Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697777030999.pdf (Fiji)
STANDING COMMITTEE ON PUBLIC ACCOUNTS Review of the 2017-2018 Audit Report on Statutory Authorities PARLIAMENT OF THE REPUBLIC OF FIJI Parliamentary Paper No.
148 of 2020 August, 2021 Published and printed by the Department of Legislature, Parliament House, Government Buildings, Suva TABLE OF CONTENT CHAIRPERSON’S FOREWORD ............................................................................................................. 1 COMMITTEE MEMBERS ........................................................................................................................ 2 INTRODUCTION ..................................................................................................................................... 3 GENERAL RECOMMENDATIONS ......................................................................................................... 5 COMMITTEE FINDINGS ......................................................................................................................... 6 1.
LAND TRANSPORT AUTHORITY .............................................................................................. 6 2.

FIJI TEACHER’S REGISTRATION AUTHORITY ........................................................................ 8 3.

FIJI HIGHER EDUCATION COMMISSION ............................................................................... 10 4.

FIJI MEATS INDUSTRY BOARD .............................................................................................. 12 5.
PUBLIC RENTAL BOARD ......................................................................................................... 15 6.

FIJI ROADS AUTHORITY ......................................................................................................... 19 7.

FIJI NATIONAL SPORTS COMMISSION .................................................................................. 21 8.
INVESTMENT FIJI ..................................................................................................................... 23 9.

CIVIL AVIATION AUTHORITY OF FIJI ..................................................................................... 25 10.

FIJI SPORTS COUNCIL ........................................................................................................ 27 11.
WATER AUTHORITY OF FIJI ............................................................................................... 31 12.

13.

14.
FIJI MEDICAL AND DENTAL SECRETARIAT ...................................................................... 36 CENTRE FOR APPROPRIATE TECHNOLOGY AND DEVELOPMENT (CATD) ................. 39 NATIONAL FIRE AUTHORITY .............................................................................................. 51 SUSTAINABLE DEVELOPMENT GOALS (SDGs) ................................................................................ 59 CONCLUSION ....................................................................................................................................... 60 APPENDICES ....................................................................................................................................... 62 1 CHAIRPERSON’S FOREWORD This report follows the Report of the Auditor General of the Republic of Fiji – 2017-2018 Audit Report on Statutory Authorities.
The 2017- 2018 Audit Report on Statutory Authorities covered the audits of 13 entities.

The Auditor General issued 12 audit opinions out of which 8 were related to the 2017 financial statements while 4 were on the 2018 financial statements for the various entities.
It is important to note that the audits that were carried out on the 2017 financial year were issued with unmodified (unqualified) opinions on 5 or 62.5% of the financial statements audited for the various entities while the audit opinion of 3 authorities were modified.

However, the audits that were undertaken on the 2018 financial year were issued with unmodified opinions on all or 100% of the financial statements audited for the various entities.
The Committee noted some of the significant matters that need to be brought to the attention of the House for consideration and these include the Governance issues which includes lack of Risk Management Policies, Disaster Recovery and Business Continuity Plans in most of the entities.

It is also important to note that more than 50% of the Statutory Authorities audits were delayed for the 2017 and 2018 financial year.
This is primarily due to the following reasons which includes:  Delay in submission of draft accounts for audits or draft accounts submitted were incomplete;  Delay in provision of management comments;  Delay in returning the signed audited financial statements for issue of audit opinion;  Relevant information/records not provided for audit on a timely basis; and  Authorities deciding to address issues raised in draft audit reports and resubmission of financial statements for audit.
 Delay in finalization of the audits by the Office of the Auditor General.

This normally happens when the audit staffs are assigned to a different audit while waiting for the clients to furnish information and accounting records for finalisation of the audit.

The Committee strongly encourages the Heads of those Statutory Authorities to take responsibility for the audit issues identified in the audit and take necessary actions to address them.
The clarifications provided to the Committee revealed that Authorities have taken the Auditor-General's recommendation positively and are taking necessary measures and strategies to resolve those significant matters that were highlighted.

Overall, I thank the Executives of these Statutory Authorities for provided its written responses to the audit issues that were raised and measures that are in place, and the Staff of the Office of the Auditor General for provided technical clarifications on those issues.
I also wish to extend my appreciation to all the Honourable Members of the Committee who were part of the successful compilation of this bipartisan report namely Hon.

Joseph Nand, Hon.

Virendra Lal, Hon.

Aseri Radrodro and Hon.

Ro Teimumu Kepa.

Hon.

Alvick Avhikrit Maharaj Chairperson 1 COMMITTEE MEMBERS Hon.

Alvick Avhikrit Maharaj (Chairperson MP) Hon.

Joseph Nitya Nand (Deputy Chairperson MP) Hon.

Aseri Masivou Radrodro (Opposition MP) Hon.

Ro Teimumu Kepa (Opposition MP) Hon.


Virendra Lal (Government MP) 2 INTRODUCTION The 2017-2018 Audit Report on Statutory Authorities was tabled in Parliament during the November 2019 sitting and referred to the Standing Committee on Public Accounts, for its scrutiny.
Standing Order 109 (2) (d) allows Standing Committee on Public Accounts to examine the accounts of the Government of the Republic of Fiji in respect of each financial year and reports of the Auditor-General, and for any other matter relating to the expenditures of the Government of the Republic of Fiji or any related body or activity (whether directly or indirectly) that the committee sees fit to review.
Standing Order 110(1)(c) authorises the Standing Committee to scrutinise the government departments with responsibility within the committee's subject area, including by investigating, inquiring into, and making recommendations relating to any aspect of such a department's administration, legislation or proposed legislative program, budget, rationalisation, restructuring, functioning, organisation, structure and policy formulation.
COMMITTEE PROCEDURE The Novel Coronavirus Disease renamed as COVID-19 was declared by the World Health Organisation as a global pandemic on 11 March 2020.

The Parliament of the Republic of Fiji therefore undertook necessary health precautionary measures to control the spread of the new virus strand outbreak.
In view of the above, Standing Order 112 (1) (b) provides powers to the Standing Committee on Public Accounts to compel the production of documents or other materials or information as required for its proceedings and deliberations.

The Committee resolved that the following entities identified in the audit report shall provide a substantive written submissions to the Committee as follows: 1.

Land Transport Authority 2.

Fiji Teacher’s Registration Authority 3.

Fiji Higher Education Commission 4.


Fiji Meats Industry Board 5.

Public Rental Board 6.

Fiji Roads Authority 7.

Fiji National Sports Commission 8.

Investment Fiji 9.

Fiji Sports Council 10.

Water Authority of Fiji 11.

Fiji Medical & Dental Authority 12.

Centre for Appropriate Technology and Development 13.

National Fire Authority 3 BACKGROUND Annual financial statements are prepared by the statutory authorities.
It is important for the management to ensure that the preparation and fair presentation of the financial statements are in accordance with International Financial Reporting Standards and requirements of applicable laws and regulations.

The 2017-2018 Audit Report on Statutory Authorities covered audit for 13 entities.

The Auditor General issued 12 audit opinions out of which 8 were related to the 2017 financial statements while 4 were on the 2018 financial statements for the various entities.
The audits that were carried out on the 2017 financial year were issued with unmodified (unqualified) opinions on 5 or 62.5% of the financial statements audited for the various entities while the audit opinion of 3 authorities were modified.

However, the audits that were undertaken on the 2018 financial year were issued with unmodified opinions on all or 100% of the financial statements audited for the various entities.
The Committee noted some of the significant matters that need to be brought to the attention of the House for consideration and these include the Governance issues which includes lack of Risk Management Policies, Disaster Recovery and Business Continuity Plans in most of the authorities.

It is also important to note that more than 50% of the Statutory Authority’s audits were delayed for the 2017 and 2018 financial year.
This is primarily due to the following:  Delay in submission of draft accounts for audits or draft accounts submitted were incomplete;  Delay in provision of management comments;  Delay in returning the signed audited financial statements for issue of audit opinion;  Relevant information/records not provided for audit on a timely basis; and  Authorities deciding to address issues raised in draft audit reports and resubmission of financial statements for audit.
 Delay in finalization of the audits by the Office of the Auditor General.

This normally happens when the audit staffs are assigned to a different audit while waiting for the clients to furnish information and accounting records for finalisation of the audit.
The Auditor General has highlighted some common findings which 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.
The Audit Report also highlights that about half of statutory authorities are yet to be audited due to the following reasons:  Delay in submission of draft accounts for audits or draft accounts submitted were incomplete;  Delay in provision of management comments;  Delay in returning the signed audited financial statements for issues of audit opinion;  Relevant information/records not provided for audit on a timely basis; and  Authorities deciding to address issues raised in draft audit reports and resubmission of financial statements for audit.
Abridge financial statements are presented in the Audit Report for each statutory authority.

The abridged statements of financial performance reflects revenue, expense and net income while the abridge statements of financial position presents the authorities assets and liabilities.

4 GENERAL RECOMMENDATIONS The Committee after reviewing the audit report and the responses from relevant entities in relation to the audit issues that were raised, it recommends that: 1.
The line Ministry should implement stringent measures to ensure timely submission of draft accounts to be audited by Auditor General, and for timely preparation and submission of Annual Reports to Parliament; 2.

The Committee notes that the draft accounts submitted were incomplete and strongly recommends that this should be tagged to CEO’s key performance indicators.

CEO’s to ensure that timely and complete draft accounts are submitted to Auditor General for audit purpose; 3.
The Committee notes that these entities are now dealing with large amounts of money through Government grants and strongly recommend that suitably well trained personnel to be recruited to manage the operational and financial affairs of the organisation; 4.

The line Ministry should setup an Internal Audit team to continuously review and report directly to the line Minister; 5.

The entities with significant audit matters highlighted should be addressed before the next audit; 6.
The Committee notes that the entities are late in implementing the policies and the risk management and disaster recovery plans, therefore the Committee recommends that entities develop and implement this at its earliest; and 7.

The Committee recommends that a performance audit be conducted on the entities highlighted in this audit report.

5 COMMITTEE FINDINGS 1.


LAND TRANSPORT AUTHORITY Audit Opinion The audit of Land Transport Authority for the financial year 2017 resulted in the issuance of modified (qualified) audit opinion.

The qualification was as follows:  Included in the Property, Plant and Equipment balance is leasehold land amounting to $3,595,000 for which titles are not registered in the name of the Authority.
Therefore, the Office of the Auditor General was satisfied with the ownership of the leasehold land recorded in the financial statements of the Authority.

 The Authority has disclosed in the financial statements as part of its notes, contingent liability amounting to $55,859,759.

Based on the current financial position of the Authority, it may be difficult to meet the payment for damages if the judgment is not in favor of the Authority.
Land Transport Authority - Abridged Statement of Financial Performance Description Grant received Other Income Total Revenue Administration expenses Operating expense Total Expenditure Net Profit/ (loss) for the period 2017 (12 months) ($) 19,322,198 2,749,570 22,071,768 11,859,262 6,890,897 19,947,861 2,123,907 2016 (7 months) ($) 3,511,301 1,094,551 9,858,203 6,116,913 3,882,322 10,789,959 (931,756) Consistent with the changes in the financial year of Government, the Authority has changed its financial year from 31 December to 31 July.
Land Transport Authority - Abridged Statement of Financial Position Description 2017 (12 months) ($) 2016 (7 months) ($) Cash and cash equivalents Receivables Inventories Property, plant and equipment Total Assets Creditors and other accruals Owing to Government consolidated account Capital Grant Provisions Finance Lease Liability Total Liabilities Net Assets 1,968,488 342,416 781,167 14,527,018 17,619,089 1,419,712 336,705 9,404,790 1,118,706 635,850 12,915,763 4,703,326 8,185,511 248,126 763,505 15,225,135 24,422,277 1,476,482 26,322 14,898,261 931,132 262, 846 17,595,043 6,827,234 6 Other Significant Matters – Land Transport Authority Governance issues The Board meeting minutes for the financial year 2016 was not maintained.
In addition, numerous control deficiencies were noted from the internal audit review conducted by a Chartered Accounting Firm.

However, some of these issues were also noted in the audit.

Hence, it is likely that recommendations in internal audit reports were not fully implemented on a timely basis.

Additionally, the Finance Manual is outdated and does not reflect the current process practiced by the Authority.
Root Cause/Implication The anomalies indicate that proper procedures are not being followed for keeping of minutes of board meeting, addressing risk issues highlighted in internal audit reports and updating of the Finance Manual.

The above issues if not rectified can lead to a poor culture of governance in the Authority.

Committee Comments/Recommendation: The Committee noted the audit issues that were identified and recommends that LTA provide regular training to staff to maintain efficiency.

7 2.
7 2.

FIJI TEACHER’S REGISTRATION AUTHORITY Audit Opinion The audit of Fiji Teacher’s Registration Authority for the financial year 2017 resulted in the issuance of the unmodified (unqualified) audit opinion.
Fiji Teacher’s Registration Authority - Abridged Statement of Financial Performance Description Government grant Other Income Amortization Total Income Depreciation expense Employee benefit expense Administrative expenses Interest expenses Total Expenditure Net Surplus for the year 12 Months Period Ended 31 July 2017 ($) 370,398 962 20,252 391,612 20,252 300,391 52,203 4,624 377,470 14,142 13 Months Period Ended 31 July 2016 ($) 394,969 --- 17,317 412,286 17,317 299,384 88,409 4,239 409,349 2,937 The Authority recorded a net surplus of $14,142 compared to a net surplus of $2,937 in 2016, an increase of $11,205 or 382%.
The increase in net surplus was mainly due to a decrease in administration expenses by $36,206 due to decrease in printing & stationery expenses and computer expenses compared to 2016.
Fiji Teacher’s Registration Authority - Abridged Statement of Financial Position Description Cash and cash equivalents Prepayment and other assets Property, plant and equipment Total Assets Trade payable and other accruals Deferred revenue Obligations under finance lease Employee entitlement Total Liabilities Net Assets 12 Months Period Ended 31 July 2017 ($) 76,783 133 66,757 143,673 13 Months Period Ended 31 July 2016 ($) 58,724 140 83,840 142,704 7,802 66,757 33,547 18,488 126,594 17,079 2,500 83,840 44,427 9,000 139,767 2,937 The increase in net assets by $14,142 was due to the increase in net surplus recorded for the year ended 31 July 2017 compared to 2016.
8 Other Significant Matters – Fiji Teacher’s Registration Authority Annual Returns not submitted to FTRA Section 46 of the FTRA Act 2008 requires that, the employer or a persons authorized by the employer must, on or before June each year, provide the Authority with a return in the prescribed form of all persons teaching at the schools as at 1st May that year.

