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ACCOUNTABILITY IN THE PUBLIC SECTOR THROUGH QUALITY AUDIT SERVICES REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS VOLUME 1 AUDIT REPORT ON THE WHOLE OF GOVERNMENT FINANCIAL STATEMENTS AND ANNUAL APPROPRIATION STATEMENT- 2007 PARLIAMENTARY PAPER NO 6 OF 2014 ACCOUNTABILITY IN THE PUBLIC SECTOR THROUGH QUALITY AUDIT SERVICES REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS VOLUME 1 AUDIT REPORT ON THE WHOLE OF GOVERNMENT FINANCIAL STATEMENTS AND ANNUAL APPROPRIATION STATEMENT - 2007 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Table of Contents FINANCIAL POSITION OF GOVERNMENT ................................................................... 6 Financial Performance 2007 ........................................................................................... 6 Appropriation (2007 Revised Budget) Promulgation 2007............................................... 7 Operating Result ............................................................................................................. 7 Financing of Operating Expenditures .............................................................................. 8 Treasury Bills .................................................................................................................. 9 Agency Financial Statements.......................................................................................... 9 CASH AT BANK............................................................................................................ 10 Overseas Cash Balance not Supported by Cash .......................................................... 11 Drawings Accounts ....................................................................................................... 12 2.2.1 Drawings Account Variances
 ........................................................................................... 12 Reconciliations.................................................................................................................. 13 2.2.2 2.2.3 General Ledger Accounts for Drawings under Head 4................................................... 14 Unpresented Cheques .................................................................................................. 15 Chinese Grant not recorded in the General Ledger....................................................... 16 Unreconciled TMA Balances for Ministries/Departments............................................... 17 CFA Reconciliation ....................................................................................................... 18 Net Impact of Errors and Omission on Cash at Bank Balances .................................... 19 INVESTMENT............................................................................................................... 19 Analysis of Dividends .................................................................................................... 20 Non Submission of Annual Reports and the Audited Accounts ..................................... 23 Financial Analysis of Companies Not Prepared ............................................................ 25 Misplaced Share Certificates......................................................................................... 26 Debt Converted to Equity .............................................................................................. 27 Inoperative Entities ....................................................................................................... 28 TRUST FUND ACCOUNT ............................................................................................ 29 No Movement in Trust Fund.......................................................................................... 30 Opening of a Separate Trust Fund Bank
 Accounts ....................................................... 31 FMIS Trust Fund System Record.................................................................................. 32 Non Submission of Reconciliations ............................................................................... 33 Overdrawn Trust Accounts............................................................................................ 34 REVENUE .................................................................................................................... 36 Tax Revenue................................................................................................................. 36 Budget Forecasts.......................................................................................................... 37 Unbudgeted Revenue ................................................................................................... 37 Unidentified Revenue Transactions .............................................................................. 39 Payments Charged to VAT Revenue ............................................................................ 40 Arrears of Revenue ....................................................................................................... 41 Fluctuating Trend of Arrears for the last 10 Years ......................................................... 41 5.6.1 Significant Balances of Arrears of Revenue by Departments.......................................... 42 5.6.2 Increases in Arrears of Revenue by Departments............................................................ 43 5.6.3 Arrears of Income Tax and VAT....................................................................................... 44 5.6.4 Recovery of Debt Over 1 Year Old................................................................................... 46 5.6.5 Whole of Government Financial Statements and Annual Appropriation Statement 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE
 FIJI ISLANDS – OCTOBER 2008 __________________ 6.0 7.0 8.0 9.0 10.0 7.5 7.6 7.1 7.2 7.3 7.4 6.1 6.2 6.3 6.4 7.7 7.8 7.9 7.10 7.11 EXPENDITURE ............................................................................................................ 48 Composition of Total Expenditure in 2006..................................................................... 48 Over-Expenditures ........................................................................................................ 49 Coordination between FMIS and Budget Section.......................................................... 50 Drawbacks of the FMIS System .................................................................................... 51 BORROWING FUND .................................................................................................... 52 Trends in Government Borrowing by Category ............................................................. 53 Borrowings over the 15 Year Period ............................................................................. 54 Loan Repayments......................................................................................................... 55 Domestic Loans ............................................................................................................ 56 7.4.1 Outstanding Domestic Loans & Interest Payments ......................................................... 58 7.4.2 Future Debt Obligations................................................................................................... 59 Overseas Loans............................................................................................................ 59 7.5.1 Yearly Overseas Borrowings............................................................................................ 60 7.5.2 Overseas Loans Outstanding & Interest Paid ................................................................. 62 7.5.3 Revaluation of Overseas Loans
 ........................................................................................ 62 Treasury Bills ................................................................................................................ 63 Treasury Bills Over a 15-year Period.............................................................................. 65 7.6.1 Treasury Bills Management ............................................................................................. 66 7.6.2 Ways and Means .......................................................................................................... 67 Flexibility ....................................................................................................................... 68 Vulnerability .................................................................................................................. 69 Sustainability................................................................................................................. 74 Public Debt per Capita to GDP per Capita Ratio ........................................................... 75 LENDING FUND ........................................................................................................... 76 Loans Convertible to Grants ......................................................................................... 76 Dormant Loan Accounts................................................................................................ 77 Fiji Sports Council ......................................................................................................... 78 Amount Drawn in Excess of Appropriation .................................................................... 79 Aging of Debtors ........................................................................................................... 80 Viti Corporation Limited................................................................................................. 81 Missing Payment
81 Missing Payment Vouchers........................................................................................... 82 Variances in 2007 Opening Balances ........................................................................... 82 REVOLVING FUND ACCOUNT.................................................................................... 83 Variances in 2007 Opening Balances ........................................................................... 83 Inoperative Accounts..................................................................................................... 84 Monitoring of Revolving Funds Accounts ...................................................................... 85 Variances between Ministry of Finance and Ministries/Departments Revolving Fund Accounts .............................................................................................................. 86 Un-retired Petty Cash.................................................................................................... 87 CONTINGENT LIABILITIES.......................................................................................... 87 10.1 Terminated Guarantee .................................................................................................. 87 10.2 Guarantee of Members contributions to Fiji National Provident Fund............................ 88 Increased Liabilities for Government Guarantees ......................................................... 88 10.3 10.4 Invoked Guarantee for Fiji Sports Council..................................................................... 89 10.5 National Bank of Fiji Guarantee .................................................................................... 90 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 9.1 9.2 9.3 9.4 9.5 Whole of Government Financial Statements and Annual Appropriation Statement 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ APPENDIX 1.1(a): Operating Fund –
 Expenditures........................................................................... 91 APPENDIX 1.1(b): Lending Fund Account......................................................................................... 92 Variances in Balances in Ministeries/Departments and General Ledger ............. 92 APPENDIX 1.2: Reconciliations not Prepared............................................................................... 93 APPENDIX 1.3: Summary of Audit Opinions Issued ..................................................................... 94 APPENDIX 1.4: Summary of Financial Statements submitted for 2007 ........................................ 96 APPENDIX 1.5: Trust Fund Details ............................................................................................... 98 APPENDIX 2: Submission of Reconciliations ............................................................................. 99 APPENDIX 3: Estimated Collections for 2007 to Actual Revenue Collection ........................... 101 APPENDIX 4: Details of Batch 416378 .................................................................................... 103 APPENDIX 5: Reconciliations Not Submitted........................................................................... 104 APPENDIX 6: Whole of Government Financial Statements and Annual Appropriation Statement 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Table of Figures TABLE 1.1: GOVERNMENT PERFORMANCE IN 2007 ............................................................................... 6 CAPITAL EXPENDITURES VS. LOANS RAISED........................................................................ 8 TABLE 1.2: BUDGET DEFICIT VS. LOANS RAISED................................................................................... 9 TABLE 1.3: CASH AT BANK BALANCE AS AT 31/12/07.......................................................................... 10 TABLE 2.1: CASH BALANCE WITH AGENCIES OVERSEAS NOT
 SUPPORTED BY CASH................................ 11 TABLE 2.2: BALANCES IN MINISTRIES/DEPARTMENTS .......................................................................... 12 TABLE 2.3: TABLE 2.4: BANK BALANCES NOT SUPPORTED WITH RECONCILIATIONS............................................... 14 TABLE 2.5: MINISTRY OF FINANCE DRAWINGS BALANCES.................................................................... 14 TABLE 2.6: UNPRESENTED CHEQUES ................................................................................................ 15 TABLE 2.7: MINISTRIES/DEPARTMENTS WITH SIGNIFICANT UNPRESENTED CHEQUE BALANCES ............. 16 VARIANCES IN TMA BALANCES ........................................................................................ 17 TABLE 2.8: TABLE 2.9: DOMESTIC BANK BALANCE NOT VERIFIED .......................................................................... 18 TABLE 2.10: ALTERNATIVE LIVELIHOOD PROJECT CASH WITH WESTPAC ................................................ 18 TABLE 2.11: ERRORS AND OMISSIONS IN STATEMENT OF CASH AT BANK ............................................... 19 CHANGES IN SHARE CAPITAL ........................................................................................... 20 TABLE 3.1: DIVIDEND ANALYSIS FOR LAST THREE YEARS.................................................................... 20 TABLE 3.2: DIVIDEND AND INVESTMENT ANALYSIS .............................................................................. 21 TABLE 3.3: LATEST ANNUAL REPORT................................................................................................. 23 TABLE 3.4: ENTITIES FINANCIAL ANALYSIS ......................................................................................... 25 TABLE 3.5: ENTITIES DEBT CONVERTED TO EQUITY............................................................................ 28 TABLE 3.6: INOPERATIVE ENTITIES
 .................................................................................................... 28 TABLE 3.7: SUMMARY OF TRUST FUND ACCOUNT ............................................................................... 30 TABLE 4.1: TABLE 4.2: TRUE TRUST ACCOUNTS WITH NO MOVEMENTS ................................................................. 31 TABLE 4.3: OPENING OF BANK ACCOUNTS FOR TRUE TRUST............................................................... 31 UNSUBSTANTIATED FIGURES IN OPERATING TRUST FUND................................................... 33 TABLE 4.4: TABLE 4.5: OVERDRAWN TRUST FUND............................................................................................... 34 FIRCA VS. MINISTRY OF FINANCE RECORDS..................................................................... 36 TABLE 5.1: COLLECTIONS OF UNBUDGETED REVENUES ...................................................................... 38 TABLE 5.2: NIL COLLECTIONS ON BUDGETED REVENUES .................................................................... 38 TABLE 5.3: TABLE 5.4: MIN/DEPT POSTING TO INCOME TAX ALLOCATION.............................................................. 39 VAT PAYMENTS TO FIRCA ................................................................................................ 40 TABLE 5.5: ARREARS OF REVENUE.................................................................................................... 42 TABLE 5.6: SIGNIFICANT INCREASES IN ARREARS OF REVENUE ........................................................... 43 TABLE 5.7: BUDGET AND EXPENDITURES AT SEG LEVEL FOR 2005-2007 .............................................. 48 TABLE 6.1: SUMMARY OF OPERATING AND CAPITAL EXPENDITURES FOR 2005-2007 ............................ 49 TABLE 6.2: EXCESS EXPENDITURE .................................................................................................... 49 TABLE 6.3: VIREMENTS NOT PROCESSED AT FMIS
 ............................................................................. 50 TABLE 6.4 TABLE 7.1: GOVERNMENT OUTSTANDING BORROWINGS (1993 – 2007) ............................................... 53 ADDITIONAL BORROWINGS PER YEAR 1993 – 2007 ........................................................... 55 TABLE 7.2: REPAYMENT OF LOANS PER YEAR 1993 – 2007 ................................................................ 55 TABLE 7.3: LOANS AND INTEREST REPAYMENTS IN 2007..................................................................... 56 TABLE 7.4: COMPOSITION OF OUTSTANDING GOVERNMENT BONDS ..................................................... 56 TABLE 7.5: BONDS PURCHASED IN 2007............................................................................................ 57 TABLE 7.6: DOMESTIC LOANS OUTSTANDING, INTEREST PAID AND BUDGETARY PROVISIONS ................. 58 TABLE 7.7: FIJI DEVELOPMENT LOANS REDEMPTION SCHEDULE .......................................................... 59 TABLE 7.8: TABLE 7.9: OVERSEAS LOAN DISBURSEMENTS - 2007 ........................................................................ 60 TABLE 7.10: OVERSEAS LOANS OUTSTANDING, INTEREST PAID AND BUDGETARY PROVISION .................. 62 Whole of Government Financial Statements and Annual Appropriation Statement 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 7.11: REVALUATION OF OVERSEAS LOANS & EXCHANGE GAINS/LOSS ......................................... 63 TABLE 7.12: TREASURY BILL HOLDERS FOR BILLS ISSUED IN 2007 ....................................................... 63 TABLE 7.13: MATURITY OF TREASURY BILLS ISSUED IN 2007 ................................................................. 64 TABLE 7.14: TREASURY BILLS 1993 – 2007......................................................................................... 65 TABLE 7.15: REVENUE VARIANCE VS. TREASURY BILLS
 RAISED............................................................. 66 TABLE 7.16: COMPARISON OF REVENUE AND DEBT REPAYMENTS ......................................................... 68 TABLE 7.17: COMPARISON OF OVERSEAS BORROWINGS AND TOTAL BORROWINGS ................................ 69 TABLE 7.18: COMPARISON OF OVERSEAS BORROWINGS AND GDP........................................................ 70 TABLE 7.19: COMPARISON OF DOMESTIC BORROWINGS AND GDP ........................................................ 71 TABLE 7.20: COMPARISON OF TAX REVENUE AND GDP ........................................................................ 72 TABLE 7.21: COMPARISON OF TAX REVENUE AND DEBT........................................................................ 72 TABLE 7.22: COMPARISON OF GOVERNMENT DEFICIT AND GDP............................................................ 73 TABLE 7.23: TOTAL GOVERNMENT DEBT TO GROSS DOMESTIC PRODUCT.............................................. 74 TABLE 7.24: GROSS DOMESTIC PRODUCT PER CAPITA AND NATIONAL INCOME PER CAPITA ................... 75 LENDING FUND BALANCES TREND .................................................................................... 76 TABLE 8.1: LOANS CONVERTED TO GRANT......................................................................................... 77 TABLE 8.2 DORMANT LOANS ............................................................................................................ 77 TABLE 8.3: PAYMENTS MADE TO FIJI SPORTS COUNCIL ....................................................................... 78 TABLE 8.4: VARIANCES BETWEEN BALANCES ..................................................................................... 78 TABLE 8.5: APPROPRIATIONS EXCEEDED ........................................................................................... 79 TABLE 8.6: AGING OF DEBTORS ........................................................................................................ 80 TABLE 8.7: TABLE
80 TABLE 8.7: TABLE 8.8: JOURNAL POSTINGS TO RECORD RECOVERY..................................................................... 81 TABLE 8.9: MISSING PAYMENT VOUCHERS......................................................................................... 82 TABLE 8.10: VARIANCE IN 2007 OPENING BALANCE ............................................................................. 83 VARIANCE IN 2007 OPENING BALANCE ............................................................................. 83 TABLE 9.1: INOPERATIVE REVOLVING FUND ACCOUNTS (SUSPENSE) ................................................... 85 TABLE 9.2: VARIANCES BETWEEN MINISTRY OF FINANCE AND MINISTRIES / DEPARTMENTS RECORDS.... 86 TABLE 9.3: UN-RETIRED IMPREST ACCOUNT....................................................................................... 87 TABLE 9.4: TABLE 10.1: TERMINATED GUARANTEES.
............................................................................................. 88 TABLE 10.2 INCREASED LIABILITIES FOR GOVERNMENT GUARANTEES................................................... 88 APPENDIX 1.3: ACCOUNTS FOR WHICH NO RECONCILIATION SUBMITTED BY MINISTRIES/DEPARTMENTS ....... 93 Whole of Government Financial Statements and Annual Appropriation Statement 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 1.0 FINANCIAL POSITION OF GOVERNMENT The Whole of Government financial statements have been presented in accordance with the provisions of the Financial Management Act (2004).
As the Government uses the cash basis system of accounting, the underlying format is cash based with direct reference to the Budget Estimates.

