Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697774702048.pdf (Fiji)
REPORT OF THE AUDITOR-GENERAL OF THE REPUBLIC OF FIJI 2018 Audit Report on General Administration Sector PARLIAMENT OF 0 FIJI PARLIAMENTARY PAPER NO.
148 OF 2019 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 OFFICE OF THE AUDITOR-GENERAL – REPUBLIC OF FIJI Location : Level 8, Ratu Sukuna House 2-10 MacArthur Street Suva, Fiji P O BOX : 2214, Government Buildings Suva, Fiji TELEPHONE : (679) 330 9032 EMAIL : info@auditorgeneral.gov.fj WEBSITE : www.oag.gov.fj _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 1 OFFICE OF THE AUDITOR GENERAL Excellence in Public Sector Auditing 6-8TH Floor, Ratu Sukuna House 2-10 McArthur St P. O.
Box 2214, Government Buildings Suva, Fiji Telephone: (679) 330 9032 Fax: (679) 330 3812 E-mail: info@auditorgeneral.gov.fj Website: http://www.oag.gov.fj File: 102 15 November 2019 The Honorable Ratu Epeli Nailatikau Speaker of the Parliament of the Republic of Fiji Parliament Complex Gladstone Road SUVA.
Dear Sir 2018 AUDIT REPORT ON GENERAL ADMINISTRATION SECTOR In accordance with section 152(13) of the Constitution of the Republic of Fiji, I am pleased to transmit to you my report on the General Administration Sector for 2018 excluding Head 4 – Ministry of Economy, Head 14 – Ministry of Disaster Management and Meteorological Services and Head 9 – Fijian Elections Office.
A copy of the report has been submitted to the Minister for Economy who as required under section 152(14) of the Constitution shall lay the report before Parliament within 30 days of receipt, or if Parliament is not sitting, on the first day after the end of that period.

Yours sincerely Ajay Nand AUDITOR-GENERAL Encl.


REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 The Office of the Auditor-General – Republic of Fiji The Office of the Auditor-General is established as an Independent Office by the Constitution of the Republic of Fiji.
Its roles and responsibilities include audit of the accounts of the Consolidated Fund and whole of Government financial statements and annual appropriation statement required to be included in the whole of Government annual report for a financial year under the Financial Management Act 2004.

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

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

This report satisfies these requirements.

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

The Office of the Auditor-General notes the impact of its reports to Parliament on the ordinary citizens and strives for accuracy and high quality reporting including recommendations which are not only value-adding to the entity subject to audit but its customers, the general public as well.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 TABLE OF CONTENTS 1.0 2.0 3.0 Sector Summary ............................................................................................................................ 4 Types of audit opinions issued ..................................................................................................... 7 Current approach on reporting to Parliament ........................................................................... 8 Introduction ....................................................................................................................................... 8 Conclusion.......................................................................................................................................... 8 4.0 Audit Opinion results .................................................................................................................... 9 Modified opinions ............................................................................................................................. 9 Unmodified opinions ....................................................................................................................... 11 Quality of draft agency financial statements ................................................................................. 11 Timeliness of financial reporting .................................................................................................... 11 Year-end closing process ................................................................................................................ 12 Appendix A: Assessment of financial governance ............................................................................... 13 Internal control framework ............................................................................................................ 13
13 Internal controls .............................................................................................................................. 13 Preparation of draft 2017-2018 agency financial statements ........................................................ 14 Quality of draft financial statements by entities ........................................................................... 15 Timeliness of draft financial statements for entities ..................................................................... 15 Timeliness of Provision of Management Comments and Signing of Financial Statements ........ 15 Result summary ............................................................................................................................... 15 Appendix B: Audit Opinion Results ....................................................................................................... 17 _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 1.0 Sector Summary All ministries and departments prepare annual agency financial statements.
Permanent Secretaries and management of these agencies are responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards Cash Basis and requirements of Finance Management Act 2004 and other applicable laws and regulations.
This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error, selecting appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
The report includes the audit for agencies completed as at 31 October 2019: The General Administration Sector includes: The Social Services Sector includes: Head 01 Head 02 Head 03 Head 05 Head 06 Head 07 Head 08 Office of the President Office of the Prime Minister and Immigration Office of the Attorney-General Ministry of i-Taukei Affairs Ministry of Defence & National Security Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Head 09 Independent Bodies: Office of the Auditor General Judiciary Department Parliament Office Office of the Director of Public Prosecutions Head 24 Ministry of Women, Children and Poverty Alleviation Head 25 Ministry of Youth and Sports The Economic Services Sector includes: Head 30 Ministry of Agriculture Head 34 Ministry of Industry, Trade and Tourism Head 35 Ministry of Sugar The Infrastructure Sector includes: Head 40 Ministry of Infrastructure and Transport Head 41 Water Authority of Fiji Head 42 Ministry of Waterways Head 43 Fiji Roads Authority Head 13 Head 15 Head 15A Head 16 Head 16A Head 17 Head 18 of Independent Commissions Ministry of Justice Fiji Corrections Service Ministry of Communication Department Technology and Computing Services Ministry of Civil Service Ministry of Rural and Maritime Development Republic of Fiji Military Forces Fiji Police Force Information Head 19 Head 20 Head 49 Peacekeeping Missions _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 It is important to note that the deficiencies highlighted in this report were identified during our audit and may have been subsequently resolved.
These have been included in this report as they impacted on the overall system of control of the ministries and departments as at 31 July 2018.

Results of Our Audits Head(s) Agency General Administration Sector Ministry of Economy 04,50,51 & 52 Date Acceptable Draft Accounts Received for Audit Audit Status as at 31/10/19 31/10/18 Audit conduct in progress.
2017-2018 Financial Statements of Government Outstanding 09 Fijian Elections Office 22/10/19 14 Ministry of Disaster Management and Meteorological Services 07/03/19 Social Services Sector Ministry of Education, Heritage and Arts Higher Education Institutions Ministry of Health and Medical Services Department of Housing Economic Services Sector Ministry of Fisheries Ministry of Forestry Ministry of Lands and Mineral Resources 21 & 26 22 23 31 32 33 27/03/19 18/02/19 19/08/19 25/01/19 28/11/19 23/04/19 36 Ministry of Public Enterprises 31/10/18 37 38 41 Ministry of Local Government Ministry of Environment Infrastructure Sector Water Authority of Fiji 20/02/19 20/02/19 2018 Draft Financial Statements of Government are yet to be submitted for audit.
The first draft 2018 Financial Statements was received on 02/07/19.

Due to errors and omissions, a second draft was submitted on 22/10/19.

Audit yet to commence.

Audit completed with audited financial statements issued for signing on 24/10/19.

Draft management letter sent for comments on 21/10/19.

Comments yet to be received.

Audit in finalization stage.

Audit in finalization stage.

held Audit conduct in progress.

Audit conduct in progress.

Audit conduct completed with on exit meeting 21/10/19.
The Ministry is working on to resolve the audit findings.

Audit completed with audited financial statements issued for signing on 18/06/19.

Draft management letter sent for comments on 25/10/19.

Draft management letter sent for comments on 21/10/19.

06/03/19 2017 and 2018 draft account submitted together.

2017 audit stage.

in finalization 43 Fiji Roads Authority 22/11/18 2018 FS received and yet to be audited.

Audit statements stage.


financial finalization for 2018 in _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 As at 31 October 2019, we issued audit opinions on 29 agency financial statements of ministries and departments for the 2017-2018 financial year.

Audit of 15 agencies have been delayed.
The delay in audits of agencies were primarily due to the following: • Delay in submission of acceptable draft accounts for audits; • As a result of delay in submission of acceptable draft accounts for audit, the assigned resources were diverted to other audits for which accounts were received on time; • Relevant information/records not provided for audit on a timely basis; • Entities deciding to address issues raised in draft audit reports and resubmission of financial statements for audit; and • The delay in the finalization of the 2016/2017 Financial Statements of Government affected resource to some extent as officers continuously had to be re-engaged in the audit.
Efforts are being made to complete the audit of the agencies.

Details of status of pending audits are provided in table below.

Quality and Timelines of Financial Statements The submission of acceptable financial statements for audit were generally delayed.

However, the quality of agency financial statements have largely improved.

We issued unmodified opinions on 22 agency financial statements out of the 29 audited for financial year 2017-2018.
In accordance with International Standards on Auditing, we express an unmodified opinion (unqualified) when the financial statements are prepared in accordance with the Financial Management Act 2004, Financial Management (Amendment) Act 2016, Finance Instructions 2010, Finance (Amendment) Instructions 2016 and with relevant legislative requirements.
This type of opinion indicates that material misstatements, individually or in the aggregate, were not noted in our audit which would affect the financial statements of an entity.
We issue a modified opinion (qualified) when having obtained sufficient appropriate audit evidence, we conclude that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.
Figure 1 – Comparison of Independent Audit Reports issued for 2017-2018 and 2016-2017 financial year Financial Year 2017 - 2018 Number of audits Percentage of total Unmodified Opinion 22 76% Modified Opinion 7 24% Financial Year 2016 - 2017 Number of audits Percentage of total Unmodified Opinion 20 71% Modified Opinion 8 29% Source: Office of the Auditor-General (detailed comparison is provided in Appendix B – Audit Opinion Results) Majority of the ministries and departments audited as at 31 October 2019 submitted the draft financial statements for 2018 well after the deadline of 31 October 2018 set by Ministry of Economy.
Only a few agencies submitted of their draft financial statements on or before the deadline.

The efforts of the agencies which submitted the draft financial statements for audit on time are commended.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 The draft financial statements for 2017-2018 of 21 or 69% of ministries and departments were not adjusted during our audit.

The remaining financial statements were adjusted through audit adjustments.
2.0 Types of audit opinions issued In accordance with International Standard on Auditing, we express an unmodified opinion (unqualified) when the financial statements are prepared in accordance with the Financial Management Act 2004, Financial Management (Amendment) Act 2016, Finance Instructions 2010, Finance (Amendment) Instructions 2016 and with relevant legislative requirements.
This type of opinion indicates that material misstatements, individually or in the aggregate, were not noted in our audit, which would affect the financial statements of an agency.
We issue a modified opinion (qualified) when having obtained sufficient appropriate audit evidence, we conclude that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.
We include an Emphasis of Matter paragraph in the audit report to highlight an issue that will help the user better understand the financial statements.

We also include an Other Matter paragraph to highlight a matter that is relevant to users’ understanding of the audit report.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 3.0 Current approach on reporting to Parliament On 5 February 2019, we reported the results of our audits for Ministries and Departments for financial year 2016-2017 by budget sectors when all audits (except for Ministry of Economy and Financial Statements of Government which were reported subsequently) were completed.
This affected the timeliness of our reporting of audits completed to Parliament.

To address this, audits of Ministries and Departments for financial year 2017-2018 which were completed as at 31 October 2019 have been included in this report.

Audit reports on audit of Ministries and Departments for financial year 2017-2018 which are subsequently completed will be included in separate reports to Parliament.
We will continue to work with Permanent Secretaries and Heads of Departments to further improve the timely completion of audits so that these can be reported to Parliament.

Introduction Each year, we audit the financial statements of State-agencies to provide assurance to their reliability.

Ministry of Economy advised all State agencies to provide the draft 2018 agency financial statements to the Auditor-General by 31 October 2018.
If agencies comply with the monthly and quarterly reporting requirements set by Finance Instructions 2010 throughout the year, the agencies should be able prepare high quality financial statements in a timely manner.

We assessed the quality and timeliness of financial statements prepared by 29 agencies for financial year ended 31 July 2018 by considering: • year-end closing process – whether accounts were closed-off on the agreed date.
• timeliness – whether complete draft 2018 financial statements were submitted for our audit by an agreed date.

• quality – the extent of accounting adjustments made during our audit.

Our assessment criteria and the result of our assessment for each ministry/department is included in Appendix A.

Conclusion A total of 29 ministries and departments were audited as at 31 October 2019.
Of these, unqualified audit reports were issued on 22 financial statements while audit reports for 7 financial statements were qualified.

It is evident from the audit that more concert efforts need to be taken to streamline year-end account closing process, improve on the timeliness of submission of draft financial statements for audit, and provision of management comments with signing of audited financial statements in a timely manner.
It is imperative that the Heads of Ministries and Departments take proactive actions to address the issues raised in this report and also improve on year-end account closing process, and improve on timeliness of provision of management comments and signing of audited financial statements.
Ajay Nand AUDITOR-GENERAL DATE: 15/11/19 _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 4.0 Audit Opinion results Table A summarizes the audit opinions we issued on the 2017-2018 financial statements for State- agencies.
Table A - Audit opinions issued by OAG as at 31/10/19 for 2017-2018 financial year Unmodified opinions 22 Modified opinions 7 Modified opinions We issued modified opinions on 7 of the 2018 financial statements audited for various ministries and departments on the following grounds: 1.0 Department of Immigration • A variance of $515,175 exists between the Integrated Border Control Management System (IBMS) which records the Department of Immigration’s operating revenue and the FMIS general ledger.
• Detailed listings of work permit holders for whom security bond totaling $28,724,628 was held in trust as at 31 July 2018 were not substantiated by the Department of Immigration.

• An unreconciled variance of $125,618 exists between the Immigration Bond Trust Fund Account cash at bank balance and the General Ledger (FMIS) balance.
• The Department of Immigration was unable to provide appropriate supporting documents including payment vouchers to substantiate payments totaling $272,985 which were made from its Operating Account.

2.0 Ministry of Employment, Productivity and Industrial Relations • The Ministry received a sum of $60,000 from Ministry of Civil Service under the Shared Services Agreement.

The Ministry receipted the service fees into the OHS Consultancy Trust Fund Account instead of the Consolidated Fund Account.
Transfer of public funds into a trust account is improper as funds in trust are those funds other than public money.

• Proper reconciliation of trust accounts for the National Employment Centre, Employment Relations Tribunal, Occupational Health and Safety, Workmen Compensation, Wages Dispute and OHS Consultancy Trust Fund Accounts were not done.
Proper cash books were not maintained for the trust accounts, satisfactory explanations were not provided for variances totaling $119,783, stale cheques were not cleared and receipts and payments were not posted in the general ledger on a timely basis.

3.0 Judicial Department Significant lapse in reconciliations were noted and there was absence of detailed breakdown listings of beneficiaries and their current balances.
As such, the accuracy of the closing balance _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 of $31,681,497 disclosed in the Judicial Trust Fund account Statement of Receipts and Payments for the year ended 31 July 2018 could not be ascertained.
4.0 Ministry of Rural and Maritime Development Included in the Provincial Trust Fund Accounts are funds received for Rural Housing Scheme 1 totaling $1,173,893 and one-third self-help projects totaling $553,611.

However, the Ministry did not maintain listing to show detailed breakdown of funds held.

5.0 Fiji Police Force The Force did not include as part of its agency financial Statements the Trust Fund Account Statement of Receipts and Payments for the Force Band Trust Fund Account.
Receipts totaling $84,542 and payments amounting to $66,485 were made from the account for the period ended 31 July 2018.

In addition, the Force Band account transactions were not recorded in the FMIS General Ledger.
6.0 Ministry of Women, Children and Poverty Alleviation • Statement of Receipts and Expenditure includes Operating Grants and Transfers balance of $89,639,571 which comprises of payments made for Social Pension Scheme of $37,116,301, Poverty Benefit Scheme of $40,102,286, and Food Vouchers for Rural Pregnant Mothers of $966,152 and Child Protection Allowance of $7,062,188.
An unreconciled variance of $8,802,261 exists between the General Ledger balance of $85,246,927 and the amount released to bank of $76,444,666 for the year ended 31 July 2018.

• Mispostings in Travel and Communication expenditure by $204,579 and Purchase of Goods and Services expenditure by $735,010 resulted in overstatement of the respective operating expenditure.
Moreover, mispostings in Operating Grants and Transfers expenditure resulted in understatement of the account by $944,262 for the year ended 31 July 2018.

The Ministry was unable to process the adjustment due to insufficient funds in the respective Standard Expenditure Groups.
7.0 Ministry of Infrastructure and Transport • An unreconciled variance of $1,405,134 exists between the Consolidated TMA balance sheet cash at bank balance of $3,303,882 and consolidated bank reconciliation balance of $1,898,748 as at 31 July 2018.

Consequently, the accuracy and completeness of the Cash at bank balance of $3,303,882 stated in the Consolidated TMA balance sheet as at 31 July 2018 could not be confirmed.

• The Energy Trust Account had a balance of $2,445,195 as at 31 July 2018.
The closing balance comprises of refunds for FEA Grid and House wiring, bond payment for projects and revenue bills collected from Solar Home Systems.

The Ministry has not maintained appropriate details of this Trust Fund account.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Unmodified opinions We issued unmodified opinions on 22 or 76% of the 2018 financial statements which were audited for various ministries and departments.

This means that material misstatements were not noted in majority of the agencies which were audited.
Quality of draft agency financial statements The extent of audit adjustments made to draft financial statements indicates the effectiveness of the agency’s internal review processes to identify and correct errors before these are provided for audit.

Twenty One (21) ministries and departments prepared good quality draft financial statements that did not require any adjustments.

Adjustments passed on draft financial statements for Six (6) ministries and departments were not material.
While most material adjustment was made for financial statements of three (3) ministries and departments.

Timeliness of financial reporting To be useful to users, financial statements should be completed and made available as soon as possible after close of financial year.

Information in financial statements becomes less relevant to users as the time passes from close of financial year.

The deadline set by Ministry of Economy for submission of draft financial statements was 31 October 2018.
Table B - Agencies which met or missed the agreed timeline for submission of draft financial statements.

Timeline Met Timeline not Met 1.

Office of the Attorney General 2.

Ministry of Foreign Affairs 3.

Office of the Auditor General 4.

Office of the Director of Public Prosecutions 5.

Fiji Independent Commission 1.

Judiciary Department 2.

Ministry of Justice 3.

Parliament Office 4.

Ministry of Civil Service and Public Service Commission 5.

Fiji Corrections Services 6.


Ministry of Rural and Maritime Development and National Against Corruption 6.

Fiji Military Force Disaster Management 7.

Fiji Police Force 8.

Ministry of Communication 9.

Office of the President 10.

Office of the Prime Minister and Immigration 11.

Ministry of i-Taukei Affairs 12.

Ministry of Defence, National Security 13.

Ministry of Employment, Productivity and Industrial Relations 14.

Department of Information Technology and Computing Services 15.
Ministry of Youth and Sports 16.

Ministry of Sugar 17.

Ministry of Industry, Trade and Tourism 18.

Ministry of Waterways 19.

Ministry of Agriculture 20.

Ministry of Women, Children and Poverty Alleviation 21.

Ministry of Infrastructure and Transport 22.


Peacekeeping Missions _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Year-end closing process On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were: • Closing date for journal adjustments by 10 August 2018 • Clearance of inter-departmental clearance accounts by 3 August 2018 • Monitoring of un-presented cheques by 31 July 2018 • Clearance of stale cheques by 22 August 2018 • Annual Board of Survey on Drawings Account cheques by 22 August 2018 • Retirement of imprests by 20 July 2018 • Cancellation of unprocessed purchase orders by 27 July 2018 • Processing of payments by 31 July 2018 and virements by 20 July 2018 • Completion of reconciliations by 29 August 2018 • Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Nine or 31% of the Ministries and Departments under the General Administration sector achieved all the key focus areas for closing of accounts set by Ministry of Economy while 20 or 69% managed to achieve 5 of 9 key processes within two weeks of due date.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Appendix A: Assessment of financial governance This section evaluates the effectiveness of the internal controls maintained by 21 ministries and departments.
Internal controls are processes designed and implemented by Permanent Secretaries, Heads of Departments and other personnel of ministries and departments to provide reasonable assurance about the achievement of a ministry or department’s objectives with regard to reliability of financial reporting effectiveness and efficiency of operations, and compliance with applicable laws and regulations.

The term “control” refers to any aspects of one or more components of internal control.
Permanent Secretaries, Heads of Departments and other personnel of ministries and departments are responsible for the preparation of the financial statements in accordance with the Financial Management Act 2004, Financial Management (Amendment) Act 2016 and Finance Instructions 2010, and for such internal control as they determine is necessary to enable preparation of financial statements that are free from material misstatements, whether due to fraud or error.
Internal control issues noted during our audit are reported to the Permanent Secretary or Head of Department of ministries and departments.

Internal control framework During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.

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

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

It requires immediate management action.

Internal controls Internal controls are categorized against the following five components of internal control.
• Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.

These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.
It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.

• Risk Assessment (RA) – involves a dynamic process for identifying and analyzing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 • Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.
Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.

• Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out internal control day-to-day controls.
Communication enables personnel to understand responsibilities and their importance for the achievement of objectives.

• Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.
The following table outlines the rating we have used to assess internal controls: Rating Internal control assessment  Effective  Generally effective  Ineffective No deficiencies identified in internal controls Deficiencies identified in internal controls Significant deficiencies identified in internal controls Preparation of draft 2017-2018 agency financial statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were: • Closing date for journal adjustments by 10 August 2018 • Clearance of inter-departmental clearance accounts by 3 August 2018 • Clearance of stale cheques by 22 August 2018 • Annual Board of Survey on Drawings Account cheques by 22 August 2018 • Retirement of imprests by 20 July 2018 • Cancellation of unprocessed purchase orders by 27 July 2018 • Processing of payments by 31 July 2018 and virements by 20 July 2018 • Completion of reconciliations by 29 August 2018 • Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Rating Year-end close process assessment  Effective  Generally effective  Ineffective All 9 key processes completed by due date Five of 9 key processes completed within two weeks of due date Less than five of 9 key processes completed within two weeks of due date _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the total expenditures, operating results or net assets of the entity subject to our audit.

Rating Quality of draft financial statements assessment  Effective  Generally effective  Ineffective No adjustments were required Adjustments on total expenditure, operating results/net assets were less than one percent Adjustments on total expenditure.
operating results/net assets were more than one percent Timeliness of draft financial statements for entities To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Rating  Effective  Generally effective  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received before or on 15 October 2018 Acceptable draft financial statements received on or before 31 October 2018 Acceptable draft financial statements received after 31 October 2018 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness for General Administration Sector as: Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Rating  Effective Rating  Ineffective Result summary The following table summarizes our assessment of controls, the 2016-2017 financial statement preparing processes and responses to the Office of the Auditor-General across the ministries and departments in the General Administration Sector which were subject to our audit.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 15                                                       REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Ministry or Department Internal controls General Administration Sector CE RA CA IC MA Financial Statement Preparation Q YE T Responses to OAG MC SFS         1.
Office of the President         2.

Office of the Prime Minister         Department of Immigration         3.

Office of the Attorney-General         5.

Ministry of i-Taukei Affairs 6.

Ministry of Defence and National Security         7.

Ministry of Employment, Productivity and         Industrial Relations 8.

Ministry of Foreign Affairs Independent Bodies 9.


Office of the Auditor-General Judiciary Parliament Office of Prosecutions the Director of Public 13.

Independent Commissions: Independent Commission Against Fiji Corruption Public Service Commission 15.

Ministry of Justice 15A Fiji Corrections Service 16.

Ministry of Communication 16A Department of Information Technology & Computing Services 17.

Ministry of Civil Service 18.


Ministry of Rural and Maritime Development and National Disaster Management 19.

Republic of Fiji Military Forces 20.

Fiji Police Force Social Services Sector 24.

Ministry of Women, Children and Poverty Alleviation 25.

Ministry of Youth and Sports Economic Services Sector 30.

Ministry of Agriculture 34.

Ministry of Industry, Trade and Tourism 35.

Ministry of Sugar Infrastructure Sector 40.

Ministry of Infrastructure and Transport 42.


Ministry of Waterways                                                                                                                                                                                     49.
Peacekeeping Missions           CE=Control Environment RA=Risk Assessment Q=Quality of draft financial statements IC=Information and Communication Control CA=Control Activities YE= Year-end close processes T=Timeliness of draft financial statements MA=Monitoring Activities MC=Management Comments provided SFS=Signed Audited financial statements returned _________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 Appendix B: Audit Opinion Results The following table presents comparison of the results of our audit of 2017-2018 financial statements with the results of 2016-2017 audit for ministries and departments in the General Administration Sector.
Ministry/Department General Administration Sector 1.

Office of the President 2.

Office of the Prime Minister and Dept of Immigration 3.

Office of the Attorney-General 5.

Ministry of i-Taukei Affairs 6.

Ministry of Defence and National Security 7.

Ministry of Employment, Productivity and Industrial Relations 8.

Ministry of Foreign Affairs Independent Bodies 9.

Office of the Auditor-General Judiciary Parliament Office of the Director of Public Prosecutions 13.
Independent Commissions: Fiji Independent Commission Against Corruption Public Service Commission 15.

Ministry of Justice 15A.Fiji Corrections Service 16.

Ministry of Communication 16A Department of Information Technology & Computing Services 17.

Ministry of Civil Service 18.

Ministry of Rural and Maritime Development and National Disaster Management 19.

Republic of Fiji Military Forces 20.

Fiji Police Force Social Services Sector 24.

Ministry of Women, Children and Poverty Alleviation 25.
Ministry of Youth and Sports Economics Services Sector 30.

Ministry of Agriculture 34.

Ministry of Industry, Trade and Tourism 35.

Ministry of Sugar Infrastructure Sector 40.

Ministry of Infrastructure and Transport 42.

Ministry of Waterways 49.
Peacekeeping Missions 2017-2018 Financial Year Date Audit Report Signed Audit Opinion Type 2016-2017 Financial Year Audit Opinion Type 15/03/19 08/07/19 29/03/19 17/05/19 29/07/19 18/07/19 Unmodified Modified Unmodified Unmodified Unmodified Modified Unmodified Unmodified Unmodified Unmodified Modified Modified 02/10/19 Unmodified Unmodified 19/10/18 12/07/19 06/02/19 18/03/19 20/12/18 02/08/19 24/06/19 21/10/19 20/06/19 17/10/19 Unmodified Modified Unmodified Unmodified Unmodified Unmodified Unmodified Unmodified Unmodified Unmodified Unmodified Modified Unmodified Unmodified Unmodified Unmodified Modified Unmodified Unmodified Unmodified 02/08/19 09/04/19 Unmodified Modified Unmodified Modified 02/10/19 22/05/19 Unmodified Modified Modified Unmodified 31/10/19 03/06/19 Modified Unmodified Unmodified Unmodified 20/06/19 22/05/19 24/05/19 30/10/19 13/06/19 31/10/19 Unmodified Unmodified Unmodified Unmodified Unmodified Modified Modified Unmodified with EOM Unmodified Modified ---1 Unmodified 1 2017 – 2018 financial year was first year audited.
_________________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 1 Office of the President Roles and Responsibilities The Office of the President provides administrative and logistical support to the Head of State in the performance of their official duties.
These duties include: the signing of Bills passed by Parliament into law, opening each session of Parliament, attending ceremonial functions, responsibility as Commander-in-Chief of the Republic of Fiji Military Forces (RFMF), state visits and active community engagement.

The President represents Fiji on state visits to other nations that strengthen Fiji’s diplomatic relations and enhance Fiji’s standing in the world.
Furthermore, His Excellency presides over commemorations for war heroes and high achievers that have made outstanding contributions to Fiji, and also attends and hosts events for visiting leaders.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 1.1 Statement of Receipts and Expenditure .................................................................................. 2 1.2 Appropriation Statement .......................................................................................................... 2 1.3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 1.4 1.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 5 1.6 Quality of draft financial statements by entities ...................................................................... 6 Timeliness of draft financial statements ................................................................................... 6 1.7 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 1.8 OTHER SIGNIFICANT MATTERS ......................................................................................... 7 PART C: 1.9 Procurement of goods and services from the accountable advance allocation .................... 7 1.10 Anomalies in Procurement ........................................................................................................ 8 1.11 Non-compliance to Procurement Regulation ........................................................................... 9 Office of the President Head 1: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 1.1 Audit Opinion The audit of the 2018 accounts for the Office of the President resulted in the issue of an unqualified audit opinion.
However, management’s attention was drawn to Note 4 to the financial statements, which describes the replenishment of funds from Head 50.

A sum of $558,323 was released from Head 50 to cater for additional commitments for the Office of the President.

For the year ended 31 July 2018, a total sum of $2,686,886 was utilized including funds sourced from Head 50 to fund the operations of the Office of the President.
Furthermore, internal controls over procurements and payments were generally found to be weak and if not addressed promptly may result in material misstatements and possible financial losses in the future.

1.2 Statement of Receipts and Expenditure The Office of the President recorded revenue totalling $1,086 and incurred a total expenditure of $2,128,563 for the year ended 31 July 2018.
Details are provided in Table 1.1 Table 1.1: Statement of Receipts and Expenditure for 2018 Description State revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Total Operating Expenditure Value Added Tax Total Expenditure 1.3 Appropriation Statement 31 July 2018 ($) 1,086 1,086 706,157 214,635 486,845 466,224 202,864 2,076,725 31 July 2017 ($) 1,040 1,040 634,847 189,884 465,514 380,314 184,652 1,855,211 51,838 103,355 2,128,563 1,958,566 The Office incurred expenditure totalling $2.1 million in 2018 against a revised budget of $2.1 million.
Details of expenditure against the revised budget are provided in Table 1.2.
Office of the President Head 1: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 1.2: Appropriation Statement for financial year 2018 SEG Item Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Total Expenditure Capital Construction Total Capital Expenditure Value Added Tax TOTAL Operating Budget Estimate ($) 744,567 219,979 411,900 483,400 187,400 Changes ($) (38,410) (5,344) 74,945 (10,608) 21,326 Revised Estimate ($) a 706,157 214,635 486,845 472,792 208,726 Actual Expenditure ($) b 706,157 214,635 486,845 466,224 202,864 2,047,246 41,909 2,089,155 2,076,725 --- --- 97,400 2,144,646 --- --- (41,909) --- --- --- 55,491 2,144,646 --- --- 51,838 2,128,563 Lapsed Appropriation ($) (a-b) --- --- --- 6,568 5,862 12,430 --- --- 3,653 16,083 Office of the President Head 1: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 1.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Office of the President Head 1: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 1.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Office of the President Head 1: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Effective All 9 key processes completed by due date 1.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 1.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 1.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Within 14 days from issue of Draft Management Letter Rating  Generally effective Timeliness of Signed Financial Statements Received Within 15 days from issue of Financial Statements for signing Office of the President Head 1: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Office as at 31 July 2018.
1.9 Procurement of goods and services from the accountable advance allocation We noted that the Office charged the procurements of goods and services totaling $103,238.10 to the accountable advance allocation (1-01101-01101-570301: Revolving Fund Account).

Root cause/Implication This was caused by the poor budgetary planning as funds were not available when required to procure goods and services.
As a result, a sum of $558,323 was released from Head 50 to cater for additional commitments for the Office of the President.

Such practice of charging operating expenditure to accountable advance allocation is serious and reflects poor accountability.

Recommendation The Manager Finance should ensure proper financial planning is done to avoid use of accountable advance allocation to procure goods and services.
Agreed Management Action Based on Audit recommendations, the Office will refrain from using Accountable Advance allocations to procure goods and services in future.

The Office was guided by the advice from the Ministry of Economy that it was to source from within.

Manager Finance shall be more vigilant in ensuring that operations expenditure is charged to the correct allocation.
The Office assures the Office of the Auditor General that this recommendation has been taken in good spirit and the same will be done to further strengthen the internal control procedures.
Officer Responsible Manager Finance Office of the President Head 1: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 1.10 Anomalies in Procurement Our review of procurements noted the following weaknesses in certain instances: • • • requisitions were approved after the invoice was issued and goods/services received.

local purchase orders were not raised due to last minute payment requests.
the LPOs / invoices were not signed by responsible officers for the receipt of goods/services and neither the delivery dockets were attached.

• payment vouchers were not signed by the Accountant before payment was done.

• payment vouchers and the supporting documents were not stamped “Paid”.

Root cause/Implication The findings indicate that proper supervisory checks were not carried out before payments were made.

Apparently, responsible officers were not diligently carrying out their duties.
Not following proper procurement procedures is a serious control failure and increases risk of errors and procurement fraud.

Recommendations The Office should: • ensure that supervisory check is strengthened in all aspects of procurements and payments.

• ensure that the procurement regulations are adhered to at all times.

• implement refresher training on procurement rules and regulations for relevant officers.
Agreed Management Action Based on Audit recommendations and moving forward, the Office shall ensure that supervisory checks are strengthened in all aspects of procurement and payments processes.

Those conducting the supervisory checks are the Official Secretary, Head of Operations, Head of Corporate Services and Manager Finance.

The Office will take relevant measures to ensure that the procurement regulations are adhered to at all times with no exception.
Additionally, the Office will invest in implementing refresher training on procurement rules and regulations for the relevant officers and have in place Standard Operating Procedures that will assist in adhering to the required processes.
Officer Responsible Official Secretary/Head of Operations/Head of Corporate Services/Manager Finance Office of the President Head 1: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 1.11 Non-compliance to Procurement Regulation Public tenders must be called for any procurement of goods, services or works valued at $50,001 or more, unless a Tender Board has approved an exemption in accordance with Procurement Regulation 30-(1).1 In 2009, China Railway Number Five Engineering Company Ltd constructed the fence at the Presidential compound.
In the financial period 2016 – 2017, the Chinese Embassy provided a sum of $500,000 to repair the fence.

In the financial period 2017 – 2018, the Office commenced the repair work on the fence.

We noted that the Office again engaged China Railway Number Five Engineering Company Ltd to carry out the repair work without calling for tender.

According to the Office, this was done to avoid excess costs.

However, the Office did not seek waiver of tender to regularize this decision.
Root cause/Implication The audit finding indicates that the responsible officers did not follow the Procurement Regulations.

Recommendations The Office should: • ensure that the Procurement Regulation is strictly followed.

• conduct refresher training in procurements with assistance from the Fiji Procurement Office.

Agreed Management Action Based on Audit recommendation and moving forward, the Office shall at all times familiarize ourselves with and observe procurement regulations without compromise.
Furthermore, with assistance from the Fiji Procurement Office, we will request assistance to conduct refresher training on procurement requirements and practices.

Ensure that proper cash flow forecasts are done so that funds are available as and when required.

The Office assures the Office of the Auditor General that this recommendation has been taken in good spirit and the same will be done to further strengthen the internal control procedures.
Officer Responsible Head of Operations 1 Office of the President Finance Manual 2015 – Section 2.3.1 Office of the President Head 1: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 2 Office of the Prime Minister and Department of Immigration Roles and Responsibilities The Office of the Prime Minister (‘OPM’) assists the Prime Minister in his role as Head of Government and the Chairperson of Cabinet by providing administrative and logistical support.
The Cabinet Office of the OPM provides Cabinet and the Prime Minister with secretarial support to ensure timely decisions for the effective running of Government.
The OPM also administers the implementation of a number of programmes, including the development of the mahogany industry, administration of small grants and the coordination of donor funding for community development projects (particularly in rural and maritime areas) and the administration of the Rotuma, Rabi, Melanesian Vasu-i-Taukei and Kioa Island Councils.

The OPM also has authority over the Department of Immigration, which is responsible for managing the flow of people across Fiji’s borders.
This includes passport issuance for Fijian citizens, entry and departure permits and the processing of applications for citizenship.

The Department is in the process of introducing new technologies to improve internal operations and deliver more effective services to the public, namely through the installation of a Biometric Verification System.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 2.1 2.2 Statement of Receipts and Expenditure .................................................................................. 3 2.3 Appropriation Statement .......................................................................................................... 3 2.4 Main Trust Fund Account........................................................................................................... 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 8 PART B: Internal Controls ........................................................................................................................ 8 2.5 2.6 Submission of FY 2017-2018 Draft Agency Financial Statements............................................ 10 2.7 Quality of Draft Financial Statements by Entities ................................................................... 10 Timeliness of Draft Financial Statements ................................................................................ 10 2.8 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 11 2.9 OTHER SIGNIFICANT MATTERS ........................................................................................ 12 PART C: 2.10 Journal vouchers not checked ................................................................................................. 12 2.11 Anomalies in clearance of Bank Lodgement Clearance (BLC) ................................................ 13 2.12 Variance between the International Border Management System (IBMS) and general ledger (FMIS) passport revenue .......................................................................................................... 14 2.13 Missing payment vouchers and
 supporting documents......................................................... 15 2.14 Anomalies in Bond trust account ............................................................................................. 15 2.15 Absence of Risk Management Framework ............................................................................. 17 2.16 Long outstanding VAT on revenue .......................................................................................... 17 2.17 Unutilized capital purchase fund (e-Passport issuance) ......................................................... 18 PRIOR YEAR UNRESOLVED ISSUES ..................................................................................................... 20 2.18 Unsubstantiated security bond amount ................................................................................. 20 Improper management of revenue ......................................................................................... 21 2.19 Office of the Prime Minister and Department of Immigration Head 2: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 2.1 Audit Opinion The audit of the 2018 accounts of the Office of the Prime Minister and Department of Immigration resulted in a qualified audit opinion.
The qualification was due to the following:  A variance of $515,175 exists between the Integrated Border Control Management System (IBMS) which records the Department of Immigration’s operating revenue and the FMIS general ledger.

As a result, I was unable to substantiate the correctness of the operating revenue balance of $12,703,433 recorded in the consolidated financial statements for the financial year ended 31 July 2018.
 Detailed listings of work permit holders for whom security bond totaling $28,724,628 was held in trust as at 31 July 2018 were not substantiated by the Department of Immigration.

As a result, I was unable to establish the completeness of the amount of security bond reflected in the Immigration Bond Trust Fund Account.

 An unreconciled variance of $125,618 exists between the Immigration Bond Trust Fund Account cash at bank balance and the General Ledger (FMIS) balance.
As a result, I was not able to ascertain that all receipts and payments had been accurately accounted and disclosed in the Immigration Bond Trust Fund cash account.

 The Department of Immigration was unable to provide appropriate supporting documents including payment vouchers to substantiate payments totaling $272,985 for Operating Account.

As such, I was unable to satisfy if these payments were properly processed and recorded in the consolidated Statement of Receipts and Expenditure.
The other matter reported was that the internal controls over revenue, payroll expenses, procurements and payments and Bond Trust Fund Account for the Department of Immigration were generally found to be weak.

This was due to lack of supervisory checks, reconciliations not properly carried out, improper record keeping and lack of proper planning and budget management.
These internal controls weaknesses if not addressed promptly may result in material misstatements and possible financial losses in the future.

Office of the Prime Minister and Department of Immigration Head 2: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.2 Statement of Receipts and Expenditure The Office collected revenue totalling $12,985,781 and incurred a total expenditure of $20,854,074 for the year ended 31 July 2018.
Details are provided in Table 2.1.
Table 2.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants &Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Capital Grants and Transfers Total Capital Expenditure 31 July 2018 ($) 12,985,781 12,985,781 5,348,307 561,169 2,295,295 1,360,834 623,013 620,030 613,958 11,422,606 --- 193,071 9,000,000 9,193,071 31 July 2017 ($) 13,636,715 13,636,715 5,368,527 595,026 1,571,160 1,175,167 974,801 665,573 226,756 10,577,010 17,872 91,291 3,163,482 3,272,645 Value Added Tax 238,397 238,254 Total Expenditure 20,854,074 14,087,909 The following factors contributed to the increase in balances for some account areas:  Travel and communication costs increased by $724,135 due to the increase overseas travel expenses for the Honourable Prime Minister and delegates.
For the Department of Immigration this was due to the increase in local travels to attend to work duties in divisional offices.

 Special expenditures increased by $387,202 due to the reimbursement of claims to the former Prime Ministers that was initially on hold and later approved by Cabinet to be paid.

 Capital purchases increased by $101,780 due to increase in expenses incurred for the construction and fittings for Nadi Office for the Department of Immigration.
 Capital grants and transfers costs increased by $5,836,518 due to increase in budget associated with project works 2.3 Appropriation Statement The Office incurred expenditure totalling $20.8 million in 2018 against a revised budget of $23.9 million, resulting in a saving of $3.1 million or 13%.

The savings was mainly attributed to operating expenditure.
Office of the Prime Minister and Department of Immigration Head 2: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Details of expenditure against the revised budget are provided in Table 2.2.
Table 2.2: Appropriation Statement for 2018 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure & 7 Total Operating Expenditure 9 10 Capital Construction Capital Grants Transfers Total Capital Expenditure and 13 Value Added Tax TOTAL Budget Estimate ($) Changes ($) 6,694,126 915,318 (461,743) (25,000) Revised Estimate ($) 6,232,383 890,318 Actual Expenditure ($) 5,348,307 561,169 2,455,720 92,500 2,548,220 2,295,295 1,403,737 124,500 1,528,237 1,360,834 1,252,133 (100,257) 1,151,876 623,013 821,000 60,000 881,000 620,030 347,161 13,889,195 550,000 9,000,000 9,550,000 540,772 23,979,967 310,000 657,161 --- 13,889,195 550,000 --- 9,000,000 --- 613,958 11,422,606 193,071 9,000,000 9,550,000 --- --- 540,772 --- 23,979,967 9,193,071 238,397 20,854,074 Carry- Over ($) Lapsed Appropriation 884,076 329,149 252,925 167,403 528,863 260,970 43,203 2,466,589 356,929 --- 356,929 302,375 3,125,893 --- --- --- --- --- --- --- --- --- --- --- --- 2.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Office of the Prime Minister operates and maintains four main trust fund bank accounts.

The Department of Immigration operates and maintains one main trust fund bank accounts.
These accounts includes the following; 2.4.1 Chinese Grant Trust Fund Account The trust fund account is used to record and maintain grants that are provided by the Chinese Government to the Fiji Government through bilateral agreements in the form of letters of exchange.
The funds are generally used to cater for those projects that are committed by the Honourable Prime Minister through requests from communities and are evaluated based on its need and priority in areas of education, integrated village/settlement developments, youth developments, women’s and minority group settlement developments and are not provided for in the national budget estimates.

The approving authority for the funding of assistance under this trust fund account is the Honourable Prime Minister.
Office of the Prime Minister and Department of Immigration Head 2: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 2.3: Chinese Grant Trust Fund Account – Statement of Receipts and Payments Description Receipts Interest Assistance & Refunds Reverse statement fee Total Receipts Payments Retention for Valelevu Multi-purpose court Withholding Tax Statement Fee Withdrawal Transfer – Bank Fees Total Payments Net (Deficit)/ Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 573 --- 6 579 22,595 57 --- 6 22,658 (22,079) 572,806 550,727 496 211,434 --- 211,930 --- 50 3 --- 53 211,877 360,929 572,806 2.4.2 Taiwan Grant Trust Fund Account – Statement of Receipts and Payments The trust fund account is used to record and maintain grants that are provided by the Taiwanese Government to the Fiji Government through bilateral agreements.
The funds are generally used to cater for those projects that are committed by the Honourable Prime Minister through request from communities and are evaluated based on its need and priority in areas of education, integrated village/settlement developments, youth developments, women’s and minority group settlement developments and are not provided for in the national budget estimates.