The Office of the Auditor General noted that FTRA did not receive a return as stipulated in the Act on 1 June 2016, 1 June 2017 and 1 June 2018.
As a result, the Authority is not able to reconcile the number of teachers registered with the Authority against the number of teachers teaching in the respective schools in Fiji.

Root Cause/Implication There may be cases of unregistered teachers teaching in schools which lead to revenue leakage for the government.

Hence, it was not possible to ascertain the completeness of the registration fees of $197,381 disclosed in note 1.2(h) of the financial statements.
Committee Comments/Recommendation: The Committee have noted the issue and response from FTRA and further recommends that FTRA Management team work with Ministry of Education officials to resolve this issue.

Absence of Risk Management Policy It is imperative that for good governance the Company has in place a Risk Management Policy.

This will ensure that all risks are identified and managed through effective processes and systems.

This will ensure that business operations are not affected and disrupted.
Review of the Authority’s Corporate Governance revealed that there is no risk management policy in place.

Root Cause/Implication It appears that the Authority does not have capacity to develop the policy.

The absence of Risk Management Policy can be attributable to absence of proper governance structure as the Authority has indicated that FTRA Board was not in place.

Annual Report not Prepared The Authority has yet to submit the 2016-2017 Annual reports to the Minister contrary to the Act.
Section 47 of the FTRA Act 2008 which states that the Authority is to submit an annual report to the Minister by 30 March the following year on its activities for the last financial year.

Root Cause/Implication Absence of a board and CEO made it difficult to get the annual report submitted to the Minister.

This increases the risk of untimely decision making and non-compliance to the Act, making the report losing its relevance.

9 3.
9 3.

FIJI HIGHER EDUCATION COMMISSION The audit of Fiji Higher Education Commission for the twelve months ended 31 July 2017 resulted in the issuance of an unmodified (unqualified) audit opinion.
Presented below is the abridged financial information of Fiji Higher Education Commission for the year ended 31 July 2017 Fiji Higher Education Commission – Abridged Statement of Financial Performance Description Government Grant MFAT grant Release of deferred income Conference collection Other Income- Reimbursements from Technical College of Fiji Other refunds Total Operating Income Depreciation and amortization expense Salaries and employee costs Operating expenses Total Operating Expenses Profit/loss for the year 2017 (12 Months) ($) 1,472,604 100,000 620,572 8,786 46,381 3,030 2,251,373 -67,680 -1,381,925 -787,128 -2,236,733 14,640 2016 (7 Months) ($) 841,424 --- 42,229 147,198 --- 20,122 1,050,973 -37,302 -696,143 -615,604 -1,349,049 -298,076 The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2017 is for a 12 month period.
Thus, the significant variances with the comparative balances.

Government grants received from Ministry of Education, Heritage and Arts are encouraged in the statements of the comprehensive income and where there is reasonable assurance that they will be received and that the Commission will comply with the conditions attached to them.
Government grants related to assets including non- monetary grants at fair value, shall be presented in the statement of financial position either by setting up the grant as deferred income or deducting the grant in arriving at the carrying amount of the asset and in the case of the entity it is treated as deferred income.
The Commission had signed a five year $7,328,947 agreement with Ministry of Foreign Affairs and Trade (MFAT) of New Zealand on 27th June 2016 to improve the Higher Education Sector and Commission’s internal capabilities.

In the MFAT project funding, a variation was made to allocate $220,000 as diminishing assistance towards management remuneration for three years.
This variation was approved and signed off by MFAT Development Manager and FHEC Board Chairperson on 26 November 2016 and $100,000 was released to FHEC in the 2016/2017 financial year.
10 Fiji Higher Education Commission – Abridged Statement of Financial Position Description Cash and cash equivalents Other debtors, deposits and prepayments Property plant and equipment Intangible assets Total Assets Trade payables and accruals Provisional Tax Provision for annual leave Deferred Income Total Liabilities 2017 2016 (12 Months) ($) (7 Months) ($) 1,839,802 89,631 258,757 182,439 2,370,629 122,658 14,193 32,328 1,869,174 2,038,353 2,306,490 37,118 233,946 166,610 2,744,164 82,826 6,012 26,799 2,310,891 2,426,528 Net Assets The Commission’s net asset increased by $14,640 or 4.6% in 2017 compared to 2016.
This was due to decrease in deferred income by $441,717 or 19.1% when compared to 2016.

317,636 332,276 Other Significant Matters – Fiji Higher Education Commission Delay in Finalization of the Financial Statements At the end of the financial year the Commission shall submit an annual report which must include an audited financial report to the Minister on or before 30 April the following year.
The audit of the financial statements of the Fiji Higher Education Commission for the year ended 31 July 2017 was finalized after the above deadline due to the following reasons:  The Commission submitted its draft financial statements four times.

Root Cause/Implication The non-inclusion of audit adjustments for 2016 in the draft accounts of 2017 and lack of relevant notes and disclosures in the draft financial statements of 2017 led to re-submission of the 2017 financial statements.
The high number of resubmitted financial statements will eventually delay the finalization of the audit.

This also implies that the Commission may be lacking depth in financial reporting.

Committee Comments/Recommendation: The Committee noted the issue that was raised and recommends that FHEC conducts an ongoing in- house training on financial reporting to its staff.

11 4.
11 4.

FIJI MEATS INDUSTRY BOARD Financial Information – 2017 The audit of Fiji Meats Industry Board for the financial year 2017 resulted in the issues of modified (qualified) audit opinion.

The qualifications were as follows:  As at the date of audit opinion, the Board held title of 74 acres of state land.

Property, plant and equipment include Lease hold improvement with a written down value of $342,770.

The Board has only booked the land area on which capital improvement has been made.
The remaining land area is yet to be valued and included in the Fixed Assets Register of the Board.

 The Board recorded fully depreciated property, plant and equipment with cost totaling of $2,272,273 that were still held for use.

The useful life of these property, plant and equipment has not been charged for the assets during the year.
Fiji Meats Industry Board – Abridged Statement of Financial Performance Description Operating Revenue Release of deferred income Other income Total Revenue Changes in Inventories – finished goods Raw Materials and Consumables used Staff Cost Depreciation Other Operating Expenses Finance Cost Total Expenses Net (Loss)/Profit from Operations Other comprehensive Income Total Comprehensive (Loss)/Income 2017 ($) 3,373,303 73,600 170,762 3,617,665 766,267 283,544 977,784 258,726 1,144,280 68,900 3,499,501 118,164 900,000 1,018,164 2016 ($) 3,235,586 73,600 46,096 3,355,282 853,035 221,753 974,330 299,776 1,065,627 67,987 3,482,508 -127,226 --- -127,226 The company recorded a net profit in 2017 compared to a loss recorded in 2016.
This was largely due to the sale of three acres of leasehold land to the Fiji Police Force for the construction of Nakasi Police Station.
Fiji Meats Industry Board – Abridged Statement of Financial Position Description Cash Investments Trade and Other Receivables Prepayments Inventory Property, Plant & Equipment Total Assets Trade Creditors and Payables Deferred Income 2017 ($) 780,292 201,957 648,435 12,838 92,344 1,640,509 3,376,375 178,141 287,500 12 2016 ($) 39,099 201,957 408,791 14,272 67,174 1,873,805 2,605,098 197,424 361,100 Description Interest Bearing Borrowings Total Liabilities Net Assets 2017 ($) 759,338 1,224,979 2,151,396 2016 ($) 913,342 1,471,866 1,133,232 The increase in net assets in 2017 compared to the balance in 2016 was largely due to the increase in cash at bank and increase in account receivables.
The increase was due to sale of land to Fiji Police Force for the construction of Nakasi Police Station.

A sum of $654,750 was received in cash while $245,250 was booked as accounts receivable (final payment to be received from Fiji Police Force) for the sale of land.
Other Significant Matters – Fiji Meats Industry Board Anomalies in Recording to Property, Plant and Equipment Disposal of assets shall only take place when the fixed assets has ceased to function or is considered to be outdated and not usable or worthwhile to repair.

If the fixed assets can be sold or traded in then this should be carried out after seeking the approval of the Chief Executive Officer.

Audit review of the Boards Fixed Assets Register (FAR) revealed the following: 1.
The Board held title of 74 acres of state land.

Property, Plant and Equipment (PPE) includes Leasehold Improvement with a written down value of $342,770.

The Board has only booked the land area on which capital improvements has been made.

The remaining land area is yet to be valued and included in the Fixed Assets Register of the Board.

2.

The Board recorded fully depreciated property, plant and equipment with cost totalling $2,272,273 that was still held for use.
The useful life of these property, plant and equipment has not been reviewed annually.

As a result, depreciation expense has not been charged on the assets during the year.

Root cause/Implication The useful life of the property, plant and equipment has not been reviewed annually.

As a result, depreciation expense has not been charged on the assets during the year.

In addition, the Board has not booked the value of the 74 acres of state land as a result the total value of leasehold is understated.
Absence of Risk Management Framework Risk management framework would provide a platform to identify various risks affecting the Board, management of the risks, develop appropriate internal control to mitigate the risks and continuous monitoring of risks.

The mechanism to mitigate risks could include policies, procedures, training and awareness.

Audit review of the Board’s corporate governance systems revealed that there is no risk management framework in place.
As a result, the Board does not have written policies, procedures or guidelines to manage risk associated with the following: • Fraud control and anti-corruption • Disaster recovery and business continuity • Assessment of potential conflict of interest • Human resource • Code of ethics.

13 Root cause/Implication The Board does not have processes in place to put into effect the implementation of a risk management framework.
In absence of a risk management framework, the Board may find difficulty in identifying, analyzing and responding to risk factors in the meat industry and in the best interests of the Board.

Committee Comments/ Recommendation: The Board to put in place written policies, procedures or guidelines to better manage the associated risks.

14 5.
14 5.

PUBLIC RENTAL BOARD Financial Information – 2017 The audit of Public Rental Board for the financial year 2017 resulted in the issue of unmodified (unqualified) audit opinion.

However, attention was drawn to the Statement of Financial Position which includes Interest Bearing Debt disclosing a Housing Authority bond amounting to $1,014,712.

Government had settled this loan and the Board is obliged to reimburse the same to Government.

The Board recorded the same amount in its financial statements.
However, the Ministry of Economy was yet to confirm the correctness of the amount booked by the Board.
Public Rental Board – Abridged Statement of Financial Performance Description Rental Revenue Operating Revenue Total Operating Income Amortization & Depreciation 2017 ($) 3,921,080 239,806 4,160,886 798,129 2016 ($) 3,882,818 878,045 4,760,863 733,631 Staff Costs Other Operating Expenses Finance Cost Total Expenditure Net Profit for the year 1,121,369 1,064,270 325,914 3,309,682 851,204 Net profit decreased by 51% or $898,301 in 2017 compared to 2016.
This was mainly due to the decrease in operating revenue due to reduction in foreign exchange gain which was recorded in 2016.

Additionally, an increase was noted in total expenditure, specifically, staff costs due to the payment of performance bonus to staff.
983,479 1,149,394 144,854 3,011,358 1,749,505 Public Rental Board – Abridged Statement of Financial Position Description Cash Investments Rent Receivables Other Assets Property, Plant & Equipment Total Assets 2017 ($) 2,425,336 2,948,092 77,809 77,563 33,345,856 38,874,656 2016 ($) 2,436,265 3,145,893 99,500 38,730 32,136,657 37,857,045 Trade payables & accruals Deferred Revenue Borrowings Employee Entitlements Total Liabilities Net Assets 1,585,342 1,932,096 10,859,960 148,393 14,525,791 24,348,865 Net assets increased by $851,204 or 4% in 2017 compared to 2016.
This was mainly attributed to increase in property, plant and equipment which increased as there were some additions and the capitalization of repairs and maintenance to the properties of the Board.

In addition, trade payables and accruals declined significantly which was due to decline in trade creditors and accruals by $701,172 as the Board cleared most liabilities in 2017 compared to 2016.
2,199,296 694,571 11,353,679 111,838 14,359,384 23,497,661 15 Other significant matters – Public Rental Board 2017 Absence of Audit Committee The functions of the Audit Committee includes performing regular reviews of monthly management accounts subject to Board Members scrutiny and the annual accounts subject to external audit and review by the Minister for presenting in Parliament.

The Auditor-General noted that the Board has not established an Audit Committee.
Root Cause/Implication In the absence of an Audit Committee, audit and accounting issues raised through internal and external audit may not be effectively resolved.

Committee Comments/Recommendation: The Committee strongly recommends that an audit committee be appointed to regularly look at audit and accounting issues.

Anomalies in Processing and Allocating of PRB Flats Public Rental Board (PRB) was established in 1989 under the Housing (Amendment) Decree No.

12.
12.

The Board was established to provide affordable rental flats for low income earners on a transitional basis without incurring a loss.

PRB assists applicants who are workers who need rental housing assistance and qualify under criteria as follows: 1) Applicant must be married or single or worker and the sole breadwinner of a family.

2) Applicant shall be employed full time earning weekly gross income (WGI) of $80 to $317.

PRB will not accept applications below the WGI of $80 income.
It was noted that the Auditors were unable to determine if the applicants were the breadwinners of the household due to absence of sufficient information in the application form.

Root Cause/Implication There is no provision in the application form for the applicants to disclose other sources of income.

It also appears that comprehensive survey of the Household income is not carried out.

There is a high risk that flats may be allocated to tenants who are not low income earners.
Absence of Risk Management Policy It is imperative that for good governance the Company has in place a Risk Management Policy.