1.1 Financial Performance 2007 The financial performance of the Fiji Government for the year 2007 is provided in Table 1.1.
TABLE 1.1: GOVERNMENT PERFORMANCE IN 2007 REVENUE Direct Taxes Indirect Taxes Others Total Operating Receipts Total Investing Receipts TOTAL REVENUE EXPENDITURE Operating Capital Value Added Tax TOTAL EXPENDITURE Net Deficit Debt Repayment Gross Deficit Original Budget 2007 ($’000) Revised Budget 2007 ($’000) Actual Results 2007 ($’000) Variance 2007 ($’000) Variance % (7,778.9) 87,762.3 15,658.0 95,641.3 (15,251.6) 80,389.8 (19,140.8) 72,269.8 13,676.8 66,805.8 (1.8) 10.0 10.1 6.5 (247.6) 5.8 (1.6) 25.9 1.7 4.3 100,725.6 99,232.8 112,816.8 (13,584.0) (13.7) 270,319.5 270,319.5 222,119.0 48,200.5 371,045.1 369,552.3 334,935.8 34,616.5 17.8 9.4 Net Deficit As A Percent of GDP 2.0% 2.0% 2.1% (0.1%) Nominal GDP 5,079,139 5,079,139 5,431,720+ + Provisional Estimate Source: Reserve Bank of Fiji The gross deficit for the year was $334.9 million which was $34.6m or 9% less than the 2007 revised forecast of $369.6m.
This was due to the decrease in expenditures by $115 million or 6% against the revised budget, 1 despite the decrease in revenue of $80.4 million or 5% during the year.