The approving authority for the funding of assistance under this trust fund account is the Honourable Prime Minister.
Table 2.4: Taiwan Grant Trust Fund Account – Statement of Receipts and Payments Description Receipts Interest received Taiwan cash grant Total Receipts Payments Assistance to community projects Assistance to schools Withholding tax Bank charges Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 165 424,032 424,197 22,759 16,500 17 3 39,279 384,918 50,125 435,043 50 --- 50 --- --- 5 --- 5 45 50,080 50,125 Office of the Prime Minister and Department of Immigration Head 2: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.4.3 Retention Fund Account – Statement of Receipts and Payments The trust fund account is used to maintain retention monies for various projects as per the conditions of contract with the contractors.
Funds kept in this account will be paid to the contractors when certificate of completion is submitted and all conditions of the contract are met.
Table 2.5: Retention Fund Account – Statement of Receipts and Payments Description Receipts Interest Retention for Vatulele District School Retention for Matanuca Primary School Retention for Vunisaiki Primary School Retention for Queen Victoria School Retention for Nabua Resource Centre Retention for Ballantine Memorial School Retention for Naseyani Primary School Retention for Tavua District School Retention for Nubu Primary School Retention for Dogotuki Primary School Retention for Vuya District School Retention for Kubulau District School Retention for Immaculate Conception Primary School Retention for Nausori Primary School Retention for Vaturova Koroalau High School Retention for Dama District School Retention for Bukuya Health Centre Retention for Raiwai Youth Hall Retention for Suvavou Kindergarten Retention for Rukurukulevu Village Retention for Nausori District School Retention for Biausevu Village Women’s Group Retention for Saint John Bosco Primary School Total Receipts Payments Bank Fee Resident Withholding Tax Retention payment – Rabulu Sanatan School Withdrawal transfer FRCS payments Retention payment – Nausori Primary School Retention payment – Mamanuca Primary School Retention payment – VunisaikiPrimary School Retention payment – Nabua Resource Centre Retention payment – Vatulele District School Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 1,045 --- --- 53,038 11,881 23,642 22,297 12,276 11,667 12,835 11,444 18,333 9,746 9,684 80,043 11,510 3,476 14,738 82,612 11,870 12,577 31,116 26,735 7,580 480,145 968 17,061 12,189 60,962 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 91,180 6 --- 105 97 --- 4,807 40 --- 4,633 --- 40,022 --- 11,630 --- 54,385 --- 14,073 --- 16,278 --- 141,172 4,904 338,973 86,276 953,810 1,040,086 1,379,059 1,040,086 Office of the Prime Minister and Department of Immigration Head 2: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL
 ADMINISTRATION SECTOR 2.4.4 Mahogany Industry Council Fund Account – Statement of Receipts and Payments The Mahogany Industry Council Trust Fund (‘Fund’) was established in July 2015 for the sole purpose of administering all license fees paid by Mahogany Industry license holders.
The license fees concept was introduced in June 2011 following the Mahogany Industry (Licensing and Branding) Act 2011.

The administration of the proceeds was handled by the Ministry of Economy and was transferred to the Office of the Prime Minister, as Secretariat of the Mahogany Industry Council (‘Council’), in August 2015.
Table 2.6: Mahogany Industry Fund Account – Statement of Receipts and Payments Description Receipts Interest License Fees Total Receipts Payments Audit fees Bank Charges Withholding Tax Refund of License Fee Total Payments Net Surplus/ (Deficit) Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 21,116 407,301 428,417 17,095 178,317 195,412 50 61 2,112 --- 2,223 426,194 --- 43 1,710 532,795 534,548 (339,136) 1,729,774 2,068,910 2,155,968 1,729,774 2.4.5 Immigration Bond Trust Fund Account The Immigration security bond trust fund account was established for the sole purpose of retention of money paid by non – Fiji citizens as security prior to the granting of work permit.
Bonds are kept with the Department until such time, they leave the country then it will be refunded.
Table 2.7: Immigration Bond Trust Fund Account – Statement of Receipts and Payments Description Receipts Immigration Bond Received Total Receipts Payments Immigration Bond Payment Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 7,071,866 7,071,866 9,222,553 9,222,553 3,562,587 3,562,587 4,187,530 4,187,530 3,509,279 5,035,023 25,215,349 20,180,326 28,724,628 25,215,349 Office of the Prime Minister and Department of Immigration Head 2: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 2.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Office of the Prime Minister and Department of Immigration Head 2: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Office of the Prime Minister Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office of the Prime Minister as: Rating Internal control assessment  Effective No deficiencies identified in internal controls Department of Immigration Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department of Immigration as: Rating Internal control assessment  Ineffective Significant deficiencies identified in internal controls Office of the Prime Minister and Department of Immigration Head 2: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 31 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 2.7 Quality of Draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Office of the Prime Minister and Department of Immigration was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 2.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 Office of the Prime Minister and Department of Immigration Head 2: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Ineffective After 15 days from issue of Financial Statements for signing Office of the Prime Minister and Department of Immigration Head 2: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Office as at 31 July 2018.
DEPARTMENT OF IMMIGRATION 2.10 Journal vouchers not checked Only the Senior Accounts Officer shall approve journal adjustments.1 We noted that 165 journal vouchers amounting to $1,783,553.21 were not checked and approved by the Senior Accounts Officer.

All these journal vouchers were posted by the Accounts Officer.
Root cause/Implication This indicate that the Senior Accounts Officer did not comply with the Department’s Finance Manual and not being vigilant in performing the roles and responsibilities of the position.

Due to the absence of proper authorization, the risk of fraudulent general ledger adjustments is high.

Recommendations The Department should:  ensure that supervisory checks and approval process of journal vouchers are strengthened.
 take necessary actions against officers who do not comply with the Department’s Finance Manual.

Agreed Management Action Management has noted the recommendation and will ensure that the internal control and checks are strengthened and monitored.
Officer Responsible Principal Accounts Officer 1 Immigration Department Finance Manual 2013 – Section 16.1.2 Office of the Prime Minister and Department of Immigration Head 2: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.11 Anomalies in clearance of Bank Lodgement Clearance (BLC) Ministries and Departments are to reconcile their Bank Lodgment Clearance Account (BLC) daily.

In essence, this account should have a zero balance.
A monthly reconciliation is to be prepared and forwarded to the Ministry of Economy.

At the end of the financial year, the BLC account should be zerorised to allow for new postings in the next financial year.2 The original receipt should be detached from the receipt book and issued to the payer.
The Revenue Collector shall retain the book copy and attach the duplicate receipt to the cash analysis sheet.3 We noted that the Department’s BLC account was cleared through bulk posting to the miscellaneous revenue allocation of $210,745.96 and passport revenue allocation of $963,221.47.

This posting was done by the Ministry of Economy to clear the BLC account at financial year-end.
The revenues were not identified and cleared to the correct allocations due to lack of information and delay in provision of proper records by the Department to Ministry of Economy.

In addition to the above, the cash analysis sheets for revenue amounting to $347,947 were not attached and reconciled with the receipts and lodgment.

Root cause/Implication This is a result of untimely preparation of revenue reconciliation as it is evident that the Department’s BLC account was not cleared on a monthly basis.
The absence of cash analysis sheet could result in unbanked receipts, fraud and misappropriation not being detected on a timely manner.

As a result, there is a high possibility that miscellaneous revenue and passport revenue allocation of the Department is overstated.

Recommendations  The Principal Accountant must ensure that the BLC clearance is done correctly and records are properly maintained and produced on a timely manner.
 Supervisory checks must be strengthened to avoid such issues recurring in future.

 Necessary action to be taken against officers who do not comply with the Department’s Financial Regulations.

Agreed Management Action Recommendations are noted and we have aligned our current systems and processes to avoid reoccurring of the same issue.

Officer Responsible Principal Accounts Officer 2 Finance Circular No.
21/13 – paragraph 3.5 3 Immigration Department Finance Manual 2013 – Section 5.3.4 Office of the Prime Minister and Department of Immigration Head 2: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.12 Variance between the International Border Management System (IBMS) and general ledger (FMIS) passport revenue Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at ministry/department level and/but most importantly at whole of government level.
The Senior Accounts Officer must reconcile all accounts to be submitted to Ministry of Economy within two weeks after the closing of each monthly account.4 We noted that an unreconciled variance of $515,175.12 exists between the total operating revenue as per the International Border Management System (IBMS) and the general ledger (FMIS).

Refer below for details.


Table 2.8: Variance between the IBMS and FMIS operating revenue Description General ledger passport revenue Less: Ministry of Foreign Affairs overseas mission posting Less: BLC posting Total GL passport revenue IBMS revenue Variance Root cause/Implication Amount ($) 12,640,060 500,227 963,221 11,176,612 10,661,437 515,175 This is the result of manual receipts not being integrated in the IBMS.
Also, poor record keeping of manual receipts by the respective centres and absence of manual receipts register or listing has contributed significantly towards the inability of the Accounting Head to reconcile the manual receipts and IBMS revenue to the General Ledger.

Recommendations The Department should:  ensure that manual receipts are reconciled and posted into the IBMS.

 carry out monthly reconciliations of revenue to detect errors and rectify it on a timely manner.
Agreed Management Action Management has noted the recommendation and we will ensure that its internal systems and processes are strengthened.

A meeting with all relevant stakeholders (MOFA/OAG/MITT) to discuss a way forward, since revenue collected by missions do not have a privilege of IBMS.
Officer Responsible Principal Accounts Officer 4 Immigration Department Finance Manual 2013 – Section 17.2.4 Office of the Prime Minister and Department of Immigration Head 2: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.13 Missing payment vouchers and supporting documents The Senior Accounts Officer is responsible for the safekeeping and proper maintenance of all accounting records or documents.5 Our review of expenditures noted that payment vouchers with supporting documents totaling $201,323 were missing.
In addition, payment vouchers for payments worth $71,662 were not prepared before payments were released.

Root cause/Implication This audit finding shows that internal control procedures were not adhered to and there is lack of proper supervisory checks.

Hence, it could not be confirmed whether payments were properly authorized and paid to bona fide recipients.

Recommendations • The Department should review and improve its record management.
• The oversight function should be strengthened to ensure that accounting records are prepared and well maintained.

Agreed Management Action The Management has noted the recommendations and will ensure that the internal control measures are strengthened and monitored.

Officer Responsible Principal Accounts Officer 2.14 Anomalies in Bond trust account The Clerical Officer (CO) – Bond shall properly file correspondences, reports, trust agreements and other relevant trust documents.
Within 5 days after the end of each month, the CO – Reconciliation shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.6 Our review of the Department’s Bond Trust account revealed the following anomalies: • The bond trust listing did not agree to the amount reported in the financial statements.

There was a variance of $392,702 for receipts and $540,761 for payments.

Refer to Table 2.9 for details.
5 Immigration Department Finance Manual 2013 – Section 19.2.1 6 Immigration Department Finance Manual 2013 – Section 15.3.1, 15.4.1 Office of the Prime Minister and Department of Immigration Head 2: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 2.9: Variance between the financial statements and bond trust listing Description Receipts Agency Financial Statements Listing Variance Payments Agency Financial Statements Listing Variance Amount ($) 7,071,866 6,531,105 540,761 3,562,587 3,169,885 392,702  Reconciliation for the general ledger cash (SAG 52) and general ledger liability (SLG 89) were not prepared on a timely basis.
 For SLG 89, a variance of $245,178 was noted between the general ledger and the reconciliation.

Refer to Table 2.10 for details.

Table 2.10: Variance between Department reconciliation and general ledger for SLG 89 Description FMIS/GL Department amount as per reconciliation Variance Root cause/Implication Amount ($) 28,724,628 28,479,450 245,178 This indicate that there was lack of supervisory checks by the Principal Accounts Officer over the management of the bond records.
This has resulted in the unreconciled trust balance and it is highly likely that errors and incorrect posting may not be detected promptly.

Recommendations The Department should ensure that: • monthly reconciliations are prepared between the trust account and the general ledger and any variances arising are properly investigated and resolved.

supervisory and review functions are strengthened.


• Agreed Management Action The Management has noted the recommendations and the Department is currently working to complete the mentioned task by updating the Bond register information into the spreadsheet.

Once the information is updated it will enable the Department to easily carry out the reconciliation.
Officer Responsible Principal Accounts Officer Office of the Prime Minister and Department of Immigration Head 2: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.15 Absence of Risk Management Framework Risk management framework enables Management, Internal Audit and respective Divisional Heads to jointly plan, implement, monitor and take action on evolving risks affecting the Department.
The framework would provide a platform to identify various risks affecting the Department, 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.
The following was noted from the review of the Department’s governance issues: • given the nature of operation where risk is a critical component of daily tasks, the Department did not have a risk management framework where it identifies risks and outline ways to manage them.

there is no disaster recovery plan in place to outline procedures to be followed in cases of disasters.
• Root cause/Implication Without the Risk Management Framework, the Department will not be able to carry out risk assessment and formulate strategies to address them.

Consequently, when the risks are not identified and addressed early, this may cause disruption in operations.

In the absence of a Disaster Recovery Plan, the Department may be exposed to risk of loss of critical information in the event of a natural disaster or fire.
Recommendation Management should ensure that the Risk Management Framework and Disaster Recovery Plan are prepared and finalized without further delay.

Agreed Management Action Under the governance issues - from a policy perspective the Policies need to be drafted.

Risk management: the Risk policy is done needs to be adopted Risk Matrix has been identified Risk register is ongoing will be adopted once policy is adopted.

Risk Committee will be formed after adoption.


• • • • • HR Recruitment has been adhered and monitored closely to complete all recruitment.

• Disaster Recovery Plan - Is under the Manager IT - currently working on the policy initiating and the way forward for the DOI in all ICT related risks and its mitigation.
Officer Responsible Senior Management 2.16 Long outstanding VAT on revenue When receipting revenue, the VAT portion should be credited to the new liability account (863201) and the balance to the revenue code.
At the end of the month, when making VAT return payment Office of the Prime Minister and Department of Immigration Head 2: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR to FRCS, the VAT portion should be debited to the same liability account whilst VAT on expenditure will continue to be met from agencies budgetary funds (SEG 13).7 We noted that VAT on revenue amounting to $1,348,949 which accounts for 97% of the operating trust fund balance has been long outstanding.
Upon audit verification of the reconciliation and considering monthly movements it was confirmed that the amounts have accumulated from previous years thus increasing the operating trust closing balance.

Root cause/Implication The significant balance in VAT on revenue indicates that payments were not made to Fiji Revenue and Customs Services (FRCS) on time.

Not making correct VAT payment to FRCS could result in VAT penalties imposed to the Department.
Recommendations • The Department should ensure that all the monies kept in the trust are cleared and paid to the respective agencies on a timely basis.

• The Principal Accountant should investigate this outstanding VAT on revenue amount and take appropriate action to clear it.

Agreed Management Action The Management has noted the recommendations and is currently paying the long outstanding VAT on Revenue which was collected by Foreign Affairs and was not paid directly to FRCS.
Officer Responsible Principal Accounts Officer 2.17 Unutilized capital purchase fund (e-Passport issuance) Proper planning is necessary for utilization of funds as approved by Parliament.

A budget of $300,000 was allocated to conduct feasibility studies for the development of an e- passport system to replace the existing Passport Issuance System.
We noted that the Department did not utilize the sum of $300,000 approved for biometrics verification system and e-Passport Issuance in the financial year 2017/2018.

Root cause/Implication This shows that the Department did not properly plan and manage its budget.

The non-utilization of funds can impact on the service delivery of the Department and as such it may not be able to achieve its desired output.

7 Finance Circular No.


10/2009 – paragraph 5.0 Office of the Prime Minister and Department of Immigration Head 2: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendation The Department must ensure that the budgeted funds are utilized for its intended purpose.
Agreed Management Action The amount allocated was to have the ground work carried out including the engagement of a Consultant to determine the feasibility, viability and proper implementation of the project.

The fund was not utilized due to the changes and decisions made in the project plans during the process.
Officer Responsible Senior Management Office of the Prime Minister and Department of Immigration Head 2: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PRIOR YEAR UNRESOLVED ISSUES 2.18 Unsubstantiated security bond amount The CO – Bond shall properly file correspondences, reports, trust agreements and other relevant trust documents.
Within 5 days after the end of each month, the CO – Reconciliation shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.8 The Department of Immigration maintains the Security Bond Trust fund bank account in order to facilitate the receipt and payment of these bonds from non-citizens.

The security bond trust cash and trust liability general ledger had a balance of $25,215,348.86 and $28,724,628.28 in 2017 and 2018 respectively.
However, the detailed listing of work permit holders equating to the security bond held in trust are not maintained by the Department.

Root cause/Implication Lack of supervisory checks by the Senior Accounts Officer over the management of the security bond records.

Also prolonged delay in refunding the bond to permit holders may pose difficulties in tracing the permit holders and result in unnecessary accumulation of the bond amount and administrative work.
As a result, the Departments is unable to establish the number of work permit holders currently in the country and those that have left the country without claiming a refund.

Recommendations The Senior Accounts Officer: • • • to provide the breakdown details of the permit holders status and balance composition/ageing as at 31/07/17.

should ensure that the Security Bond Trust Register are up to date, file reference are recorded appropriately and checked on a monthly basis.
should ensure the security bonds are refunded to the permit holders or organisation in accordance with Section 27 (1) of the Policies & Management guidelines on Processing & Issuance of Non-Citizen Permits, Visas & Exemptions.

Agreed Management Action The Management has noted the recommendations and the Department is currently working to complete the mentioned task by updating the Bond register information into the spreadsheet.
Once the information is updated it will enable the Department to easily carry out the reconciliation.
Officer Responsible Principal Accounts Officer 8 Immigration Department Finance Manual 2013 – Section 15.3.1, 15.4.1 Office of the Prime Minister and Department of Immigration Head 2: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 2.19 Improper management of revenue Each Accounting Head must ensure that revenue is recorded against the correct account as per the Chart of Accounts.9 When applying for new revenue items, the Senior Accounts Officer must first seek Ministry of Economy approval.10 The Department collects four different types of revenue namely for Passports, Permits, Visas and Citizenships.
However, the Department recorded all the four different types of revenue collections under its Passport revenue allocation number 1-06201-70999-230306 in the FMIS general ledger.

The Department of Immigration did not seek assistance from the Ministry of Economy to create separate allocations for the four different types of revenues it collected.

As a result revenue collected by the Department was not correctly stated under each of the four different types of revenue.
Root cause/Implication The revenue allocations not separated by FMIS.

Recommendations The Department should: • ensure that adequate training in accounting knowledge is provided to its accounting staff, • request the Ministry of Economy to provide separate allocations for the four different types of revenue collected; and • ensure that all the revenues collected are captured in the IBMS system and reconciled regularly with FMIS figures.
Agreed Management Action The Department has noted the recommendation and will liaise with Ministry of Economy to provide separate allocation for the four (4) different types of revenue collected.

The DOI will also ensure that proper training is provided to its accounting staffs.
Officer Responsible Principal Accounts Officer 9 Finance Instructions 2010 – Section 21 (1a) 10 Immigration Department Finance Manual 2013 – Section 5.9.1 Office of the Prime Minister and Department of Immigration Head 2: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 3 Office of the Attorney-General Roles and Responsibilities The Attorney-General is the Chief Legal Adviser to Government, whose Permanent Secretary is the Solicitor-General.
The Attorney-General’s Chambers seeks to continually review and improve Fijian laws to bring about a more just and secure society.

It provides legal services to Government and represents the State in legal proceedings.

It also prepares draft laws on request of Cabinet and maintains a publicly accessible register of all written laws.
The Chambers is therefore responsible for: Providing legal advice to Government and to the holders of a public office on request;   Drafting laws on the request of Cabinet;  Maintaining a publicly accessible register of all written laws;  Representing the State in Tribunals and Courts in legal proceedings to which the State  is a party, except criminal proceedings; and Performing other functions assigned by the Constitution, any written law, Cabinet or the Attorney-General.
The Department of Civil Aviation comes under the Office of the Attorney-General and is responsible for the regulation of air transport in Fiji.

The Department develops air safety protocols, in line with international standards, and looks after the development of Fijian airports.

The Fiji Intellectual Property Office and the Media Industry Development Authority also come under the Office of the Attorney-General.
Table of Contents 3.5 3.6 3.7 3.8 PART A: 3.1 3.2 3.3 3.4 FINANCIAL STATEMENTS ..................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 Statement of Receipts and Expenditure – Head 03 Office of the Attorney-General ............ 2 Appropriation Statement – Head 03 Office of the Attorney General .................................... 3 Statement of Receipts and Expenditure – Head 13 (i) Fiji Human Rights Commission (FHRC) 4 Appropriation Statement – Head 13 (i) Fiji Human Rights Commission ................................. 4 Statement of Receipts and Expenditure – Head 13 (ii) Constitutional Service Commission .
4 Appropriation Statement – Head 13 (ii) Constitutional Service Commission ......................... 5 Statement of Receipts and Expenditure – Head 13 (iii) Fiji Accident Compensation Commission ................................................................................................................................ 5 Appropriation Statement – Head 13 (iii) Fiji Accident Compensation Commission ............... 6 3.9 3.10 Appropriation Statement – Head 13 (iv) Accountability and Transparency Commission ...... 6 3.11 Main Trust Fund Account .......................................................................................................... 6 ASSESSMENT OF FINANCIAL GOVERNANCE ...................................................................... 9 PART B: Internal Controls ........................................................................................................................ 9 3.12 3.13 Submission of FY 2017-2018 Draft Agency Financial Statements ........................................... 10 3.14 Quality of Draft Financial Statements by entities ................................................................... 11 3.15 Timeliness of Draft Financial Statements ................................................................................ 11 Timeliness of Provision of Management Comments and Signing of Financial Statements .
12 3.16 Head 3: Page 1 Office of the Attorney-General REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 3.1 Audit Opinion The audit of the 2018 accounts of the Office of the Attorney General resulted in an unqualified audit opinion.
3.2 Statement of Receipts and Expenditure – Head 03 Office of the Attorney-General The Office collected revenue totalling $330,296 and incurred a total expenditure of $17.8 million for the year ended 31 July 2018.

Details are provided in Table 3.1.
Table 3.1: Statement of Receipts and Expenditure for 2018 Description State revenue Agency revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital construction Capital purchase Capital grants and transfers Total Capital Expenditure 31 July 2018 ($) 303,936 26,360 330,296 3,847,572 330,920 333,951 580,154 549,209 2,464,456 8,748,187 16,854,449 --- --- --- --- 31 July 2017 ($) 296,663 9,511 306,174 3,488,716 304,459 524,601 468,710 955,164 7,307,304 188,983 13,237,937 --- --- --- --- Value added tax 917,441 244,928 Total Expenditure 17,771,890 13,482,865 The Office collected revenue totalling $330,296 in 2018, an increase of 8% from the previous year.
Revenue mainly comprised of hotels and guest house license fees which are normally received in the last quarter of the calendar year resulting in significant increase in state revenue.

Established staff expenditure increased by $358,856 in 2018 compared to 2017 due to 13 vacant positions filled through new appointments and promotion, pay rise for tranche 3 Officers mostly comprising of legal officers and leave compensation payment to Officers approved by the Solicitor General.
Operating grants and transfers expenditure decreased by $4,842,848 in 2018 compared to 2017 due to transfer of Legal Aid Commission budget to Independent Commission Head.
Office of the Attorney-General Head 3: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Special expenditure increased by $8,559,204 in 2018 compared to 2017 due to the new budget allocation for Digital Government Transformation, hosting the Director General’s Civil Aviation Conference and an increase in aircraft accident Investigation expenses.
3.3 Appropriation Statement – Head 03 Office of the Attorney General The Office incurred expenditure totalling $17.8 million in 2018 against a revised budget of $22.3 million, resulting in a saving of $4.5 million or 20%.
The large savings was mainly attributed to all vacant positions not being filled by the Office in 2018, the actual charge provided by the Singapore Corporation Enterprise under the Digital Government Transformation project was less than the budgeted amount, no major drafting of laws project was undertaken following the completion of Laws of Fiji revision project and in Fiji Intellectual Property Office (FIPO) allocation as most of the FIPO operational cost was met by the Office of the Attorney General through its shared facilities and resources.
Details of expenditure against the revised budget are provided in Table 3.2.
Table 3.2: Appropriation Statement for 2018 SEG Item wage 1 2 3 Established staff Government earners Travel communication 4 Maintenance Budget Estimate ($) 5,104,780 307,802 Changes ($) (70,500) 70,500 Revised Estimate ($) 5,034,280 378,302 Actual Expenditure ($) 3,847,572 330,920 Lapsed Appropriation ($) 1,186,708 47,382 & & 356,750 110,000 466,750 333,951 132,799 453,900 216,000 669,900 580,154 89,746 6 5 operations Purchase of goods & services Operating grants & transfers Special expenditure Total Expenditure Capital construction 8 9 Capital purchase 10 Capital grants and Operating 7 Capital transfers Total Expenditure Value added tax TOTAL 13 1,509,784 (106,000) 1,403,784 549,209 854,575 4,938,685 (2,155,000) 2,783,685 2,464,456 319,229 7,855,000 20,526,701 2,735,000 10,590,000 800,000 21,326,701 8,748,187 16,854,449 1,841,813 4,472,252 800,000 --- --- (800,000) --- --- 800,000 (800,000) --- --- --- --- --- --- --- --- --- --- --- --- 987,800 22,314,501 987,800 --- --- 22,314,501 917,441 17,771,890 70,359 4,542,611 Office of the Attorney-General Head 3: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 3.4 Statement of Receipts and Expenditure – Head 13 (i) Fiji Human Rights Commission (FHRC) The annual budget for FHRC increased by $860,730 in 2018 when compared to 2017.
The increase in the FHRC operational grant was attributed to increase in the number of planned programs and decentralisation plan of the FHRC Office to the Northern and Western Division.
Details are provided in Table 3.3 and Table 3.4 Table 3.3: Statement of Expenditure for 2018 Description Operating Expenditure Operating Grants and Transfer Total Expenditure 31 July 2018 ($) 31 July 2017 ($) 2,353,386 1,492,656 2,353,386 1,492,656 3.5 Appropriation Statement – Head 13 (i) Fiji Human Rights Commission Table 3.4: Appropriation Statement for 2018 SEG Item 6 Operating grants & transfers Total Operating Expenditure Budget Estimate ($) 2,353,386 2,353,386 Changes ($) --- --- Revised Estimate ($) 2,353,386 Actual Expenditure ($) 2,353,386 2,353,386 2,353,386 TOTAL 2,353,386 --- 2,353,386 2,353,386 Lapsed Appropriation ($) --- --- --- 3.6 Statement of Receipts and Expenditure – Head 13 (ii) Constitutional Service Commission The Constitutional Service Commission was established under Section 132 of the Constitution of the Republic of Fiji is responsible for providing advice to the President for the appointment the following Constitutional Offices: (a) the Chairperson and the members of the Human Rights and Anti-Discrimination; (b) the Chairperson and the members of the Electoral Commission; (c) Supervisor of Elections; (d) Secretary-General to Parliament; (e) the Chairperson and the members of the Public Service Commission; (f) Commissioner of Police; (g) Commissioner of the Fiji Corrections Service; (h) Commander of the Republic of Fiji Military Forces; (i) Auditor-General; and (j) Governor of the Reserve Bank of Fiji.
Details are provided in Table 3.5 and Table 3.6 Office of the Attorney-General Head 3: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 3.5: Statement of Expenditure for 2018 Description Operating Expenditure Operating Grants and Transfer Total Expenditure 31 July 2018 ($) 31 July 2017 ($) 10,943 10,943 --- --- 3.7 Appropriation Statement – Head 13 (ii) Constitutional Service Commission Table 3.6: Appropriation Statement for 2018 SEG Item 6 Operating grants & transfers Total Operating Expenditure TOTAL Budget Estimate ($) 50,000 50,000 50,000 Changes ($) --- --- --- Revised Estimate ($) 50,000 Actual Expenditure ($) Lapsed Appropriation ($) 10,943 39,057 50,000 10,943 39,057 50,000 10,943 39,057 3.8 Statement of Receipts and Expenditure – Head 13 (iii) Fiji Accident Compensation Commission The Accident Compensation Act 2017 came into force on 1 January 2018.
The Act creates the Accident Compensation Commission Fiji.

The Commission is a statutory body and the operating grant was for the initial establishment and operational use of the Commission.

Details are provided in Table 3.7 and Table 3.8.
Table 3.7: Statement of Expenditure for 2018 Description Operating Expenditure Operating Grants and Transfer Total Expenditure 31 July 2018 ($) 31 July 2017 ($) 1,000,000 1,000,000 --- --- Office of the Attorney-General Head 3: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 3.9 Appropriation Statement – Head 13 (iii) Fiji Accident Compensation Commission Table 3.8: Appropriation Statement for 2018 SEG Item 6 Operating grants & transfers Total Operating Expenditure Budget Estimate ($) 1,000,000 1,000,000 Changes ($) --- --- Revised Estimate ($) 1,000,000 Actual Expenditure ($) 1,000,000 1,000,000 1,000,000 TOTAL 1,000,000 --- 1,000,000 1,000,000 Lapsed Appropriation ($) --- --- --- 3.10 Appropriation Statement – Head 13 (iv) Accountability and Transparency Commission Accountability and Transparency Commission “bill” is before the parliament.
And funds can be utilised after the establishment of the Accountability and Transparency Commission.

Details are provided in Table 3.9.


Table 3.9: Appropriation Statement for 2018 SEG Item 6 Operating grants & transfers Total Operating Expenditure TOTAL Budget Estimate ($) 500,000 500,000 500,000 Changes ($) --- --- --- Revised Estimate ($) 500,000 500,000 500,000 Actual Expenditure ($) Lapsed Appropriation ($) --- --- --- 500,000 500,000 500,000 3.11 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Office of the Attorney General operates and maintains 3 main trust fund bank accounts which includes the following; 3.11.1 Attorney General’s Conference Trust Fund Account The Trust Fund Account was established to retain surplus fund generated after the Annual Attorney General’s Conference to assist the next conference as the Office is only allocated a sum of $100,000 from the annual budget allocation.
Receipts in the account consist of a sum of $100,000 from Continuing Legal Education allocation and registration fees from private practitioners attending the Conference.

Payments comprise of expenditure associated with the conference which is usually held in December.

As at 31 July 2018, the Trust Fund Account had a balance of $177,473.

This balance is made up of $100,000 received from the budget allocation and the surplus funds carried forward from prior years.
Office of the Attorney-General Head 3: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 3.10: Attorney General’s Conference Trust Fund Account – Statement of Receipts and Payments Description Receipts Participants registration fees for AG’s conference Budget allocation from Consolidated Fund Interest Total Receipts Payments Conference accommodation Conference incidental Conference stationery Conference speakers travel Conference advertising Refund of registration Dishonored cheques Conference transportation Meal claims Bank charges Withholding Tax Total Payments Net Surplus/(Deficit) Opening balance as at 1 August Closing Balance as at 31 July 3.11.2 Laws of Fiji Trust Fund Account 31 July 2018 ($) 31 July 2017 ($) 443,510 100,000 2,329 545,839 442,663 21,234 19,036 16,669 15,897 3,800 2,200 1,500 1,020 233 118 524,370 21,469 156,004 177,473 385,276 100,000 2,187 487,463 460,839 21,767 16,681 16,664 6,624 8,874 --- 1,600 774 143 219 534,185 (46,722) 202,726 156,004 The Laws of Fiji Fund was established to fund the cost of publication and printing of the Laws of Fiji and to provide funding for future law revisions.
The website development and mobile digital software application was work in progress and is anticipated to be completed in 2019.

Receipts consist of orders from buyers of the new set of Laws of Fiji.

As at 31 July 2018, the Laws of Fiji Trust Fund Account had a balance of $974,613.

This balance is made up of the surplus from sale and publishing and printing of the law books.
Office of the Attorney-General Head 3: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 3.11: Laws of Fiji Trust Fund Account – Statement of Receipts and Payments Description Receipts Laws of Fiji Book Interest Total Receipts Payments Laws of Fiji Book payments Website for Laws of Fiji – Phase 1 Mobile Digital Software Application Withholding Tax Bank charges Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 495,950 1,358,685 3,036 504,122 1,361,721 8,172 243,486 113,570 102,683 817 96 460,652 43,470 931,143 974,613 430,239 --- --- 304 35 430,578 931,143 --- 931,143 3.11.3 Solicitor-General’s Trust Account The Solicitor-General’s Trust Fund Account was established on 27 July 2018 and prior to that the funds received and paid out were recorded in the Standard Liability Group (SLG) 84 allocation in FMIS general ledger.
The funds are received from government ministries, department and agencies to facilitate the payments of court judgements or awards, including payments approved for court costs, out-of-court settlements and ancillary legal expenses in litigation involving Government.

As at 31 July 2018, the Solicitor-General’s Trust Fund Account had a balance of $479,043.

This balance is mostly made up of the payments received from ministries, department and agencies for which cases are in progress.
Table 3.12: Solicitor General Trust Account – Statement of Receipts and Payments Description Receipts Transfer from SLG 84 Interest Total Receipts Payments Withholding Tax Bank charges Total Payments Net Surplus 31 July 2018 ($) 31 July 2017 ($) 478,990 64 479,054 6 5 11 479,043 --- --- --- --- --- --- --- Office of the Attorney-General Head 3: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 3.12 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Office of the Attorney-General Head 3: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR authorization, performance reviews, information processing, physical controls, and segregation of duties.

 Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls.
 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.
This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating Internal control assessment  Effective No deficiencies identified in internal controls 3.13 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 – 2018 accounts and times were detailed.

The final day for closing the 2017 -2018 accounts was 24 August 2018.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018 Office of the Attorney-General Head 3: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Effective All 9 key processes completed by due date 3.14 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 3.15 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements received on or before 31 October 2018 Office of the Attorney-General Head 3: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 3.16 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Ineffective After 15 days from issue of Financial Statements for signing Office of the Attorney-General Head 3: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Head 5 Ministry of i-Taukei Affairs Roles and Responsibilities Through the Ministry of i-Taukei Affairs, Government develops, implements and monitors policies and programs for the good governance and wellbeing of the i-Taukei people.
The Ministry’s specific roles and responsibilities are outlined in the i-Taukei Affairs Act and other legislation.

The Ministry’s core function is to provide the link between Government and the various institutions that govern the affairs of the i-Taukei.

The Ministry is responsible for ensuring that these institutions are well run, accountable and transparent so as to best serve the interests of all i-Taukei.
The i-Taukei administration – established across 14 Provinces in Fiji – is under the direction of the i-Taukei Affairs Board, an eight member group appointed by the Minister for i- Taukei Affairs.

The Ministry is the custodian of various registers that detail i-Taukei land ownership, customary fishing grounds, village boundaries and traditional titles, including the Vola ni Kawa Bula, known as the VKB.
As such, the Ministry has the important responsibility of resolving disputed claims in relation to these matters.

In support of its role as official record keeper, the Ministry conducts surveys of i-Taukei land, as well as demarcations of village and fishing boundaries, in areas where no records exist.

The Ministry is also entrusted with preserving and promoting i-Taukei culture for the present and future generations.
It develops programs aimed at deepening the understanding of i-Taukei customs, language and traditional knowledge, as well as documents important ceremonial occasions and conducts research on a broad range of topics.
Table of Contents FINANCIAL STATEMENTS ................................................................................................... 2 PART A: Audit Opinion ............................................................................................................................. 2 5.1 5.2 Statement of Receipts and Expenditure .................................................................................. 2 5.3 Appropriation Statement .......................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 5.4 5.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 5 5.6 Quality of Draft Financial Statements by entities..................................................................... 6 Timeliness of Draft Financial Statements ................................................................................. 6 5.7 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 5.8 Ministry of i-Taukei Affairs Head 5: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 5.1 Audit Opinion The audit of the 2018 accounts of the Ministry of i-Taukei Affairs resulted in an unqualified audit opinion.
5.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $6,151 and incurred a total expenditure of $12.9 million for the year ended 31 July 2018.

Details are provided in Table 5.1.
Table 5.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Services Special Expenditure Total Operating Expenditure Capital Grants and Transfers Total Capital Expenditure Value Added Tax 31 July 2018 ($) 3,795 2,356 6,151 31 July 2017 ($) 2,596 13,183 15,779 3,131,525 279,730 250,794 311,782 240,206 6,954,879 1,077,313 2,491,844 164,287 162,715 375,974 214,262 6,545,900 739,619 12,246,229 10,694,601 578,971 578,971 636,546 636,546 119,819 113,159 Total Expenditure 12,945,019 11,444,306 The following factors contributed to the increase in the expenditures in 2018:  Established Staff expenditure increased by $639,681 due to payment of acting allowances, increment and bonuses.
 Government Wage Earners expenditure increased by $115,443 due to increase in overtime payments.

 Travel and Communication expenditure increased by $88,079 due to increase in meal allowance from $9 to $20.

 Operating Grants and Transfers costs increased by $408,979 due to increases in Turaga-ni- Koro and Mata-ni-Tikina allowances by 15 percent.
 Special expenditure increased by $337,694 due to creation of Cultural Mapping Project position and the rollout of the digitalisation project for the indigenous Fijian register (Vola- ni-Kawa Bula).
Ministry of i-Taukei Affairs Head 5: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR 5.3 Appropriation Statement The Ministry incurred expenditure totalling $12.9 million in 2018 against a revised budget of $13.2 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $269,405 or 2%.

Details of expenditure against the revised budget are provided in Table 5.2.
Table 5.2: Appropriation Statement for 2018 Budget Estimate ($) 3,577,674 218,994 Changes ($) (359,335) 89,335 Revised Estimate ($) 3,218,339 308,329 Actual Expenditure ($) Lapsed Appropriation ($) 3,131,525 279,730 SEG Item 1 2 3 Established staff Government wage earners Travel communication 4 Maintenance & & 5 6 7 10 13 operations Purchase of goods & services Operating grants & transfers Special expenditure Total Operating Expenditure Capital grants and transfers Total Capital Expenditure Value added tax TOTAL 200,212 95,800 296,012 250,794 275,500 45,000 320,500 311,782 204,618 40,200 244,818 240,206 6,954,879 --- 6,954,879 6,954,879 1,063,194 12,495,071 29,000 1,092,194 (60,000) 12,435,071 1,077,313 12,246,229 563,153 60,000 623,153 578,971 563,153 60,000 623,153 578,971 156,200 13,214,424 --- 156,200 --- 13,214,424 119,819 12,945,019 86,814 28,599 45,218 8,718 4,612 --- 14,881 188,842 44,182 44,182 36,381 269,405 Ministry of i-Taukei Affairs Head 5: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 5.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of i-Taukei Affairs Head 5: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective A few deficiencies identified in internal controls 5.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions detailing the procedures and timelines for closing of the 2018 accounts.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques prior to 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments by 31 July 2018 and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Ministry of i-Taukei Affairs Head 5: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end closing process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 5.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 5.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 5.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 14 days from issue of Financial Statements for signing Ministry of i-Taukei Affairs Head 5: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Head 6 Ministry of Defence and National Security Roles and Responsibilities The Ministry of Defence and National Security is responsible for Fiji’s national security, including the defence of the country’s sovereignty and territorial integrity.
The Ministry carries out this responsibility through the implementation of Fiji’s National Security Strategy and by conducting policy oversight of two of Fiji’s Disciplined Forces, the Republic of Fiji Military Forces (RFMF), and Fiji Police Force (FPF).
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 6.1 Audit Opinion ............................................................................................................................. 2 Statement of Receipts and Expenditure .................................................................................. 2 6.2 6.3 Appropriation Statement .......................................................................................................... 2 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 6.4 6.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 5 6.6 Quality of draft Financial Statements by Entities ..................................................................... 6 6.7 Timeliness of Draft Financial Statements ................................................................................. 6 6.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 OTHER SIGNIFICANT MATTERS ......................................................................................... 7 6.9 Enforcement of the Security Industry Act ................................................................................ 7 6.10 Publishing of valid master license holders ................................................................................ 8 6.11 Meetings of the Security Industry Registration and Licensing Board .................................... 9 6.12 Control weaknesses over the receipting process ................................................................... 10 PART C: Ministry of Defence and National Security Head 6: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 6.1 Audit Opinion The audit of the 2018 accounts of the Ministry of Defence and National Security resulted in an unqualified audit opinion.
6.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $25,992 and incurred a total expenditure of $4,772,835 for the year ended 31 July 2018.

Details are provided in Table 6.1.
Table 6.1: Statement of Receipts and Expenditure for 2018 Description Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Total Capital Expenditure Value Added Tax Total Expenditure 6.3 Appropriation Statement 31 July 2018 ($) 25,992 25,992 984,612 340,319 418,477 273,679 293,286 43,366 1,811,434 4,165,173 31 July 2017 ($) 16,631 16,631 1,050,528 245,155 251,858 105,370 256,745 50,265 625,434 2,585,355 352,178 352,178 90,647 90,647 255,484 125,170 4,772,835 2,801,172 The Ministry incurred expenditure totalling $4.7 million in 2018 against a revised budget of $5.2 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $0.4 million or 9%.
The savings of $404,433 under the Capital Construction allocation was due to the delay in project processing caused by shortage of materials from vendors and adverse weather conditions which affected the progress of capital works.

Details of expenditure against the revised budget are provided in Table 6.2.
Ministry of Defence and National Security Head 6: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Table 6.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 1,423,330 196,627 Changes ($) (438,684) 143,693 Revised Estimate ($) 984,646 340,320 Actual Expenditure ($) 984,612 340,319 195,000 229,760 424,760 418,477 4 Maintenance & 120,200 160,646 280,846 273,679 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction 5 6 7 8 Total Capital Expenditure Value Added Tax TOTAL 13 339,090 (44,491) 294,599 293,286 45,140 --- 45,140 43,366 1,865,790 4,185,177 (50,924) --- 1,814,866 4,185,177 1,811,434 4,165,173 756,611 756,611 294,900 5,236,688 --- --- --- --- 756,611 756,611 352,178 352,178 294,900 5,236,688 255,484 4,772,835 Lapsed Appropriation ($) 34 1 6,283 7,167 1,313 1,774 3,432 20,004 404,433 404,433 39,416 463,853 The Ministry collected revenue totalling $25,992 in 2018, an increase of 56% from the previous year.
Ministry of Defence and National Security Head 6: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 6.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Defence and National Security Head 6: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry of Defence and National Security as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 6.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 31 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Ministry of Defence and National Security Head 6: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 6.6 Quality of draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 6.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received on or before 31 October 2018 6.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of Defence and National Security Head 6: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2018.
6.9 Enforcement of the Security Industry Act No person may employ or provide other persons to carryon any security activity unless that person is the holder of a master licence and employs or provides no more than the number of persons authorised by the master licence.
No person may carry on any security activity apart from a security activity to which subsection (I) applies unless that person is the holder of an individual or a provisional licence and the licence authorises the person to carryon that security activity.

Any person who contravenes subsection (I) commits an offence and shall be liable on conviction if a body corporate to a fine not exceeding $10,000 and for an individual to a fine not exceeding $5,000 or imprisonment for up to 2 years or both.
Any person who contravenes subsection (2) commits an offence and shall be liable on conviction to a fine not exceeding $5,000 or imprisonment of up to 2 years or both.1 Section 13 (3) of the Act provides that any person who fails to lodge their application to renew the license, shall be liable for a fine not exceeding $5, 000 or imprisonment for up to 2 years or both.
For a body corporate a fine not exceeding $5, 000 and for an individual to a fine not exceeding $5,000 or imprisonment for up to 2 years or both would apply.

Our review of the security license and related records revealed that several companies have not renewed their security license over the years but continued to provide security services.
Moreover, the Ministry has not taken proactive actions to promptly follow up with these companies to ensure that the license are renewed and fees are paid on a timely basis.

The Ministry also did not enforce Section 13(3) of the Act for those companies that have failed to lodge their application to renew their license.

Root cause/Implication This is due to the absence of a standard operating procedures to guide, coordinate and properly organize the work of the Securities Division.
As a result, revenue due to government has not been collected over the years.

1 Security Industry Act 2010 – Section 13 Ministry of Defence and National Security Head 6: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Recommendations The Ministry should ensure that: • Standard operating procedures/ policies of the Securities Division are developed to guide • officers in the enforcement of the Act.
advise is sought from the relevant authorities on the possibility of collecting prior years license fees from those companies that have been in operation.