This will ensure that all risks are identified and managed through effective processes and systems.

This will ensure that business operations are not affected and disrupted.

The Auditor-General noted that the Board did not have a Risk Management Policy.
Root Cause/Implication The delay in developing and implementing the Risk Management Policy could indicate that the Board may not have necessary capacity to develop a Risk Management Policy.

In the absence of a Risk Management Policy, the 16 Board may not be carrying out its risk assessment and formulating strategies to address the risks that may exist.

In addition, when the risks are not identified and addressed in a timely manner this may cause disruption in business operation.
Committee Comments/Recommendation: The PRB must implement the policy that have been developed to minimize the risks.

Long Outstanding rent receivable Rent is due, charged and payable every week on Saturdays.

Tenants who fail to pay rent for 4 consecutive weeks or accumulate arrears equivalent to 4 weeks shall be issued with a reminder.

It was noted that 40.4% of the debtors had balances totaling $43,432 which were outstanding for more than four months.
Root/Cause/Implication The audit findings indicated that debt collection process is either not very effective or consistent which results in outstanding balances.

Significant receivables will affect cash inflow from the Board’s main stream of revenue which will affect the ability of the Board to pay off its recurring expenditures and more importantly its debts.

Committee Comments/Recommendation: The PRB should review its current collection strategy and make necessary arrangements with tenants.
Financial Information – 2018 The audit of Public Rental Board for the financial year 2018 resulted in the issue of unmodified (unqualified) audit opinion.

However, attention was drawn to the following:  Statement of Financial Position includes a credit balance in receivables amounting to $465,295.

 Stated in notes of the financial statements are the financial risk management objectives and policies of the Board.

The Board’s Risk Management Policies are yet to be implemented.
Public Rental Board – Abridged Statement of Financial Performance Description Rental Revenue Operating Revenue Total Operating Income Amortization & Depreciation Staff Costs Other Operating Expenses Finance Cost Total Expenditure Net Profit for the year 2018 ($) 4,093,335 119,092 4,212,427 762,748 1,173,923 1,494,427 16,557 3,447,655 764,772 2017 ($) 3,921,080 239,806 4,160,886 798,129 1,121,369 1,064,270 325,914 3,309,682 851,204 Net profit decreased by 10% or $86,432 in 2018 compared to 2017.
This was mainly due to the increase in total expenditure which is directly the result of increases in insurance, repairs and maintenance and the expected credit loss arising from the adoption of the new accounting standard IFRS-9 Financial Assets.

17 Additionally, personnel expenses increased due to the increase in pay rates as a result of the Job Evaluation Exercise carried out by the Board.
Rental revenue has increased by $172,255 which indicates the general improvement in rental collection strategies of the Board.
Public Rental Board –Abridged Statement of Financial Position Description Cash Investments Rent Receivables Other Assets 2,516,896 4,760,638 47,886 174,610 Property, Plant & Equipment 33,278,344 Total Assets Trade Payables & Accruals Deferred Revenue Borrowings Employee Entitlements Total Liabilities Net Assets 40,778,374 1,279,037 4,184,569 10,174,081 312,923 15,950,610 24,827,764 2018 ($) 2017 ($) 2,425,336 2,948,092 77,809 77,563 33,345,856 38,874,656 1,585,342 1,932,096 10,859,960 148,393 14,525,791 24,348,865 Net assets increased by $478,899 or 2% in 2018 compared to 2017.
This was mainly attributed to the increase in deferred revenue as the result of the capital grant received for the Simla Housing Development Project.

Other Significant Matters – Public Rental Board 2018 Use of Government Grant funds for Investment Purpose The Government grant under the agreement is for the Simla Housing Development Project and must only be utilized for the purpose it is provided for.
The Board, on 16th July 2018 received government grant of $2,225,533 for the Simla Housing Project and was deposited into a separate BSP Simla Housing Project 2016 Bank account.

The Simla Housing Project is currently work in progress.

The Auditors noted that in December 2018, a sum of $2million was transferred from this account for the purpose of investment in term deposits.
It was noted that a sum of $1,000,000 was invested in term deposit with an overseas based bank at an interest rate of 4.5% for three months.

The findings of the audit noted that the Board did not obtained approval from the Ministry of Housing to invest the grant funds.

In addition, the investment was only approved by the Acting General Manager of the Board.
Committee Comments/Recommendation: The Government grant should solely be used for the intended purpose that is Simla Housing Development Project and approvals should be sought from relevant authorities for the use of Government grant.

All developments through Government grants should be well monitored by the line Ministry.

18 6.

FIJI ROADS AUTHORITY Financial Information – 2017 The audit of Fiji Roads Authority for the year ended 31 July 2017 resulted in the issue of modified (Qualified) audit opinion.
The qualification was due to:  The Authority has not brought to account the amount of payable and contribution receivable to and from the Municipal Councils amounting to $22,328,520 and $34,429,613, respectively in the Statement of Financial Position.

These amounts have been disclosed as contingent Assets and Contingent Liabilities in the notes of the financial statements.
In 2012, the Authority have entered into Memorandum of Agreement with the Municipal Councils whereby the Councils were delegated work by the Authority to be carried out for which the Authority would reimburse the costs to the councils.

It was also agreed that the Councils will pay the Authority an annual contribution for Council roads maintained by the Authority.
Fiji Roads Authority – Abridged Statement of Financial Performance At period end Grants and Contributions Amortization of Deferred Income Other Income Total Income Employee Related Expenses Maintenance Depreciation and Amortization Other Operating Expenses Total Operating Expenditure Deficit for the year/period 2017 (12 months) 31 July ($) 15,854,174 152,874,640 1,999,193 170,728,007 7,796,814 100,988,152 144,801,194 12,041,630 265,627,790 -94,899,783 2016 (7 months) 31 July ($) 10,136,746 103,584,724 227,202 113,948,672 2,035,661 51,761,478 73,502,382 10,854,906 138,154,427 -24,205,755 Consistent with the changes in the financial year of Government, the Authority changed its financial year from 31 December to 31 July.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2017 is for a 12-month period.

Thus, the significant variances with the comparative balances.

Fiji Roads Authority – Abridged Statement of Financial Position Consistent with the changes in the financial year of Government, the Authority changed its financial year from 31 December to 31 July.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2017 is for a 12-month period.

Thus, the significant variances with the comparative balances.
19 At period end Property, Plant and Equipment Intangible Assets Total Assets Payables Provision Deferred Income Total liabilities Net Assets 2017 (12 months) 31 July ($) 8,874,136,356 185,952 9,062,881,828 91,617,988 42,305,872 753,065,186 886,989,046 8,175,892,782 2016 (7 months) 31 July ($) 8,802,947,890 36,623 9,046,305,337 79,130,077 43,840,142 662,790,518 785,760,737 8,260,544,600 Other significant matters – Fiji Roads Authority Redundancy Liability Account It is imperative that adequate and complete records are maintained for all account balances.
It was noted that the Auditors were not provided with a complete list of staff which makes up the total balance of the redundancy liability account amounting to $1,803,399.

Root Cause/Implication The Authority was unable to obtain details of redundancy liability account from the Department of National Roads in 2012 when the Authority was established.

In absence of the listing, the Authority will find difficulty in making payments to the staff.
Committee Comments/Recommendation: FRA should strengthen its human resource policy in regards to employment terms and conditions including redundancy issues.

Variance in Deferred Revenue Balance between General ledger and Subsidiary Listing There should be nil variance between the general ledger of deferred grant income and written down value of assets in the fixed assets schedule for donated assets or assets purchased through capital grant.
The auditors noted that there is un-reconciled variance between general ledger of deferred grant revenue and the subsidiary listing.

Refer to Table for details.


Account Deferred Grant Income General ledger ($) 753,065,188 WDV of Assets in FAR ($) 921,523,548 Variance ($) 168,458,361 Root Cause/Implication The OAG were informed that the Authority adopted deferred income approach from 2013 and the variance could be the grant income received for capital projects prior to 2013 which was recorded as contributed equity.

However, there is no reconciliation to support the variance.
Due to the variance, there is risk of incorrect financial reporting of deferred grant income in the financial statements.

Committee Comments/Recommendation: FRA should adhere to proper accounting procedures as per the Financial Management Act 2004.

20 7.

FIJI NATIONAL SPORTS COMMISSION Financial Information – 2018 The audit of Fiji National Sports Commission for the financial year 2018 resulted in the issue of unmodified opinion (unqualified) audit opinion.
Presented below is the abridged financial information of Fiji National Sports Commission for the financial year 2018.
Fiji National Sports Commission - Abridged Statement of Comprehensive Income Description Operating Revenue Other Operating revenue Total Revenue Expenses Sports Grant Expenses International Coaches Salary expenses Personal Expenses Operating Expenses Other Expenses Total Expenses Net Profit 2018 ($) 9,687,518 101,393 9,788,911 7,532,720 1,260,409 543,090 286,435 133,186 9,755,840 33,071 2017 ($) 6,434,203 100,899 6,535,102 4,764,848 860,409 446,447 283,604 131,616 6,486,924 48,178 Total revenue of the Commission increased by 50% or $3.25 million in 2018 due to increase in sporting grant received by the Commission.
Total expenditure also increased by 50% or $3.26 million in 2018 compared to 2017 due to increase in sports grants and International Coaches salary in 2017 compared to 2016.
Fiji National Sports Commission - Abridged Statement of Financial Position Description Cash and Cash Equivalents Other Current Assets Property Plant & equipment Total Assets Trade and Other Payables Employee Entitlements Deferred Revenue Finance Lease Liability Total Liabilities NET ASSETS 2018 ($) 705,504 12,846 171,001 889,351 130,320 27,982 391,675 - 549,977 339,374 2017 ($) 752,177 15,563 282,034 1,049,774 126,223 23,069 583,469 10,710 743,471 306,303 Net assets increased by $33,071 or 11% in 2018 compared to 2017.
This was mainly attributed to decrease in liabilities due to the decrease in deferred revenue.

This was mainly because of the grants utilized in 2018 which were held in 2017.

Other Significant Matters – Fiji National Sports Commission Finance Manual Not Updated The Fiji National Sports Commission’s Finance accounting policy and procedure manual was developed in 2016.

21 The OAG noted that some policies and procedures currently practiced are not updated in the existing Finance Manual.
Refer below for details.
Current practices not documented in the Finance Manual Finance Manual: Areas to consider including in the Finance Manual There is no specific provisions for the following matters; Finance Manual • • • • appropriate control procedures for raising, approvals and posting of general journals; review of depreciation, residual value and useful life of assets in accordance to IFRS for SME s17 & s10; appropriate control procedures for the payroll process and; Non-updating of bank accounts sections of the manual for new accounts opened.
Human Resource Manual • Appropriate control procedures for the resignation process.

Root Cause/Implication The Manager Finance revealed that it was an oversight by the Commission to include the mentioned procedures in the Finance Manual.

The variation between the documented finance accounting procedures and the accounting procedures implemented may create confusion amongst staffs and result in inconsistent application of financial management procedures and processes.
Absence of Governance Policies It is imperative that for good governance the Company has in place a Risk Management Policy.

This will ensure that all risks are identified and managed through effective processes and systems.

This will ensure that business operations are not affected and disrupted.

Disaster Recovery Plan is a systematic process of recovering loss of data and information in an event of a disaster.

The Commission did not have in place a Risk Management Policy and Disaster Recovery Plan.
Root Cause/Implication  The delay in developing these policies indicates that the Commission may not have the capacity to develop the two policies.

 The Commission may not be able to effectively identify risks and appropriately manage it on a timely manner.

 Failure to have a Disaster Recovery Plan increases the risk of data loss in the event of natural disaster.

22 8.
22 8.

INVESTMENT FIJI Financial Information – 2018 The audit of Investment Fiji for the financial year 2018 resulted in the issue of unmodified (unqualified) audit opinion.

Presented below is the abridged financial information of Investment Fiji for 2018.
Investment Fiji - Abridged Statement of Financial Performance Description Government Grant Registration Fees International Business Award- Income Other Income Total income Administrative Expenses Depreciation Operating Expenses Amortization of Intangible Asset Personnel Expenses International Business Award- expenses Total Expenditure Net Surplus/(deficit) for the Year/Period 2018 ( 12 months) ($) 2,481,157 293 361,133 65,969 2,908,552 274,761 83,484 555,182 9,244 1,578,383 331,079 2,832,133 76,419 2017 (7 months) ($) 2,136,580 286 504,697 4,721 2,646,284 269,030 95,835 515,971 --- 1,338,977 323,932 2,543,745 102,539 Consistent with the changes in the financial year of Government, Investment Fiji changed its financial year from 31 December to 31 July in 2017.
The financial statements for the year ended 2018 reflect transactions for twelve- month period whereas the financial statements for the period ended 2017 is for 7 months.

Thus, the variances with the comparative balances.
Investment Fiji - Abridged Statement of Financial Position Description Cash on Hand and at Bank Receivables Property, Plant and Equipment Intangible Assets Total Assets Trade Creditors and Accruals Payable to Ministry of Economy Provisions for Employee Entitlement Deferred Grant Income Total Liabilities Net Assets 2018 (12 months) ($) 917,104 104,263 348,644 455,516 1,825,527 110,374 455,000 106,802 142,202 814,378 1,011,149 2017 (7 months) ($) 927,882 283,521 675,274 --- 1,886,677 181,880 545,023 82,842 142,202 951,947 934,730 Other Significant Matters – Investment Fiji 2017 Absence of Government Policies It is imperative that for good governance the Company has in place a Risk Management Policy.
This will ensure that all risks are identified and managed through effective processes and systems.

This will ensure that business operations are not affected and disrupted.

Disaster Recovery Plan is a systematic process of recovering loss of data and information in an event of a disaster.

23 The Auditor-General noted that Risk Management Policy and Disaster Recovery Plan was not in place.
Root Cause/ Implication  The Commission may not be able to effectively identify risks and appropriately manage them on a timely manner.

 Failure to have a Disaster recovery plan increases the risk of data loss in the event of natural disaster.

24 9.

