Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697813141985.pdf (Fiji)
REPORT OF THE AUDITOR-GENERAL OF THE REPUBLIC OF FIJI Remaining 2019 Audit Report on General Administration, Social Services, Economic Services and Infrastructure Services Sectors PARLIAMENT OF FIJI PARLIAMENTARY PAPER NO.
109 OF 2021 Location : Level 8, Ratu Sukuna House 2-10 MacArthur Street Suva, Fiji Postal Address Telephone Email Website : P O BOX 2214, Government Buildings Suva, Fiji : (679) 330 9032 : info@auditorgeneral.gov.fj : www.oag.gov.fj The Office of the Auditor-General – Republic of Fiji The Office of the Auditor-General is established as an Independent Office by the Constitution of the Republic of Fiji.
Its roles and responsibilities include audit of the accounts of the Consolidated Fund and Financial Statements of Government and Annual Appropriation Statement required to be included in the Whole of Government annual report for a financial year under the Financial Management Act 2004.

The audit extends to audit of the accounts of all money received or held by a State entity, whether or not for purposes of Government.

These audits are carried out by the Auditor-General on behalf of Parliament.
At least once every year, the Auditor-General must report to Parliament on the audits conducted and on other significant matters the Auditor-General wishes to bring to the attention of Parliament.

This report satisfies these requirements.

As a result of its mandate, the Office of the Auditor-General has a distinctive view of the entire public sector of matters affecting financial and non-financial performance.
We use this perspective to achieve our vision of promoting public sector accountability and sustainability through our audits by providing comprehensive analysis and value-adding recommendations.

The Office of the Auditor-General notes the impact of its reports to Parliament on the ordinary citizens and strives for accuracy and high-quality reporting including recommendations which are not only value-adding to the entity subject to audit but its customers, taxpayers and the general public as well.
REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 Table of Contents AUDITOR-GENERAL’S FOREWORD ....................................................................................................... 2 1.0 2.0 3.0 SECTOR SUMMARY ................................................................................................................... 5 AUDIT OPINION RESULTS ......................................................................................................... 6 ASSESSMENT OF FINANCIAL GOVERNANCE ........................................................................... 9 3.1 Internal control framework ........................................................................................... 9 3.2 Internal controls .............................................................................................................. 9 3.3 Preparation of draft 2018 – 2019 agency financial statements ........................ 10 3.4 Quality of draft financial statements by entities .................................................... 11 3.5 Timeliness of draft financial statements .................................................................. 11 3.6 Timeliness of provision of management comments and signing of financial statements ....................................................................................................................... 12 4.0 RESULT SUMMARY – FINANCIAL GOVERNANCE ................................................................... 13 Summary P a g e 1 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 AUDITOR-GENERAL’S FOREWORD I am pleased to present the remaining 2019 report on the General Administration, Social Services, Economic Services and Infrastructure Services Sectors.
Permanent Secretaries and those charged with governance of the agencies under the General Administration, Social Services, Economic Services and Infrastructure Services Sectors are responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards Cash Basis and requirements of Finance Management Act 2004 and other applicable laws and regulations.
This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error, selecting appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

It is important to note that the deficiencies highlighted in this report were identified during our audit and may have been subsequently resolved.
These have been included in this report as they impacted on the overall system of control of the ministries and departments as at 31 July 2019.

The vision of the Office of the Auditor-General of “Promoting Public Sector Accountability and Sustainability through our audits” will be achieved when audits are completed and reported to Parliament on a timely basis.
Majority of the agencies have been very cooperative throughout the audit process, however, some agencies have not given the work of my office sufficient priority.
The completion of audits of 2018-2019 and prior year Agency Financial Statements and timely preparation of the respective years’ Sector Audit Reports to Parliament has been hampered due to the following: (i) Draft Agency Financial Statements submitted considerably late for audit or drafts submitted within the set timeline are found to be not acceptable hence need to be resubmitted.

(ii) Considerable delay in providing comments to draft management letters.
(iii) Difficulty in confirming date and time for Exit Meetings.

(iv) Not providing documents to support management comments for audit verification prior to finalization of management letters.

Summary P a g e 2 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 (v) Delay in signing of audited accounts and Management Representation Letters.

Consequently, I have modified my reporting approach to Parliament in the past by issuing the Sector Audit Reports in volumes.
However, the Chairperson of the Standing on Public Accounts (PAC) indicated to me in his letter dated 18 September 2020, that the modified reporting approach was causing difficulty to the Committee in its examination and scrutiny of the reports.

To effectively deal with the challenges I have described above, meet the expectations of the PAC and achieve the vision of OAG, I have approved the following key changes in processes of the OAG in preparing reports to Parliament.
• In the event management comments are not received and/or exit meetings are not confirmed by the agency/entity audited, the Final Management Letter will be issued after 14 days from issue of Draft Management Letters (Audit Memorandum).

It will be assumed that management has agreed to the audit findings reported in the Draft Management Letter.

Significant matters will be included in my report to Parliament.
• Where signed accounts with Management Representation Letter for issue of audit report are not returned within seven days from date of issue for signature, audited financial statements will be included in the report to Parliament with relevant comments.

• In cases where management comments or information provided during the audit are found to be false, misleading or incorrect upon audit verification, the matter will be dealt in accordance with section 7(1)(d) of the Audit Act 1969.
Section 7(1)(d) states that “in the performance of his or her functions under section 152(2) of the Constitution of the Republic of Fiji and of his or her duties under this Act, the Auditor-General may examine upon oath, declaration or affirmation (which oath, declaration or affirmation the Auditor- General hereby empowered to administer) all persons whom her or she may think to examine respecting the receipt or expenditure of money or the receipt or issue of any stores affected by the provisions of this Act and respecting all other matters or things whatsoever necessary for the due performance and exercise of the duties and powers vested in him or her.” Section 7 (3) of the Act further states that “Any person examined pursuant to the provisions of section (1)(d) who gives a false answer to any questions put to him or her or makes a false statement on any matter knowing or believing it to be true shall be deemed to be guilty of perjury and shall be liable to be prosecuted and punished accordingly.” The relevant provisions of the Act will also be applied to cases where records and/or information required for audit purposes are not provided when requested during the audit Summary P a g e 3 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 and are produced after the issue has been reported in the Draft Management Letter or Draft Audit Report or not provided at all.
The changes in processes have been brought to the attention of Permanent Secretaries, Heads of Independent Bodies and Commissions and those charged with governance in agencies, which are subject to audit by the Auditor-General, on 01 April 2021.

However, with the second-wave of the COVID-19 pandemic and closure of most operations of government including OAG, it was decided to suspend the new reporting guidelines till 31 July 2021.
This report contains summaries and my analysis of the audit findings, the quality and timeliness of financial reporting, the audit opinions issued on the financial statements and the key reasons for such opinions, internal control assessments, other significant issues identified from the audits and high level recommendations aimed to strengthen financial reporting, governance and internal controls, by the remaining agencies under the General Administration, Social Services, Economic Services and Infrastructure Services Sector.
The issues discussed in this report require the immediate attention and prompt actions by the Permanent Secretaries and those charged with governance of the agencies to improve financial accountability by the Ministries and Departments.
Ajay Nand AUDITOR-GENERAL Date: 29 November 2021 Summary P a g e 4 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 1.0 SECTOR SUMMARY This report includes the audit results of the remaining five (5) agency financial statements, for the financial year ended 31 July 2019, for the following: General Administration Sector includes: Head 4 Ministry of Economy Social Services Sector includes: Head 23 Ministry of Housing & Community Development Economic Services Sector includes: Head 36 Head 37 Ministry of Public Enterprises Ministry of Local Government Infrastructure Sector includes Head 41 Ministry of Waterways and Environment The audit results of the other Ministries and Departments for the year ended 2019 have already been reported and tabled in Parliament on 01/06/2021 as follows: 1.
2019 Audit Report on Economic Services Sector (Parliamentary Paper No.

24 of 2021) 2.

2019 Audit Report on General Administration Sector (Parliamentary Paper No.

25 of 2021) 3.

2019 Audit Report on Infrastructure Sector (Parliamentary Paper No.

26 of 2021) 4.

2019 Audit Report on Social Services Sector (Parliamentary Paper No.
27 of 2021) Results of our Audits – Quality and Timeliness of Financial Statements Of the five agencies reported in this report, the Auditor-General issued four unmodified audit opinions and one modified audit opinion.

The details are contained in Section 2.

The submission of acceptable draft financial statements for audit were generally delayed impacting the timeliness of financial statements.
Summary P a g e 5 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 2.0 AUDIT OPINION RESULTS The main outcome of the audits are independent auditors’ reports on the agency financial statements that were submitted to the Auditor-General.

Comparatively, for the financial years 2017 – 2019, the quality of the agency financial statement for Ministry of Waterways and Environment has not improved.
This indicates that significant matters reported in the independent auditors’ report were not given sufficient priority and attention.

As a result, most of these matters remain unresolved resulting in modified audit opinion.

The following table presents comparisons of the results of our audit for the past three financial years.
Ministry/Department 2018 – 2019 Financial Year 2017 – 2018 2016 -2017 Financial Year Financial Year Date Audit Audit Audit Opinion Audit Opinion Report Signed Opinion Type Type Type Ministry of Economy 27/10/21 Unmodified Unmodified Unmodified Ministry of Housing and 15/11/21 Unmodified Unmodified Unmodified Community Development Ministry of Public 01/06/21 Unmodified Unmodified Unmodified Enterprise Ministry of Local 02/09/21 Unmodified Unmodified Modified Government Ministry of Waterways 18/11/21 Modified Modified --- and Environment In accordance with International Standards on Auditing, we express an unmodified opinion (unqualified) when the financial statements are prepared in accordance with the Financial Management Act 2004, Finance Instructions 2010 and with relevant legislative requirements.
This type of opinion indicates that material misstatements, individually or in the aggregate, were not noted in our audit which would affect the financial statements of an entity.
We issue a modified opinion (qualified) when having obtained sufficient appropriate audit evidence, we conclude that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.
Summary P a g e 6 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 An Emphasis of Matter and/or Other Matter paragraph is included in the auditor’s report to highlight an issue that will help the user better understand the financial statements.

The financial reporting framework on which the agency financial statements of Ministries and Departments are prepared are based on the Financial Management Act 2004 and Finance Instructions 2010.
Based on the above, we issued modified audit opinion on the following grounds.

Ministry of Waterways and Environment 1.

Monthly bank and Trust Fund Account reconciliations for the Environment Trust Fund account were not performed during the financial year.

As a result, an unreconciled variance of $4.1 million existed between the bank balance (bank audit confirmation) and the FMIS general ledger balance.
Furthermore, the Ministry was unable to provide for verification payment vouchers and supporting documents of the trust fund account for payments totalling $359,980.

Consequently, audit was unable to substantiate the accuracy and completeness of the Trust Fund Account balance of $6.05 million reflected in the Environment Trust Fund Account.

Note 6(b) to the financial statements provides the status of the Ministry’s effort to resolve the above variance.
The Environment Trust Fund account bank reconciliation statements for 2019 - 2021 have been prepared and submitted to the Ministry of Economy.

2.

Contrary to the requirements of section 49 of Finance Instructions 2010, the Ministry did not prepare a report for the annual board of survey of assets under its authority.

As a result, audit was unable to verify the existence and condition of the Ministry’s assets and could not ascertain the accuracy of Loss of Assets recorded in the Statement of Losses.

3.
3.

The Ministry disbursed a total of $3.4 million as capital grants to Municipal Councils for maintenance of drainage.

Audit was unable to extend the verification beyond the acquittal reports submitted by the Municipal Councils.

The acquittals reports were not supported with appropriate progress reports and project completion reports or engineer’s certificate.
Furthermore, the Ministry did not carry out independent verification of the projects to ascertain whether the projects were undertaken as per the approved scope and plan.

Due to the lack of appropriate supporting documents and evidence of verification by the Ministry, audit was unable to ascertain whether value for money for payments totalling $3.4 million for maintenance of drainage reflected as Capital Grant and Transfers in the Financial Statements has been achieved.

4.
4.

Funds totalling $50,505 were transferred from the Drainage Boards in accordance with section 26 of the Drainage (Budget Amendment) Act 2018.

The funds transferred were Summary P a g e 7 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 neither based on audited closing cash at bank balance nor supported with closing bank statements balances of the respective Drainage Boards.
As a result, audit was unable to ascertain the accuracy and completeness of the Transfer of Drainage Board Fund revenue totaling $50,505 reflected in the Statement of Receipts and Expenditure.
Summary P a g e 8 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 3.0 ASSESSMENT OF FINANCIAL GOVERNANCE Internal controls are processes designed and implemented by Permanent Secretaries, Heads of Departments and other personnel of Ministries and Departments to provide reasonable assurance about the achievement of a ministry or department’s objectives with regard to reliability of financial reporting effectiveness and efficiency of operations, and compliance with applicable laws and regulations.
The term “control” refers to any aspects of one or more components of internal control.

Permanent Secretaries, Heads of Departments and other personnel of Ministries and Departments are responsible for the preparation of the financial statements in accordance with the Financial Management Act 2004 and Finance Instructions 2010, and for such internal control as they determine is necessary to enable preparation of financial statements that are free from material misstatements, whether due to fraud or error.
Internal control issues noted during our audit are reported to the Permanent Secretary or Head of Department of Ministries and Departments.

Our overall assessment of the financial governance of the Ministry of Housing indicate no improvement around internal control, the financial statement preparing processes and responses to the Office of the Auditor-General.

Details of our assessment is provided under section 4.0 – Results Summary Financial Governance.
3.1 Internal control framework During our audit, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.

Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.
A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may lead to a material misstatement in the financial statements.

It requires immediate management action.

3.2 Internal controls Internal controls are categorized against the following five components of internal control.

Refer to the next page.


Summary P a g e 9 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 3.3 Preparation of draft 2018 – 2019 agency financial statements On 29 May 2019, Permanent Secretary for Economy issued Circular No.

09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and times were detailed.
• Cancellation of unprocessed purchase orders by 12 July 2019 • Retirement of Imprest by 19 July 2019 • Processing of payments by 29 July 2019 • Clearance of stale cheques by 5 August 2019 • Closing date for journal adjustments by 7 August 2019 • Processing of virement by 23 August 2019 • Completion of reconciliation by 29 August 2019 • Clearance of Inter departmental clearance accounts by 30 August 2019 • Annual Board of Survey on Drawings accounts cheques by 30 August 2019 • Submission of Arrears of Revenue Return by 30 August 2019 When ministries and departments achieves the key focus areas highlighted by the Permanent Secretary for Economy, by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Rating Internal control assessment  Effective  Generally effective All 10 key processes completed by due date Five or 10 key processes completed within two weeks of due date.
Summary P a g e 10 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 Rating Internal control assessment  Ineffective Less than five or 10 key processes completed within two weeks of due date 3.4 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the total expenditures, operating results or net assets of the entity subject to our audit.

Rating Internal control assessment  Effective  Generally effective No adjustments were required Adjustments on total expenditure, operating results/net assets were less than one percent.

 Ineffective Adjustments on total expenditure, operating results/net assets were more than one percent.
3.5 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.

Rating Internal control assessment  Effective Acceptable draft financial statements received before or on 15  Generally effective Acceptable draft financial statements received before or on 31 October 2019.
 Ineffective Acceptable draft financial statements received after 31 October October 2019 2019 Summary P a g e 11 | REPORT OF THE AUDITOR - GENERAL OF THE REPUBLIC OF FIJI - 31 JULY 2019 3.6 Timeliness of provision of management comments and signing of financial statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to the entity and the date management comments and signed accounts were received.
Rating Internal control assessment Timeliness of Management Comments  Effective  Generally effective  Ineffective Timeliness of Signed Accounts Received  Effective  Generally effective  Ineffective Within 14 days from the issue of Draft Management Letter Within 21 days from the issue of Draft Management Letter After 21 days from the issue of Draft Management Letter Within 5 days from the issue of Financial Statements for signing Within 15 days from the issue of Financial Statements for signing After 15 days from the issue of Financial Statements for signing Summary P a g e 12 | - – Y R A M M U S T L U S E R 0 .
4 o f e h T 9 1 0 2 Y L U J 1 3 - I J I F F O C I L B U P E R E H T F O L A R E N E G - I R O T D U A E H T F O T R O P E R | 3 1 e g a P y r a m m u S .
- I J I F F O C I L B U P E R E H T F O L A R E N E G - I R O T D U A E H T F O T R O P E R | 4 1 e g a P y r a m m u S REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 HEAD 04 MINISTRY OF ECONOMY Roles and Responsibilities The Ministry of Economy is responsible for managing public finances in accordance with the Fijian Constitution and the Financial Management Act 2004.
The Ministry formulates Government’s national budget and coordinates with other ministries and departments to ensure effective implementation.

The Ministry through its various functional units promotes sound management of the Fijian economy via economic analysis, efficient budgeting and pro-active planning, including prudent management of financial assets and debts and the administration of fiscal policy and tax collection through the Fiji Revenue and Customs Service.
Other major roles include: coordination and management of Government’s capital construction projects including its offices and accommodation; formulation of national development plans, including climate change policy and financing, monitoring of programmes and projects under the national budget; and ensuring effective operation of the Fiji Bureau of Statistics [FBOS] in collating, storing and publishing statistical information in a timely and coherent manner.
Table of Contents PARTA: FINANCIAL INFORMATION…………………………………………………………..18 4.1 Audit Opinion ..................................................................................................................... 18 4.2 Appropriation Statement – Head 4 Ministry of Economy ....................................... 19 4.3 Appropriation Statement – Head 50 Miscellaneous Services ................................ 21 4.4 Appropriation Statement – Head 51 Pensions, Gratuities and Compassionate Allowances ......................................................................................................................... 22 4.5 Appropriation Statement – Head 52 Charges on Account of Public Debt ........ 22 4.6 Appropriation Statement – Head 13 FICAC .............................................................. 23 M i n i s t r y o f E c o n o m y P a g e 15 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 4.7 Trading & Manufacturing Account (TMA)................................................................... 23 4.8 Trust Fund Account .......................................................................................................... 25 PART B: SIGNIFICANT MATTERS……………………………………………………………30 4.9 Detailed listing not maintained for rental bond received - Office AccommodationTMA ........... …………………………………………………………30 4.10 Anomalies in the Parenthood Assistance Payment ............................................... 31 4.11 Grant paid to Fiji Servicemen Aftercare Fund
 ...................................................... 32 4.12 Accounting for TMA Assets ....................................................................................... 33 4.13 Batch posting of transactions using Smartlink ...................................................... 34 4.14 Mis-posting of revenue ............................................................................................... 35 4.15 Expired Tenancy Agreements ................................................................................... 36 4.16 Clarity in the Procurement Regulation for “Urgent Waiver of Tender” ......... 36 4.17 Excessive variations and extension of time for completion............................... 38 4.18 Anomalies in Operating Trust Fund Account ........................................................ 39 4.19 Variance between Overseas Pension Cash GL and Bank Reconciliation Statement .
……………………………………………………………………………..40 4.20 Increase in arrears of revenue for pensions ............................................................ 41 4.21 Anomalies in Main Trust Accounts ........................................................................... 42 4.22 Anomalies for VAT Payables – TMA ........................................................................ 43 4.23 4.24 Absence of Risk Management Policy and Operational Plans – Recurring Issue ................................................................................................................................. 44 Ageing Reports not maintained for VAT & Income Tax Refunds Outstanding ................................................................................................................... 45 4.25 Variance in LTA revenue – Recurring Issue ............................................................ 46 4.26 Delay in Finalisation of Audited Financial Statements – Recurring Issue ...... 48 4.27 Internal Control ............................................................................................................. 49 4.28 Preparation of 2018 - 2019 Draft Agency Financial Statements ...................... 50 4.29 Quality of draft financial statements by entities .................................................... 51 4.30 Timeliness of draft financial statements .................................................................. 51 4.31 Timeliness of Provision of Management Comments and Signing of Financial Statements
 ....................................................................................................................... 51 M i n i s t r y o f E c o n o m y P a g e 16 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.1: Trading and Manufacturing Accounts – FPO............................................. 52 Appendix 4.2: Trading and Manufacturing Accounts – Office Accommodation ......... 54 Appendix 4.3: Trust Account Statements of Receipts and Payments ............................. 55 Appendix 4.4: Parenthood Assistance Payment ................................................................... 60 Appendix 4.5: Details of Batch Posting and Mispostings of Revenue ............................61 Appendix 4.6: Waiver of Tender Process ............................................................................... 63 Appendix 4.7: Variations to the Scope and Extension of Time ...................................... 64 M i n i s t r y o f E c o n o m y P a g e 17 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART A: FINANCIAL INFORMATION The budget, including total receipts and expenditures, consisted of the following Heads: • Head 4 – Ministry of Economy and Fiji Bureau of Statistics • Head 50 – Miscellaneous Services • Head 51 – Pensions, Gratuities and Compassionate Allowances • Head 52 – Charges on Account of Public Debt • Head 13 – Fiji Independent Commission Against Corruption 4.1 Audit Opinion The audit of
 the 2019 accounts of the Ministry of Economy resulted in an unqualified audit opinion, however, with emphasis of matters and other matters.
The Emphasis of Matters included the following: 1.

The Office Accommodation Trading Manufacturing Account on Schedules 14 & 15 of the Agency Financial Statements relate to the semi-commercial arm of the Ministry that caters for the commercial rent out of government quarters.

The Ministry recorded deposits and deductions of $204,921 in the Office Accommodation TMA Balance Sheet as at 31 July 2019.

The funds were transferred from Public Service Commission in 2015.
The Ministry was not able to provide detailed listing to confirm the completeness and accuracy of deposits and deductions of $204,921.

The Ministry had agreed to resolve the matter in the subsequent year’s financial statements.

M i n i s t r y o f E c o n o m y P a g e 18 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 2.

There were opportunities to improve internal controls over the Parenthood Assistance Scheme.
The audit could not establish whether independent checks were carried out to confirm the accuracy of the information provided in the application forms.

There was no documentary evidence to confirm that the bank accounts were opened under the children’s name and there were no follow up with financial institutions to confirm that a minimum balance of $500 were retained in the bank accounts to be accessed only when the child is enrolled in Year 1.
These internal control weaknesses, if not addressed promptly, may result in material misstatement and possible financial losses in the future.