• proper mechanisms are put in place to ensure the effective enforcement of the Act.
Agreed Management Action The Ministry notes the concerns raised and have also acted on the issues as follows; • Appointment of Acting Manager Security, Executive and Clerical Officer; and • The Ministry will be working with the Office of the Director Prosecutions, Police and Solicitor General’s Office.
Officer Responsible Acting Manager Security 6.10 Publishing of valid master license holders Not later than 30 June each year the Registrar shall publish in a notice in the Gazette a list containing the name of every holder of a valid master license.2 Contrary to the requirement of the Security Industry Act of 2010, we noted that the Registrar did not publish the name of every holder of a valid master license in the gazette.
Root cause/Implication This is the result of limited number of staff in the Securities Division to fulfill certain responsibilities of the division.

Also, no proper mechanism is in place to ensure compliance with the requirements of the Act.

As a result, the Division is unable to function as required by the Act.

Recommendations The Ministry should ensure that: • the names of every holder of a valid master license is published in the gazette as required under the Security Industry Act of 2010.
• proper mechanisms are put in place including the allocation of appropriate staffs and other resources to the Division.

2 Security Industry Act 2010 – Section 11 (4) Ministry of Defence and National Security Head 6: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The Ministry notes and agrees to the recommendations and are currently preparing to publish names of valid Master License holders as required under the Act.
The Ministry have identified various areas that had contributed to the issues raised and have taken measures through recent appointments of vacant positions.

The Ministry will also work closely with the Office of the Solicitor General to strengthen the security units’ enforcement powers.
Officer Responsible Acting Manager Security 6.11 Meetings of the Security Industry Registration and Licensing Board The functions of the Board are to consider and determine applications for the grant of security licences.3 We noted that the Security Industry Registration and Licensing Board had met only twice during the financial year.

The meetings were held on 22 November 2017 and 03 May 2018.

However, minutes of the board meeting that was held on 03 May 2018 were not provided for review.
Root cause/Implication This is attributed to the lack of planning and the absence of a detailed Standard Operating Procedures for the Division to ensure that the application for master licenses are processed and approved by the Board on a timely basis.

Due to the limited number of board meetings, as at audit date (22/05/19), a total of 21 application for the Security Master License were yet to be approved.
Recommendation The Ministry should ensure that proper plans are put in place so that the Board meets regularly to avoid the delays in the approval process for the license.

Agreed Management Action The Ministry agrees with the recommendation and have firstly addressed the appointment of new board members.

The schedule will also be part of the agenda for the first board meeting and this will ensure timely decisions are made with regards to this issue.
Officer Responsible Acting Manager Security 3 Security Industry Act 2010 - Section 8 Ministry of Defence and National Security Head 6: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR 6.12 Control weaknesses over the receipting process The lodgement forms shall be checked and signed by the Accounts Officer (who must not also be responsible for collecting revenue).
Cash to be deposited shall be counted before the Accounts Officer signs the lodgement forms.4 The Accounts officer shall maintain a revenue collectors’ chart to monitor the regularity of revenue lodged by the Assistant Account Officer (Payment).5 The Assistant Account Officer Payments (revenue collectors) shall bank money received on a daily basis at least.
The lodgement form shall be prepared in triplicate detailing the deposits to be made.6 Review of the revenue receipt books and related records of the Ministry noted the following weaknesses:  The bank lodgement form is not properly checked and signed by the accounts supervisors/officer in charge before/after the lodgement.

 The revenue collectors’ chart has not been updated and therefore the completeness of the revenue collected cannot be confirmed.
 Delay in banking of the receipted money was also noted.

Root cause/Implication The above internal control weaknesses are attributed to the lack of oversight by supervising officers which may result in loss of government revenue.

Recommendations The Ministry should ensure that:  supervisory checks are strengthened to ensure that all the bank lodgment forms are checked and signed by the accounts supervisors both before and after the lodgment.

the revenue collectors’ chart is updated on a regular basis.
  banking of money is done on a daily basis.

Agreed Management Action The Ministry acknowledges the finding for the anomalies noted in revenue receipting process from the Audit Team.

Corrective action will be taken to ensure that the responsible officer will see that such actions does not reoccur in the future.
Officer Responsible Senior Accounts Officer 4 Ministry of Defence & National Security Draft Finance Manual 2018 - Section 5.4.3 5 Ministry of Defence & National Security Draft Finance Manual 2018 - Section 5.6.1 6 Ministry of Defence & National Security Draft Finance Manual 2018 - Section 5.4.2 Ministry of Defence and National Security Head 6: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 7 Ministry of Employment, Productivity and Industrial Relations Roles and Responsibilities The Ministry of Employment, Productivity and Industrial Relations is responsible for upholding the constitutional right of every Fijian to economic participation, a just minimum wage, humane treatment in the workplace and proper working conditions.
The Ministry promotes and advances the rights of workers and employers, and administers and enforces the Employment Relations Promulgation 2007, Health and Safety at Work Act 1997, National Employment Centre Decree 2009 and the Workers Compensation Act (Cap.

94).
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 7.1 Statement of Receipts and Expenditure .................................................................................. 2 7.2 7.3 Appropriation Statement .......................................................................................................... 3 7.4 Main Trust Fund Account........................................................................................................... 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 7 Internal Controls ........................................................................................................................ 7 7.5 7.6 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 8 7.7 Quality of draft financial statements by entities ...................................................................... 9 Timeliness of draft financial statements ................................................................................... 9 7.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 9 7.9 PART C: OTHER SIGNIFICANT MATTERS ............................................................................................. 10 7.10 Anomalies in payroll reconciliations ......................................................................................... 10 7.11 Anomalies in retirement of accountable advance .................................................................. 11 7.12 Stale cheque not cleared .......................................................................................................... 12 PRIOR YEAR UNRESOLVED ISSUES
 ...................................................................................................... 13 7.13 Shared Services Revenue Recorded in OHS consultancy services Trust Fund ...................... 13 7.14 Presentation of Main Trust Accounts ...................................................................................... 14 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: 7.1 Audit Opinion FINANCIAL STATEMENTS The audit of the 2018 accounts of the Ministry of Employment, Productivity and Industrial Relations resulted in a qualified audit report.
The qualifications were as follows: • The Ministry received a sum of $60,000 from the Ministry of Civil Service under the Shared Services Agreement.

The Ministry receipted the service fees into the OHS Consultancy Trust Fund Account instead of the Consolidated Fund Account.

Consequently, including the amount received and accumulated over the years, the OHS Consultancy Trust Fund Account is overstated by $130,000 and Ministry’s operating revenue is understated by the same amount.
• The reconciliation of the main trust bank balances is not effective for the National Employment Centre, Employment Relations Tribunal, Occupational Health and Safety, Workmen Compensation, Wages Dispute and OHS Consultancy Trust Fund Accounts.

Proper cash books were not maintained for each trust account, satisfactory explanations were not provided for variances totaling $119,783, stale cheques were not cleared and receipts and payments were not posted in the general ledger on a timely basis.
As a result, I was not able to ascertain the completeness of the respective trust fund receipts and payments and whether it has been accurately accounted and disclosed in the trust fund cash balance of $9,201,780 as at 31 July 2018.

Also, other matter was reported where internal controls over payroll were generally found to be weak.

This was due to payroll reconciliations not being prepared on a timely basis, overpayment of salary and lack of due diligence in recruitment.
These internal controls weakness if not addressed promptly may result in material misstatements and possible financial losses in the future.

Statement of Receipts and Expenditure 7.2 The Ministry of Employment, Productivity and Industrial Relations collected revenue totalling $15,849 and incurred a total expenditure of $13,605,112 for the year ended 31 July 2018.

Details are provided in Table 7.1.
Table 7.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Value Added Tax Total Expenditure 31 July 2018 ($) 520 15,329 15,849 31 July 2017 ($) 947 8,625 9,572 5,687,975 339,309 657,477 722,498 1,143,519 22,250 4,714,267 5,496,334 288,046 433,878 621,507 1,000,582 22,697 4,691,001 13,287,295 12,554,045 317,817 316,107 13,605,112 12,870,152 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 7.3 Appropriation Statement The Ministry of Employment, Productivity and Industrial Relations incurred expenditure totalling $13.6 million in 2018 against a revised budget of $16.4 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $2.8 million or 17%.
The savings was mainly due to the high number of vacant posts due to resignation and expiry of contracts which were not filled during the year.

For Special Expenditure, the Ministry anticipated an increase payout in workmen compensation but this did not eventuate as less claims were made.

Details of expenditure against the revised budget are provided in Table 7.2.
Table 7.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 7,714,806 283,188 Changes ($) (735,715) 104,515 Revised Estimate ($) 6,979,091 387,703 Actual Expenditure ($) 5,687,975 339,309 Lapsed Appropriation ($) 1,291,116 48,394 422,795 393,089 815,884 657,477 158,407 4 Maintenance & 527,200 471,504 998,704 722,498 276,206 5 6 7 13 Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Operating Total Expenditure Value Added Tax TOTAL 1,435,772 (171,645) 1,264,127 1,143,519 120,608 55,000 (32,748) 22,252 22,250 2 5,351,851 15,790,612 (29,000) 5,322,851 --- 15,790,612 4,714,267 13,287,295 696,387 16,486,999 --- 696,387 --- 16,486,999 317,817 13,605,112 608,584 2,503,317 378,570 2,881,887 The Ministry collected revenue totalling $15,849 in 2018, an increase of 66% from the previous year.
7.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
The Ministry operates and maintains the following trust fund bank account: 7.4.1 National Occupational Health & Safety Education and Accident Prevention Trust Fund Account This liability account is responsible for the promotion of OHS and enforcement of the Health and Safety at Work Act 1996 and its subsidiary legislation.
The National Occupational Health & Safety Education Unit aims to promote and maintain a working environment, which is healthy and safe for both workers and employers and directly contributes to improved productivity.
Ministry of Employment, Productivity and Industrial Relations Head 7: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 7.3: National Occupational Health & Safety Education and Accident Prevention Trust Fund Account - Statement of Receipts and Payments Description Receipts OHS Trust Fund Total Receipts Payments OHS Trust Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 1,348,749 1,348,749 1,212,196 1,212,196 578,468 578,468 770,281 6,129,273 6,899,554 416,854 416,854 795,342 5,333,931 6,129,273 7.4.2 Employment Relations Agency Trust Fund Account In instances whereby employment disputes and employment grievances are not resolved by the Mediation Service, the Employment Relations Tribunal assists employers or their representatives and workers or their representative trade union by adjudicating and determining the grievance or dispute between parties.
In adjudication proceedings, there is also a requirement on the Tribunal to provide mediation assistance to the disputing parties when the need arises.

In this regard the Tribunal assists disputing parties to amicably settle matters and these settlements are documented as binding awards or decisions.
Table 7.4: Employment Relations Agency Trust Fund Account - Statement of Receipts and Payments Description Receipts ERT Trust Fund Total Receipts Payments ERT Trust Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 132,437 132,437 107,251 107,251 83,756 83,756 48,681 508,527 557,208 451 451 106,800 401,727 508,527 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 7.4.3 National Employment Centre Trust Fund Account The National Employment Centre operates under the National Employment Centre Act 2009.
The Centre is responsible for providing employment skills training and facilitating employment opportunities for the unemployed.

The Centre offers three services – Formal Employment Service, Foreign Employment Service and Fiji Volunteer Service.

Unemployed persons who register under the National Employment Centre undertake professional counselling, aptitude assessment, life skills training and are trained in the relevant employment skills demanded by the labour market.
Moreover, the Centre provides opportunities for the unemployed to do volunteer services, work attachment, and facilitates opportunities for employment both locally and internationally.
Table 7.5: National Employment Centre Trust Fund Account - Statement of Receipts and Payments Description Receipts NEC Trust Fund Total Receipts Payments NEC Trust Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 11,962 11,962 6,454 6,454 5,508 222,798 228,306 80,777 80,777 68,203 68,203 12,574 210,224 222,798 7.4.4 OHS Consultancy Services, Workmen’s Compensation and Wages Dispute Trust Fund Account • Occupational Health and Safety (OHS) Consultancy Trust Account: Used to facilitate the payment of overtime hours, meal allowances, transport allowances, and accommodation which is paid by companies into OHS Trust account when OHS Inspectors have performed services to the companies.
Funds are transferred from OHS Trust Account to OHS Consultancy to pay the OHS inspectors.

• Work Compensation Trust Account: Workmen’s Compensation Act (Cap.

94) places on employers the legal responsibility to compensate workers who sustain injuries, lose their lives or contract diseases in the course of their employment.

Compensation is through monetary payments and medical care provisions for the injured workers.
Cases involving the death of a worker, monetary payments are given to the dependents’ of the deceased worker.

• Wages Dispute Trust Account: Wages Unit is responsible for setting minimum wages and other terms and conditions of employment in Fiji’s employment sector.

It ensures workers are actually provided with the stipulated Wages Regulations terms and conditions.

Any payment received from employer after dispute on wages is resolved by the Wages unit and is paid out to the respective employee.
Ministry of Employment, Productivity and Industrial Relations Head 7: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 7.6: OHS Consultancy Services, Workmen’s Compensation and Wages Dispute Trust Fund Account - Statement of Receipts and Payments Description Receipts Workmens Compensation Wages Dispute OHS Consultancy Total Receipts Payments Workmen Compensation Wages Dispute OHS Consultancy Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 3,993,405 4,388,376 463,166 121,097 4,660,839 4,972,639 592,439 74,995 700,482 159,652 4,891,544 3,815,895 413,874 17,554 5,751,678 4,247,323 725,316 2,607,553 1,882,237 1,516,714 2,607,553 (1,090,839) 7.4.5 Child Labour Unit Trust Fund Account The Child Labour Unit is responsible for monitoring, training and development for the labour inspectorate and stakeholders on all aspects of child labour issues under the ERP 2007 and Health and Safety at Work Act 1996, for promotion and advocacy on issues of child labour in Fiji and also for the maintenance of child labour information system in Fiji with the aim of maintaining proper and effective management of the child labour cases.
The unit conducts investigation and prosecution on child labour cases, provides awareness programmes for stakeholders and members of the public on the aspects of child labour laws and ensures that issues related to child protection are properly addressed.
Table 7.7: Child Labour Unit Trust Fund Account - Statement of Receipts and Payments Description Receipts Child Labour Unit Trust Fund Total Receipts Payments Child Labour Unit Trust Fund Total Payments Net Deficit Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) --- --- 1,570 1,570 (1,570) 2,342 772 133 133 2,438 2,438 (2,305) 4,647 2,342 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 7.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

• Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
• Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
• Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Employment, Productivity and Industrial Relations Head 7: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls • Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 7.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were: • Closing date for journal adjustments by 10 August 2018 • Clearance of Inter-departmental clearance accounts by 3 August 2018 • Clearance of stale cheques by 22 August 2018 • Annual Board of Survey on Drawings Account cheques by 22 August 2018 • Retirement of imprests by 20 July 2018 • Cancellation of unprocessed purchase orders by 27 July 2018 • Processing of payments and virements by 31 July 2018 • Completion of reconciliations by 29 August 2018 • Submission of arrears of revenue returns by 31 August 2018 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 7.7 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 7.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 7.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of Employment, Productivity and Industrial Relations Head 7: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2018.
7.10 Anomalies in payroll reconciliations The salary reconciliation must reconcile the difference between the previous fortnight payroll report and the current report, and must be prepared prior to each pay date.1 The Accounting Head must ensure that payroll reconciliations are carried out fortnightly for salaries and weekly for wages and copies sent to the Ministry of Economy.2 Our review of payroll reconciliations noted the following weaknesses: • • • salary reconciliations for Pay 13/18, Pay 14/18 and Pay 15/18 were not prepared.
the wages reconciliations for Pays 31/17 – 46/17, 48/17 – 51/17, 21/18, 23/18 – 30/18 were not prepared.

there was significant delay in the preparation of the reconciliations for other pays.

Root cause/Implication The delay and non-preparation of reconciliation is due to the lack of staff in the Salaries Section as there is only one Assistant Accounts Officer handling all the payroll matters for both Established and Government Wage Earners of the Ministry.
The risk of fraudulent payroll payments being made, errors and omissions not detected on a timely basis is very high.

Recommendations The Ministry should ensure that: • • • reconciliations are prepared before the next pay date.

staffing in the Salaries Section is reviewed and strengthened.

internal controls over payroll is reviewed and duties are segregated.
1 Ministry of Employment Finance Manual 2013 – Section 4.1.4 2 Finance Instructions 2010 – Section 17 (7) Ministry of Employment, Productivity and Industrial Relations Head 7: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action Finance policies and SOPs are currently under review.

Management is currently reviewing its organizational structure together with staffing; lack of staff is an issue.
Officer Responsible Senior Accounts Officer 7.11 Anomalies in retirement of accountable advance A travelling officer shall recoup the travel advance within seven days of completing travel by submission of an acquittal report with supporting documents.
If an advance has not been fully expended, the travelling officer must repay the balance within seven days of completing travel.3 Where an advance has not been acquitted within seven days of travel, the salaries clerk shall inform the Senior Accounts Officer to effect recovery of unretired amount with an interest of 12% per annum, through a salary deduction from the concerned officer’s salary within six (6) fortnights.
Interest on all advances will accrue at the rate set by the Minister of Finance from time to time.

The current rate is 12 % per annum.4 Our review of accountable advances noted the following: • • the Ministry cleared the accountable advances totaling $15,239.54 at year-end to expenditure allocations without relevant source documents.

Furthermore, it was noted that interest of 12% was not charged to the officers as approved by the Permanent Secretary for Ministry of Employment and Productivity.
the accountable advance register was not maintained up-to-date as it was only updated till 31/05/18 as at the date of audit on 12 March 2019.

Root cause/Implication This finding is a result of responsible officers not being vigilant in their work and the lack of supervisory checks to ensure that clearance of advance is done properly and on time.

As a result, it cannot be confirmed whether the accountable advances were retired to the rightful expenditure allocations.
Recommendations The Ministry should: • comply with the approval of the Permanent Secretary and effect salary recovery actions against the relevant officers to clear the accountable advances.

• ensure that advances are retired within the 7 day period from the date of return.

• update the accountable advance register on a regular basis.
3 Ministry of Employment Finance Manual 2013 – Section 9.1.12 – 9.1.13 4 Ministry of Employment Finance Manual 2013 – Section 9.1.15 – 9.1.16 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action Notice has been issued for those who fail to abide by the 7 days period as required.
Officer Responsible Senior Accounts Officer 7.12 Stale cheque not cleared If cheques remain in the unpresented cheque list for more than 3 months, the Senior Accountant must attempt to locate the payees and have their cheques presented before they become stale.
The Senior Accountant shall review the unpresented cheque list and determine whether a replacement cheque should be issued for cheques that are stale.5 In 2017, the Ministry prepared a cheque – 11610 dated 20/09/17 amounting to $70,000 to transfer the shared services fee from OHS consultancy trust to operating fund.

We noted that the cheque has become stale and has it has not been cleared or adjusted in the trust liability and cash general ledger for the OHS consultancy trust.
Root cause/Implication This is due to the ineffective reconciliation of OHS Consultancy Trust Fund bank account and lack of proper supervision.

As a result, both the OHS consultancy trust liability and cash general ledger is understated by the same amount.

Recommendations The Ministry should ensure that: stale cheques are cleared on a timely basis.

• • proper reconciliation of the trust fund is carried out and supervisory check is strengthened.
Agreed Management Action Accounts unit have identified gaps in our internal control and is currently developing a remedial plan, Internal control, including oversight to ensure timely clearance is effected.
Officer Responsible Senior Accounts Officer 5 Ministry of Employment Finance Manual 2013 – Section 6.5.1 – 6.5.2 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PRIOR YEAR UNRESOLVED ISSUES 7.13 Shared Services Revenue Recorded in OHS consultancy services Trust Fund Trust money is money that the agency is holding in trust (it does not include creditor payments such as salary deductions or money that is held in a separate “trust fund” which is not a true trust).
As stipulated in the Act and Finance Instructions, trust money is to be kept in a separate bank account and accounted for separately from “public money” and “other money”.6 Income is defined as increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

The definition of income encompasses both revenue and gains.
Revenue arises in the course of the ordinary activities of an entity.

The Ministry has a shared service arrangement with the Ministry of Civil Service where it provides services including Accounts, Human Resources and IT related functions at a fee of $70,000 per annum.

We noted that for the year ended 31 July 2017 and 2018, the Ministry deposited the shared services revenue of $70,000 and $60,000 respectively into the OHS consultancy trust fund account instead of the Consolidated Fund Account.
The OHS Consultancy Trust Fund Account maintains the funds paid by companies to facilitate the payment of overtime hours, meal allowances, transport allowances, and accommodation for OHS Inspectors when they perform OHS related services outside their normal working hours.

The recording of shared services revenue contradicts the nature and purpose of the account.
Root cause/Implication Due to the incorrect recording of revenue, the Ministry’s operating revenue is understated whilst the OHS consultancy trust fund liability is overstated by $130,000.

Recommendation The Ministry should reverse the shared services revenue recorded in the OHS consultancy trust fund and deposit it in the Consolidated Fund Account of government.

Update/Status The Ministry is liaising with Ministry of Economy and Ministry of Civil Service to have this funds moved to their budget.
The shared service arrangement will come to an end from 2019 – 2020 financial year as the payroll for doctors, leave administrations and training has been reverted back to Ministry of Health.
6 Ministry of Employment Finance Manual 2013 – Part 14 Trust Accounts Ministry of Employment, Productivity and Industrial Relations Head 7: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 7.14 Presentation of Main Trust Accounts Trust money is money that the agency is holding in trust (it does not include creditor payments such as salary deductions or money that is held in a separate “trust fund” which is not a true trust).
As stipulated in the Act and Finance Instructions, trust money is to be kept in a separate bank account and accounted for separately from “public money” and “other money”.7 The Accountant shall prepare bank reconciliation within 5 days of the end of the month.

Details of unpresented cheques and other reconciling items should be attached to the reconciliation statement.

Once the bank reconciliation is prepared, it should be signed and dated by the Accountant and submitted to the Senior Accountant.
The Senior Accountant 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.8 As at balance date, the Main Trust Account balances for Ministry of Employment, Productivity and Industrial Relations was $9,470,495.
These funds relate to receipts and payments for Workmen’s Compensation, Wages dispute, Occupational Health and Safety Consultancy, Occupational Health and Safety Trust, Employment Relations Tribunal, National Employment Centre and Child Labour.
Our review of the current presentation of the Main Trust Fund revealed the following: • • The Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one line item on the Statement even though the nature of the trust receipt and payment may vary.
For OHS Consultancy Service, Workmen Compensation and Wages Disputes trust funds, the Ministry maintains one bank account and provides a consolidated statement of trust receipts and payments in its Agency Financial Statements.

Separate statements are not presented for each trust type with the receipts and payments to be classified by the nature of receipt and expenditure.
Moreover, with the various trust funds being deposited into one bank account, there is a risk of funds for a particular trust being utilised for the other trust funds.

In 2017, an unreconciled variance of $381,087 was noted between the cash at bank balance and general ledger (FMIS).

In 2018, the variance noted between these two records was $105,840.
In 2018, the reconciliation of the main trust bank balances was not effective for the National Employment Centre, Employment Relations Tribunal, Occupational Health and Safety, Workmen compensation, Wages dispute and OHS consultancy trust fund accounts.

Proper cash books were not drawn for each trust account, unaccounted variances were not satisfactorily explained, stale cheques were not cleared and the receipts and payments were not posted in the general ledger on a timely basis.
• • Root cause/Implication The current presentation of the trust fund accounts are deemed inadequate and does not provide adequate and useful information to the users of the Ministry’s financial statements.

As a result, the accuracy of the OHS Consultancy Service, Workmen Compensation and Wages Disputes trust funds cash at bank balance cannot be ascertained.
7 Ministry of Employment Finance Manual 2013 – Part 14 Trust Accounts 8 Ministry of Employment Finance Manual 2013 – Section 6.4.7 - 6.4.10 Ministry of Employment, Productivity and Industrial Relations Head 7: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations • The Ministry should work towards maintaining separate bank accounts for all each trust accounts and submit separate statements accordingly.
• The trust receipts and payments should be classified by nature.

• The variance in cash at bank balance noted should be investigated and rectified.

Update/Status The Ministry is still in discussion with Ministry of Economy on having the 3 accounts separated.

As recommended we will provide a detailed statement of receipts and payment for the trust fund account in 2018-2019 financial statements.

The Assistant Account Officer is working towards resolving the variance noted.
Officer Responsible Senior Accounts Officer Ministry of Employment, Productivity and Industrial Relations Head 7: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 8 Ministry of Foreign Affairs Roles and Responsibilities The Ministry of Foreign Affairs promotes Fijian interests in other nations and on the world stage.
This includes a broad range of activities from providing consular services to Fijians living overseas to organizing high-level visits to Fiji.

The Ministry develops and carries out Fiji’s foreign policy and manages Fiji’s relationships with other nations and with multi-national and sub-regional organisations like the United Nations and the Melanesian Spearhead Group.

The Ministry is focused on securing the maximum benefits for Fiji from these relationships.
The Ministry maintains diplomatic relations with as many countries as possible and in co- ordination with the line ministries focuses on promoting and advancement of Fijian interests in the areas of tourism, employment opportunities, and investment and trade.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 8.1 Audit Opinion ............................................................................................................................. 2 8.2 Statement of Receipts and Expenditure .................................................................................. 2 8.3 Appropriation Statement .......................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 5 PART B: Internal Controls ........................................................................................................................ 5 8.4 8.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 6 8.6 Quality of draft financial statements by entities ...................................................................... 7 8.7 Timeliness of draft financial statements ................................................................................... 7 8.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 7 OTHER SIGNIFICANT MATTERS ......................................................................................... 8 8.9 Un-reconciled Variance in Overseas Mission Bank Reconciliation .......................................... 8 8.10 Anomalies noted in Procurement of Goods and Services ...................................................... 10 8.11 Anomalies in Domestic Allowance ........................................................................................... 11 8.12 Fixed Asset Register not Updated ........................................................................................... 12 8.13 Operating Trust Balances Carried Forward from Prior Years ................................................. 14 8.14 Absence of Risk Management
 Framework ............................................................................. 15 8.15 Revenue Collected by Overseas Missions not Formalised ..................................................... 16 TRUST FUND ACCOUNT BALANCES CARRIED FORWARD .................................. 18 APPENDIX 8.1: PART C: Ministry of Foreign Affairs Head 8: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 8.1 Audit Opinion The audit of the 2018 accounts of the Ministry of Foreign Affairs resulted in an unqualified audit report.
However, attention was drawn to the following matters: 1.

Internal controls over procurement of goods and services were generally found to be weak.

This relates to Local Purchase Orders not attached to payment vouchers, competitive quotations not obtained, payments were not adequately supported and rental agreements for overseas missions were not provided for audit verification.
These internal controls weakness, if not addressed promptly, may result in material misstatements and possible financial losses in the future.

2.

An unreconciled variance of $3,725,421 exists between the FMIS general ledger balance of $7,208,398 and the accumulated bank reconciliation balance of $3,482,977.

The Overseas Mission bank accounts facilitate the payment of expenditures of Missions and record the transfer of funds from the Consolidated Fund Account.
The variance identified in the Overseas Mission’s bank account have been recurring for many years and not much effort has been undertaken by the Ministry to resolve the matter.

8.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $369,655 and incurred a total expenditure of $40,396,601 for the year ended 31 July 2018.

Details are provided in Table 8.1.
Table 8.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2018 ($) 49,354 320,301 369,655 13,386,287 3,655,727 3,939,577 10,994,967 1,018,904 5,489,038 799,673 39,284,173 140,536 190,162 330,698 31 July 2017 ($) 10,310 380,969 391,279 13,977,868 3,645,770 3,308,133 10,760,180 672,734 5,467,608 1,029,149 38,861,442 76,018 309,456 385,474 Value Added Tax 781,730 1,159,328 Total Expenditure 40,396,601 40,406,244 Ministry of Foreign Affairs Head 8: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR In comparison with financial year 2016/2017, no major variation was noted in the revenue generated and expenditure incurred in the 2017/2018 financial year.
Administration Fees collected by the Ministry is related to services provided by Fiji Overseas Missions in processing of passports and visas, birth certificates and police clearances.

Expenditure was mostly related to the operations of the Ministry.

8.3 Appropriation Statement The Ministry incurred expenditure totalling $40.4 million in 2018 against a revised budget of $43.9 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $3.5 million or 8%.
Savings of $203,524 or 20% was noted under Special Expenditure, which was attributed to savings derived from funds budgeted for Protocol & Hospitality expenses, Melanesian Spearhead Group meeting, Prime Minister – Papua New Guinea State Visit, Goods and Services Tax for Fiji High Commissions in Canberra and Papua New Guinea.
in Savings of $159,464 or 53% under Capital Construction was attributed to the delay implementation of the planned refurbishment work for Fiji House and Chancery in Brussels which were estimated to cost around $150,000 (requested amount €81,288.40).

There was an issue with the provision of relevant documentations required by Ministry of Economy to facilitate the approval of the Requisition to Incur Expenditure (RIE) which resulted in delay in the release of funds.
The delay was also attributed to the process required for seeking tender board approval from Fiji Procurement Office.

Savings of $83,853 or 31% under Capital Purchase was attributed to delay in the finalisation and approval of purchases of furniture from a local supplier of high quality furniture.
A verbal agreement by the Honourable Prime Minister with some Missions after his visits in 2018 was to purchase the products from this particular supplier with the aim of showcasing Fiji’s artefacts to the world.

Further discussions were made on this matter before a request for waiver was made in early 2019 for the waiver of tender approval for the purchase.

However, this did not eventuate in prior to the closure of the 2017-2018 financial year hence the purchases of office furniture was delayed.
Details of expenditure against the revised budget are provided in Table 8.2.
Table 8.2: Appropriation Statement for 2018 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers & Budget Estimate ($) 16,149,606 4,260,072 Changes ($) Revised Estimate ($) (2,036,333) 14,113,273 4,022,831 (237,241) Actual Expenditure ($) 13,386,287 3,655,727 Lapsed Appropriation ($) 726,986 367,104 2,643,769 1,736,204 4,379,973 3,939,577 440,396 11,050,451 374,443 11,424,894 10,994,967 429,927 946,290 369,087 1,315,377 1,018,904 296,473 5,927,678 (325,150) 5,602,528 5,489,038 113,490 Ministry of Foreign Affairs Head 8: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR SEG Item 7 Special Expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 8 9 13 Budget Estimate ($) 1,008,222 41,986,088 Changes Revised Estimate ($) 1,003,197 (124,015) 41,862,073 ($) (5,025) Actual Expenditure ($) 799,673 39,284,173 Lapsed Appropriation ($) 203,524 2,577,900 300,000 150,000 450,000 - 124,015 124,015 300,000 274,015 574,015 140,536 190,162 330,698 159,464 83,853 243,317 1,448,900 43,884,988 - 1,448,900 - 43,884,988 781,730 40,396,601 667,170 3,488,387 Ministry of Foreign Affairs Head 8: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 8.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Foreign Affairs Head 8: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reporting to management of agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry of Foreign Affairs as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 8.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 – 2018 accounts and times were detailed.

The final day for closing the 2017 -2018 accounts was 24 August 2018.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018;  Clearance of Inter-departmental clearance accounts by 3 August 2018;  Monitoring of unpresented cheques by 31 July 2018;  Clearance of stale cheques by 22 August 2018;  Annual Board of Survey on Drawings Account cheques by 22 August 2018;  Retirement of imprest by 20 July 2018;  Cancellation of unprocessed purchase orders by 26 July 2018;  Processing of payments by 31 July 2018;  Processing of virements by 20 July 2018;  Completion of reconciliations by 29 August 2018; and Ministry of Foreign Affairs Head 8: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Submission of arrears of revenue returns by 31 August 2018.
When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 8.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry of Foreign Affairs was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 8.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally Effective Acceptable draft financial statements received on or before 31 October 2018 8.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 14 days from issue of Draft Management Letter Rating  Effective Timeliness of Signed Financial Statements Received Within 15 days from issue of Financial Statements for signing Ministry of Foreign Affairs Head 8: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2018.

8.9 Unreconciled Variance in Overseas Mission Bank Reconciliation All bank accounts must be reconciled monthly.
The bank reconciliation shall list the outstanding cheques and other reconciling items and be signed and dated by the responsible officer.1 Unreconciled items must be investigated and resolved promptly.2 The Principal Accounts Officer must verify balances in the bank reconciliation to the cashbook, bank statements, un-presented cheque list and the previous month’s bank reconciliation before certifying it.3 The overseas mission’s bank accounts facilitate the payment for mission expenditure and the transfer of monies from the consolidated fund account.
At the end of the month, the expenditure is journalised to respective budgetary expenditure allocation.

Our review of the Ministry’s overseas missions’ bank accounts revealed an unreconciled variance of $3,482,977 between the FMIS general ledger balance $7,208,398 and the bank reconciliation of $3,725,421.

Refer to Table 8.3 for details.
Table 8.3: Variance between Bank Reconciliation and FMIS General Ledger Account Number Missions 1-08103-80102-510106 Fiji Consulate General Sydney 1-08103-80101-510107 Canberra Cash Account 1-08103-81001-510202 1-08103-80501-510401 Tokyo Cash Account London Cash Account 1 Finance Instruction 2010, Section 32 (6) 2 Finance Instructions 2010, Section 58 (3) 3 Ministry of Foreign Affairs Finance Manual 2013, Section 5.3.10 Ministry of Foreign Affairs FMIS Balance as at 31/07/18 ($) 919,009 277,919 337,551 566,102 Bank Reconciliation as at 31/07/18 Variance ($) ($) --- 919,009 258,043 20,480 482,563 19,876 317,071 83,540 Head 8: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Account Number Missions 1-08103-80701-510502 Wellington Cash Account 1-08103-80201-510504 Beijing USD Cash Account 1-08103-80301-510601 Brussels Cash Account 1-08103-81101-510801 New York Cash Account 1-08103-81102-510802 Washington Cash Account 1-08103-80407-510808 Geneva Cash Account 1-08103-80301-510901 Addis Ababa Cash Account 1-08103-80405-510901 Abu Dhabi Cash Account 1-08103-80406-510901 Seoul Cash Account 1-08103-80601-510901 Kuala Lumpur Cash Account 1-08103-80801-510902 PNG Cash Account 1-08103-80402-510905 Jakarta Rupiah Cash Account FMIS Balance as at 31/07/18 ($) 732,764 395,864 205,831 272,010 191,628 422,545 453,000 798,989 555,235 336,336 56,074 352,184 Bank Reconciliation as at 31/07/18 Variance ($) ($) 546,501 29,163 64,394 102,308 97,445 381,537 133,685 310,136 421,029 316,061 187 221,169 186,263 366,701 141,437 169,702 94,183 41,008 319,315 488,853 134,206 20,275 55,887 131,015 1-08103-80403-510906 Brazil USD Cash Account 1-08103-80401-510910 New Delhi Rental Account Overseas Bank Balances Total 256,463 78,894 7,208,398 246,156 94,564 10,307 (15,670) 3,725,421 3,482,977 The Fiji Consulate General Sydney was closed and transferred to the Ministry of Industry, Trade & Tourism during the month of April 2016.
However, balance of $919,009 was still appearing under the Ministry’s head in the FMIS general ledger.

Root Cause/Implication The anomalies indicate lack of verification and supervisory checks in postings made in the FMIS general ledger and timely regularisation of the accumulated variance from past years.

Hence, we could not ascertain the accuracy of the balances reflected in the FMIS general ledger.
Recommendations The Ministry should:  liaise with Ministry of Economy to rectify the above variance in bank reconciliation records;  ensure that overseas missions bank balance is reconciled with the FMIS general ledger bank balance on a monthly basis and any foreign exchange gain or loss are adjusted immediately; and  ensure that the balance of accounts at Fiji Consulate General Sydney are transferred to the Ministry of Industry, Trade & Tourism in consultation with the Ministry of Economy.
Agreed Management Action The variances identified in the Mission’s Bank account reconciliations with General Ledger have been recurring over the years.

Unfortunately not much effort has been undertaken to resolve the matter.

It is noted that through this system that Missions with more than one Bank Account are reconciled against one General Ledger account.

In such instances, it is obvious that it will be difficult to reconcile these accounts.
Ministry of Foreign Affairs Head 8: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The Ministry has now introduced a new format of recording in the General Ledger system with changes also made to reconciliation prepared locally.

The new format individually reflects transactions in the system and aligning balances with Bank account.
The Ministry feels that it would be appropriate that even though the new format of posting has been implemented, the unreconciled variances accumulated in the past still needs to be rectified.

In this regard, the Ministry is consulting Ministry of Economy on the way forward of removing these variances and starting afresh.

Although the new format of postings is currently addressing the issue, it is important to note that the accumulated variances from the past will remain.
In our consultations with Ministry of Economy, we are proposing the removal of left over funds of the Consulate General Sydney account from the Ministry’s General Ledger account as the account now falls under the Ministry of Industry and Trade accounts.

Officer Responsible Principal Accounts Officer 8.10 Anomalies noted in Procurement of Goods and Services All payments must be processed through payment vouchers prepared by the Clerical Officer Payments/Ledgers.
Separate vouchers are to be used for separate payees and for the payment of different services.4 The Clerical Officer Payments/Ledgers preparing a payment voucher must ensure that all information required under Finance Instruction 14-(1) has been included on the payment voucher or attached to it, before passing it to the SAO for certification.
5 The Principal Accounts Officer, Senior Accounts Officer & Accounts Officer must not certify a payment as correct unless they are satisfied that: i. it is in accordance with an LPO, indent, contract, invoice or other authorisation; ii.

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

sufficient uncommitted funds are available for payment of the account; iv.
the account is not fraudulent and has not been previously paid; the expenditure account it is charged to is correct.6 Our review of the Ministry expenditures during the period indicated instances where:  Local Purchase Orders (LPOs) were not attached to the payment vouchers;  Competitive quotes were not obtained; and  No supporting documents attached to the payment voucher to substantiate the payment made.

Refer to Appendix 8.1 for examples.
4 Ministry of Foreign Affairs Finance Manual 2013, Section 2.9.3 5 Ministry of Foreign Affairs Finance Manual 2013, Section 2.9.4 6 Ministry of Foreign Affairs Finance Manual 2013, Section 2.9.5 Ministry of Foreign Affairs Head 8: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication The above findings indicate that responsible officers have not complied with the provisions of the Finance Manual (2013).
Such non-compliance could be catalyst to abuse, misappropriation and could result in wastage of taxpayer’s funds.

Recommendations  The Director Finance should ensure that the Ministry complies with its Finance Manual, procurement procedures and instructions at all times.

 The internal control procedure in the Accounts Section, specifically supervisory checks should be strengthened and appropriate disciplinary actions taken if the responsible officers continue to breach financial regulations.
Agreed Management Action The Ministry has reviewed its internal system and processes and has put in place a more proactive approach in ensuring that there are no overlapping of task, internal control measures such as rotation of duties and thorough checks are made at all levels - from desk officers right up to the Supervisors on any payment to be made.

With the system in place, the Ministry is confident that it will address the anomalies highlighted.
Officer Responsible Principal Accounts Officer 8.11 Anomalies in payment of Domestic Allowance Domestic help allowance is payable only to Heads of Missions to assist Heads of Mission “employ” a domestic help or maid to assist his or her spouse in carrying out daily chores.7 We noted that the Ministry pays Head of Missions a sum of FJ$8,000 domestic allowance annually as part of post allowance.
Audit was not able to determine the basis upon which the Ministry has arrived at the current rate for domestic allowances.

The Regulation is vague and does not clearly highlight the responsibilities of the Ministry and Heads of Missions in the engagement of a domestic help or maid.

There is lack of guidance and direction on this matter by the Ministry.
Root Cause/Implication Fiji Public Service (Diplomatic and Consular Services) Regulations 2005 has not been revised and interpretations are not sought from the Solicitor General in case of ambiguity.

With the inadequate guidance and direction on the engagement of domestic help or maid, there is a risk of the Ministry incurring liabilities particularly when the host countries labour law are breached.
7 Fiji Public Service (Diplomatic and Consular Services) Regulations 2005, Section 55 (2) Ministry of Foreign Affairs Head 8: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations The Ministry should:   review and update the Fiji Public Service (Diplomatic and Consular Services) Regulations 2005; and seek formal interpretation and directive to regularise the payment of domestic allowance.
Agreed Management Action The Fiji Overseas Service Regulations states under Section 55 (2) that the Domestic help allowance is payable only to Head of Missions to assist them in employing a domestic help/maid.
The reality on the ground is that:  employing a maid on a formal basis will mean Head of Missions paying far more than the FJ$8,000 annual Domestic allowance and goes through tedious process;  maids are normally engaged by the Head of Missions on his/her own informal/personal arrangement –  without employment contracts; some Head of Missions engage their relatives coming over from Fiji to work as their maid again with no formal employment contracts.
So the rationale behind paying domestic allowance as part of their fortnightly post allowance is to again assist Head of Missions in engaging a maid/domestic assistant as per the Fiji Overseas Service Regulations.

It is also for administrative purpose in terms of paying the annual F$8,000 entitlement throughout the 26 pays rather than paying it as and when request received from Head of Missions.
There is no provision in the Fiji Overseas Service Regulations that requires Head of Missions to provide evidence of employment of maid in order to access the F$8,000 domestic allowance that they are entitled to.
Officer Responsible Director Finance 8.12 Fixed Asset Register not Updated Each agency must have in place a cost effective system of internal controls which safeguard money and property against loss and avoids or detect accounting errors.8 All property, plant or equipment with a value in excess of $2,000 or more must be recorded in the asset module of the financial management information system; and asset register for those without the financial management information system.9 The Asset Recorder must ensure that the fixed assets register is kept updated.10 Our review of the procurements made during the year revealed instances where items procured were not recorded in the Fixed Assets register.
Refer to Table 8.4 for details.
8 Finance Instruction 2010, Section 59(1) 9 Finance Instruction 2010, Section 46(1) 10 Ministry of Foreign Affairs Finance Manual 2013, Section 7.2.2 Ministry of Foreign Affairs Head 8: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 8.4: Details of Procurement not recorded in the Fixed Asset Register Date 06.06.18 Chq/EFT # 5015 Vendor Particulars Company D Purchase of (1) 1 x sofa set (2) dining table & chairs (3) dressing drawer Amount ($) 5,784.37 06.06.18 5018 Company E Purchase of (1) clothes dryer (2) free 2,016.27 standing stove (3) fridge freezer Total 7,800.64 In addition, the we noted that the capital expenditures incurred for the refurbishment works for Missions in Canberra, Brussels, and Wellington amounting to $114,167.24 were not included in the fixed asset registers.
Table 8.5: Details of Refurbishment Works not included in FAR Date Cheque / EFT No.

Mission Vendor Description 08.12.17 417500 Canberra Company F Repair to roof tiles at Chancery to hailstorm on residence due caused due 17.11.17.

Repair to roof tiles at Second Secretary's to hailstorm on 17.11.17 Renovation works at Chancery and Second Secretary's residence.

Renovation works at Chancery and Second Secretary's residence.

Final payment for renovation works Second and Chancery at Secretary's residence.
Amount ($) 5,437.37 5,437.37 31,377.92 30,806.96 27,599.65 13,507.97 114,167.24 05.06.18 Online Wellington Company C Final deposit as per condition of payment for capital work done at the Chancery.

Total Root Cause/Implication The above finding indicates failure on the part of the Officer responsible for updating the fixed asset register on a timely manner.

This increases the risk of loss of fixed assets through theft and damages without being detected.
In addition, the Ministry will not be able to ascertain the correct value of its property abroad.

Recommendation The Ministry should ensure that all items valued above $2,000 are recorded in the Fixed Asset Register upon purchase.
Ministry of Foreign Affairs Head 8: Page 13 08.12.17 417501 02.02.18 417611 10.04.18 417768 25.07.18 418021 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The Ministry now introduced a new system of recording Assets introduced by Ministry of Economy in 2018.