CIVIL AVIATION AUTHORITY OF FIJI Financial Information – 2018 The audit of the Civil Aviation Authority of Fiji for the year ended 31 December 2018 resulted in the issue of an unqualified audit opinion.
Presented below is the abridged financial information of Civil Aviation Authority of Fiji for the year ended 31 December 2018.
Civil Aviation Authority of Fiji – Abridged Statement of Financial Performance At Year End 2018 ($) 2017 ($) Income Other Operating Income Total Income Administrative Expenses Operating Expenses Personnel Expenses Total Expenses Operating (Loss)/Profit Before Net Financing Income Net Financing Income Operating (Loss)/Profit Before Tax Income Tax Benefit/(Expense) Net Loss After Tax Change in Fair Value of Investments Revaluation of Property, Plant and Equipment, net of tax Total Comprehensive Income For the Year 5,486,525 376,297 5,862,822 1,454,735 1,762,230 2,995,478 6,212,443 (349,621) 108,541 (241,080) 109,491 (131,589) 2,226,797 - 5,481,747 402,541 5,884,288 1,372,549 1,514,496 2,891,100 5,778,145 106,143 112,099 218,242 (481,483) (263,241) 1,206,182 1,847,543 2,095,208 2,790,484 The Authority incurred a net loss before tax of $241,080 in 2018 compared to the net profit before tax of $218,242 in 2017.
The net loss was mainly due to the increase in expenses by 8% or $434,298 in 2018.

The expenses increased as the Authority incurred expenditure of $290,626 to host the conference of the 55th Directors General of Civil Aviation Asia and Pacific Region on 22 to 26 October 2018.
In addition, travel and accommodation expenses increased by 75% or $176,165 due to travel incurred for various overseas meetings attended by staff on Water Aerodromes meeting in Maldives, ICAO Regional Workshop, inspection of Fiji Airways new aircraft Boeing B737 Max-8 acceptance in Seattle USA and other inspection and audit works.
The net loss after tax decreased by 50% or $131,652 in 2018 compared to 2017 due to the income tax benefit of $109,491 in 2018 arising from net loss during the year compared to the income tax expense of $481,483 in 2017.
Civil Aviation Authority of Fiji – Abridged Statement of Financial Position At period end Cash and Cash Equivalents Trade Receivables Income Tax Refundable Other Assets 2018 ($) 1,769,948 216,289 34,562 1,114,334 25 2017 ($) 748,130 146,248 - 1,082,546 At period end Investments Property, Plant and Equipment Intangible Assets Total Assets Trade and Other Payables Income Tax Payable Employee Benefits Deferred Income Tax Liability Total Liabilities Net Assets 2018 ($) 13,041,201 6,520,205 349,781 23,046,320 959,978 - 168,600 501,825 1,630,403 21,415,917 2017 ($) 11,814,404 6,608,966 352,924 20,753,218 738,883 4,669 95,620 592,757 1,431,929 19,321,289 Net assets increased by 11% or $2,094,628 in 2018 compared to 2017.
The increase was mainly due to the increase in cash and cash equivalents by 137% or $1,021,818, and increase in investments by 10% or $1,226,797.

The Authority cashed $1,000,000 of its term deposits held with HFC bank resulting in increased cash as at 31 December 2018.

In addition, the value of investment at Unit Trust of Fiji increased by $2,226,797 as the market price per unit at 31 December 2018 increased to $2.38 compared to $1.90 per unit at 31 December 2017.
Abridged Financial Information and Other Significant Matter(s) – Backlog Audit In the following section, we provide the abridged financial information and significant audit findings for each statutory authority which are in the backlog.

26 10.

FIJI SPORTS COUNCIL Financial Information – 2016 The audit of the financial statements for the year ended 31 July 2016 resulted in an unqualified audit opinion.

Presented below is the abridged financial information of Fiji Sports Council’s for 2016.
Fiji Sports Council - Abridged Statement of Financial Performance Year period/year ended 31 July/December Revenue Operating Revenue Other Operating Revenue Total Revenue Expenditure Administrative Expenses Depreciation Personnel Expenses Interest Expenses Total Expenses Net Deficit/Surplus Other Comprehensive Income TOTAL Comprehensive (loss)/Income 2016 (7 months) ($) 2015 (12 months) ($) 552,855 1,992,566 2,545,421 229,921 3,897,962 1,103,388 173,747 5,405,018 (2,859,597) --- (2,859,597) 2,513,078 2,167,999 4,681,077 218,826 4,747,808 1,655,003 342,795 6,964,432 (2,283,355) 85,990,133 83,706,788 Consistent with the changes in the financial year of Government, Fiji Sports Council changed its financial year from 31 December to 31 July in 2016.
The financial statements for the year ended 2016 reflect transactions for 7-month period whereas the financial statements for the period ended 2015 is for 12 months.

Thus, the variances with the comparative balances.
Fiji Sports Council - Abridged Statement of Financial Position As at 31 July/December Assets Current Assets Other receivables Property, Plant & Equipment Total Assets Liabilities Current Liabilities Non-current liabilities Total Liabilities Net Assets Accumulated Funds Reserves Accumulated Losses Total Funds and Reserves 2016 ( 7 months) ($) 2015 (12 months) ($) 1,859,786 242,274 149,836,294 151,938,354 4,341,727 65,072,125 69,413,852 82,524,502 88,315,210 (5,790,708) 82,524,502 2,030,760 - 152,004,613 154,035,373 5,342,021 63,309,253 68,651,274 85,384,099 88,315,210 (2,931,111) 85,384,099 27 Other Significant Matters – Fiji Sports Council Lack of Controls in recording of facility Hire and concession Income It is imperative that effective and adequate internal control is in place to ensure that cash received by the Council is properly received, banked and recorded in the financial statements.
It is good internal control measure to implement separation of duties in areas of operations involving collection of cash to minimize the risk of misappropriation of funds.

Review of the Council’s internal controls on receipting and banking of income from hiring of facilities revealed that quotations/invoices for major events conducted for more than half day were not provided.
The following anomalies were noted on receipt and banking of concession income:  Stock sheet not signed off by the preparer and reviewer;  No evidence of check for the accuracy of the stock sheet;  No indication of verification performed against the stock sheet;  No evidence of reviews and checks on daily lodgments prepared by the cashier; and  Daily cash analysis sheets not signed off by the preparer and reviewer.
Root Cause/Implication The above findings indicate that the Council staff did not follow proper procedures for internal controls mainly due to lack of guidance and supervisory checks.

This increases the risk of irregularities or fraudulent activities.

Absence of Receipt Book Register A register or revenue register record should also be maintained to document receipt books stock and those issued to other facilities of the Council.
This will ensure adequate internal control for the custody of receipt books.

It is also imperative that monthly stock take of receipt books is conducted.

The Council did not maintain an updated register for receipt books issued to other facilities.

In addition, there was no evidence that monthly stock take of the receipt books was conducted.
Root Cause/Implication  The above finding indicates that the Council did not follow proper procedures for safe keeping of critical documents and accounting records.

 Non-maintenance of the receipt book register can encourage fraudulent activities relating to cash.

Anomalies in Receipting and Banking of Revenue Receipts All revenue collected shall be banked in the Council’s’ nominated bank account daily.
Officers in violation of daily banking requirements specified above shall be dealt with through the appropriate disciplinary procedures.

The OAG noted the late lodgements of revenue for concessions income.

Refer to Table below for details.

28 Receipt No.

Amount ($) Receipt Date Deposit Date No.
of Days Delayed Concession Account 62715 62724 62718 62720 62722 62729 62716 62721 62719 62727 62725 62728 62726 63092 63096 63097 63095 63094 Total 59.70 04/07/2016 03/08/2/016 23 1,148.40 494.80 1,555.00 224.00 3,593.90 2,531.30 23.80 2,964.00 1,713.40 74.20 113.65 97.00 41.30 20/07/2016 680.35 571.40 42.10 36.15 15,964.45 04/08/2016 12 Root Cause/Implication The above anomalies were a result of inadequate supervision and staffs not in compliance with the policies in the Finance manual.
The above exposes the Council to high risk of fraudulent activities in relation to revenue received by the Council.

Variance between Ticket Sales Receipts and Cash Banked Tickets and cash must be reconciled at the end of every event.

If balance is not achieved, the Facility Manager and the Finance representative must be notified immediately and a full report written.

The Finance Manager must investigate and if balance is not achieved, the CEO must be advised.
All Gates taking revenue must be banked on the next working day.

The bank deposit must reflect the name of the event.

The Auditor-General noted variance of $5,882 between the total receipts amounts for ticket sales and the cash banked during a major event match ticket presales from 18th of April to 1st of July.

Refer to Table below for details.


Details of Short Deposit Descriptions Total Receipts Issues (includes cash sales, EFTOS and direct deposit Deposit noted in the Bank statement (includes EFTOS and direct deposit and less refunds) Short deposit Root Cause/Implication Amount ($) 575,340 569,458 5,882 The audit findings indicate that appropriate accounting procedures were not followed by staff responsible.

The above anomaly increases the risk of fraudulent activities relating to cash.
29 Western Division Drainage Board Financial Information – 2016 The audit of the Western Division Drainage Board for the seven months ended 31 July 2016 resulted in the issue of unmodified opinion (unqualified) audit opinion.

Presented below is the abridged financial information of Western Division Drainage Board for the seven months ended 31 July 2016.
Western Division Drainage Board – Abridged Statement of Financial Performance At period end Grants from Government Other Income Total Income Administrative Expenses Staff Costs Drainage Maintenance Depreciation Expenses Operating Expenses Total Expenditure (Deficit)/Surplus for the Period 2016 (7 months) 31 July ($) 2015 12 months) ( 1 December ($) 3 121,078 12,086 133,164 24,288 41,435 128,210 106 17,462 211,501 (78,337) 647,710 6,167 653,877 20,778 72,312 408,318 623 28,933 530,964 122,913 Consistent with the changes in the financial year of Government, the Board changed its financial year from 31 December to 31 July.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period.

Thus, the significant variances with the comparative balances.
Western Division Drainage Board – Abridged Statement of Financial Position At period end Cash Receivables Financial Assets – Term Deposits Plant and Equipment Total Assets Creditors and Accruals Provisions Total Liabilities Net Assets 2016 (7 months) 31 July ($) 2015 12 months) 1 December ($) ( 3 309,724 5,506 - 1,430 316,660 65,684 5,088 70,772 245,888 340,984 1,699 144,251 291 487,225 159,302 3,698 163,000 324,225 30 11.
WATER AUTHORITY OF FIJI Financial Information – 2016 The audit of the financial statements of Water Authority of Fiji for the year ended 31 December 2016 resulted in a qualified audit opinion.

The qualification was due to the following:  Revenue included as Note 5 in the financial statements are water and sewerage charges of  $32,410,653 which are directly deposited in the consolidated bank account of Government.
The recognition criteria for revenue recognition set by International Accounting Standards (IAS) 18 requires that economic benefit associated with the item of revenue should flow to the entity.

The Authority did not meet this recognition criteria and therefore water and sewerage charges of   $32,410,653 and its related receivables 0f $10,228,694 are not fairly stated in the financial statements.
The opening balance of Property, Plant and Equipment amounting to $1,888,909,608 for the year ended was not subject to valuation at the time of the transfer to Water Authority of Fiji.

The valuation of those assets was carried out in 2006.

Consequently, the valuation of the opening balance of property, plant and equipment when it transferred in 2010 could not be confirmed.

Presented below is the abridged financial information of Water Authority of Fiji.
Water Authority of Fiji - Abridged Statement of Financial Performance Description Operating Revenue Other income Total revenue Personnel Expenses Operating Expenses Profit from operations before depreciation and amortization, finance income and income tax Depreciation and Amortization Finance income Loss before income tax Income tax Loss for the period Other comprehensive income for the year, net of income tax Total comprehensive (loss) for the year 2016 ($) 114,125,502 39,022,697 153,148,199 (26,026,267) (89,319,186) 37,802,746 (59,288,328) 103,454 (21,382,128) --- (21,382,128) --- 2015 ($) 87,329,457 22,497,780 109,827,237 (19,515,199) (62,452,610) 27,859,428 (58,300,576) 50,315 (30,390,833) --- (30,390,833) --- (21,382,128) (30,390,833) The Authority continued to record loss which decreased by $9,008,705 or 30% from the loss recorded in 2015.
The decrease in loss recorded is a result of the increase in government grant received in 2016 which increased by $17,152,853 or 31%.

Revenue collected for water and waste water charges also increased in 2016 by a total of $9,643,192 or 28%.
31 Water Authority of Fiji - Abridged Statement of Financial Position Description Assets Cash & Cash Equivalents Trade and Other Receivables Inventories Held to Maturity Investments Other Assets & Prepayments Property, Plant & Equipment Total Assets Liabilities Obligation Under Finance lease Trade & Other Payables Provision for Employee Entitlement Deferred revenue- Capex grant ADB Funded grant Total Liabilities 2016 ($) 34,565,274 15,694,970 28,939,985 1,000,000 887,838 1,757,340,790 1,838,428,857 91,458 15,610,201 775,140 296,841,158 68,398,812 381,716,769 2015 ($) 35,464,433 12,235,959 16,565,503 5,000,193 1,513,407 1,762,534,613 1,833,314,108 510,901 15,268,669 683,010 231,992,329 70,011,961 318,466,870 Net Assets 1,456,712,088 1,514,847,238 Net assets decreased by $58,135,150 or 4% in 2016 compared to 2015.
The decrease was mainly attributed to increase in deferred grant balance which increased by $64,848,829 or 28% in 2016 compared to 2015.

This was mainly due to not lesser capital grant utilized in 2016 compared to 2015 for project works.
Other Significant Matters – Water Authority of Fiji 2016 Unauthorised Contractors Engaged for Hiring of Vehicles and Machines The WAF Board on 21/3/16 through decision paper no.1985 approved the tender for the hire of plant and machinery for efficient and effective delivery of services and provision of consistent water supply to 176 contractors for the Authority to engage from.
The audit noted that several contractors which were not approved by the Board were contracted for hire of plant and equipment by the Authority.

