13,461,155 27,209 4,446 20,778,013 32,936,250 4,746,235 69,292,149 398,212 % of Total Arrears 65% 74% 55% 45% 37% 37% 41% 13% 1% Whole of Government Financial Statements and Annual Appropriation Statement Page 140 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 APPENDIX 7.0 REVENUE APPENDIX Appendix 7.1: Weaknesses in Internal Control Appendix 7.1.1: Breakdown in Monetary Values Ministries/Departments Ministry of iTaukei Affairs Department of Information Communication Ministry of Women, Children & Poverty Alleviation Republic of Fiji Military Force Ministry of Agriculture Ministry of Sugar Ministry of Defence, National Security & Immigration Ministry of Fisheries & Forests Ministry of Health & Medical Services Fiji Police Force Ministry of Foreign Affairs TOTAL Revenue Controls Weaknesses Measured in Monetary Values Revenue amounts that were incorrectly posted ($) Variance Between Ministry’s
 Record and GL ($) Under/Over statement of Revenue ($) Delays in Banking ($) Board Sitting Allowance without receipts ($) 15,843 368,528 29,852 31,833 85,177 215,966 785,213 1,532,412 2,080 8,141 120,294 21,410 94,197 224,312 74,566 229,464 64,253 546 534,779 229,464 66,879 8,141 Whole of Government Financial Statements and Annual Appropriation Statement Page 141 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Appendix 7.1.2 : Breakdown in Monetary Values Ministry Ministry of iTaukei Affairs Anomalies in Revenue The balances for scholarship bond recovery were still reflected in the Ministry's general ledgers despite the transfers of the administration of scholarships to the TSLB from 2014.
All receipts were posted to securities license fees allocation irrespective of their nature.

Ministry of Defence, National Security & Immigration There is a variance between the revenue in the agency financial statements and the general ledger of $21,410.

Unreconciled variance between the receipts generated by Integrated Border Control Management System (IBMS) records and General Ledger (FMIS) records $94,197.
Republic of Fiji Military Force Ministry of Agriculture Vat receivable has been recognised as revenue.

Income received from march band performance not recognised as operating revenue but is kept in the Band Trust Account.

RFMF purchased new band equipment worth $408,761 during the year and charges a fee of $500 for march band.

The revenue collector's chart for monitoring the revenue was not maintained.
The audit review of the Ministry’s Quarterly Return noted a significant variance of $120,924 between the budgeted rental revenue from government quarters and the actual amount recorded in the FMIS general ledger.

The audit noted that the Ministry did not maintain the gazetted list of fees and charges for revenue collected from TMA sales.
The fees list provided for audit was prepared by the revenue clerk at the Ministry’s headquarters who indicated that the list was prepared after enquiring from the respective revenue collectors in the stations.

A variance of $224,312 was noted between the audit calculation and FMIS general ledger balance for fishing license fees.

Ministry of Fisheries & Forestry There is no interface between the Timber Revenue System (TRS) and the FMIS general ledger.
Consequently, a variance of $74,566 was noted between the audit calculation and the FMIS general ledger.

Ministry of Health & Medical Services The TMA sales amount as per the FMIS/GL as at 31/07/16 was $229,464.

However the Ministry stated total sales of $178,133 in its VAT return for the period ended 31/07/16.

The audit noted that the total sale amount was under stated by $51,331 by the Ministry in its VAT Return for the period ended 31/07/16.
Incorrect revenue allocations were entered on the revenue receipt books and on some instances, the revenue allocations on the receipt books did not match with the revenue allocations on the revenue collectors’ analysis sheets.

Revenue allocations entered on the revenue receipt books were not clear as it was only scribbled on the receipt books, hence it cannot be deduced whether these receipts were posted to the correct allocations.
Whole of Government Financial Statements and Annual Appropriation Statement Page 142 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministry Anomalies in Revenue In some cases, revenue allocations were not entered at all on the receipt books; hence, it was difficult to determine the accuracy of the revenue figures.