This is through a standard template [in excel] which is now been currently implemented including Fiji Missions abroad.
The template specifically identifies the particular asset, its specifications years of service, cost and value which are some major information kept in the template register.

This template is currently being updated on a weekly basis.

The Ministry of Economy Asset Management officials have also conducted a full training session that captures the whole asset register followed by their continuous assistance monitoring at agency level.
Officer Responsible Principal Accounts Officer 8.13 Operating Trust Balances Carried Forward from Prior Years Within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, the Accounts Officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.11 Any errors or misallocations must be immediately adjusted by way of journal vouchers.12 Our review of the operating trust fund account balances revealed that trust account balances have been carried forward from previous years without any or minimal movement noted during the year.
Refer to Appendix 8.2 for details.

Root Cause/Implication The anomalies indicate that inadequate internal control and supervision and non-compliance with procedures in the Finance Instructions which could result in penalties imposed by the relevant authorities and accumulation of liabilities for the Ministry.

Recommendations  The Ministry should investigate the significant balances in the Operating Trust Fund account as at 31 July 2018 and take appropriate action to clear the balances.
 The Ministry should ensure that proper supervisory checks are in place to ensure that all balances are accurate, adequately supported and that errors from previous years are rectified.

 Alternatively, the Ministry may consider liaising directly with the relevant authorities and seeking confirmation that all dues was cleared for the relevant periods.
11 Ministry of Foreign Affairs Finance Manual 2013, Section 12.3.3 12 Ministry of Foreign Affairs Finance Manual 2013, Section 12.3.4 Ministry of Foreign Affairs Head 8: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action These balances of account in the mentioned Trust Allocations have been recurring over the past years although consultations has been conducted with relevant parties, particularly the Ministry of Economy.
This issue has been our main agenda of discussions with the Ministry of Economy recently with the intention of reconciling the left over credits and clearance of the accounts.

Note that most of these accounts have been dormant over the years mainly due to the introductions of new accounts, new format of postings and or nonexistence of the vendors.
Officer Responsible Principal Accounts Officer 8.14 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Ministry’s Management, and Internal Audit and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Ministry.
Risk management framework would provide a platform to identify various risks affecting the Ministry, 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.

Our review of the Ministry’s Corporate Governance revealed that there is no risk management framework in place.
As a result, the Ministry does not have written policies, procedures or guidelines to manage risk associated with the following: • occupational health and safety; • Ministry operational and human resource / succession planning; • • disaster recovery, IT back up and business continuity; and • assessment of potential conflicts of interest.

fraud control and anti-corruption; The Ministry does not have an established governance and accountability function to drive the risk management framework.
Root Cause/Implication The Ministry is currently in the process of developing a Risk Management Framework.

In absence of a risk management framework, the Ministry may find difficulty in managing risks affecting the Ministry particularly risk of fraud and misappropriation of assets.
Ministry of Foreign Affairs Head 8: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations  The Ministry should work towards establishing a governance and accountability function that supports the operations of the Ministry by providing financial and operational risk management and management of external reporting obligations.
 Following the establishment of the governance and accountability function, a risk management framework should be developed, continuously used and reviewed as and when necessitated.

Agreed Management Action The Ministry is working on developing its Risk Management Framework policy within the next 6 months.
Officer Responsible Senior Management 8.15 Revenue Collected by Overseas Missions not Formalised The Senior Accounts Officer, Assistant Accounts Officer and Clerical Officer Mission shall check the respective revenue received from missions, analyse it and prepare journal upload to General Ledger.13 The Fiji Missions charged administrative fees in addition to the prescribed fees and charges for the services provided.
The following anomalies were noted:  There is no standard rate applied;   The fees charged were implemented in 2003 and there has been no review made to date.
It was not formally endorsed by the Ministry of Economy; and Refer to Table 8.6 for details Table 8.6: Examples of Administration Fees Charged by the Missions Mission London Passport Renewal Marriage Certificate Washington Visa Application Details Multiple Entry Visa Application Shipment of Application Passport Renewal CI Application Application fee for Appostille copy of marriage certificate Passport Renewal Application for Work Visa Application for Passport Renewal Birth Certificate Application for Visa Canberra Wellington Rate £30.00 £10.00 USD10.65 USD12.40 USD100.00 USD40.00 USD10.82 USD20.00 AUD100.00 AUD136.00 NZD59.00 NZD19.80 NZD100.00 13 Ministry of Foreign Affairs Finance Manual 2013, Section 4.5.5 Ministry of Foreign Affairs Head 8: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication The Fiji Missions provides pivotal services to the Fijian citizens and visitors.
The non-standardisation, review and formalisation of the administrative fees indicates lack of management reviews and commitment.

Recommendation The Ministry should review and formalize the administrative fees charged by the Mission for facilitating the request or applications for government services Agreed Management Action The Ministry is in consultation with the Ministry of Economy on the matter as the Agency that has the jurisdiction for any new fees and charges levied.
The Ministry is working together with Ministry of Economy on developing a Cabinet Paper seeking Cabinet’s endorsement on the specific rate of fees to be charged by each Mission as administrative fees for conducting consular services.

The intent is to resolve this within the first quarter of 2019-2020 financial year.
Officer Responsible Principal Accounts Officer Ministry of Foreign Affairs Head 8: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 8.1: EXAMPLES OF PROCUREMENT ANOMALIES Date 12.12.17 Cheque No 1590379 21.12.17 5810 Amount ($) 761.17 Employee A Reimbursement Payee Description of medical expenses 6,235.71 Employee B Medical 19.12.17 5796 2,542.56 Company A 19.12.17 5798 2,156.47 Company A 09.02.18 5876 6,112.47 Employee C Medical insurance allowance for the year 2018 as per contract Ambassador and family health insurance for the month of January, 2018 Second Secretary and family health insurance for December 2017 insurance allowance for the year 2018 as per contract Ambassador and family health insurance for the month of December, 2017 Second Secretary and family health insurance for of the month December, 2017 Ambassador and family health insurance for the month of June and July, 2018 First Secretary health insurance for the month of June & July, 2018 Second Secretary and family health insurance for the month of June & July, 2018 Per diem travel (01/03/18 to 05/03/18) for official to Las Vegas for official to Las Vegas travel (01/03/18 to 05/03/18) Repair to roof tiles at Chancery to hailstorm on 17.11.17. due Repair to roof tiles at Secretary's Second residence to due hailstorm on 17.11.17 Audit Comment No supporting documents attached to substantiate the claim supporting No documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim No supporting documents attached to substantiate the claim
 supporting No documents attached to substantiate the claim No supporting documents attached to substantiate the claim Competitive quotes not obtained Local purchase order not attached Competitive quotes not obtained Local purchase order not attached Head 8: Page 18 21.11.17 5755 3,609.84 Company A 21.11.17 5757 2,502.30 Company A 18.06.18 6049 9,613.73 Company A 18.06.18 6050 2,492.76 Company A 18.06.18 6051 6,337.27 Company A 02.12.17 5885 2,265.69 Employee D 08.12.17 417500 5,437.37 Company B 08.12.17 417501 5,437.37 Company B Ministry of Foreign Affairs 12.02.17 5907 12.02.17 5906 2,832.11 Employee E Per diem for official to Las Vegas travel (28/02/18 to 05/03/18) 2,265.69 Employee F Per diem REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Date 18.01.18 Cheque No Online Amount ($) Payee Description Audit Comment 18,457.20 Employee G Renovation costs to former First Secretary landlord.
05.06.18 Online 13,507.97 Company C Final deposit as per condition of payment for capital work done at the Chancery.
Competitive quotes not obtained Local purchase order not attached Competitive quotes not obtained Local purchase order not attached Ministry of Foreign Affairs Head 8: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 8.2: TRUST FUND ACCOUNT BALANCES CARRIED FORWARD Balance as at 31/07/17 ($) (24,901.70) Balance as at 31/07/18 ($) (23,920.00) Account Description 1-08101- 08101- 861902 204 PD Deposit Account Recoverable 1-08101- 08101- 861910 383 PD Sundries 1-08101- 08101- 861920 501 PD Employees FNPF (212,072.61) (212,072.61) (475,893.96) (487,823.65) 1-08103- 80101- 863101 Administration Contributions Foreign Mission (239,444.54) (239,444.54) Increase / (Decrease) ($) Ministry’s Comments has (981.70) The credits appearing on the allocation been recurring since year 2010. the current practice, For for deductions required are made payable to respective vendors after pay has been processed.
credited recoveries - This allocation has not been financial transacted since year 2016 and recommend that the credit be posted to revenue allocation.

to 11,929.69 An amount of $449,333.02 was credited to the account since year 2013 which the main contributor this unsubstantiated credits for the account.

The credits in the current period were subsequently paid out to FNPF on respective months.
The Ministry also wishes to include this unsubstantiated credit into the submission for clearance SLG86 dormant balances.

the of - These fees for Missions, have allocations were previously to opened facilitate revenue generated on Missions by Administration for Missions office.

During the introduction of new GL the posting allocations been deactivated and credits are now been passed to SEG 27.
A submission approved by PS MOFA been forwarded to PS Economy requesting adjustments of these dormant SLG 86 accounts to Equity SEG 91 and clear the issue from recurring.

This submission is awaiting approval from PS Economy.
has Ministry of Foreign Affairs Head 8: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Balance as at 31/07/17 ($) (330,157.99) Balance as at 31/07/18 ($) (330,157.99) Increase / (Decrease) ($) Ministry’s Comments - As per above (49,269.33) (49,269.33) - As per above (3,261.14) (3,261.14) - As per above (131,018.25) (131,018.25) - As per above (23,961.59) (23,961.59) - As per above (8,100.51) (8,100.51) - As per above (18,795.34) (18,795.34) PSC Cuba Scholarship (1,703.92) (1,703.92) - These allocations have been dormant since 2016.
This allocation is also included in the submission for clearance into SEG 91.
- As per above Account Description Administration Contributions Foreign Mission Administration Contributions Foreign Mission Administration Contributions Foreign Mission Administration Contributions Foreign Mission Administration Contributions Foreign Mission Administration Contributions Foreign Mission Sundries 1-08103- 80102- 863101 1-08103- 80201- 863101 1-08103- 80401- 863101 1-08103- 80701- 863101 1-08103- 81001- 863101 1-08103- 81102- 863101 1-08101- 08101- 864102 1-08101- 08101- 864199 Ministry of Foreign Affairs Head 8: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 9 Office of the Director of Public Prosecutions Roles and Responsibilities The Office of the Director of Public Prosecution is an independent office established by the Fijian Constitution.
The Director of Public Prosecutions (DPP) is responsible for instituting and conducting criminal proceeding in Fiji.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 9.1 Audit Opinion ............................................................................................................................. 2 9.2 Statement of Receipts and Expenditure .................................................................................. 2 9.3 Appropriation Statement .......................................................................................................... 2 9.4 Trust Fund Accounts .................................................................................................................. 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 5 9.5 Internal Controls ........................................................................................................................ 5 9.6 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 6 9.7 Quality of Draft Financial Statements by entities..................................................................... 7 9.8 Timeliness of Draft Financial Statements ................................................................................. 7 9.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 7 Independent Body - Office of the Director of Public Prosecutions Head 9: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 9.1 Audit Opinion The audit of the 2018 accounts of the Office of the Director of Public Prosecutions resulted in an unqualified audit opinion.
9.2 Statement of Receipts and Expenditure The Office collected revenue totalling $2,105 and incurred a total expenditure of $5.6 million for the year ended 31 July 2018.

Details are provided in Table 9.1.
Table 9.1: Statement of Receipts and Expenditure for 2018 Description Revenue State revenue Agency revenue Total Revenue Expenditure Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Special expenditures Total Operating Expenditure Value Added Tax Total Expenditure 31 July 2018 ($) 31 July 2017 ($) 1,427 678 2,105 3,041,101 241,356 471,009 377,766 1,195,321 115,901 5,442,454 185,558 5,628,012 5,967 589 6,556 2,789,866 193,972 341,940 392,186 1,192,106 120,165 5,030,235 182,041 5,212,276 Revenue amounting to $2,105 in 2018 mainly comprised of commission.
Revenue decreased by $4,451 in 2018 compared to 2017 due to no major revenue received apart from disclosure fees and court costs.

The Government Wage Earners expenditure increased by $47,384 in 2018 compared to 2017 due to increase in overtime and meal payments for standby after official hours and during weekends for pick up and drop off for staff and witnesses and stand by for Legal staff who work late due to back to back trials.
The Travel and Communication expenditure increased by $129,069 in 2018 compared to 2017 due to increase in local, overseas travels and subsistence costs for attending trials out of station and attending monthly trainings.

9.3 Appropriation Statement The Office incurred expenditure totalling $5.6 million in 2018 against a revised budget of $6.2 million.
Independent Body - Office of the Director of Public Prosecutions Head 9: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Details of expenditure against the revised budget are provided in Table 9.2.
Table 9.2: Appropriation Statement for 2018 Budget Estimate ($) Revised Estimate ($) Changes SEG Item ($) Actual Expenditure ($) & Established Staff Unestablished Staff & Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchase Capital Grants & Transfers Total Expenditure Value Added Tax TOTAL Capital --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- Lapsed Appropriation ($) --- --- --- --- --- 6,292,166 --- 6,292,166 5,628,012 664,154 --- 6,292,166 --- --- --- 6,292,166 --- 5,628,012 --- 664,154 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 6,292,166 --- --- --- 6,292,166 --- 5,628,012 --- 664,154 9.4 Trust Fund Accounts As at 31 July 2018, funds amounting to $289,044 were maintained in trust fund accounts which consisted of funds amounting to $105,999 for DPP Trust Account and $183,045 for Forfeited Assets Fund Account.
9.4.1 DPP Trust Account The purpose of this fund is to administer the trainings normally conducted by the Office.

Money received in this account from parties such as Fiji Police Force, lawyers and other participants and payments are made for provision of the trainings and bank interest.
Details are provided in Table Table 9.3: Director of Public Prosecutions – Statement of Receipts and Payments Description 31 July 2018 ($) 31 July 2017 ($) Receipts Lawyers’ Prosecution Training Fees Interest Bank Fees Reversal Total Receipts Payments Refund of Lawyers’ Prosecution Training Fees 300 Bank Fees 244 Total Payments 544 Net Surplus 23,083 82,916 Opening balance as at 1 August Closing balance as at 31 July 23,500 97 30 23,627 105,999 1,219 49 --- 1,268 300 137 437 831 82,085 82,916 Independent Body - Office of the Director of Public Prosecutions Head 9: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 9.4.2 Forfeited Assets Fund Account Proceeds of Crime Act 2004 and Proceeds of Crime Act Amendment No.7/2005, Section 71 (A) established the trust fund account for the purpose of keeping funds received from a person instead of a forfeited order as per section 16 of the act, proceeds of pecuniary penalty orders and money receive by the state from a foreign country for mutual assistance on criminal matters.
The purpose of this fund is to make payments to the person if a forfeiture order is discharged, make payments to foreign countries with approval of the Minister of Economy in the obligation with respect of a registered foreign forfeiture order and registered foreign pecuniary order.

Receipts consist of $183 for bank interest and no payments was made during the financial year.
Details are provided in Table 9.4 Table 9.4: Forfeited Assets – Statement of Receipts and Payments Description Receipts Interest Error in deposit of prosecution fees Total Receipts Payments Purchase of second hand containers Purchase of hand held analyser Bank fees Transfer to DPP Trust Account for error in deposit Total Payment Net Surplus/(Deficit) Opening balance as at 1 August Closing balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 183 --- 183 -- --- --- --- --- 183 182,862 183,045 344 300 644 49,327 122,000 1 300 171,628 (170,984) 353,846 182,862 Independent Body - Office of the Director of Public Prosecutions Head 9: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 9.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

 A significant deficiency is a deficiency that either alone or in combination with multiple deficiencies may to lead to a material misstatement in the financial statements.
It requires that provide the basis for carrying out internal controls across the entity.

These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.
It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.

Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
 Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to Independent Body - Office of the Director of Public Prosecutions Head 9: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating Internal control assessment  Effective No deficiencies identified in internal controls 9.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Independent Body - Office of the Director of Public Prosecutions Head 9: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Effective All 9 key processes completed by due date 9.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 9.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements received before 15 October 2018 9.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 5 days from issue of Financial Statements for signing Independent Body - Office of the Director of Public Prosecutions Head 9: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 9 Judicial Department Roles and Responsibilities The Judicial Department is responsible for enhancing the quality of justice in the community by ensuring an effective and accessible Court System as the cornerstone of Justice.
The Court System will uphold the principles of impartiality, equality, fairness and access, while protecting the dignity and rights of all members of the community.

In line with the Constitution of the Republic of Fiji 2013, Chapter 5, Part A 97 (2), the courts and all judicial officers are subject only to the Constitution of the Republic of Fiji and the law, which they must apply without fear, favour or prejudice.
Table of Contents PART B: 9.5 9.6 9.7 9.8 9.9 FINANCIAL STATEMENTS ................................................................................................... 2 PART A: Audit Opinion ........................................................................................................................... 2 9.1 Statement of Receipts and Expenditure ................................................................................ 2 9.2 Appropriation Statement ........................................................................................................ 3 9.3 9.4 Main Trust Fund Account ........................................................................................................ 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 8 Internal Controls ...................................................................................................................... 8 Submission of FY 2017-2018 Draft Agency Financial Statements .......................................... 9 Quality of Draft Financial Statements by entities ................................................................. 10 Timeliness of draft financial statements ............................................................................... 10 Timeliness of Provision of Management Comments and Signing of Financial Statements.............................................................................................................................. 10 OTHER SIGNIFICANT MATTERS .........................................................................................11 PART C: Anomalies noted in the Sundries Trust Fund – Suva ............................................................ 11 9.10 Anomalies noted in the Suitors Trust Fund – Suva ............................................................... 13 9.11 9.12 Manual record keeping with no backups .............................................................................. 13 Judicial Trust Fund Account Bank
 Reconciliation Variance .................................................. 14 9.13 Presentation of Judicial Trust Fund Accounts ...................................................................... 17 9.14 Significant Arrears of Revenue .............................................................................................. 18 9.15 Independent Body - Judiciary Department Head 9: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 9.1 Audit Opinion The audit of the 2018 accounts of the Judicial Department resulted in a qualified audit report.
The qualification was due to the following: There still exists significant lapse in the years of reconciliation and absence of detailed breakdown listings of beneficiaries and their current balances, as such the accuracy of the closing balance of $31,681,497 disclosed in the Judicial Trust Fund account Statement of Receipts and Payments for the year ended 31 July 2018 could not be ascertained.
9.2 Statement of Receipts and Expenditure The Department collected revenue totalling $2,968,627 and incurred a total expenditure of $38,028,598 for the year ended 31 July 2018.

Details are provided in Table 9.1.
Table 9.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2018 ($) 2,534,391 434,236 2,968,627 24,197,666 2,342,731 2,868,214 1,015,016 830,582 1,797,986 33,052,195 31 July 2017 ($) 4,496,946 510,569 5,007,515 19,965,063 1,222,471 1,912,631 988,476 1,485,422 1,209,134 26,783,197 3,704,295 571,742 4,276,037 1,628,228 478,946 2,107,174 Value Added Tax 700,366 471,914 Total Expenditure 38,028,598 29,362,285  Total Revenue decreased by $2,038,888 or 41% in 2018.
This was attributed to the amendment to the Land Transport Authority (LTA) Act 1998 which came in effect from 7 April 2017.

As per the amendment, when a Traffic Infringement Notice is issued, the person to whom this notice is issued is liable to pay the prescribed fine within 90 days at the LTA Office.

Unlike previously, after 21 days if fine is not paid, the case is referred to the Court.
Therefore, under current system, offenders have ample time to pay their fines at LTA Office thus reducing cases referred to the Court.
 Established Staff expenditure increased by $4,232,603 or 21% in 2018, which was mainly attributed to increase in the salaries of all the Judicial Officers with effect from 1 April 2018; Independent Body - Judiciary Department Head 9: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR increase in a base salary of all Court Support Staffs with effect from 1 August 2017 based on the outcome of the Job Evaluation Exercise and increase in the visiting Judges sitting allowance with effect from 23 January 2018.
The Government Wage Earners expenditure increased by $1,120,260 or 92% in 2018, which was due to the pay rise received with effect from 1 August 2017 based on the outcome of the Job Evaluation Exercise and the payment of gratuity.
 Travel and Communications expenditure increased by $955,583 or 50% in 2018, which was directly attributed to the increase in overseas travel for Judicial Officers who travelled overseas to attend seminars and trainings and the travel and passage for the expatriate Judicial Officers.

 Special Expenditures increased by $588,852 or 49% in 2018.
The increase was mainly attributed to training provided by the Singapore Mediation Centre and the alternate accommodation cost for Honourable Chief Justice while his quarters was under renovation.

 Capital Construction expenditure increased by $2,076,067 or 128% in 2018 due to new capital projects undertaken during the year: construction of Nasinu Courthouse, Relocation of Ba Court, renovation of old Parliament Complex and upgrading of sound and recording System.
9.3 Appropriation Statement The Department incurred expenditure totalling $38.0 million in 2018 against a revised budget of $54.4 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $16.4 million or 30%.

 Savings of $3,264,500 or 12% under Established Staff was mainly attributed to the existence of 18 vacant positions for Judicial Officers that were not filled.
 Savings of $510,425 or 22% noted under Special Expenditure was mainly attributed to the vacant Chief Tribunal, Legal Tribunal and Non-Legal Tribunal positions under Employment Relations Tribunal.

 The significant savings for Capital Construction was mainly attributed to the low utilisation rate of on-going projects and non-implementation of a project earmarked for the 2017/2018 financial year.
The savings of $4,860,391 or 81% for Renovation of old Parliament Complex at Veiuto was due to delay in the initial stage of consultations because of the variation in the scope of work; savings of $3,740,702 or 75% Construction of Nasinu Court was due to the delay in the initial stage of consultations and tendering process; and savings of $783,073 or 92% under Rural Small Town Court House Upgrade was due to the tender of Nabouwalu Courthouse project being withdrawn since only one tender bid was received by CIU.
The Extension of Lautoka Court with the budget of $1,000,000 was not implemented because the lead consultant contract was terminated and Construction Implementation Unit was in tendering process of appointing new consultant.

Details of expenditure against the revised budget are provided in Table 9.2 and 9.3.
Independent Body - Judiciary Department Head 9: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 9.2: Appropriation Statement for 2018 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure & Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 13 Budget Estimate ($) --- --- --- --- --- 54,463,543 --- 54,463,543 --- --- --- --- 54,463,543 Changes Revised Estimate ($) --- --- Actual Expenditure ($) --- --- Lapsed Appropriation ($) --- --- --- --- --- --- --- --- --- --- --- 54,463,543 38,028,598 16,434,945 --- 54,463,543 --- --- 38,028,598 16,434,945 --- --- --- --- --- --- --- --- --- --- --- --- - 54,463,543 38,028,598 16,434,945 ($) --- --- --- --- --- --- --- --- --- --- --- --- Table 9.3: Appropriation Movement for 2018 SEG Item Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 13 Value Added Tax TOTAL 9.4 Main Trust Fund Account Revised Estimate ($) 27,462,166 2,357,135 3,149,491 1,084,160 1,086,600 3,000 2,308,411 37,450,963 14,359,380 656,620 15,016,000 1,996,580 54,463,543 Actual Expenditure ($) 24,197,666 2,342,731 2,868,214 1,015,016 830,582 --- 1,797,986 33,052,195 3,704,295 571,742 4,276,037 700,366 38,028,598 Lapsed Appropriation ($) 3,264,500 14,404 281,277 69,144 256,018 3,000 510,425 4,398,768 10,655,085 84,878 10,739,963 1,296,214 16,434,945 Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Judicial Department operates and maintains three main trust fund bank accounts which include the Judicial Trust Fund Account, the Judiciary Trust Fund Account and the Legal Practitioners Unit Fund Account.
The Trust Fund Account Statement of Receipts and Payments is now presented separately in the current year for transparency purposes and to correctly reflect the trust monies received and paid Independent Body - Judiciary Department Head 9: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR out of the three separate bank accounts maintained for the various trust funds being administered by the Department.
9.4.1 Judicial Trust Fund Account The Judicial Trust Account consisted of four trust fund accounts namely; Suitors Trust, Maintenance Trust, Sundries Trust and Deposit Retention for project funds.

(i) (ii) The Suitors Trust comprise of monies received from FNPF on behalf of deceased who did not have nominees for their FNPF accounts, Criminal and Civil related matters.

The Suitors Trust Account are administered only at Suva, Lautoka and Labasa Office.
The current status of the Suitors Trust Fund Reconciliation is as follows: - - - Suva Suitors Trust Reconciliation prepared up to February 2017; Lautoka Suitors Trust Reconciliation prepared up to December 2007; Labasa Suitors Trust Reconciliation prepared up to September 2009.

The Maintenance Trust comprise of monies received from maintenance payments by defendants to their spouses based on the judgements passed by the Family Law Court.
The Maintenance Trust is administered at 11 Stations; namely Suva, Sigatoka, Nadi, Lautoka, Ba, Tavua, Rakiraki, Nausori, Nasinu, Taveuni and Levuka.

The status are as follows: Current - - 2016 Reconciliation completed for all 11 Stations; 2017 Reconciliation is in progress.

Backlog - - 1995 Reconciliation completed for all 11 Stations; 1996 Reconciliation is in progress.

(iii) The Sundries Trust of monies received from Civil and Criminal cases based on Court judgements.
These include compensations, LTA fines, cash bail, court fees, bailiff fees and small claims.

The Sundries Trust are administered at 12 Stations; namely Suva, Nasinu, Nausori, Rakiraki, Tavua, Ba, Lautoka, Nadi, Sigatoka, Labasa, Savusavu and Taveuni.

The current status of the Sundries Trust Fund Reconciliation is as follows: Current - - 2016 Reconciliation completed for all 12 Stations; 2017 Reconciliation is in progress.
Backlog - - 1995 Reconciliation completed for all 12 Stations; 1996 Reconciliation is in progress.

(iv) The Deposit Retention for projects comprises of funds retained for projects that are being carried out by the contractors and are paid back to them after the defects liability period.

It is usually 10% of the gross cost of the project.

The funds are kept in this account because some projects defects liability period lapses in the following financial year.
Independent Body - Judiciary Department Head 9: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 9.4: Judicial Trust Fund Account – Statement of Receipts and Payments Description Receipts Suitors Fund Maintenance Fund Sundries Deposit Retention for Project Funds Total Receipts Payments Suitors Fund Maintenance Fund Sundries Retention paid for Project Funds Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 9.4.2 Judiciary Trust Fund Account 31 July 2018 ($) 31 July 2017 ($) 15,279,125 5,716,751 3,487,336 135,775 24,618,987 16,493,671 4,385,693 4,266,256 58,029 25,203,649 15,301,203 6,192,021 3,024,319 43,717 24,561,260 57,727 31,623,770 31,681,497 11,012,496 3,702,031 3,665,638 18,126 18,398,291 6,805,358 24,818,412 31,623,770 The Trust Fund comprise of funds received from an audit firm for interest received from the Law Society Account to meet the costs and expenses for improving court premises, purchase of equipment for various courts in all the divisions including acquisition of equipment for the Judiciary, implementation of electronic recording of court proceedings and on the discretion of the Chief Justice.
Table 9.5: Judiciary Trust Fund Account – Statement of Receipts and Payments Description Receipts Judiciary Trust Fund Account Total Receipts Payments Judiciary Trust Fund Account Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 433,199 433,199 1,189,335 1,189,335 288,878 288,878 144,321 583,571 727,892 1,007,226 1,007,226 182,109 401,462 583,571 9.4.3 Legal Practitioners Unit Fund Account The Trust Fund comprise of funds received from a Chartered Accounting firm for interest received from the Law Society Account to meet the costs and expenses of the Legal Practitioners Unit in the Office of the Chief Registrar in the performance of the functions and duties of the Chief Registrar under the Legal Practitioners Act 2009 and other expenses on the discretion of the Chief Registrar.
Independent Body - Judiciary Department Head 9: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 9.6: Legal Practitioners Unit Fund Account – Statement of Receipts and Payments Description Receipts Legal Practitioners Unit Fund Total Receipts Payments Legal Practitioners Unit Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 379,550 379,550 259,717 259,717 22,399 22,399 357,151 771,901 1,129,052 33,681 33,681 226,036 545,865 771,901 Independent Body - Judiciary Department Head 9: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 9.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Independent Body - Judiciary Department Head 9: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and functioning.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Rating  Ineffective Internal control assessment Significant deficiencies identified in internal controls 9.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 - 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 26 July 2018  Processing of payments by 31 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Independent Body - Judiciary Department Head 9: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Generally effective Year-end close process assessment Five of 9 key processes completed within two weeks of due date 9.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Department was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 9.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Generally effective Timeliness of draft financial statements assessment Acceptable draft financial statements received before or on 31 October 2018 9.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 15 days from issue of Financial Statements for signing Independent Body - Judiciary Department Head 9: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Department as at 31 July 2018.
9.10 Anomalies noted in the Sundries Trust Fund – Suva Every accused person has a right to be released on bail unless it is not in the interests of justice that bail should be granted.1 Bail may be granted unconditionally or subject to written conditions imposed by the police officer or the court, as the case may be.
The accused person deposits with an authorised officer of the court a specified amount of money in cash and enters into an agreement to forfeit the amount deposited if the accused person fails to comply with his or her bail undertaking.2 Within 5 days after the end of each month, the Assistant Accounts Officer (Ledgers) shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.3 Details of balances must be attached to the reconciliation statement.4 The Suva Criminal and Civil Magistrate Court Registry maintain Sundries Trust funds which contains compensations, LTA fines, cash bail, court fees, bailiff fees and small claims from the Criminal and Civil cases awaiting the court judgement/court order or disposal.
The closing balance as at 31/07/18 was $1,615,706.

Following our review of the records maintained at the Registry, the following anomalies were noted: • The Criminal Magistrate Court Registry has the unclaimed funds dating back 1995.
This consist of cash bail bond and compensation totalling $730,448.51 and administration cost unclaimed by the respective prosecutions for example; Land Transport Authority, Small Claim Tribunal, Director of Public Prosecution amounting to $103,428.42; and • Although the Registry was maintaining a register to record the case files, it does not maintain a detailed breakdown case listing of funds held in Trust as at 31/07/18.
1 Bail Act 2002, Section 3(1) 2 Bail Act 2002, Section 22.1,22.2(g) 3 Judicial Department Finance Manual – section 15.4.1 4 Judicial Department Finance Manual – section 15.4.2 Independent Body - Judiciary Department Head 9: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication The respective authorities and the respondents/applicants (plaintiff/defendants) are not following up actively with the Registry on their refund or status.
Hence, the unclaimed funds have accumulated in the trust account.

In addition, due to movement of recipients/applicants, the Department is unable to locate them as it does not have their current contact address.

Also, due to the sensitivity of the matter, the Department is not in a position to advertise the names and the case details of the recipients/applicants.
Recommendations The Department should: • review the disposed case files to ascertain that there was no breach of bail condition, confirm the compensation amount received and payable to respective respondent/applicants and administrative fees payable to the respective authorities are in order; • prepare the detailed breakdown listing of the Trust Fund closing balance for its decision • • making, public awareness and monitoring; create public awareness through various talk back Television/ radio/newspaper shows or article or through partnership with line agencies; and consider reviewing the Act and if legally feasible putting the clause on the timeframe the bond funds to be claimed from the Department.
In absence of any claims within stipulated timeframe the unclaimed bonds would become the state revenue.

Agreed Management Action The procedure for refund of Cash Bail is that once the matter is disposed, the application has to be made by the Accused person for refund of Cash Bail and the Order has to be made by Court for the refund.

After the Order is made then Voucher is raised for refund.

Some Cash Bails that are not refunded are for the matters that are still pending in Court.
For the matters that are already disposed and Cash Bail not refunded are those matters where there are no order for refund.

Without the Court Order Cash Bails are not refunded.

For Compensation - Once the matter is disposed, Prosecution has to inform the Complainant to liaise with the MCT Registry for compensation to be paid to them.

Voucher is only raised once Complainants give their bank/TIN details to us.
In cases where complainants do not get in touch with the registry, compensations are not paid as we don't have details of the complainants.

Prosecution Cost - this should be refunded to Prosecutions after 28 days Appeal period has from the date of disposal.

We are practicing this currently.

These should have been refunded to Prosecution for old matters as well.

We will try to work on the refund of these old Prosecution Costs which has not been refunded till to date.
Officer Responsible Senior Management Independent Body - Judiciary Department Head 9: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 9.11 Anomalies noted in the Suitors Trust Fund – Suva Within 5 days after the end of each month, the Assistant Accounts Officer (Ledgers) shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.5 Details of balances must be attached to the reconciliation statement.6 The Suva High Court Criminal and Civil Registry maintained the Suitors Trust Fund which contains funds from the FNPF, Criminal and Civil cases awaiting the court judgement/court order or disposal.
The closing balance as at 31/07/18 was $21,735,446.

We noted that although the Registry was maintaining the register to record the case files, it did not maintain a detailed breakdown listing of each funds type held in Trust as at 31/07/18.

Root Cause/Implication This was mainly attributed to the lack of internal controls and monitoring, case loads and manual record keeping system.

In absence of the detailed breakdown listings, details of funds held as per the registry records could not be ascertained.
Recommendation The Suva High Court Registry should stocktake and review the case files and prepare the detailed breakdown listing of the funds held in Trust for each fund type.

Agreed Management Action The comments of the Auditors are noted.

We will liaise with our IT section for creation of a database so that all details are captured.

The Department is also considering using the artificial intelligence in near future.
Officer Responsible Senior Management 9.12 Manual record keeping with no backups An effective backup strategy minimises the potential impact of the loss of data and enables a return to normal operations as soon as practicable.7 Upon examination of the records in Suva Family Court registry, Suva Criminal and Civil Magistrate Court Registry and Suva High Court Registry, we noted that all three registries are using the manual system for record keeping.
Case files called jackets similar to a manila files contain all the relevant documents of the case and the important details are documented on the jacket.
5 Judicial Department Finance Manual – section 15.4.1 6 Judicial Department Finance Manual – section 15.4.2 7 The Fiji Government Information Technology Policies and Procedures – Appendix C: Section C7 Independent Body - Judiciary Department Head 9: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR However, we noted that the condition of the files are deteriorating and the details are fading away which could lead to loss of significant case information.
We also noted that the registries maintain a basic database but it does not contain all the documents maintained in the case file/ jacket and the financial records.

Root Cause/Implication There is a lack of technological (ICT) investment to ease the administration of the respective trust funds and its case files maintained by the Department.
In absence of any backup of the vital case file records, it exposes the Department to the risk of loss of information arising from natural disasters particularly fire/tsunami and staff errors/ collusion to destroy the records.

Recommendations  The Department should consider setting up the steering committee to oversee modernising the operations and consider investing in Informations and Communications Technologies (ICT).
 The funding could be sourced through the national budget, donor agencies or through the interest generated from the respective trust funds maintained by the Department (Ministry of Economy to be consulted).

Agreed Management Action The Maintenance section, the Magistrates Court and High Court Civil Registry do not have a database system.

The three registries have liaised with our IT section about the database and this is being looked into.
The Department is intending to adapt to e-filing system in the near future which will be very helpful in terms of record keeping and backups.

The feasibility studies and consultations are in progress.

Officer Responsible Senior Management 9.13 Judicial Trust Fund Account Bank Reconciliation Variance Each month the trust account must be balanced and reconciled with the trust bank account.
The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.

Un-reconciled items must be investigated and resolved promptly.8 The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.

Each month, the trust account must be balanced and reconciled with the trust bank account.

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.9 8 Finance Instructions 2010 – Section 58 (3) 9 Finance Instructions 2010 – Section 58 (2& 3) Independent Body - Judiciary Department Head 9: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The Department maintains Judicial Trust Fund Account which consists of three trust fund accounts: Suitor’s Trust, Maintenance Trust and Sundries Trust accounts.
As at 31 July 2018, the General Ledger for respective trust fund account had the following balances: Table 9.7: Details of the Judicial Trust Fund Account Trust Account Amount ($) Suitors Trust Fund Maintenance Trust Fund Sundries Trust Fund Total 24,264,070 1,739,890 5,545,577 31,549,537 Our review of the bank reconciliations revealed the following:  There is a balance of $734,667 that is appearing in the Judicial Trust account bank reconciliation as “Adjustment by Ministry of Economy in December 2013”.
This amount has been appearing in the Judicial Trust reconciliation since 2013.

Physical cash amounting to $734,667 is yet to be transferred by Ministry of Economy.

While the Department has raised the issue with the Ministry of Economy on numerous occasions,, the issue remains unresolved.
As a result the cash at bank general ledger is overstated by the same amount as there is no actual cash held against this balance;  Included in the trust fund account reconciliation as at 31 July 2018 is a reconciling balance of $49,774 for which the Department has not been able to provide relevant details to substantiate the balance; and  The monthly bank reconciliations are being carried out by the Department to reconcile the receipts and payments made out of the bank account.
We noted that the trust liability reconciliations for the Suitors, Maintenance and Sundries Trust Fund accounts were significntly delayed.

- - - For Suitors Trust Fund, Suva Suitors Trust reconciliations were prepared up to February 2017, Lautoka Suitors up to December 2007 while Labasa Sutiors Trust reconciliations were prepared up to September 2009.
For Maintenance Trust, the current Maintenance Trust reconciliations were completed up to 2016, while the backlog reconciliations were completed up to 1995 for 11 stations.

For Sundries Trust reconciliations, the current Sundries Trust reconciliations were completed up to 2016 while the backlog Sundries Trust reconciliations were completed up to 1995 for 12 stations.
As a result, we could not obtain the detailed breakdown listing of those beneficiaries and ascertain the respective balances held by Department as trust as at 31 July 2018.

Independent Body - Judiciary Department Head 9: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR A variance of $12,910 was also noted between the Trust Fund Account balance (SLG 89) and the Cash at bank balance (SAG 52) in the FMIS general ledger as at 31 July 2018.
Refer to the table 9.8 for details.

Table 9.8: Variance in FMIS Trust Fund Account and FMIS Cash at Bank Balance Description Amount ($) FMIS Cash at Bank balance 31,562,447* 31,549,537 FMIS Trust Fund Balance 12,910 Variance *Exclude project retention balance $131,960 We noted that the Department maintains Judicial Trust Fund Account which consists of three trust fund accounts: Suitor’s Trust, Maintenance Trust and Sundries Trust accounts.
All funds related to the above trusts are deposited in one bank account and a consolidated statement of trust receipts and payments is prepared by the Department in its Agency Financial Statements.

Root Cause/Implication The backlog was mainly due to the poor monitoring and controls in place by the previous management and scrutiny from Ministry of Economy.

The unresolved variance indicates lack of coordination between the Department and the Ministry of Economy.
However, the efforts made by current management to update the reconciliations is acknowledged.

In the absence of proper reconciliations, we were not able to ascertain the correctness of the balance reflected in the Judicial Trust Fund accounts.
Recommendations The Department should: • • liaise with the Ministry of Economy to rectify the variances noted above; consider allocating more resources to undertake the exercise of updating the backlog in the trust account detailed reconciliations; and • ensure that trust fund account bank statement balance, trust fund cash at bank balance in FMIS general ledger and trust fund account balance in FMIS general ledger is reconciled on a monthly basis and any error or omissions are investigated and resolved.
Agreed Management Action The Department is still liaising with Ministry of Economy for the funds of $784,441 which was adjusted by them in the year 2013.We had initially managed to provide all documents amounting to $734,667 leaving a balance of $49,774.This amount has also been identified from the details of the bank statements of May 2009.

During this period all monies, Trust & Revenue were deposited in one bank account, thus we had to separate both in order to find the variance.
Whilst in the process of separating the two, we found that $49,774 were accounted in revenue which in fact should be Trust Money.

We are in the process of writing to Ministry of Economy again requesting them to provide us the sum of $784,441.00 so that it can be accounted in our Trust Fund Account.
Independent Body - Judiciary Department Head 9: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The Department has already written to Ministry of Economy on 26th February 2019 to adjust the previous year's variance of $12,910.00 which has been recurring from years 2014 to 2018.

We are awaiting their decision on this.


The root cause of the reconciliation being so behind is that in previous years the reconciliation was not taken seriously thus left without taking any action.

Had this been queried at that point in time, then we wouldn't be in the situation which we are in now.

The backlog is not because of the limited resource and staff we have now.
In fact the current staff are tirelessly trying to do the reconciliations and bring it up to date As discussed earlier this backlog is because the reconciliations were not carried out in the years 1988 onwards thus has accumulated over the years.
We have managed to complete all the reconciliations till the year 1994.After the recruitment of seven (7) night shift staffs on project from May 2018, they managed to complete 1995 and 1996 reconciliations to date (Maintenance ).These staff have now started with the 1997 data entries and are expected to complete Maintenance reconciliations by August 2019.
The current staff have completed 2016 and 2017 maintenance and Sundries reconciliations and have started on the 2018 reconciliations which they intend to complete by June 2019 and then start on 2019 reconciliations.

The department understands the importance of the reconciliations but as advised earlier we have inherited this problem and are trying our best to try and update it.
Since there are so many transactions and also the number of reconciliations to be carried out, it takes time to do the data entry and then reconcile.

Officer Responsible Executive Management 9.14 Presentation of Judicial Trust Fund Accounts Trust money is to be accounted for separately from public money and other money within the meaning of this Act.

Trust money is to be kept in a separate bank account pending its withdrawal and accounted for separately from “public money” and “other money”.
The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.

Each month, the trust account must be balanced and reconciled with the trust bank account.

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.10 The audit noted that the Department maintains Judicial Trust Fund Account which consists of three trust fund accounts: Suitor’s Trust, Maintenance Trust and Sundries Trust accounts.

All funds related to the above trusts are deposited in one bank account and a consolidated statement of trust receipts and payments is prepared by the Department in its Agency Financial Statements.
As at 31 July 2018, the General Ledger for respective trust fund account had the following balances: Table 9.9: Details of the Judicial Trust Fund Account Trust Account Amount ($) Suitors Trust Fund Maintenance Trust Fund Sundries Trust Fund Total 24,264,070 1,739,890 5,545,577 31,549,537 10Finance Instructions 2010 – Section 58 (2& 3) Independent Body - Judiciary Department Head 9: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Currently, separate statements are not presented for each trust type with the receipts and payments to be classified by the nature of receipt and payment.
However, the current presentation in the Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one line item on the Statement even though the nature of the trust receipt and payment may vary.

Moreover, we noted that the retention monies totalling $131,959.80 for three capital projects were also kept in the Judicial Trust Fund bank account and therefore the amount is reflected in the Judicial Trust cash balance as at 31 July 2018.
Root Cause/Implication With the various trust funds being deposited into one bank account, there is a risk of funds for a particular trust being utilised for the other trust funds exacerbated by the backlog in the reconciliation for each of the trust types.

With the current presentation, the trust fund accounts disclosures are deemed inadequate and does not provide adequate useful information to the users of the financial statements.
Recommendations The Department should: • work towards maintaining separate bank accounts for all new trust accounts created and • submit separate statements accordingly; and liaise with the Ministry of Economy and consider opening up a new bank accounts to account fresh and separately for each trust fund account.

At the same time continue updating pending reconciliations.
Agreed Management Action As advised earlier, once all reconciliations are up to date, then we would have a clear picture of how much money belongs to each account and then consideration can be given to open separate Trust Accounts for Maintenance, Sundries and Suitors as recommended by the Auditors.

At the moment it would be difficult without the proper reconciliations.
As for the retention monies, when the separation of accounts will be done then we have to decide how to account for the bank fees and charges as the entire sum has to be paid to the supplier after the defects liability period.