3.

A total grant of $11.7 million was paid to Fiji Servicemen’s After-Care Fund (FSAF) for the year ended 31 July, 2019.

The FSAF has yet to submit the draft financial statements for the years ended 31 July 2017 to 2019 for audit.

A disclaimer of opinion was issued for the year ended 31 July 2016.

Other Matters included the following: 1.


The Ministry did not have a Risk Management Policy and was still in the process of finalising the Strategic Plan and Costed Operational Plan.

2.

The Trading and Manufacturing Account (Fiji Procurement Office and Office Accommodation) are operating on semi-accrual accounting basis instead of full accrual accounting as required by the Finance Instructions 2010.
Property, plant and equipment used for the operation were not disclosed in the balance sheet of the Trading Accounts.

3.

The Ministry did not disclose any significant events subsequent to year end that would require adjustment to or disclosure in the financial statements.
4.2 Appropriation Statement – Head 4 Ministry of Economy The Ministry collected revenue totalling $3.86 billion in 2019 and incurred expenditure totalling $73.8 million against a revised budget of $120.4 million resulting in unutilised budget of $46.7 million or 38.8%.

Details of expenditures against the revised budget are provided in Table 4.1.
Table 4.1: Head 4 - Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditure Appropriation ($) ($) ($) ($) ($) Established Staff 18,637,119 22,500 18,659,619 11,949,400 6,710,219 Government Wage Earners 617,647 117,462 735,109 578,270 156,839 1 2 M i n i s t r y o f E c o n o m y P a g e 19 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditure Appropriation ($) ($) ($) ($) ($) 3 Travel & 1,760,039 25,000 1,785,039 1,142,258 642,781 Communication 4 Maintenance & 1,949,500 (28,962) 1,920,538 1,265,727 654,811 5 6 7 Operations Purchase of 2,513,506 (138,000) 2,375,506 1,745,067 630,439 Goods & Services Operating Grants 80,472,722 --- 80,472,722 54,358,640 26,114,082 & Transfers Special expenditure 3,611,617 2,000 3,613,617 2,298,768 1,314,849 Total Operating 109,562,150 --- 109,562,150 73,338,130 36,224,020 Expenditure 8 Capital Construction Capital Purchase 9 10 Capital Grants & 10,000,000 Transfers --- --- --- --- --- --- --- 10,000,000 --- --- --- --- --- 10,000,000 Total Capital 10,000,000 --- 10,000,000 --- 10,000,000 Expenditure 13 Value Added Tax 885,100 --- 885,100 416,897 468,203 TOTAL 120,447,250 --- 120,447,250 73,755,027 46,692,223 The unutilised budget were largely due to the following: 1.
Unutilised budget of $6.7 million in SEG 1 - Established Staff was due to the significant number of positions that remained vacant at year end due to the delay in filling them.

2.

Unutilised budget of $26.1 million in SEG 6 - Operating Grants and Transfers was due to the partial release of funding to the Fiji Revenue Customs and Service.

Grants were released on need for funding basis.

3.
3.

Unutilised budget of $1.3 million in SEG 7 - Special Expenditure were due to the delay in the development of the National Asset Management Framework and savings from the Population Census and Household Income & Expenditure Survey.

4.

Unutilised budget of $10 million in SEG 10 - Capital Grants and Transfer was due to non- release of quarterly capital grants to the Fiji Revenue and Customs Service.
M i n i s t r y o f E c o n o m y P a g e 20 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 4.3 Appropriation Statement – Head 50 Miscellaneous Services Miscellaneous Services is administered by the Ministry of Economy.

The funding provided under Head 50 normally include contingency funding and other common central pools of funds that are available to the Whole of Government.

It also includes funding for activities that require scrutiny and monitoring by the Ministry of Economy.
Expenditures totalling $310.4 million were incurred under Head 50 in 2019 against a revised budget of $538.9 million resulting in unutilised budget of $228.5 million or 42%.

Details of expenditures against the revised budget are provided in Table 4.2.
Table 4.2: Head 50 - Appropriation Statement for 2019 SEG Item & & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Costs Capital Construction Capital Purchase Capital Grants & Transfers Total Expenditure Value Added Tax TOTAL Capital Budget Estimate ($) 10,000,000 --- 5,438,300 --- Changes ($) --- --- --- --- Revised Estimate ($) 10,000,000 --- Actual Expenditure ($) --- --- Lapsed Appropriation ($) 10,000,000 --- 5,438,300 2,744,969 2,693,331 --- --- --- 47,649,038 (3,352,838) 44,296,200 38,386,303 5,909,897 2,845,231 130,000 2,975,231 2,319,426 655,805 32,508,480 98,441,049 5,768,026 38,276,506 2,545,188 100,986,237 27,067,620 70,518,318 11,208,886 30,467,919 22,480,970 (1,167,355) 21,313,615 6,723,139 14,590,476 33,500,000 400,813,498 (1,594,365) 31,905,635 (28,108,741) 372,704,757 25,326,720 200,589,546 6,578,915 172,115,211 456,794,468 (30,870,461) 425,924,007 232,639,405 193,284,602 12,628,500 567,864,017 (617,368) 12,011,132 (28,942,641) 538,921,376 7,237,375 310,395,098 4,773,757 228,526,278 The unutilised budget were mainly due to the following: 1.
Unutilised budget of $193.3 million in SEGs 8 – 10 Capital Expenditures were due to the partial release of funds to agencies based on the funding needs, delay in progress of project implementations and finalisation of procurements.

2.

Unutilised budget of $11.2 million in SEG 7 - Special Expenditure was due to the delay in the implementations of projects such as Public Private Partnership for housing and for health and the deferral of support measures for Crop Insurance Development.
M i n i s t r y o f E c o n o m y P a g e 21 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 3.

The budget of $10 million for SEG 1 - Established Staff was not utilised as there were no over expenditures for Ministries and Department.

4.4 Appropriation Statement – Head 51 Pensions, Gratuities and Compassionate Allowances The Pensions Section manages the computation and payment of various pensions in accordance with existing pension legislation.
The Section also processes re-engagement benefits for prison officers, military officers and forest guards.

The section oversees the payment of pensions to Government Pensioners, Ex-Parliamentarians, Ex-Prime Ministers and Presidents, Ex-Chief Justices and Retired Judges, Service Pensioners and the widows and orphans of deceased public officers.
Expenditures totalling $34.6 million were incurred under Head 51 against a revised budget of $46.2 million, resulting in unutilised budget of $11.6 million or 25.1% for 2019.

Details of expenditure against the revised budget are provided in Table 4.3.
Table 4.3: Head 51 - Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditure Appropriation ($) ($) ($) ($) ($) 11 Pensions 45,315,100 (8,676) 45,306,424 33,895,442 11,410,982 Gratuities 906,000 8,676 914,676 752,000 162,676 TOTAL 46,221,100 --- 46,221,100 34,647,442 11,573,658 The unutilised budget resulted from the decrease in the number of pensioners from natural attrition and non-submission of Life Certificates, which is required on a six-monthly basis.
4.5 Appropriation Statement – Head 52 Charges on Account of Public Debt Funds allocated under Head 52 – Charges on Account of Public Debt were for the repayments of domestic and overseas loans.

Expenditures totalling $617.4 million was incurred under Head 52 in 2019 against a revised budget of $635.8 million, resulting in unutilised budget of $18.4 million or 3%.

Details of expenditure against the revised budget are provided in Table 4.4.
M i n i s t r y o f E c o n o m y P a g e 22 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table 4.4: Head 52 - Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditure Appropriation ($) ($) ($) ($) ($) Finance Charges on Public Debt 12 Miscellaneous 9,200,000 --- 9,200,000 3,903,139 5,296,861 Payment 14 15 Overseas Loans 123,372,400 Domestic Loans 503,178,900 TOTAL 635,751,300 --- --- --- 123,372,400 109,191,082 14,181,318 503,178,900 504,269,080 (1,090,180) 635,751,300 617,363,301 18,387,999 4.6 Appropriation Statement – Head 13 FICAC Expenditures totalling $7.8 million was incurred under Head 13 in 2019 against a revised budget of $8.4 million.
The expenditure was related to grants paid to the Fiji Independent Commission Against Corruption (FICAC).

Details of expenditure against the revised budget are provided in Table 4.5.
Table 4.5: Head 13 - Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate ($) 6 Operating Grants 8,480,987 ($) --- Budget Expenditure Appropriation ($) ($) ($) 8,480,987 7,815,296 665,691 & Transfers TOTAL 8,480,987 --- 8,480,987 7,815,296 665,691 4.7 Trading & Manufacturing Account (TMA) Trading & Manufacturing Accounts are government owned entities that are operated on a semi-commercial basis and within the limits of a prescribed ceiling set by the Minister to provide goods, services or works cost effectively, whilst increasing the returns that are realised from them.
The Ministry of Economy operated two TMAs which included the following: (a) Fiji Procurement Office (FPO) The FPO TMA is designed to assist with the procurement and logistic service requirements in line with the Ministry of Economy’s objectives.
FPO sells official Fiji flags, charges for tender documentation fees, levies accounts and administrative charges to Ministries for payment M i n i s t r y o f E c o n o m y P a g e 23 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 services and logistic service charges for customs clearance of imported goods and delivery of items from ports to agency site.

The financial analysis of the FPO TMA for the year ended 31 July 2019 is provided below.
Detailed Statements for the FPO TMA are provided in Appendix 4.1.

(b) Office Accommodation The Office Accommodation TMA provides housing for eligible civil servants.

In 2009, the responsibility of the function was extended to commercial rental to interested members of the public resulting in the establishment of the TMA in 2011.
The TMA is solely responsible for the semi-commercial nature that caters for commercially renting out of quarters.1 1 Office Accommodation & Government Housing, Construction Implementation Unit, Ministry of Economy TMA Business Plan 2016 M i n i s t r y o f E c o n o m y P a g e 24 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The financial analysis of TMA for the year ended 31 July 2019 is provided below.
Detailed Statements for the Office Accommodation TMA are provided in Appendix 4.2.

4.8 Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending withdrawal for use.
The Ministry of Economy operated and maintained ten main trust fund accounts which included the following: (a) COP 23 Trust Fund The COP 23 Presidency Trust Fund account was established for the funding of the Republic of Fiji (‘government’) in their role as President of Conference of Parties 23 and to assist the government to finance programmes, projects and activities that relate to the Paris Agreement and for related matters.

As at 31 July 2019, the account had a balance of $5.1 million.
M i n i s t r y o f E c o n o m y P a g e 25 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 (b) Performance Bond Performance bonds for tenders awarded by the Fiji Procurement Office as a means of security for the faithful performance of contracts for which payments are made according to the tender contracts.

As at 31 July 2019, the Trust Fund account had a balance of $6.5 million.
(c) TC Winston Trust Fund Account The Tropical Cyclone Winston Trust Fund Account was established for donations received from various donors of the Cyclone Winston Relief Fund appeal.

As at 31 July 2019, the Trust Fund account had a balance of $3.6 million.

M i n i s t r y o f E c o n o m y P a g e 26 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 (d) Government Tuna Stabilization Trust Fund This trust fund was established to facilitate the Tuna Stabilization Fund (TSF) Policy.
The underlying purpose of the TSF policy is to assist locally owned fishing companies by providing funding assistance to the fishing companies that are locally owned and/or controlled.

The fund was created to assist these companies raise their financial capacity to compete with foreign fishing companies.

As at 31 July 2019, the Trust Fund account had a balance of $0.4 million.
(e) ODA Performance and Tenancy Bond The Tenancy trust fund account was established to record tenancy bonds for occupation of quarters on rent.

As at 31 July 2019, the Trust Fund account had a balance of $0.2 million, and there was no movement in the balances during the year.
M i n i s t r y o f E c o n o m y P a g e 27 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 (f) Adopt a School Trust Fund The trust fund was established specifically to record funds received from donors willing to carry out the rehabilitation of schools.

As at 31 July 2019, the Trust Fund account had a balance of $4.7 million.
(g) Group Insurance Trust Fund Account The trust account receives insurance payments and facilitates payments after assessments are made to the nominees of the insurance policy holders upon death.

As at 31 July 2019, the Trust Fund account had a balance of $0.09 million.
M i n i s t r y o f E c o n o m y P a g e 28 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 (h) Miscellaneous Fund and Others The trust fund account was established following a Cabinet decision on "Effective management of trust monies - FIN 60/16" CP (09)72 of 16/06/09.

The Cabinet approved that the surplus funds in various Agency trust bank accounts be transferred into the Consolidated Trust Fund account.

As at 31 July 2019, the Trust Fund account had a balance of $8.8 million.
While there were no expenditures incurred during the year, $174,094 was recorded as trust receipts from interest earned during the year.

(i) Accident Compensation Fund This trust fund account was established for the payment of compensation for personal injury and death as a result of an accident in Fiji arising out of and in the course of employment and accidents occurring on any school premises.

As at 31 July 2019, the Trust Fund account had a balance of $14.5 million.
Detailed statements for trust receipts and payments are provided in Appendix 4.3.

M i n i s t r y o f E c o n o m y P a g e 29 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART B: SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

It is likely that these issues may have an impact on the operations of the Ministry in future, if necessary action is not taken to address them.
It is important to note that the deficiencies detailed in this report were identified during our audit and may have been subsequently resolved by the Ministry.

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2019.

4.9 Detailed listing not maintained for rental bond received - Office Accommodation TMA The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.2 The audit noted that detailed listings to support the rental bonds of $204,921 were not maintained by the Ministry.

Root Cause/Implication There was no handover when management of Office Accommodation was transferred from the Public Service Commission to the Ministry of Economy.
In the absence of detailed listings, we were not able to ascertain the accuracy and completeness of the deposits and deductions balance reflected in the Trading and Manufacturing Account - Accommodation as at 31 July 2019.

Recommendation The Ministry should ensure that detailed listings of the bonds received from tenants are maintained.
2 Finance Instruction 2010 - Section 58(3) M i n i s t r y o f E c o n o m y P a g e 30 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action The recommendation of the auditors are noted.

A thorough exercise would be carried out to prepare the detailed bond listing which should be finalised in FY2021-2022.

Officer Responsible Head of CIU.


4.10 Anomalies in the Parenthood Assistance Payment The parenthood assistance payment (PAP) of $1,000 was provided in the 2018/2019 budget to assist low income families cover the costs of rearing a child during infancy and upon entering primary school.

The review of the applications under the PAP program (Appendix 4.4.)
revealed the following: • The audit could not ascertain whether independent checks were carried out to confirm the accuracy of the information provided in the application forms such as the annual gross income of applicants.

• There were no documentary evidence to confirm that the bank accounts were opened in the children’s name.

• The audit could not ascertain that follow-ups were made with financial institutions to confirm that a minimum balance of $500 have been retained in the children’s bank account.
• Contrary to Section 2.9.3 of the Finance Manual, the parenthood assistance of $14.1 million paid to applicants were not processed through payment vouchers.

Instead, direct transfers were made by the bank upon receiving approval from Registrar of Births, Deaths and Marriages.

Root Cause/Implication There were no Inter-Agency Data Sharing Memorandum of Understanding/Agreement between the Government entities involved in the PAP program.
Recommendations The Ministry should review the processes involved in the PAP program and develop an inter-agency Memorandum of Understanding describing principles, procedures, roles and responsibilities for the parenthood assistance scheme.

In addition, internal control and oversight of the PAP program should be improved.

M i n i s t r y o f E c o n o m y P a g e 31 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action We agree with the recommendation.
The scheme is not budgeted in the FY 2020-2021.

If the programme is reintroduced to be budgeted, the Ministry will ensure that internal control processes are observed and improved.

Officer Responsible Head of Budget and Planning.


4.11 Grant paid to Fiji Servicemen’s Aftercare Fund Administering agencies must review each grant scheme each year to determine whether it is achieving its specified outcomes as efficiently and effectively as possible and, where it is not, must take action necessary to improve its efficiency and effectiveness.

Acquittal reports must be obtained before the next monthly or quarterly grants are paid out.
The administering agency must ensure that each grant has been used only for the purpose for which it was provided.3 The audit could not ascertain whether the Ministry had carried out a review of the grant scheme to the Fiji Servicemen’s Aftercare Fund (FSAF).

A disclaimer of opinion was issued to FSAF’s last audited financial statements for the period ending 31 July, 2016.

A total of $11.7 million was paid to FSAF during the year of which $11 million was acquitted.

Refer to Table 4.6 for details.


Table 4.6: Details of Amount Paid and Acquitted by FSAF Recipient Amount Paid Amount Acquitted Unutilised Sum FSAF 11,685,749 11,021,466 ($) ($) ($) 664,283 Root Cause/Implication Non–compliance with the Grant Agreement between the Ministry of Economy and Fiji Servicemen’s Aftercare Fund.

Recommendation The Ministry should ensure that the requirements of the Grant Agreement are complied with.

3 Finance Instructions 2010 – Section 16 - (6), (8) and (9).
M i n i s t r y o f E c o n o m y P a g e 32 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action The Fiji Servicemen’s Aftercare Fund receives annual grant, through the annual budget process for which an agreement is signed between the Ministry of Economy and Aftercare Fund on the disbursements of funds.

The roles and responsibilities of both the agencies is stipulated in the signed agreement.
The Ministry of Economy reviews the grant on yearly basis through the submission of acquittals and progress reports of the current year through the normal budgetary process whereby expenditure are critically reviewed and allocated.

Based on this, the following year’s grant is determined.

For example, a sum of $11.7m was provided in the 2018-2019 FY and $11.3m in the 2019-2020 FY.

The reduction of $0.4m was due to the reduction in the number of recipients who were no longer in the service.
The fluctuations in the annual grant for the Aftercare over the years is tabulated below Financial Year Annual Grant 2016-2017 2017-2018 2018-2019 2019-2020 Revised 2019-2020 2020-2021 2021-2022 ($) 8,776,749 10,985,749 11,685,749 11,285,749 11,285,749 11,485,749 12,045,239 We understand that there was unutilized sum of around $664,283, emanating from the 2018-2019 FY which was rolled over to 2019-2020 FY.
In the 2019-2020 FY, the Aftercare Fund was transferred from the Ministry of Economy to the Ministry of Defence, National Security and Policing.

Officer Responsible Head of Budget and Planning.

4.12 Accounting for TMA Assets The profit and loss statement and the balance sheet must be prepared on an accrual accounting basis.4 The audit noted that the cost of property, plant and equipment acquired for Trading and Manufacturing Activities have not been capitalised.
For example, the cost of the forklift of 4 Finance Instructions 2010 – Section 30(2) M i n i s t r y o f E c o n o m y P a g e 33 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 $55,300 acquired in 2019 was not capitalised but included as repairs and maintenance expenses.

Root Cause/Implication The Ministry’s Finance Manual does not specify the accounting policy and guideline to account for property, plant and equipment purchased for TMA.
The TMA Policy is not aligned to the requirements of the Finance Instruction 2010.

Recommendation The Ministry should review its Finance Manual and clearly document the accounting policies including treatment and presentation of fixed assets purchased for TMA.

Agreed Management Action The recommendation of the auditors are noted.

Fiji Procurement Office will review the Finance Manual and clearly document the accounting policies including treatment of fixed assets bought through TMA.
Officer Responsible Head of Procurement.

4.13 Batch posting of transactions using Smartlink Financial transactions shall be posted into automated information system (General Ledger System) using journal entry input forms or directly from source documents such as journal vouchers or payment vouchers.5 The Ministry used Smartlink for batch posting of transactions totalling $7.8 million.
The audit could not ascertain the existence of controls on the use of Smartlink to post large volume of transactions in the FMIS general ledger.

Refer to Appendix 4.5 for details of batch postings.

Root Cause/Implication The process/procedure on the use of Smartlink is not documented in the Finance Manual.

The absence of documented procedures and the lack of supervisory checks increases the risk of misstatements.
5 Ministry of Economy Finance Manual 2018 Section 16.2.1 M i n i s t r y o f E c o n o m y P a g e 34 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Recommendation The Ministry should review the Finance Manual to include the process for using Smartlink and the approval thresholds for journal vouchers / Smartlink.

Agreed Management Action The Finance Manual will be updated to reflect the usage of Smartlink and thresholds.
The Smartlink postings are accompanied by approved JVs as additional controls which is the current practice.

Officer Responsible Respective Accounting Heads of Section.

4.14 Mis-posting of revenue The audit noted that revenue transactions totalling $8.65 million were incorrectly posted in the FMIS general ledger.

Refer to Appendix 4.5 for details.


Root Cause/Implication Lack of supervisory checks within the Accounting Section to ensure that transactions are posted to the correct allocation in the FMIS general ledger.

Recommendation The Ministry should ensure that supervisory checks are improved in the Accounting function and that internal controls as required by the Finance Manual are implemented.

Agreed Management Action We acknowledge the audit issue.
However, we also wish to highlight that the new grant allocations were setup at that time in FMIS to cater for the new grants anticipated to be received by Government in the fiscal year 2019.

The past practice was posting of all grants receipted into the GCA to the ‘Other Grants-In-Aid’ allocation in FMIS.

As a change, separate revenue allocations have been created to cater for the vast majority of revenue items in the FMIS.

Officer Responsible Respective Accounting Heads of Section.
M i n i s t r y o f E c o n o m y P a g e 35 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 4.15 Expired Tenancy Agreements A total of $28.9 million was paid to various landlords for office space to the various Government Ministries/Department.

Our audit noted that the tenancy agreements based on which a total rental payment of $2.8 million were made, had expired.

The expiry dates of these tenancy agreements ranged from 1984 to 2019.
Root Cause/Implication Tenancy agreements do not include the clause on the automatic transition from month to month status.

Recommendation The Ministry should expedite the renewal of the tenancy agreements upon expiry and ensure that the terms and conditions in the rental agreement is consistent with other rental agreements.
Agreed Management Action The Ministry notes the comments and is currently in the process of drafting the new Agreements with current terms and conditions and undertake all due processes to ensure that Agreements are valid.