The loans raised in 2007 to finance the budget deficit was $118.9 million, with $216 million from the global borrowing raised in 2006.

In addition, Treasury Bills were also raised in 2007 to meet short term financing shortfalls.

This is discussed in 1.3.


1 The operating and capital expenditures decreased by $66.8 million or 6% and debt repayments by $48.2 million or 18% against the revised budgets in 2007.
Whole of Government Financial Statements and Annual Appropriation Statement 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 1.2 Appropriation (2007 Revised Budget) Promulgation 2007 Following the revision of the 2007 Budget, the interim government reduced the appropriation heads to 26 with the merging of several ministries and departments, as detailed in Schedule 1 of the Appropriation Promulgation.
Schedule 2 of the Promulgation also provides for the re-current and non- recurrent loans.

The expenditures under the various heads and their variances are detailed in Appendix 1.1(a) and (b).

Against a revised budget of $1.571 billion, the government spent $1.504 billion resulting in a savings of $66.8 million.

However, 4 agencies over-spent their budgets and they include the Royal Fiji Military Forces (56%), Legislature (19%), Police (5%) and Justice (0.1%).
Under the Lending Fund appropriation of $23.9 million, there was an outstanding balance of $31.8 million at the beginning of 2007.

This was reduced considerably by the end of 2007 with the recovery $6.6 million during the year from students of tertiary institutions ($4.1 million), students under the loan scheme ($1.4m), private students ($0.6m) and the Fiji Sports Council ($0.4m).

The government approved new loans totalling $591,000 during the year.
1.3 Operating Result In view of the reduction in revenue in 2007, the government had tightened budget management considerably resulting in the net deficit of $112.8 million against a budgeted deficit of $99.2 million.

The budget deficits as a percentage of GDP over the last 10 years is illustrated in Figure 1.1.
Figure 1.1: Operating Deficits 1998 - 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 ) m $ ( t n u o m A 0 -50 -100 -150 -200 -250 -300 -350 -400 Year The operating deficit in 2007 was less than the 2006 deficit by $13.2 million or 3.8%.

This improvement was attributed to the net decrease of $34.6 million in government expenditures.

The net deficit for 2007 as a percentage of GDP was 2.1%,, an increase of 0.1% above the budget.
Whole of Government Financial Statements and Annual Appropriation Statement 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 1.4 Financing of Operating Expenditures It is generally accepted that capital works should be funded by loans.
The funding of operating expenditures by loan would be a concern if there are no efforts to reduce operating expenditures Figure 1.2 and Table 1.2 shows the percentage of loans that have been used in meeting government’s operating expenditures over the last 10 years.
e g a t n e c r e P 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Figure 1.2 Operating Expenditure Financed from Loans 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year The audit noted that as the budget increased every year, a greater proportion of the operating expenditures of government have been met by loans.

The recurring nature of the operating expenditures fundamentally means the continued reliance of the government on loans to meet its day- to-day operations.
TABLE 1.2: CAPITAL EXPENDITURES VS. LOANS RAISED Details Total Loans (Domestic & Overseas) 1998 ($’000) 1999 ($’000) 2000 ($’000) 2001 ($’000) 2002 ($’000) 2003 ($’000) 2004 ($’000) 2005 ($’000) 2006 ($’000) 2007 ($’000) 116,511 192,175 225,000 239,248 325,197 319,738 458,468 328,608 417,810 334,937 Less Capital Expenditures 142,687 159,990 146,157 186,749 238,639 243,692 205,609 213,509 212,642 206,933 Balance for Operating Expenditures % Loans Utilized for Operating Expenditures (26,176) 32,185 78,843 52,499 86,558 76,046 252,859 115,099 205,168 128,004 (22%) 17% 35% 22% 27% 24% 55% 35% 49% 38% The percentage of loans which financed operating expenditures varied over the past 10 years.
The ratio of loans utilised for operating expenditures decreased from 49% in 2006 to 38% in 2007.

Although the above analysis shows that there was a decrease in the ratio in 2007, the continued utilization of loan funds for operating expenditures reflects constant reliance by government on its financiers for its day to day operations.

This has denied government from investing in capital works which would have contributed to increased employment and economic growth.
Whole of Government Financial Statements and Annual Appropriation Statement 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 1.5 Treasury Bills As government had raised domestic loans in accordance with the approved budgets over the years, the excess has been in the form of Treasury Bills.

As at 31/12/07, outstanding Treasury Bills amounted to $114,160,433.
Table 1.3 details the loans raised by government to finance its budget deficits over the last 10 years.
TABLE 1.3: BUDGET DEFICIT VS. LOANS RAISED Details Gross Deficit Domestic Loans Overseas Loans Treasury Bills Loans Deficit % Excessive Borrowings % 1998 $ 1999 $ 2000 $ 2001 $ 2002 $ 2003 $ 2004 $ 2005 $ 2006 $ 2007 $ There has been an increase in the financing of budget deficits as 78% of the loans raised was sufficient to cover the 2007 budget deficit compared to 71% in 2006, in other words, there is a decrease in excessive borrowings from 29% in 2006 to 22% in 2007.
Nevertheless, cash management still needs significant improvement.

1.6 Agency Financial Statements Section 81(2) of the Finance Instructions 2005 states that commencing with the 2006 financial year, each annual report must include financial statements which have been prepared and signed in accordance with the Finance Instructions, audited and accompanied by an audit opinion prepared by the Auditor General.
Furthermore, section 81(3) of the Instructions states that the draft financial statements must be submitted to the Auditor-General by 31 March in the following year, or within such other time as agreed to with the Auditor-General.

All ministries and departments submitted their 2007 accounts for audit but only a few met the due date.
Most submitted their accounts in April and May 2008 but a lot of these were returned because of deficiencies in the accounts or the Financial Management Information System (FMIS) of the Ministry of Finance had taken a while to close the general ledgers and finalise the expenditures to be taken into each agency’s books.

There was also lack of understanding of the new FMIS, and the failure of departments to prepare necessary reconciliations of accounts, or to prepare them correctly.
These are detailed in Appendices 1.2 and 1.3.

In addition, certain audit adjustments to the accounts that were recommended were not taken on board immediately or not at all by the Ministry of Finance.

The Office of the Auditor General had planned to audit 26 accounts of Ministries and Departments, of which 10 of them were required to be consolidated.

Only 6 consolidated accounts were submitted of which a few were allowed time to consolidate their accounts.
Nevertheless, the OAG audited all the accounts that were submitted, whether or not they were consolidated.

A total of 31 financial statements were therefore audited, and 22 were issued adverse/disclaimer opinions and 9 qualified or “except for” opinions.

The audit opinions issued to ministries and departments are detailed in Appendix 1.4.
Whole of Government Financial Statements and Annual Appropriation Statement 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ A qualified audit report (or opinion) is issued when the overall financial statements are fairly stated but either the financial data indicated a failure to follow applicable accounting standards, or there was a significant uncertainty concerning certain financial data.
An adverse opinion is where the financial statements are materially misstated or misleading that they do not present fairly the state of affairs in the organisation.

A disclaimer or inability to form an opinion is where the auditor is unable to determine that the overall financial statements are fairly stated.
Finance Instructions 82(1) provides that each agency must include in its annual financial statements (i) a statement of receipts and expenditures; (ii) a statement of output costs; (iii) a profit and loss statement for each trading and manufacturing activity; (iv) an appropriation statement; (v) a statement of assets and liabilities; (vi) notes to the statement of assets and liabilities; (vii) a statement of losses; and (viii) a trust account statement of receipts and payments.
As the government has yet to adopt accrual accounting, ministries and departments have not been required to submit a statement of assets and liabilities and notes to statement of assets and liabilities.

A total of 17 ministries and departments did not submit the complete set of financial statements in accordance with Finance Instructions 82(1).

These include the statement of output costs, appropriation statements, statement of losses and trust accounts statements.
The details of these are shown in Appendix 1.5.

2.0 CASH AT BANK All Government Ministries/Departments use several bank accounts called Drawings Accounts and these are cleared on daily basis through a Consolidated Bank Account.2 The Cash at Bank balance declined significantly from $269,749,693 in 2006 to $42,307,686 or 84% in 2007.