Officer Responsible Executive Management 9.15 Significant Arrears of Revenue The credit officer must promptly follow up accounts that fall due.
If the recovery is unsuccessful after one month, the following actions shall be taken:  a demand notice for payment shall be sent to the debtor after his/her debt has been overdue for more than a month; and Independent Body - Judiciary Department Head 9: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  if the account still remains unpaid after the first demand notice was issued, a final notice shall be issued demanding payment within fourteen days.11 If a final notice had been issued to one of the debtors listed, the Principal Accounts Officer may approve the case to be referred to the Solicitor General or the Small Claims Tribunal, after considering the cost implication and the probability of recovery.12 The arrears of revenue comprise of arrears arising from court fees, fines and costs awarded to the state.
The audit noted that the Department’s arrears of revenue as at 31 July 2018 amounted $13,337,274.

The last six years balances are as follows: Table 9.10: Arrears of Revenue over Six Financial Years Year 31/07/18 31/07/17 31/07/16 2015 2014 2013 Balance ($) 13,337,274 13,450,691 13,461,155 13,215,858 13,345,569 11,968,031 Although, the Department has established a Fine Enforcement Unit in prior years to manage the arrears of revenue, the arrears of revenue remains substantial.
The breakdown of aging as at 31/07/18 are as follows: Table 9.11: Aging of Debtors Age of Debtors Amount ($) % of Total Less than 1 year 1-2 years 2-5 years More than 5 years Total 733,117 991,513 2,053,473 9,559,171 13,337,274 5.5 7.4 15.4 71.7 100 Root Cause/Implication The recovery measures warrants immediate review and collaborative actions with other government agencies.
Further delay in collecting the outstanding revenue increases the risk of revenue not likely to be collected which may require writing it off resulting in loss of revenue for government.
11 Judicial Department Finance Manual 2013 - Section 9.2.1 12 Judicial Department Finance Manual 2013 - Section 9.2.4 Independent Body - Judiciary Department Head 9: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations The Department should: • work closely with Fine Enforcement Unit in an effort to recover the arrears of revenue from • the defaulters; consider seeking collaborative assistance in terms or recovery from FRCS, LTA, Immigration and FNPF before considering the write offs; and • upgrade its database information to capture information such as FNPF/Tin number, License and Passport Number in order to easily track the defaulters.
Agreed Management Action The total arrears of revenue as at 31 July 2017 was $13,450,691 and it decreased slightly to $13,337,274 (0.84%) as at 31 July 2018.

Even though the fine enforcement unit staff accompanied the Police officers to locate the defaulters, they were not able to collect many arrears as people had changed their addresses from the ones which they had initially provided.
The Department is working with the Police to increase the number of execution runs such as having a full time transport allocated by the Police to do day time executions during the week whilst the Department provides the transport for the evening executions.

The Department is also carrying out execution runs in the Northern Division now.
Officer Responsible Executive Management Independent Body - Judiciary Department Head 9: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 9 Office of The Auditor-General Roles and Responsibilities Office of the Auditor-General is an independent public office established and mandated by the Fijian constitution and is responsible for;   The inspection, audit and report on the public accounts, property and transaction of state.
To perform annual audits across various state entities, ministries, departments and whole of government accounts and fiancé.

Report on performance, environment and information technology risk assessment.
Table of Contents PART A: FINANCIAL STATEMENTS ............................................................................................................................. 2 9.1 Audit Opinion ............................................................................................................... 2 Statement of Receipts and Expenditure......................................................................... 2 9.2 9.3 Appropriation Statement .............................................................................................. 2 ASSESSMENT OF FINANCIAL GOVERNANCE ........................................................................................... 4 PART B Internal Controls .......................................................................................................... 4 9.4 Submission of FY 2017-2018 Draft Agency Financial Statements ....................................... 5 9.5 9.6 Quality of draft financial statements by entities ............................................................. 6 Timeliness of draft financial statements ......................................................................... 6 9.7 9.8 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 6 Independent Body - Office of the Auditor General Head 9: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 9.1 Audit Opinion The audit of the 2018 accounts of the Office of the Auditor General done by the Chartered Accounting firm, BDO resulted in an unqualified audit opinion.
9.2 Statement of Receipts and Expenditure The Office collected revenue totalling $389,729 and incurred a total expenditure of $4,380,933 for the year ended 31 July 2018.

Details are provided in Table 9.1.
Table 9.1: Statement of Receipts and Expenditure for 2018 Description Revenue Audit Fess Miscellaneous revenue Total Revenue Expenditure Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Operating grants and transfer Total Operating Expenditure Value Added Tax Total Expenditure 31 July 2018 ($) 388,943 786 389,729 3,348,290 38,381 238,778 98,053 585,975 12,775 4,322,252 31 July 2017 ($) 547,559 2,406 549,965 2,998,592 31,146 136,766 109,120 486,884 5,298 3,767,806 58,681 51,971 4,380,933 3,819,777 The significant variances with the comparative balances for some account areas were attributed to salary increment for all staff following Job Evaluation Review (JER), increase in staff professional development through local and international trainings and meetings and staff performance assessment bonus and staff health insurance benefit payments.
Revenue mainly comprised of audit fees and commission.

9.3 Appropriation Statement The Office incurred expenditure totalling $4,380,933 in 2018 against a revised budget of $4,612,843 resulting in savings of $231,910 or 5%.

Major saving was in personal emolument due to some vacant positions which were filled in 2018/2019 financial year.

Details of expenditure against the revised budget are provided in Table 9.2.
Independent Body - Office of the Auditor General Head 9: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 9.2: Appropriation Statement for 2018 SEG Item Established Staff Unestablished Staff Travel & Communication 1 2 3 4 Maintenance & Operations 5 6 Purchase of Goods & Services Operating Grants & Transfer Total Operating Expenditure 13 Value Added Tax Total Expenditure Budget Estimate ($) 3,693,927 39,352 213,000 131,064 444,500 16,000 4,537,843 75,000 4,612,843 Changes ($) Revised Estimate ($) Actual Expenditure ($) (178,148) 3,515,779 41,852 2,500 248,000 35,000 127,212 (3,852) 602,500 158,000 15,000 (1,000) 12,500 4,550,343 62,500 --- 4,612,843 (12,500) 3,348,290 38,381 238,778 98,053 585,975 12,775 4,322,252 58,681 4,380,933 Lapsed Appropriation ($) 167,489 3,471 9,222 29,159 16,525 2,225 228,091 3,819 231,910 The Office collected revenue totalling $389,729 in 2018.
Independent Body - Office of the Auditor General Head 9: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B ASSESSMENT OF FINANCIAL GOVERNANCE 9.4 Internal Controls As part of its audit, BDO assessed the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

The Risk Management Policy (POL 31/2019 – Version 1/2019) was formally approved on 23 May 2019.

The Office of the Auditor General is committed to embedding Risk Management Principles and Practices in its operations.
Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.

 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.
Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.

Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Independent Body - Office of the Auditor General Head 9: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR authorization, performance reviews, information processing, physical controls, and segregation of duties.

 Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.
Examples of issues which would fall under this category are reporting to boards and line ministries of entities on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.
Examples of issues which would fall under this category are self-assessment by entities to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on the audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office of the Auditor General as: Rating  Effective Internal control assessment No significant deficiencies identified in internal controls 9.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of unpresented cheques by 31 July 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018 Independent Body - Office of the Auditor General Head 9: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When OAG achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 9.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
BDO assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
The assessment for the Office of Auditor General was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 9.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, BDO have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements submitted to Chartered Accounting firm BDO before 15 October 2018 9.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, BDO have compared the date the draft management letter and audited financial statements were provided to OAG and the date management comments and signed accounts were provided by OAG to the firm.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Effective Timeliness of Management Comments Provided to Chartered Accounting firm BDO After 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements After 15 days from issue of Financial Statements for signing Independent Body - Office of the Auditor General Head 9: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 9 Parliament Office Roles and Responsibilities The primary function of the Parliament is provided for under Section 46(1) of the Constitution of the Republic of Fiji which states that “the authority and power to make laws for the State is vested in Parliament”.
The Parliament is the voice of the Fijian people, and it is responsible for ensuring representative government, openly debating relevant issues and providing oversight of government activities.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 9.1 Audit Opinion ............................................................................................................................. 2 9.2 Statement of Receipts and Expenditure .................................................................................. 2 9.3 Appropriation Statement .......................................................................................................... 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 Internal Controls ........................................................................................................................ 4 9.4 9.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 5 9.6 Quality of Draft Financial Statements by entities..................................................................... 6 Timeliness of Draft Financial Statements ................................................................................. 6 9.7 9.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 Independent Body - Parliament Head 9: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 9.1 Audit Opinion The audit of the 2018 accounts of the Parliament Office resulted in an unqualified audit opinion.
9.2 Statement of Receipts and Expenditure The Office collected revenue totalling $12,262 and incurred a total expenditure of $10.8 million for the year ended 31 July 2018.

Details are provided in Table 9.1.
Table 9.1: Statement of Receipts and Expenditure for 2018 Description State revenue Agency revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital Purchase Total Capital Expenditure 31 July 2018 ($) 12,068 194 12,262 31 July 2017 ($) 11,523 151 11,674 4,792,066 322,178 2,695,508 848,115 472,952 750,000 569,931 4,523,347 387,200 2,068,416 686,670 545,203 437,500 1,485,628 10,450,750 10,133,964 50,988 50,988 261,651 261,651 Value Added Tax 391,719 440,157 Total Expenditure 10,893,457 10,835,772 Revenue mainly comprised of refunds from accountable advance and recoveries arising from losses and damages.
The reduction in expenditure for Government Wage Earners resulted from the reduction in staff establishment and overtime payments.

The increase in expenditure for Travel and Communication resulted from increase in the number of overseas official engagements attended by Honourable Speaker and Members of Parliament.

The Members of Parliament also attended Parliament sittings, Committee sittings and public consultations which resulted in increase in local subsistence spending.
There was increase in charges for internet services utilised by executives, Members of Parliament and staff for research purposes.

The increase in expenditure for Maintenance and Operation resulted from increased activities and demand for stationeries and printing.

The Office also procured and installed a generator which in costs of increased expenditure in this allocation.
Additionally, there was an increase Independent Body - Parliament Head 9: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR refreshments and catering for Members of Parliament during Parliament and Committee sittings and secretariat management meetings.

The increase in expenditure for Operating Grants and Transfers resulted from the full payment of the grant to political parties compared to 2017 where grant was only paid for 7 months.
This was done to regularise 2016 grant payment which was done for the 12 months instead of the seven months.

The reduction in expenditure for Special Expenditure resulted from the reduction in the expenses for the 25th Asia-Pacific Parliamentary Forum.

The reduction in expenditure for Capital Purchases resulted from less capital procurements in 2018 compared to 2017 resulting from delay in tender process relating to the IT projects.
9.3 Appropriation Statement The Office incurred expenditure totalling $10,893,457 in 2018 against a revised budget of $10,997,878.

Details of expenditure against the revised budget are provided in Table 9.2.
Table 9.2: Appropriation Statement for 2018 SEG Item Budget Estimate ($) Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) Established Staff Unestablished Staff Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Expenditure Capital Constructions Capital Purchase Capital Grants Transfers Total Expenditure Value Added Tax TOTAL Operating Capital & --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 10,997,878 --- 10,997,878 10,501,738 496,140 --- 10,997,878 --- --- --- 10,997,878 --- 10,501,738 496,140 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 10,997,878 --- --- --- 10,997,878 391,719 10,893,457 (391,719) 104,421 Independent Body - Parliament Head 9: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 9.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Independent Body - Parliament Head 9: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR authorization, performance reviews, information processing, physical controls, and segregation of duties.

Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.
  Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.
Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating Internal control assessment  Effective No deficiencies identified in internal controls 9.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018 Independent Body - Parliament Head 9: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Effective All 9 key processes completed by due date 9.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 9.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received on or before 31 October 2018 9.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 5 days from issue of Financial Statements for signing Independent Body - Parliament Head 9: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 13 Independent Commissions Roles and Responsibilities Fiji’s independent commissions directly serve the people in specialised areas where objective and non-political judgment is required.
These commissions apply the law independently, and are valuable tools for transparent and accountable governance.

They share the larger purpose of defending the rights and dignity of individuals and communities consistent with the Fijian Constitution, keeping institutions and the people who serve the public accountable and serving as a constant reminder that Government serves the people.
A sum of $27.0 million is provided to fund the operations of the seven Independent Commissions: the Human Rights and Anti-Discrimination Commission, the Accountability and Transparency Commission, the Constitutional Offices Commission, the Fiji Accident Compensation Commission, the Public Service Commission and the Fiji Independent Commission Against Corruption.
Table of Contents FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION ................................................................. 2 FINANCIAL INFORMATION ................................................................................................. 2 PART A: 13.1 Audit Opinion ............................................................................................................................. 2 13.2 Abridged Statement of Comprehensive Income ..................................................................... 2 13.3 Abridged Statement of Financial Position ................................................................................ 2 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 3 PART B: Internal Controls ........................................................................................................................ 3 13.4 13.5 Quality of Draft Financial Statements by Entities .................................................................... 4 13.6 Timeliness of Draft Financial Statements ................................................................................. 4 13.7 Timeliness of Management Comments and signed Financial Statements ............................. 5 PUBLIC SERVICE COMMISSION ............................................................................................................. 6 FINANCIAL STATEMENTS ................................................................................................... 6 PART A: 13.8 Audit Opinion ............................................................................................................................. 6 13.9 Statement of Receipts and Expenditure .................................................................................. 6 13.10 Appropriation Statement .......................................................................................................... 6 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE
 .................................................................... 7 Independent Commissions Head 13: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION PART A: FINANCIAL INFORMATION 13.1 Audit Opinion The audit of the financial statements of Fiji Independent Commission Against Corruption for the year ended 31 July 2018 resulted in an unqualified audit opinion.
The Commission prepares its financial statements in accordance with International Financial Reporting Standards for Small and Medium-sized entities.
13.2 Abridged Statement of Comprehensive Income Description Government grant Other income Total Revenue Administrative Expenses Other Expenses Total Expenditure Net Profit/(Loss) 2018 ($) 8,254,648 7,247 8,261,895 737,043 7,602,725 8,339,768 (77,873) 2017 ($) 8,215,437 136,729 8,352,166 719,976 7,581,863 8,301,839 50,327 The financial year end for the Commission was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
13.3 Abridged Statement of Financial Position Description Cash Receivables Other current assets Property, plant and equipment Intangible assets Total Assets Trade and other payables Employee entitlements Total Liabilities Net Assets Accumulated funds Total Equity 2018 $ 1,054,171 17,148 355,638 1,770,377 289,648 3,486,982 319,242 388,057 707,299 2,779,683 2017 $ 1,068,206 53,119 263,455 1,599,308 416,108 3,400,196 207,827 334,813 542,640 2,857,556 2,779,683 2,779,683 2,857,556 2,857,556 Independent Commissions Head 13: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 13.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Independent Commissions Head 13: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of Commission on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by the commission to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment  Risk Assessment  Control Activities  Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Commission as: Ratings Internal control assessment  Effective No deficiencies identified in internal controls 13.5 Quality of Draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Commission was: Ratings Internal control assessment  Effective No adjustments were required 13.6 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Ratings Internal control assessment  Effective Acceptable draft financial statement received within one month from the end of financial year.
Independent Commissions Head 13: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 13.7 Timeliness of Management Comments and signed Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Management response received within 14 days Rating  Effective Timeliness of Signed Financial Statements Received Signed accounts was received within 5 days Independent Commissions Head 13: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PUBLIC SERVICE COMMISSION PART A: FINANCIAL STATEMENTS 13.8 Audit Opinion The audit of the 2018 accounts of the Public Service Commission resulted in an unqualified audit report.
13.9 Statement of Receipts and Expenditure The Public Service Commission allocation caters for the salaries, allowances and other expenses for contracted Permanent Secretaries in civil service.

The Ministry of Civil Service is responsible for the administration of this fund under the budget.

The Commission incurred a total expenditure of $5,180,294 for the year ended 31 July 2018.

Details are provided in Table 13.3.
Table 13.3: Statement of Receipts and Expenditure for 2018 Description Operating Grants and Transfers – Salaries for Permanent Secretaries Total Operating Expenditure Total Expenditure 13.10 Appropriation Statement 31 July 2018 ($) 5,180,294 5,180,294 5,180,294 31 July 2017 ($) 4,983,911 4,983,911 4,983,911 The Commission incurred expenditure totalling $5,180,294 in 2018 against a revised budget of $6,253,596 in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $1,073,302 or 17%.
Details of expenditure against the revised budget are provided in Table 13.4.
Table 13.4 Appropriation Statement for 2018 SEG Item 6 Operating grants & transfers Total Operating Expenditure Total Expenditure Budget Estimate ($) 6,253,596 Changes ($) --- Revised Estimate ($) 6,253,596 Actual Expenditure ($) 5,180,294 Lapsed Appropriation ($) 1,073,302 6,253,596 --- 6,253,596 5,180,294 1,073,302 6,253,596 --- 6,253,596 5,180,294 1,073,302 Independent Commissions Head 13: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE The assessment of financial governance for the Public Service Commission was performed together with the assessment of Ministry of Civil Service.
The results are included under section 17 of this report.

Independent Commissions Head 13: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 15 Ministry of Justice Roles and Responsibilities The Ministry of Justice is responsible for the administration of law and justice in Fiji.

The Ministry delivers judicial services through registries established by the law to maintain official records of legal documents.
The Office of the Registrar of Companies registers companies, businesses, credit unions and money lenders.

The Office of the Registrar of Titles registers titles and deeds.

The Office of the Registrar-General registers births, deaths and marriages.

The Office of the Official Receiver is responsible for the administration of the winding-up of companies and bankruptcy matters, whereas the Office of the Administrator General is responsible for the administration of the Justices of the Peace.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 15.1 Audit Opinion ............................................................................................................................. 2 15.2 Statement of Receipts and Expenditure .................................................................................. 2 15.3 Appropriation Statement .......................................................................................................... 3 15.4 Main Trust Fund Account........................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 6 PART B Internal Controls ........................................................................................................................ 6 15.5 15.6 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 7 15.7 Quality of draft financial statements by entities ...................................................................... 8 15.8 Timeliness of draft financial statements ................................................................................... 8 15.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 8 Ministry of Justice Head 15: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 15.1 Audit Opinion The audit of the 2018 accounts of the Ministry of Justice resulted in the issue of an unqualified audit opinion.
15.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $2,657,722 and incurred a total expenditure of $5,898,077 for the year ended 31 July 2018.

Details are provided in Table 15.1.
Table 15.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchases Total Capital Expenditure Value Added Tax Total Expenditure 31 July 2018 ($) 2,657,722 2,657,722 3,034,750 132,814 207,756 536,559 92,442 --- 1,218,597 5,222,918 442,798 70,162 512,960 31 July 2017 ($) 2,385,560 2,385,560 2,305,416 139,050 119,887 409,650 99,668 11,500 851,821 3,936,992 524,039 121,031 645,070 162,199 150,273 5,898,077 4,732,335 The following factors contributed to the increase in balances for some account areas:  Other State revenue increased by $139,413 due to bankruptcy and liquidation government revenues that were previously deposited in the Official Receiver Liquidation and Bankruptcy Trust Fund Account and now required by the Companies Act 2015 to be deposited into the Consolidated Fund Account.
 Travel and Communication expenditure increased by $87,869 in 2018 due to increase in meal allowance from $9 to $20 and increase in telecommunication expense following the opening of the new Birth, Death and Marriage (BDM) offices.

 Special Expenditure increased by $366,776 due to increase in meal allowance from $9 to $20 and overtime pay-out for those involved in the digitisation programme.
Ministry of Justice Head 15: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 15.3 Appropriation Statement The Ministry incurred expenditure totalling $5.8 million in 2018 against a revised budget of $7.9 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $2.0 million or 26%.

The savings under Travel and Communication is due to less spending on accommodation, travel and subsistence.
Savings under Operating Grants and Transfers is due to the approved budget being insufficient to facilitate the increase in subscription for Asian Pacific Group on Money Laundering.

Approval was given to facilitate the payment from anti-corruption activities allocation.

Savings under Capital Construction is due to the non-implementation of the decentralisation of BDM office projects and refurbishment of titles office project caused by delay in tender process for approval.
Details of expenditure against the revised budget are provided in Table 15.2.
Table 15.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 3,850,469 193,685 Changes ($) (65,000) --- Revised Estimate ($) 3,785,469 193,685 Actual Expenditure ($) Lapsed Appropriation ($) 3,034,750 132,814 750,719 60,871 293,000 55,000 348,000 207,756 140,244 4 Maintenance & 657,000 83,000 740,000 536,559 203,441 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 13 40,384 11,500 205,826 (73,000) 132,826 92,442 11,500 1,537,478 6,748,958 800,000 100,000 900,000 322,450 7,971,408 --- --- --- --- --- --- --- --- 11,500 --- 1,537,478 6,748,958 1,218,597 5,222,918 318,881 1,526,040 800,000 100,000 900,000 442,798 70,162 512,960 357,202 29,838 387,040 322,450 7,971,408 162,199 5,898,077 160,251 2,073,331 The Ministry collected revenue totalling $2,657,722 in 2018, an increase of 11% from the previous year.
15.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
The Ministry of Justice Ministry of Justice Head 15: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR operates and maintains two main trust fund bank accounts, which include the Official Receiver Liquidation Trust Fund Account and the Official Receiver Bankruptcy Trust Fund Account.

The Official Receiver administers Liquidation and Bankruptcy Accounts in accordance with the Companies Act 2015 and Bankruptcy Act 1944, respectively.
The creditor files the petition against the debtor by paying a sum of $150 for individual debtors and $700 for companies.

The petitions are then lodged with the Magistrates’ Court or High Court which then appoints the Official Receiver as the Official Receiver of a debtor’s estate for individuals or as the Provisional Liquidator for a company.
The Official Receiver then would have to take necessary steps as required under the Companies Act 2015 and the Bankruptcy Act 1944 to ensure recoveries are made from the debtors to pay off the creditors.

Money received from the individual debtors is deposited in the Bankruptcy Trust Bank Account for payment to creditors.

Money received from Liquidated Companies on the other hand is deposited into the Liquidation Trust Bank Account for payment to creditors.
15.4.1 Official Receiver Liquidation Trust Fund Account Table 15.3: Official Receiver Liquidation Trust Fund Account – Statement of Receipts and Payments Description Receipts Debt Collected Petition Search Fees Proof of Debt Total Receipts Payments Debt Payment Company Operational Expenditure Debtor Refund Petition Refund Valuation Costs Publication Costs Bank Fees & Charges Payment to CFA Accounting Fee Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) --- --- 1,531,283 (29,811) 617,248 587,437 Ministry of Justice Head 15: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 15.4.2 Official Receiver Bankruptcy Trust Fund Account Table 15.4: Official Receiver Bankruptcy Trust Fund Account – Statement of Receipts and Payments Description Receipts Debt Collected Search Fees Official Receiver Fees & Costs Petition Proof of Debt Total Receipts Payments Debt Payment Debtor Refund Publication Costs Petition Refund Bank Fees & Charges Payment to CFA Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 105,501 37,475 --- 4,456 18 147,450 59,788 673 4,733 --- 513 63,086 128,793 18,657 255,603 274,260 102,356 29,410 29,037 7,618 64 168,485 101,722 24,908 3,044 2,375 463 --- 132,512 35,973 219,630 255,603 Ministry of Justice Head 15: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B ASSESSMENT OF FINANCIAL GOVERNANCE 15.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Justice Head 15: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to the management of the entities on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by entities to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 15.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Ministry of Justice Head 15: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When Ministries and Departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 15.7 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 15.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 15.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Effective Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 5 days from issue of Financial Statements for signing Ministry of Justice Head 15: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 15A Fiji Corrections Service Roles and Responsibilities The Fiji Corrections Service [FCS] is responsible for properly and safely detaining and rehabilitating persons sentenced to a term of imprisonment or placed on remand pending trial by the courts at its correctional centres.
The FCS upholds Government’s obligation to meet international standards and best practices in its custody of inmates.

One of its main responsibilities is to reduce overcrowding in correction centres to ensure that the human dignity of all inmates is respected.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 15A.1 Audit Opinion ........................................................................................................................... 2 15A.2 Statement of Receipts and Expenditure ................................................................................ 2 15A.3 Appropriation Statement ........................................................................................................ 3 15A.4 Main Trust Fund Account ........................................................................................................ 4 15A.5 Consolidated Trading and Manufacturing Account .............................................................. 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 9 PART B: Internal Controls ...................................................................................................................... 9 15A.6 15A.7 Submission of FY 2017-2018 Draft Agency Financial Statements ......................................... 10 15A.8 Quality of Draft Financial Statements by entities ................................................................. 11 15A.9 Timeliness of Draft Financial Statements .............................................................................. 11 15A.10 Timeliness of Provision of Management Comments and Signing of Financial Statements 11 OTHER SIGNIFICANT MATTER .......................................................................................... 12 15A.12 Budget savings ....................................................................................................................... 12 15A.13 Weaknesses noted in the reconciliation process ................................................................. 13 PRIOR YEAR UNRESOLVED ISSUES ...................................................................................................... 15 15A.
14 Beneficiaries listing of Prisoner’s trust fund account ........................................................... 15 PART C: Fiji Corrections Service Head 15A: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 15A.1 Audit Opinion The audit of the 2018 accounts of the Fiji Corrections Service resulted in the issue of an unqualified audit opinion.
Without further qualifying the opinion above, attention was drawn to the following matters: 1.

Internal controls over the preparation of TMA cash at bank reconciliations were generally found to be weak.

This relates to reconciliations not being performed and reviewed on a timely manner.

Instances were noted where TMA cash at bank reconciliations were not adequately supported.
These internal controls weakness if not addressed on a monthly basis may result in material misstatements and possible financial losses in the future.

2.

Note 6 of the Department’s Financial Statements provides a brief description on the purpose of the Prisoners Cash Trust Fund Account.

As at the date of this report, the Fiji Corrections Service was in the process of updating the beneficiaries listing which details the actual income earned by the prisoners during incarceration.
15A.2 Statement of Receipts and Expenditure The Fiji Corrections Service collected revenue totalling $402,679 and incurred a total expenditure of $31,555,620 for the year ended 31 July 2018.

Details are provided in Table 15A.1.
Table 15A.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax Total Expenditure 31 July 2018 ($) 357,679 45,000 402,679 17,740,596 16,812 709,128 2,421,163 4,915,743 9,940 645,448 26,458,830 31 July 2017 ($) 64,779 1,604 66,383 18,275,010 31,721 473,504 1,890,104 4,349,534 9,623 359,071 25,388,567 3,540,439 486,302 4,026,741 6,844,787 364,890 7,209,677 1,070,049 1,374,477 31,555,620 33,972,721 Fiji Corrections Service Head 15A: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 15A.3 Appropriation Statement The Fiji Corrections Service incurred expenditure totalling $31.5 million in 2018 against a revised budget of $38.7 million, resulting in a saving of $7 million or 19%.
The significant savings of $3.6 million or 17% in Established Staff resulted from vacant positions which were not filled during the financial year.

Funds allocated under operating grant and transfers are used to pay those inmates with formal qualifications who provide services to institutions while in custody.

The funds are released to inmates upon their discharge from the care of Fiji Corrections Service.
For the financial year, there were less inmates released hence savings were noted for the funds allocated under operating grants and transfers.

Savings in Special Expenditure amounting to 27% was due to reduction in self-help projects, businesses and rehabilitation programs provided to sustain inmates when integrating into the community.

Savings in Capital Construction budget resulted from the delay caused by vetting of contracts and tender process for approval.
Details of expenditure against the revised budget are provided in Table 15A.2.
Table 15A.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 24,249,368 34,656 Changes ($) Revised Estimate ($) (2,904,151) 21,345,217 34,656 --- Actual Expenditure ($) 17,740,596 16,812 Lapsed Appropriation ($) 3,604,621 17,844 640,670 170,000 810,670 709,128 101,542 4 Maintenance & 1,923,000 811,424 2,734,424 2,421,163 313,261 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Expenditure Value Added Tax TOTAL Capital 3,806,232 1,683,761 5,489,993 4,915,743 574,250 46,260 --- 46,260 9,940 36,320 884,745 31,584,931 --- 884,745 (238,966) 31,345,965 645,448 26,458,830 5,425,000 550,000 5,975,000 --- --- --- 5,425,000 550,000 5,975,000 3,540,439 486,302 4,026,741 1,190,600 38,750,531 238,966 1,429,566 --- 38,750,531 1,070,049 31,555,620 239,297 4,887,135 1,884,561 63,698 1,948,259 359,517 7,194,911 The Department collected revenue totalling $402,679 in 2018; an increase of 507% from the previous year due to a refund received from a supplier for fence supplies which could not be provided, overpayment recoveries and late arrival deductions from staff.
Fiji Corrections Service Head 15A: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 15A.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
The Fiji Corrections Service operates and maintains the following trust fund bank account: 15A.4.1 Prisoners Cash Trust Fund Money held in trust consist of confiscated cash from prisoners upon convictions, engagement in the Trading and Manufacturing Small Business Units (TMA SBUs), engagement in the art gallery and commercial wage job placements.

For the TMA SBUs, the wage rate depends on the job cost, skill of the prisoner and years of experience in the trade.
The more skilful the prisoner, the higher the wage rate which is charged.

For commercial wage job placements, the wage rate depends on the rate offered by the company.

For the art gallery, 60% of sale goes to the prisoner while 40% is used to purchase gallery items.

The hours worked by the prisoners are recorded in the timesheets and receipted when deposited into the Prisoners Trust Account.
Any pay out for prisoners upon discharge is taken out from the Trust Account upon production of receipts by a prisoner.

Pay outs are based on actual cash earned by the prisoners during imprisonment.

If there are discipline issues during imprisonment these are accounted for when making payments to prisoners during release but upon Commissioner’s discretion.

All payments are supported by receipts and approved by the Commissioner before payment is made.
Table 15A.3: Prisoners Cash Trust Fund – Statement of Receipts and Payments Description Receipts Prisoner’s cash Job placement Sale of art gallery Sugar cane harvesting Commercial wages Total Receipts Payments Return of Prisoner’s cash Job placement Art gallery Sugar cane harvesting Total Payments Net surplus Balance as at 1 August Closing Balance as at 31 July 2018 31 July 2018 ($) 31 July 2017 ($) 27,969 7,399 14,730 173,861 1,758 225,717 81,042 558 3,320 34,654 119,574 106,143 661,323 767,466 389,987 --- --- --- --- 389,987 169,024 --- --- --- 169,024 220,963 440,360 661,323 15A.5 Consolidated Trading and Manufacturing Account The Fiji Corrections Service operates the Trading and Manufacturing Account (TMA) and is guided by its legal mandate to operate its Commercial Enterprises Unit as stipulated under the Fiji Corrections Act 2006 under Part 10 Clause 45 (a) to (d).
Fiji Corrections Service Head 15A: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The Department’s TMA consists of six Small Business Units (SBUs) namely the Bakery, Joinery, Piggery, Poultry, Tailor and Crops.

The summary of the activities are presented in a consolidated form as there is only one bank account for all the SBUs.
The operation of these TMA helps in the rehabilitative work programs with key objective of teaching and developing inmates with basic industrial and agricultural skills.

The TMA also generates much needed revenue through the sale of agricultural products, joinery, tailor and bakery materials.

The activities for the TMA are as follows: Bakery - is responsible for baking long loaves and slice bread.

Bakery unit is located within the Maximum Correction facility.
This is the only product currently produced at the bakery.

The production is to cater for the demand from the corrections institution and two main external customers which are the Fiji Military Forces and Fiji Navy.

It also includes supply for special events like the Hibiscus Festival and Show Case when the need arises.

Crops - does farming of crops and vegetables such as ginger, cassava, dalo and many other products according to seasons.
The produce are mostly used to cater for institutional needs and also for sale to local buyers.

Joinery - comprises of inmates who are involved with the construction of furniture items for institutional and commercial use.

The furniture include construction of tables, desks, chairs, coffin boxes and wardrobes.

Piggery - is responsible for breeding pigs and supplying pig meat to buyers along the Navua to Nausori corridor.

The unit breeds pigs from weaner to baconer.


Although it’s not part of the major supplies of pig meat in Fiji, the unit is aiming to improve its breeding numbers.

Poultry - is responsible for breeding live chickens for supply of fresh eggs which are then retailed in the local market.

The eggs produced are of high quality with affordable prices compared to other suppliers of fresh eggs and is mostly bought by households and businesses around the greater Suva area.
Additionally, the unit sells live chicken.

Tailor - is responsible for making garments such as school uniforms, beddings, government uniforms, health workers uniforms/coats and many more.

Garments are mostly bought by clothing retail shops around Fiji.

The unit also specializes in custom made designs and modifies the designs according to customer needs.
The operating results for each business unit are tabulated below: Fiji Corrections Service Head 15A: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 15A.4: Operating results for each business unit Bakery Crops Joinery Piggery Poultry 2018 ($) 2017 ($) 2018 ($) 2017 ($) 2018 ($) 2017 ($) 2018 ($) 2017 ($) 2018 ($) 2017 ($) Tailoring 2018 ($) 2017 ($) Consolidated 2017 2018 ($) ($) Business Units Income Gross Profit Expenses Maintenance and Operations Total Expenses Net Profit/(Loss) 84,123 207,096 10,455 81,517 (21,890) (38,498) (13,473) (21,924) (48,059) 146,193 161,041 104,387 247,038 161,159 1,361 453,091 522,166 Fiji Corrections Service Head 15A: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR As can be seen from the table above, loss incurred in operation of Joinery business unit was financed from surpluses in other operations.
The consolidated Trading and Manufacturing Accounts are presented in the tables below: Table 15A.5: Manufacturing Account – Consolidated Trading Activity Description Opening Raw Materials Add: Purchases Less: Closing Raw Materials Raw Materials Used Add: Opening Work in Progress Add: Direct Cost – Labour Less: Closing Work in Progress Cost of Manufactured Goods Transferred to Trading Account Table 15A.6: Trading Account – Consolidated Trading Activity Description Sales Total Sales Opening Stock Add: Cost of Manufactured Goods transferred from Manufacturing Account Less: Closing Stock of Finished Goods Cost of Goods Sold Gross Profit transferred to Profit & Loss Account 31 July 2018 ($) 44,019 882,043 926,062 72,841 853,221 95,424 31,423 357,243 31 July 2017 ($) 142,969 1,066,375 1,209,344 44,019 1,165,325 108,721 37,153 95,424 622,825 1,215,775 31 July 2018 ($) 1,487,190 1,487,190 354,541 622,825 31 July 2017 ($) 2,033,087 2,033,087 396,308 1,215,775 17,570 959,796 527,394 354,541 1,257,542 775,545 Table 15A.7: Profit and Loss Account – Consolidated Trading Activity Description Income Gross Profit Transferred from Trading Account Total Income Expenses Maintenance and Operations Total Expenses Net Profit 31 July 2018 ($) 31 July 2017 ($) 527,394 527,394 74,303 74,303 453,091 775,545 775,545 253,379 253,379 522,166 Fiji Corrections Service Head 15A: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 15A.8: Balance Sheet – Consolidated Trading Activity Description Assets Cash at Bank Debtors Raw Materials Works in Progress Finished Goods VAT Receivable Total Assets Net Assets Equity TMA Accumulated Surplus TMA Surplus transferred to Consolidated Fund Net Profit Total Equity 31 July 2018 ($) 31 July 2017 ($) 702,424 218,558 72,841 357,243 17,570 8,064 1,376,700 1,376,700 916,713 6,896 453,091 1,376,700 753,527 218,558 44,019 95,424 354,541 13,390 1,479,459 1,479,459 950,397 6,896 522,166 1,479,459 Fiji Corrections Service Head 15A: Page 8 REPORT OF THE
 AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 15A.6 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

• Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
• Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
• Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Fiji Corrections Service Head 15A: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

• Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 15A.7 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Foreign Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were: • Closing date for journal adjustments by 10 August 2018 • Clearance of Inter-departmental clearance accounts by 3 August 2018 • Clearance of stale cheques by 22 August 2018 • Annual Board of Survey on Drawings Account cheques by 22 August 2018 • Retirement of imprests by 20 July 2018 • Cancellation of unprocessed purchase orders by 27 July 2018 • Processing of payments and virement by 31 July 2018 • Completion of reconciliations by 29 August 2018 • Submission of arrears of revenue returns by 31 August 2018 Fiji Corrections Service Head 15A: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 15A.8 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Department was: Rating Quality of draft financial statements assessment  Ineffective Adjustments on operating results were more than one percent 15A.9 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 15A.10 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Ineffective After 15 days from issue of Financial Statements for signing Fiji Corrections Service Head 15A: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTER The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Fiji Corrections Service as at 31 July 2018.
15A.12 Budget savings Each year the Appropriation Act and the Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.1 We noted that there were significant savings in certain expenditure allocations of the Department.

The overall savings for the Department was $7,194,911 which equates to 19% of the revised budget.

Refer to table below for detail.
Table 15A.9: Detail of significant savings Expenditure Established staff Government wage earners Operating grants and transfers Special expenditures Capital construction Root cause/Implication Revised budget ($) 21,345,217 34,656 46,260 884,745 5,425,000 Actual expenditure ($) Savings ($) Percentage savings ($) 17,740,596 3,604,621 17,844 36,320 239,297 3,540,439 1,884,561 16,812 9,940 645,448 17 51 79 27 35 Such finding indicates that there was no proper planning of procurement and implementation of capital projects.
As a result, the Department’s budget was under-utilized and organizational objective was not met.

Recommendation The Department should ensure that proper planning is done for utilizing the funds as appropriated by Parliament.

1 Finance Instructions 2010 – Section 7 Fiji Corrections Service Head 15A: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action This recommendation is welcomed.
The overall 16% budget saving is from various allocations within the operating and capital SEGs of FCS budgetary provisions.

There are two major SEGs that contribute to this percentage balance, is the SEGs 1 and 8.

This issue will be rectified in the next financial period (2019/20), to which MoE budget division has reduced FCS SEG 1 vote by $2,670,000 and VAT at $253,900; bringing to a total of $5,159,911.

This budgetary decrease will eventually equate the savings experienced in this 2017/18 period.
Savings was mainly derived from the vacant posts and funds released through RIEs for SEG 8, Capital construction.

Officer Responsible Senior Accounts Officer 15A.13 Weaknesses noted in the reconciliation process The TMA Clerical Officer shall be responsible for preparing and submitting to the Ministry of Economy a monthly bank reconciliation statement within 7 days after the end of the month.

A standard Bank Reconciliation format is provided in Part 18 Schedule 6 of the manual.
The TMA bank reconciliation is to be submitted first to the Accounts Officer/ Senior Accounts officer, who will verify and forward to the Commissioner of Corrections for endorsement.

2 The Senior Accounts Officer should ensure that all irregularities in the bank reconciliation is investigated and rectified within 7 work days and all irregularities are documented.3 Internal controls over the preparation of salary reconciliations and TMA cash at bank reconciliations were generally found to be weak.
This relates to reconciliations not been performed and reviewed on a timely manner and endorsed by the Commissioner.

Instances were noted where TMA cash at bank reconciliations were not adequately supported.

Refer to table below for detail.

Table 15A.10: Detail of weaknesses in reconciliation process.
TMA Cash Book Reconciliations Reconciliation Month Financial Year August September October November December January February March April May June July 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 2018 Audit Observations Bank reconciliation provided was not signed by SAO and endorsed by the Commissioner.

Opening balance did not agree with previous month's closing balance.

Bank reconciliation provided was not signed by the SAO and endorsed by the Commissioner.
All supporting for adjustments were not attached.

documentation 2 Fiji Corrections Service Finance Manual 2018 – 2019 Section 6.5.3 3 Fiji Corrections Service Finance Manual 2018 – 2019 Section 6.5.4 Fiji Corrections Service Head 15A: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The above errors were only rectified by the Department after it was highlighted during audit.
The practices highlighted above were also prevalent in our audit of the 2016-2017 financial statements, whereby amended reconciliations were resubmitted only after errors and omissions were discovered following our audit.

Root cause/Implication The audit finding indicates that the monthly monitoring and supervision of the reconciliations process has been ineffective.

These internal controls weakness if not addressed may result in material misstatements and possible financial losses in the future.
Recommendation Supervisory checks are strengthened at the Accounts Section to ensure all reconciliations checks and verifications are carried out in a timely manner.

Agreed Management Action The Audit findings is acknowledged.

• • • Reconciliations have a timeline for endorsement and submission to MoE.

This timeliness have been improved to meet the schedule times.
Changes in balances are usually identified later after the closing hence the reason for correcting the reconciliations to balance back with the FMIS system.

The variances between the opening and closing balances were addressed accordingly through the re - submission of all monthly recons as required by them.

FCS has tried its best to address this issue; the insufficiency in the FMIS structure to capture FCS TMA processes.

• Amended recons were given to OAG and variances clarified and cleared.
Officer Responsible Senior Accounts Officer Fiji Corrections Service Head 15A: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PRIOR YEAR UNRESOLVED ISSUES 15A.
14 Beneficiaries listing of Prisoner’s trust fund account Within 5 days after the end of each month, the reconciliation clerk shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.4 Details of balances must be attached to the reconciliation.5 Review of the Prisoner's trust fund account revealed that the beneficiaries listing was not updated whereby the listing entailed unidentified beneficiaries.
Root cause/Implication This indicates the lack of proper controls and supervisory checks for record keeping and administration of Prisoner's Cash Trust Account.

In the absence of updated beneficiaries’ listings, it will be difficult for the Department to verify claims made by beneficiaries.

Recommendation The Department should identify all the beneficiaries and reconcile their record against the general ledger (FMIS) balance.
Agreed Management Action We have acknowledged the audit team's comments on the maintaining of documents with respect to the Prisoner Trust Fund Account.

We confirm that receipt documents prior to 2015 cannot be located in our archives room and stores.

As way forward, to release funds to an inmate being discharged that was incarcerated prior to 2015, the original receipt is requested from the supervisor and OC in which the inmate is detained.
This is checked with the FMIS system for any payments processed for this bearer.

If not, then a payment is processed upon the approval of the Commissioner and released to the inmate.

If original is misplaced, a statutory declaration is made and system checked also.
Officer Responsible Senior Accounts Officer 4 Fiji Corrections Service Finance Manual 2018 - 2019, Section 15.4.1 5 Fiji Corrections Service Finance Manual 2018 - 2019, Section 15.4.2 Fiji Corrections Service Head 15A: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Head 16 Ministry of Communication Roles and Responsibilities Modern technology can create many opportunities for media, businesses, education, health and finance.
It provides access to a world of information and helps keep families and communities, often separated by vast distances, connected.

Government is committed to spreading the benefits of technology to all Fijians – to bridge the digital divide between the rural and urban, the rich and the poor.

The benefits of technological advances should be equally accessible to all Fijians and not just the elite.
In pursuit of this goal, the Ministry of Communication is responsible for providing coordination, support and leadership on all matters of policy, law, regulation and strategy for the Information, Communication and Technology [ICT] sector.

The Ministry comprises the following Departments: Information, Communication and Information Technology and Computing Services.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 16.1 Audit Opinion ............................................................................................................................. 2 16.2 Statement of Receipts and Expenditure .................................................................................. 2 16.3 Appropriation Statement .......................................................................................................... 3 16.4 Main Trust Fund Account........................................................................................................... 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 6 PART B: 16.5 Internal Controls ........................................................................................................................ 6 16.6 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 7 16.7 Quality of Draft Financial Statements by entities..................................................................... 8 16.8 Timeliness of Draft Financial Statements ................................................................................. 8 16.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 8 OTHER SIGNIFICANT MATTERS ......................................................................................... 9 16.10 Additional budget appropriation vired from ITC ...................................................................... 9 16.11 Corporate Governance ............................................................................................................. 10 16.12 Non submission of proper acquittal for grant appropriated to WALESI Ltd ......................... 11 PART C: Ministry of Communications Head 16: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 16.1 Audit Opinion The audit of the 2018 accounts of the Department of Information and Communications resulted in an unqualified audit opinion.
16.2 Statement of Receipts and Expenditure The Department of Information and Communication collected revenue totalling $22,103 and incurred a total expenditure of $32,688,342 for the year ended 31 July 2018.