To date, the landlords had not raised any litigation against the Ministry and based on mutual agreement it is being occupied and paid monthly.
Officer Responsible Head of CIU 4.16 Clarity in the Procurement Regulation for “Urgent Waiver of Tender” Public tenders must be called for any procurement of goods, services or works valued at $50,000 or more, unless a Tender Board has approved an exemption in accordance with the Procurement Regulations.
M i n i s t r y o f E c o n o m y P a g e 36 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The Board may approve that tenders procedures be waived where there is only one supplier capable of supplying the goods, services or works and a supplier has been nominated by an aid agency which is fully funding the procurement.6 If it is impractical to comply with regulations 30 in relation to the provision of urgent infrastructure development and services, the Minister of Economy may on this basis exempt such particular infrastructural services from complying with regulations 30 sub regulation 1.7 With reference to Section 48 of the Procurement Regulations, the Ministry had requested for waiver of tender procedures for the procurement of goods, services and works valued at more than $50,001.
Although approvals for urgent waiver of tender were sighted, audit could not ascertain whether these services or works carried out met the criteria for “provision of urgent infrastructure development and services”.

Refer to Appendix 4.6 for details.

Root Cause/Implication Ambiguity in the regulation on the definition of “urgent infrastructure services” as per the procurement regulation.
Recommendation It is recommended that the Procurement Regulation is reviewed to clearly define “urgent infrastructure development and services”.

Agreed Management Action The Ministry notes the requirement of Procurement Regulation 2010.

However, due to the urgency and nature of works and limited timeframe, the waiver of tender processes were sought which are as follows: • due to the urgency of the project since the building was deteriorating significantly and posing high risk to occupants.
Therefore, to expedite the construction works, the waiver of tender processes; • due to the priority and need for expertise required and nature of project with high security requirement, the waiver of tender was requested.
The first layer of procurement by calling EOI for architects was made and costing was requested for proposal of fees from the shortlisted bidders; and 6 Procurement Regulations 2010 – Regulation 48 (1) 7 Procurement Regulations 2010 – Regulation 48 (4) M i n i s t r y o f E c o n o m y P a g e 37 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 • Similar to other projects, the ITC Centre required urgent maintenance as the Government data was at risk and could affect the operations of Government, therefore to expedite the maintenance works, waiver of tender process was sought.
The earlier scope has very minimal approach given that the real assessment was unknown until preliminary assessment was submitted.

Upon receiving the detailed assessment, there was requirement for design change to ensure that Government will not be required to revisit this project in near future for further maintenance.

Officer Responsible Head of CIU.


4.17 Excessive variations and extension of time for completion A variation is an alteration to the scope of work originally specified in the contract, whether by way of an addition, omission or substitution to the works, or through a change to the manner in which the works are to be carried out.
Any variation to the value of the initial contract must be approved by the Board.8 Our review of sample projects with variations approved by the Government Tender Board and Minister for Economy noted that variations exceeded 10% of the original contract sum.

Refer to Appendix 4.7 for examples of variations and extension of time for completion of projects.

Root Cause/Implication The variations indicate insufficient project planning and lack of involvement during the design phase.
The request for extension of completion time indicates that contractors may have redirected resources to other projects as they have been engaged by the Ministry in multiple projects concurrently.
Recommendations The Ministry should: • develop a variation order procedure which should outline a decision tree when to call for re-tender if variation exceeds a certain percentage of the original contract amount; • ensure that sufficient data/information is obtained prior to developing designs; and • ensure that designs are complete at the tender stage to minimize variation.
8 Procurement Regulation 2010 – Regulation 11(2) M i n i s t r y o f E c o n o m y P a g e 38 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action The design is on preliminary concept developed and full stages at individual levels.

Therefore, these variations are either unforeseen or considered as latent conditions.

The variation is always kept at minimal; however, on some occasions we equate the value of variation works against the retendering process.
During the execution of the project, if that particular project suffers damages from disaster such as cyclone and flood, we will have to request the contractor and consultant to attend those work.

Setting up a limit or policy will lead to further delaying the completion of the project and will add more risk to Government as all risk related costing will be charged to the client; hence, Government will end up losing more funds.
Similarly, due to unforeseen circumstances, the Extension of Time (EoT) is granted and where not applicable the delay damages and liquidated damages are imposed as per the terms and conditions of the contract.

For this particular case, the roof of this building was blown away by another cyclone and at that moment there was a contractor and consultant assigned at the site.
We have used most practical solution to include this additional works as variation to the standing contract on site to avoid new cost and charges for Detailed Damaged Assessment, Long Term structural design works, preliminaries & General for a new bidder, management of 2 contracts and contractors at one single site and on one building, profit margins and admin cost for implementing the project.
The relevant documents related to the projects on EoT can be viewed by OAG with Assistant Finance Manager – CIU Officer Responsible Head of CIU.

4.18 Anomalies in Operating Trust Fund Account Reconciliation is an internal control activity established to ensure the accuracy of financial reports being produced not only at division level and/but most importantly at ministry level.
The Accounts Officer must reconcile all accounts to be submitted to Manager Treasury within two weeks after the closing of each monthly account.9 Our review of the Head 50 Operating Trust (Retention Money) Fund revealed the delay in the preparation of monthly reconciliation statements.
Refer below for examples: 9 Ministry of Economy Finance Manual 2018 – Section 17.3.3.2.1 M i n i s t r y o f E c o n o m y P a g e 39 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 • August 2018 to February 2019 reconciliation statements were prepared on 28 March 2019.

• March to May 2019 reconciliation statements were prepared on 10 July 2019.

• June and July 2019 reconciliation statements were prepared on 27 August 2019.
Root Cause/Implication Delay in performing the reconciliation and preparing the reconciliation statement were due to the shortage of staff at CIU Department.

Recommendations The Ministry should ensure that reconciliation of accounts are prepared on time and that supervisory checks are improved in the Accounting function and that internal controls are as required by the Finance Manual.

Agreed Management Action The recommendation is noted.
The monthly reconciliation of retention allocation is carried out regularly, which is matched against the individual project retentions.
Officer Responsible Head of CIU 4.19 Variance between Overseas Pension Cash GL and Bank Reconciliation Statement The Manager must verify balances in the bank reconciliation to the cashbook, bank statements, unpresented cheque list and the previous month’s bank reconciliation before certifying it.10 The audit noted variances between cash balance in the FMIS general ledger and the bank reconciliation statement as at 31 July, 2019.

Refer to Table 4.7 for details.


Table 4.7: Variance between FMIS general ledger and Amended Bank Reconciliation.

Cash Account FMIS GL Amended Variance Bank Recon ($) ($) ($) Crown Agent 104,680 58,095 46,585 10 Ministry of Economy Finance Manual 2018 – Section 7.4.11 M i n i s t r y o f E c o n o m y P a g e 40 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Root Cause/Implication Incorrect treatment of Pension Cash Account as Drawings in the FMIS general ledger.
Recommendation The Ministry should reconcile cash balance in the FMIS general ledger with bank reconciliation statement.

Agreed Management Action This is a legacy issue and the Ministry has undertaken a thorough exercise to resolve the issues in FY2021-2022.
Officer Responsible Manager Pension & Payroll 4.20 Increase in arrears of revenue for pensions It is important to have in place a stringent credit policy and debt recovery procedures to counter the risk of losses from irrecoverable debts.11 Our review of the arrears of revenue report noted the significant increase in the arrears as at 31 July 2019.

Refer to Table 4.8 for details of arrears of revenue from 2016 – 2019.
Table 4.8: Details of Arrears of Revenue 2019 2018 2017 2016 ($) ($) ($) ($) 172,528 141,743 149,639 110,545 From the $172,528 owed to the Ministry, $94,246 or 55% of the arrears were more than two years old.

Root Cause/Implication The significant increase in arrears of revenue is due to the untimely submission of death certificates from families of pensioners.
11 Ministry of Economy Finance Manual 2018 – Part 9 paragraph 1 M i n i s t r y o f E c o n o m y P a g e 41 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The non-recovery has provided reasons to the Ministry to write them off and thus resulting in loss of revenue for Government.

Recommendation The Ministry should consider alternative processes of being notified when pensioners are deceased.
Agreed Management Action Arrears of revenue for the Pension department has decreased from FY 2017 onwards.

In most cases the arrears of revenue consist of overpayment of pensions to 60% dependents and payments to widows and orphans.

As a result, if the widow dies, there are no further pension payments due to the deceased pensioner.

However, if a civil pensioner passes away, the 60 percent payments are recoverable from the beneficiaries.

Officer Responsible Manager Pension & Payroll.


4.21 Anomalies in Main Trust Accounts Management has the responsibility for devising, installing and supervising an adequate system of internal control.12 The audit noted the following anomalies: • Variances noted between the FMIS general ledger and bank reconciliation statement balances.

Refer to Table 4.9 for details.

Table 4.9: Variance between FMIS general ledger and Bank Reconciliation Statement.
Main Trust Account General Ledger Bank Reconciliation Variance ODA Performance and Tenancy 164,907 ($) ($) 166,460 ($) 1,553 Bond BOB Adopt a School ANZ Adopt a School 2,780,896 1,893,164 2,837,027 1,940,108 (56,131) 46,944 • No detailed listing to support the Group insurance balance of $89,210.
12 Ministry of Economy Finance Manual – Part 17 paragraph 1 M i n i s t r y o f E c o n o m y P a g e 42 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Root Cause/Implication Supervisory checks within the Accounting Section to ensure bank reconciliation are reconciled with the cash book (general ledger).
Recommendation The Ministry should ensure that supervisory checks are improved in the accounting function and that internal controls as required by the Finance Manual are implemented and to investigate and rectify any variances noted; and maintain detailed listing of the group insurance.

Agreed Management Action ANZ Adopt a School – Variance of $403,374 has been regularized through audit adjustment in FY2017-2018.

Officer Responsible Respective Accounting Heads.


4.22 Anomalies for VAT Payables – TMA VAT Payable or Refundable will be determined by the balance sitting in Natural account number 863201 at the end of the month.

TMA’s to register separate Tax Identification Number (TIN) from its Ministries and Department for VAT purposes.13 Our review of the TMA VAT Liability Accounts noted the following: • There was no VAT Output allocation for TMA Office Accommodation.
As a result, rental revenue was posted at VAT inclusive price.

The VAT Liability allocation in the FMIS general leger reflected the VAT input from expenditure.

• TMA Office Accommodation did not have a separate TIN.

Root Cause/Implication As there was no separate TIN, there was also no Statement of VAT account for the TMA to ascertain the correctness of the VAT Liability balance reflected in the financial statements.
As such, audit was not able to substantiate the accuracy and completeness of the VAT liability amount.

13 Finance Circular No.11/2012 – Section 3 M i n i s t r y o f E c o n o m y P a g e 43 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Recommendation The Ministry should ensure that the TMA registers a separate TIN for VAT purposes in accordance with the requirements of the Ministry of Economy Circular 11/2012.
Agreed Management Action Ministry will post the VAT output in FY 2021/2022.

Reconciliation on VAT will be prepared to identify the necessary adjustments to rectify the issues highlighted above.

Acquiring the separate TIN would not be practical as the Ministry is planning to close the TMA.
Officer Responsible Respective Accounting Heads 4.23 Absence of Risk Management Policy and Operational Plans – Recurring Issue Risk management and internal control are important and integral parts of a performance management system and crucial to the achievement of outcomes.

They consist of an ongoing process designed to identify and address significant risks involved in achieving an entity’s outcome.
A strong system of financial management is essential for the implementation of public sector policies and the achievement of intended outcomes, as it will enforce financial discipline, strategic allocation of resources, efficient service delivery and accountability.

The audit noted that there was no risk management framework in place.
As a result, the Ministry does not have approved written policies, procedures and guidelines to manage the risks associated with the following: • Fraud control and anti-corruption • Disaster recovery and business continuity • Assessment of potential conflict of interest In addition, the Strategic and Operational Plans that were drafted were yet to be endorsed.

Root Cause/Implication The Ministry’s plan is still in draft form awaiting approval.
M i n i s t r y o f E c o n o m y P a g e 44 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Recommendation The Ministry should ensure that the Risk Management Policy is developed and that the Strategic Plan and Costed Operational Plans are appropriately approved before the commencement of the financial year.
Agreed Management Action In the absence of the Risk Management Policy, the Ministry is complying with the Ministry’s Finance Manual, Financial Management Act 2004 and the Finance Instruction 2010 in the operation of its daily activities.

Everyone at the Ministry has the responsibility of managing risks through controls embedded into daily activities and decisions.
The Ministry is working with the Development Partners to source a Technical Assistance for a Risk and Compliance Specialist to assist with the development of risk and compliance framework for the Ministry.

As for the Strategic Plan and Operation Plan, the documents have been drafted and submitted to Hon.

Minister Office for approval.

Upon finalization, these plans will be provided to OAG.
Officer Responsible Head of Administration 4.24 Ageing Reports not maintained for VAT & Income Tax Refunds Outstanding - Recurring Issue Accounts payable balance of $254,815,142 is made up of VAT and Income Tax Refunds Outstanding.

The audit noted that the FRCS did not maintain the ageing reports for income tax and VAT refunds outstanding as at 31 July 2019.

Root Cause/Implication The FRCS explained that there is no systematic way currently in place whereby the age of refunds is extracted and recorded.
The Fiji Integrated Tax Systems (FITS) maintain timelines for each refund case, which is compiled manually.

The absence of ageing reports for accounts payable limits the ability of government to keep track of long outstanding dues.
M i n i s t r y o f E c o n o m y P a g e 45 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Recommendation The Ministry should require that the FRCS maintain and submit aging reports for Income tax and VAT Refund outstanding to assist in identifying long outstanding payables of Government.
Agreed Management Action The aging reports for VAT and Income Tax refunds have been implemented in the FRCS new IT system as such moving forward, FRCS will be able to retrieve debt aging reports for refunds.

VAT tax type have been activated in the new system and FRCS have started submitting VAT aging report for the period November 2019 onwards.

Whilst, Income Tax aging report will be available from July 2021 onwards.
No aging report was maintained for VAT and Income Tax refund as at 31st July 2018 due to: • Continuous changes to the refund statements done through assessment, journals, payments and other corresponding entries; and • The correct Vat and Income Tax aging report could have only been retrieved if data extraction was done on 31 July 2018 and the data extraction done now does not reconcile with the actual balances held at the same date.
Officer Responsible Director Revenue – FRCS 4.25 Variance in LTA revenue – Recurring Issue Reconciliation is an internal control activity established to ensure the accuracy of financial reports being produced not only at division level and/but most importantly at ministry level.
The Accounts Officer must reconcile all accounts to be submitted to Chief Accountant within two weeks after the closing of each monthly account.14 Audit noted a variance of $0.6 million between the amount recorded in the FMIS general ledger (SRG 23) and the amount received through independent confirmation from the Land Transport Authority (LTA) for the year ended 31 July 2019.

Refer to Table 4.10 for details.


14 Ministry of Economy Finance Manual - Section 17.3.3.2.1 M i n i s t r y o f E c o n o m y P a g e 46 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table 4.10: Details of Variance between LTA Report and FMIS General Ledger Month LTA Revenue (VEP) Balance – FMIS GL Balance – LTA Confirmation Variance ($) 52,115,056.17 52,680,958.06 565,901.89 There were no reconciliations performed for the 2018/2019 period.
Root Cause/Implication The reconciliation process was not effectively performed to properly determine the component of the variance between the relevant records.

Recommendation The Ministry should perform monthly reconciliation for revenue with collecting agencies’ records and ensure that any variance identified are rectified.

Agreed Management Action The Ministry is performing revenue reconciliation with collecting agencies and obtaining revenue confirmation on a quarterly basis from FY2019-2020.
This has been discussed in length with the staffs of OAG during the audit process.

Additionally, Ministry is correctly recording revenue under cash-based accounting (incorporating reversals, dishonored cheque, refunds and VAT payments).

LTA is now providing journal vouchers for the recording of revenue in the correct revenue streams.

Ministry has held discussion with the LTA team in July of 2020 and a reconciliation with working sheet was provided to them for their verification and confirmation.
Officer Responsible Manager Financial Reporting M i n i s t r y o f E c o n o m y P a g e 47 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 4.26 Delay in Finalisation of Audited Financial Statements – Recurring Issue Each agency must prepare an annual report for submission to its Minister by 31 December in the following year.
Each annual report must include financial statements which are prepared and signed in accordance with these instructions, audited by the Auditor-General and accompanied by the audit opinion provided by the Auditor-General.15 As in the previous year, the delay in the finalisation of the audit for Ministry of Economy was due to multiple draft financial statements submitted after various amendments were made for the year ended 31 July 2019.

The 2019 financial statement were received on 31 October 2019.
There were variances identified and communicated to the Ministry on the 2019 draft financial statements received for audit on 31 October 2019.

The second draft financial statements were received on 10 July 2020 with the final revised draft financial statements received on 18 June 2021.

The audit opinion was issued on 14 October 2021.


Root Cause/Implication The continuous amendments in the draft financial statements after its submission to the Office of the Auditor-General is an indication of the quality of the financial statements submitted for audit.

This has resulted in the delay of the finalisation of the audit.
Recommendation The Ministry should ensure that the draft financial statements prepared by the Ministry are verified by the Financial Reporting Section for accuracy before submission for audit and that the due dates for closing of accounts circular are complied with.

Agreed Management Action The draft financial statement are unaudited accounts prepared by the Ministry in accordance with the requirements of the Financial Management Act 2004 and Finance Instruction 2010.
However, during the course of audit, adjustments were taken on board to correctly reflect the balances in the GL and eliminate any material misstatement.

As you are aware, there is a backlog of accounts which needs to be audited.

This issue will be rectified once all audits have been completed.

15 Finance Instruction 2010 - Section 70 (2).


M i n i s t r y o f E c o n o m y P a g e 48 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Officer Responsible Respective Accounting Heads/OAG 4.27 Internal Control During our audit, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.

A significant deficiency is a deficiency that either or alone or in combination with multiple deficiencies may lead to a material misstatement in the financial statements.

It requires immediate management action.


Internal controls are categorised against the following five components of internal control.
M i n i s t r y o f E c o n o m y P a g e 49 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 A summary of assessment of key controls based on our audit was as follows: Control Risk Control Information & Monitoring Environment  Effective Assessment  Generally Effective Activities  Generally Effective Communication Control  Effective Activities  Effective In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 4.28 Preparation of 2018 - 2019 Draft Agency Financial Statements On 29 May 2019, the Permanent Secretary for Economy issued Circular No.
09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and due dates were detailed.