From a sample reviewed during audit, we noted that a sum of $315,757 was paid to contractors which were not approved by the Board.

The Authority indicated that vendors outside the approved list were selected due to unavailability of the approved vendors.

However, no evidence was documented to substantiate this.
Furthermore, we could not substantiate the reasonableness of the rates charged by the unauthorized contractors.

Root Cause/Implication The anomaly indicates that the Authority has no written policy or guideline to document the reasons with supporting documents for selecting vendors other than from the approved list.

In absence of any supporting documentation there is a high risk that unauthorized vendors are selected for the services.
Additionally, the risk of hiring the unauthorized vendors through collusion is also very high.

 Policies should be written or amendments made in the procurement policy for the provision of selecting vendors other than from the approved list 32 Anomalies in Engagement of a Contractor for Hire of Gensets and Transformers  The Board approved the following proposed rates for Gensets and Transformers from a Contractor to be effective for a duration of one year.
 FJD $5,000 VEP per week for each Genset on standby plus $75 per hour on each running time;  Damage waiver: FJD $1,500 VEP per week.6; and  Contract vendors must be regularly reviewed for pricing and quality of products and services.

The tender committee is responsible for the approval of preferred suppliers to supply goods and services to Authority.
Review of the payments for hire of generators revealed the following anomalies:  The Auditor-General was not provided with the contract between the Authority and the Contractor.

During the review of the payment vouchers, it was evident from the email correspondences that the contract had expired.
 The Authority did not call for fresh tenders in 2016 for hiring of generators and transformers at the Waimanu Pumping Station  The Authority re-engaged the Contractor during 2016 for the hire of generators and transformers even though the contract had expired.

 Approval was obtained from the Chief Executive Officer through email for the continual hire of generators and transformers.
Root Cause/Implication The audit findings indicate that the Authority did not invite other contractors to bid for hiring of generators and transformers and did not obtain Board approval for the extension of the contract agreement with the Contractor.

The findings also indicated that the Authority did not monitor the expiry of the contract agreement and will not be able to obtain value for money if proper procurement procedures are not followed.
This can result in cost escalations and inability to take legal actions against the contractor for non-performance due to absence of a legally binding contract agreement between the two parties.

Engagement of Unapproved Supplier for Provision of Tendered Services Water Authority of Fiji’s Policies and Procedures Procurement and Purchasing section 11 (11.2) and 11(11.3) requires that All tenders submitted and received shall be officially recorded and initialed during the tender committee meeting.
At no stage may additions or alterations be made to original tender documents.

The audit review of the payment vouchers for plant hire revealed the following anomalies:  Instances were noted where Contractor A was engaged for hire of 15,000 litres tank even though it was not an approved contractor for the provision of this service.
 WAF did not maintain adequate supporting documents to confirm that the tendered suppliers of 15,000 litre tank would not be able to provide the services requested and thus the Authority decided to engage the Contractor A.

33  WAF provided a letter dated 26/08/16 from contractor requesting for addition of a 10 wheeler water cart truck with pump and tank of 15,000 litres at a rate of $180.00 VIP per hour to be included in the tender submission list.
However, the tender for plant hire was already approved through Board Decision Paper 1985 on 21/03/16.

The change in the scope of services was not communicated to the Board and included in the list of plant hire.
 Contractor B who is the approved contractor for the hire of water cart truck with 19,000 litres tank capacity was charging $100.00 VIP per hour which is $80.00 less than the charge rate for contractor A. Root Cause/Implication The finding shows that proper procurement procedures were not always followed by the Authority.

There is a high risk of collusion between the Authority’s employees and the Contractor.
No Proper Board Approval for Bad Debts Written Off The OAG noted that there was board approval obtained for bad debts written off in 2016 amounting to $551,889.70.

The Authority mentioned that the approval was given in 2012 by Cabinet for the write off of $13m.

However, the approval given by the Cabinet was for water and sewage rate debtors up to year 2012 and mostly for debtors that was inherited by Water Authority of Fiji from the Water and Sewage Department.
Bad debts written off in 2016 could also include debtors which would not have been part of the initial approval by the Cabinet hence Board approval should have been obtained.

Root Cause/Implication This indicates that the Authority is not following the laid down process in the Authority’s policies and procedures.

In the absence of Board approval, the write-off of bad debts may not be properly authorized.
Increasing Trend of Debtors A review of the Authority’s arrears was carried out for the past three years and it was noted that there is an increasing trend in the debtors balance.

Refer to graph below for details.

Increasing Debtors Trend (2014 - 2016) Arrears Amount ($) In addition, we noted that the Authority’s provision for doubtful debts as at 31 December 2016 amounted to 75% of the gross water and sewage rate debtors.
Refer below for details: Description Gross rate and sewage debtors Provision for doubtful debts % of provision over debtors Amount ($) 37,740,884 28,203,272 75% 34 High provision for doubtful debts is a matter of concern as it shows that the Authority’s debt recovery processes are not working well and the Government may be losing out on the revenue it is entitled to receive.
Root Cause/Implication  While the Authority has the process in place to follow up the debt, it appears that this is not practiced  effectively.

It is possible that these may become irrecoverable and the Authority will end up writing-off substantial amount of debts.
Anomalies in Engagement of Internal Audit Services Purchase of goods and services including capital purchase of $50,000 or more (excluding VAT) should be subject to formal tender process and required to be evaluated by the Tender Committee and approved by the Board.
Tendering processes and guidelines are to be applied to:  Ensure the best sources of goods and services;  Determine the most competitive price and terms available;  Explore the market for alternative options;  Minimize the potential risk to reputation; and  Reduce the risk of unfair purchase or conflicts of interest.
The Authority engaged an accounting firm to provide three-year risk-based Internal Audit services from 11 January 2016 to 30 December 2018 at an annual fee of $58,000 without following the tender process.

Root Cause/Implication  The findings indicate disregard by the Authority of the Procurement and Purchasing Policy.

 The Authority was not transparent in selection of the accounting firm for internal audit which could have resulted in savings.

35 12.
35 12.

FIJI MEDICAL AND DENTAL SECRETARIAT Financial Information – 2015 The audit of Fiji Medical and Dental Secretariat for the financial year 2015 resulted in the issue of unmodified opinion (unqualified) audit opinion.
However, emphasis was provided on the following matter: Recorded in the Statement of Financial Position is Trade Receivables of $12,781 which resulted from the issue of medical or dental practice license by the Registrar without the payment of the prescribed fee which is also a breach of section 45 of the Medical & Dental Practitioner Act 2010.
Presented below is the abridged financial information of Fiji Medical and Dental Secretariat Fiji Medical And Dental Secretariat – Abridged Statement of Financial Performance Description Subscriptions Amortization of deferred revenue Other Income Total Income Administration & Operating expenses Personnel Expenses Total Expenditure Surplus for the year 31 December 2015 ($) December 2014 ($) 247,103 18,400 20,871 286,374 89,369 144,461 233,830 52,544 226,868 6,400 13,519 246,787 52,524 125,768 178,292 68,495 The Secretariat recorded a net surplus of $52,544 in 2015compared to a net surplus of $68,495 in 2014; a decrease of $15,951 or 23%.
The decrease in surplus was mainly due to increase in total expenditure which increased by $55,538 or 31% when compared to 2014.

The increase was mostly attributable to loss on disposal of plant and equipment of $14,014 compared to $1,441 in 2014.
Fiji Medical and Dental Secretariat – Abridged Statement of Financial Position Description Cash and cash equivalents Held-to-maturity Investment Trade Receivables Other Assets Plant and equipment Total Assets Subscriptions received in advance Trade and other payables Employee entitlement Deferred Revenue Total Liabilities Net Assets December 2015 ($) December 2014 ($) 159,458 262,929 12,781 9,007 50,916 495,091 3,731 25,756 12,504 22,975 64,966 430,125 123,356 257,000 10,630 300 51,093 442,379 4,046 14,059 6,969 39,724 64,798 377,581 The increase in net assets by $52,544 or 14% was due to the net surplus of $52,544 recorded for the year ended 31 December 2015.
36 Other Significant Matters – Fiji Medical and Dental Secretariat Increase in Unpaid Subscriptions  Section 45 of the Medical and Dental Practitioner Act 2010, requires every registered medical and dental practitioner who engages in medical and dental practice to hold a valid and current medical and dental license.

 A total of $12,781 subscriptions remained unpaid as at 31/12/15.This was an increase of $2,151 or 20% compared to 2014.
 The OAG noted that the amount owed by medical practitioners continues to increase yearly and the members continue to be issued their certificate for practice and serving the public.

Root Cause/Implication The Secretariat does not have a recovery policy in place.

The Secretariat follows up with reminders to the debtors.

However, this can be improved.

This is a non-compliance issue with the Act and increases the risk of uncertified medical services rendered to the public.
Recommendation The Secretariat should develop and implement a debt recovery policy and take a prudent approach before issuing practicing certificates.

Agreed Management Action  The Secretariat agreed to the recommendation provided.

 Breach of Medical & Dental Practitioner Act 2010-Section 45 (5)  Contrary to Section 45 (5) of the Act, the audit noted that the Secretariat was renewing and issuing the Practitioners Licenses without payment of the prescribed fees.
The Auditor-General noted that the Registrar allowed Practitioners to pay subscriptions in instalments which is breach of Section 45 (5) of the Medical & Dental Practitioner Act 2010.

Amount totalling of $12,781 remained outstanding in subscriptions as at 31 December 2015 while subscriptions are the major source of income for the Secretariat.

We further noted that outstanding subscription from the practitioners totalled $12,781 as at 31 December 2015.
Root Cause/Implication Issuing Licenses to practitioners without receipt of full prescribed fee is breach of Section 45 (5) of the Act which can result in loss of revenue if not collected promptly and practitioners operating on expired licenses.

Recommendations The Secretariat should ensure that renewal of licenses are only made upon full payment of prescribed fees as required under the Act.
Secretariat should develop monitoring strategies to ensure that all medical and dental practitioners are registered with the Secretariat and are operating in Fiji with valid license; and the board should consider taking appropriate action for breach of Act in renewing licenses.

37 Agreed Management Action The Secretariat agreed to the recommendation of the Auditor-General.
Annual Report not prepared Section 24 of the Medical and Dental practitioner Act 2010 states that each Council must, on or before April in each year, deliver to the Minister a report on the administration of this Act in relation to its administration of this Act in relation to its responsibilities and the work of that Council during the preceding financial year.

The OAG noted that the Secretariat -as yet to submit the 2011-2015 Annual reports to the Minister.
Root Cause/Implication Changes in the board members over the years have made it difficult to get the annual report signed- off by the respective Board Chairman during these years.

In the absence of the annual report, the Secretariat has not been reporting on its responsibilities, activities and financial performance over the years.

Recommendations The Secretariat should ensure that annual reports are prepared and delivered to the Minister.

Agreed Management Action.


The Secretariat agreed to the recommendation of the Auditor-General.

Absence of Risk Management Policy It is imperative that for good governance the Company has in place Risk Management Policy.

This will ensure that all risks are identified and managed through effective processes and systems.

This will ensure that business operations are not affected and disrupted.

The OAG noted that the Secretariat does not have a risk management framework in place.
As a result, the Secretariat does not have written policies, procedures and guidelines to manage the risks associated with the fraud control and anti-corruption, disaster recovery and business continuity plans.

Root Cause/Implication It is possible that the Secretariat does not have the necessary capacity to develop the Risk Management Policy.

As a result the Secretariat may not be able to effectively identify risks and appropriately manage them in a timely manner.
Recommendation The Secretariat should ensure that governance and accountability function is established in consultation with its line Ministry.

This will support the operations of the Secretariat by providing financial and operational risk management.

A risk management framework should also be developed and continuously used.

Agreed Management Action The Secretariat agreed to the recommendation of the Auditor-General.

38 13.
38 13.

CENTRE FOR APPROPRIATE TECHNOLOGY AND DEVELOPMENT Financial Information – 2010 The audit of Centre for Appropriate Technology and Development (‘CATD’) for the financial year 2010 resulted in the issue of modified opinion (qualified) audit opinion.
The qualifications were as follows:  The Centre did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2010, which is a departure from the requirement of the Fiji Accounting Standard 1 – Presentation of Financial Statements and Fiji Accounting Standards 7 – Cash Flow Statements.

 An unreconciled variance of $83,102 exists between the capital reserve cash at bank balance and the general ledger balance.
As a result the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from seminar reimbursement, leadership and entrepreneurship and farm produce of $23,153, $136,755 and $39,633, respectively.

The missing records have provided limitation to the scope of the audit to confirm the balance of these revenue disclosed in the financial statements.
 The Centre recorded work in progress of $28,288 in the Financial Statements.

The Centre was unable to provide any documentations to support the work in progress balance.

As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.
Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2010 ($) 2009 ($) 519,307 800,000 34,230 1,353,537 152,133 368,989 904,356 1,479 1,426,957 (73,420) 561,181 854,365 19,402 1,434,948 143,407 369,007 933,256 2,148 1,447,818 (12,870) The centre recorded an increase in net loss in 2010 as a result of reduction in government grant and reduction in operating income arising from leadership/entrepreneurship fees.
39 CATD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables Property, Plant & Equipment Total Assets Accounts Payable Total Liabilities Net Assets 2010 ($) 742,617 4,045 156,874 148,759 4,702,693 5,754,988 15,573 15,573 5,739,415 2009 ($) 918,363 4,045 22,215 134,238 4,742,511 5,821,372 3,184 3,184 5,818,188 The decrease in net assets in 2010 was largely due to the low cash inflow which was due to reduction in government grant and operating income.
Financial Information - 2011 The audit of Centre for Appropriate Technology and Development for the financial year 2011 resulted in the issue of modified opinion (disclaimer) audit opinion.

The qualifications were as follows:  The financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium – sized Entities (“IFRS for SMEs”).
The Centre is yet to adopt and comply with IFRS for SMEs as required for general purpose financial statements.

Accordingly, I am unable to determine the impact on the financial statements if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.