This decline was due to a significant reduction in Overseas Bank Balance with the drawdown from the JP Morgan cash account.
In addition there was a 20% decrease in domestic bank balance, 13% decrease in the Trading and Manufacturing Accounts and 22% increase in unpresented cheques.

Refer to Table 2.1 for details.
TABLE 2.1: CASH AT BANK BALANCE AS AT 31/12/07 Account 2006 Balance $ 2007 Balances $ Variance % Change Domestic Account Fiji Overseas Agents Trading & Manufacturing Accounts (TMA) Unpresented Cheques Net Cash 70,524,396 252,544,849 7,181,637 (60,501,189) 269,749,693 56,774,511 52,855,117 6,264,251 (73,586,193) (42,307,686) (13,749,885) (199,689732) (917,386) (13,085,004) (227,442,007) 20 79 13 22 84 The increased amount in unpresented cheques is attributed to delegation of procurement authority to accounting heads under the new Financial Management Reform and lack of monitoring by the accounting heads.
A graphical presentation of the major account balances for the past ten years is provided in Figure 2.1.
2 Finance Instruction 88 Whole of Government Financial Statements and Annual Appropriation Statement 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 2.1 Bank Account Balances: 1996 - 2007 Local Banks Overseas Bank TMA Bank ) m ( $ t n u o m A 300 250 200 150 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Cash balances in local banks make up majority of the government’s cash holdings.
2.1 Overseas Cash Balance not Supported by Cash The Cash at Bank balance should reflect all balances of bank accounts operated by Ministries/Departments as at 31/12/07.

A total of $1,042,573 in Statement of Cash and Bank Balances with Overseas Agencies is not supported by cash.

This was due to the non closure of the general ledger accounts of cash balances for Foreign Agents under under the Ministry of Finance.
These cash balances were carried forward from previous years after the accounts were transferred to the Ministry of Foreign Affairs.

Table 2.2 below shows the details of the general ledger cash accounts for Overseas Missions and Agents not supported by actual cash.
TABLE 2.2: CASH BALANCE WITH AGENCIES OVERSEAS NOT SUPPORTED BY CASH Account Description 10410204202510102 Sydney Trade Commission 10410204202510105 FMF-Bank account in Darwin 10410204202510106 Fiji Trade Commission Sydney 10410204202510107 Fiji High Commission - Canberra 10810381001510201 Crown Agents - London 10410204202510202 Fiji High Commission - London 10410204202510401 Fiji Embassy Tokyo Dominion Cash 10410204202510502 Fiji High Commission - Wellington 10410204202510503 Fiji Trade Commission Los Angeles 10410204202510504 Fiji High Commission - Beijing 10410204202510601 Fiji Mission Brussels 10410204202510701 Sinai 10410204202510801 Fiji High Commission – United Nation 10410204202510802 Washington Balance $ 28,231 5,091 (325,064) (163,006) 293,420 (55,869) 477,073 5,317 109,736 53,741 1,147 21,956 259,703 101,919 Whole of Government Financial Statements and Annual Appropriation Statement 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Account Description 10410204202510901 Bank in Kular Lumpur 10410204202510902 Closing Balance for PNG 10410204202510903 Fiji High Commission – New Delhi Total Balance $ 112,443 931 115,806 1,042,573 The above indicates the lack of reconciliation of the general ledger cash balances and the actual cash holdings by the Ministry of Finance.
Due to the laxity of the officers responsible, the cash accounts were not closed in the general ledger and are still appearing under the Ministry of Finance cash account, thus overstating the cash balance.

As such, the Overseas Cash Balance stated in the Statement of Cash and Bank Balance – Accounts and Finance is overstated by $1,042,573.

Recommendations • The Ministry of Finance should ensure that amounts in the general ledger are supported by actual cash.
• The Ministry of Finance should close all dormant accounts for which balances do not exist or have been transferred.
Ministry’s Comments Comments not received 2.2 Drawings Accounts 2.2.1 Drawings Account Variances The Accounting Heads are responsible for submitting their monthly drawings reconciliation statements within the stipulated time to the Ministry of Finance.3 Variances in the drawings reconciliations for some departments had not been updated into the Financial Management Information System (FMIS) in 2007.
Table 2.3 highlights Ministries/Departments that had variances between their Drawings Accounts reconciliations and the Ministry of Finance General Ledger (GL) balances as at 31/12/07.
TABLE 2.3: BALANCES IN MINISTRIES/DEPARTMENTS Department OAG Cabinet Foreign Affairs ITC Information National Planning Office Prisons Unpresented Cheques $ 73,593.30 624,232.77 938,205.28 56,222.96 202,894.37 124,550.75 372,800.80 GL Balance Difference GL Overstated/ Understated $ 65,963.60 522,106.51 925,492.67 41,043.96 179,518.73 124,673.28 1,104,558.60 $ (7,629.90) (102,126.26) (12,712.61) (15,179.00) (23,375.64) 122.53 731,757.80 Understated Understated Understated Understated Understated Overstated Overstated 3 Ministry of Finance, Finance Manual - Section 17.3.1 Whole of Government Financial Statements and Annual Appropriation Statement 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Department Public Enterprise Salaries Treasury (#149268) Treasury (#108651) Youth Employment & Sports Total Unpresented Cheques $ 118,781.29 73,037.67 5,501730.83 9,166,462.22 GL Balance Difference $ 28,593.91 71,961.44 5,498,837.88 9,167,317.22 $ (90,187.38) (1,076.23) (2,892.95) 855.00 GL Overstated/ Understated Understated Understated Understated Overstated 297,486.42 330,920.71 33,434.29 Overstated 510,989.85 Overstated Discussion with officers at the Ministry of Finance revealed that the onus of correcting the drawing ledger accounts lies with the different ministries/departments.
The major contributing factors for the variances were: • • • • • delays and incorrect bank reconciliations; lack of monitoring by Ministry of Finance; lack of understanding of the new Financial Management Information System; deficiency in the Finance Manual in that it does not specify the process to be taken by the ministries/departments after carrying out their drawings account reconciliation; no documented work procedure for the receiving officer of drawings reconciliation at the Ministry of Finance.
As a result, these drawings accounts as well as the affected expenditures were either under or overstated and the net cash figure in the Accounts and Finances distorted.

Recommendations • Ministries/Departments should ensure that the differences in the drawings reconciliation are updated into the Financial Management Information System before the closure of the accounts.
• The Ministry of Finance should closely monitor month end drawings reconciliation • Finance Manual should be reviewed by the Ministry of Finance to specify procedures to be followed by ministries/departments following the preparation of the drawings reconciliation; • The Ministry of Finance should draw up a procedural work manual for the receiving officer of the drawings reconciliation.
Ministry’s Comments The Ministry of Finance have been monitoring the reconciliations submitted and can only go as far to advise Departments to submit their reconciliations.

The delays and error as identified when reconciliations are returned is the responsibility of the various Ministry/Departments.

On going training has been conducted to address the above mentioned problems since the delays and problems are coming from the Ministries and Departments.
The Finance Ministry merely receives and analyses reconciliations and advises Ministries and Departments of any irregularities in the submitted reconciliations.

2.2.2 Reconciliations A total of 8 Ministries/Departments failed to provide their Drawings Account reconciliations as at 31 December 2007 to support the bank balances disclosed in the 2007 Whole of Government Financial Statements.

Refer to Table 2.4 for details.
Whole of Government Financial Statements and Annual Appropriation Statement 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 2.4: BANK BALANCES NOT SUPPORTED WITH RECONCILIATIONS Ministry/Department Agricultural Tribunal Agriculture Energy Forestry Lands Mineral Resources Social Welfare Women & culture GL Balance As at 31/12/07 $ 248 2,464,756 835,017 414,484 3,565,258 79,991 2,158,300 60,735 The accuracy of these balances therefore could not be established.
Recommendation The Ministry of Finance should be more vigilant when checking reconciliations and to ensure that ministries/departments submit their drawings reconciliations promptly.

Ministry’s Comments The Ministry of Finance have been monitoring the reconciliations submitted and can only go as far to advise Departments to submit their reconciliations.

The delays and error as identified when reconciliations are returned is the responsibility of the various Ministry/Departments.
On going training has been conducted to address the above mentioned problems since the delays and problems are coming from the Ministries and Departments.
The Finance Ministry merely receives and analyses reconciliations and advises Ministries and Departments of any irregularities in the submitted reconciliations 2.2.3 General Ledger Accounts for Drawings under Head 4 For Ministry of Finance, a total of $2,256,917 was unaccounted for in the Statement of Cash in the Accounts and Finances, as the amount reflected is $19,853,099 against the general ledger figure of $21,110,017.