The above anomalies were prevalent in the hospitals within the Central Division especially the Colonial War Memorial hospital.
Ministry of Sugar The audit review of revenue records in the Central Division noted evidences of delayed banking with cash being kept at the respective hospitals for a period of 3 to 98 days.

The Ministry did not have any revenue records during the year including government receipt book, revenue collectors’ analysis sheet and bank lodgement forms despite the Ministry receiving the Director of Sugars board sitting allowances for the above boards from previous years.
In 2016, the Ministry of Sugar received a total of $8,141 as board sitting allowance for the Director of Sugar attending the board meetings without an official government revenue receipt being issued.

Considerable delays in the lodgement of revenue by the Force.

Instances were noted whereby the total amount of revenue including VAT was posted to the revenue allocation.

Fiji Police Force Instances were noted whereby revenue receipts could not be traced.
However, the receipt sequence before and after these receipts were banked.

The revenue collected is held with the missions overseas bank accounts and recorded in the Overseas Cash (SAG 51) allocation, hence, the cash was available to the Missions to meet its operational expenses.
Ministry of Foreign Affairs Month Description Total Amount ($) CANBERRA January February March April May June July Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Total – Canberra WELLINGTON January February March April May June July Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Total – Wellington WASHINGTON January February March April Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 3,386 2,471 2,666 3,694 4,286 2,557 854 19,914 22,652 23,531 15,195 20,686 22,290 37,016 20,181 161,551 4,168 3,058 6,521 4,536 Whole of Government Financial Statements and Annual Appropriation Statement Page 143 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI - JUNE 2017 Ministry Anomalies in Revenue May June July Immigration Fees for 2016 Immigration Fees for 2016 Immigration Fees for 2016 Total –Washington Total 3,267 3,616 9,338 34,504 215,969 fees collected by the overseas Missions were posted into the Operating Trust account instead of a revenue account.
However, the Ministry following the audit query raised for the financial period ended 2015 on the current treatment, journalized all the postings from 01/01/16 to 31/07/16 to the miscellaneous revenue allocation.

administrative The Department Information Communication of and Review of the lodgement records reveal that cash collected by the Department of Information were not banked daily.

Refer to the Table below for details.

Revenue Receipt No.
Revenue Receipt No.

107129 107132 107134 107135 107140 107150 107251 107255 107256 107257 107258 Date Amount ($) Cash /Cheque Date Deposited 31/03/16 12/04/16 14/04/16 15/04/16 13/05/16 12/07/16 12/07/16 22/07/16 22/07/16 25/07/16 26/07/16 40 20 97 261 76 128 20 123 1,107 168 40 Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash 07/04/16 18/04/16 18/04/16 18/04/16 17/05/16 14/07/16 14/07/16 28/07/16 28/07/16 28/07/16 28/07/16 No.
of Working Days Delayed 4 4 2 1 2 2 2 4 4 3 2 Comments Sale of DVD Sale of DVD Retirement of Advance Retirement of Advance Retirement of Advance OPR Retirement of Advance Retirement of Advance Retirement of Advance Sale of DVD Sale of DVD Ministry of Social Welfare The audit noted that cheques for Social Welfare Allowances94 were returned from the banks due to incorrect recipient’s bank account details.
The audit established that the Ministry recognized the returned cheques totaling $368,528 from the banks as miscellaneous revenue contrary to finance regulations.

Refer below for details.
Period 2015 Amount ($) 367,993 01/01/16 31/07/16 Total – 535 368,528 Remarks The amount were credited to Miscellaneous revenue (SRG 27) rather than RFA- Reimbursement and Recoveries of Overpayment in Previous Years account (SRG 28) The amount were wrongly adjusted to Miscellaneous revenue (SEG 27) as it should have been adjusted to SRG 28 94 The cheques comprised of Poverty Benefit Scheme, Social Pension Scheme and Care &Protection Allowances allocated for SEG 6 Whole of Government Financial Statements and Annual Appropriation Statement Page 144