When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end closing process as: Rating Year-end close process assessment  Generally effective 5 of 10 key processes completed within two weeks of due date M i n i s t r y o f E c o n o m y P a g e 50 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 4.29 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject.
Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Ineffective Adjustments on operating results/net assets were more than one percent 4.30 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Three draft financial statements received between 31 October 2019 and on 18 June 2021 4.31 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to the entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Within 21 days from the date of issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received Effective Within 7 working days from issue of Financial Statements for signing M i n i s t r y o f E c o n o m y P a g e 51 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.1: Trading and Manufacturing Accounts – FPO Trading Account Description Sales 31 July 31 July 2019 ($) 2018 ($) 964,406 1,119,372 Less: Cost of Goods Sold (19,757) (11,137) Gross Profit/ (Loss) 944,649 1,108,235 Profit and Loss Account Description Income 31 July 31 July 2019 ($) 2018 ($) Gross Profit Transferred from Trading Account 944,649 1,108,235 Expenses Office upkeep and supplies Total Expenses Net Profit Balance Sheet Description Equity 36,222 36,222 59,147 59,147 908,427 1,049,088 31 July 31 July 2019 ($) 2018 ($) TMA Surplus Transferred to Consolidated Fund (7,392,615) (6,558,242) TMA Accumulated Surplus Net Profit Total Equity Assets Cash at Bank Inventory Total Assets Liabilities Deposits & deductions M i n i s t r y o f E c o n o m y 8,107,387 7,058,300 908,427 1,049,088 1,623,199 1,549,146 1,500,448 1,412,058 156,992 176,749 1,657,440 1,588,807 34,241 39,661 P a g e 52 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Description Total Liabilities Net Assets 31 July 31 July 2019 ($) 2018 ($) 34,241 39,661 1,623,199 1,549,146 M i n i s t r
 y o f E c o n o m y P a g e 53 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.2: Trading and Manufacturing Accounts – Office Accommodation Profit and Loss Account Description Income Rental from quarters Expenses Other expenses Total Expenses Net Profit Balance Sheet Description Equity 31 July 31 July 2019 ($) 2018 ($) 5,549,382 4,082,550 1,712,504 599,023 1,712,504 599,023 3,836,878 3,483,527 31 July 31 July 2019 ($) 2018 ($) TMA Surplus Capital Transferred to Consolidated
 Fund (10,345,064) (6,680,546) TMA Accumulated Surplus Net Profit Total Equity Assets Cash at Bank Accounts Receivable Total Assets Liabilities Accounts payable Retention Deposits & deductions VAT liability Total Liabilities 10,618,197 7,204,956 3,836,878 3,483,527 4,110,011 4,007,937 2,947,594 4,164,518 1,408,569 --- 4,356,163 4,164,518 300 184,604 204,921 (143,673) 210 23,341 133,030 --- 246,152 156,581 Net Assets 4,110,011 4,007,937 M i n i s t r y o f E c o n o m y P a g e 54 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.3: Trust Account Statements of Receipts and Payments (i) COP 23 Trust Fund Account Description 31 July 2019 ($) 31 July 2018 ($) Opening Balance as at 1 August 13,587,943 11,837,450 Receipts Donations Refunds Interest Total Receipts Payments External Professional services Conference cost Cultural intervention Trade related costs Staff related costs Other outreach Pavilion Bank charges Audit fees FSEPP – Solar projects Total Payments 1,783,113 37,164 136,139 1,956,416 6,115,615 2,084,938 6,002 251,888 171,658 59,863 1,728,604 221 26,836 18,805 18,820,551 151,926 252,187 19,224,664 11,818,318 2,355,651 89,214 1,337,620 409,112 188,527 1,275,431 298 --- --- 10,464,430 17,474,171 Closing Balance as at 31 July 5,079,929 13,587,943 (ii) Performance Bond Trust Fund Account Description 31 July 2019 ($) 31 July 2018 ($) Opening Balance as at 1 August 5,548,158 5,206,602 Receipts Tender deposit Performance bond
 Interest Refund Training M i n i s t r y o f E c o n o m y 854,238 938,965 6,219 20,900 --- 598,247 1,418,617 5,696 447,208 1,669 P a g e 55 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Description Total Receipts Payments 31 July 2019 ($) 31 July 2018 ($) 1,820,322 2,471,437 Tender and performance bonds Bank charges Total Payments 886,970 595 887,565 2,129,508 373 2,129,881 Closing Balance as at 31 July 6,480,915 5,548,158 (iii) Tropical Cyclone Winston Trust Fund Account Description 31
 July 2019 ($) 31 July 2018 ($) Opening Balance as at 1 August 3,619,531 3,610,911 Receipts Donations Interest Total Receipts Payments Bank charges Total Payments 155 4,683 4,838 468 468 4,438 4,864 9,302 682 682 Closing Balance as at 31 July 3,623,901 3,619,531 (iv) Government Tuna Stabilisation Trust Fund Account Description Opening Balance as at 1 August Receipts Interest Total Receipts Payments Fishing Assistance Bank charges M i n i s t r y o f E c o n o m y 31 July 2019 ($) 352,647 3,541 3,541 --- 414 31 July 2018 ($) 3,615,210 3,283,403 3,283,403 6,545,966 --- P a g e 56 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Description Total Payments 31 July 2019 ($) 414 31 July 2018 ($) 6,545,966 Closing Balance as at 31 July 355,744 352,647 (v) ODA Performance and Tenancy Trust Fund Account Description Opening Balance as at 1 August Receipts Donations Interest Total Receipts Payments Tender refunds Bank charges Total Payments 31 July 2019 ($) 164,907 --- --- --- --- --- --- 31 July 2018 ($) 169,095 3,220 2,408 5,628 9,500 316 9,816 Closing Balance as at 31 July 164,907 164,907 (vi) Adopt A School Trust Fund Account Description 31 July 2019 ($) 31 July 2018 ($) Opening Balance as at 1 August 9,785,419 5,293,958 Receipts Donation Retention Refund Interest --- 47,500 --- --- 4,997,637 100,224 818,596 64,108 Total Receipts 47,500 5,980,565 Payments Contractor payments Transfers Bank charges M i n i s t r y o f E c o n o m y 464,980 4,693,879
 --- 1,243,361 245,712 31 P a g e 57 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Description 31 July 2019 ($) 31 July 2018 ($) Total Payments 5,158,859 1,489,104 Closing Balance as at 31 July 4,674,060 9,785,419 (vii) Group Insurance Trust Fund Account Description Opening Balance as at 1 August Receipts Insurance proceeds Total Receipts Payments Insurance payments Bank charges Total Payments Closing Balance as at 31 July 31 July 2019 ($) 89,273 64,672 64,672 64,671 63 64,734
 89,211 (viii) Miscellaneous Fund Vs Others Trust Fund Account Description 31 July 2019 ($) 31 July 2018 ($) 101,404 255,000 255,000 267,000 131 267,131 89,273 31 July 2018 ($) Opening Balance as at 1 August 8,625,194 8,472,954 Receipts Interest Total Receipts 174,094 174,094 152,240 152,240 Closing Balance as at 31 July 8,799,288 8,625,194 M i n i s t r y o f E c o n o m y P a g e 58 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 (ix) Accident Compensation Trust Fund Account Description Opening Balance as at 1 August Receipts ACF proceeds Interest Total Receipts Payments ACF payments VAT payments Bank charges Total Payments 31 July 2019 ($) 7,165,722 11,469,995 105,397 11,575,392 3,315,000 934,679 10,630 4,260,309 31 July 2018 ($) --- 7,823,540 16,594 7,840,134 300,000 367,415 6,997 674,412 Closing Balance as at 31 July 14,480,805 7,165,722 M i n i s t r y o f E c o n o m y P a g e 59 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.4: Parenthood Assistance Payment M i n i s t r y o f E c o n o m y P a g e 60 | ) $ ( : 5 .
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– , 5 1 1 5 9 , 3 1 9 8 0 , 3 8 7 , 7 0 3 O D 4 0 1 0 0 B D A 9 1 0 2 / 4 0 9 1 0 2 / 2 1 l a t o T | 2 6 e g a P y m o n o c E f o y r t s i n i M REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Appendix 4.6: Waiver of Tender Process Date of Description of Work Amount Details Waiver Done ($) 18 January Payment for 417,005 The bids from preselected consultants were 2018 Consultancy Service received and analysed by CIU.
for the Upgrading & Maintenance of Executive Residence -Bidder 1 submitted lump sum fee proposal with 5% contingency.

Also stated that specialist heritage architect would be engaged within the cost.

-Other 2 Bidders submitted fee proposal based on contract value and improper balance from design to construction supervision.

Fee claimed is high at design and less at construction phase.

This would result in high risk as most payment would be made at design phase.
6 July 2017 Payment for 808,000 Expression of Interest was advertised.

Architectural Service for Prime Minister’s Office Complex Total of 9 EOI was received.

Two bidders met the criteria and had suitable experience.

AAPI was ranked no.

1 tender rating score sheet 12 July 2016 Payment for Lead 1,261,925 Total of 9 bidders registered their expression Consultancy Service for Prime Minister’s Office Complex of interest.
2 preselected firm who met the compliance check of initial EOI requirements were shortlisted.

Consultancy Firm A was ranked no.

1 in technical and non-technical attributes.

12/2/19 Payment for ITC 3,008,056 Being the lone compliant bidder, the other Centre Works Remedial bidder was rejected.

ITC had approached CIU in February 2017.

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c t e | 6 6 e g a P y m o n o c E f o y r t s i n i M REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Head 23 Ministry of Housing and Community Development Roles and Responsibilities The Ministry of Housing and Community Development is responsible for all of the functions of the Department of Housing and Rural Housing Unit formerly under the Ministry of Rural and Maritime Development, along with the various housing and community services previously offered by the Ministry of Lands and the Ministry of Local Government to help more Fijian families own their home.
The Ministry works expeditiously to increase the supply of affordable housing in Fiji, the Ministry will also engage with all stakeholders, including construction companies, with the ambition to reduce the construction costs of homes by harnessing new technologies.

The Ministry work with development partners, including the private sector, to introduce innovative new strategies employed in other parts of the world to successfully meet increasing demands for home ownership.
The Ministry will also continue the important work around the country to provide security of tenure to Fijians residing in informal settlements, bringing the stability and peace of mind of long-term land ownership to more Fijian families.
Ministry of Housing and Community Development P a g e 67 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table of Contents PART A: FINANCIAL INFORMATION………………………………………………………...69 23.1 Audit Opinion ................................................................................................................ 69 23.2 Appropriation Statement ............................................................................................ 70 PART B: SIGNIFICANT MATTERS……………………………………………………………...72 23.3 Anomalies for Rural Housing Deposits ................................................................... 72 23.4 Variance between drawings account reconciliation statement and GL balance.
........................................................................................................................... 74 23.5 Cheque numbers in FMIS GL did not match Bank Statement .......................... 75 23.6 Recording and disposal of assets and inventory .................................................. 76 23.7 Absence of Risk Management Policy....................................................................... 78 23.8 Underutilization of budget ......................................................................................... 78 23.9 Monthly Reconciliations Not Prepared (Recurring Issue) ................................... 80 23.10 Anomalies in Payroll .................................................................................................... 80 23.11 Carried forward balances for Operating Trust Fund Account ........................... 82 23.12 Anomalies in Revolving Fund Account (Recurring Issue) ................................... 84 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE………………………………..86 23.13 Internal Controls ........................................................................................................... 86 23.14 Submission of FY 2018-2019 Draft Agency Financial Statements ............. 87 23.15 Quality of Draft Financial Statements by entities ................................................. 87 23.16 Timeliness of draft financial statements ................................................................. 88 23.17 Timeliness of Provision of Management
 Comments and Signing of Financial Statements ...................................................................................................................... 88 APPENDIX 23.1: LONG OUTSTANDING DEPOSITS………………………………………89 APPENDIX 23.2: MONTHLY RECONCILIATIONS NOT PERFORMED……………………..91 Ministry of Housing and Community Development P a g e 68 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART A: FINANCIAL INFORMATION 23.1 Audit Opinion The audit of the 2019 accounts of the Ministry of Housing and Community Development resulted in an unqualified audit opinion.
However, attention was drawn to the following Emphasis of Matters: • Note 4 to the financial statements stated that the Ministry had recorded deposits received from the public for rural housing assistance, of $833,634, as Unearned Income under the Liability Account (SLG85).

This was previously recorded as operating revenue for the Ministry, which was incorrect, as these deposits were still refundable to applicants on request until the social housing assistance is provided by the Ministry.
• Implementation of internal controls over recording of transactions, records management and reconciliation process for underline accounts, as discussed below, were found to be generally weak.

If the issues are not addressed promptly, it will result in material misstatements and possible financial losses in the future.

 Variance of $136,581 existed between the Ministry’s Drawings Account reconciliation statement balance and the balance in the FMIS general ledger as at 31 July 2019.
 For some payments, cheque numbers recorded in the FMIS general ledger did not match the numbers recorded in the bank statements.

Ministry of Housing and Community Development P a g e 69 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019  The Fixed Assets Register had not been updated with complete information as required by the Finance Manual.

 Salaries and wages files were not maintained, processed input forms and APA approvals were not filed properly.
 Payroll reconciliations were not prepared in a timely manner and monthly underline accounts reconciliation were not performed.

• The Ministry did not have in place approved written policies, procedures and guidelines to manage risks associated with fraud and anti-corruption, disaster recovery and business continuity and assessment of potential conflict of interest.
23.2 Appropriation Statement The Ministry collected revenue totalling $10,169 in 2019 and incurred expenditure totalling $12 million against a revised budget of $41.4 million resulting in unutilised budget of $29.4 million or 71% Details of expenditure against the revised budget are provided in Table 23.1.
Table 23.1: Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditur Appropriation ($) ($) ($) e ($) ($) 1 2 Established staff 707,648 (37,250) Government wage 490,766 37,250 670,398 528,016 447,338 488,242 223,060 39,774 earners 3 Travel & communication 84,930 26,000 110,930 99,328 11,602 4 Maintenance & 87,250 70,000 157,250 83,583 73,667 operations 5 Purchase of goods 359,000 (144,550) 214,450 14,143 200,307 & services 6 Operating grants & 1,300,000 --- 1,300,000 1,300,000 --- transfers 7 Special expenditure 700,000 48,550 748,550 148,521 600,029 Total Operating 3,729,594 --- 3,729,594 2,581,155 1,148,439 Expenditure 8 Capital 10,524,983 --- 10,524,983 3,228,599 7,296,384 Construction 10 Capital Grants & 26,110,000 --- 26,110,000 5,984,490 20,125,510 Transfers Ministry of Housing and Community Development P a g e 70 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditur Appropriation ($) ($) ($) e ($) ($) Total Capital 36,634,983 --- 36,634,983 9,213,089 27,421,894 Expenditure 13 Value added tax 1,058,000 TOTAL 41,422,577 --- --- 1,058,000 192,781 865,219 41,422,577 11,987,025 29,435,552 Significant unutilised budget was largely due to the following: • Unutilised budget of $1.1 million in Operating Expenditures was due to unspent budget allocated for the establishment of Divisional Offices and regularization of informal settlements.
• Unutilised budget of $27 million in Capital Expenditure was due to unspent budgets for programs under SEGs 8 & 10 which included the upgrade of informal settlements, upgrade of town-wide informal settlements, city-wide upgrade First Home and First Land Programs, HART, Interest subsidy for Home Loans, Social Housing Assistance and survey for regularization of lease and land titles.
The utilization of budget for the First Home and First Land ownership initiative was due to the fact that this grant program was demand- driven and the actual spending was in line with the applications received during the financial year.

Other grant assistance were utilized in line with the subsidy requests submitted by the relevant organizations.

The Ministry was established as a stand-alone operation in 2018/2019 financial year.
Most programs were under review for improvements during the 2018/2019 financial year.

Ministry of Housing and Community Development P a g e 71 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART B: SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

It is likely that these issues may have an impact on the operations of the Ministry in future, if necessary action is not taken to address them.
It is important to note that the deficiencies detailed in this report were identified during our audit and may have been subsequently resolved by the Ministry.

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2019.
23.3 Anomalies for Rural Housing Deposits Where the agency becomes responsible for managing trust money, an application shall be made to the Head of Treasury, Ministry of Economy seeking approval to open a separate bank account and detailing the nature of the trust and of any beneficiaries.1 The following anomalies were noted from the review of the Rural Housing Deposits Account: • Funds totaling $82,320 for Rural Housing Assistance Scheme 1 is still reflected in the Ministry of Rural & Maritime Development Trust Fund Account even though the Rural Housing Unit has moved to the Ministry of Housing & Community Development; • From the $763,650 that was transferred from the Ministry of Rural & Maritime Development Trust Fund Account, $403,051 of deposits was received from applicants from as far back as 2014.
The trust fund relates to the 1/3 contribution received for projects.

Refer to Appendix 23.1 for details.

• Tender deposits for the Rural Housing Projects totaling $192,015 are still reflected under the Ministry of Rural & Maritime Development’s FMIS general ledger and has not been transferred to the Ministry of Housing and Community Development.
1 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 15.1.1 Ministry of Housing and Community Development P a g e 72 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 • During the year, the Ministry collected $69,985 in relation to deposits under the Rural Housing Scheme for which the applications and supporting documents were not provided for audit to ascertain that the applicants met the criteria for the assistance.
Root cause/Implication The eligibility for assistance provided to applicants could not be verified without the applications and supporting documents.
Recommendations The Ministry should:  Liaise with Ministry of Rural & Maritime Development to correctly reflect the balance of the funds not transferred;  Strengthen records management to ensure that applications from the public for rural housing assistance are maintained and readily available for audit; and  Review the backlog projects and prepare an action plan/timeline for assessing applications and provide timely feedback to applicants.
Agreed Management Action The Ministry of Housing and Community Development wrote to Ministry of Economy (MoE) requesting for opening of the Trust Fund Account 27.02.2019 and it was advised by MoE 18.03.2019 to deposit all Rural Housing Deposits to Consolidated Fund Account.

Ministry acted according to this instruction.

However as per the Auditor General Office recommendation, we will be writing to MoE seeking further advice on opening a Trust Account.
As per the process followed Ministry of Rural and Maritime Development (MRMD), applicants deposited their share of money through the District Officer, PA etc and application were assessed; were eligible at the time of releasing Government assistance, the applications under discussion were those transferred MRMD to MHCD when the program was transferred.

Required assessments were carried out by MHCD in FY 2019/2020 when MHCD commenced processing applications.
All applications are thoroughly checked before making recommendations for release of grant money.

The applications assisted in 2019/2020 can be submitted for review.

All new applications will be filed separately for ease of reference.

48 out of the 73 applications were cleared in 2019/2020, utilizing $585,373 out of the $600,000 allocated for this program in 2019/2020; the balance applicants are been assisted in 2020- 2021 financial year.
Ministry has also strengthened the project management team under the Ministry of Housing and Community Development P a g e 73 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 supervision of the Director of Housing – 3 technical assistance and 1 clerical officer has been recruited to support the project management within the Ministry.
Officer Responsible Senior Accounts Officer and Director Housing 23.4 Variance between drawings account reconciliation statement and GL balances Within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, the Assistant Accountant shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.

2 Any errors or misallocations must be immediately adjusted by way of journal vouchers.
3 The audit noted a variance of $136,581 between the Ministry’s Drawings Account reconciliation statement balance and the FMIS general ledger balance.

Refer to the Table 23.2 below for details.


Table 23.2: Variance between Drawings Account Reconciliation and balance as per FMIS Drawings Account Balance as per Drawings Reconciliation Statement Balance as per FMIS GL Variance Root cause/Implication Amount 31/07/2019 ($) 662,279.11 798,859.95 136,580.84 Absence of effective supervisory checks with the Drawings Account reconciliation process.
Recommendations • The Ministry should strengthen supervisory checks with the drawings account reconciliation process to ensure accuracy and completeness of the reconciliation statements and FMIS GL balances; and • The Ministry should develop a training plan for capacity development of existing resources on accounting and reconciliation process.
2 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 16.3.3 3 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 16.3.4 Ministry of Housing and Community Development P a g e 74 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action The balance as per Drawings Account is combination of Head 23 and 37.

As per April 2020, the drawings account was separated.
The variance is as per the FMIS and GL balance is due to the unpresented cheques as per the reconciliation provided.

These cheques have been presented in the Ministry of Environment bank statements.

An adjustment is submitted herewith to rectify these entries in both Ministry of Housing and Ministry of Environment.
Officer Responsible Senior Accounts Officer 23.5 Cheque numbers in FMIS GL did not match Bank Statement Once cheques have been printed they have to be matched in the system.4 Cheque numbers will be matched according to the cheque numbers on the cheque leaf.5 The audit noted that cheque numbers recorded in the FMIS GL did not match the cheque numbers that were presented to the bank.

Refer to Table 23.3 below for examples.


Table 23.3: Cheque numbers in FMIS not matching cheque numbers presented to the bank Cheque No.

in Cheque No.

Amount FMIS GL as per Bank Statement ($) 45572 45573 45574 45575 45573 45574 45575 45572 30,000 25,000 5,000 10,000 Root cause/Implication The Ministry did not have sufficient accounting staff for FY 2018-2019 which resulted in absence of adequate reviews during the accounts reconciliation process.
Recommendation The Ministry should ensure that supervisory checks are improved in the accounting function and that internal controls as required by the Finance Manual are complied with.
4 FMIS Accounts Payable User Manual Modification 1 page 25, section 3 (i) 5 FMIS Accounts Payable User Manual Modification 1 page 25, section 3 (ii) Ministry of Housing and Community Development P a g e 75 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Agreed Management Action The reason for mis-matching of cheques was mainly due to the Ministry not having sufficient staff from 2019-2020.
Separate accounting team has been approved for the Ministry consisting of Senior Accounts Officer, Assistant Accounts Officer and Accounts Clerk.

The MLG staff who performed incorrect matching have been terminated as per the Finance Manager MLG.
However following actions have been taken into to ensure that this issue is not repeated: • All MHCD payments are now done through EFT • Training has been provided to MHCD accounts team • Monthly reconciliation are prepared now Officer Responsible Senior Accounts Officer 23.6 Recording and disposal of assets and inventory The Assistant Accountant shall be responsible for maintaining the fixed assets register.
The fixed assets register shall provide the following details:6 • date of acquisition and cost; • description; • serial number and model; • location & other relevant information (e.g.

if asset is sold or written off).

The Assistant Accountant shall record items valued at less than $2000 but more than $200, in an expendable item register.7 The Assistant Accountant shall update the fixed assets register to reflect assets that have been disposed of.
8 The Ministry Clerk shall keep an inventory card for each inventory item to determine the value of items.
Each card must provide the following details:9 • date and description of each item purchased; • quantity purchased and cost price; • quantity sold and at which price; and • quantity remaining and price 6 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 11.2.1 7 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 11.2.5 8 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 11.5.3 9 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Section 8.1.6 Ministry of Housing and Community Development P a g e 76 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The audit of assets and inventory records noted the following: • The Fixed Assets Register (FAR) had not been updated with complete information as required by the Finance Manual.
For items verified, information such as serial numbers and model, description and location of the items were not updated in the FAR.

• The Expendable Items Register for FY 2019 was not provided for audit.

• Asset Disposal Forms were not signed-off by the officer-in-charge of disposal thus audit was unable to determine whether assets have been disposed.

• Inventory cards were not maintained by the Ministry for FY 2018/2019.
Root cause/Implication Absence of adequate supervisory checks with the accounting function.

Board of Survey process was not fully completed.

This is also an indication of inadequate control over the recording of fixed assets which could result in the inability of the Ministry to identify items, which are unserviceable or missing.
Recommendations • Supervisory checks with the accounting function should be strengthened through adequate resourcing of the Accounts Section; and • The Ministry should ensure that the Board of Survey process is fully completed and signed off including the approval for disposal of assets.

Agreed Management Action The reason for not updating register was due to the Ministry not having sufficient accounting staff from 2019-2020.
Separate accounting team has been approved for the Ministry consisting of Senior Accounts Officer, Assistant Accounts Officer and Accounts Clerk.

Recommendation is noted.

Fixed Assets register has been duly updated and expendable register is also maintained; audit has verified this.

Senior Accounts Officer will monthly review both registers to ensure timely and correct updates.

Inventory cards have been introduced and verified by Auditors.
Officer Responsible Senior Accounts Officer Ministry of Housing and Community Development P a g e 77 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 23.7 Absence of Risk Management Policy Review of the Ministry’s corporate governance revealed that there is no risk management framework or policy in place.
As a result, the Ministry does not have written policies, procedures and guidelines to manage the risks associated with the following: • Fraud control and anti-corruption; • Disaster recovery and business continuity; and • Assessment of potential conflict of interest.
Root cause/Implication Lack of capacity and management oversight in ensuring that a risk management policy is developed to assist the Ministry in managing its risks affecting the Ministry particularly risk of fraud and misappropriation of assets.

Recommendation The Ministry should develop the capabilities of existing staffs to enable the development of policies, procedures and guideline for risk management.
Agreed Management Action The corporate, finance and policy teams have been established in the financial years 2019- 2020 and 2020-2021.

The recommendation is noted and will be implemented from current financial year 2020-2021.

Officer Responsible Head of Policy, Human Resources Officer and Senior Accounts Officer 23.8 Underutilization of budget Our audit noted that the Ministry did not utilize $29.4 million or 71% of the budgeted funds in the financial year 2018/2019.
The Ministry had only utilized $12 million in expenditure against the revised budget of $41.4 million.
Major savings were noted in SEG 8 - Capital Construction of $7.3 million and SEG 10 - Capital Grants & Transfers of $20.1 million, which included programs for the upgrade of informal Ministry of Housing and Community Development P a g e 78 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 settlements, upgrade of town-wide informal settlements, city-wide upgrade First Home and First Land Programs, HART, Interest subsidy for Home Loans, Social Housing Assistance and survey for regularization of lease and land titles.
Root cause/Implication The Ministry was established as a standalone operation in the financial year 2018/2019 with most programs under review for improvements during the financial year.