Refer to Table 2.5 for details.
TABLE 2.5: MINISTRY OF FINANCE DRAWINGS BALANCES Items in Appendix 3 Customs Inland Revenue Services Public Enterprise Treasury Salaries Pensions Appendix Total GL Total Difference Amount $ 2,112,578.69 (7,157,224.37) (28,593.91) (5,498,847.88) (9,239,278.66) (41,733.28) (19,853,099.41) (22,110,016.79) 2,256,917.38 Whole of Government Financial Statements and Annual Appropriation Statement 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ The Ministry of Finance revealed that the Customs does not have a drawings account with Government even though an item in the Statement of Cash balances shows a debit balance of $2,112,579.
The accuracy of the general ledger Drawings balances for the Ministry of Finance cannot therefore be substantiated.

Recommendations • The Ministry of Finance should carry out reconciliations of their drawings accounts against all drawings account in the general ledger and rectify the anomalies.

• The Ministry should verify all drawings accounts in the general ledger and remove those that are dormant.
Ministry’s Comments Comments not received 2.3 Unpresented Cheques The drawings accounts balances (credits) for Ministries/Departments represent the total value of cheques that were issued but were not presented to the banks as at 31/12/07.

A review of the unpresented cheques balances over the past 10 years provided in Table 2.6 and Figure 2.2 indicate that it is a significant portion of the domestic cash at bank and total cash holdings of Government.
TABLE 2.6: UNPRESENTED CHEQUES Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Unpresented Cheques $ 20,009,268 18,373,689 58,202,508 24,031,011 36,272,562 45,687,430 29,749,633 51,889,269 60,501,189 73,586,193 Cash at Bank 51,915,161 106,620,136 92,150,492 44,104,751 58,749,914 70,886,542 79,080,721 56,633,778 330,250,882 115,893,879 % of Unpresented Cheques against Cash at Bank 39 17 63 54 62 64 38 92 18 63 Domestic Cash Holding $ 29,206,513 74,419,280 85,718,633 43,855,695 45,525,054 59,566,056 69,771,759 50,071,389 70,524,396 56,774,511 % of Unpresented Cheques against Domestic 69 25 68 55 80 77 43 104 86 130 Whole of Government Financial Statements and Annual Appropriation Statement 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 2.2 Unpresented Cheques vs. Cash at Bank e g a t n e c r e P 140% 120% 100% 80% 60% 40% 20% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year % of Unpresented Cheques Against Cash at Bank % of Unpresented Cheques against Domestic Cash Holdings Unpresented cheques have increased significantly by $13,085,004 or 22% from $60,501,189 in 2006 to $73,586,193 in 2007.
Table 2.7 shows details of Ministries/Departments which had significant unpresented cheques balances.
TABLE 2.7: MINISTRIES/DEPARTMENTS WITH SIGNIFICANT UNPRESENTED CHEQUE BALANCES Ministry/Department Education FMF Health Inland Revenue Lands Salaries Treasury Others Total Amount $ 5,414,993 4,613,715 6,942,406 7,157,224 3,565,258 9,239,279 5,498,848 31,154,470 73,586,193 % of Total 7 6 9 10 5 13 8 42 100 The significant unpresented cheque balances is an indication that spending is still concentrated towards the end of the year.
Such spending often results in uneconomical purchases, overstocking of goods and sometimes abuse of procurement procedures.

Recommendations • Cash management should be improved.

• Ministries/Departments should be encouraged to plan their expenditures well in order to avoid the accumulation of unpresented cheques at year end.
Ministry’s Comments Comments not received 2.4 Chinese Grant not recorded in the General Ledger The Cash at Bank balance should reflect all balances of bank accounts operated by Ministries/Departments as at 31/12/07.
Whole of Government Financial Statements and Annual Appropriation Statement 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ In 2007, Ministry of Finance gave approval to the Prime Minister’s Office to open a bank account for the Chinese Government Grant, with the provision of a general ledger to this trust account.

On 27 June 2007, a sum of US$5 million was received by the Prime Minister’s office.
No corresponding general ledger account for cash was provided to record the cash received for this grant.

As at 31/12/07 the cash at bank balance for this account was $6,881,198.

The above indicates the lack of understanding on the accounting treatment for this transaction and a total disregard for the double entry rule.

The general ledger has yet to record the grant received, resulting in the understatement of the cash account.
Recommendation The Ministry should ensure that proper accounting procedure is followed in accounting for cash and other transactions.

Ministry’s Comments Comments not received 2.5 Unreconciled TMA Balances for Ministries/Departments The Accounting Heads are responsible for submitting, their monthly reconciliation statements within the stipulated time frame to the Ministry of Finance.4 Details of Ministries/Departments with unreconciled TMA balances as at 31/12/07 are provided in Table 2.8.
TABLE 2.8: VARIANCES IN TMA BALANCES Ministry/Department Agriculture Forestry Public Works and Infrastructure (DECE) Public Works and Infrastructure (Labasa) Public Works and Infrastructure (Lautoka) Public Works and Infrastructure (Mechanical) Ministry/Department’s Reconciliation at 31/12/07 $ No Bank Reconciliation No Bank Reconciliation 892,424 (524,911) 408,402 41,942 General Ledger Records as at 31/12/07 $ 508,522 66,656 87,138 (254,588) 730,837 42,226 Variance $ 508,522 66,656 (26,217) (779,069) 322,435 284 Ministries/Departments failed to provide satisfactory explanations for the variances in the TMA account balances as at 31 December 2007.
Moreover, Agriculture and Forestry failed to submit their TMA reconciliations.

In addition, 3 items under Domestic Bank balances (refer to Table 2.9) could not be verified with actual cash balances.
4 Ministry of Finance, Finance Manual - Section 17.3.1 Whole of Government Financial Statements and Annual Appropriation Statement 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 2.9: DOMESTIC BANK BALANCE NOT VERIFIED Account Balance Remittance Between Chests – RBC General Remittance Between Chests – PWD Western PWD Northern Total 5,458 25,130 (16) 30,572 Furthermore, the Alternative Livelihood Project cash balance with Westpac was overstated by $645,072 when compared with the confirmation from the Bank.
Refer to Table 2.10 below: TABLE 2.10: ALTERNATIVE LIVELIHOOD PROJECT CASH WITH WESTPAC Detail General Ledger Bank Confirmation Overstatement Balance 873,950 228,878 645,072 As such, the correctness of these balances could not be verified.

Recommendations • The Ministry of Finance should be more vigilant when checking reconciliations and investigate reasons for any variances.

• Also the Ministry should ensure that the amounts in the Accounts are supported by bank balances.
Ministry’s Comments Ministries/Departments have been advised to clear the RBC balances.

Recommendation duly noted 2.6 CFA Reconciliation The Accounting Heads are responsible for submitting Ministry’s monthly drawings reconciliation statements within the stipulated time to the Ministry of Finance.5 The Ministry of Finance were reluctant to pass audit adjustments affecting cash, with the reason that the consolidated fund account had reconciled with balances at the banks.
However, after 2 audit adjustments were passed, the Ministry of Finance passed 2 additional adjustments that effectively reversed the initial one that had affected cash, leaving cash balance in the general ledger unchanged.

Also an adjustment of $33.7 million was passed by the Ministry to the Consolidated Fund Account.

This was made to balance the Customs Lodgement cash account to the general ledger.

Details of this adjustment could not be provided as no reconciliations were prepared during the year.
The reconciliation of the Whole of Government Consolidated Fund Account requested for verifications, was not provided for.
5 Ministry of Finance, Finance Manual – Section 17.3.1 Whole of Government Financial Statements and Annual Appropriation Statement 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ As such, transactions and adjustments such as batch numbers 04A822 (with a total value of $195,130), 04A813 ($33,684,356) and 04A814 ($505,435) passed by the Ministry affecting cash account could not be substantiated.
Recommendation The Ministry of Finance should carry out documented reconciliation on the consolidated fund account.
Ministry’s Comments Comments not received 2.7 Net Impact of Errors and Omission on Cash at Bank Balances The Cash at Bank balance of $42,307,686 as at 31/12/07 has been misstated in view of the following errors and omissions: TABLE 2.11: ERRORS AND OMISSIONS IN STATEMENT OF CASH AT BANK Errors and Omissions Overstatement of Cash Balance with Overseas Agencies Variance between Drawings Account of Ministries/Departments and Ministry of Finance Variance between TMA balances of Ministries/Departments and Ministry of Finance Bank Balance not supported with Reconciliation Understatement of Head 4 Drawings in Appendix 3 Chinese Grant (cash) not reflected in the general ledger Domestic Bank Balance not verified Overstatement in ALP Westpac account Amount $ 1,042,537 34,289 92,611 2,207,026 2,256,917 6,881,198 30,572 645,072 The net impact on Cash at Bank of the errors and omissions in the 2007 accounts is substantial and reflects the existence of weak internal controls in cash management.
Recommendation Ministry of Finance should take appropriate action to rectify the anomalies.