Details are provided in Table 16.1.
Table 16.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchase Capital Grants and Transfers Total Capital Expenditure 31 July 2018 ($) 18,630 3,473 22,103 1,247,516 161,671 348,901 101,507 1,845,460 803,966 2,298,854 6,807,875 9,075,678 14,368,579 --- 23,444,257 31 July 2017 ($) 20,754 3,793 24,547 1,078,089 148,439 253,981 97,774 770,654 549,142 2,205,091 5,103,170 4,014,641 --- --- 4,014,641 Value Added Tax Total Expenditure 2,436,210 471,843 32,688,342 9,589,654 The total expenditure incurred by the Department in 2018 increased by $23,098,688 or 241% compared to 2017.
The following factors contributed to the increase in the expenditures in 2018:  Established Staff expenditure increased by $169,427 due to the increase in pay as a result of implementation of Job Evaluation Review and the introduction of salary bands and steps.

 Government Wage Earners costs also increased by $13,232 as a result of implementation of Job Evaluation Review and wage rate increase.
 Travel and Communication expenditure increased by $94,920 due to increase in meal allowance from $9 to $20 and purchase of communication tools due to increases in staffing.
 Purchase of Goods and Services increased by $1,074,806 or 139.5% due to the inclusion of new budgetary provisions for Qorvis Communication and National Training Productivity Centre Levy which were previously budgeted under Head 50 – Miscellaneous Services and Ministry of Communications Head 16: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Head 17 – Ministry of Civil Service respectively.
An increase was also noted in the budget provision for purchase of photography cameras for coverage of main events.

 Operating Grants and Transfers costs increased by $254,824 due to increase in grant pay- out to Telecommunication Authority of Fiji.

 Special expenditure increased by $93,763 due to the inclusion of new budgetary provision for hosting of Asia Pacific Broadcasting Union (ABU) meeting in February 2018.
 Capital Construction increased by $5,061,037 or 126.1% as a result of inclusion of World Bank loan component for Cable Connection project to Vanua Levu.

 Capital Purchase increased by $14,368,579 due to the provision of grant to WALESI Limited for the Digital TV Rollout programme.

 Value Added Tax expenditure increased by $1,964,367 as a direct result of the increase in related standard expenditure groups.
16.3 Appropriation Statement The Department incurred expenditure totalling $32.7 million in 2018 against a revised budget of $41.7 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $9.0 million or 28%.

The savings was largely attributed to capital construction.
The savings for capital construction of $7,461,401 was the result of an additional budget funding of $12.5 million as the loan component from the World Bank to fund the Suva to Savusavu Cable Project, which was successfully completed in July 2018.

Details of expenditure against the revised budget are provided in Table 16.2.
Table 16.2: Appropriation Statement for 2018 SEG Item wage 1 2 3 Established staff Government earners Travel communication 4 Maintenance Budget Estimate ($) 1,815,490 192,610 Changes ($) (135,000) - Revised Estimate ($) 1,680,490 192,610 Actual Expenditure ($) 1,247,516 161,671 Lapsed Appropriation ($) 432,974 30,939 & & 328,782 80,000 408,782 348,901 59,881 203,520 (16,000) 187,520 101,507 86,013 operations Purchase of goods & services Operating grants & transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchases Capital grants and transfers 2,097,792 (89,000) 2,008,792 1,845,460 163,332 1,297,598 (469,000) 828,598 803,966 24,632 3,180,000 9,115,792 (849,000) (1,478,000) 2,331,000 7,637,792 2,298,854 6,807,875 32,146 829,917 17,537,079 (1,000,000) 16,537,079 9,075,678 7,461,401 8,000,000 6,368,579 14,368,579 14,368,579 --- --- --- --- --- --- Ministry of Communications Head 16: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR SEG Item Total Capital Expenditure Value added tax TOTAL 13 Budget Estimate ($) 25,537,079 Changes ($) Revised Estimate ($) Actual Expenditure ($) 5,368,579 30,905,658 23,444,257 Lapsed Appropriation ($) 7,461,401 2,821,300 37,474,171 402,710 3,224,010 4,293,289 41,767,460 2,436,210 32,688,342 787,800 9,079,118 The Department received additional budget funding of $4.3 million vired from the Department of Information and Technological Services (ITCS) to fund the Digital Television program overseen by WALESI Company Limited.
16.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Department operates and maintains a main trust fund bank accounts which was established under the Telecommunication Act 2008 and the Telecommunication (Trust Fund) Regulations 2016 for the in purpose of telecommunications.
interconnections to fund national developments imposing a levy on the Carriers (such as Telecommunication companies) are liable to pay to the Department a levy at such rate as maybe specified by order published in the Gazette.

Money that is accumulated in the Telecommunication Development Trust Fund may be invested or utilised for national development in relation to information, communication and technology projects approved by Minister.
The Telecommunication Trust Fund Account recorded a balance of $682,617 for the financial year ending 31 July 2018.

The Trust recorded receipt totalling $5,407,299 and expenses totalling $8,327,105 resulting in net deficit of $2,919,806 for the financial year ending 31 July 2018.
Details of receipts against payments are provided in Table 16.3 Table 16.3: Telecommunication Trust Fund Account - Statement of Receipts and Payments Description Receipts Levy Fees from Telecommunication Companies Pay Reimbursement Interest VAT refund for JICA project Total Receipts Payments Digital Television (DTV) Expenses - WALESI Tele-centre Expenses Bank Fee VAT payment for JICA Project Government Digital Transformation Total Payments Ministry of Communications 31 July 2018 ($) 5,404,944 --- 2,355 --- 5,407,299 31 July 2017 ($) 6,320,657 188 12,708 1,312,320 7,645,873 6,224,425 544,159 229 35,818 1,522,474 8,327,105 23,671,568 507,861 225 1,291,940 --- 25,471,594 Head 16: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Description Net Deficit Balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) (2,919,806) 3,602,423 682,617 (17,825,721) 21,428,144 3,602,423 Ministry of Communications Head 16: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 16.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Communications Head 16: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of agencies on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Rating Internal control assessment  Generally effective Adjustments on operating results/net assets were less than one percent 16.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions detailing the procedures and timelines for closing of the 2018 accounts.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Clearance of stale cheques prior to 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments by 31 July 2018 and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Ministry of Communications Head 16: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Effective All 9 key processes completed by due date 16.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 16.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 18 October 2018 16.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 20 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 7 days from issue of Financial Statements for signing Ministry of Communications Head 16: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Department as at 31 July 2018.

16.10 Additional budget appropriation vired from ITC The Department of Communication was appropriated a sum of $32,853,600 in the 2017-2018 National Budget.
At the end of the financial year, an additional funding of $4,293,289 was vired from the Department of Information and Technological Services (ITCS).

The virement of additional funding was made into SEG 9 Capital Purchases for the Digital TV Rollout program with WALESI Ltd.

The initial budget appropriated for 2018 was $8,000,000 which was paid in a lump sum to WALESI Ltd in September 2017.
Root cause and Implication While the project of digitalization is appreciated, the additional funding requested through virements highlights weakness in the budget preparation process of the Department of Communication.

Virement of such large amount indicates that planning for the project was not comprehensively carried out.

Recommendations The Department should plan comprehensively for large projects to ensure that funds are readily available for the projects.
Agreed Management Action Audit concern has been noted.

Upon request from WALESI Ltd, further grant was paid out through vired funds from ITC.

Due to the high public demand in 2018 after the rollout, Free Public WIFI were launched.

In addition to this, as per Government initiative to promote Digital Television, free set up boxes were also issued to public.

The additional costs was not due to poor planning by WALESI Ltd, but change in scope of the operation as required by the shareholder (Government).
The overall cost was more than the budgeted.

Officer responsible Senior Accounts Officer Ministry of Communications Head 16: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR 16.11 Corporate Governance Having strategic plans and annual corporate plans provides the department direction and a flow of accountability from the Government National Development Plan which are then linked to operational plans and subsequently, the individual work plans.
The flow of accountability in these plans also demonstrates outcomes to be achieved and provides measures of appropriate key performance indicators for the Department.

We noted that the Department did not have a corporate plan or a strategic plan in place.

The last annual corporate plan and strategic plan was last developed for the financial year ending 2014.

Additionally, the last annual report the Department prepared was for year ending 2014.
As practices of good governance requires, records of management meetings were also not maintained.

Root cause and Implication The Department did not develop the strategic and annual plan because the operations of the Department has remained fairly the same.

Inability to document strategies and plans of the Department, in line with Government goals and plans, can result in the lack of direction and non-achievement of government plans and goals.
Recommendation The Department should ensure that • a strategic plan and annual corporate plan is developed in line with the National Development plan • Requirements of the Financial Management Act 2004 Division 3 in relation to annual reports should be adhered.

• Minutes of management meeting must be kept for records and monitoring of management decisions Agreed Management Action • Strategic Development Plan Ministry of Communication has a draft Strategic Development Plan 2018-2021 in place.
At present, this is in a reviewing stage to align with the Government vision “Transforming Fiji”.

The Ministry will have this document ready for the management decision in the second half of this year (2019).

• Annual Corporate Plan The Annual Corporate Plan 2018-2019 is in draft form.

There is a review in progress to align Annual Corporate Plan with Strategic Development Plan.

Ministry has maintained its business work plan at the Unit level as a working document.
The Ministry ensures that all Staffs are well versed with their accountabilities.

The staff performance is assessed on this unit work plan.

• Minutes of Heads Meeting Ministry of Communications Head 16: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2019 – GENERAL ADMINISTRATION SECTOR Ministry has stopped raising and circulating minutes of the meeting to minimize paper usage.

Ministry does have an action plan soft copy for discussion purposes.
Preference is to continue with daily and weekly briefing at unit level and important issues raised are included in the soft copy action plan.

Officer responsible Principal Assistant Secretary and Senior Accounts Officer 16.12 Non submission of proper acquittal for grant appropriated to WALESI Ltd The grant agreement signed between the Ministry of Communication and WALESI Ltd on 22 September 2017 required that the grant recipient (WALESI Ltd) must submit to Government quarterly acquittal reports.
While the agreement did not detail the form of acquittal report to be submitted, WALESI Ltd submitted their cash book only and a list of all installations done so far.

It was noted that the financial statements, status and progress report was not provided to the Department of Information and Communication.

A total grant of $14,368,579 was paid out to WALESI Ltd in financial year 2018.
Root Cause/Implication Since the grant pay-out was a lump sum payment, the acquittal for the previously given grant amount was not enforced.

This is a non-compliance to the signed grant agreement.

Recommendation The Department must enforce the requirements of the agreement to obtain the quarterly acquittal report and provide the necessary checks and reviews on the utilisation of the government grant in accordance to the purpose and agreement of the grant.
Agreed Management Action Management acknowledges the audit findings and has noted recommendations for further improvement and compliance.

For the 2017/2018 financial year, a lump sum grant payment was made to WALESI Ltd and department had received a full year report with the cash book.

Further grant was paid to WALESI Ltd this financial year (2018/2019) and the department to date has received 2 quarterly reports from them.
The Department will ensure that it continues to comply with the requirement of the agreement by providing the necessary checks and reviews on the utilization of funds.
Officer responsible Senior Accounts Officer Ministry of Communications Head 16: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 16A Department of Computing Services Information Technology and Role and Responsibilities Modern technology can create many opportunities for media, businesses, education, health and finance.
It provides access to a world of information and helps keep families and communities, often separated by vast distances, connected.

Government is committed to spreading the benefits of technology to all Fijians – to bridge the digital divide between the rural and urban, the rich and the poor.

The benefits of technological advances should be equally accessible to all Fijians and not just the elite.
In pursuit of this goal, the Ministry of Communication is responsible for providing coordination, support and leadership on all matters of policy, law, regulation and strategy for the Information, Communication and Technology [ICT] sector.

The Ministry comprises the following Departments: Information, Communication and Information Technology and Computing Services.
Table of Contents PART A: FINANCIAL STATEMENT ......................................................................................................... 2 16A.1 Audit Opinion ............................................................................................................................. 2 16A.2 Statement of Receipts and Expenditure ................................................................................. 2 16A.3 Appropriation Statement .......................................................................................................... 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ........................................................................ 4 16A.4 Internal Controls ....................................................................................................................... 4 16A.5 Submission of FY 2017-2018 Draft Agency Financial Statements ............................................ 5 16A.6 Quality of draft financial statements by entities ..................................................................... 6 16A.7 Timeliness of Draft Financial Statements ................................................................................. 6 16A.8 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 6 PART C: OTHER SIGNIFICANT MATTERS ............................................................................................. 7 16A.9 Corporate governance .............................................................................................................. 7 16A.10 Unutilised Budget and Budget Savings .................................................................................... 8 16A.11 Overstatement of SEG 4 ............................................................................................................ 9 Department of Information Technology and Computing Services Head 16A: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENT 16A.1 Audit Opinion The audit of the 2018 accounts of the Department of Information Technology and Computing Services resulted in an unqualified audit opinion.
16A.2 Statement of Receipts and Expenditure The Department collected revenue totalling $142,041 and incurred a total expenditure of $7,908,807 for the year ended 31 July 2018.

Details are provided in Table 16A.1 below.
Table 16A.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Commission Total State Revenue Agency Revenue Miscellaneous Revenue Total Agency Revenue Total Revenue Operating Expenditure Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditure Total Operating Expenditure Capital Purchases Capital Grants & Transfers Total Capital Expenditure 31 July 2018 ($) 31 July 2017 ($) 40 40 142,001 142,001 142,041 1,231,836 17,317 1,274,509 986,332 2,642,123 1,092,121 7,244,238 --- 132,868 132,868 69 69 20,433 20,433 20,502 1,570,594 17,748 1,334,290 1,213,312 3,274,015 1,217,068 8,627,027 793,468 793,468 Value Added Tax 531,701 722,051 Total Expenditure 7,908,807 10,142,546 The total expenditure incurred by the Department in 2018 decreased by $ 2,233,739 or 22% compared to 2017.
The following factors significantly contributed to the decrease in the expenditures in 2018:  Established Staff costs decreased by $338,758 or 21.6% as a result of staff turnover and the vacancy of more than 50% of the established positions which remained vacant at year end.

 Travel and Communication costs decreased by $59,781 or 4.5% due to reduction of work travels and related expenses.
 Maintenance and Operation costs decreased by $226,980 or 18.7% as a result of decrease in the use of motor vehicles and related expenses.

Additionally, there was a decrease in the use of stationeries, and power supply.
Department of Information Technology and Computing Services Head 16A: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Purchase of Goods and Services expenses decreased by $631,892 or 19.3% due to the reduction in the number of local and overseas trainings attended.

Additionally software upgrades were not carried out during the financial year except for renewal of existing licenses.
 Special expenditure decreased by $124,947 or 10.3% as some invoices were unpaid at year end.

 Capital Construction, Capital Purchase and Capital Grants and Transfers decreased by $660,600 or 83.3% as a result of the non-implementation of capital projects planned for the financial year apart from the utilisation of 50% advance payment for the National Switch project.
Planned capital projects budgeted for in the financial year which remained unutilised at financial year end were for the Disaster Recovery site, Digitisation of the BDM, Companies and Titles Office, Central VOIP Infrastructure, Data centre certification, storage system capacity, Government Fibre Network Project and Fiji Pay.

 Value Added Tax expenses decreased by $190,350.

This is a direct result of the decrease in related expense accounts.
16A.3 Appropriation Statement The Department of Information Technology and Computing Services incurred expenditure totalling $7.9 million in 2018 against a revised budget of $13.5million resulting in savings of $5.68 million or 41.8%.

During the financial year, a total of $4,293,289 of budgetary allocation was transferred out of the Department to the Department of Information and Communication to cater for payments to WALESI Limited.
Details of expenditure against the revised budget are provided in Table 16A.2.
Table 16A.2: Appropriation Statement for 2018 SEG Item Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditure Total Operating Cost Capital Construction Capital Purchase Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL Budget Estimate ($) 3,641,042 41,501 1,614,392 2,186,000 3,804,760 Revised Estimate ($) 2,023,888 41,501 1,466,103 2,034,773 3,805,987 2,000,000 2,000,000 13,287,695 11,372,252 50,000 1,061,272 175,000 1,286,272 937,676 17,889,489 13,596,200 50,000 2,461,272 1,000,000 3,511,272 1,090,522 Actual Expenditure ($) 1,231,836 17,317 1,274,509 986,332 2,642,123 1,092,121 7,244,238 --- --- 132,868 132,868 531,701 7,908,807 Lapsed Appropriation ($) 792,052 24,184 191,594 1,048,441 1,163,864 907,879 4,128,014 50,000 1,061,272 42,132 1,153,404 405,975 5,687,393 The Department collected revenue totalling $142,041 in 2018, an increase of 593% from the previous year.
The increase was due to the receipt of a reimbursement of an overpayment made in the prior year.

Department of Information Technology and Computing Services Head 16A: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 16A.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Department of Information Technology and Computing Services Head 16A: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to the management of the entities on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by entities to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment  Risk Assessment  Control Activities  Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Ratings Internal control assessment  Generally Effective Deficiencies identified in internal controls 16A.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions detailing the procedures and timelines for closing of the 2018 accounts.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of un-presented cheques by 31 July 2018  Clearance of stale cheques prior to 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments by 31 July 2018 and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Department of Information Technology and Computing Services Head 16A: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Ratings Year-end close process assessment  Effective All 9 key processes completed by due date 16A.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the below department was: Ratings Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 16A.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Ratings Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received on or before 31 October 2018 16A.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective Management response received after 14 days Rating  Effective Timeliness of Signed Financial Statements Received Signed accounts was received after within 15 days Department of Information Technology and Computing Services Head 16A: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Department as at 31 July 2018.
16A.9 Corporate governance Our review of the governance structure of the Department revealed the following;  The annual corporate plan, strategic plan were still in draft format at the end of the financial year;  Annual report of the Department for financial year 2017 is still in draft; and  Risk management policy, disaster recovery plan, business continuity plan and a Human Resource policy in line with government policies issued by the Civil Service Reform Management Unit (CSRMU) were not developed by the Department Root Cause/Implication The anomalies indicate that the department does not have proper processes in place to ensure timely preparation of the Annual Corporate plan, update of the strategic plan and Annual plan.
In absence of the above mentioned plans and reports the Department can lack strategic direction.

In addition, absence of the Risk Management Policy and business continuity plans can pose risk of operations in case of natural disasters or unforeseen events.

Recommendation The Department should ensure that it prepares and finalizes the plans and reports in a timely manner.

Agreed Management Action The Annual Corporate Plan and Annual Report are currently being finalized.
With regards to Risk Management Policy, Disaster Recovery Plan, Business Continuity Plan, a tender for an IT Disaster Recovery was advertised.

There was a table top exercise with Singapore Corporation Enterprise (SCE) where a simulation was carried out on Payroll and FMIS and how data would be recovered during disaster.

The objective of the table top exercise of 6hrs was met within 5.5hrs.

A Business Continuity Plan (BCP) was also discussed during the exercise.
Department of Information Technology and Computing Services Head 16A: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Officer responsible Management 16A.10 Unutilised Budget and Budget Savings Each year the Appropriation Act and the Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency1.

Our review of the Department’s financial statement revealed overall savings in the budget.
The Capital Expenditure budget was not utilized in the year.

Total percentage of savings was 59%.6.

Refer to Tables 16A.3 and 16A.4 below for details.
Table 16A.3: Details of Expenditure Groups with savings of more than 30% Expenditure Group Established staff Government Wage Earners Maintenance & Operations Purchase of Goods & Services Special Expenditure Capital Construction Capital Purchase Revised Budget ($) 2,023,888 41,501 Actual Expenditure ($) 1,231,836 17,317 792,052 24,184 Variance ($) % Utilized % Savings 2,034,773 986,332 1,048,441 3,805,987 2,642,123 1,163,864 2,000,000 50,000 1,061,272 1,092,121 --- --- 907,879 50,000 1,061,272 61% 42% 48% 69% 55% 0% 0% 39% 58% 52% 31% 45% 100% 100% Table 16A.4: Details of budgeted ITC projects not implemented Description Capital construction (SEG 8) Disaster recovery site project Capital Purchase (SEG 9) Central VOIP (Voice over Internet Protocol): An internet based telephone system to provide a central and secure unified communication platform, which is also much cheaper to run than a traditional telephone system.
Original Budget ($) Revised Budget ($) 50,000 50,000 461,272 461,272 Storage System Capacity: To increase the storage capacity in ITC for current and future requirements.

250,000 250,000 Data Centre Infrastructure Upgrade: To consolidate all Government systems to a central Data Centre that meets the highest international standards.

250,000 50,000 Government Fibre Network Project: To replace 20-year-old and obsolete multimode fibre optic cables with newer fibre cables in the CDB areas.
This will improve the speed of accessing the Govnet network and provide a stable environment for online services.

500,000 300,000 1 Finance Instruction 2010 Appropriations Department of Information Technology and Computing Services Head 16A: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root cause/implication Unutilized funds may reflect ineffectiveness in carrying out planned activities for the year.
In addition, the department may not be achieving its objectives.

Recommendations The Department must:  Ensure that it is adequately resourced to carry out planned activities of the Department; and  Ensure that government policies and initiatives appropriated in the Budget are carried out Agreed Management Action Capital Projects 1.

DR site Tender has been advertised for DR Solutions Table top exercise complete and target of 6hrs recovery time was achieved 2.
DC Infrastructure Upgrade - A tender has been advertised fora Building Management System solution 3.

Govt.

Fiber network - Tender was advertised to complete the last two phases.

With regard to the recommendation, it is noted that ITC is currently reviewing the number of total staff required within ITC.

The structure lists 105 established and 3 unestablished and the intention is to reduce this number.
Work has already commenced to restructure/re-evaluate some of the roles within ITC to align the job descriptions and roles to the role title and the remuneration package.

When comparing to the old structure, we have now consolidated some of duties which was common to a particular position thereby reducing the number of positions.
The re-evaluation of the ITC structure will result in a more streamlined Organization structure that is also effective and efficient Officer responsible Team Leader Infrastructure 16A.11 Overstatement of SEG 4 We noted an incorrect recording of a payment was made on 27/11/2017 under SEG 4 - Maintenance and Operations expenses instead of the budgeted SEG 10 – Capital Grants and Transfers.
The payment was made out of SEG 4 as there were delays in the approval of the Requisition to Incur Expenditure (RIE) from Ministry of Economy which restricted the Department from utilising the budget under SEG 10.

The payment was later correctly posted to the relevant expenditure allocation in SEG 10.

However, it was noted that the withholding tax portion of the payment amounting to $23,447.27 was not adjusted out of SEG 4.
Root cause/implication The above anomaly indicates the absence of proper checks verification of journal vouchers before posting into the general ledger.

Department of Information Technology and Computing Services Head 16A: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendation The Senior Accountant must ensure that thorough checks are made before journal vouchers are approved for posting into the general ledger.
Agreed Management Action Audit issue is noted.

WHT is always charged to Trust Account and that is the reason for not journalizing.

Payment voucher #2323 withholding tax was credited.

Payment voucher #2324 was prepared passing its debit amount.

Evidence can also be checked in GL874 & Commitment & Expenditure Report for Year 2017 – 2018.
Officer responsible Senior Accounts Officer Department of Information Technology and Computing Services Head 16A: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 17 Ministry of Civil Service Roles and Responsibilities The Ministry of Civil Service has been created to oversee and implement the necessary central guidelines in line with the Government’s view of Civil Sector Reform, which was undertaken to produce a more accountable, effective and professional Civil Service with the ultimate aim of improving service delivery to the public.
The Ministry comprises three main divisions: the Policy Division, responsible for the assessment of overarching government policies to ensure consistency and fairness within the Civil Sector’s Human Resource policies; the Central Training Division, to coordinate central training programs that are necessary to facilitate the up skilling of civil servants; and the Corporate Service Division, to administer the day-to-day activities of the Ministry.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 17.1 Audit Opinion ............................................................................................................................. 2 17.2 Statement of Receipts and Expenditure – Head 17 Ministry of Civil Service .......................... 2 17.3 Appropriation Statement - Head 17 Ministry of Civil Service ................................................... 2 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 Internal Controls ........................................................................................................................ 4 17.4 17.5 Submission of FY 2017-2018 Draft Agency Financial Statements............................................. 5 17.6 Quality of Draft Financial Statements by entities..................................................................... 6 17.7 Timeliness of draft financial statements ................................................................................... 6 17.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 Ministry of Civil Service Head 17: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 17.1 Audit Opinion The audit of the 2018 accounts of the Ministry of Civil Service resulted in an unqualified audit report.
17.2 Statement of Receipts and Expenditure – Head 17 Ministry of Civil Service The Ministry collected revenue totalling $373,880 and incurred a total expenditure of $50,868,904 for the year ended 31 July 2018.

Details are provided in Table 17.1.
Table 17.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Services Special Expenditure Total Operating Expenditure Value Added Tax 31 July 2018 ($) 74 373,806 373,880 48,819,375 82,882 127,468 231,499 1,429,625 995 22,317 50,714,161 154,743 31 July 2017 ($) 42 - 42 40,789,894 34,629 121,948 142,172 1,079,021 1,047,988 539 43,216,191 167,208 Total Expenditure 50,868,904 43,383,399 Agency Revenue increased by 373,806 in 2018 as a result of National Training Productivity Centre grant levy refund for 2016.
Established Staff expenses increased by $8,029,481 in 2018 compared to 2017.

The increase was mainly attributed to the increase in staff strength for the Ministry from August 2017 till July 2018.

The Ministry filled in 202 vacant positions which also included hiring more expat doctors leading to increase in SEG 1.
The Operating Grants and Transfers expenditure decreased by $1,046,993 in 2018 because the Ministry was no longer administering the National Training Productivity Centre Levy on behalf of other Ministries and Departments with effect from 01 August 2017.
17.3 Appropriation Statement - Head 17 Ministry of Civil Service The Ministry incurred expenditure totalling $50.9 million in 2018 against a revised budget of $69.0 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $18.1 million or 26%.
Ministry of Civil Service Head 17: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Significant Savings were noted for Established Staff and Purchase of Good & Services for the financial year ended 31 July 2018.

Savings in Established Staff was due to the Ministry not employing the maximum number of medical officers as per approved establishment of 968 doctors.
During the 2018 financial year, there were a total of 683 doctors employed and 285 doctors’ positions were vacant, which resulted in a savings of $17,481,936 under Established Staff expenditure.

Savings in Purchase of Goods and Services allocation was mainly due to the savings in the training budget as the Ministry was trying to set up the online education module and tender works were still in process.

Details of expenditure against the revised budget are provided in Table 17.2.
Table 17.2: Appropriation Statement for 2018 SEG Item 5 3 1 2 Established Staff Government Wage Earners Travel & Communication 4 Maintenance & Operations Purchase of goods & services Operating grants & transfers Special expenditure Total Operating Expenditure Value added tax TOTAL 7 6 13 Budget Estimate ($) 66,389,311 65,422 Changes ($) Revised Estimate ($) (88,000) 66,301,311 92,922 27,500 Actual Expenditure ($) 48,819,375 82,882 Lapsed Appropriation ($) 17,481,936 10,040 160,000 - 160,000 127,468 32,532 397,932 (55,000) 342,932 231,499 111,433 1,806,201 80,500 1,886,701 1,429,625 457,076 1,000 - 1,000 995 5 - 68,819,866 35,000 35,000 - 68,819,866 22,317 50,714,161 12,683 18,105,705 212,800 69,032,666 - 212,800 - 69,032,666 154,743 50,868,904 58,057 18,163,762 Ministry of Civil Service Head 17: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 17.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Ministry of Civil Service Head 17: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR authorisation, performance reviews, information processing, physical controls, and segregation of duties.

 Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.
 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.
This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Effective No deficiencies identified in internal controls 17.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.

The final day for closing the 2018 accounts was 4 August 2018.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of unpresented cheques by 31 July 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018 Ministry of Civil Service Head 17: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 17.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 17.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 31 October 2018 17.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Ineffective Timeliness of Management Comments Received After 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Ministry of Civil Service Head 17: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 18 Ministry of Rural and Maritime Development Roles and Responsibilities The Ministry of Rural and Maritime Development and National Disaster Management manages and coordinates Government’s rural and maritime development programs.
Guided by the socio- economic rights enshrined in the Fijian Constitution, the Ministry is focused on providing Fijians with the things they need to empower themselves and support their families.

The Ministry’s programs are targeted at generating economic growth and improving living standards in Fiji’s rural and maritime communities.

This includes self-help programs and work on non-cane access roads, maritime roads and housing assistance.
The Ministry also provides support services to rural, peri-urban and maritime communities such as registration of births, deaths, marriages, issuing licences and collecting licence and permit fees.
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 18.1 Statement of Receipts and Expenditure ................................................................................ 2 18.2 Appropriation Statement ........................................................................................................ 3 18.3 18.4 Main Trust Fund Account ........................................................................................................ 4 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 6 18.5 Internal Controls ...................................................................................................................... 6 Submission of FY 2017-2018 Draft Agency Financial Statements .......................................... 7 18.6 18.7 Quality of Draft Financial Statements by entities .................................................................. 8 Timeliness of draft financial statements ................................................................................ 8 18.8 Timeliness of Provision of Management Comments and Signing of Financial Statements 8 18.9 PART C: OTHER SIGNIFICANT MATTERS .............................................................................................. 9 18.10 Delay in Implementation of PSIP Projects ............................................................................. 9 18.11 Impact and Sustainability Assessment .................................................................................. 10 18.12 Rural Housing Assistance Programme .................................................................................. 11 18.13 Significant Arrears of Revenue
 .............................................................................................. 13 18.14 Backlog Projects ..................................................................................................................... 14 18.15 Information Database ............................................................................................................ 16 18.16 Absence of Risk Management Framework ........................................................................... 17 18.17 Presentation of Main Trust Account ..................................................................................... 18 APPENDIX 18.1: COMPLETION CERTIFICATE NOT CERTIFIED BY THE RURAL LOCAL AUTHORITY AND TECHNICAL OFFICER ..................................................................................................................... 19 Ministry of Rural and Maritime Development Head 18: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 18.1 Audit Opinion The audit of the 2018 accounts of the Ministry of Rural and Maritime Development resulted in a qualified audit report.
The qualification was for the following: Included in the Provincial Trust Fund Accounts are funds received for Rural Housing Scheme 1 totalling $1,173,893 and one third self-help projects totalling $553,611.

However, the Ministry did not maintain listing to show detailed breakdown of funds held.

Hence, I was unable to establish the status and accuracy of the closing balance of the account.
18.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $1,464,668 and incurred a total expenditure of $16,589,916 for the year ended 31 July 2018.

Details are provided in Table 18.1.
Table 18.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure 31 July 2018 ($) 1,402,195 62,473 1,464,668 5,545,564 1,578,461 533,916 976,535 891,657 572,074 743,175 10,841,382 31 July 2017 ($) 1,340,496 76,569 1,417,065 5,422,886 1,477,614 510,798 981,759 887,833 398,507 824,755 10,504,152 Capital Construction Capital Purchase Capital Grants and Transfers Total Capital Expenditure 2,120,681 167,943 2,976,906 5,265,530 1,570,783 198,834 11,566,666 13,336,283 Value Added Tax 483,004 470,334 Total Expenditure 16,589,916 24,310,769  The Ministry collected revenue totalling $1,464,668 in 2018, an increase of 3% from the previous year.
Revenue mainly comprised of business and liquor licences and registration of marriage/birth fees collected on behalf of other government agencies.

 State revenue increased by $61,699 in 2018 compared to 2017 because of timely renewal of license fee and new registrations made during the year.
Ministry of Rural and Maritime Development Head 18: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Operating Grants and Transfers increased by $173,567 in 2018 compared to 2017 due to increase in provision for District Advisory Councillors allowances.
 Capital Construction expenses increased by $549,898 in 2018 compared to 2017 due to the increase in value of projects undertaken for the community access roads, footpaths and footbridge programs.

 Capital Grants and Transfer expenditures decreased by $8,589,760 in 2018 compared to 2017.
The decrease in provision in 2018 was due to the transfer of the two programs; the Committee on Better Utilisation of Land [CBUL] which was transferred to Ministry of Agriculture and Disaster Rehabilitation Fund and Disaster Risk & Climate Mitigation which was transferred to Ministry of Disaster Management and Meteorological Services.
18.3 Appropriation Statement The Ministry incurred expenditure totalling $16.6 million in 2018 against a revised budget of $18.7 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $2.1 million or 11%.

The savings of $502,025 in the Special Expenditure (SEG 7) allocation resulted from the underutilisation of funds in one of its component; Emergency Water Supplies budget because there was no major drought recorded in the financial year 2017-2018.
The Emergency Water Supplies funding is maintained at Headquarters and only distributed to the Divisional Commissioners upon request.

The savings of $359,319 under the Capital Construction (SEG 8) allocation resulted from underutilisation of funds appropriated for:  Vunidawa Government Station project due to delay in preparatory work and tender process; and  Community Access Roads, Footpaths and Footbridges allocation for Headquarters and Eastern Division.
There was a saving of $673,094 under the Capital Grants & Transfers (SEG 10) allocation which resulted from underutilisation of funds:  allocated to each Division for the Project Preparatory Works intended to be carried out in the 2018-2019 financial year.

 for Wainua Government Station due to the delay in the preparatory works and tender process.

There was a redeployment of funds from the Ministry’s (Head 18) budget to Head 50 – Miscellaneous Services.

The redeployment was approved by Cabinet.


The Ministry’s budget was affected through reduction of Capital Construction (SEG 8) by $1,200,000, Capital Grants and Transfer by $500,000 and Value Added Tax (SEG 13) by $108,000.

Details of expenditure against the revised budget are provided in Table 18.2.
Ministry of Rural and Maritime Development Head 18: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 18.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & 4 Maintenance & 5 6 7 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure` Capital Construction Capital Purchase 8 9 10 Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL 13 Budget Estimate ($) 5,772,825 Changes ($) (11,186) Revised Estimate ($) 5,761,639 Actual Expenditure ($) 5,545,564 1,621,899 26,186 1,648,085 1,578,461 424,660 145,471 570,131 533,916 931,900 69,455 1,001,355 976,535 961,572 (991) 960,581 891,657 780,030 (190,135) 589,895 1,284,000 (38,800) 1,245,200 572,074 743,175 11,776,886 --- 11,776,886 10,841,382 3,680,000 200,000 (1,200,000) --- 2,480,000 200,000 2,120,681 167,943 4,150,000 (500,000) 3,650,000 2,976,906 Lapsed Appropriation ($) 216,075 69,624 36,215 24,820 68,924 17,821 502,025 935,504 359,319 32,057 673,094 8,030,000 (1,700,000) 6,330,000 5,265,530 1,064,470 673,400 20,480,286 (108,000) 565,400 (1,808,000) 18,672,286 483,004 16,589,916 82,396 2,082,370 18.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Ministry of Rural and Maritime Development operates and maintains one main trust fund bank account which includes the Provincial Development Trust Fund Account.
18.4.1 Provincial Development Trust Fund Account The Provincial Development Trust Account comprise of the following funds which are all kept in one bank account: (i) (ii) Rural Housing Deposit Trust Fund Account: a scheme where rural dwellers are assisted by Government in the building of their homes and they are required to meet one third of the cost; PM Relief and Rehabilitation Trust Fund Account: is where the rural dwellers deposit the full cost of building materials for their houses.
Government would negotiate and get cheaper quotes for the materials and also provide free transportation for the delivery of the materials; (iii) Special Purpose Trust Account – Vatukoula: is to cater for Vatukoula Housing Clients Assistance which consists of two-thirds government contribution; and Ministry of Rural and Maritime Development Head 18: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR (iv) One-Third Self Help Trust Fund Account: the Ministry assist communities in their self-help projects which consist of the Government contributing two third of the cost whilst one third is provided by the community.
Table 18.3: Provincial Development Trust Fund Account – Statement of Receipts and Payments Description Receipts Rural Housing Deposits Scheme II Rural Housing Scheme I / PM Relief & Rehab Committee Special Purpose Trust Account – Vatukoula One – Third Self Help Projects Cities Trust Total Receipts Payments Rural Housing Deposits Scheme II Rural Housing Scheme I / PM Relief & Rehab Committee Special Purpose Trust Account – Vatukoula One – Third Self Help Projects Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 31 July 2017 ($) 675,962 48,669 40,226 194,879 59 959,795 686,408 32,446 71,535 143,535 933,924 25,871 2,265,927 2,291,798 411,314 72,324 163,038 108,739 999 756,414 210,220 71,819 --- 86,906 368,945 387,469 1,878,458 2,265,927 Ministry of Rural and Maritime Development Head 18: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 18.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Ministry of Rural and Maritime Development Head 18: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  authorization, performance reviews, information processing, physical controls, and segregation of duties.

Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.
 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.

Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.
This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating  Generally effective Internal control assessment Deficiencies identified in internal controls 18.6 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of un-presented cheques by 31 July 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 20 July 2018 Ministry of Rural and Maritime Development Head 18: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 18.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Effective No adjustments were required 18.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 18.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Ineffective Timeliness of Management Comments Received After 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Ministry of Rural and Maritime Development Head 18: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2018.
18.10 Delay in Implementation of PSIP Projects Divisional Development Project (PSIP) Scheme is granted to capital projects that benefits a wider section of the community and determined by relevant ministries in consultation with the Provincial Development Board and Divisional Development Board.1 Our review of the Public Sector Investment Programme (PSIP) Projects of the Ministry revealed the following: • • For Wainikoro Government Station, the full project budget of $700,000 was not utilised in 2017/2018 and was fully redeployed on 18/05/18; In the case of Vunidawa Government Station, $750,000 was allocated for the construction of 1 x 4 Maisonette Quarters, but only $109,487 was utilised for the preparatory works.
Due to non- utilisation of the funds, $500,000 was redeployed on 18/05/18; For Wainua Government Station, one Timber Administration Office and one Grade V Timber Quarters was to be constructed.

However, we noted the following: • The project preparatory work fund was provided in 2016 and 2016/2017 budgets.
However, allocated funds was not utilised in 2016 due to TC Winston and in 2016/2017, a sum of $91,644 was utilised from the $100,000 allocated; • The actual construction work was supposed to commence in 2017/2018 financial year from the budget of $850,000 which was allocated.

However, the project was still at the preparatory work stage and only $71,275 was utilised.

On 18/05/18, $500,000 was redeployed.


1 Capital Programme Standard Operating Procedures 2011 Part 4 Section 2.1 Ministry of Rural and Maritime Development Head 18: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication Delay in the implementation of PSIP projects was mainly attributed to inadequate planning and untimely completion of preparatory work.

As a result funds were redeployed by Ministry of Economy.
Recommendations The Ministry should; • • improve its planning process to ensure that all the preparatory works are completed for planned projects before requesting the budget for construction; recruit a suitable officer with strong background in the project management and/or building/infrastructure engineering.

Agreed Management Action The non – utilisation of the Project Preparatory Works [PPW] in the 2016 was due to the TC Winston Rehabilitation Works.
PPW funds were not utilized until the appointment of the Senior Economic Planning Officer Central on 10th, April, 2017 (which was only 3 months away from the end of the FY 2016-2017).

Further to the above, all PPW and PSIP capital projects are now captured in the Ministry’s August 2018-July 2023 Strategic Plan.

One of the difficulties and greatest hindrance faced was the very slow response from MoIT.
MoIT was requested to prepare the Tender Documents at the beginning of the financial year to allow for finalisation of tender by December.

However, the Tender Documents were submitted right in January 2018.

After it was submitted to FPO and CIU for Advertisement, CIU found anomalies in their drawings and the documents were reverted back to MoIT.

This occurred two times and this whole process took another two months before the Tender (WSC 72/87) was advertised in March 2018.
Officer Responsible  Divisional Commissioners  Director Development Services  Divisional Planning Officer  Senior Economic Planning Officer 18.11 Impact and Sustainability Assessment Evaluation is an almost continuous exercise.

Evaluation of projects is necessary to explain what has happened and to design better projects in the next cycle.
Project evaluation tries to answer questions about the progress, worth, effectiveness, impacts and lessons from projects.2 The Ministry under its Rural and Maritime assistance program provides Rural Housing Assistance, Community Access Roads, Footpaths and Footbridges and Self Help Scheme in a response to bring Fijians living in rural and maritime regions the same level of access to essential services and economic opportunity as anywhere else in the country.
2 Capital Programme Standard Operating Procedures 2007 Part 5.6 Ministry of Rural and Maritime Development Head 18: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR For the past five years, the Ministry has provided combined assistance amounting $18.38 million under its three programs.

The Ministry has a Development Unit whose role is to perform oversight function, monitoring and evaluation of the capital projects/programs.
However, the Ministry did not effectively produce the impact and sustainability assessment report of its rural housing assistance, community access roads, footpaths and footbridges and self-help scheme assistance program.

Root Cause/Implication There was lack of supervisory control and strategic leadership due to the Director Development Services position being vacant since 28 October 2016.
Not carrying out the impact and sustainably assessment at regular intervals would deny the Ministry the prospect to gauge the effectiveness of its assistance program and the opportunity to replicate its successes and avoid the mistakes/failures.
Recommendations The Ministry should:   fill the position of the Director Development; carry out the impact and sustainability assessment of its assistance program at regular intervals of 3 to 5 years in order to gauge its assistance program effectiveness, suitability, impact and sustainability.
Agreed Management Action Stringent measures would be undertaken by the Development Monitoring and Evaluation Team to ensure that physical implementation is undertaken according to work plan and timeline provided in the project proposals.

Impact Assessments has also been considered for duration of 3 years from the completion date of the project to ascertain the sustainability of the project and to wean it off to the recipient.
Officer Responsible  Acting Director Development Services  Divisional Commissioners  Divisional Planning Officers 18.12 Rural Housing Assistance Programme The rural housing assistance programme aims at eliminating homelessness in rural Fiji through provision of affordable, durable and cyclone resistant structures.3 The existing Rural Housing Unit (RHU) would be involved in the monitoring of the programme to ensure conformity with building codes etc.
Upon completion of the building, Health authorities assisted by our staff in RHU will issue completion certificates to ensure compliance with building codes.4 3 Capital Programme Standard Operating Procedures 2007 - Section 3 7.1 4 Capital Programme Standard Operating Procedures 2007 - Section 3 7.3 (c) 7 & 8 Ministry of Rural and Maritime Development Head 18: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR As at 31 July 2018, the total expenditure for Rural Housing Assistance for the Ministry was $979,626.
Review of the Rural Housing projects files at the Commissioner Central’s Office noted the following anomalies:  The Rural Housing’s Standard Operation Procedure (SOP) was not reviewed and aligned to best practices since 2007;  The completion certificate for ten Rural Housing Assistance (RHA) projects under Scheme 2 and Poverty Alleviation Programme (PAP) were not certified by either the Rural Local Authority or the Rural Housing Unit Technical Officer.
Therefore, we could not ascertain whether technical experts were involved in the inspection of the Rural Housing projects during and after the construction and whether the houses are built in accordance with the national building code/plan.

Also, some projects were not vetted by the Divisional Planning Officer.

Refer to Appendix 18.1 for details.


 The Rural Housing Scheme 2 standard building plan sized 7.2m x 4.8m open space wooden house and the Poverty Alleviation Programme (PAP) 5.4m x 5.4m design were both designed in 2014.