Funds which were appropriated to the Ministry but were not used could have been allocated elsewhere where it could have been resourcefully utilized.

Recommendation The Ministry should ensure that budgeted funds are utilized for the purpose as appropriated by Parliament.
Agreed Management Action The Ministry was established as a stand-alone operation in 2018/2019 financial year.

The main objectives of this was to provide an increase level of focus and clear direction to the service delivery in the housing sector in Fiji.

Accordingly, most of the Ministry programs have been under review for improvements during 2018/2019 financial year.

Capacity building has been a main focus as well.


Capital grants – First Home ownership initiative ($10,680,635) is due to the fact that this grant program is demand driven and the actual spending is in line with the applications received during the financial year.

Grant assistance allocated for Public Rental Board, HART and Habitat for Humanity have been utilized in line with the subsidy requests submitted by this organizations.
The Ministry used 95% of its approved budget in 2019-2020 showing a significant improvement in service delivery as the Ministry established its operations and capacity to better service its objectives.

The progress on all Ministry programs are now closely monitored in a quarterly basis.

All programs are in line with cash flow forecast in the current financial year 2020-2021.
Officer Responsible Director Housing and Senior Accounts Officer Ministry of Housing and Community Development P a g e 79 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 23.9 Monthly Reconciliations Not Prepared (Recurring Issue) Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at ministry/department level and/but most importantly at whole of government level.
The Assistant Accountant must reconcile all accounts to be submitted to Ministry of Economy within two weeks after the closing of each monthly account.

The Senior Accountant must verify all the reconciliations before signing and submitting it to the Ministry of Economy.

We noted that the reconciliation statements for payroll and underline accounts were not prepared in a timely manner.

Moreover, monthly reconciliation statements were not prepared for all of the Underline Accounts.
Refer to Appendix 23.2 for details Root cause/Implication The Ministry did not have sufficient resources for its accounting function to adequately perform the monthly reconciliation of accounts.

Recommendation The Ministry should ensure sufficient resourcing of the accounting function.

Agreed Management Action The reason for delay in reconciliation was mainly due to the Ministry not having sufficient accounting staff from 2019-2020.
Separate accounting team has been approved for the Ministry consisting of Senior Accounts Officer, Assistant Accounts Officer and Accounts Clerk.

Officer Responsible Director Housing 23.10 Anomalies in Payroll The letter of appointment shall be forwarded to the CO/Salaries who shall create a salary file and issue an Electronic Data Processing (EDP) Number for that employee.
10 The CO/Salaries must file all processed input forms into the appropriate salary files.11 The report shall be handed to the Assistant Accountant who is responsible for preparing the salary 10 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, section 4.1.2 11 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, section 4.2.15 Ministry of Housing and Community Development P a g e 80 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 reconciliation.12 The salary reconciliation shall be signed by the Assistant Accountant and forwarded to the Senior Accountant with a copy to the Ministry of Finance, within one week from the pay date.13 The PS shall provide a letter of appointment to all new salary employees.
The letter shall include at a minimum, the following information: 14 job classification; • • salary scale and starting salary; • date of appointment to position.

The Senior Accountant is responsible for the safekeeping and proper maintenance of all accounting records or documents.15 Audit of payroll records revealed the following anomalies: • The Ministry did not maintain salaries and wages files for all officers employed.
• Approved timesheets were not provided to ascertain the accuracy of payments of overtime, meal allowance and wages.

Refer to Table 23.4 for details.

Table 23.4: Approved timesheets not provided EDP No.
Pay Amount Wages Meal Reason for Increase Details of Period Allowance ($) ($) ($) Records Not Provided QL173 07/2019 1,005.12 236.28 --- Arrears of salary of Approved LC265 07/2019 395.35 230.91 --- Increase in OT & Meal: the officers $708.84 timesheets of AA054 07/2019 160.00 --- 160.00 Increase in OT & Meal provided meal of $100 were not to AA065 06/2019 848.48 788.48 60.00 Officers transferred the hours 42037 17196 06/2019 504.76 254.76 250.00 from Ministry of Rural charged during 06/2019 486.80 426.80 60.00 and Maritime this pays.
Due AA055 06/2019 472.56 472.56 --- Development to to this, audit QL642 06/2019 454.24 394.24 60.00 Ministry of Housing and could not also VY702 06/2019 416.62 416.62 --- Community ascertain the audit to confirm Development that led accuracy of the to the increase in wages payment of from Pays 5 & 6 wages and meal allowances paid to this officers.
12 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, section 4.6.3 13 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, section 4.6.5 14 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, section 4.1.1 15 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013, Section 19.2.1 Ministry of Housing and Community Development P a g e 81 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 • Processed input forms and Annual Performance Assessment approvals were not filed in the appropriate officers’ personal files.
• The Ministry did not issue appointment letters for the Officers that were transferred from Ministry of Rural and Maritime Development now working with the Ministry of Housing.

Root cause/Implication Proper handover was not done during movement of Officers and relocation of the Ministry resulting in misplaced records.

The non-provision of records created a limitation on the scope of the audit and restricted the performing of necessary audit procedures.
Recommendations • Proper handover of records should be done and recorded through Hand-Over Statements; and • Supervisory checks with the accounting and HR functions should be strengthened through adequate resourcing of the HR and Accounts Sections.

Agreed Management Action Personnel files for all current staffs under P2P are with HRO, the box that contains files of old staffs has been misplaced during the shifting.

The Ministry will ensure the files are found.


Officer Responsible Senior Accounts Officer and Human Resources Officer 23.11 Carried Account forward balances for Operating Trust Fund The Senior Accountant is responsible for maintaining ledgers and reconciling balances in such ledgers to ensure the accuracy of financial information and the timeliness of management reports.16 As at 31/07/2019, Operating Trust Fund Account had a credit closing balance of $425,516.
It was noted that the balance of $403,403 had been carried forward from previous years and remained outstanding as at 31/07/2019.

Refer to Table 23.5 below for details.
16 Ministry of Local Government, Urban Development, Housing and Environment, Finance Manual 2013, Part 16 Ministry of Housing and Community Development P a g e 82 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table 23.5: Carried Forward Balances from 2015 – 2019 Account Allocation Security Deposits Tender Deposits OPR Current Year PSC Scholarship Loan Deposit A/C Recoverable Payroll Deduction Agriculture Total Root cause/Implication 2015 ($) 2016 ($) 2017 2018 ($) ($) 2019 ($) --- 95 95 95 95 133,621 326,321 400,836 400,836 400,836 --- 83 83 83 83 1,165 1,947 2,239 2,239 2,239 126 --- 126 54 126 54 126 54 126 54 403,403 Absence of adequate supervisory checks with the accounting function relating to monitoring and reviewing of the monthly accounts reconciliation performed.
Failure to accurately perform reconciliation of accounts can lead to errors and omission not being detected on a timely basis.
Recommendations • The Ministry should consider capacity development for accounting officers involved in the monthly reconciliation of accounts and awareness on the requirements of the Finance Instructions and Finance Manual; and • The balance carried forward from previous years should be reviewed with the Ministry of Housing liaising with Ministry of Local Government and the Ministry of Economy to make the necessary accounting adjustments.
Agreed Management Action The reason for delays in reconciliation was due to the Ministry not having sufficient accounting staff from 2019-2020.

Separate accounting team has been approved for the Ministry consisting of Senior Accounts Officer, Assistant Accounts Officer and Accounts Clerk.

However, this balance relates to transaction recorded in previous years.

Ministry has written to the finance team of MLG seeking assistance to provide data/documents to clear this long outstanding balance.
This balance will be cleared in financial year 2020-2021.

Officer Responsible Senior Accounts Officer Ministry of Housing and Community Development P a g e 83 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 23.12 Anomalies in Revolving Fund Account (Recurring Issue) The Assistant Accountant must also record the travel advance in the debtors register.17 Any errors or misallocations must be immediately adjusted by way of journal vouchers.
18 Where an advance has not been acquitted within seven days of travel, the Senior Accountant shall effect recovery through a salary deduction from the concerned officer’s salary within six (6) fortnights.

19 Audit noted the following anomalies: • Advances allocation number 1-23101-23999-570301: The advances allocation had an outstanding debit balance of $181,111 as at 31/07/19.

There was no movement in the balance from 31/07/2018 to 31/07/2019.
We were unable to determine whether advances issued have been retired as the accountable advance register prior to January 2018 was not provided.

Refer to Table 23.6 for details.

Table 23.6: RFA Outstanding Balances 20014 – 2019 Year Amount 2014 2015 2016 2017 2018 2019 ($) 165,294 163,794 177,399 178,999 181,111 181,111 • Accountable Receivable – 1-23101-23999-560203: The accounts receivable allocation had a credit outstanding balance of $46,036 as at 31/07/2019.
The Ministry on 14/10/18 wrote to the Ministry of Economy for adjustments to the RFA.

However, the balance remained unchanged.

Root cause/Implication Absence of adequate supervisory checks with the accounting function relating to monitoring and reviewing of the monthly accounts reconciliation performed.
17 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013, Section 10.1.10 18 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013, Section 16.3.4 19 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013, Section 10.1.14 Ministry of Housing and Community Development P a g e 84 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Accounts receivable with credit balances indicated lack of proper reconciliation and mis- posting of transactions in the FMIS general ledger.
Recommendation The Ministry should strengthen the administration of accountable advances and improve supervisory checks of the accounts reconciliation process.

Agreed Management Action These balances are carried forward from as back as 2014.

Ministry has written to the finance team of Ministry of Local Government seeking assistance to provide data/documents to clear this long outstanding balance.

This balance will be cleared in financial year 2020-2021.
Officer Responsible Senior Accounts Officer Ministry of Housing and Community Development P a g e 85 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE 23.13 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.

A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may to lead to a material misstatement in the financial statements.

It requires immediate management action.


Internal controls are categorized against the following five components of internal control.
A summary of assessment of key controls based on our audit was as follows: Control Risk Control Information & Monitoring Environment Assessment Activities Communication Activities Ineffective Ineffective Ineffective Control Ineffective Ineffective Ministry of Housing and Community Development P a g e 86 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 In view of the above, we have assessed the internal controls of the Ministry as: Rating  Ineffective Internal control assessment Significant deficiencies identified in internal controls 23.14 Submission of FY 2018-2019 Draft Agency Financial Statements On 29 May 2019, Permanent Secretary for Economy issued Circular No.
09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and times were detailed.

When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Ineffective Only three of the eight applicable key processes completed within two weeks of due date 23.15 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
Ministry of Housing and Community Development P a g e 87 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry was: Rating  Ineffective Quality of draft financial statements assessment Adjustments were made by Ministry and the draft financial statements was resubmitted on 06/09/2021 and 02/11/2021 23.16 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 31 October 2019 23.17 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating Effective Timeliness of Management Comments Received Within 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Ministry of Housing and Community Development P a g e 88 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 23.1: LONG OUTSTANDING DEPOSITS Date Recipients Receipt No.
Amount Received ($) 108/08/2014 01/09/2015 01/09/2015 01/09/2015 01/09/2015 06/02/2015 06/02/2015 22/10/2015 15/02/2015 08/11/2015 08/12/2016 02/09/2016 12/07/2016 01/02/2016 18/12/2017 28/02/2017 09/06/2017 09/06/2017 11/10/2017 11/10/2017 11/10/2017 11/10/2017 11/10/2017 05/09/2017 12/09/2017 18/09/2017 04/10/2017 02/11/2017 26/10/2017 03/04/2018 03/04/2018 16/01/2018 08/03/2018 26/04/2018 29/01/2018 21/06/2018 11/06/2018 23/05/2018 12/01/2018 J.S P.L M.Y L.V T.S K.T S.Q.N J.V M.B A.B J.M E.T A.S Y.S T.R J.P.R S.T A.M I.K T.R V.D J.C A.K V.T M.I.A S.L S.M M.R J.P I.K S.W R.I.Y K.R N.R J.V R.V K.L A.V K.V Ministry of Housing and Community Development P a g e 89 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Date Recipients Receipt No.
14/05/2018 05/06/2018 13/03/2018 14/06/2018 I.T E.W W.T S.R 06/04/2018 MT-14 houses 05/01/2018 05/01/2018 23/02/2018 23/02/2018 23/02/2018 29/05/2018 29/05/2018 29/05/2018 06/09/2018 06/09/2018 06/09/2018 10/09/2018 19/09/2018 01/11/2018 02/11/2018 19/09/2018 17/09/2018 21/02/2018 21/02/2018 21/02/2018 15/01/2019 17/01/2019 08/01/2019 Not dated A.S R.K M.D R.F.L F.N S.T K.N K.R L.T A.W A.S A.S S.K J.K.G F.L.G E.T A.M T.O A.B S.R K.V R.K S.Q V.N S.G U.R V.R P.Q T.N Amount Received ($) Total 403,050.79 Ministry of Housing and Community Development P a g e 90 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 23.2: MONTHLY RECONCILIATIONS NOT PERFORMED FMIS GL Allocation Account GL balance Comments Description as at 31/07/2019 ($) 1-23101-23999-536101 IDC Nil One Consolidated reconciliation was prepared from August 2018 to July 2019 on 10/09/2019 1-23000-00000-860000 Operating Trust (425,516) One Consolidated reconciliation was (Various allocations) Fund
 Account prepared from August 2018 to July 2019 1-23101-23999-570301 Advances 181,111 Two consolidated reconciliations were on 10/09/2019 prepared, August 2018 – December 2018 on 02.10.19 and January 2019 – July 2019 on 09/10/2019.
1-23101-23999-538101 BLC Nil One Consolidated reconciliation was prepared from August 2018 to July 2019 on 10/09/2019.

1-23101-23999-530301 Drawings account (798,860) One Consolidated reconciliation was prepared from August 2018 to July 2019 1-23401-23999-840602 SLG 84 – $89,460 One Consolidated reconciliation was on 02.10.2019 1-23101-23999- 840101001 Withholding Tax SLG 84 – Previous Year Social Housing Contribution Refund prepared from August 2018 to July 2019 on 10/09/2019.
Nil One Consolidated reconciliation was prepared from August 2018 to July 2019 on 10/09/2019.
1-23000-00000-010000 SEG 1 415,871 All Reconciliations from Pay 16/2018- 1-23000-00000-020000 SEG 2 519,710 All Reconciliations from Pay 32/2018- 26/2018 and 01/2019 to 15/2019 were prepared on 02/07/2019 52/2018 and 01/2019 to 31/2019 were prepared on 03/10/2019 Ministry of Housing and Community Development P a g e 91 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Head 36 Ministry of Public Enterprises and Government Printing Roles and Responsibilities The Ministry of Public Enterprises oversees and implements reform programs, provide policy recommendations and monitors the performance and operations of public enterprises to increase efficiency and effectiveness in terms of financial growth and improvements in services to the public.
The Government Printing and Stationery Department was responsible for printing Government documents and the Laws of Fiji.
The Department was managed by the Government Printer who was reporting to the Permanent Secretary for Public Enterprises Table of Contents PART A: FINANCIAL INFORMATION ...................................................................................... 93 36.1 Audit Opinion ................................................................................................................ 93 36.2 Appropriation Statement ............................................................................................ 93 36.3 Trading and Manufacturing Account ....................................................................... 95 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ................................................ 96 36.4 Internal Controls ........................................................................................................... 96 36.5 Submission of FY 2018-2019 Draft Agency Financial Statements ................... 97 36.6 Quality of Draft Financial Statements by entities ................................................. 98 36.7 Timeliness of draft financial statements ................................................................. 98 36.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ...................................................................................................................... 98 APPENDIX 36.1: CONSOLIDATED TRADING AND MANUFACTURING ACCOUNT .
99 Ministry of Public Enterprises and Government Printing P a g e 92 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART A: FINANCIAL INFORMATION 36.1 Audit Opinion The audit of the 2019 accounts of the Ministry of Public Enterprises and Government Printing resulted in an unmodified audit opinion.
36.2 Appropriation Statement The Ministry collected revenue totalling $42,809 in 2019 and incurred expenditure totalling $12.4 million against a revised budget of $15.8 million resulting in unutilised budget of $3.3 million or 21.2%.

Details of expenditure against the revised budget are provided in Table 36.1.
Table 36.1: Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate ($) 1 2 Established Staff 3,355,473 Government Wage Earners 474,724 ($) -- -- Estimate Expenditure Appropriation ($) ($) ($) 3,355,473 2,195,776 1,159,697 474,724 275,544 199,180 Ministry of Public Enterprises and Government Printing P a g e 93 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 SEG Item Budget Changes Revised Actual Lapsed Travel Communication Maintenance Operations & & Purchase of Goods & Services Operating Grants & Transfers Estimate ($) 110,300 606,000 102,687 4,787,540 Special expenditure 2,075,000 Total Operating Costs 1,1511,724 Capital Grants Transfers Total Capital and 4,072,170 Expenditure 13 Value Added Tax TOTAL 4,072,170 260,500 15,844,394 Estimate Expenditure Appropriation ($) ($) ($) 110,300 49,012 61,288 606,000 241,901 364,099 102,687 24,785 77,902 4,787,540 4,787,540 --- 2,075,000 1,984,723 90,277 1,1511,724 9,559,281 1,952,443 4,072,170 2,850,992 1,221,178 4,072,170 2,850,992 1,221,178 260,500 70,660 189,840 15,844,394 12,480,933 3,363,461 ($) -- -- -- -- -- -- -- -- -- -- Unutilised budget was largely due to the following: 1.
Unutilised budget of $1.3 million in Established Staff and Government Wage Earners allocation is due to staff resignation which resulted in vacant positions.

Thirteen of the vacant posts were put on hold as Management decided to advertise it at a later date to attract better pool of applicants.

2.

Unutilised budget in Other Operating Expenditure budget is mainly attributed to Government Printing and Stationeries Department ceasing operation which caused the reduction in expenditure.

3.
3.

The unutilised budget of $1.2 million in Capital Grants and Transfers budget is due to the following: • Biosecurity of Fiji – had submitted quarter 4 request after RIE applications closing date, hence quarter 4 grant remained unutilized.

• Fiji Rice Limited – was able to complete the allocated project at a competitive rate.

• Copra Millers (Fiji) Limited – for the whole nut subsidy, the total raw materials purchased in the 2018 – 2019 period were lower than forecasted.
For the Coconut Replanting Program, the savings was due to delay in the commencement of the program hence funds were not distributed to the farmers as planned.
Ministry of Public Enterprises and Government Printing P a g e 94 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 36.3 Trading and Manufacturing Account Trading and Manufacturing Account (TMA) is established under the Revolving Fund Account for the purpose of trading or production of goods and services for sale to other departments, statutory bodies or individuals.

Trading involves the buying and selling of goods.


Manufacturing involves the conversion of one type of good or material to another through the application of labour and facilities.

The TMA relating to the Government Printing Department whose functions included providing printing and stationery services to Parliament of Fiji, Government Ministries and Departments, statutory bodies including the general public on semi-commercial practices.
It was responsible for printing government documents, including parliamentary papers, gazettes, supplements, bills, acts, revenue earnings forms and cheque books.

It was also responsible for printing of the Laws of Fiji.

The financial analysis of TMA for the year ended 31 July 2019 is provided below.

Detailed Statements for the TMA are provided in Appendix 36.1.
Ministry of Public Enterprises and Government Printing P a g e 95 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 36.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.

Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.
A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.

A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may to lead to a material misstatement in the financial statements.

It requires immediate management action.

Internal controls are categorized against the following five components of internal control.
Ministry of Public Enterprises and Government Printing P a g e 96 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 A summary of assessment of key controls based on our audit were as follows: Control Risk Assessment Control Information & Monitoring Environment Activities Communication Activities    Control   In view of the above, we have assessed the internal controls of the Department as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 36.5 Submission of FY 2018-2019 Draft Agency Financial Statements On 29 May 2019, Permanent Secretary for Economy issued Circular No.
09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and times were detailed.

When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Six of 10 key processes completed within two weeks of due date.
Ministry of Public Enterprises and Government Printing P a g e 97 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 36.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Department was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 36.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements received before 31 October 2019.
36.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received Effective Within 14 days from issue of Draft Management Letter Rating Generally effective Timeliness of Signed Financial Statements Received Within 10 days from issue of Financial Statements for signing Ministry of Public Enterprises and Government Printing P a g e 98 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 36.1: CONSOLIDATED TRADING AND MANUFACTURING ACCOUNT Manufacturing Account Description Opening Raw Materials Add: Purchases Less: Closing Raw materials Raw Materials Used Add: Opening Work In Progress Add: Direct Cost – Labour Less: Closing Work in Progress Cost of Manufactured Goods Transferred to Trading Account Trading Account Description Sales Opening Stock Add: Cost of Manufactured Goods transferred from Manufacturing Account Goods available for sale Less: Closing Stock of Finished Goods 31 July 31 July 2019 ($) 2018 ($) 365,178 366,063 480,738 741,043 731,241 1,221,781 --- 365,178 731,241 856,603 17,874 61,514 --- 64,430 94,846 17,874 810,629 998,005 31 July 31 July 2019 ($) 2018 ($) 448,003 1,579,367 860,984 800,755 810,629 998,005 1,671,613 1,798,760 --- 860,984 Cost of Goods Sold 1,671,613 937,776 Gross (Loss)/Profit transferred to Profit & Loss Account (1,223,610) 641,591 Ministry of Public Enterprises and Government Printing P a g e 99 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Profit and Loss Account Description Income 31 July 31 July
 2019 ($) 2018 ($) Gross Profit Transferred from Trading Account (1,223,610) 641,591 Total Income Expenses (1,223,610) 641,591 Maintenance and Operations Total Payments 93,541 93,541 119,632 119,632 Net (Loss)/Profit (1,317,151) 521,959 Balance Sheet Description Assets TMA Dominion Cash CNB Suva Accounts Receivable IC Raw materials Work In progress Finished Goods for sales Total Assets Liabilities Deposits & Deductions Total Liabilities Net Assets Equity Accumulated TMA Surplus Net Profit 31 July 31 July 2019 ($) 2018 ($) 765,913 2,707 --- --- --- 978,125 753,479 365,178 17,874 860,984 768,620 2,975,640 40,356 40,356 89,884 89,884 728,264 2,885,756 6,926,115 6,404,156 (1,317,151) 521,959 TMA Surplus transferred to Consolidated Fund (4,880,700) (4,040,359) Total Equity 728,264 2,885,756 Ministry of Public Enterprises and Government Printing P a g e 100 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Head 37 Ministry of Local Government Roles and Responsibilities The Ministry of Local Government is responsible for formulating and implementing local government and urban planning policies.
The Ministry oversees two key Departments: Local Government & Town and Country Planning.