Ministry’s Comments Comments not received 3.0 INVESTMENT Section 55(1) (b) of the Finance Management Act 2004 empowers the Minister to invest public money in securities issued by a statutory authority.

In 2007, Government’s investments were held in 30 companies, 2 local term deposits and one offshore bank account.

Government investments totalling $429,861,896 increased by $83,231 or 0.02% compared to 2006.
Table 3.1 shows the list of the entities in which investment increased in 2007.
Whole of Government Financial Statements and Annual Appropriation Statement 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 3.1: CHANGES IN SHARE CAPITAL Entity Pacific Forum Line Limited Unit Trust Of Fiji (Trustee) Ltd Fiji Shipping Corporation Limited Rewa Co-operative Dairy Company Limited Total Increase Capital 2007 $ 3,171,701 Capital 2006 $ 3,121,822 654,820 649,860 10,000 42,854 --- 24,462 3,879,375 3,796,144 Variance $ 49,879 4,960 10,000 18,392 83,231 The increase in total investment is largely attributed to the increase in the interest rate for Unit Trust of Fiji (Trustee Ltd), the exchange rate (conversion to Fiji dollars) for the Pacific Forum Line Limited, share equalisation of Rewa Dairy and the inclusion of Fiji Shipping Corporation Limited as government investments.
3.1 Analysis of Dividends Within two months after receiving the recommendation from the Board of Government Commercial Companies and Commercial Statutory Authorities whether to pay or not to pay Government any dividend for the financial year, the Public Enterprise Minister shall after consulting the Minister of Finance, either: a) b) approve the recommendation; direct the payment of a specified dividend having regard to the adequacy of the capital in relation to the size and nature of its business and the maximum amount that may be declared under the Companies Act.6 11 of the 30 entities which Government had investments remitted dividends to the government totalling $21,971,159 in 2007 compared to $27,619,234 in 2006 and $23,701,130 in 2005.
Table 3.2 shows the dividends received from the entities in the three years.
TABLE 3.2: DIVIDEND ANALYSIS FOR LAST THREE YEARS Entity 2005 $ 2006 $ Fiji International Telecommunications Limited 9,779,328 7,055,594 Yaqara Pastoral Company Limited Amalgamated Telecom Holding Limited Air Pacific Limited Fiji Television Limited Land Transport Authority Fiji Reinsurance Corp. Limited Fiji Ports Corporation Limited Pacific Fishing Company Limited Airports (Fiji) Limited 68,779 245,122 6,004,071 8,755,933 3,725,981 2,262,203 259,560 259,560 2,500,000 4,000,000 190,000 137,354 --- --- --- 1,609,352 443,224 2,759,005 2007 $ 6,924,636 385,013 8,755,933 1,996,061 259,560 --- --- 2,010,746 443,224 315,780 6 Part 3, Division 6, Section 52(4) and Part 4, Division 6, Section 81(4) of the Public Enterprise Act of 1996 Whole of Government Financial Statements and Annual Appropriation Statement 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Entity Fiji Broadcasting Corporation Limited Unit Trust of Fiji Limited Post Fiji Limited Pacific Forum Line Limited Daily Post Colonial National Bank Fiji Hardwood Corporation Shipbuilding (Fiji) Limited Air Fiji Limited Equity Investment Management Company Limited Fiji Pine Limited Fiji Sugar Corporation Limited National Trading Corp. Limited Rewa Co-operative Dairy Company Limited Rewa Rice Limited Viti Corps Company Limited Fiji Sugar Marketing Company Limited International Hotels of Fiji Limited Fiji Ships and Heavy Industries Limited Ports Terminal Limited Total 2005 $ --- --- 634,978 538,433 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 2006 $ 26,387 65,500 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 23,701,130 --- 27,619,234 2007 $ --- 69,800 457,148 353,258 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 21,971,159 Table 3.3 shows the dividend and investment analysis for 2006 and 2007.
TABLE 3.3: DIVIDEND AND INVESTMENT ANALYSIS Entity Investment Dividends Variances Amalgamated Telecom Holding Limited Fiji International Telecommunications Limited Land Transport Authority Airports (Fiji) Limited Fiji Ports Corporation Limited Pacific Fishing Company Limited Yaqara Pastoral Company Limited Unit Trust of Fiji (Management) Limited Fiji Broadcasting Corporation Limited Air Pacific Limited Fiji Television Limited Fiji Reinsurance Corp. Limited Total $ 36,483,052 3,569,990 --- 81,849,908 73,154,852 14,728,956 1,191,846 50,000 2 2007 $ 8,755,933 6,924,636 --- 315,780 2,010,746 443,224 385,013 69,800 --- 2006 $ 8,755,933 7,055,594 4,000,000 2,759,005 1,609,352 443,224 245,122 65,500 26,387 13,307,075 1,996,061 2,262,203 1,442,000 259,560 --- --- 259,560 137,354 $ --- (130,958) (4,000,000) (2,443,225) 401,394 --- 139,891 4,300 (26,387) (266,142) --- (137,354) 225,777,681 21,160,753 27,619,234 (6,458,481) Whole of Government Financial Statements and Annual Appropriation Statement 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Entity Investment Dividends Variances Post Fiji Limited Pacific Forum Line Limited Total Daily Post Fiji Hardwood Corporation Air Fiji Limited Fiji Pine Limited Fiji Sugar Corporation Limited Rewa Co-operative Dairy Company Limited Fiji Shipping Cooperation Ltd Rewa Rice Limited Fiji Sugar Marketing Company Limited Viti Corps Company Limited Fiji Ships and Heavy Industries Limited Ports Terminal Limited Unit Trust of Fiji (Trustee) Limited Food Processor Fiji Limited Total In-Operative Entities Equity Investment Management Company Limited National Trading Corp. Limited Shipbuilding (Fiji) Limited International Hotels of Fiji Limited Total $ 5,600,000 3,171,702 8,771,702 950,220 90,000,000 171,804 61,002,064 15,119,580 42,854 10,000 1,506,224 2 6,000,000 7,662,228 3,084,300 654,820 687,680 186,891,776 51 3,358,186 3,062,500 2,000,000 8,420,737 2007 $ 457,148 353,258 810,406 2006 $ --- --- --- $ 457,148 353,258 810,406 --- --- ---
 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- Total Investment 429,861,896 21,971,159 27,619,234 (5,648,075) The following were noted: 11 entities paid dividends totalling $21,971,159 in 2007, a decrease of 5,648,075 compared to 2006; 14 entities in which Government has investment totalling $186,9891,776 did not pay any dividends for the past two years; 2 entities paid dividend in 2007 amounting to $810,406 but had not paid dividend in 2006; 3 entities that paid dividends in 2006 amounting to $4,163,741 did not pay dividends in 2007; 4 entities with total investments of $8,420,737, have been in-operative for over two years.
Whole of Government Financial Statements and Annual Appropriation Statement 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 4.1: Dividends Received : 1999 - 2007 ) m $ ( t n u o m A 30 25 20 15 10 5 0 1999 2000 2001 2002 2003 Year 2004 2005 2006 2007 The dividend revenue has decreased by $5,648,075 due to fewer companies paying dividends and comparatively less than dividends paid in 2006.
3.2 Non Submission of Annual Reports and the Audited Accounts Within 5 months after the end of the financial year, the Board of the Government Commercial Company or Commercial Statutory Authority, shall give to the Public Enterprise Minister, its relevant Minister and the Minister for Finance its annual report and the audited consolidated financial statements accompanied by the auditor’s report.7 Only 7 of the 30 companies in which Government held investments submitted their 2007 audited annual accounts.
These include: • Amalgamated Telecom Holdings (ATH) • Fiji Television Limited • Air Pacific Limited • Unit Trust of Fiji Limited (Trustee & Management) • Fiji Ports Cooperation Limited • Yaqara Pastoral Company Limited • Fiji Sugar Marketing Company Limited.

The Ministry of Finance had not taken adequate actions to ensure that audited annual accounts are submitted as required.