 An unreconciled variance of $83,102 exists between the capital reserve cash at bank balance and the general ledger balance in prior year.
We were unable to substantiate the adjustment made during the year to reconcile the variance.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from seminar reimbursement and leadership and entrepreneurship of $74,453 and $83,974, respectively.
The missing records have provided limitation to the scope of the audit to confirm the balance of these revenue disclosed in the financial statements.

 The Centre recorded work in progress of $28,288 in the Financial Statements.

The Centre was unable to provide any documentations to support the work in progress balance.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

40  The Center did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2011.
Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2011 ($) 2010 ($) 381,444 458,890 36,443 876,777 140,851 356,938 812,029 1,180 1,310,998 (434,221) 519,307 800,000 34,230 1,353,537 152,133 368,989 904,356 1,479 1,426,957 (73,420) The Centre recorded an increase in net loss in 2011 as a result of reduction in government grant received and reduction in operating income arising from leadership/entrepreneurship fees.
CTAD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables Property, Plant & Equipment Total Assets Accounts Payable Total Liabilities Net Assets 2011 ($) 557,574 7,466 21,953 123,632 4,607,845 5,318,470 12,750 12,750 5,305,720 2010 ($) 742,617 4,045 156,874 148,759 4,702,693 5,754,988 15,573 15,573 5,739,415 The decrease in net assets in 2010 was largely due to the low cash inflow which was due to reduction in government grant and operating income relating to leadership/entrepreneurship fees.
Financial Information – 2012 The audit of Centre for Appropriate Technology and Development for the financial year 2012 resulted in the issue of modified opinion (disclaimer) audit opinion.

The qualifications were as follows:  The financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium – sized Entities (“IFRS for SMEs”).
The Centre is yet to adopt and comply with IFRS for SMEs as required for general purpose financial statements.

Accordingly, I am unable to determine the impact on the financial statements if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.

41  An unreconciled variance of $70,000 exists between the capital reserve cash at bank balance and the general ledger balance in prior year.
We were unable to substantiate the adjustment made during the year to reconcile the variance.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from farm produce amounting to $53,367.

The missing records have provided limitation to the scope of the audit to confirm the balance of these revenue disclosed in the financial statements.
 The Centre was unable to provide supporting documents to the journal entries made to the cash general ledger of $228,626.

As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Centre recorded work in progress of $28,288 in the financial statements.
The Centre was unable to provide any documentations to support the work in progress balance.

As a result, the audit was unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.
 The Center did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2012.

Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2012 ($) 437,522 458,690 23,478 919,690 135,290 317,350 838,447 858 1,291,945 (372,255) 2011 ($) 381,444 458,890 36,443 876,777 140,851 356,938 812,029 1,180 1,310,998 (434,221) The Centre recorded a reduction in net loss in 2012 as a result of increase in operating income relating to leadership/entrepreneurship fees and seminar reimbursements.
CATD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables Property, Plant & Equipment 2012 ($) 331,345 12,096 33,153 144,804 4,520,062 42 2011 ($) 557,574 7,466 21,953 123,632 4,607,845 Description Total Assets 2012 ($) 5,041,460 2011 ($) 5,318,470 Accounts Payable Mokani farm land Total Liabilities Net Assets The decrease in net assets in 2012 was largely due to increase total liability of the centre.
The Government provided capital grant of $88,245 for the upgrade of Mokani farm land in 2012.

This fund remained unutilized as at balance date.

12,750 --- 12,750 5,305,720 19,750 88,245 107,995 4,933,465 Financial Information – 2013  The audit of Centre for Appropriate Technology and Development for the financial year 2013 resulted in the issue of modified opinion (disclaimer) audit opinion.
The qualifications were as follows:  The financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium – sized Entities (“IFRS for SMEs”).

The Centre is yet to adopt and comply with IFRS for SMEs as required for general purpose financial statements.

Accordingly, I am unable to determine the impact on the financial statements if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.
 An unreconciled variance of $70,000 exists between the capital reserve cash at bank balance and the general ledger balance in prior year.

We were unable to substantiate the adjustment made during the year to reconcile the variance.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from farm produce, grants, leadership and entrepreneurship and seminar reimbursements of $939,101.
The missing records have provided limitation to the scope of the audit to confirm the balance of this revenue disclosed in the financial statements.

 The Centre was unable to provide supporting documents to the journal entries made to the cash general ledger of $40,601.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Centre recorded work in progress of $28,549 in the Financial Statements.

The Centre was unable to provide any documentations to support the work in progress balance.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Center did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2013.
Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
43 CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2013 ($) 2012 ($) 356,360 656,804 33,357 1,046,521 122,765 305,158 785,172 904 1,213,999 (167,478) 437,522 458,690 23,478 919,690 135,290 317,350 838,447 858 1,291,945 (372,255) The centre recorded a reduction in net deficit in 2013 compared to 2012.
This was largely due to increase in government grant and reduction in operating expenditure.
CATD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables Property, Plant & Equipment Total Assets Accounts Payable Mokani farm land Total Liabilities Net Assets 2013 ($) 159,543 12,096 33,153 165,584 4,420,014 4,790,390 18,000 6,403 24,403 4,765,987 2012 ($) 331,345 12,096 33,153 144,804 4,520,062 5,041,460 19,750 88,245 107,995 4,933,465 The decrease in net assets in 2013 was largely due to the low cash balance at year end which was mostly due to reduction in sale from farm produce, decrease in leadership/entrepreneurship training fees and seminar reimbursements.
Financial Information – 2014 The audit of Centre for Appropriate Technology and Development for the financial year 2014 resulted in the issue of modified opinion (disclaimer) audit opinion.

The qualifications were as follows:  The financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium – sized Entities (“IFRS for SMEs”).
The Centre is yet to adopt and comply with IFRS for SMEs as required for general purpose financial statements.

Accordingly, I am unable to determine the impact on the financial statements if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.

44  An unreconciled variance of $70,000 exists between the capital reserve cash at bank balance and the general ledger balance in prior year.
We were not able to substantiate the adjustment made during the year to reconcile the variance.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from farm produce, grants, leadership and entrepreneurship and seminar reimbursements of $1,150,264.
The missing records have provided limitation to the scope of the audit to confirm the balance of this revenue disclosed in the financial statements.

 The Centre was unable to provide supporting documents to the journal entries made to the cash general ledger of $54,881.
As a result, audit was unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Centre recorded work in progress of $29,845 in the Financial Statements.

The Centre was unable to provide any documentations to support the work in progress balance.
As a result, the audit was unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Center did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2014.
Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2014 ($) 2013 ($) 424,897 656,513 33,678 1,115,088 111,946 303,543 820,713 1,219 1,237,421 (122,333) 356,360 656,804 33,357 1,046,521 122,765 305,158 785,172 904 1,213,999 (167,478) The Centre recorded a reduction in net loss in 2014 as a result of increase in operating income arising from increase in leadership/entrepreneurship training fees and seminar reimbursements.
CATD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables 2014 ($) 129,720 12,096 40,204 179,002 2013 ($) 159,543 12,096 33,153 165,584 45 Description Property, Plant & Equipment Total Assets Accounts Payable Mokani farm land Total Liabilities Net Assets 2014 ($) 4,317,553 4,678,575 28,941 5,980 34,921 4,643,654 2013 ($) 4,420,014 4,790,390 18,000 6,403 24,403 4,765,987 The decrease in net assets in 2014 was largely due to the low cash balance at year end and increase in accounts payable.
Financial Information – 2015 The audit of Centre for Appropriate Technology and Development for the financial year 2015 resulted in the issue of modified opinion (disclaimer) audit opinion.

The qualifications were as follows:  The financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium – sized Entities (“IFRS for SMEs”).
The Centre is yet to adopt and comply with IFRS for SMEs as required for general purpose financial statements.

 Accordingly, I am unable to determine the impact on the financial statements if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.

 An unreconciled variance of $70,000 exists between the capital reserve cash at bank balance and the general ledger balance in prior year.
We were not able to substantiate the adjustment made during the year to reconcile the variance.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

 The Centre was unable to provide receipts pertaining to income generated from farm produce, grants, leadership and entrepreneurship and seminar reimbursements of $901,379.
The missing records have provided limitation to the scope of the audit to confirm the balance of this revenue disclosed in the financial statements.

 The Centre was unable to provide supporting documents to the journal entries made to the cash general ledger of $530,062.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Centre recorded work in progress of $29,845 in of the Financial Statements.

The Centre was unable to provide any documentations to support the work in progress balance.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

 The Center did not prepare and present a statement of cash flow and notes comprising a summary of accounting policies and explanatory notes for the year ended 31 December 2015.
Presented below is the abridged financial information of Centre for Appropriate Technology and Development.
46 CATD - Abridged Statement of Financial Performance Description Operating income Government grant Other income Total Income Depreciation Staff costs Other operating expenses Interest expenses Total Expenses Net Deficit 2015 ($) 2014 ($) 276,473 656,513 31,546 964,532 91,742 279,669 782,026 916 1,154,353 (189,821) 424,897 656,513 33,678 1,115,088 111,946 303,543 820,713 1,219 1,237,421 (122,333) The Centre recorded an increase in net loss in 2015 as a result of reduction in operating income arising from reduction in leadership/entrepreneurship training fees and seminar reimbursements.
CATD - Abridged Statement of Financial Position Description Cash Deposits and prepayments Receivables VAT receivables Property, Plant & Equipment Total Assets Accounts Payable Mokani farm land Total Liabilities Net Assets 2015 ($) 23,316 12,096 40,204 187,325 4,227,681 4,490,622 32,000 4,789 36,789 4,453,833 2014 ($) 129,720 12,096 40,204 179,002 4,317,553 4,678,575 28,941 5,980 34,921 4,643,654 The decrease in net assets in 2015 was largely due to the low cash balance at year-end which was mostly due to reduction in sale from farm produce, decrease in leadership/entrepreneurship training fees and seminar reimbursements.
Other significant matters Non adoption of IFRS for SMEs Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME from 1st January 2011, need to comply with that Standard.

The old Fiji Accounting Standards (FASs) have been withdrawn.

The Centre was yet to adopt and implement the requirement of the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) or International Public Sector Accounting Standards (IPSAS).
The IFRS for SMEs or IPSAS has simplifications that reflect the needs of users of SME’s financial statements and cost-benefit considerations.

47 In addition, it was noted that Statement of Cash flow was not included as part of the financial statements.

Root cause/Implication This is due to the fact that the Center was not aware of the requirement to comply with general financial reporting framework.
This also indicates that the accounting and finance personnel at the Centre are not well versed with preparation of financial statements.

Variance in capital reserve bank account The Accounts Officer shall prepare a bank reconciliation within five days after the end of the month.

The Manager Corporate Services 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.
The OAG noted a variance of $83,102 between the cash at bank balance as per bank reconciliation and the cash at bank balance as per cash book in 2010.

The variance was regularized in 2011.

However, the adjustment made to regularize variance was not provided for audit verification.

Root cause/Implication This indicates that accounting records are not maintained properly.

As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.
Anomalies noted in revenue When cash or bank cheques are received, the Revenue Collector shall immediately issue an official receipt.

It was noted that the following revenue balances were not supported with receipts and banking summary.

Refer to Table 2.1 for details.


Details of unsupported revenue balances Year 2010 2011 Seminar reimbursement ($) Egg sale ($) Leadership revenue ($) 23,152.72 74,453.19 6,569.35 1,407.15 136,755 83,973.55 Root cause/Implication This is a result of improper maintenance of accounting records.

The missing records have provided limitation to the scope of the audit to confirm the balance of this revenue disclosed in the financial statements.
Unsupported balances in the financial statements The financial statements must be prepared and audited by the Auditor General.

To ensure that the financial statements are prepared on time, all “end of the year” adjustments must be carried out within the first two weeks of the following financial year.

The Centre recorded work in progress of $29,845 in of the Financial Statements.

The Centre was unable to provide documentations to support the work in progress balance.
48 Furthermore, accumulated fund includes prior year adjustment amounting to $5,353 in 2010 and $526 in 2011.

Relevant supporting documents to substantiate the prior year adjustment balance were not provided.

Root cause/Implication This is a result of improper maintenance of financial records.
As a result, we were unable to verify the completeness and accuracy of the balance and also unable to determine whether any adjustments might have been necessary and any corresponding adjustments to the elements making up the statement of revenue and expenditure and balance sheet.

Anomalies noted in cash at bank The Accounts Officer shall prepare bank reconciliation within five days after the end of the month.
The Manager Corporate Services 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.

The following anomalies were noted in cash:  In 2012 – 2015, a variance of $70,000 existed between the cash at bank balance as per bank reconciliation and the cash at bank balance as per general ledger for the capital reserve account.
 The cashbooks were not prepared and adjustments passed in the general ledger were not supported.

This was evident in the Capital Reserve, Catering and Salary Partner bank account in 2012 and 2013 and for all the six bank accounts in 2014 and 2015.

 In 2014, monthly bank reconciliations were not prepared for all bank accounts.

A yearly bank reconciliation was prepared which was not checked or signed by the supervising officer.
Root cause/Implication This indicates that proper bank reconciliations were not performed As a result, the accuracy and completeness of the Capital Reserve cash account cannot be ascertained.

Issues noted in revenue The Accounts Officer shall maintain a distribution register recording all receipt books and other revenue earning forms issued to revenue collectors.

The lodgement forms shall be checked and signed by the Accounts Officer.
When cash or bank cheques are received, the Revenue Collector shall immediately issue an official receipt.

The Centre was unable to provide receipts pertaining to income generated from farm produce, grants, leadership and entrepreneurship and seminar reimbursements.

Refer to Table 2.2 for details.Details of receipts not provided.
Year Seminar reimbursement ($) Farm produce ($) Leadership revenue ($) Government grant ($) Other income ($) 2012 2013 2014 2015 - 168,529 342,185 229,146 53,367 22,724 45,122 - - 57,365 73,418 1,506 - 656,804 656,513 656,513 - 33,678 33,025 14,213 Total ($) 53,367 939,102 1,150,264 901,379 49 Root cause/Implication This is caused by the improper maintenance of financial records and lack of supervisory checks.
The missing records have provided limitation to the scope of the audit to confirm the balance of this revenue disclosed in the financial statements.