The primary responsibility of the Department of Local Government is to improve local governance through the effective implementation of the Local Government Act 1972.

It is also responsible for the provision of policy advice and support service to the National Fire Authority to ensure effective delivery of its core services.
The Department of Town and Country Planning is responsible for the overall administration, planning and regulation of land use in Fiji through the Town Planning Act 1946 and Subdivision of Land Act 1937, to ensure sustainable development and coordinated growth.

Its key functions are strategic planning of urban and rural areas and regulation and compliance with development laws.

It also offers physical planning and land development advice to government and promotes town planning in Fiji.
The Ministry also partners with other authorities such as National Fire Authority, Municipal Councils nationwide, as well as with international donor agencies that conduct environment waste management programs.
Ministry of Local Government P a g e 101 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table of Contents PART A: FINANCIAL INFORMATION ..................................................................................... 103 37.1 Audit Opinion ............................................................................................................... 103 37.2 Appropriation Statement ........................................................................................... 103 PART B: SIGNIFICANT MATTERS ............................................................................................ 106 37.3 Monitoring and oversight role of the Ministry – Capital Projects ................... 106 37.4 Anomalies in the management of Revolving Fund Account (RFA) ................... 111 37.5 Failure to Implement Capital Projects Approved for 2019 ................................ 112 37.6 Anomalies in Payments ............................................................................................... 113 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE ................................................ 116 37.7 Internal Controls ........................................................................................................... 116 37.8 Submission of FY 2018-2019 Draft Agency Financial Statements ................... 117 37.9 Quality of Draft Financial Statements by entities ................................................. 117 37.10 Timeliness of draft financial statements
 ................................................................. 118 37.11 Timeliness of Provision of Management Comments and Signing of Financial Statements ...................................................................................................................... 118 APPENDIX 37.1: Status of the Lautoka Botanical Garden Swimming Pool Project .... 119 APPENDIX 37.2: Capital Project funds not utilized in 2019 .............................................. 123 Ministry of Local Government P a g e 102 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART A: FINANCIAL INFORMATION 37.1 Audit Opinion The audit of the 2019 accounts of the Ministry of Local Government resulted in an unmodified audit opinion.
However, it was emphasised that necessary controls for payments were found to be weak.

In addition, timely reconciliations were not performed for Drawings Account, SLG 84 Account, Operating Trust Fund and Advances.

These are critical areas of the Ministry’s operation and if not addressed promptly could result in financial losses or financial irregularities in the future.
37.2 Appropriation Statement The Ministry collected revenue totalling $301,569 in 2019 and incurred expenditure totalling $13.5 million against a revised budget of $30.1 million resulting in unutilised budget of $16.6 million or 55%.

Ministry of Local Government P a g e 103 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Details of expenditure against the revised budget are provided in Table 37.1.
Table 37.1: Appropriation Statement for 2019 SEG Item Budget Changes Revised Actual Lapsed Estimate Estimate Expenditure Appropriation ($) ($) ($) ($) ($) Established Staff 2,927,595 (14,800) 2,912,795 2,114,403 Government Wage 190,958 14,800 205,758 198,196 798,392 7,562 Earners Travel Communication Maintenance Operations & & 228,700 29,690 258,390 248,241 10,149 287,700 68,940 356,640 302,230 54,410 Purchase of Goods & 164,045 8,450 172,495 171,523 972 Services Operating Grants & 4,529,455 (33,380) 4,496,075 2,887,792 1608,283 Transfers Special expenditure 859,100 (73,700) 785,400 361,636 423,764 Total Costs Operating 9,187,553 --- 9,187,553 6,284,021 2,903,532 Capital Construction Capital Purchase --- --- 10 Capital Grants & 20,800,000 Transfers --- --- --- --- --- --- --- --- --- 20,800,000 7,211,127 13,588,873 Total Capital 20,800,000 --- 20,800,000 7,211,127 13,588,873 Expenditure 13 Value Added Tax TOTAL 138,500 30,126,053 --- --- 138,500 62,671 75,829 30,126,053 13,557,819 16,568,234 The unutilised budget was largely due to the following: a) Unutilised budget of $798,392 in established staff was due to the vacant positions resulting from resignations and non-renewal of contracts.
Vacant positions were not filled pending approval of the restructure of the Ministry.

b) Unutilised budget of $54,410 in maintenance and operations was the result of expenditure controls implemented by the Ministry.

c) Unutilised budget of $1.6 million in operating grants and transfers was a result of reduction in the grant funding to rural local authorities and the National Fire Authority Ambulance Service.
Ministry of Local Government P a g e 104 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 d) Unutilised budget of $0.42 million in special expenditure was due to the reduction in assistance to municipal councils for building surveyor consultants to facilitate building application services.
e) Unutilised budget of $13.59 million in capital grants and transfers was a result of the non- utilisation of capital funds budgeted for ten new projects namely; National Fire Authority Capital Grant, Construction of Rakiraki Market; Preparatory works new Rakiraki Bus Station, Lami Market, New indoor Sporting facility - Lautoka; Construction of Roadside Mini Market, Swimming Pool, Nasinu; Re-development of Churchill Park, Upgrade of Children’s Park and Valelevu Sports Stadium.
The capital grant funding was only released to the municipal councils and National Fire Authority subject to the completion of each stage of the project with certification from the Consultant.

In addition, a sum of $3,420,312 was de-requisitioned for utilization, as approval was not granted by Ministry of Economy.
The projects affected were Rakiraki Market - $600,000; Challenge & Investment Fund - $1,050,405; Laqere Market - $525,997; Lautoka Swimming Pool - $918,200; Namaka Market - $300,000 and New Town Development projects - $25,709.78 which was not completed in 2018-2019 financial year but instead rolled-over to 2019-2020 fiscal year.
Ministry of Local Government P a g e 105 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART B: SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

It is likely that these issues may have an impact on the operations of the Ministry in future, if necessary action is not taken to address them.
It is important to note that the deficiencies detailed in this report were identified during our audit and may have been subsequently resolved by the Ministry.

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2019.
37.3 Monitoring and oversight role of the Ministry – Capital Projects The capital project management, monitoring and oversight role of the Ministry for projects carried out by Municipal Councils funded through capital grants were generally found to be weak.

Audit review of the capital projects noted, variations to the approved plan, changes in project site and scope which indicates poor project planning and improper feasibility study.
Ineffective project management led to project cost overruns, delay and untimely completion of projects resulting in value for money on some capital investments not being realised during the financial year.

The audit reviewed the following projects: Laqere Market Project Review of Laqere Market project report noted that the market building was repositioned from its initial location and was reset six meters from the boundary-line on the left of the property.
As a result of this change, an additional sum of $636,324 was vired from the Ministry’s capital expenditure budget allocation to cater for the variation and necessary preparatory work on the new site.

Ministry of Local Government P a g e 106 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 It was noted that from the total additional funding, $564,991.80 was for additional work not initially planned and a direct result of the changes in building site.
The project was finally commissioned in June 2020, a year after its planned completion date.

The total cost of the Project amounted to $7,198,434.

Sigatoka River Bank Reclamation Project In 2016, the Ministry paid a sum of $845,000 to Sigatoka Town Council for the Sigatoka river bank reclamation project.

The contractor and the project manager was engaged by the Sigatoka Town Council.
Audit review of the project revealed the following irregularities: • A total sum of $54,086.09 was paid to the Project Manager without a signed contract agreement between that the Council and Project Manager.

• The Contractor was paid a sum of $487,791.

We could not confirm the contract amount and the conditions as the contract agreement between the Council and contractor was not provided when requested during the audit.
• A payment of $75,651 was made to the contractor in 2018 as the second progress payment although the progress payment certificate provided by the Project Manager was not signed.

Upon further inquiry, it was revealed that the project was put on hold due to structural failure.

The audit site visit carried out on the 06/08/20 noted that the sheet piles had either bent towards the river or had fallen apart.
Refer to the Figure 37.1 for details Figure 37.1: Sigatoka Riverbank Project as at 06/08/2020 Pictures taken on date of site visit - 06/08/2020 Ministry of Local Government P a g e 107 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Lautoka Botanical Garden Swimming Pool Review of Lautoka Botanical Garden Swimming Pool project reports noted that the total estimated cost for the construction of the project was revised from $2 million to $12,638,743.
This revision was a result of the change in the scope and the site of the project resulting from the decision of the Ministry during the site visit on 21/08/2016.

It was noted that the Council was reluctant to take up the project after the change in scope to construct an Olympic standard swimming pool due the Council’s financial capacity and the lack of in-house resources to undertake such specialized project scope.
As a direct result of the change in scope, ensuing variations to fencing, foundation block and additional digging and compaction works for children’s pool arose.

Additionally, it was noted that delays in works by the contractors was directly due to the delays in progressive payments by the Council and the Ministry.

According to the Lautoka Botanical Garden Grant agreement signed on 02/08/18, the completion time of the project should be eight months from the date of the agreement.
However, as at the date of the audit site visit1, two years after the agreement, the Pool has not being commissioned for use and the project is still incomplete.

The Ministry provided grant of $5,250,000 to the Council for the project.

At the end of the 2019 financial year, the Council had utilized a total of $5,916,985 for the construction of the pool and its related infrastructure.
Refer to Appendix 37.1 for the status of the project taken on 18/02/2021 and the detailed management comments provided by the Ministry.

Lautoka Market Ventilation and Lights Project The Ministry of Local Government agreed to provide funding of $1,000,000 to the Lautoka City Council for the Lautoka Market Improvement of Ventilation and lights.

The grant agreement was signed on the 20/02/2019.


Audit review of the Grant Agreement noted that the Ministry, in the financial year, paid $81,800 to Lautoka City Council from which the Council has paid $54,391 to the project consultant.

This has resulted in budget savings of $918,200 for the Ministry and $27,409 savings for Lautoka City Council.
Despite the payment made, it was noted that there has been no progress and development in the project activities which has lapsed in its timelines from what was stipulated and agreed in the grant agreement between the Ministry and Lautoka City Council.
1 18/02/2021 Ministry of Local Government P a g e 108 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Root cause/Implication The above findings indicate poor project planning, ineffective project management and improper feasibility study.

As a result, variations to the approved plan and changes in project site and scope were evident.
Ineffective project management has led to project cost overruns, delay and untimely completion of projects resulting in value for money on capital investments not being realised during the financial year.

Recommendations • The Ministry must be proactive and increase its oversight role and enforce an effective system of project management, monitoring and supervision at every stage of the project.
• Investigation into the Sigatoka River Bank Reclamation Project must be carried out and appropriate action to be taken against those accountable for the poor project management, resulting in financial loss.

• Sigatoka Town Council must refund the utilized grant for the Sigatoka River Bank Reclamation Project amounting to $473,150 2.

• The Ministry should provide project management training to Officers responsible to monitoring capital projects.
It is imperative, that the Ministry assess the technical capacities and project management ability of the respective Municipal Council’s before providing funding.

Agreed Management Action The Municipal Council is a corporate body on its own and operates with its governance structure.

The Ministry has no legislative control on the operations of the Council.

The Ministry provides the administrative support in releasing the capital grant via a grant agreement to the Councils on quarterly basis.
The Ministry has put additional controls on the release of project grants to the Councils.

The technical aspect of the contract management of the civil works contractors has been verified and supervised by the lead consultant at Council level.

The lead consultant certify the work of the civil contractor before any payment is released to the civil works contractor.
The Ministry’s monitoring role has been strengthened through the partnership with Construction Implementation Unit (CIU) at Ministry of Economy.
Joint site visit and project meeting are held regularly between Nasinu Town Council, Ministry of Local Government Management and Head of Construction 2 Amount sourced from Sigatoka Town Council 2019 Signed Financial Statement Ministry of Local Government P a g e 109 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Implementation Unit, where the project progress status is discussed and financial need to complete the project.
From 2018, the CIU also certifies the claims of the works completed of both the lead consultant and the civil works contractor before recommending for release of capital project funds.

The technical team from the Director Building’s Office of Ministry of Infrastructure (MoIT), who are engaged as the Quality Surveyor (QS) for the Project oversee the project construction progress and certifies claims by the contractor.
The Construction Implementation Unit, Technical team also work with the project team in terms of monitoring of the project progress.

The Ministry monitoring role in partnership with the QS Team from MoIT and CIU ensures that the project is completed as per the approved plan.

Sigatoka River Bank Reclamation Project This project was put on hold due to the horizontal shift of the sheet piles in 2019.
Sigatoka Town Council has raised the concerns with the Lead Consultant and sought rectification of the problems, however, to no avail.

The Council’s solicitor has written to the consultant of the said project on 26/08/2020 on the issues pertaining to the said project.

The solicitor will now institute legal proceedings to claim the amount lost as a result of the incorrect advice provided by the Lead Consultant.
The Ministry has appointed a Team of Special Administrators and Chief Executive Officers who have set KPIs to ensure appropriate implementation of Council Operations and capital projects.

Lautoka Market Ventilation and Lights Project • The Consultant was paid for the works carried out at the Lautoka Market as per the Agreement between Lautoka City Council and the Consultant.

• This project was put on hold when funding by the Government was discontinued in the COVID-19 Budget.
• All projects are now monitored by the Construction Implementation Unit at the Ministry of Economy.

• Extra lights and fans have been installed at the market in various sections where complaints were received from the vendors.

This is an interim solution provided by the Council through its operational costs.

• The Council intends to use its own funds and enter into PPP arrangement to complete the project.

• The Ministry will request the Council to reimburse the sum of $27,409.
Officer Responsible Director Local Government Ministry of Local Government P a g e 110 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 37.4 Anomalies in the management of Revolving Fund Account (RFA) Advances may be provided to staff to assist in carrying out their official duties or as part of their approved remuneration.

The repayment of these advances must be actively pursued to reduce the risk of losses from irrecoverable debts.
3 Audit review of Revolving Fund Account noted that outstanding RFA balance amounted to $132,274.39 which was carried forward from 2018 financial year indicating that balances in the account have not been cleared in a timely manner.

Root cause/Implication The above findings indicates, that revolving fund accounts has not been reconciled and cleared in a timely manner.

This is a non-compliance to Ministry’s Finance Manual.
Recommendations The Ministry should ensure that: • Officers retire their accountable advances within seven days upon return from official trips and recoveries are made from salaries for those that do not retire on time; • Monthly reconciliations are prepared and reviewed in a timely manner; and • Charges in the RFA account is cleared in timely manner.

Agreed management comments Audit comments are noted.
The outstanding RFA balance amounting to $134,694.62 comprises of balances brought forward of $133,794.64 from 2018 and sum of $899.98 of current financial year (2018-2019 FY) which was cleared in 2019-2020 financial year through recovery of outstanding advances amounting to $2,420.23.

The sum of $132,274.59 for previous year’s carried forward balances includes non- advance related transactions and non-advance.

The Ministry will resubmit the submission for book entry adjustment to Ministry of Economy.
Ministry has recruited a quality with requisite accounting and book keeping accounts team namely; Senior Accounts Officer, Accounts Officer, and two Assistant Accounts Officer who are responsible for the timely closure and reporting of the financials for the Ministry for all underline accounts on a monthly basis.
In 2019, with the given said staff monitoring has been strengthen to ensure the retirement of 3 Part 10 Ministry of Local Government Finance Manual 2013 Ministry of Local Government P a g e 111 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 accountable advances is constantly followed up and retired within seven days of advance retirement period.
The RFA reconciliations is performed on a weekly, fortnightly and monthly basis by one of the Assistant Accounts Officers and checked by an Accounts Officer, which are then verified by the Senior Accounts Officer in concurrence with Manager Finance before it is submitted to Ministry of Economy.

From 2020 financial year, strict monitoring has been placed on the retirement of accountable advances whereby constant follow-ups are done to ensure retirement is within 7 days.
Monthly reconciliations are carried out and submitted to MOE with zero variances except for the carried forward balance from prior years.

All payment vouchers, acquittals and relevant documents with regards to the issue and retirement of advances are certified and filed accordingly.

Officer Responsible Manager Finance 37.5 Failure to Implement Capital Projects Approved for 2019 The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
4 For financial year 2019, the Ministry was appropriated a total of $20,800,000 for capital expenditure for 17 capital projects.

At the end of the financial year, the Ministry only managed to utilize 35% of the capital expenditure budget totalling $7,211,127 for only seven projects.

The budget of $4,650,000 for 10 projects remained unutilized.

Refer to Appendix 37.2 for details of project budget not utilised.

Refer to the illustration below for details.
Figure 37.2: 2019 Capital Budget utilisation Capital Budget utilisation 26% 74% Budget Actual 4 Part 2 - 2013 Ministry of Local Government Finance Manual Ministry of Local Government P a g e 112 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Root cause/Implication Ineffective project management led to delay and untimely completion of projects resulting in value for money on the capital investments not being realised during the financial year.
Recommendation The Ministry should properly plan, coordinate and manage its budget to ensure that projects and programs are implemented on time and in a proper manner.

Agreed management comments Audit comments are noted.

The Ministry utilized 35% of the CAPEX budget totalling to $7,211,127 on seven projects based on completed works on the ground.
There has been no capital funds used on ten new projects namely; National Fire Authority Capital Grant, Construction of Rakiraki Market; Preparatory works new Rakiraki Bus Station, Lami Market, New indoor Sporting facility - Lautoka; Construction of Roadside Mini Market, Swimming Pool, Nasinu; Re-development of Churchill Park, Upgrade of Children’s Park and Valelevu Sports Stadium as the capital grant funding is only released to the Municipal Councils and National Fire Authority subject to completion of each stage of the project with certification from the Consultant.
Sum of $3,420,311.78 has been de-requisitioned for utilization however, the excess approval was not granted by Ministry of Economy for the following projects namely; Rakiraki Market - $600,000; Challenge & Investment Fund - $1,050,405; Laqere Market - $525,997; Lautoka Swimming Pool - $918,200; Namaka Market - $300,000 and New town Development projects - $25,709.78 which was not completed in 2018-2019 financial year but instead rollover to 2019-2020 fiscal year.
Officer Responsible Manager Finance 37.6 Anomalies in Payments The Senior Accountant must not certify a payment as correct unless they are satisfied that: it is in accordance with an LPO, indent, contract, invoice, statement or other authorisation; i. ii.

there is documentation that the goods, services or works have been received; iii.

sufficient uncommitted funds are available for payment of the account; iv.
the account is not fraudulent and has not been previously paid; Ministry of Local Government P a g e 113 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 v. the expenditure account it is charged to is correct.5 Review of the internal controls for payments revealed the payments vouchers were not properly authorized by the supervising officers before payments were made.

Refer to table below for examples.
Table 37.2: Examples of payment cycle anomalies Date Cheque/EFT Amount Audit Observation Number VEP ($) 22/05/19 5745 1,174.31 Payment vouchers not authorized by supervising officers 22/05/19 5750 316.51 Payment vouchers not authorized by supervising officers 15/03/19 5742 40.00 Payment vouchers not authorized by supervising officers 20/06/19 5812 3,403.67 Payment vouchers not authorized by supervising officers 04/07/19 5875 2,443.01 Payment vouchers not authorized by supervising officers 30/07/19 5866 367.34 Payment vouchers not authorized by supervising officers 16/04/19 5700 1,880.73 Payment vouchers not authorized by supervising officers.
08/04/19 5687 9,000.00 Payment vouchers not authorized by supervising officers 07/02/19 5616 69.60 Payment vouchers not authorized by supervising officers 11/12/19 5432 784.62 Payment vouchers not authorized by supervising officers 08/11/18 5381 605.50 Payment vouchers not authorized by supervising officers 06/11/18 5370 811.47 Payment vouchers not authorized by supervising officers 5s2.8.4 - MLOG 2013 Finance Manual Ministry of Local Government P a g e 114 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Date Cheque/EFT Amount Audit Observation Number VEP ($) 12/09/18 5240 1,367.15 Delay in payment for procurement of an item resulted in additional $1,500 being charged as storage fees 06/09/18 5224 1,541.28 Payment vouchers not authorized by supervising officers 25/07/19 5943 5,688.07 Payment vouchers not authorized by supervising officers Root cause/Implication The findings indicate non–compliance to stated rules and regulations.
It also indicates the lack of supervisory checks and management override of controls.

Payments is a critical area of the Ministry’s operation and if not addressed promptly may result in financial losses or financial irregularities in future.

Recommendation The Ministry should strengthen internal control practices for payments and ensure all payments are properly certified by responsible officers prior to disbursement.
Agreed management comments The Ministry has improved its payment processes from financial year 2019-2020 as the Finance department is now fully resourced to practice separation of duties as required by the Manual.
Officer responsible Manager Finance Ministry of Local Government P a g e 115 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE 37.7 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.

A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may to lead to a material misstatement in the financial statements.

It requires immediate management action.


Internal controls are categorized against the following five components of internal control.
A summary of assessment of key controls based on our audit was as follows: Control Risk Control Information & Environment Assessment Activities Communication    Control  Monitoring Activities  Ministry of Local Government P a g e 116 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 In view of the above, we have assessed the internal controls of the Ministry as: Rating  Generally effective Internal control assessment Some deficiencies identified in internal controls 37.8 Submission of FY 2018-2019 Draft Agency Financial Statements On 29 May 2019, Permanent Secretary for Economy issued Circular No.
09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and times were detailed.

When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of the eight key processes applicable for the Ministry was completed within two weeks of due date.

37.9 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
Ministry of Local Government P a g e 117 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Generally effective While there was no adjustment to the figures in the financial statement, there was an adjustment made to the Drawings account of the Ministry.