As at the date of the audit,8 the latest annual reports that were received by the Ministry of Finance are as follows.
TABLE 3.4: LATEST ANNUAL REPORT Entities Airports Fiji Limited Fiji Ships & Heavy Industries Limited Post Fiji Limited Fiji Broadcasting Corporation Limited Rewa Rice Limited Fiji Hardwood Corporation Limited Food Processors Fiji Limited Latest Annual Report 2006 2006 2006 2006 2005 2004 2004 7 Part 5, Division 4.
Section 103(a-c) of the Public Enterprise Act of 1996 and the Public Enterprise (Amendment) Act 28 of 2002 8 10 June 2008 Whole of Government Financial Statements and Annual Appropriation Statement 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Entities Ports Terminal Limited Viti Corporation Company Limited * Fiji Shipping Corporation Limited Public Rental Board Housing Authority Fiji Electricity Authority Fiji Meats Industry Board* Fiji Sugar Corporation Limited PAFCO Fiji Pine Limited * Rewa Co-op Dairy Company Limited Air Fiji Limited Pacific Forum Line Limited Daily Post Latest Annual Report 2004 2002 ** 2006 2006 2006 1992 2006 2006 2005 2004 2005 2005 1999 The Fiji Meats Industry Board, Viti Corporations Company Ltd, and Fiji Pine Ltd have not been submitting their annual reports since 1992, 2002, and 2005 respectively.
The Fiji Shipping Corporation Limited has not submitted its annual report since its incorporation in 2004.

The audit could not confirm whether Equity Investment Company Limited had submitted any annual reports.

As most entities do not submit their annual reports, their performance can not be monitored and the viability of their business operations can not be known.
Thus, it is not possible to assess their financial performance and which could limit the Government from making essential and sound decisions in regards the operations of the entities.

Recommendations • Annual reports should be sought from the relevant entities and used as a tool to facilitate better informed investment decisions that will benefit Government in the long term, • Officers responsible in ensuring the submission of annual reports should be held accountable and disciplined accordingly.
• The Ministry’s database should be up-dated on the submission of annual reports of Equity Investment Company Limited and Fiji Sugar Marketing Ltd. Ministry’s Comments Whilst the comments by OAG is noted, AMU however totally disagrees to the findings that MOF “had not taken adequate action to ensure that audited annual accounts are submitted as required”.
On the contrary officers responsible had time and time again written to these entities and while some have had the courtesy to reply others do not bother at all.

Copies of these correspondences were shown to the officers conducting the audit.

It must be also noted that GCC and CSA falls under the ambit of the Public Enterprises Act 1996 and perhaps this issue of non submission should be directed at the Department of Public Enterprises.
One good example is Airports Fiji Limited wherein MOF had reminded them of the deadline is submitting their audited accounts for 2007.

Their response of April 26 2008 stated that the Ministry of Public Enterprises via their circular of 19th February 2008 had extended the time frame of submission of accounts for 2007.

This was also shown to the officer conducting the audit.
The above situation is indicative of the minor role MOF plays in regards to submission of annual accounts of GCC and CSA under the PE Act 1996.

Furthermore, s53 FMA 2004 explicitly states that the division governing submission of annual accounts “does not apply to GCC and CSA”, hence MOF cannot exercise the powers bestowed upon it by the FMA Act 2004.
Whole of Government Financial Statements and Annual Appropriation Statement 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Fiji Meats Industry Board was only declared a CSA in 2006 and prior to that their annual accounts and annual reports are submitted to the Minister of Agriculture in accordance with S.11 & S.12 of the Meat Industry Act 1970.

Their reason for non submission in 1993 should be directed to the Ministry responsible.
Viti Corp is currently managed by the Ministry of Public Enterprises and as such their reason for non submission for 2003 should be directed to them while non submission of Fiji Shipping Corporation Limited’s should be directed to Ministry of Transport.

It must be emphasized that MOF’s role in terms of monitoring GCC and CSA are limited to one of consultative only.

Apart from the PE Act 1996 these entities are also accountable to their line Ministries by the individual legislations that governed them.
Fiji Pine however has submitted their 2005 annual accounts.

Both Equity Investment Company Limited and Fiji Sugar Marketing Company Limited are not GCC nor are they CSA, hence are not obligated to submit their annual accounts to MOF.
MOF have been promptly seeking annual reports from entities as indicated to officers conducting the audit but perhaps OAG can suggest other options that can be pursued by this Ministry as judging from their findings the current avenue pursued by this Ministry is not acceptable to them.

We totally disagree with the recommendation to take the officer responsible to tasks because the officer and so as the Unit responsible have taken all measures to ensure this is adhered to but to no avail.
As mentioned above our role is secondary in as far as this is concerned as there are other considerations that have to be taken into account and a good example is mentioned above – the case of Airports Fiji Limited.

Government holds 51 $1 units in the defunct Equity Investment Company Limited and 2 $1 shares in Fiji Sugar Marketing Company Limited.
As such neither GCC or CSA and are not obligated to submit annual accounts to MOF therefore this Ministry’s database cannot include their annual accounts as recommended.
3.3 Financial Analysis of Companies Not Prepared Performance will be monitored by government against performance targets specified in the statement of corporate intent.9 Out of the 30 companies, only 2 companies have had their financial (ratio) and non-financial analysis completed from information in the annual reports for 2007, namely FINTEL and Fiji TV.

For some entities, financial analysis had not been carried out since 2002.
Table 3.5 shows the list of entities whose financial analysis were conducted by the Assets Management Unit of the Ministry of Finance.
TABLE 3.5: ENTITIES FINANCIAL ANALYSIS Government-owned Entities Airports Fiji Limited Fiji Hardwood Corporation Limited Food Processors Fiji Limited Fiji Ships & Heavy Industries Yaqara Pastoral Company Limited Post Fiji Limited Viti Corporation Limited Annual Report Submitted 2007 Latest Annual Report Remarks 2006 2004 2004 2006 2006 2006 2002 Annual Report to be published prior to 30 June 2008 FPL awaiting 2006 audited accounts pending clarification on restructure by MOF 2007 accounts finalized and audit will commence from 1st wk of June.
Final audited accounts to be released by end of June 2008 9 Schedule 1 sec10 (Part B) Principle 3 of the Public Enterprise Act 1996 Whole of Government Financial Statements and Annual Appropriation Statement 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Government-owned Entities Fiji Broadcasting Corporation Limited Annual Report Submitted 2007 Latest Annual Report 2006 Remarks Fiji Ports Corporation Limited Rewa Rice Limited Unit Trust of Fiji Ltd Fiji Public Trustee Public Rental Board Housing Authority Fiji Electricity Authority Fiji Meats Industry Board* Fiji Pine Limited Fiji Sugar Corporation PAFCO Air Pacific Limited FINTEL Rewa Dairy Co-op Limited Air Fiji Limited Pacific Forum Line Limited Amalgamated Telecom Holding Limited Fiji Television Limited Daily Post 2007 accounts finalized but not finally reported and given to OAG.
Awaiting Approval from MPE to publish 2007 AR.

Not able to give a timeline.

Analysis in progress 2006 accounts completed but yet to presented to OAG.

may finalize AR by 30/06 Audit report to be out by June 2008 2006 and 2007 audits yet to be completed.
Analysis in progress Analysis completed Analysis in progress Analysis completed 2006 2005 2007 2006 2006 2006 1992 2005 2006 2006 2007 2007 2004 2005 2007 2007 2007 1999 The unavailability of annual reports has created the backlog in carrying out the financial analysis of the above entities.

Without a timely and an updated financial analysis, the actual performance of the companies would not be determined for the management team to make appropriate decisions on government’s current investments.
Recommendation The Ministry should ensure that annual reports are received on a timely basis and appropriate financial analyses are made without delay.
Ministry’s Comments Comments not received 3.4 Misplaced Share Certificates The Minister may invest public money, and other money in accordance with the Financial Management Act, as follows: Whole of Government Financial Statements and Annual Appropriation Statement 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ (a) (b) (c) (d) (e) on deposit with a bank; in securities issued by a statutory authority; by way of advances authorised by an Act or by resolution of the House of Representatives; in any way in which trustees are authorised to invest money under the Trustee Act; in any way in which the particular money may be invested under the authority of another Act10.
On 19/11/02, Cabinet approved a $10 million financial assistance to PAFCO to be converted into ordinary share capital.

However, despite this decision, and the showing of the $10 million as equity in PAFCO’s financial statement, the Ministry of Finance is yet to receive the Share Certificate.
The conversion of the financial assistance to equity is of a significant amount and thus priority should be given to locate the share certificate as it is an important document showing government’s ownership of shares and interests in PAFCO.
Recommendations • The Ministry should ensure that the actual share certificate is received as the conversion of • the assistance into share capital is now over 5 years, Investigation should be conducted as to whether the $10 million was actually converted to equity and trace the share certificate date, and • Alternatively, if the effort to locate the actual share certificate is futile the Management should cancel from its books all records pertaining to the original share certificate and issue the new share certificate to the Ministry.
Ministry’s Comments The comments by OAG is noted but it must be emphasized that issuance of share certificates is the sole responsibility of the firm concerned.