However, no documentation was provided us to confirm whether the plans were reviewed or amended by a certified engineer following the aftermath of Tropical Cyclone Winston.
Root Cause/Implication The RHU unit faced resource constraint to effectively monitor and provide the technical support to all recipients.

There was lack of coordination and no agreement between the Ministry and Rural Local Authorities.

Absence of adequate monitoring and certification during and after the construction and the regular reviews of the building plan used for RHU and PAP projects could result in sub-standard construction during another severe tropical cyclone.
Recommendations  Rural Housing Assistance Standard Operating Procedure needs to be reviewed;  The Rural Local Authority and/or the Rural Housing Unit Technical Officers should be involved in the inspection of the Rural Housing Projects during the construction phase and certifications upon completion;  The Rural Housing and PAP building plan/design should be reviewed at a regular intervals to evaluate its strength, suitability and sustainability.
Agreed Management Action The Ministry agreed with the recommendations by the Audit Team that the Technical Officers should be involved with the inspection and issuance of completion certificates.

It also agreed that the building plan/design will need to be reviewed on a regular basis to ensure compliance to national building standards.
Ministry of Rural and Maritime Development Head 18: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Officer Responsible  Acting Director Development Services  Divisional Commissioners  Divisional Planning Officers 18.13 Significant Arrears of Revenue Accounts which are overdue must be promptly followed up in accordance with the debt recovery procedures in the Finance Manual.5 We noted that the Ministry had significant arrears of revenue balance amounting $2,243,139 as at 31/07/18.
The arrears of revenue comprise of outstanding business licence fees for operation outside the town/city boundaries and maritime areas.

It has an upward trend over the last eight years.

Refer to Table 18.4 for details.


Table 18.4: Arrears of Revenue over the last 8 years Year Amount ($) Variance ($) 2011 2012 2013 2014 2015 2016 2017 2018 499,358 495,059 656,688 756,568 753,843 917,430 994,292 2,243,139 - (4,299) 161,629 99,880 (2,725) 163,587 76,862 1,248,847 Percentage Change (%) - (1) 33 15 0 22 8 126 Root Cause/Implication The main challenge the Ministry is facing is the lack of resources in terms of vehicles and staffing to effectively monitor the defaulters.
Also there is a lack of public awareness through media on a need for timely renewal of the business license and its consequences.

In addition, it was noted that the Ministry has not effectively engaged the District Advisory Councillors and Turaga-ni-Koro’s to assist in the monitoring process.

Further delay in collecting the outstanding revenue increases the risk of revenue not likely to be collected which may require writing it off resulting in loss of revenue for government.
5 Finance Instruction 2010 – section 41 Ministry of Rural and Maritime Development Head 18: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations  Due to resource constraints faced, the Ministry should consider engaging the District Advisory Councillors and Turaga ni Koro/Mata ni Tikina in terms of monitoring of illegal business operators in their respective boundaries;  The Ministry should consider setting up the internal Arrears of Revenue Collection Committee to review, verify and manage the arrears;  Revenue Standard Operating Procedures should be prepared as a guide to ensure a structured and consistent revenue recovery process is implemented in the Ministry;  The Ministry should consider setting up the database for Business License for ease of monitoring, data management and decision-making.
Agreed Management Action The Ministry has noted the audit comments and recommendations.

The Ministry has set up teams within each Division to conduct a special recovery exercise.

The Ministry is developing a Revenue Monitoring and recovery guideline/manual to ensure a structured and consistent revenue recovery process is implemented in the Ministry.
Officer Responsible  Director Corporate Services (DCS)  Manager Finance 18.14 Backlog Projects Within 5 days after the end of each month, the Trust Fund Clerk shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.
Details of balances must be attached to the reconciliation statement.6 Our review of the Provincial Development Trust Accounts revealed significant balance in the trust closing balance for PM's Relief/Rehabilitation (Rural Housing Scheme 1) and 1/3 Self Help Scheme deposit.

The Ministry held substantial amount of funds in the Provisional Development Trust fund account.

Refer to Table 18.5 for details.


Table 18.5: Details of Provisional Development Trust Fund Account Balances Account Name PM Relief & Rehab Committee Brief Description Rural Housing Scheme 1 – In this scheme, the rural dwellers can either be an individual or community based projects.

The clients deposit their houses.
the Government assist the procurement of in building materials at cheaper quotes & then provide free transportation of the delivery of the full cost of building 2018 ($) 2017 ($) 1,173,893 1,157,671 1,157,166 2016 ($) 6 Ministry of Rural and Maritime Development Finance Manual 2013 – section 13.4.1 & 13.4.2 Ministry of Rural and Maritime Development Head 18: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Account Name Self Help Scheme Brief Description 2018 ($) 2017 ($) 2016 ($) building materials to the project site.
The Ministry funds transportation costs from the Rural Housing operational budget.

The Ministry assist communities in their self- help projects which consist of the Government the contributing 2/3rd of community provides 1/3rd.

This 1/3rd is deposited into this trust account.

the cost whilst 553,611 502,267 480,435 Our review of the trust fund account revealed that the Ministry did not maintain detailed breakdown of the projects for which funds were held in trust.
In the absence of the detailed breakdown of projects, it is difficult to ascertain the status of individual projects for which funds are retained in trust.

Root Cause/Implication Not maintaining the up-to-date backlog list of the project indicates weak supervisory checks and controls at the Accounts Section, Rural Housing Unit and Development Unit.
The significant accumulation of the project funds indicates poor service delivery and execution of projects by the RHU Units and respective Divisional Commissioners Office and weak monitoring of the status/progress by the Development Unit at headquarters to ensure that the projects are completed on a timely manner.
Recommendations The Ministry should:  ensure that the detailed breakdown listing of the respective trust balances are maintained   and attached to the monthly reconciliation; review the backlog project and prepare the action plan/timeline to execute those projects; strengthen its project implementation unit to ensure the projects are executed on a timely manner.

Agreed Management Action The Ministry has noted the audit comments and recommendations.
The Ministry will verify Trust fund receipts with the GL balance.

The Ministry will develop a system to regularly update and monitor trust fund receipts, payments and project listing.
Officer Responsible  Director Corporate Services (DCS)  Manager Finance Ministry of Rural and Maritime Development Head 18: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 18.15 Information Database At the Ministry Head Quarters, there is a Development Section which is responsible for the following; 1) Collection, collation, storage and dispersal of data and identification of suitable data systems.
2) Evaluation of projects and overall development, efforts, based on established data to advise authorities on suitable policy guidelines that enable planning for more effective development, especially on issues that will uplift and improve the quality of life of rural people.7 The Ministry under its Rural and Maritime assistance program provides rural housing assistance, community access roads, footpaths and footbridges and self-help scheme assistance.
For the past five years, $18.38 million has been utilised for these programs.
From our review of records for rural and maritime assistance programmes, we noted that the Ministry does not have a structured information database to consolidate and capture the following information: types of assistance provided to individuals/groups/villages under different programmes, location of the project,    number and assistance provided at a tikina/province/community level,  document references to confirm delivery of assistance, linkage with other line ministry/department who provide similar poverty alleviation assistance; and  project progress/monitoring and evaluation reports.
Root Cause/Implication The delay in setting up the database could be attributed to change in management and lack of prioritisation and initiative taken to seek the funding's through the annual budgetary process or donor agency.
Given its importance, technological advancement and the size of the budgets allocated to the programs annually, it is essential that credible data/information are captured for sustainability and impact assessment of the programs on the livelihood of rural and maritime dwellers and for informed management and more coordinated/structured and effective implementations of various programs regarding decisions program design, policy Recommendation The Ministry should establish a database to consolidate and capture information on all programmes to assist in reviewing the effectiveness of these programmes and improving policies and guidelines.
Agreed Management Action The establishment of a database to consolidate and capture information the processes of the Ministry’s Capital Programmes, had started from the 2017-2018 Financial Year.
The database project was intended for both capital 7 Capital Programme Standard Operating Procedures 2007 - Section 7.5.3 & 7.5.4 Ministry of Rural and Maritime Development Head 18: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR projects and National Disaster Management processes.

Budget was provided for the database project but it was allocated under Head 14 Ministry of NDMO and Met Services.
Since NDMO has been transferred to MoIT, the Ministry is now looking for alternative funding sources to fund the full implementation of the database project.

In the meantime, the Ministry’s capital project data (excel) and information is stored by the Development Division and updates are done following their monitoring and evaluation excises conducted on quarterly basis.
Officer Responsible Acting Director Development Services 18.16 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Ministry’s Management, and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Ministry.

Our review of the Ministry’s Corporate Governance revealed that there is no risk management framework in place.
As a result, the Ministry does not have approved policies, procedures or guidelines to manage risk associated with the following:  occupational health and safety (still in draft);  Ministry’s operational and human resource planning;   disaster recovery and business continuity, and  assessment of potential conflicts of interest fraud control and anti-corruption; Root Cause/Implication The above finding indicates that the Ministry has not allocated sufficient resources to develop the risk management framework.
In absence of a risk management framework, the Ministry may find difficulty in managing risks affecting the Ministry particularly risk of fraud and misappropriation of assets.
Recommendations  The Ministry should work towards establishing a governance and accountability function that supports the operations of the Ministry by providing financial and operational risk management and management of external reporting obligations;  Following the establishment of the governance and accountability function, a risk management framework should be developed and continuously used.
Agreed Management Action The Ministry admitted that it does not have a specific Risk Management Framework in place and would work towards formulating a Risk Management Policy and plan.
Officer Responsible  Deputy Secretary  Director Corporate Services  Executive Management Ministry of Rural and Maritime Development Head 18: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 18.17 Presentation of Main Trust Account Trust money is money that the agency is holding in trust.
As stipulated in the Financial Management Act and Finance Instructions, trust money is to be kept in a separate bank account and accounted for separately from “public money” and “other money”.8 The Provincial Development Trust Fund Account includes Tender Deposits, Unclaimed Wages, One Third Self Help Projects.

All funds related to the above trusts are deposited into one bank account and a consolidated statement of trust receipts and payments is prepared by the Ministry in its Agency Financial Statements.
In addition, the current presentation of the Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one line item on the Statement even though the nature of the trust receipt and payment may vary.

Root Cause/Implication The current presentation and the trust fund accounts disclosures are deemed inadequate which does not provide adequate information to the users of the financial statements.
With the various trust funds being deposited into one bank account, there is a risk of funds for a particular trust being utilised for the other trust funds exacerbated by the lack of proper record keeping.

Recommendation The Ministry should work towards opening separate bank accounts for various trust fund currently recorded under the Provincial Development Trust Fund Account and prepare separate statements of receipts and payments.

Agreed Management Action The Ministry noted the audit recommendations.
The Ministry would liaise with the Ministry of Economy for the opening of separate accounts for the various trust fund accounts maintained.
Officer Responsible  Director Corporate Services  Manager Finance 8 Ministry of Rural and Maritime Development Finance Manual 2013 – Part 13 Introductory Paragraph Ministry of Rural and Maritime Development Head 18: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 18.1: LOCAL AUTHORITY AND TECHNICAL OFFICER COMPLETION CERTIFICATE NOT CERTIFIED BY THE RURAL RHA Recipients Location Total Project Cost ($) Date of Completion Audit Remarks Recipient 1 Lakena Hill No.
2, Nausori 4,974.82 15/03/18 Recipient 2 Verata, Wailevu, Tailevu 12,408.00 20/03/18 Recipient 3 Taulevu, Matailobau, Naitasiri 12,408.00 07/05/18 Recipient 4 Qoma, Verata, Tailevu 12,408.00 20/04/18 Recipient 5 Recipient 6 Recipient 7 Recipient 8 Recipient 9 Lokia, Rewa, Rewa Namakala, Suva, Rewa Nadali, Nausori, Tailevu Nakorovatu, Waima, Naitasiri Naqarani, Noco, Rewa 6,314.61 12/01/18 17,241.58 28/02/18 17,996.47 09/08/18 12,408.00 01/08/18 8,032.50 02/02/18 Recipient 10 Narocake, Noco, Rewa 16,821.61 27/07/18 TOTAL 121,013.59  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Not vetted by Divisional Planning Officer  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Not vetted by Divisional Planning Officer  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Not vetted by Divisional Planning Officer  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Not vetted by Divisional Planning Officer  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Completion certificate was not certified by Technical Officer and/or Rural Local Authority  Not vetted by Divisional Planning Officer Ministry of Rural and Maritime Development Head 18: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 19 Republic of Fiji Military Forces Roles and Responsibilities The RFMF is charged with, and responsible for the defence and state security of Fiji, in the maintenance of Law and Order in land
 and sea and provision of maritime surveillance of Fiji’s maritime zone.
It improves the living standards of rural community through infrastructure development and youth training of life skills provided by the Engineering Corp through its Trade Training.

It also provides services to mariners through the coastal radio station (Suva Radio 3DP) for all vessels within Fiji waters as required under the International Law of the Sea and the surveying and charting of Fiji’s Exclusive Economic Zone.
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 19.1 Statement of Receipts and Expenditure ................................................................................ 2 19.2 Appropriation Statement ........................................................................................................ 3 19.3 19.4 Main Trust Fund Account ........................................................................................................ 4 Consolidated Trading and Manufacturing Account .............................................................. 5 19.5 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 7 Internal Controls ...................................................................................................................... 7 19.6 19.7 Submission of FY 2017-2018 Draft Agency Financial Statements .......................................... 8 19.8 Quality of Draft Financial Statements by Entities .................................................................. 9 19.9 Timeliness of draft financial statements ................................................................................ 9 19.10 Timeliness of Provision of Management Comments and Signing of Financial Statements 9 PART C: OTHER SIGNIFICANT MATTERS ............................................................................................. 10 Procurement of Equipment and Stores Supplies ................................................................. 10 19.11 Significant Savings noted for the Force Capital Projects ..................................................... 11 19.12 19.13 Overpayment of Military Pension .......................................................................................... 13 19.14
13 19.14 Anomalies noted in Leave Management .............................................................................. 14 19.15 Anomalies noted in the Consolidated Trade and Manufacturing Account ......................... 15 19.16 Follow up on Stores Management Performance Audit ....................................................... 16 19.17 Significant Outstanding Operating Trust Fund Balance ....................................................... 17 19.18 Effectiveness of the Internal Audit Function ........................................................................ 18 19.19 Absence of Risk Management Framework ........................................................................... 19 APPENDIX 19.1: PURCHASES BASED ON THREE COMPETITIVE QUOTES ........................................... 21 Republic of Fiji Military Forces Head 19: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 19.1 Audit Opinion The audit of the 2018 accounts of the Republic of Fiji Military Forces resulted in an unqualified audit opinion.
19.2 Statement of Receipts and Expenditure The Republic of Fiji Military Forces collected revenue totalling $356,792 and incurred a total expenditure of $92,049,468 for the year ended 31 July 2018.

Details are provided in Table 19.1.
Table 19.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2018 ($) 283,456 73,336 356,792 69,702,616 350,305 2,593,390 3,745,141 6,350,791 --- 2,209,183 84,951,426 2,588,793 2,843,253 5,432,046 31 July 2017 ($) 335,115 141,365 476,480 69,829,823 333,974 2,799,216 3,795,084 6,982,964 42,375 1,771,837 85,555,273 1,210,317 2,584,580 3,794,897 Value Added Tax 1,665,996 1,708,128 Total Expenditure 92,049,468 91,058,298 Special Expenditure increased in 2018 by 25% or $437,346 due to increase in payments related to military training costs, conducting of the Basic Recruit Course and the procurement of military expendable items.
Capital Construction expenditure increased in 2018 by 114% or $1,378,476 due to the life expectancy programme works carried out for RFNS Kikau, infrastructure and amenities projects undertaken, camp upgrades and the renovation works carried out at the Force Training Group.

Capital Purchase expenditure increased in 2018 by 10% or $258,673 due to the procurement of new Hydrographic boat, IT equipment and military equipment.
Republic of Fiji Military Forces Head 19: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 19.3 Appropriation Statement The Republic of Fiji Military Forces incurred expenditure totalling $92.0 million in 2018 against a revised budget of $96.1 million in accordance with section 19 of the Financial Management Act 2004, resulting in savings of $4.1 million or 4 %.
The savings of $1,991,501 or 43% under Capital Construction was due to the planned capital projects that were not completed in the financial year.

The saving were largely due to the following:  Construction of Magazine - The savings of $246,953 or 62% was due to extension of practical completion date as a result of adverse weather condition and shortage of building materials.
 Upgrade of Armoury - The savings of $184,490 or 74% was due to the delay in tender process since tender was called twice and after not getting a suitable bidder, the RFMF opted to request for waiver of tender and engage the RFMF Engineers.
 Blackrock Integrated Peacekeeping Centre - The savings of $994,286 or 72% for Blackrock Integrated Peacekeeping Centre was due to the (i) extension of practical completion date for the ablution block as a result of adverse weather condition; (ii) mess hall construction was put on hold since a new waiver of tender needs to be obtained before recommencement of work; and (iii) the phase 2 roadwork did not commence during the financial year.
The savings of $822,278 or 22% noted under Capital Purchase was due to delays in delivery and tendering processes for kitchen implements, communication equipment, medical equipment and back-up generator.

There was a redeployment of funds from the Force’s (Head 19) budget to Head 50 – Miscellaneous Services.

The redeployment was approved by Cabinet.

The Force’s budget was affected through reduction of Capital Construction (SEG 8) by $500,000 and Value Added Tax (SEG 13) by $45,000.
Details of expenditure against the revised budget are provided in Table 19.2.
Table 19.2: Appropriation Statement for 2018 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 74,550,391 256,531 Changes ($) Revised Estimate ($) (4,156,547) 70,393,844 358,397 101,866 Actual Expenditure ($) 69,702,616 350,305 1,380,890 1,288,473 2,669,363 2,593,390 4 Maintenance & 4,153,710 (334,657) 3,819,053 3,745,141 Lapsed Appropriation ($) 691,228 8,092 75,973 73,912 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure 5 6 7 5,796,386 829,835 6,626,221 6,350,791 275,430 --- --- --- --- --- 1,433,000 836,005 2,269,005 2,209,183 59,822 Republic of Fiji Military Forces Head 19: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR SEG Item Operating Total Expenditure Capital Construction Capital Purchase Total Expenditure Value Added Tax TOTAL Capital 8 9 13 Budget Estimate ($) 87,570,908 Changes ($) Revised Estimate ($) Actual Expenditure ($) (1,435,025) 86,135,883 84,951,426 Lapsed Appropriation ($) 1,184,457 5,720,000 1,590,800 7,310,800 (1,139,706) 2,074,731 935,025 4,580,294 3,665,531 8,245,825 2,588,793 2,843,253 5,432,046 1,806,800 96,688,508 (45,000) 1,761,800 (545,000) 96,143,508 1,665,996 92,049,468 1,991,501 822,278 2,813,779 95,804 4,094,040 The Force collected revenue totalling $356,792 in 2018, a decrease of 25% from the previous year.
19.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Republic of Fiji Military Forces operates and maintains the following trust fund bank account: 19.4.1 Engineer Project Trust Fund Account On 19 May 2017, the RFMF obtained approval from Ministry of Economy to open the Engineer Project Trust Fund Account.
The Engineers Trust Fund recorded the receipts and payments incurred for each Engineers project carried out during the financial year.
Table 19.3: Engineer Project Trust Fund Account – Statement of Receipts and Payments Description Receipts Rural Development PM’s Office Miscellaneous Project Rotuma Hospital Nasamila District School Neomai Lewakai Ratu Ilaisa Memorial School Namalata District School Solevu Kindergarten Tailevu North College Nawaikama Footpath Ratu Kadavulevu School Vunisalusalu Vaturova/Koroalau Druadrua Footpath Tobuniqio Total Receipts Payments Rural Development PM’s Office Miscellaneous Project Rotuma Hospital Nasamila District School Republic of Fiji Military Forces 31 July 2018 ($) 31 July 2017 ($) --- --- 9,633 --- 209,025 2,646 205,449 608,556 18,527 202,852 60,946 26,558 93,791 108,047 14,113 132,399 1,692,542 19,749 24,868 7,182 3,221,256 165,183 34,095 24,868 17,661 3,815,000 --- --- --- --- --- --- --- --- --- --- --- --- 3,891,624 --- --- --- --- --- Head 19: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Description Ratu Ilaisa Memorial School Namalata District School Solevu Kindergarten Tailevu North College Nawaikama Footpath Ratu Kadavulevu School Vunisalusalu Vaturova/Koroalau Total Payments Net (Deficit)/Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2018 ($) 96,589 131,829 18,527 131,642 9,755 19,272 13,963 17,847 3,877,662 (2,185,120) 3,891,624 1,706,504 31 July 2017 ($) --- --- --- --- --- --- --- --- --- 3,891,624 - 3,891,624 19.5 Consolidated Trading and Manufacturing Account The RFMF has two Trading Activity account, namely the Engineers Plant Troop and the Nautical Chart.
a) The Plant Troop was formed in 1978 to construct and develop roads to the inaccessible parts of rural areas in Fiji.

The total sales for Plant Troop for 2018 decreased by $793,002 since the major project earmarked for the financial year, which was the phase 2 of the Gau playground construction, was deferred to the 2018 – 2019 financial year.

b) The Nautical Chart was transferred to the RFMF’s naval division in 2010 to provide accurate Oceanographic and Hydrographic information and services.
On September 2017, the RFMF obtained approval from the Ministry of Economy to close the operations of Nautical Chart TMA.

The closing of the Nautical Chart TMA was finalised in November 2017 thus the Nautical Chart TMA transactions for August to November 2017 are reflected in the Force Consolidated Trade and Manufacturing Accounts for the financial year ended 31 July 2018.

In 2018, there was a loss of $459,389 incurred.


This was due to the incomplete projects carried forward, the cost of machinery repairs & maintenance and cartage of machinery to and from outer islands.
Table 19.4: Trading Account – Consolidated Trading Activity Description Sales Plant Hire Sale - Charts and Maps Opening Finished Goods Add: Cost of Manufactured Goods Goods Available for Sale Less: Closing Finished Goods Cost of Goods Sold Gross Profit Transferred to Profit and Loss Statement 31 July 2018 ($) 31 July 2017 ($) 31,487 6,446 37,933 22,524 --- 22,524 21,912 612 824,489 32,787 857,276 25,362 --- 25,362 22,524 2,838 37,321 854,438 Republic of Fiji Military Forces Head 19: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 19.5: Profit and Loss Account – Consolidated Trading Activity Description Income Gross Profit Transferred from Trading Account Total Income Expenses Fuel and Oil Repairs and Maintenance Freight Office Upkeep and Supplies Fixed Asset Replacement and Improvement Minor Improvement Consultant and Expert Fees Total Expenses Net (Loss)/Profit Table 19.6: Balance Sheet – Consolidated Trading Activity Description Assets Cash at Bank Accounts Receivable Inventory VAT Receivable Total Assets Liabilities Accrued Expenses Total Liabilities Net Assets Equity TMA Accumulated Surplus Transfers to Consolidated Fund Net (Loss)/Profit for the Period Total Equity 31 July 2018 ($) 31 July 2017 ($) 37,321 37,321 854,438 854,438 71,721 244,642 50,210 --- 72,408 32,888 24,841 496,710 (459,389) 85,625 265,401 45,675 454 81,947 46,287 75,320 600,709 253,729 31 July 2018 ($) 31 July 2017 ($) 461,647 289 --- 212,741 674,677 489,108 489,108 185,569 1,016,411 (371,453) (459,389) 185,569 956,418 289 22,524 138,163 1,117,394 25,539 25,539 1,091,855 838,126 --- 253,729 1,091,855 Republic of Fiji Military Forces Head 19: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 19.6 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material
 misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It is also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Republic of Fiji Military Forces Head 19: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Force as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 19.7 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 - 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of unpresented cheques by 31 July 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 26 July 2018  Processing of payments by 31 July 2018  Processing of virements by 20 July 2018  Completion of reconciliations by 29 August 2018 Republic of Fiji Military Forces Head 19: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Submission of arrears of revenue returns by 31 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 19.8 Quality of Draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Force was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 19.9 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements received before 15 October 2018 19.10 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Ineffective After 15 days from issue of Financial Statements for signing Republic of Fiji Military Forces Head 19: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Force as at 31 July 2018.
19.11 Procurement of Equipment and Stores Supplies A tender must be called for the procurement of goods, services or works valued at $50,001 and more.1 During the 2018 financial year, the total payments made to the following vendors exceeded $50,000.
Table 19.7 Payments to vendors that exceeded $50,000 Vendor Vendor A Vendor B Vendor C Vendor D Total Payments ($) 334,144 262,928 227,662 135,850 Procurements from these four vendors’ consisted of equipment and stores supplies that were part of the Force’s day to day operational needs.

These were normally purchased through three competitive quotations process and in most instances the above vendors offered the lowest price.
We noted that the Force did not sought to engage the above vendors through a tender process.

By engaging these vendors through the tender process, the Force would have obtained best value for money for a longer period of time (period of up to 2 year) through contractual agreement with their suppliers.

Refer to Appendix 19.1 for examples of supplies purchased from these aforementioned vendors in 2018.
1 Procurement Regulations 2010 – section 30 (1) Republic of Fiji Military Forces Head 19: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication The above finding indicates that the Force has not properly planned its procurement and has not realized the benefits of engaging vendors through a tender process.
As a result, there is risk the procurement of equipment and stores may have not been sourced from the most economical supplier.

Recommendation The Force should ensure that tenders are called for the procurements of goods and services that are part of their operational needs so that best prices and qualities are locked for a longer period of time through contractual agreement.

Agreed Management Action Not all items reported are on tender as they are not common user goods.
Some items are one off purchases while others are small items procured as and when required.

Furthermore, RFMF has identified a number of common user goods for which a contract to supply has been approved.

RFMF will continue to identify common user goods for tender process.
Officer Responsible  Director Finance, Logistics and Acquisition  Staff Officer Acquisition 19.12 Significant Savings noted for the Force Capital Projects Each year the Appropriation Act and the Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.2 Review of the capital projects revealed the following anomalies:   It was noted that 44% or $1,991,501 of the Capital Construction (SEG 8) funds totalling $4,580,294 allocated for the 2017/2018 financial year was not utilised by the Force.
As a result of the low utilisation rate of Capital Construction budget, funds totalling $500,000 from the Black Rock Integrated Peacekeeping Centre allocation was approved by Cabinet to be redeployed to Head 50.

In addition, Capital Purchase allocation for the procurement of the Kitchen Equipment for the Other Ranks Mess (Nabua) and Lautoka Mess ($401,694) and Specialised Medical Equipment ($277,404) could not be utilised due to late finalisation of tendering and contractual agreement.
2 Finance Instruction 2010 – section 7 Republic of Fiji Military Forces Head 19: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication This was mainly attributed to lack of preparedness and planning as the procurement processes did not commence in first quarter to ensure its timely completion and account for unforeseen circumstances such as weather, material shortages and tender/contract vetting process.
Inability to fully utilise budgets for capital expenditures is deemed as lost opportunity particularly considering the current operational needs of the Force.

Recommendations The Force should improve its planning process to ensure that all the capital works/procurement planned for year are completed and all funds budgeted are effectively utilised at year end.

Agreed Management Action Reasons for the significant savings are explained as follows: A.
Construction of Magazine The tender for the project was awarded to the recommended contractor in October, 2017.

Extension of time was given to the contractor due to adverse weather conditions and shortage of building materials.

It is important to note that this is a highly technical building which needs to be properly constructed and designed to avoid any security threats that may prevail in the long-run.

B.

Construction of Armoury Two tenders were called for the project.
No bid was received in the initial call of tender.

In the second call of tender, only one bid was received for the project however, the bidder’s tendered price was higher than the budgetary provision.

A waiver of tender was then requested for the engagement of RFMF Engineers which was approved on October, 2017.

Hence, the delay in project implementation and low utilization of project funding.
C. Blackrock Integrated Peacekeeping Centre The low utilization rate for the Blackrock Integrated Peacekeeping Center was due to: An extension of completion time was given to the contactor engaged for the construction of Ablution Block at Blackrock due to adverse weather conditions.

This caused the spill-over of progress claims payment to the contractor in the following financial year.
In the 2017-2018 financial year, $500,000 was earmarked for the construction of Mess Hall of the $2.0m allocated for Blackrock Camp project.

However, the construction work for the Mess Hall was put on hold as Ministry of Economy had instructed for a new waiver of tender to be produced before re-commencement of construction work.

The initial waiver of tender for the project was granted to RFMF Engineers in 2015.
Due to this, the physical progress of the project was delayed as RFMF Engineers personnel engaged for the project have to be pulled-out from the site, pending waiver of tender approval.

D. Kitchen Equipment – Lautoka and Other Ranks Mess Queen Elizabeth Barracks (QEB) The Lautoka Mess and Other Ranks Mess at QEB were under renovations and not ready to be equipped with new kitchen equipment, thus the delay in the utilization of funding.
Likewise, the procurement of specialized medical equipment was delayed as the George Mate Medical Center (GMMC) at QEB, was under renovation.
Officer Responsible  Director Finance, Logistics and Acquisitions  Director Force Development Republic of Fiji Military Forces Head 19: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR 19.13 Overpayment of Military Pension Subject to this Act, the Minister may grant in respect of an officer's service in the Regular Force pensions and gratuities in accordance with Part I of the regulations set out in the Fifth Schedule.3 Subject to this Act, the Minister may grant in respect of a soldier of the Regular Force pensions, gratuities and benefits in accordance with Part II of the regulations set out in the Fifth Schedule.4 A soldier who has retired from the Force and is in receipt of a pension under this Part (other than a pension granted) dies leaving a widow, the Minister may grant to that widow a pension of an amount equivalent to 40 percent of the pension that soldier would have been entitled to receive had he continue to live.5 Our review of the Military Pension records revealed that three Military Pensioners continued to receive their fortnightly pension payment after their death resulting in significant pension overpayment amounting to $76,845.59.
The overpayment is yet to be recovered.

Refer to Table 19.8 for details.
Table 19.8 Details of overpayment of Military Pension Regimental Number Officer/Widow 17976 21105 20598 Total Officer Officer Widow Root Cause/Implication Date of Death 03/08/14 12/02/16 06/09/15 Pension Termination Date 25/02/18 25/02/18 11/02/18 Number of Days Delayed 1,298 741 886 Overpayment ($) 40,283.28 26,834.32 9,727.99 76,845.59 The Military Pensioners life status certificates were not obtained on six monthly basis resulting in the overpayments and eventual loss of taxpayers’ funds.
Recommendations The Force should:  Seek life certificates from all the existing pensioners on six monthly basis;  Seek legal advice on the possible recovery of the overpayment.

Agreed Management Action Audit observation is noted.

Legal advice is being sought from the RFMF Army Legal Services on this issue.

In 2018, the RFMF had conducted an audit of all its military pensioners by visiting certain individuals around Fiji to verify their pension status.
This exercise is being conducted quarterly when required.

The RFMF will ensure that Pensions payments will be ceased if Life Certificates are not received by due date.
3Pension (Amendment) Act 1986 - Section 32 4Pension (Amendment) Act 1986 - Section 35 5Pension (Amendment) Act 1986 - Section 37 B(2) Republic of Fiji Military Forces Head 19: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Officer Responsible Chief Staff Officer Finance 19.14 Anomalies noted in Leave Management Agencies must keep accurate and up to date records of all leave and other employee entitlements.6 From the verification of leave records, we noted the following anomalies:  From the sample records selected, it was noted that the Force had paid leave compensation amounting $22,770 on own request and $110,583 on discharge either “At His/Her Own Request” or upon “Reaching Age of Retiring”;  The Force Human Resource Unit at Headquarters maintained excel worksheets to update and track leave records of individual officers.
However, it was noted that the excel records for the majority of the officers were not updated during the 2017/2018 leave year.

 The Force Human Resource Department did not prepare a consolidated Annual/Long Service Leave report/status for the whole of RFMF for the 2017/2018 leave year to assist in monitoring and tracking officers holding excessive leave.

Root Cause/Implication The above indicates that the Force HR Unit does not maintain proper leave records.
As a result, there is a risk of incorrect leave days taken by officers and incorrect leave compensation.
Recommendations  The Force Human Resource Unit at the HQ should map out their records with the records kept at the respective Units’ orderly rooms to ensure that the leave balances recorded in each officers Unit Personal Files reconciles with the records maintained at HQ at all times;  The respective Units Orderly Rooms chief clerks to update/advice HQ on a fortnightly basis on the leave status of their respective Units;  The Force to encourage Officers to utilise their leave as and when due and discourage leave compensation.
Agreed Management Action Audit observations are noted.

Due to the nature of work, it is difficult for some soldiers with specialist skills/trade to take leave, thus having to compensate them.

The Commander RFMF has also issued a Directive that all soldiers with outstanding leave balances should take leave.

RFMF has specifically invested in recruiting a software engineer to develop an RFMF Human Resource Software database to record personal information including leave balances.
Once implemented will address the issues reported.

The database will be completed in next 4 months and fully implemented in December 2019.
6 Finance Instructions 2010 – Section 54 Republic of Fiji Military Forces Head 19: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Officer Responsible  Director Human Resources Management  Chief Staff Officer Information Technology 19.15 Anomalies noted in the Consolidated Trade and Manufacturing Account Trading and manufacturing activities (TMAs) are operated on a semi-commercial basis to increase the returns that are realised from them and to provide goods, services or works more cost- effectively.
7 Review of the Trade and Manufacturing Account records noted the following anomalies:  Unexplained variance of $75,444 was noted between the Equity closing balance as at 31 July 2017 and opening balance of the 2017/2018 financial year as at 01 August 2017.

Refer to Table 19.9 for details.


Table 19.9 Details of variance in Equity opening balance Particulars Amount ($) Equity closing balance at 31/07/17 Equity opening balance at 01/08/17 Variance 1,091,855 1,016,411 75,444  Unexplained variance of $4,491 exists between VAT Receivable account as per the FMIS General Ledger and Statement of VAT (SVA) from Fiji Revenue and Customs Services (FRCS).

Refer to Table 19.10 for details.


Table 19.10 Details of unexplained variance in VAT between VAT receivable and Statement of VAT Particulars Amount ($) VAT receivable as per Statement of VAT Account Reconciliation VAT receivable as per Financial Statements Variance 208,250 212,741 4,491 Root Cause/Implication The above is the indication of ineffective account reconciliation as variances were not detected and rectified in a timely manner.
Recommendations The Chief Staff Officer Finance should ensure that account reconciliations are performed effectively and variances rectified in a timely manner.
7 RFMF Finance Manual 2014 – Part 6: Trading & Manufacturing Accounts Republic of Fiji Military Forces Head 19: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The recommendation from the Office of Auditor General is noted and RFMF Accounts will implement strict internal control.

RFMF will ensure that variances appearing in reconciliation statements are acted on in a timely manner.
Officer Responsible Chief Staff Officer Finance 19.16 Follow up on Stores Management Performance Audit Storage of inventories shall be the responsibility of the storekeepers.

The storekeeper must ensure that: i.)

ii.)

iii.)

iv.)
v.) adequate storage space is available for incoming stock as and when required; storage facilities are properly secured; stocks are kept in an orderly manner allowing for safe access; stocks are handled with care and well stored so as to reduce the risk of damage; quantity of stock is closely monitored to avoid excess holdings or shortages.8 The Performance Audit carried out on the RFMF Stores Management in 2017 noted instances were noted where proper storage facilities were not maintained or were not secured as they had broken windows and leaking roof.
A follow up carried out on 16 August 2019 revealed that the RFMF warehouse storage facilities at Walu Bay (Old Government Supplies stores) was in a deteriorated condition and not sufficiently secured as it had broken windows, doors not well-secured, broken ceilings and leaking rusted roofs.

Refer to Figure 19.1 and 19.2 for details.


Figure 19.1: Door not secured, leaked sewer line Figure 19.2: Leaked rusted roof without ceiling Root Cause/Implication The deteriorated condition of the warehouse indicates improper planning and lack of prioritisation.

Delay and untimely renovation would further deteriorate the condition of the building, which would be more costly to repair in the future.
8 RFMF Finance Manual 2014, section 8.2.1 Republic of Fiji Military Forces Head 19: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendation The Force should prioritise the renovation of their warehouse to ensure that their storage facilities, which houses high valued stores items, are well secured.

Agreed Management Action The Force acknowledges that the warehouse in Walu Bay is in a deteriorated state.
Plans are in place to construct a new warehouse.

This is however subject to the provision of budget funding.

RFMF will submit a budget proposal in the next financial year for the construction of the new warehouse.
Officer Responsible  Director Finance, Logistics and Acquisition  Staff Officer Budget 19.17 Significant Outstanding Operating Trust Fund Balance The Chief Staff Officer Finance is responsible for maintaining ledgers and reconciling balances in such ledgers to ensure the accuracy of financial information and the timeliness of management reports.

9 Our review of the Operating Trust Fund account noted that the account had a credit balance of $972,413 as at 31/07/18.
This balance included the significant balance of $801,704 for Employees FNPF, which was carried forward from prior years.

Root Cause/Implication The anomaly indicates mispostings, non – clearance of the various deductions to respective authorities / organization or the non-clearance of the book entries on a timely manner.

This could be attributed to the lack of stringent monitoring and review of the monthly reconciliation performed in the accounts section.
Recommendations  The Force should ensure timely clearance of the operating trust balance.

 Force should set up a task force unit with a specified timeframe to speed up the review of the postings made in the general ledger (FMIS) and clearance of outstanding balances carried forward.

 Alternatively, the Force may consider liaising directly with the relevant authorities/entities and seek confirmation that all dues was cleared for the period concern.
9RFMF Finance Manual 2014 – Part 18 Republic of Fiji Military Forces Head 19: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The recommendation from the Office of the Auditor General is duly noted.

The amount of $972,413 is the brought forward accumulated outstanding amount from previous years (2015, 2016 and 2017).
The outstanding balance of $972,413 includes FNPF deduction of $801,704.00 and credits from other pay deductions.

These credits will be cleared at earliest.

Officer Responsible Chief Staff Officer Finance 19.18 Effectiveness of the Internal Audit Function Internal audit is a key pillar of good governance.
It inspects an organisation’s systems and processes and provides the board of directors, the audit committee, senior management, with objective, independent assurance on how well they are working, and aim to add value and improve the organisation’s operations.

Internal audit also provides a view on whether an entity has appropriate controls, practices and procedures both to minimise the risk that an adverse event will occur and to reduce the potential consequences if it does.
The Force has an Internal Audit Unit that is handled by three civilian staffs and that reports directly to the Director Finance, Logistic and Acquisition.

From the review of the internal audit functions of the Force, it was noted that there was no audit carried out to review the effectiveness of the internal controls, systems and process of the Force in 2018.
In addition, the Unit does not have an internal audit charter defining the internal audit’s purpose, authority, responsibility and position within the Force.

Root Cause/Implication The above findings indicate that the purpose and function of the internal audit function and has not been properly documented to allow it to operate effectively, efficiently and independently.
Recommendations  The Force should develop an internal audit charter outlining the internal audit functions purpose, authority, responsibility and position within the Force;  Following the establishment of the internal audit charter, an annual audit program should be developed based on risk assessment of key functional units within the Force;  The Internal Audit team should carry out reviews on the effectiveness of its internal controls, systems and processes particularly in the areas of risk and provide recommendation where deficiencies exist; and  For the purpose of effectiveness and accountability, the Internal Audit function should directly report to the Force Commander.
Republic of Fiji Military Forces Head 19: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The Internal Audit Unit of RFMF was established in 2010 comprising of one civilian staff and three military staffs.

Due to issues with high staff turnover of military staffs, because of Peacekeeping duties abroad, the recruitment of two civilian staffs was completed in August 2017.
Though the internal audit team reports directly to Commander RFMF, the team is administered under the Director Finance Logistic and Acquisition.

Due to the lack of staff in 2016 the Audit team conducted only two routine audits for the RFMF – Logistics Support Unit and Engineers Regiment.

Apart from that, the Audit team conducted special investigations as instructed by RFMF Headquarters.
With the recruitment of 2 civilian auditors’, routine checks and reviews on internal controls in RFMF units is now being carried out in accordance with the audit plans.

In addition RFMF is developing an audit charter for endorsement by the Commander by December 2018.
Officer Responsible Director Finance, Logistics and Acquisition 19.19 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Force Management, and Internal Audit and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Force.
Risk management framework would provide a platform to identify various risks affecting the Force, 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.

Our review of the Force’s Corporate Governance revealed that there is no risk management framework in place.
As a result, the Force does not have written policies, procedures or guidelines to manage risk associated with the following:  occupational health and safety  Force operational and human resource planning   disaster recovery and business continuity  assessment of potential conflicts of interest.
fraud control and anti-corruption Root Cause/Implication In absence of a risk management framework, the Force may find difficulty in managing risks affecting the Force particularly risk of fraud and misappropriation of assets.

Recommendations The Force should work towards establishing a risk management framework that would support their operations by providing financial and operational risk management and management of external reporting obligations.
Republic of Fiji Military Forces Head 19: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Agreed Management Action The RFMF operations is administered by various documents such as the Commander RFMF Intent; the Standing Orders Volume I – Admin Matters and Standing Orders Volume II – Support Matters, Camp Standing Orders, and various Standard Operating Procedures (SOPs) for various specialized groups and tasking’s.
Most of these SOPs cover risks managements for those particular tasks.

As a way forward RFMF acknowledges that a review and documenting of an overall Risk Management Framework should be put in place for the Force.
Officer Responsible Director Finance, Logistics and Acquisition Republic of Fiji Military Forces Head 19: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 19.1: PURCHASES BASED ON THREE COMPETITIVE QUOTES Vendor Supplies purchased from vendor Vendor A Vendor B Vendor C Vendor D Webbing set, Badge cap, 20 Men Tent, 10 Men Tent, Fleece jacket, Wais Mil Webbing, Belt web, Star Pips Bod Stock, Gasmate Burners, Thermal Box Terry Socks, Flennet Cloth, Gun Cleaning Sprays, Slides All Ranks, Duffle Bag, White Jacket, Mess Tin, Round neck T Shirt, Compass, Green Towel Mattresses, High density foam pillows, Green Cummerbund, Stretcher beds, White bed sheet, Sam Brown Belt, Green shoes socks, Polar fleece blankets, Polar fleece blankets, Thermo mat, Olive green round neck, Steel roller cabinet, Green sweaterman, jungle hat, long sleeve under armour, Olive green elbow and knee pad, Olive Green Vest, Olive green summer socks Stryker 5-25 fogging solution, White bed sheet, Maki blocks rat bait, Floor hygeine controller, Green overall with RFMF logo, White LED Head mounted lights, Flannet Cloth Total ($) 334,144 262,928 227,662 135,850 Republic of Fiji Military Forces Head 19: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 20 Fiji Police Force Roles and Responsibilities The Fiji Police Force is responsible for maintaining law and order in Fijian society by employing best practices in police work and using modern technologies and innovative strategies to prevent criminal activity.
The Fiji Police Force engages in a wide range of activities to maintain professional personnel that are well-trained and well-equipped to handle evolving criminal threats.