37.10 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2019 37.11 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received Ineffective Rating Effective Within 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Ministry of Local Government P a g e 118 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 37.1: Status of the Lautoka Botanical Garden Swimming Pool Project Ministry of Local Government P a g e 119 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Ministry of Local Government P a g e 120 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Detailed Management Comments The estimated cost for the initial project design was $2m.
The $12.6 million was due to further changes in the project scope, which are: • 10 lane Competition Pool • 8 Lane Warm Up Pool • 1 Children’s Pool • All to be at Olympic International Standard.

a) The $12,638,743 also includes the engaging of two contractors; Luxury Pool and Metal Works, Project Consultant, Quantity Surveyor and sub-contractors.
Luxury Pools was contracted to construct the two (2), Olympic International Standard Swimming pool and a Children’s pool at a cost of $4,864,125.00, while Metals Works on the other hand was contracted for the sum of $3,965,200.00 to construct the associated facilities, which included the medical rooms, pump room, change room, public convenience and kiosk.

The other cost was associated with the cost of engaging the Lead Consultant, Quantity Surveyor and sub-contractors and sub services provider.
b) The sum of $5,916,985 was utilized to pay the claims received from the two contractors, the registered Quantity Surveyor and Lead Consultant.

Also included in the cost was the cost incurred by the Council in levelling the project site.

All these payments was released after the Quantity Surveyor verified the claims and submits the claims to the Lead Consultant to provide a Payment Certificate.
The Construction Implementation Unit also assisted in the project monitoring and vetting of the claims before payments was released to the respective parties.

The location was changed in consultation with the Lead Consultant and the Lautoka City Council.

The project was approved on 17 January 2017.

The Lautoka City Council and the Lead Consultant executed the Consultancy Agreement for the Swimming Pool Development on 18 December 2017.
The Ministry, Lautoka City Council and the Consultant, had a discussion during the design phase of the project.

After much consideration on the lack of International Swimming pool facility in the Western Division and to maximize the benefit of the Botanical Garden it was decided to change the scope of the Pool from a re-creation purpose pool to an International Standard Swimming Pool.

Therefore, the site selected earlier was not ideal for the change of scope.
The International Olympic Standard Swimming pool would require a training pool to be also constructed.

This is the standard requirement to host International Swimming Competitions.

Hence, a Ministry of Local Government P a g e 121 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 big open space would be required.

The new site was a steep area and also not utilized at that time.
To construct the pools and the associated facilities to compliment the pools, we had to excavate the steep area to bring it into a level open space ground.

As mentioned earlier, the project cost had increased due to the change in the scope of works.

The increased amount stands at $12.6 million.

In addition, the Ministry does not understand why the Council would be reluctant to construct an Olympic Standard Swimming Pool, when the same would bring increased revenue for the Council.
It must also be noted that the project was to be and has been carried out by external Lead Consultant and contractors with the funding provided by the Government.

This was all part of the change in scope of works.

The new site will accommodate the construction of associated facilities such as the medical rooms, Change rooms, Pump room, kiosks and two sets of public convenience.

Children’s pool was to be constructed below the International Swimming Pool and Training Pool.
The substantial earth work was necessary to level the ground and constructed the three pools and the associated buildings.

The delay of the project implementation was due to a number of factors including natural disasters and material suppliers not able to meet the specified timelines and demand.

As to be expected on such a large project, all work needed to be carefully scrutinized, so the final quality standards at project completion were not compromised.
The Lautoka City Council in consultation with Ministry of Local Government began an urgent project review around December 2019.

The said review on the delay in the project was completed in March 2020.

The findings revealed that the Contractor for the buildings and associated facilities was not able to complete its contract by 18 March, 2019 citing wet weather, shortage of materials and delays in some progress payments by the City Council as reasons for not being able to complete their contract on time.
Ministry of Local Government P a g e 122 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 37.2: Capital Project funds not utilized in 2019 Project Budget Amount ($) ($) Utilised Percentage Amount Utilised Ministry’s Comments National Fire 1,500,000 0 Authority – Capital Grant (%) 0% No funding has been released in 2018- 2019 fiscal year as the funding released in previous year were not fully utilized.
NFA Board has considered tender documents and forwarded to Ministry for consent in February 2019.

Meeting with MOE, decided that the project be deferred and await completion of Rakiraki, Lami, Nakasi and Nabouwalu Fire stations under construction and expected to be completed by July 2019.

Construction of 600,000 0 0% No funding has been released in 2018- Rakiraki Market 2019 fiscal year as the funding released in previous year were not fully utilized due to natural disaster i.e.
flooding that has further delayed the Construction of Rakiraki Market project.

Prep Works – New 150,000 0 0% This Project is led by Construction Rakiraki Station Bus Implementation Unit (CIU) of Ministry of Economy.

The majority of the time has been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.

Prep Works – Lami 250,000 0 0% This Project is led by Construction Market Implementation Unit of Ministry of Economy.
The majority of the time has been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.

Valelevu Sports 324,003 0 0% Project involves the Design and Stadium Construction of a stadium at Valelevu ground.
The proposed stadium will include the 2 changing rooms, pavilion Ministry of Local Government P a g e 123 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Project Budget Amount ($) Utilised Percentage Amount Utilised Ministry’s Comments ($) (%) with sitting capacity of 3,500, public convenience, medical room, media room and a car park.

Detailed plan and specifications has been delayed from the Guangdong Province side.
It was expected to be received by mid-March, 2019, however, according to Chinese Embassy work is still continuing.

Redevelopment of 500,000 0 0% This Project is led by Construction Churchill Park Implementation Unit (CIU) of Ministry of Economy.

The majority of the time has been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.
Presentation of detailed design to CIU was submitted with concept design in February, 2019 and have decided to hold on the project.

Construction of 500,000 0 0% This Project is led by Construction Swimming Pool – Nasinu Implementation Unit (CIU) of Ministry of Economy.

The majority of the time has been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.
TOR for the project took time to be prepared as CIU decided to carry out research on needs for the area.

Consultant was appointed in April, 2019 compared to forecast of November, 2018.

Prep Works New 500,000 0 0% This Project is led by Construction Indoor Sporting – LTC Implementation Unit (CIU) of Ministry of Economy.
The majority of the time has Ministry of Local Government P a g e 124 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Project Budget Amount ($) Utilised Percentage Amount Utilised Ministry’s Comments ($) (%) been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.

Presentation of detailed design to CIU was submitted with concept design in February, 2019 and have decided to hold on the project.
Construction of 800,000 0 0% This Project is led by Construction Roadside Mini Market Implementation Unit (CIU) of Ministry of Economy.

The majority of the time has been spent in preliminary survey, planning and documentation so that the variation costs to the project shall be minimized or have zero tolerance.

Mini Markets at Nakasi approval letter from FRA has been withdrawn by FRA.

Alternative site search is now in progress.


Lautoka Botanical 3,418,200 2,500,000 73% Three swimming pools has been Garden Pool constructed by the Contractor Luxury Pool and also associated facilities to the pools are partially completed.

The project scope and location changed during the course of project implementation, hence the project budget also changed from 2m to 12.6m as of 15/07/20.

From fiscal year 2016/2017 to 2019/2020 a total of $4,891,250.60 has been released to Lautoka City Council.
New Town 4,650,000 709,327 15% The project is on hold in interim due to Development redesign on the concept plan on overriding the initial plan which includes Ministry of Local Government P a g e 125 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Project Budget Amount ($) Utilised Percentage Amount Utilised Ministry’s Comments ($) (%) redesigning the scheme and engineering plan.
Drainage issues on site was noted, hence, CIU has requested to revisit the possibility of elevating the ground levels.

Upgrade 500,000 0 0% This project aims to commence upgrade Children’s Parks – Municipal Councils works of open spaces and improve an estimated 442 open spaces in all municipalities over the next 5 years.

Activities include landscaping and the installation of children's playground equipment and other facilities.
The program was in totality revised by CIU and broadened to ensure that open spaces are well utilized.

First open space selected to be piloted is Waila Open Space and Consultants through the normal tender process was appointed by Government in April, 2019.
Ministry of Local Government P a g e 126 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Head 42 Ministry of Waterways and Environment Roles and Responsibilities The Ministry of Waterways and the Ministry of Environment have been combined to form the newly established Ministry of Waterways and Environment (‘Ministry’), in recognition that waterways management and the preservation of Fiji’s natural environment share many inherent linkages.
Fiji’s waterways, as part of our natural environment, also share a unique vulnerability to the worsening impacts of climate change.

Duties previously carried out by the Ministry of Environment will now fall under the purview of the new Ministry.

That includes the steadfast commitment of the Fijian Government to ensure that no development in Fiji comes at the cost of the overall health of our natural environment.
The new Ministry also carries out the full mandate of the previous Ministry of Waterways to address the growing threat that flooding poses to Fijian cities, towns and communities, a threat that is projected to worsen due to the effects of climate change.

The Ministry maintains drainage systems and manages waterways in Fiji, including creeks, tributaries and rivers, to build Fiji’s overall resilience to the economic setbacks of extreme and widespread flooding.
Ministry of Waterways and Environment P a g e 127 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table of Contents Audit Opinion ............................................................................................................... 129 42.1 42.2 Appropriation Statement ........................................................................................... 130 42.3 Main Trust Fund Account .......................................................................................... 132 PART B: SIGNIFICANT MATTERS …………………………………………………………….135 42.4 Unreconciled variances in the Ministry’s Main Trust Fund Account ............... 135 42.5 Approved Capital Projects not implemented during the year......................... 137 42.6 Anomalies in Municipal Councils Capital Grants ................................................ 139 42.7 Transfer of Drainage Boards to the Ministry ........................................................ 141 42.8 Board of Survey Report not prepared ................................................................... 144 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE…………………………………145 42.9 Internal Controls .......................................................................................................... 145 42.10 Submission of FY 2018-2019 Draft Agency Financial Statements ................. 146 42.11 Quality of draft financial statements by entities .................................................. 147 42.12 Timeliness of Draft Financial Statements
 .............................................................. 147 42.13 Timeliness of Provision of Management Comments and Financial Statements for Signing ............................................................................................... 147 APPENDIX 42.1:ENVIRONMENT TRUST FUND ACCOUNT………………………………..148 APPENDIX 42.2:WATERWAYS RETENTION TRUST FUND…………………………………149 APPENDIX 42.3:ENVIRONMENT TRUST FUND ACCOUNT BALANCES…………………150 APPENDIX 42.4:CAPITAL PROJECTS NOT IMPLEMENTED………………………………..151 APPENDIX 42.5:DRAINAGE WORKS NOT IN ACCORDANCE WITH WORK PLAN…….154 Ministry of Waterways and Environment P a g e 128 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART A: FINANCIAL STATEMENTS 42.1 Audit Opinion The audit of the 2019 accounts of the Ministry of Waterways resulted in a modified audit opinion.
The qualifications are as follows: 1.

Monthly bank and Trust Fund Account reconciliations for the Environment Trust Fund account were not performed during the financial year.

As a result, an unreconciled variance of $4,140,717 exists between the bank balance as per bank audit confirmation and the cash at bank general ledger balance.

Furthermore, the Ministry was unable to locate and submit payment vouchers for the trust account totalling $359,980 for my verification.
Consequently, audit was unable to substantiate the accuracy and completeness of the Trust Fund Account balance of $6,051,833 reflected in the Environment Trust Fund Account.

Note 6(b) to the financial statements provides the status of the Ministry’s effort to resolve the above variance.

The Environment Trust Fund bank reconciliations for 2019 - 2021 have been prepared and submitted to Ministry of Economy.

2.
2.

Contrary to requirements of section 49 of Finance Instructions 2010, the Ministry did not prepare a report for the annual board of survey of assets under its authority.

As a result, audit was unable to verify the existence and condition of the Ministry’s assets and could not ascertain the accuracy of Loss of Assets recorded in the Statement of Losses.

Ministry of Waterways and Environment P a g e 129 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 3.
The Ministry disbursed a total of $3,410,962 as capital grants for maintenance of drainage to Municipal Councils.

audit was unable to extend my verification beyond the acquittal reports submitted by the Municipal Councils.

The acquittals reports were not supported with appropriate progress reports and project completion reports or engineer’s certificate.
Furthermore, the Ministry did not carry out independent verification of the projects to ascertain whether the projects were undertaken as per the approved scope and plan.

Due to the lack of appropriate supporting documents and lack of evidence of verification by the Ministry, audit was unable to ascertain whether value for money of payments totalling $3,410,962 for maintenance of Drainage reflected as Capital Grant and Transfers in the Financial Statements has been achieved.

4.
4.

Funds totalling $50,505 were transferred from the Drainage Boards in accordance with section 26 of the Drainage (Budget Amendment) Act 2018.

The funds transferred were neither based on audited closing cash at bank balance nor supported with closing bank statements balances of the respective Drainage Boards.

As a result, audit was unable to ascertain the accuracy and completeness of the Transfer of Drainage Board Fund revenue totaling $50,505 reflected in the Statement of Receipts and Expenditure.
42.2 Appropriation Statement The Ministry incurred expenditure totalling $23.8 million in 2018-2019 against a revised budget of $69.9 million resulting in an unutilised budget of $46.1 million or 66%.

Unutilised budget of $995,970 under Established Staffs was due to the 36 Established Staff positions that were still vacant at the end of the 2019 financial year as the Ministry’s Human Resource section was yet to recruit the required number of staff to facilitate the Ministry’s role.
Unutilised budget of $4,307,741 under Special Expenditure was mainly attributed to unspent funds of $3,467,511 under Fiji Ridge to Reef Project allocation.

The project commenced in 2019 and only $90,194 was utilized for project preparatory work.

This is an ongoing project facilitated by UNDP.

Unutilised budget of $34,691,351 under Capital Construction was mainly attributed to the delay in tender process.
For Naboro Landfill Stage 2 Cell 3, the tender was called on 02/10/18, closed on 21/11/18 and GTB approval was finally issued on 28/05/19.

The contract was signed on 19/07/19, which was 12 days before the end of the financial year, thus majority of the project funds were not utilised.

For Irrigation Support for Farm Development, the tender was advertised on 17/10/18, closed on 21/11/18 and submission to GTB was made on 04/01/19.
However, the tender has been withdrawn due to re-prioritisation of funds by Ministry of Waterways and Environment P a g e 130 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 the Ministry of Economy.

For Maintenance of Irrigation Schemes, the tender for the Navua Irrigation Scheme and Maintenance of Completed Irrigation Scheme – Northern Division were completed during the 2nd quarter of the year.

Thus, the Ministry was only able to utilise $853,337 on both projects during the year.
For Coastal Erosion Protection Works, the Yaroi, Qarani, Sasa, Nakawaqa, Dromuna, Anitioki, Naselai and Namatakula villages’ projects were shelved due to re-prioritisation of funds.

Tender for Bau Island project was re-advertised due to less interest shown on projects in maritime islands.

The tender process for Tavuki District School, Namuana village and Dravuni village has been finalised but works are yet to commence.
Most projects for which GTB approval was obtained during the period were still 60 – 70% progress, thus the savings in Coastal Erosion Protection Works project funds.

Details of expenditure against the revised budget are provided in Table 42.1.
Table 42.1: Appropriation Statement for 2019 SEG Item Budget Estimate ($) Changes Revised Actual Lapsed Estimate Expenditure Appropriation ($) ($) ($) ($) Established staffs 4,119,918 (281,000) 3,838,918 Government wage 1,368,199 (69,000) 1,299,199 2,842,948 1,039,404 995,970 259,795 earners Travel & communication Maintenance & operations 200,400 140,000 340,400 298,514 41,886 569,000 105,000 674,000 599,544 74,456 Purchase of goods 309,925 105,000 414,925 379,077 35,848 & services 6 Operating grants & 1,256,220 --- 1,256,220 801,032 455,188 Transfers 7 Special expenditures 5,243,424 --- 5,243,424 935,683 4,307,741 Total Operating Expenditure 13,067,086 --- 13,067,086 6,896,202 6,170,884 Capital construction 46,987,394 1,500,000 3,809,710 --- --- --- 46,987,394 12,296,043 34,691,351 1,500,000 3,809,710 --- 3,410,962 1,500,000 398,748 8 9 Capital purchase 10 Capital grants & transfers Total Capital Expenditure 52,297,104 --- 52,297,104 15,707,005 36,590,099 13 Value added tax 4,591,496 Total Expenditure 69,955,686 --- --- 4,591,496 1,249,340 3,342,156 69,955,686 23,852,547 46,103,139 Ministry of Waterways and Environment P a g e 131 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 42.3 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Ministry operates and maintains 2 main trust fund bank accounts which include the Environment Trust Fund Account, the Waterways Retention Trust Fund Account.

42.3.1 Environment Trust Fund Account The Environment Trust Fund Account consisted of four trust fund accounts.
They are Ozone Depletion Substance (ODS) Fines, Naboro Landfill, Environment Trust and Convention on International Trade in Endangered Species (CITES) Trust Fund Accounts.
i. Ozone Depletion Substance (ODS) Fines – section 12 of the Ozone Depleting Substance Act 1998 establishes the Ozone Layer Protection Fund which consisted of all money appropriated by Parliament for the purposes of the Fund or required to be paid into the Fund by or under any other Act; fees paid under this Act; and all money paid from any source outside Government for the purposes of this Act, and which will be dealt with as a special account under the Financial Management Act 2004.
The objects and purposes of the Fund are for programmes for the establishment or management of any strategy or action plan required for the protection of the ozone layer; and the administration of programmes established to give effect to the Vienna Convention for the protection of the Ozone Layer and Montreal Protocol on substances not deplete the Ozone layer.

ii.

Naboro Landfill Trust Fund Account - the Naboro Landfill Trust Fund Account consisted of gate fees collected at the Naboro Landfill.
This fund is used to pay monthly progressive claims to the nominated contractor, HG Leach.

iii.

Environment Trust - section 55 of Environment Management Act 2005 establishes the Environment Trust Fund Account into which shall be paid, money appropriated by Parliament, any environment bond, any contribution or donation, fines of fixed penalties or any other money required under the Act or any other written law to be paid into the fund.
The Department of Environment administer the trust fund for various purpose including payment for debts for nature swaps, payment for necessary expenses incurred in the negotiation, monitoring, investigation or analysis of any matter or the undertaking of any environmental monitoring or audit programme, payment for environmental rehabilitation work, research programmes, refund of environment bonds and security of costs and rewards under the act.
Ministry of Waterways and Environment P a g e 132 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 iv.

Convention on International Trade in Endangered Species (CITES) Trust Fund Accounts – in accordance with section 31 of the Endangered and Protected Species Act 2002, any money received by or on behalf of the Fiji CITES Management Authority for the purpose of protecting any species listed in section 3 of the Act will be deposited into this Trust Fund Account.
Monies for the Trust are utilised for the purpose of protecting endangered and protected species.

The Ministry collected Environment Trust Fund revenue totalling $1,340,771 in 2019 and incurred expenditure totalling $2,337,318 resulting in a deficit of $996,547 compared to a surplus of $2,517,441 in 2018.

The financial analysis of the Environment Trust Fund Account for the year ended 31 July 2019 is provided below.
The detailed trust fund account statement of receipts and payments is provided in Appendix 42.1.

42.3.2 Waterways Retention Trust Fund Account The Department of Waterways Retention Trust Fund Account includes deposits and refund of retention monies for the Department’s capital projects which are under contract.

The Ministry collected retention revenue totalling $929,000 in 2019 and incurred expenditure totalling $189,490 resulting in a surplus of $739,510 compared to a surplus of $132,756 in 2018.
Ministry of Waterways and Environment P a g e 133 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The financial analysis of the Waterways Trust Fund Account for the year ended 31 July 2019 is provided below.

The detailed trust fund account statement of receipts and payments is provided in Appendix 42.2.
Ministry of Waterways and Environment P a g e 134 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART B: SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

It is likely that these issues may have an impact on the operations of the Ministry in future, if necessary action is not taken to address them.
It is important to note that the deficiencies detailed in this report were identified during our audit and may have been subsequently resolved by the Ministry.

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2019.

42.4 Unreconciled variances in the Ministry’s Main Trust Fund Account Each month the trust account must be balanced and reconciled with the trust bank account.
The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.

Un-reconciled items must be investigated and resolved promptly.1 The Ministry maintained the following Main Trust Fund Accounts: 1.

Waterways Trust Fund – for Retention funds for Waterways capital projects; and 2.
Environment Trust Fund – includes Trust Funds for Ozone Depletion Substance (ODS) Fines, Naboro Landfill, Environment and Convention on International Trade in Endangered Species (CITES).

Audit review of the trust fund accounts noted the following anomalies: • An unreconciled variance of $640,470 existed between the Environment Trust Fund Account balance (SLG 89) and the Cash at bank balance (SAG 52) in the FMIS general ledger as at 31 July 2019.
Refer to Table 42.3 for details; 1 Finance Instructions 2010 – Section 58 (3) Ministry of Waterways and Environment P a g e 135 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Table 42.3: Variance between SLG 89 and SAG 52 for Environment TFA Description Trust Fund (SLG 89) balance Cash at Bank (SAG 52) balance Variance Amount ($) 6,051,833 6,692,303 (640,470) • An unreconciled variance of $4,140,717 existed between the Environment Trust Fund cash balance in the FMIS general ledger (SAG 52) and the bank balance as per bank confirmation at 31 July 2019.
Refer to Table 42.5 for details; Table 42.5: Variance between Cash GL and bank balance for Environment TFA Description Cash GL (SAG 52) balance Amount ($) 6,692,303 Cash at bank as per bank confirmation 10,833,020 Variance (4,140,717) • Significant delays were noted in the posting of Environment Trust Fund receipts to the FMIS General Ledger.

Refer to Table 42.6 for details.

Table 42.6: Significant delay in GL posting of Environment Trust Fund receipts Receipt Date Receipt No.

GL Posting Date JV No.


Time taken 26/09/18 - 660410 - 660646 03/09/19 07/09/19 11 months to post to 31/10/18 01/08/18 - 29/08/18 03/09/19 - 26/09/18 597700 - 597756 GL 660154 - 660365 03/09/19 08/09/19 12 to 13 months to 897685 - 897686 597691 - 597693 post to GL 660366 - 660408 03/09/19 06/09/19 Up to 12 months to 597697 - 597699 post to GL Root Cause/Implication The finding indicates non adherence to stipulated trust fund account processes and procedures and lack of oversight.
The variances highlighted indicate that reconciliations were not prepared and properly reviewed on a timely basis.

Ministry of Waterways and Environment P a g e 136 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Delay in posting to the general ledger indicates the lack of proper supervisory checks.