Delay in banking The Clerical Officer Accounts shall bank money received on a daily basis before the bank closes.

Unless or otherwise if money received after 3:30pm then it shall be banked on the next working day.

The OAG noted several instances whereby banking was not done daily in 2013.

Refer to table below for details.
Details of delay in banking Receipt date Receipt number Particulars Amount ($) 18/02/13 22/04/13 22/07/13 – 02/08/13 09/09/13 – 30/09/13 30/09/13 – 25/10/13 28/10/13 – 27/11/13 62 - 67 75 – 82 28 – 49 701 – 9728 730 – 9769 – 9770 2901 - 2904 L & E training fees L & E training fees Egg sale Egg sale Egg sale Egg sale 715.60 831.20 537.00 599.00 738.00 836.00 9800, Deposit date 29/05/13 30/08/13 30/08/13 29/11/13 29/11/13 24/12/13 Delayed by 3 months 4 months 30 days 2 months 30 days 30 days Root cause/Implication The audit findings indicate weakness in internal control where no proper supervisory check is carried out to ensure daily banking is done.
Delay in banking increases the risk of fraud and theft.

50 14.

NATIONAL FIRE AUTHORITY Financial Information The audit of the National Fire Authority for the year ended 31 December 2014 resulted in the issue of modified (disclaimer of opinion) audit opinion.

The basis for disclaimer of opinion are as follows: 1.

The OAG did not perform any physical verification to test existence of Property, Plant and Equipment recorded at a cost of $18,853,371 after 31 December 2014.
I was unable to satisfy myself by alternative means as no proper records has been maintained by the Authority for fixed asset verification performed in 2014.

Also, unreconciled difference of $85,356 was noted between opening cost as per Fixed Asset Register (FAR) and audited accounts.

In addition, difference of $133,410 was noted between opening accumulated depreciation as FAR and audited accounts.

2.
2.

Furthermore, while capital projects relating to the construction of the Savusavu, Korovou and Korolevu fire station was in work in progress (WIP) in 2014, relevant cost relating to WIP was not separated in the FAR.

Costs amounting to $315,604 incurred for consultancy, preliminary works and engineering has been incorrectly capitalized to Land and Building category and depreciated during the year.

3.
3.

During my audit, I noted that the Authority has not prepared the necessary debtors reconciliations as at year end in relation to fire levy contributions.

Based on the audit procedures performed, I note that there was under accrual of fire levy contributions amounting to $491,096 which had not been rectified by the Authority.
Accordingly, the trade receivable balance is understated by $491,096 as at 31 December 2014 and fire levy contributions is understated by $491,096 for the year ended 31 December 2014.

4.

Government grant income amounting to $3,715,875, government grant receivable amounting to $340,580 and deferred revenue amounting to $3,125,784 is recorded in the Authority’s books of account for which management was unable to explain or provide relevant supporting documents to substantiate these balances.
Furthermore, management has not carried out an assessment for amortization of deferred revenue during the year.

Accordingly, I am unable to ascertain the accuracy of government grant income amounting to $3,715,875 recorded in the books of account of the Authority for the year ended 31 December 2014, government grant receivable and deferred revenue balance amounting to $340,580 and $3,125,784 respectively recorded in the books of account as at 31 December 2014.

5.
5.

Purchase order accrual amounting $224,904 is recorded in the Authority’s books of account for which management was unable to explain or provide relevant supporting documents to substantiate this balance.

Furthermore, unreconciled difference of $140,110 is noted between the trade creditors ageing 51 and general ledger, with general ledger being understated.

No explanation or relevant supporting documents could be provided for my review for the difference.
Accordingly, I am unable to determine the impact of these limitations, if any, to creditors and accrual balance as at 31 December 2014 and to the profit and any other related balances of the Authority for the year ended 31 December 2014.

6.

The OAG did not attend and observe annual inventory physical counting and verification by management at the end of the financial year.

I was unable to satisfy myself by alternative audit procedures concerning the inventory quantities held as at 31 December 2014.
Furthermore, inventory holding report for communication department amounting to $227,651 was not made available for my review.

Accordingly, I am unable to determine the impact of the above limitations, if any, to the inventory balances as at 31 December 2014 and profit of the Authority for the year ended 31 December 2014.

7.

VAT Returns lodged for the period 1 January 2014 to 31 December 2014 were incorrectly lodged.

The Authority is in the process of compiling and lodging the amended VAT Returns.
I was also not provided with reconciliation of taxable supplies as per the VAT returns and the trial balance.

Accordingly, the ultimate resolution of this matter cannot be determined with certainty, and no provision has been made in respect to the additional VAT liabilities and penalties that may arise.

8.
8.

During my audit, the OAG noted that the Authority has not maintained an effective system of internal control over recording of income from structural fire safety inspections until their initial entry in the accounting records.

Accordingly, it was not practicable for my examination of this income to extend beyond amounts recorded in the accounting records of the Authority.

9.
9.

During my audit, the OAG also noted that the Authority has not maintained proper schedule for provision for annual leave and provision for long service leave balances.

Based on the audit procedures performed, I note that the balances are carried forward from prior year.

Accordingly, I am unable to determine the impact of this limitation, if any, to provisions for annual leave and provision for long service leave balance as at 31 December 2014.

10.
10.

Income from JICA aid totalling $138,516 have been utilized to purchase fire trucks.

\However, the accounting treatment to deferred revenue and property, plant and equipment have not been done and resulting in the overstatement of total income by $138,516.

11.

The OAG was not been provided with relevant supporting documents and explanation in relation to event subsequent to balance date review.
Accordingly, I am unable to determine if any adjustments, or disclosures is required to be made in the financial statements of the Authority for the year ended 31 December 2014.

52 Presented below is the abridged financial information of National Fire Authority for the year ended 31 December 2014.
National Fire Authority – Abridged Statement of Financial Performance For the Year Ended Revenue Total Revenue Personnel Expenses Depreciation Operating and Administration Expenses Total Expenses Net Operating Surplus For the Year 2014 ($) 15,644,062 15,644,062 6,693,041 1,009,735 2,935,441 10,638,217 5,005,845 2013 ($) 11,755,711 11,755,711 5,446,539 813,320 2,392,108 8,651,967 3,103,744 Net operating surplus increased by 61% or $1,902,101 in 2014 compared to 2013.
The increase was mainly due to the increase in revenue received from fire levy contributions and government grants during the financial year 2014.
National Fire Authority – Abridged Statement of Financial Position At period end Cash and Cash Equivalents Held to Maturity Investments Prepayments Trade and Other Receivables Inventories Property, Plant and Equipment Total Assets Trade and Other Payables Employee Benefit Liability Deferred Revenue Total Liabilities Net Assets 2014 ($) 8,036,142 1,822,775 398 2,135,300 304,104 8,784,688 21,083,407 620,816 239,763 3,125,785 3,986,364 17,097,043 2013 ($) 4,500,952 1,808,595 5,562 1,833,414 266,964 6,707,771 15,123,258 533,967 239,763 2,258,330 3,032,060 12,091,198 Net assets increased by 41% or $5,005,845 in 2014 compared to 2013.
The increase was mainly due to the increase in cash and cash equivalents balance by 79% or $3,535,190, trade and other receivables by 16% or $301,886, and additions to property, plant and equipment of $3,086,652.

Other Significant Matters – National Fire Authority Provision for Employee Benefits The Authority has recorded provision for employee entitlement leave amounting $239,763.
The following exceptions were noted with respect to provision for employee leave entitlement:  Provision for annual leave of $89,739 and provision for long service leave of $150,024 is carried forward from 2013.

 Management had not carried out proper assessment for annual leave and long service leave balances as at 31 December 2014.
53  Schedule provided for audit review was incomplete and inaccurate, as necessary adjustments for leave taken/accrued had not been processed in the Authority’s books of account.

Root Cause/Implication  Responsible staffs are not competent and properly supervised.

 Increased risk of inaccurate reporting.

 Provision for employee entitlement balance may not be fairly stated in the Authority’s books of account.
 Possible understatement of liabilities of the Authority Value Added Tax From our review of the VAT Returns and reconciliations for the year ended 31 December 2014, we noted the following:  Reconciliations were not performed on a regular basis to reconcile the balance as per general ledger with Statement of VAT account (SVA) issued by FRCS and taxable supplies as per books of account with VAT Returns lodged.
 The Authority was in the process of lodging amended VAT returns for 2014 as books of account was not in agreement with amounts in lodged VAT returns subsequent to processing adjustments upon compilation of the financial statements.

Thus no verification was performed on VAT lodgements for 2014.

 No provision has been made in respect to the additional VAT liabilities and penalties that may arise as a result of lodgement of amended VAT returns.
Root Cause/Implication  Taxable supplies may not be correctly declared in the VAT Returns.

 Lack of proper and effective VAT recording and reconciliation process increases the risk of misreporting of VAT balances in the books of account and Returns.

 Increased risk of penalties.

The OAG did not attend and observe annual inventory physical counting and verification by management at the end of the financial year.
 The OAG was unable to satisfy ourselves by alternative audit procedures concerning the inventory quantities held as at 31 December 2014 as no inventory count reports carried out by management were available for our review.

 Furthermore, inventory holding report for communication department amounting to $227,651 was not made available for audit review.

 Thus, we were unable to determine the impact of the above limitations, if any, to the inventory balances as at 31 December 2014.
54 Root Cause/Implication  Inventory balance may not be fairly stated.

 Increased risk of errors, omissions, misreporting.

 Inadequate audit trail in the absence of appropriate and adequate documentation.

Trade Receivable From our review of trade receivable balance and related reconciliations, the following exceptions were noted: 1.

Necessary debtor reconciliations were not performed as at yearend in relation to fire service levy contributions.
Based on our review, we noted that receivable in relation to fire service is understated by $491,096, which has not been rectified by the Authority.

As a result, trade receivable and income from fire service levy is understated by $491,096 as at balance date; 2.

Government grant receivable amounting to $340,580 is recorded in the Authority’s books of account for which no supporting documents or explanations have been provided by management to substantiate the balance; and 3.
Provision for doubtful debts amounting to $24,560 is carried forward from prior year.

No assessment has been carried out by management to assess recoverability of trade receivables amounting to $228,407.

Root Cause/Implication  Responsible staffs not competent to perform their roles and responsibilities effectively.

 Increased risk that trade receivables may not be fairly stated.

 Increased risk of errors and irregularities.

 Provision for doubtful debts may be understated.


 Possibility that long outstanding dues may no longer be recoverable.

Irregularities noted in Creditors and Accruals From our review of creditors ageing as at 31 December 2014, we noted the following anomalies:  Difference of $140,110 was noted between the creditor’s subsidiary ledger and general ledger account.

Refer below for details.


Variance in Creditors Subsidiary ledger and general ledger Particulars Subsidiary balance General ledger Variance Amount ($) 388,289 248,179 140,110 55  The creditor subsidiary contains various creditor balances which are being carried forward from prior years and have not been subsequently paid.
 Purchase order accrual amounting $224,904 is recorded in the Authority’s books of account for which management was unable to explain or provide relevant supporting documents to substantiate this balance.

 Scope imitation exists where we were unable to verify certain balances in the creditor’s subsidiary, as hard copies of invoices were not available nor could it retrieved from the system as data prior to 2014 had been archived in the accounting software, Peachtree.
 An instance of double posting of invoice was noted, whereby one invoice amounting to $51,080 had been posted to two supplier accounts.

Root Cause/Implication  Responsible staffs have not been carrying out their roles and responsibilities effectively.

 Creditors and accruals balances may not be fairly stated as at balance date.

  Increased risk of inaccurate reporting of creditors and accruals balances.

Increased risk of non-detection of error and irregularities.
Government Grant not Fairly Stated The government has been providing grants to National Fire Authority (NFA) to undertake capital works developments to meet expansion plans and operational needs.
From our review of government grant income, receivable, deferred income and amortization of deferred income reconciliations, the following exceptions were noted:  Government grant income amounting to $3,715,875, government grant receivable amounting  $340,580 and deferred revenue amounting to $3,125,784 is recorded in the Authority’s books of account for which management was unable to explain or provide relevant supporting documents to substantiate these balances;  The Authority has incorrectly treated capital grant as grant income instead of recording deferred income.
As per IAS 20, all grant received for the purpose of acquisition of an asset should be deferred and amortised over the period of the life of the asset;  Out of $3.9m grant received, only $1m was deferred and balance of $2.9m was recognized as income.
No segregation of assets acquired through government grant has been carried out in the fixed asset register of the Authority for the purposes of calculating amortisation of deferred revenue; and  No assessment for amortization of deferred income of $3,125,784 has been carried out by management.

Root Cause/Implication 56  Grant income, grant receivable, deferred income and amortization may not be fairly stated.
 The Authorities treatment of grant does not comply with IAS 20, Accounting for Government grants and Disclosure of Government Assistance.

Process - Financial Reporting There is a need for significant improvement and enhancement for existing system and procedures.

Refer below for details:  There were significant delays in providing certain required information, schedules and reconciliations for audit of the Authority.
A number of reconciliations and schedules were not provided to us at the time of commencement of audit.

 The Authority does not perform proper monthly reconciliation to reconcile balances as per general ledger.

 Certain critical reconciliations and schedules were not prepared such as schedule for provision for employee entitlement, deferred income and inventory holding.

 Certain schedules and reconciliations provided for audit were not accurate.
These were subsequently updated upon our review and query.

 Certain critical reconciliations such as bank reconciliations and VAT related reconciliations were performed during the year.

These have been subsequently performed.

Root Cause/Implication  Responsible staffs have not been carrying out their roles and responsibilities effectively.

 Significant additional time and cost being incurred for audit and significant delays in finalization of audit of the Authority.
 Delay in completion of the audit.

 Inadequate controls in reconciliation process leads to inefficient and ineffective accounting, recording and errors in reporting.

 Increased risk of errors and irregularities.