The Force is currently seeking to expand the reach of its services through the construction of new facilities and to improve response times and investigative effectiveness by procuring new specialised equipment, including vehicles, communication equipment and forensic science tools.
The Force’s efforts to integrate new technology will also help address crimes of increasing levels of sophistication, particularly the investigation and prevention of cybercrimes.
Table of Contents FINANCIAL STATEMENTS ................................................................................................... 2 PART A: Audit Opinion ........................................................................................................................... 2 20.1 Statement of Receipts and Expenditure ................................................................................ 2 20.2 Appropriation Statement ........................................................................................................ 3 20.3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ...................................................................................................................... 4 20.4 20.5 Submission of FY 2017-2018 Draft Agency Financial Statements .......................................... 5 20.6 Quality of Draft Financial Statements by entities .................................................................. 6 Timeliness of Draft Financial Statements ............................................................................... 6 20.7 Timeliness of Provision of Management Comments and Signing of Financial Statements 6 20.8 OTHER SIGNIFICANT MATTERS ......................................................................................... 7 PART C: 20.9 Operation of National Command Center ............................................................................... 7 20.10 Police WaterPol Unit ............................................................................................................... 8 Force Information Technology (IT) Strategy Plan ................................................................ 10 20.11 20.12 Poor Condition of Force Quarters ......................................................................................... 12 20.13 Variance in Revenue Records ................................................................................................ 13
13 20.14 Police Trust Fund .................................................................................................................... 14 20.15 Significant Outstanding Operating Trust Fund Balance ....................................................... 15 QUARTERS CONDITIONS ....................................................................................... 18 APPENDIX 20.1 Fiji Police Force Head 20: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 20.1 Audit Opinion The audit of the 2018 accounts for the Fiji Police Force resulted in the issue of a qualified audit opinion.
The qualification was due to the following: The Force did not include as part of the Financial Statements the Trust Fund Account Statement of Receipts and Payments for the Force Band Trust Fund Account with receipts $84,542 and payment amounting $66,485 for the period ended 31 July 2018.

In addition, the Force Band account transactions were not recorded in the FMIS General Ledger.
20.2 Statement of Receipts and Expenditure The Fiji Police Force recorded revenue totalling $2,709,303 and incurred a total expenditure of $143,085,755 for the year ended 31 July 2018.

Details are provided in Table 20.1.
Table 20.1: Statement of Receipts and Expenditure for 2018 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2018 ($) 2,418,841 290,462 2,709,303 112,433,425 1,072,080 6,107,680 7,949,937 4,684,230 38,466 992,257 133,278,075 31 July 2017 ($) 2,299,786 247,988 2,547,774 95,077,397 627,403 4,187,359 6,684,422 5,184,797 61,945 1,399,253 113,222,576 3,148,044 4,297,805 7,445,849 877,374 4,416,095 5,293,469 Value Added Tax 2,361,831 1,934,979 Total Expenditure 143,085,755 120,451,024 Revenue mainly comprised of police clearance fees, license fees and overpayment recoveries.
The Established Staff expenditure increased by $17,356,028 or 18% in 2018, which was due to increase in Force strength from 3,992 in 2017 to 4,084 in 2018 and pay rise due to realignment of Police Pay Structure.

The realignment was part of the “One Force” concept that the Fiji Police Force embarked on to consolidate officer salary structure.

The new salary structure was approved via Police (Amendment) Regulations 2017.
The Government Wage Earners expenditure increased by $444,677 or 71% in 2018, which was mainly attributed by 14% pay increase for the members of the Special Constabulary.
Fiji Police Force Head 20: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Travel and Communication expenditure increased by $1,920,321 or 46% in 2018, which was directly attributed to increase in operational costs (travelling, subsistence and communication expenses) of the Force.

The revised rate of the meal allowance of $20 made a significant cost impact as well.
Maintenance and Operations expenditure increased by $1,265,515 or 19% in 2018, which was mainly attributed to increase in operational costs such as office stationery and printing expenditure, repair and maintenance expenditure, purchase of fuel due to increase in the allocation of vehicles and electricity expenditure.
Capital Construction expenditure increased by $2,270,670 or 259% in 2018, which was due to the upgrading/repairs of Police Institutions and Police Quarters at Namarai, Dawasamu, Rakiraki Police Station and Valelevu Police Station compounded by the commencement of the consultancy (project design and engineering) works on the proposed upgrading and extension of the Nadi and Lautoka Police Stations and the construction of the new Nakasi Police Station.
20.3 Appropriation Statement The Force incurred expenditure totalling $143.1 million in 2018 against a revised budget of $146.9 million, resulting in a saving of $3.8 million or 2.6%.
The savings of $1,035,317 or 19% under the Capital Purchase (SEG 9) allocation was mainly attributed to the Force anticipation to reprioritise the funds to commence the major CCTV project, waiting for approval of the Department of Information Technology and Computing for its Forensic Chemistry Equipment Project and leaving the procurement of the fibre glass boats to the last quarter resulting in the supplier not being able to supply the boats Details of expenditure against the revised budget are provided in Table 20.2.
Table 20.2: Appropriation Statement for 2018 SEG Item Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating grants & transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL Budget Estimate ($) 118,054,649 637,576 3,984,000 6,789,000 5,344,043 90,000 1,133,000 136,032,268 7,003,100 3,287,000 10,290,100 2,476,600 148,798,968 Changes ($) (5,544,956) 487,836 2,480,000 2,024,000 204,732 (21,407) (32,629) (402,424) (3,642,818) 2,046,122 (1,596,696) 91,620 (1,907,500) Revised Estimate ($) a 112,509,693 1,125,412 6,464,000 8,813,000 5,548,775 68,593 1,100,371 135,629,844 3,360,282 5,333,122 8,693,404 2,568,220 146,891,468 Actual Expenditure ($) b 112,433,425 1,072,080 6,107,680 7,949,937 4,684,230 38,466 992,257 133,278,075 3,148,044 4,297,805 7,445,849 2,361,831 143,085,755 Lapsed Appropriation ($) (a-b) 76,268 53,332 356,320 863,063 864,545 30,127 108,114 2,351,769 212,238 1,035,317 1,247,555 206,389 3,805,713 Fiji Police Force Head 20: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 20.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Fiji Police Force Head 20: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reported to management of the agencies on matters relating to internal controls.

 Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Force as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 20.5 Submission of FY 2017-2018 Draft Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of inter-departmental clearance accounts by 3 August 2018  Monitoring of un-presented cheques by 31 July 2018  Clearance of stale cheques by 22 August 2018  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments by 31 July 2018 and virements by 20 July 2018  Completion of reconciliations by 29 August 2018  Submission of arrears of revenue returns by 31 August 2018 Fiji Police Force Head 20: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 9 key processes completed within two weeks of due date 20.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Force was: Rating Quality of draft financial statements assessment  Ineffective Adjustments on operating results/net assets were more than one percent 20.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received on or before 31 October 2018 20.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Effective Within 15 days from issue of Financial Statements for signing Fiji Police Force Head 20: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Force as at 31 July 2018.
20.9 Operation of National Command Center The responsible authority for a budget sector agency is responsible for the effective, efficient and economical management of the agency.1 Physical assets provide a vital resource base that supports the delivery of outputs by the agency.
Therefore it is important to ensure that:  assets are safeguarded and properly maintained;  assets are used for official purposes only;  all assets held by the agency are used efficiently.2 The Force National Command Centre (NCC) is based at the Totogo/Central Police Station building.

Its role is to manage the 917 hotline, manage the CCTV footage and manage the operation by receiving and disseminating of information/instruction.
Our visit to the NCC on 27/11/18 revealed that:  The Force through the partnership with Suva City Council has eight CCTV cameras installed in the central business district.

However, it was noted that CCTV monitor was not operational for over a year and hence no monitoring could be done.

 National Command Center (NCC) supports whole of Fiji operation.

However, it was noted that the CCTV camera except for Suva was not installed or linked at/to any other district (town/cities).
 Except for Suva City Council, there was no partnership approach with other municipal council and the business chambers/council.

 Although the Force was allocated a sum of $50,000 for CCTV cameras in 2017/2018 budget, the fund were not utilised.
1 Financial Management Act 2004 – Section 28.1 (a) 2 Fiji Police Force Finance Manual 2015 – Part 10 Fiji Police Force Head 20: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication Prolong delay in fixing the NCC monitor screen and strengthening the operational needs of the NCC such as strategic installation of the CCTV and partnership with the municipal council, business chambers and public transport providers indicates lack of prioritisation.
CCTV system increases the Force visibility and is a great tool to assist the Force in smart/modern policing.

In the absence of fully operational systems, it would limit the capacity of the Force in crime deterrence, quick response and tracking of the criminal activity or escapee from the police custody.
Recommendation The Force should:  prioritise the review and strengthen the operational needs of its National Command Center;  consider engaging in a partnerships with local business chambers/council and municipal councils on the installation and maintenance cost of the CCTV while the monitoring to be facilitated by the Force; and  ensure that funds allocated for the CCTV camera is effectively and efficiently utilised.
Agreed Management Action CCTV for CBD The Cameras that were already in operation in the Suva CBD that belongs to the SCC was in operation and linked to the Police Coordinating Command Centre.

However, due to wear & tear the links from the cameras to the monitors at the National Command Centre has worn out and needs to be replaced.

Therefore, the links have been removed and new links have been ordered for replacements.

This is still a work in progress.


Linkage to other Divisions For this issue, it is a work in progress in liaison with the Huawei Company, trying to facilitate the new platform for the CCTV monitoring system for the Fiji Police Force.

Manager Communication is currently working on this Project.

This Project will a have new platform to meet the current demand and standards of Police operations through monitoring and surveillance.
Officer Responsible  Manager Communication  Chief Administration Officer 20.10 Police WaterPol Unit Physical assets provide a vital resource base that supports the delivery of outputs by the agency.
Therefore it is important to ensure that:  assets are safeguarded and properly maintained;  assets are used for official purposes only; Fiji Police Force Head 20: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  all assets held by the agency are used efficiently.3 The principles of responsible financial management are to ensure value for money in the use of money and resources.4 The responsible authority for a budget sector agency is responsible for the effective, efficient and economical management of the agency.5 During the 2017/18 financial year, the Force had a savings of $300,877 from the funds allocated for the operations of WaterPol Unit.
Similarly in 2016/17 financial year, there was a savings of $342,912.

The Force owns a total of 27 vessels of which 15 vessels (2 Aluminium, 11 Fibre Glass, 1 wooden and 1 rubber dingy) were in operation, four were under repair, one was lost in the sea and seven in the process of being boarded due to its old age and non-compliance to the requirement of Maritime Safety Authority of Fiji .
Our review of the condition and operational capability of the vessels noted the following:  Out of the 15 vessel in operation only WP Nahatogo was fully equipped with navigating equipment's while WP Veiqaravi was partially equipped.

Both the vessel went through massive overhaul in 2017/2018.

 The Fiber glass vessel used by the Force does not have the basic navigational equipment, lights and shelter which affects its movement at night and during heavy rain.
Root Cause/Implication The above finding indicates lack of priority for the proper establishment of the WaterPol Unit as substantial funds remained unutilised during the 2017/18 financial year.

As a result, the Force is unable to perform water policing efficiently and effectively.
Recommendations The Force should:   review and strengthen its WaterPol Unit establishment and operational need; strategize ways to increase its visibility, timely interception and deterrence for criminals/drug peddlers from their criminal activities;  develop the Standard Operating Procedures to guide the Water Pol operation;  review the need for the type of vessel/boat required for current/future operation needs and equip it with the basic navigational equipment for the safety of the officers and as well as to effectively deliver its service; and  effectively plan the utilization of funds allocated for Police WaterPol Unit.
Agreed Management Action Adequate Vessels The FPF notes and agrees with the comments whereby in order to build its water policing works, FPF has advertised to procure 4 x Fast Intercept, Search and Rescue Boats.

Moreover, approx.
Moreover, approx.

FJD$5.5 Million has been 3 Fiji Police Force Finance Manual 2015 – Part 10 4 Financial Management Act 2004 – Section 5 (c) 5 Financial Management Act 2004 – Section 28.1 (a) Fiji Police Force Head 20: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR agreed by the Japanese Government on 18/12/18 to assist the Fijian Government to supply equipment, etc.

to enhance the capabilities for the maritime operational works.
Procurement of 20 x 25 ft. Standard Fiberglass Boats These engines were procured to supplement the installation of 2 x 60HP per boat.

However, due to the Whole of Government Tender in place whereby only one contractor is manufacturing the boats, the contractor was dragging on furnishing of requirement of Advance Payment documents and also the contractor failed to deliver the boats.
Due to constant delays from the Supplier and as such to meet Ministry of Economy requirement closing of account procedures, the Purchase Order had to be cancelled which resulted in a saving of $342,912.

Review and strengthen its WaterPol Unit establishment and operational need The new Establishment has been approved as part of the current Fiji Police Force Reform & Restructure.
Standard Operating Procedures to guide the WaterPol operation The work on the Draft Standard Operating Procedures is ongoing and to be completed by 30/06/2019.

Vessels/boats required for current/future operation needs The biggest challenge is the approved Government Tender which approves the standard boat and did not take into account the requirements of agencies [Fiji Police Force] in relation to the nature of their operations.
However, Fiji Police Force has refitted and refurbished 2 x aluminium boats, WP 03 Nahatogo and WP 04 Naivonoi, with 200HP Yamaha outboard engine and installed with navigation systems approved by MSAF.

Currently the Force is working on design and building police boat to meet CP’s intent to achieve organizational goals.
Effective utilisation of funds allocated for Police WaterPol Unit Your advice has been noted and currently the Force is in the process of upgrading the existing boats/vessels and acquiring of new vessels for our maritime operation areas, hence the allocated funds will be used for such expenditures.
Officer Responsible  Director Operations  Chief Operation Officer 20.11 Force Information Technology (IT) Strategy Plan IT strategy is a comprehensive plan that information technology management professionals use to guide their organizations.

We noted that the Force does not have an approved Strategic Plan on its IT needs.

Currently, the use of Information Technology by the Force is minimal and system and process was mostly manual.
For instance, the following tasks were performed manually:  Complain registration and Case File Management;  Registration and movement of exhibits; and  Registry records.

Fiji Police Force Head 20: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Furthermore, the police email domain was not adequately functioning hence most of the staffs were resorting to personal email addresses.
Root Cause/Implication The Force has the established Director IT position.

However, the IT unit is not established properly.

As at the date of audit6, the unit had eight constable positions but there was no organisational structure for the IT unit.

The Force plays a vital role in ensuring safety, security, law and order to boost the public and investor confidence.
Technology is a vital tool in helping police forces to manage its internal operation, database for performance measurement and also prevent and fight crime more efficiently, and effectively.
Recommendations The Force should:  establish and strengthen its IT Unit;  consider recruiting experience system analyst and software developers to assist in programming and apps development; set up the taskforce/Working Group to review its IT capability and needs, consult with the respective stakeholders and prepare the strategic plan for its implementation; and seek funding through annual appropriation or seek donor funding for institutional strengthening through partnership approach.
  Agreed Management Action   Complain Registration Case/ File Management and Tracking – Project was undertaken by IT (FPF) and Director Prosecution in the last two years but did not progress due to no budgetary funding.

Exhibit Registration and Movement – No project was undertaken on this initiative.

However it is envisaged being undertaken in future.
 Registry Records – Through the HRIS implementation, the database has already being developed and are currently utilised in the Fiji Police HQ Registry.

However, the IT Department is working on the deployment of the database to all four divisions through a dedicated Police Network.

 Database software – for quick crime analysis, tracking and response - No project has been done on this initiative.

However it is envisage being undertaken in future.


Police Email Under the Govnet, a Domain was created for the Fiji Police Force official mailing system namely the police.gov.fj.
Most of the officers were reverting back to the open email system due to the following reasons:  Only 10MB of data for any attachments compared to 25MB for open emails;  Access to the Govnet mailing system is limited and most times cannot be accessed by our frontline officers; and  Development of Government ICT infrastructure has yet to reach some Police in remote and maritime sites.
6 31/10/2018 Fiji Police Force Head 20: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Structure and Manpower The establishment of IT Unit has been approved for regularisation in Phase 1 of the Fiji Police Reform & Restructure and this to be executed in 2019 financial year.
The IT Department views this strategy as a positive move towards the establishment and strengthening of the IT departments through the implementation of its re- structure to facilitate establishment and enhance the development critically needed in the organization.

Officer Responsible  Director IT  Chief Administration Officer 20.12 Poor Condition of Force Quarters Agencies must prepare an Annual Procurement Plan (APP) to support their projected procurement requirements for the coming financial year.
The APP is to contain a short strategic procurement outlook for the agency supported by details of any planned procurement.
The detail should include the subject matter of any planned procurement and the estimated date of the publication of the approach to the market.7 The responsible authority for a budget sector agency is responsible for the effective, efficient and economical management of the agency.8 Our site visit to the Force Quarters listed below in the Central Division noted that some quarters were in a very poor condition.
 Nausori Police Station, Station’s single men’s and married quarters – for the Nausori Police Station, the condition of washrooms were very dirty.

The condition of the cell was not OHS compliant.

We were informed that the sewer tank gets flooded during heavy rain which gives foul smell.

Also, the ‘Bure’ for the Police Station needed a roof and new door For the Nausori Police Station’s single men’s quarters, the toilet and urinary bowl were dirty and the toilet cistern was not working.
The main door to the quarters is damaged, mosquito netting torn and there were missing louvre blades and broken windows For the Nausori Police Station’s married quarters, the roof was leaking and the old guttering needed replacement.

There were broken/damaged windows on the quarters, the paintings were worn out and the power points were loose, which was unsafe for tenants.
 Valelevu Police Station single men’s and married quarters – there were no showers, no doors, broken taps and broken washbowls in the bathrooms.

The roofs and the guttering are old and needs replacing.

The drainage for the sinks were damaged.

 Nasova married quarters barrack – the paintings on the barracks have worn out and had rusted roofing irons.

Refer to Appendix 20.1 for pictures taken during the site visit.
7 Guide to the Procurement Policy Framework 2010 – Section 3.4.2 8 Financial Management Act 2004 – Section 28.1 (a) Fiji Police Force Head 20: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR The Force was allocated a sum of $800,000 for upgrade and replacement of Living Quarters during the 2017 – 2018 financial year while $1,000,000 was allocated during the 2016-2017 financial year.
However, the budgetary provision was revised to nil during the year as the funds were vired for other projects.

Root Cause/Implication The findings indicate the lack of periodic maintenance of stations and quarters due to lack of prioritisation as the funds in 2016/2017 and 2017/2018 was not used for the intended purpose.
Delay and untimely repairs would further deteriorate the condition of the building, which will be more costly to repair it in future, create negative public image of the Force and also it affects the welfare issues for tenants (officers) occupying those quarters.
Recommendations The Force should:  review the status/condition of all its stations/quarters and prioritise its maintenance/repairs in next budget in accordance to the police modernisation plan;  moving forward ensure the maintenance and repairs are carried out by the Building and   Maintenance Unit on a timely manner; inspections of quarters and stations are strictly carried out by the Station Officer on a regular basis; and take necessary action is instituted against officers who damage or do not maintain the quarters in good condition.
Agreed Management Action $1.0 Million not utilised – in order to utilise the allocated funds FPF had made a submission to outsource the maintenance works; however, this was not approved by CIU.

As a result a submission amounting to $52.8m for periodic maintenance to be phased out for a period of 4 years has been submitted to the Cabinet through Ministry of Defence and we are waiting for approval.

All works in phases will be carried out by CIU through engagement of their consultants and contractors.
Officer Responsible  Manager Procurement  Director Corporate Services  Chief Administration Officer 20.13 Variance in Revenue Records Within five working days of the Ministry of Economy issuing the monthly General Ledger Reports, the Assistant Accounts Officer Revenue shall reconcile the revenue figures in the report to the Revenue Statement.9 The Force major source of the revenue is through the issue of the Police Clearance report.
From the analytical review performed using the FMIS (GL) data and the data obtained from the Police 9 Fiji Police Force Finance Manual 2015 – Section 5.5.12 Fiji Police Force Head 20: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Clearance Register revealed the variance of $133,519 between two records.
The details are as follows: Table 20.3: Details of Variance between GL and Force Records Description Total Revenue as per GL (FMIS) Convert to VIP Revenue as per Report (Police Clearance Register) Variance Percentage Variance Amount ($) 2,418,841 2,636,537 2,503,018 133,519 5% Root Cause/Implication As the internal control mechanism the records from the Force Criminal Record Unit was not analysed and reconciled with the FMIS (GL).
In the absence of reconciliation between the revenue posted in general ledger (FMIS) and Police clearance register, error and omission will not be detected on a timely manner.

Recommendations The Force should:   regularly reconcile the Police Clearance issued data from the Criminal Record Unit with the revenue records submitted from the division on a monthly basis; and investigate and rectify the variance noted between the two records.
Agreed Management Action The Criminal Records Office have provided amount from their Police clearance register for the number of Police clearance applications were received and processed.

There were some transferring errors into the register that has been rectified.

However, we have noted your recommendations and way forward accordingly had advised the CRO and Deputy Force Accountant to regularly verify and reconcile the two records.
Officer Responsible Manager Finance 20.14 Police Trust Fund Each year the Deputy Force Accountant shall prepare an annual trust receipts & payments statement within two weeks of the end of the year.10 The audited financial statement of trust balances shall be included in the agency’s annual report.11 10 Fiji Police Force Finance Manual 2015 – Section 14.4.5 11 Fiji Police Force Finance Manual 2015 – Section 14.4.8 Fiji Police Force Head 20: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Financial transactions shall be posted into the automated information system (General Ledger System) using journal entry input forms or directly from source documents such as journal vouchers or payment vouchers.12 The Force maintains a Band Trust Fund account which had a closing cashbook balance of $156,221 as at 31 July 2018.
This account records the receipts and payments incurred for the band entertainment provided to general public on request.

We noted that the transactions were not recorded in the FMIS general ledger (FMIS) and also not reflected in the Force’s agency financial statement.

Root Cause/Implication The findings indicate that Force Accountant did not recognise that the Band Trust Fund account should be included as part for the Force Financial Statements.
As a result the Band Trust Fund account has been excluded from been disclosed in the Force Financial Statements.

Recommendations The Force should liaise with Ministry of Economy on reflecting the Police Band Trust Fund account in the FMIS General Ledger and consequently in the Force Financial Statements.

Agreed Management Action The Police Band Fund Trust account has been operating under separate Bank account after obtaining approval from the Ministry of Economy on 27/01/2004.
The money received arising from the paid Band engagement is deposited into this account and this money is used to pay for repairs and maintenance of Band equipment, transportation of Band officials, accommodations, subsistence, etc.

There is no budgetary provision for repairs and maintenance of Band equipment.
Officer Responsible  Manager Finance  Director Corporate Services  Chief Administration Officer 20.15 Significant Outstanding Operating Trust Fund Balance Operating Trust Fund Accounts facilitate transactions relating to the Ministry’s administrative role as an employer.

These transactions include deductions from employees’ salaries/wages with regards to the superannuation contributions, housing loan, repayments, insurance premiums and other deductions for onward payment to the respective payees.
Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the Assistant Accounts Officer Ledgers shall reconcile the ledger balances to the general ledger reports 12 Fiji Police Force Finance Manual 2015 – Section 15.2.1 Fiji Police Force Head 20: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR and prepare a ledger reconciliation statement.13 Any errors or misallocations must be immediately adjusted by way of journal vouchers.14 Our review of the Operating Trust Fund account noted that the account had a credit balance of $2,410,759 as at 31/07/18.
This included significant outstanding balances amounting $2,303,499.64 carried forward from prior years.
Details are as follows: Table 20.4: Details of Outstanding Operating Trust Fund Balance Allocation Description 1-20101-20101-861210 1-20101-20101-861517 1-20101-20101-861917 1-20101-20101-861920 1-20101-20101-863201 Total Root Cause/Implication Police Welfare Scheme Police Service Credit Union Improved Forestry Employees FNPF VAT from provision of goods and services Amount ($) 212,241.43 654,416.76 285,440.60 155,720.76 995,680.09 2,303,499.64 The above finding is a result of mispostings and non - clearance of charges in the operating trust fund on a timely manner.
As a result, significant balance is appearing in the operating trust fund general ledger.
Recommendations  The Force should ensure timely clearance of the operating trust balance;  Force should set up a task force unit with a specified timeframe to speed up the review of the postings made in the general ledger (FMIS) and clearance of outstanding balances carried forward;  Alternatively, the Force may consider liaising directly with the relevant authorities FNPF, FRCS, Welfare Scheme and Credit Union and seek confirmation that all dues were cleared for the period in concern.
Agreed Management Action Police Welfare  Misallocation of allocations in previous year’s payments.

The Police Welfare payments were made from Operating Fund account - SEG 1 instead of Police Welfare Trust Fund account.

 Reversals were not made to the respective Personal Emolument allocations – SEG 1.

 The Force is liaising with Ministry of Economy for way forward to clear these previous years’ accumulated figures.

Police Credit Union  Misallocation of allocations in previous year’s payments.
The Police Credit Union payments were made from Operating Fund account - SEG 1 instead of Police Credit Union Trust Fund account.

 Reversals were not made to the respective Personal Emolument allocations – SEG 1.
13 Fiji Police Force Finance Manual 2015 – Section 15.3.3 14 Fiji Police Force Finance Manual 2015 – Section 15.3.4 Fiji Police Force Head 20: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  After verification we have noted that few payments are pending to the Police Credit Union.

However, awaiting confirmation from Manager Police Credit Union for members whose contributions has not been received that are still in the trust fund account.
The Force is liaising with Ministry of Economy for way forward to clear these previous years’ accumulated figures.

 Improved Forestry    This allocation is used to hold the 10% retention money for capital projects.

The allocation will be cleared once the payment is made for the release of the retention money on expiry of defects liability period.
The description for the allocation will be changed to Retention Fund for Capital Projects and a request has been submitted to FMIS/MoE FNPF  All payments have been done to FNPF, except for some mis-postings that are to be rectified and corrected.

AR VAT  Necessary write up was made to MOE on the clearance of $479,065.90 but till to-date no response is received from them.
Officer Responsible Manager Finance Fiji Police Force Head 20: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 20.1 QUARTERS CONDITIONS Nausori Police Station Quarters Figure 20.1: Single men quarters door damaged Figure 20.2: Torn mosquito screen missing louvre blades Figure 20.3: Single men quarters Urinary bowl Figure 20.4: Single men quarters toilet Figure 20.5: Single men quarters broken cistern Figure 20.6: Married quarters’ broken windows Fiji Police Force Head 20: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Nausori Police Station Quarters Figure 20.7: Married quarters’ broken windows Figure 20.8: Loose power-point Figure 20.9: Cracks in ceiling Figure 20.10: Old guttering Figure 20.11: Married quarters old guttering Figure 20.12: Leaking roof Fiji Police Force Head 20: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Figure 20.13: Damaged quarters currently vacated Figure 20.14: Damaged windows for married quarters Valelevu Police Station Quarters Figure 20.15: Broken taps and wash bowl Figure 20.16: No shower in bathroom Figure 20.17: Roof/guttering needs replacement Figure 20.18: Damaged drainage for sink Figure 20.19: No bathroom door/old painting Figure 20.20: Old guttering needs replacement Fiji Police Force Head 20: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Figure 20.21: Missing louvre blades Figure 20.22: Missing louvre blades Nasova Police Station Quarters Figure 20.23: Worn out paint Figure 20.24: Rusted roofing iron Fiji Police Force Head 20: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Head 49 Peacekeeping Missions Roles and Responsibilities For more than three decades, Fiji has responded to the call of the United Nations [UN] to serve in some of the most difficult
 circumstances around the world.
Fiji has proudly contributed troops to successive peacekeeping operations in Lebanon, Sinai, Iraq, Syria, Timor Leste, South Sudan, Darfur, Liberia, Bosnia, Kosovo, Kuwait, Namibia, Cambodia and the Solomon Islands.
The UN Security Council mandate for peacekeeping operations calls for security personnel deployed to conflict zones under UN authority to maintain or restore international peace and security, exclusively in the common interest of the international community; disengage the conflict parties; create conditions for peaceful settlement of a conflict; monitor cease-fire peace agreements; and render humanitarian assistance to civilian populations in the area of deployment.
TABLE OF CONTENTS PART B: PART A: FINANCIAL STATEMENTS ........................................................................................................ 2 49.1 Audit Opinion .................................................................................................................... 2 49.2 Statement of Receipts and Expenditure.............................................................................. 2 49.3 Appropriation Statement ................................................................................................... 2 ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 4 49.4 Internal Controls ............................................................................................................... 4 49.5 Preparation of Draft 2017-2018 Agency Financial Statements ................................................ 5 49.6 Quality of draft financial statements by entities .................................................................. 6 49.7 Timeliness of draft financial statements .............................................................................. 6 49.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ....... 6 OTHER SIGNIFICANT MATTERS .............................................................................................. 7 49.9 Splitting of contracts ......................................................................................................... 7 49.10 Breach of Government Tender Board Approval ................................................................... 8 49.11 Misposting not adjusted .................................................................................................... 9 EXTRA PAYMENT FOR VACCINE ................................................................................ 12 APPENDIX 49.1: PART C: Peacekeeping Missions Head 49: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 49.1 Audit Opinion Audit of the 2018 accounts of the Peacekeeping Missions resulted in an unqualified audit opinion.
However, attention was drawn to the following matter: The Peacekeeping Missions did not carry out a complete board of survey to verify the existence and condition of the assets under its authority except for Black Rock training camp contrary to Section 49(2) of the Finance Instructions 2010.

49.2 Statement of Receipts and Expenditure The Peacekeeping Mission incurred expenditure totalling $75,824,535 for the year ended 31 July 2018.

Refer to Table 21.1 for details.
Table 49.1: Statement of Receipts and Expenditure for 2018 Description RECEIPTS State Revenue Total Revenue EXPENDITURE Operating Expenditure Established staff Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditures Total Operating Expenditure Capital Expenditure Capital Purchase Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 31 July 2018 ($) 31 July 2017 ($) --- --- --- --- 64,135,279 539,346 276,741 4,469,607 4,138,871 73,559,844 969,494 969,494 1,295,197 75,824,535 61,854,644 301,772 47,856 3,993,097 966,946 67,164,315 6,878,905 6,878,905 1,222,806 75,266,026 The total expenditure increased by $558,509 or 1% in comparison to 2017.
This was due to increase in operating expenditure by $6,395,529 or 10%.

This increase was offset by a decrease in capital expenditure by $5,909,411 or 86%.

49.3 Appropriation Statement The Mission incurred expenditure totaling $75,824,535 in 2018 against a revised budget of $79,207,702 resulting in a saving of $3,383,167 or 4%.
Peacekeeping Missions Head 49: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Review of the FMIS General Ledger revealed that significant savings were on the following areas: Personal Emoluments (SEG 1) by $935,300, Allowances (SEG 1) by $1,057,798, Military Tech Equipment by $145,882 (SEG 7), Standby for Rapid Deployment by $202,000 (SEG 7), Winter Clothing by $233,570 (SEG 7) and Standby Arrangement Rapid Deployment by $250,000 (SEG 7).
Savings were due to the following reasons:  There was a savings of $2,145,986 or 3% in Established Staff budget due to fluctuations in the number of deployed troops on the ground.

 There was a savings of $843,699 or 17% in Special Expenditure budget due to savings in Standby Arrangement for rapid deployment of manpower (RDPM) allocation of $452,000 which was under requisition, winter clothing of $233,570 and military tech equipment of $145,882.
Details of expenditure against the revised budget are provided in Table 49.2.
Table 49.2: Appropriation Statement for 2018 SEG Item 1 3 4 5 7 8 13 Established Staff Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditure Total Operating Expenditure Capital Purchases Total Capital Expenditure Value Added Tax Total Expenditure Budget Estimate ($) 72,810,206 122,758 180,146 3,264,192 Changes ($) Revised Estimate ($) Actual Expenditure ($) (6,528,941) 66,281,265 562,695 367,257 4,627,421 439,937 187,111 1,363,229 64,135,279 539,346 276,741 4,469,607 Lapsed Appropriation ($) 2,145,986 23,349 90,516 157,814 2,302,200 78,679,502 2,680,370 4,982,570 (1,858,294) 76,821,208 4,138,871 73,559,844 --- --- 528,200 79,207,702 969,494 969,494 888,800 969,494 969,494 1,417,000 --- 79,207,702 969,494 969,494 1,295,197 75,824,535 843,699 3,261,364 --- --- 121,803 3,383,167 Peacekeeping Missions Head 49: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 49.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

 Control Environment (CE) – is the set of standards, processes and structures that provide the basis for carrying out internal controls across the entity.
These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.

It also includes commitment to attract, develop and retain competent individuals, and holding them accountable for their internal control responsibilities.
Examples of issues which fall under this category are ethical breaches, gaps in internal controls or controls are non-existent, individuals are not held accountable for breaches in control or entities code of ethics, staff recruitment, and training and professional development, performance assessment and succession planning matters.
 Risk Assessment (RA) – involves a dynamic process for identifying and analysing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

Examples of issues which would fall under this category are absence of risk management framework, operational including fraud and enterprise risks not identified, assessed and mitigated and impact of changes in business processes on controls not identified and assessed.
 Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technology environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned Peacekeeping Missions Head 49: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR to the policies of the entity.
Specific control activities include those relating to authorisation, performance reviews, information processing, physical controls, and segregation of duties.

 Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

Communication occurs both internally and externally and provides the entity with the information needed to carry out internal control day-to-day controls.
Communication enables personnel to understand responsibilities and their importance for the achievement of objectives.

Examples of issues which would fall under this category are reporting to boards and line ministries of entities on matters relating to internal controls  Monitoring Activities (MA) – on-going evaluations, separate evaluations or some combination of the two are used to ascertain whether controls are present and functioning.
Findings are evaluated and deficiencies are communicated in a timely manner.

Examples of issues which would fall under this category are self-assessment by entities to determine whether internal controls are present and function.

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Mission as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 49.5 Preparation of Draft 2017-2018 Agency Financial Statements On 12 June 2018, Permanent Secretary for Economy issued Circular No.
03/2018 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2018 accounts and times were detailed.

The final day for closing the 2018 accounts was 29 August 2018.
The key focus areas in the circular were:  Closing date for journal adjustments by 10 August 2018  Clearance of Inter-departmental clearance accounts by 3 August 2018  Monitoring of unpresented cheques by 29 August 2018  Clearance of stale cheques by 22 August 2018 Peacekeeping Missions Head 49: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR  Annual Board of Survey on Drawings Account cheques by 22 August 2018  Retirement of annual imprests by 20 July 2018  Cancellation of unprocessed purchase orders by 27 July 2018  Processing of payments and virements by 13 August 2018  Completion of reconciliations by 29 August 2018 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Generally effective Year-end close process assessment Five of 9 key processes completed within two weeks of due date 49.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to out audit.
Our assessment for the Mission was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results were less than one percent 49.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 31 October 2018 49.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of Management Comments Received Management comments received after 21 days Rating  Generally effective Timeliness of Signed Financial Statements Received Signed financial statements received within 15 days Peacekeeping Missions Head 49: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Mission as at 31 July 2018.
49.9 Splitting of contracts Splitting of contracts - means dividing contracts in to smaller quantities and amounts, or dividing contract implementation into artificial phases or subcontracts, for the purpose of making it fall below the threshold requiring legislated procurement approval or circumvent the requirement of public bidding for procurement over $50,000 VIP.1 In order to differentiate and identify a split, the procurement would be classed under one of the following criteria; dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of the regulations.2 We noted that the following works were divided into two separate contracts which were carried out by one contractor.
Refer to Table 49.3 for details.
Table 49.3: Works divided into 2 separate contracts Scope of Works Construction of new driveway and carport (Area A) for DPSO (Directorate of Peace Support Operations, Berkeley Crescent, Suva) Construction of new carport with cover and waiting area (Area C) for DPSO ( Directorate of Peace Support Operations, Berkeley Crescent, Suva) TOTAL Date of Signing the Contract 18/06/18 Duration Amount 2 weeks ($) 39,875 18/06/18 4 weeks 43,000 82,875 1 Ministry of Economy Splitting of Contracts Policy 2014, Section.
5.1 2 Ministry of Economy Splitting of Contracts Policy 2014, Section 6.1 (v) Peacekeeping Missions Head 49: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Root Cause/Implication Due to the urgency of the work towards the end of the financial year, the tender process was not followed.

Hence inability to properly plan for projects resulted in splitting of contracts and not calling for tender for procurement above $50,000.
Recommendation The Mission should ensure that instructions stipulated in the Procurement Regulations are complied with and proper procurement procedures are followed at all times.

Agreed Management Action Audit observations were noted.

The Force will comply with instructions stipulated in the Procurement Regulations.

Commanding Officers will also monitor all projects under their command to ensure completion within budget and compliance with regulations.
Officer Responsible Director Peacekeeping Support Office 49.10 Breach of Government Tender Board Approval As per Tender No.

CTN 3/2016 for Supply of Vaccines for Republic of Fiji Military Forces, the Government Tender Board had approved to award the contract for supply of vaccines to Supplier X at the cost of $383,250 VIP annually; totaling $766,500 VIP for a period of 2 years.

The approval was at a unit cost of $FJ56.40 VIP for each Meningococcal Poly Vaccine.
In addition the Board had advised the office that prior approval of Government Tender Board is required in the event there is a variation.3 The Mission purchased Meningococcal Poly Vaccine at $122 per vaccine while the Government Tender Board (GTB), (CTN 3/2016) had approved to purchase at $56.40 VIP per vaccine.

This resulted in additional costs of $65.60 per vaccine purchased which totaled $17,588.20.
In addition, unit cost of $22 VIP was approved by Government Tender Board for purchase of Tetavax Vaccines.

We further noted that the Mission paid 9% VAT again on the purchase of the vaccines.

Hence, an extra amount of $1.98 per vaccine was paid in error.

Refer to Appendix 49.1 for details.

Root Cause/Implication Due to shortage of Meningococcal Poly vaccine namely Mencevax worldwide, the substitute, Nimenrix, was provided at higher price.
This resulted in the payment for the extra amount which was done without the Tender board approval.

3 CTN 3/2016 - Supply of Vaccines - Republic Fiji Military Forces (RFMF) of 20/5/2016 Peacekeeping Missions Head 49: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Recommendations The Mission should ensure: • • that prior approval of the GTB is obtained for variation in prices; and compliance with Government Tender Board decision at all times.
Agreed Management Action Audit observations were noted.

The increased price for Meningococcal Vaccine was due to a shortage of supply in the global market, forcing the price upwards.

Due to the urgent and mandatory vaccination requirement for deployed soldiers, the procurement was made.

The Force will ensure that prior approval is obtained in the event of a variation to a contract.

Officer Responsible Director Finance Logistics and Acquisitions /Chief Staff Officer Acquisition.
49.11 Misposting not adjusted The Senior Accounts Officer, Chief Staff Officer Finance or Staff Officer Trade must not certify a payment as correct unless they are satisfied that the expenditure account it is charged to is correct.4 In addition, within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, the Staff Officer Ledgers shall reconcile ledger balances to the general ledger reports and prepare a ledger reconciliation statement.5 Any error or misallocations must be immediately adjusted by way of journal vouchers.6 Journal vouchers shall be used to correct accounting errors and make other required transfers between accounts.7 We noted that the Mission misposted VAT Inclusive Price (VIP) amounting to $45,024.76 to some expenditure allocations.
Refer to Table 49.4 below for details.
Table 49.4: Examples of VIP Amounts Posted to Expenditure Allocations Date Cheque Number 12/07/2018 31274 11/07/2018 31248 Payment for renovation works to Peacekeeping Office Payment for purchase of 293 pieces of Duffle bag at $165.00 VIP Payment Details Allocation Expensed Amount VIP ($) 14,700.00 Amount Expensed ($) 14,700.00 VAT ($) 1,213.76 Building Maintenance 14910349103050501 Personnel Equipment 14910349103059102- $47,513.42 92,295.00 47,513.42 831.58 3,991.79 43,950.00 3,628.90 4 Republic of Fiji Military Force, Finance Manual 2014, Section 2.8.4 (v) 5 Republic of Fiji Military Force, Finance Manual 2014, Section 16.3.3 6 Republic of Fiji Military Force, Finance Manual 2014, Section 16.3.4 7 Republic of Fiji Military Force, Finance Manual 2014, Section 16.1.1 Peacekeeping Missions Head 49: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Date Cheque Number Payment Details Allocation Expensed Amount VIP ($) Amount Expensed ($) VAT ($) 04/07/2018 30937 06/07/2018 31085 13/07/2018 31328 for of Payment purchase Runaway Pack Payment for purchase of 3*20 men tent at $13,950 VIP each for the Middle-East deployment training for Payment purchase of 586 Head Gear T-Shirts at $85 VIP each for UNAMI, UNIFIL and Middle-East Issue Payment for purchase of 2 x 40 men tent at $20,000 each Purchase of 126 litre gun oil Purchase of 60 one tent at $95 men each Purchase of 120 M16 Pouch (Mag) at $55 each 11/07/2018 31242 A Payment for purchase of 1,090 Long John at $198 each 11/07/2018 31242 B Payment for supply Military of Equipment (545 pieces of scarf) at $99 each) Total Clothing Winter 14910349103079904 - $43,950 and $831.58 Military 14910349103059199 Stores 41,850.00 41,850.00 3,455.50 National Food 14910349103059904 Items 49,810.00 49,810.00 4,112.75 Military 14910149101071118 Technology 40,000.00 40,000.00 3,302.75 Technology Military 14910149101071118 Other Stores 14910349103050156 Personnel Equipment 14910349103059102 Winter Clothing 14910349103079904
 24,570.00 24,570.00 2,028.72 5,700.00 5,700.00 470.64 6,600.00 6,600.00 544.95 215,820.00 215,820.00 17,820.00 Winter Clothing 14910349103079904 53,955.00 53,955.00 4,455.00 45,024.76 In addition, it was noted the Mission was charging expenses to incorrect expenditure allocations.
Refer to Table 49.5 below for examples.
Peacekeeping Missions Head 49: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR Table 49.5: Examples of VIP Amounts Posted to Expenditure Allocations Date Cheque Number Vendor Payment Details 16/11/2017 25568 JAD International Travel Services 24/04/2018 29161 Priya’s Laundry Services Total Root Cause/Implication for airfare Payment for Director Peace Keeping to for accompany Minister Defence on an official visit (Middle East Tour).
Payment uniform and beddings.

laundry of for Amount (VEP) ($) Anomalies 11,727.52 Misposting to SEG 5 (Departure Tax) instead of SEG 3 (Travel).

9,285.55 Misposting to SEG 5 (Departure Tax) 21,013.07 The Mission did not rectify the misallocation which indicates that proper supervisory checks were not carried by the Accounts team to identify and rectify the anomaly on a timely basis.

.

Recommendation The Mission should ensure that all transactions are posted to the correct allocations in the FMIS ledger.
Agreed Management Action VAT mis-posting Audit observations are noted.

A virement application for VAT was submitted by the Force but could not be processed before the end of the financial year.

The Force will ensure that the VAT component for the acquisition of all goods and services are charged to the VAT account numbers.

Charging Expenses to incorrect Allocations.

Audit comments are noted.

The Force will ensure that the correct expenditure allocations are charged.
Any misposting will be adjusted to the correct allocation in the correct financial period.

Officer Responsible Finance Officer Peacekeeping Support Office/Chief Staff Officer Finance.

Peacekeeping Missions Head 49: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2018 – GENERAL ADMINISTRATION SECTOR APPENDIX 49.1: EXTRA PAYMENT FOR VACCINE Date Cheque No.
Type of Vaccine 21/09/17 23494 23/11/17 25684 Nimenrix (Meningococcal Vaccine) Nimenrix (Meningococcal Vaccine) Tetavax Vaccine Quantity of Vaccines Purchased Tendered Cost Price (VIP)/ per Vaccine ($) 120 56.40 Total Tendered Cost Price (VIP) (A) ($) 6,768.00 Actual Price Paid (VIP) per Vaccine ($) Total Actual Price paid (VIP) (B) ($) 122.00 14,640.00 Extra Paid (Variance) (B - A) ($) 7,872.00 146 56.40 8,234.40 122.00 17,812.00 9,577.60 70 Total 22.00 1,540.00 23.98 1,678.60 138.60 17,588.20 Peacekeeping Missions Head 49: Page 12 www.oag.gov.fj