Failure in addressing the issue could result in the misstatement of Trust Fund revenue.
As a result of the variances noted, it was not possible to ascertain the accuracy and completeness of the balances of $6,051,833 reflected in the Environment Trust Fund Accounts.

Recommendations The Ministry should: • Carry out the monthly trust fund and bank reconciliations for the Ministry’s Main Trust Fund Account on a timely manner.
Any errors or variances identified should be investigated and rectified immediately; • Strengthen its supervisory check and review process and ensure compliance with requirements stipulated in the Finance Instructions and Finance Manual; • Post Trust Fund Account revenue to the general ledger on a timely manner.

Ministry’s Comments Management had sought assistance from the FMIS, Ministry of Economy (Central Agency) on the transfer of balances and reconciliations also.
A Trust Fund committee has been formed to work on this Trust Fund Variances.

Committee members consist of Environment & Waterways Staff and will report directly to PS.

The committee will work on the current reconciliation and backwards too and will seek assistance from FMIS whenever required.

Recommendations by the auditors are acknowledged and noted.

Officer Responsible Principal Accountant and Senior Accountant.
42.5 Approved Capital Projects not implemented during the year The responsible authority for a budget sector agency is responsible for the effective, efficient and economical management of the agency.2 The Ministry was appropriated a total of $46,987,394 to meet its approved capital expenditure during the financial year.
2 Financial Management Act 2004 – Section 28.1 (a) Ministry of Waterways and Environment P a g e 137 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 We noted that a sum of only $12,296,043 or 26% of the Capital Construction (SEG 8) budget was utilised by the Ministry while the Capital Purchase budget for the 2018/2019 financial year was not utilised at all.

Refer to Appendix 42.4 for details.


Root Cause/Implication Non-utilisation of capital budget indicates ineffective planning and absence of management reviews done to ensure that the allocated funds are effectively utilised as appropriated.

Inability to fully utilize the capital budget is deemed as the lost opportunity especially when no economic benefit is realized from funds provided in the budget.

Also, the objectives of funds appropriated by Parliament has not been met.
Recommendation The Ministry should ensure that the necessary measures and reviews are put in place to ensure the capital budgets are fully utilised for its intended purpose before the end of the financial year.

Ministry’s Comments Recommendations made by the audit is highly acknowledged and noted.

Ministry will ensure that the following measures are taken: 1.

Re-look into the Tender Process and ensure that it is carried out in a timely manner so that funds are effectively utilized.

2.
2.

Proper consultation in all areas is done before the Tender is Advertised and Contract Awarded 3.

Work more closely with other Government Agencies and Stakeholders in identifying potential farmers and vendors in a timely manner and funds utilized in that particular Financial Year.

The Ministry has now an Approved GTB for Hire of Machinery that is valid for 2 years which we are currently working on for Drainage Improvement Works.

Officer Responsible Director – Environment and Director – Operations.
Ministry of Waterways and Environment P a g e 138 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 42.6 Anomalies in Municipal Councils Capital Grants Where required under Finance Instruction 16-(8), the recipient shall prepare an acquittal report.

The acquittal report shall provide the following information: details of grant money expended and unexpended; grant objectives and targets achieved; and Financial statement (audited if practicable) for grants of $20,000 or more.
3 The Grant Recipient must only utilise the Government Grant for the purpose and, if applicable must strictly adhere to the implementation plan, requirements and time schedule set out in Schedule 2, unless variations have been agreed in writing with the Government.4 For the projects, Director Operations authorised representatives shall inspect project sites monthly.
The authorised representatives shall check that: records are being properly kept; information in the acquittal report corresponds to records kept by the recipient; and the progress of the project is satisfactory.
5 The Grant recipient must submit acquittal reports as outlined in Item 5 (b) to the Government before the next instalment of the Government Grant is disbursed to Grant Recipient.6 During the year, the Ministry disbursed Maintenance of Drainage Capital Grant totalling $3,410,962 to Municipal Councils.

The Capital Grants were for the upkeep of drainage under all municipal councils and upgrade of drains and creeks to mitigate flood risk in urban and peri-urban areas.
The following anomalies were noted: Acquittals • We were only provided soft copy of acquittals (excel copy) from Municipal Councils.

These acquittals did not have supporting documents such as the payment vouchers, invoices from contractors and payment certificates from the Councils; • The soft copy acquittals were not dated therefore we could not ascertain whether acquittals were submitted on time; • The acquittals only provided the breakdown of how the Capital Grants were utilised.
There was no evidence to indicate that physical progress/completion reports or certification was provided by the Council to confirm that the drainage works have been carried out in accordance with the scope of works and at the required standard; • Acquittals from Lami Town Council for the Capital Grants totalling $340,072.08 was not 3 Ministry of Waterways and Environment Finance Manual 2013 – section 3.3.1 4 Grant Agreement between Ministry and Municipal Council – section 3.2 (a) 5 Ministry of Waterways and Environment Finance Manual 2013 – section 3.3.7 & 3.3.8 6 Grant Agreement between Ministry and Municipal Council – section 3.1 (c) Ministry of Waterways and Environment P a g e 139 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 provided for audit review; • Most of the Councils only submitted one acquittal report for both the Quarter 1 and 2 grants.
Work Plan • For a number of Municipal Councils, the drainage works carried out were not in accordance with the stipulated work programme, contrary to 3.2 (a) of Councils’ grant agreement.

There was no evidence to indicate that approval was obtained from the Ministry regarding the variation in the work programme.

Refer to Appendix 42.5 for details.
Inspections by the Ministry • There was only one inspection carried out by the Ministry for each Municipal Councils during the year, contrary to section 3.3.7 of the Ministry’s Finance Manual 2019; • Inspections carried out by the Ministry was not thorough, contrary to section 3.3.8 of the Finance Manual 2019.as the inspection reports only included the pictures of completed projects but there were no confirmations on the satisfactory progress or completion of works inspected.
Payments • There were delays in disbursement of funds for both the quarters.

As per the grant agreements schedule 2, the works for Quarter 1 was to commence from August to October 2018, however the Grant was disbursed on 19/10/18.

The works for quarter 2 was to be held from November 2018 to January 2019, however Quarter 2 grant was disbursed on 30/05/19.
• Verification of payment vouchers noted that the Quarter 2 grants were disbursed without satisfactory acquittal of Quarter 1 grant and without any inspections carried out by the Ministry, contrary to section 3.1 (c) of the Grant Agreements.
Root Cause/Implication Anomalies noted in provision of acquittal reports from the Councils indicates the lack of follow up, proper monitoring and enforcement of accountability by the Ministry to ensure that all grant appropriated and disbursed were used for the intended purposes and were properly accounted for.

As a result, the risk of misuse and misappropriation of public funds is high.

Weak oversight function increases the risk of substandard work being carried out leading to wastage of public funds.
Ministry of Waterways and Environment P a g e 140 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Delays in the disbursement of grants indicates non-compliance to the requirements of grant agreements and has contributed to delays in the implementation of project by the Councils.
Recommendations The Ministry should ensure that: • constant follow up is done with Municipal Councils on the timely submission of acquittals/progress reports with full supporting documents; • acquittals are properly vetted for accuracy and anomalies or unsupported expenditures are investigated and resolved; • Councils are required to submit acquittals for every quarter and following quarter’s grants are only released upon satisfactory acquittal of previous quarter’s grant; • it is proactive and improve its oversight role to ensure the requirements of the grant agreements and Finance Manual are complied with and quality of works is not compromised; and • Grants are disbursed to the Municipal Councils on a timely manner.
Ministry’s Comments An Engineer has been appointed to oversee the Municipal Council Grants.

Management will ensure that: 1.

Grants are to be release upon submission of timely acquittals with full supporting documents 2.

Acquittals are vetted and unsupported expenditures are investigated and resolved 3.

Inspections are done to ensure that the works carried out are in line with the request of funds.

4.

Funds are disbursed on a timely manner 5.


The Ministry is undertaking the above-however, the grant is no longer available (from the current fiscal year).

Officer Responsible Director Operation 42.7 Transfer of Drainage Boards to the Ministry In accordance with the Drainage (Budget Amendment) Act 2018 Part 4, all the Drainage Boards (Central, Western and Labasa) were to cease operation before 1 August 2018.
All assets, interests, rights, privileges, liabilities and obligations of the Board were transferred to the Ministry without conveyance, assignment or transfer; all staffs of the drainage board were transferred to the Ministry and all drainage funds were transferred to the Consolidated Fund Account.
Ministry of Waterways and Environment P a g e 141 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 The following were noted: • There is backlog in the submission of Drainage Boards accounts for audit hence assets and liabilities that were transferred to the Ministry were not based on audited figures.
Refer table 42.7 below on the status of the Drainage Boards audit: Table 42.7: Backlog in Drainage Boards audit Drainage Last audited Board Central Western Labasa accounts 31/12/2013 31/07/2016 31/12/2015 No.

of years of audit backlog 5 2 3 • We could not confirm the condition and availability of all accounting records for prior years as the accounts are yet to be audited.
Moreover, there was no evidence to indicate that proper handing over of records was done to the Ministry; • The Ministry, upon taking charge of the Drainage Boards’ fixed assets from 1 August 2018 have not recorded them in the Ministry’s fixed assets register; • Fixed assets register were not submitted by the Drainage Boards detailing all the assets that they owned.
The Central and Labasa Drainage Board compiled a list of assets during their inspection prior to the transfer which was submitted to the Ministry.
The list of assets from the Western Division Drainage Board was not provided for audit verification; • We could not confirm whether board of surveys were carried out to verify the existence and condition (working or unserviceable) of the fixed assets and stock take of inventory/ under the control of the Drainage Boards was done, prior to their transfer to the Ministry; • Listings were not provided on debtors and creditors and accruals to be transferred to the Ministry; • Revenue totaling $50,376 for funds transferred by the Drainage Boards ($49,326) and rental revenue ($1,050) were neither based on audited closing cash at bank balance nor supported with closing bank statements balances of the respective Drainage Boards bank accounts.
Also, the funds deposited into CFA without being receipted and recorded in the cash analysis sheet.

Root Cause/Implication Backlog in audit of the drainage boards indicates the passive role the line Ministry plays to monitor and account for the yearly budget appropriated and the lack of enforcement of accountability on past Drainage Boards members to ensure that the audit of the Boards are kept current.

The risk of misappropriation or fraud not being detected due to backlog of audits is high.
Ministry of Waterways and Environment P a g e 142 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 As a result of the audit backlog, the accuracy and completeness of assets and liabilities transferred from Drainage Boards to the Ministry and the cash transferred to CFA could not be ascertained.
The findings indicate the lack of verifications and due diligence check to ensure that all assets and liabilities are properly accounted for during the transition of Drainage Boards to the new Ministry.

In the absence of a proper handover, we could not ascertain the availability of all Drainage Boards accounting records and whether they have been properly accounted for.
Also, in the absence of FAR, debtors and creditors listings, the existence, accuracy and completeness of fixed assets, accounts receivables and accounts payables transferred to the Ministry could not be ascertained.

Failure to comply with revenue internal controls also increases the risk of loss of revenue.
Recommendations The Ministry should ensure that: • annual accounts of the Drainage Boards for the backlog years are submitted for audit; • a listing of accounting records of Drainage Boards is prepared for audit and other reviews; • fixed assets of Drainage Boards are taken on charge by the Ministry are recorded in the Ministry’s fixed assets register; and • documentary evidence pertaining to cash, revenue, debtors, creditors and accruals for Drainage Boards are maintained.
Ministry’s Comments The Management acknowledges the issue raised, unfortunately the Ministry had no chance to work with the Board on the issues raised.

As per Bill 20 the Drainage Board was to be closed at an immediate time.

The Ministry will deal with the issue as per the procedure below: The Management has approved and select a team/committee to work on: • Collate all the required documents • Facilitate Assets Register • Audit of the Drainage Board past books.
Ministry of Waterways and Environment P a g e 143 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Officer Responsible Principal Accountant and Senior Accountant.

42.8 Board of Survey Report not prepared An annual board of survey must be conducted each year to verify the existence and condition of assets recorded on the asset register.

Annual boards of survey must be conducted by 3 officers who are independent of the officer responsible for the custody of the assets.
A written record must be kept of each board of survey and must be signed and dated by the officers undertaking it.

All assets which are not accounted for in the board of survey must be investigated to determine the appropriate recovery or write-off action.7 Contrary to requirements of section 49 of Finance Instructions 2010, the Ministry did not prepare a report for the annual board of survey of assets under its authority.
Root Cause/Implications The above findings indicate the inadequate system of controls in the management of fixed assets to ascertain their existence and condition.

The risk of losses not being reported is high.

As a result, we could not substantiate the completeness and accuracy of Loss of Assets recorded in the Statement of Losses.

Recommendation The Ministry should ensure that annual Board of Survey for fixed assets is carried out annually and finalized on a timely manner.
Ministry’s Comments Recommendations made are acknowledged.

The Ministry will ensure that Board of Survey is carried out and finalized on a timely manner.

Officer Responsible Principal Accountant.


7 Finance Instructions 2010 – section 49 (1) to (3) Ministry of Waterways and Environment P a g e 144 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 PART C: ASSESSMENT OF FINANCIAL GOVERNANCE 42.9 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

A deficiency occurs when internal controls are unable to prevent, detect or correct errors in the financial statements or where controls are missing.

A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may to lead to a material misstatement in the financial statements.

It requires immediate management action.


Internal controls are categorized against the following five components of internal control.
Ministry of Waterways and Environment P a g e 145 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 A summary of assessment of key controls based on our audit was as follows: Control Risk Control Information & Environment Assessment Activities Communication    Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry of Waterways as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 42.10 Submission of FY 2018-2019 Draft Agency Financial Statements On 29 May 2019, Permanent Secretary for Economy issued Circular No.
09/2019 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2019 accounts and times were detailed.

When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Generally effective Year-end close process assessment Five of 9 key processes completed within two weeks of due date Ministry of Waterways and Environment P a g e 146 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 42.11 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry of Waterways was: Rating  Ineffective Quality of draft financial statements assessment Adjustments on total expenditure, operating results/net assets were more than one percent.
42.12 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Generally effective Timeliness of draft financial statements assessment Acceptable draft financial statements received before 31 October 2019 42.13 Timeliness of Provision of Management Comments and Financial Statements for Signing To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Ineffective Timeliness of Management Comments Received Management response received within 14 days Timeliness of Signed Financial Statements Received Signed accounts was received after 15 days Ministry of Waterways and Environment P a g e 147 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 42.1: ENVIRONMENT TRUST FUND ACCOUNT Description Receipts Ozone Depletion Substance (ODS) Fines Naboro Landfill Environment Trust 31 July 31 July 2019 ($) 2018 ($) 7,031 1,009,933 348,317 3,018,241 977,089 1,333,541 Convention on International Trade in Endangered Species 8,334 22,220 Total Receipts Payments Ozone Depletion Substance (ODS) Fines Naboro Landfill Environment Trust Total Payments Net (Deficit)/Surplus Opening balance as at 1 August Closing balance as 31 July 1,340,771 5,383,935 - 38,505 1,945,030 2,809,989 392,288 18,000 2,337,318 2,866,494 (996,547) 2,517,441 7,048,380 4,530,939 6,051,833 7,048,380 Ministry of Waterways and Environment P a g e 148 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 42.2: WATERWAYS RETENTION TRUST FUND Description Receipts Retention funds Deposits Total Receipts Payments Retention pay-outs Bank Fees Total Payments Net Surplus Add Balance as at 1 August Closing Balance as at 31 July 31 July 31 July 2019 ($) 2018 ($) 929,000 268,527 929,000 268,527 189,490 135,747 - 24 189,490 135,771 739,510 132,756 132,756 872,266 132,756 Ministry of Waterways and
 Environment P a g e 149 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 42.3: ENVIRONMENT TRUST FUND ACCOUNT BALANCES Department of Environment Main Trust Fund (SLG 89) Balances Description Head 42 ($) Head 38 ($) TOTAL ($) ODS Fines Environment (7,030.56) (3,302,942.23) (3,309,972.79) Naboro Landfill Environment Trust CITES Trust TOTAL 968,148.49 (1,045,850.85) (77,702.36) (599,801.73) (1,761,530.01) (2,361,331.74) (8,334.54) (294,491.58) (302,826.12) 352,981.66
 (6,404,814.67) (6,051,833.01) Department of Environment Main Trust – Other Liabilities (SLG 84 & 86) Balances Description Head 42 Head 38 ($) ($) TOTAL ($) Withholding Tax Payable (SLG 84) (7,939.66) (38,924.53) (46,864.19) VAT on Revenue (SLG 86) - (4,083.45) (4,083.45) TOTAL (7,939.66) (43,007.98) (50,947.64) Department of Environment Main Trust Cash (SAG 52) Balances Description Head 42 Head 38 ($) ($) TOTAL ($) Environment Trust Drawings Account 807,864.49 5,884,438.71 6,692,303.20 TOTAL 807,864.49 5,884,438.71 6,692,303.20 Ministry of Waterways and Environment P a g e 150 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 42.4: CAPITAL PROJECTS NOT IMPLEMENTED SEG 8 - Capital Construction: Budget vs. Actuals Capital Project Revised Budget 2019 ($) Actuals 2019 ($) Savings Savings ($) % Reasons for Saving Construction of 3,300,000 74,409 3,225,591 98% The reason for the non-utilisation of Naboro Landfill- Stage 2 project fund was due to the delay in the finalisation of the tender process for the construction of Stage 2, Cell 3.
The tender was called on 02/10/18, closed on 21/11/18 and GTB approval was finally issued on 28/05/19.

The contract was signed on 19/07/19, which was the end of the financial year, thus no majority of the project funds were not utilised.

Drainage for Rural 3,000,000 714,237 2,285,763 76% There was delay in finalisation of tender for Residential Areas the hire of machinery for the Central, Northern and Western Division drainage works for rural residential areas and farmland, thus the significant savings.
Maintenance of 1,955,100 853,337 1,101,763 56% The reason for the non-utilisation of fund Irrigation Schemes was that the tender for the Navua Irrigation Scheme and Maintenance of Completed Irrigation Scheme – Northen nd Division were completed during the 2 quarter of the year.

The Ministry only managed to utilise $853,337 on both projects during the year Irrigation Support 2,500,000 24,083 2,475,917 99% The non-utilisation of project was fund was for Farm Development due to the delay in tender process.
Tender was advertised on 17/10/18, closed on 21/11/18 and submission to GTB was made on 04/01/19.

However, the tender has been withdrawn due to re- prioritisation of funds.
Drainage & flood 14,480,000 4,701,073 9,778,927 68% The significant savings was due to the protection termination of the Sigatoka River Dredging project carried out by China Railway First Group as there was no dumping site Watershed 2,000,000 1,402,412 597,588 30% There were delays in the processing of Ministry of Waterways and Environment P a g e 151 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 Revised Budget 2019 ($) Actuals 2019 ($) Capital Project Management Savings Savings ($) % Reasons for Saving payments for Namosi Flood Mitigation DAM 3, thus the savings.
Maint.

Drainage of 2,752,294 1,297,550 1,454,744 53% The non-utilisation of funds was due to non-municipal areas tender for the maintenance of drainage schemes for the Central just being awarded and works commenced, Western was re-advertised and for Northern Division, the contract was still vetted by SG’s Office when the financial year ended.

However, emergency drainage works were carried out (waiver of tender obtained) resulting in the 53% utilisation rate.
Coastal erosion 14,000,000 1,246,481 12,753,519 91% The Yaroi, Qarani, Sasa, Nakawaqa, protection works Drainage for farmlands Dromuna, Anitoki, Nasilai and Namatakula villages projects were shelved due to reprioritisation of funds.

Tender for Bau Island project was re-advertised due to less interest on projects in maritime islands.

The tender process for Tavuki District School, Namuana village and Dravuni village has just been finalised and works are yet to commence.
Most projects whose GTB approval were obtained during the year are still 60 – 70% progress, thus the savings in project funds.

3,000,000 1,982,462 1,017,538 34% There was delay in finalisation of tender for the hire of machinery for the Central, Northern and Western Division drainage works for rural residential areas and farmland, thus the significant savings.
TOTAL 46,987,394 12,296,043 34,691,351 74% Ministry of Waterways and Environment P a g e 152 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 SEG 9 - Capital Purchase: Budget vs. Actuals Capital Project Revised Budget 2019 ($) Actuals 2019 ($) Savings Savings ($) % Remarks Purchase of 1,000,000 - 1,000,000 100% The reason for non-utilisation of funds was standardised bins the delay in the finalisation of tender process.
Compost bin pilot 500,000 - 500,000 100% The reason for non-utilisation of funds was project- Nasinu the delay in the finalisation of tender process.
TOTAL 1,500,000 - 1,500,000 100% Ministry of Waterways and Environment P a g e 153 | REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 APPENDIX 42.5: DRAINAGE WORKS NOT IN ACCORDANCE WITH WORK PLAN Municipal Council Work Plan as per agreement Actual work carried out Estimated Cost ($) Audit remarks Rakiraki Town Yaratale Road (From Vaileka Works has been done for 215,000 No approval obtained from Council House Junction to Ra Mead Road till junction of the Ministry on change of Disable school reaching the Ilikini road.
work programme.

corner of Penang school) 5 crossings with culverts Clearing and construction of were done.

new box drains, 900 - 600mm concrete as per concrete drains with plans.

Driveway culverts and crossings and culverts, headwalls included.

Installation of culvert.


Labasa Town Off Ritova Street – removal Not carried out in quarter 1 Council of deteriorate old v drains, 168,000 • No approval noted from the Ministry on change of excavation, rock lining and v drain footing, realigning of inver v-unit drains in quarter 1 Savusavu Town Council Vunikoka Road drain – rock lining, desilting, concrete • Not completed as per work to be plan, which is work programme.
• Ministry continued to release quarter 2 grant despite unsatisfactory completion of quarter 1 planned works.

150,000 • No approval noted from the Ministry on change of drain General completed in quarter 1 work programme.

drainage • No general drain • Ministry continued to maintenance maintenance work carried out release quarter 2 grant despite unsatisfactory completion of quarter 1 planned works.

Ministry of Waterways and Environment P a g e 154 | www.oag.gov.fj