Property, Plant & Equipment From the audit review of the Fixed Assets Register (FAR) maintained by the Authority for the year ended 31 December 2014, we noted the following exceptions:  Unreconciled difference of $85,356 noted between opening cost as per FAR and signed accounts.
Difference of $133,410 was also noted between opening accumulated depreciation as per FAR and signed accounts.

 The fixed asset register was not updated on timely basis and there was no evidence of review by senior independent personnel.

 Assets acquired under government grant was not segregated in the FAR.

57  Furthermore, no register for land titles was maintained by NFA nor adequate details such as title number for leases was available in the FAR for ease of identification.
 Capital projects relating to the construction of the Savusavu, Korovou and Korolevu fire stations was in work in progress (WIP) in 2014.

However, relevant costs relating to WIP was not segregated in the FAR.

Costs amounting to $315,604 incurred for consultancy, preliminary works and engineering has been incorrectly capitalised to land and building and depreciated during the year.
The OAG was unable to perform any physical verification to test existence of Property, Plant and Equipment recorded at a cost of $18,853,371 as at 31/12/2014.

We were unable to satisfy ourselves by alternative means as no proper records has been maintained by the Authority for fixed asset verification performed at respective fire stations by management in 2014.
Root Cause/Implication  Property, plant and equipment balance may not be fairly stated in the Authority’s books of account in accordance with the International Financial Reporting Standards.

 Increased risk of errors, omissions, and misreporting.

 Lack of effective controls to assist management in exercising proper physical control over fixed assets.

 Increased risk that fixed assets recorded in the FAR are either obsolete, disposed of or are no longer in working condition.
Bank Reconciliation not prepared and reviewed on time  From our review of the bank reconciliation and review process, we noted the following exceptions:  Monthly bank reconciliations for the bank accounts (ANZ, BSP and HFC) for the entire year had not been prepared during the year.

Bank Reconciliations were subsequently prepared during audit.

 There was no evidence to suggest that bank reconciliations have been reviewed by independent senior personnel.
Furthermore, bank reconciliations have no indications as to the date of preparation or the person responsible for the preparation.

 Stale cheques amounting to $6,302 were included in the unpresented cheque listing for the ANZ bank reconciliation which have not been cleared on a timely basis.

 Various mispostings were noted in the cashbook, which appear as reconciling items in the bank reconciliation.

Root Cause/Implication  Increased risk of errors, omissions and irregularities.
 Risk of misreporting on bank balances.

58 SUSTAINABLE DEVELOPMENT GOALS The Committee notes that the Fiji Parliament with its six (6) Standing Committees which includes the Public Accounts Standing Committee are now extending and expanding its roles and initiated activities to strengthen its support towards promotion, implementation and monitoring of the SDGs.

This is in terms of Fiji’s 5 years & 20 years National Development Plan, the 2030 Agenda, the Sustainable Development Goals (SDGs).
Parliament is at the core of the SDGs implementation Agenda 2030 insists on the “Essential role of national parliaments through their enactment of legislation and adoption of budgets, and their role in ensuring accountability for the effective implementation of the SDGs”.

This is done through the National Development Plan (NDP) targets and indicators.
In this case, the Public Accounts Committee examines the entities covered in the Office of the Auditor General Statutory Authorities Audit Report and through its oversight role scrutinised the budget expenditure and revenue of these entities through its financial statements.
The Committee questioned these entities, this is on how it addresses the development issues as detailed in the 17 SDGs based from the relevant NDP targets and indicators, questions were also directed on the SDGs and the NDP awareness made to its staff and plans to achieve the targets relevant to their individual entity.
GENDER EQUALITY The Committee noted the importance of Gender Equality while scrutinising the Auditor General’s Reports and it has encouraged these entities on the needs to adopt the Open Merit Recruitment System (OMRS) and the provision of relevant accounting trainings for its staff, especially on basic accounting reporting training and this is for staff responsible in their Accounts/Finance Section as this will address audit issues identified as well as improve the capacity of staff which benefitted both men and women in those entities.
59 CONCLUSION The Committee notes that in the 2017 financial year the Auditor General have issued unmodified (unqualified) audit opinions to five (5) which is equivalent to 62.5% of the financial statements audited for the various entities and three (3) financial statements audited were issued with modified audit opinion.
However, in 2018 financial year, the Auditor General had issued unmodified audit opinions to all the four (4) or 100% of the financial statements of the various entities that were audited.

Overall, the results of the audits for the 2018 financial year reflects positively on the entities.

The Committee also emphasises on the timely preparation of quality draft annual financial statements.

This is one of the major issues which need to be addressed by those charged with governance of the authorities.
The involvement of line ministries to improve accountability in statutory authorities is encouraged.

It has been noted that it becomes challenging for authorities to prepare annual accounts when these have not been done for some time resulting in a backlog.

Line ministries can encourage entities to prepare and submit draft financial statements for audit annually.
In addition, the other significant matters that has been identified was the governance issues and these includes lack of Risk Management Policies, Disaster recovery and Business Continuity Plans in most of the authorities.
Last and not the least, it is also important to note that the Office of the Auditor General did not audit the financial statements for a number of Statutory Authorities as their governing body had appointed Chartered Accountant firms as external auditors to carry out the audits of their annual accounts.

60 We, the undersigned Members of the Standing Committee on Public Accounts agree with the contents of this report: …………………………… Hon.

Alvick Maharaj (Chairperson) ……………………….. Hon.


Joseph Nand (Deputy Chairperson) ………………………….

Hon.

Virendra Lal (Member) ………………………………… Hon.

Ro Teimumu Kepa (Member) …………………………… Hon.


Aseri Masivou Radrodro (Member) 61 APPENDICES 62 APPENDIX 1: PUBLIC ACCOUNTS COMMITTEE QUESTIONS 63 5.1 Public Rental Board QUESTIONS 2016/2017 Audit Report on Statutory Authorities Unallocated Government Subsidy What measures the Board has taken to ensure subsidy is allocated promptly and provide status of subsidy outstanding for 2017 and 2018?

Remainder Notices Not Issued What remainder notices sent on time now?
What is the process of sending the remainder notices?

5.2 Civil Aviation Authority of Fiji SIGNIFICANT FINDINGS - 2016 Enterprise Risk Management Does the Authority maintain a detailed risk register?

What is the process of identifying the Enterprise risk?

Anomalies in Consultancy Agreement What didn't the Authority see it useful to have a fixed timeline for the consulting work?

How does the Authority justify the actual cost of $150,975 against the estimated cost of $55,520?
Section 5.5 Investment Fiji Provide background of CRM system and how has it improved operation of Investment Fiji?

Section 5.6 Fiji Meats Industry Board Other Significant Matters The Committee notes that the Board is in the process of reviewing the Accounting Manual.

What is the process of the review, has it been completed and approved?

If yes, what are some new matters included in the reviewed manual?

If not, provide the reason(s) for not finalising the review.
The Board has been complying with the requirements of the Accounting Procedure Manual as far as procurement of goods and services were concerned.

Is the Board now complying with the Accounting Procedures Manual?

Please explain.

Is this issue repetitive in the 2017 audit?


(confirmation to be provided by the Office of the Auditor General) The Committee notes that changes in the approved prices for 'Magiti' sales were made without proper documented approval, rather changes are made based on verbal approvals given by the Chief Executive Officer.

Has the Board addressed this issue?

Please explain and provide evidences of the documentation of the approval process of the changes in 'Magiti' prices.
Internal Controls The Assessment of the Board's internal controls noted significant deficiencies What has the Board done to strengthen internal controls?

How often does the Board review the internal controls and address weakness identified?
Timelines of draft financial statements 64 The Committee notes that the draft financial statements were submitted for audit late (less than 30 days before legislative deadline) What were the reason(s) for the delay in submission and what mechanisms have the Board put in place to ensure that draft financial statements are submitted to OAG on time?
Quality of draft financial statements by Authorities The Committee notes that the extent of audit adjustments made to the draft financial statements indicates the ineffectiveness of the Board's internal review processes before the accounts are submitted for audit.

What has the Board done to strengthen the internal review processes before the accounts are submitted for audit to avoid undertaking substantial audit adjustments to rectify errors or misstatements?
Section 5.7 Fiji National Sports Commission What is the process of providing sporting grants?

How does the Commission ensure that the grant has met the objective of promoting sports in Fiji?

How is the international Coach's salary determined?

Section 5.8 Film Fiji GENERAL What is the quantitative benefit to the country from overseas Film Making for 2016, 2017 and 2018?

How many films making were done in 2016, 2017 and 2018?
SIGNIFICANT FINDINGS Lack of VAT Reconciliations Are VAT reconciliation performed?

Provide evidence.

Section 5.11 LAND TRANSPORT AUTHORITY Errors in Draft Financial Statements submitted for Audit What measures the Authority has put in place to ensure that the draft financial statements submitted for Audit is free from errors?

Cashier Shortages What measures are there to ensure that cash is not misappropriated?
Section 5.13 FIJI ROADS AUTHORITY Lack of Reconciliation of Donated Assets What is the status of new ERP and Assets Management System?

Section 5.15 - Maritime Safety Authority of Fiji 65 The audit of Maritime Safety Authority of Fiji for the financial year 2016 resulted in the issue of modified opinion or qualified audit opinion.
The qualification were as follows: Overstatement of Assets Note 2.14 - Impairment of Asset states that each reporting date Property, Plant and Equipment (PPE) of the Authority are reviewed to determine whether there is any indication that PPE have suffered an impairment loss.

As at the date of issue of audit, no impairment assessment of the Aids to Navigation (Lighthouse) which sustained major structural damages arising from the construction defects and Cyclone Winston was carried out by the Authority.
As a result, the Auditor-General was unable to ascertain the reasonableness and impact of it on the carrying amount of the PPE disclosed in Note 8 of the Financial Statements.

What steps that MSAF has taken to address this issue?

What is the timeline for completing this exercise?

The Ministry of Infrastructure and Transport (MoIT) constructed Lighthouse during the years 2013 to 2015 at a cost of $1,358,043.
The cost of construction of the Lighthouses was capitalized into the Property, Plant and Equipment of the Authority.

The Auditors noted that the Lighthouses constructed by MoIT from 2013 to 2015 have suffered structural failure whereby lighthouse have either leaned or totally collapsed this not in operation.

The lighthouse serves a very crucial role in aiding navigations of ships and without proper navigational lights there is a high risk of marine accidents.
For the benefit of the Committee, please briefly explain: 1.

What is the normal expected useful life of a light house?

2.

Significant cost was involved in the construction of the lighthouses.

Was any investigation carried out to identify the root cause of the structural failure?

What was the root cause of the structural failure?

Was MSAF consulted during the design and construction phase of the construction?

Who is responsible for the structural failure - MoIT or MSAF?

3.
3.

What is the current status of the leaned and structural damaged lighthouses?

Is it repaired and in operation?

What was the cost of the remedial work and who met the cost?

4.

What is the current status of the totally collapsed lighthouse?

Has it been replaced?

What was the cost of the replacements and who met the cost?

5.

What mechanisms are put in place by the MSAF to ensure that the above incident does not repeat in future?
Qualification 2 Not 18 - The Authority disclosed $795,144 as funds received and transferred to Governments Consolidated Fund Account (CFA).

However, the CFA Bank Statements revealed that out of the $795,144, the Authority had only transferred a total sum of $584,921.

In addition, the Authority has booked Relievable Amounting to $435,531 and Payable to Ministry of Economy amounting to $234,769 in the Statement of Financial Position.
The Authority did not prepare year-end reconciliations to support the above balances.

As a result, the Auditor-General was unable to ascertain the accuracy and completeness of these amounts disclosed in the financial statements What has the MSAF done to address this issue?

What internal controls have been implemented to ensure it is not repeated?
Income Tax Exemption Status Note 2.7 - Income Tax to the financial statements states that the Authority is exempted from income tax under Section 55 of the Maritime and Safety Authority of Fiji Act 2009 for the first three years commencing 1 January 2011.

Consequently, the tax 66 exemption period should cease from 1 January 2014.

As at the date of issue of audit opinion, the Authority did not provide documentary evidences to support Note 2.7 and its continuous tax exemption status.
Has this issue been resolved?

If not, why not.

Establishment of Marine Spill Pollution Advisory Committee Section 155 of the Martine Transport Act 2013 establishes the Marine Spill Pollution Advisory Committee, to give advice to the Authority on the use of environmental levy.

As at the date of the audit was conducted, the Marine Spill Pollution Advisory Committee has not been established as required by the Marine Transport Act and the Marine (Pollution Levy) Regulation.

1.
1.

What is the current balance of the Environment Levy Fund?

2.

Why was there a significant delay in the appointment of the Marine Spill Advisory Committee?

What is the current status?

Incomplete Ships System Software Database The Authority invested a sum of $163,385 for the purchases and installation of a Ships System Database Software in 2015.

The development of the software was incomplete.


In the absence of the databases and required features, the new Ships System Database Software does not support the core function of Marine Investigation, Compliance and Enforcement.

The Authority carried that although all features of the new software have been installed, staff are unable to fully utilize them due to having insufficient vessel data and lack of knowledge pertaining to the software.
Transition to the new system had led to old vessel data not being transferred adequately hence staffs are now manually entering data into the system.

Significant period of time has lapsed since 2015.

For the benefit of the Committee, please briefly explain: 1.

What it took so long for the MSAF to implement and migrate the data?

2.

What is the current status of the Ships System Software Database?

3.

What the training provide by the Software Provider?

4.

What version of the Software is in use?


Software version changes, is it relevant to the needs of MSAF?
67 APPENDIX 2: PUBLISHED WRITTEN EVIDENCE The following copies of the written evidence and supplementary evidences from the 14 agencies covered in this review link: the Parliament Website http://www.parliament.gov.fj/committees/standing-committee-on-public-accounts/ accessed following report using can the on be 68 APPENDIX 3: Report of the Auditor General 2017-2018 155 http://www.parliament.gov.fj/wp-content/uploads/2020/01/PP-No.-155-of-2019-SA-2017-2018.pdf Authorities Statutory Report Audit (PP No.
on of 2019) 69