PAFCO in their letter of 25th July 2006 had confirmed that the $10m financial assistance by Government was converted into ordinary share capital and the accounting firm of Price Waterhouse Coopers was assigned to register the increase in authorized share capital and the issue of share certificates accordingly.
This was done but they are yet to locate the actual share certificate.

The letter in question was also shown to the officer conducting the audit.

However, MOF is vigorously following up with PAFCO on issuance of new share certificates should they still fail to locate the original ones.

3.5 Debt Converted to Equity Loans granted by Government to various entities are converted to equity or grants on the express approval of the Parliament.
Disclosed as a footnote to the Statement of Investments (Appendix 9) made by Government as at 31/12/07 are 4 entities whose initial indebtedness to Government was authorized by Parliament to be converted to equity.

Refer Table 3.6 for details.
10 Financial Management Act 2004, Section 55(1) Whole of Government Financial Statements and Annual Appropriation Statement 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 3.6: ENTITIES DEBT CONVERTED TO EQUITY Entity Fiji Electricity Authority Fiji Pine Limited Public Rental Board Housing Authority of Fiji Total Year of Conversion 1990 1992 1999 2002 Amount $ 5,500,000 49,610,129 695,811 41,772,000 97,577,940 It cannot be confirmed as to whether share certificates which were received from Fiji Pine Limited and shareholdings in it are being fully reflected in the Statement of Investments as no response has been received from the Company.
Also the Ministry of Finance could not confirm if any share certificate was issued when the debt was converted to equity.

Rewa Rice Limited received an advance of $4.6 million from Government.

Following a Cabinet Decision of 7th September 2004 it was decided to convert the advance into a grant.

However, Rewa Rice has proposed that the advance be converted to equity as a grant would require a VAT payment which the company could not afford.
These issue’s have been highlighted in previous years audit report but no action has yet been taken by the Ministry.

Recommendation The Ministry should determine the status of these debt converted equities or grants in the entities above and take necessary actions to rectify them to ensure that all investments are properly accounted for.
Ministry’s Comments Comments not received 3.6 Inoperative Entities Reflected in the Statement of Investments (Appendix 9) as at 31/12/07, are some entities that are dormant, in liquidation or have ceased operations.

Refer Table 3.7 for details.
TABLE 3.7: INOPERATIVE ENTITIES Entity Status Equity Investment Management Company Limited Ceased Operations International Hotels of Fiji Limited Shipbuilding (Fiji) Limited National Trading Corporation Limited Total Dormant In Liquidation In Liquidation Current Status Since 1999 2000 2000 2006 Amount $ 51 2,000,000 3,062,500 3,358,186 8,420,737 Whole of Government Financial Statements and Annual Appropriation Statement 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ These inoperative entities are being shown in the Statement of Investments over the years because no concrete actions on winding up has been taken.
This issue has been highlighted in previous reports but no action has been taken to date.

Equity Investment Management Company Limited ceased operations in 1999 but it is still listed in the Statement of Investments because it has not been wound up.

Fiji Development Bank (FDB) holds 50% shares in International Hotels of Fiji Limited and also manages the entity.

Despite numerous requests to FDB on the status of the entity, there have been no responses.
Ship Building (Fiji) Limited is currently being liquidated with proceeds yet to be distributed.

National Trading Corporation is in the process of liquidation.

Recommendation The Ministry should take effective actions as necessary.
Ministry’s Comments Comments not received 4.0 TRUST FUND ACCOUNT Section 25 of the Financial Management Act (2004) states that trust moneys should be accounted separately from the public monies and should be kept in a separate bank account pending its withdrawal for use or investment.

The Trust Fund Account consists of main trust funds and operating trust funds.
Main trust funds are funds held in trust due to their relationship with the entity’s core functions such as tender deposits, bonds, Aid monies from overseas agencies, etc.
Operating trust funds on the other hand are maintained to facilitate transactions relating to the entity’s administrative role as an employer, such as deductions from employees’ salaries/wages with regards to contributions to the Fiji National Provident Fund, housing loan repayments, insurance premiums, etc., for onward payment to the respective payees.

The balance in the Trust Fund Account was $64,442,713 as at 31/12/07, a decrease of $3,737,089 or 5.5% from 2006.
This is mainly due to a significant decrease of 27% in the Operating Trust Fund in 2007 compared to 2006.

A graphical analysis of the Trust Fund Account maintained by Ministries and Departments is shown below.

Figure 4.1 shows the trend in the Trust Fund Account balances over the last 10 years.
Whole of Government Financial Statements and Annual Appropriation Statement 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 4.1: Trust Fund Account Balances: 1997-2007 ) m $ ( t n u o m A 80 70 60 50 40 30 20 10 0 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2002 Year The Main Trust Fund Accounts of 18 Ministries/Department comprise 50% or $32.1 million of the total trust monies of $64.4 million as at 31/12/07.
The balance relate to the Operating Trust Fund Accounts of 50 ministries/departments.

Refer to Appendix 2 for details.
TABLE 4.1: SUMMARY OF TRUST FUND ACCOUNT Title Amount $ Main Trust Fund Operating Trust Fund 32,637,943.89 34,797,537.00 Overdrawn Account Main Trust Fund Operating Trust Fund (509,261.39) (2,483,506.02) Total Trust Fund 67,435,480.89 (2,992,767.41) 64,442,713.48 Although actual monies held in Trust Fund Account as at 31/12/07 was $67,435,480.89, the Statement of Trust Fund reflects the net balance of $64,442,713.48, the difference of $2,992,767.41 being the overdrawn trust accounts.
These overdrawn accounts are discussed in paragraph 4.4.

4.1 No Movement in Trust Fund The Accounts Officer shall properly file correspondences, reports, trust agreements and other relevant trust documents and each trust account shall have its own file.11 There was no movement in the true trust fund accounts held by the following departments for the past three years.
Main or True Trust refers to an obligation enforceable in equity which rests on a person (the trustee) as owner of some specific property (the trust property) to deal with that property for the benefit of another person (the beneficiary) or for the advancement of certain purposes.12 Operating Trust Fund Accounts facilitate transactions relating to the Department’s administrative role as an employer.

11 Section 15.3.1 - Finance Manual 2005.

12 Solicitor General’s opinion of 17/10/05.
Whole of Government Financial Statements and Annual Appropriation Statement 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 4.2: TRUE TRUST ACCOUNTS WITH NO MOVEMENTS Ministry/Department Local of Ministry Government Attorney - General Ministry of Commerce Opening Balance 01/01/07 $ 36,920.70 (412.16) (24,374.28) Receipts 2007 Payments 2007 $ --- --- --- $ --- --- --- Ending Balance 31/12/07 $ 36,920.70 (412.16) (24,374.28) The above outstanding balances had been in the Main Trust Fund account of the respective Departments from 2005 during the implementation of the FMIS General Ledger.
The Departments could not provide details of the amounts in the trust funds.

This issue has been highlighted in the previous years audit reports, however no corrective action has been taken by the Ministry.

Recommendation The Ministries/Departments mentioned should close these accounts and transfer the money to Consolidated Revenue Account.
Ministry’s Comments The Ministry agrees with the recommendation that the ministries/departments mentioned who have not had any transaction in their trust accounts as mentioned should have these balances transferred to revenue.

However, this would have to be done after the agency has v verified its records.

Similar to 4.0 above, it has to be first established whether balances need to be net off in the case of misposting of same charges.
4.2 Opening of a Separate Trust Fund Bank Accounts Trust money should be accounted for separately from public money and other money, and should be kept in a separate bank account pending its withdrawal.13 The total trust fund of $64.4 million is not kept in a separate bank account and is still kept in the Consolidated Fund Account of government together with other funds.
The Ministry of Finance is currently in the initial process of opening 11 different bank accounts for the following trust accounts: TABLE 4.3: OPENING OF BANK ACCOUNTS FOR TRUE TRUST Agency Title of Account Immigration Immigration Account Provincial Development Ministry of Provincial Development Energy Department of Energy Department Trust 2007 Balance $ 9,404,238.96 Comments • Bank Account Opened (Account # 9801907123) 2,027,318.77 • Processing opening of bank account 1,239,201.72 • Processing opening of bank account 13 Section 25, Financial Management Act (2004) Whole of Government Financial Statements and Annual Appropriation Statement 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Agency Title of Account Fisheries & Forestry Ministry of Fisheries and Forests DPP Prisons Judicial Labour DPP Trust Account Prisons Department Judicial Department Ministry Labour Trust Account Mineral Resources Agriculture Commerce Mineral Resources Trust Account Ministry of Agriculture Trust Account Ministry of Commerce Trust Account Comments 2007 Balance $ 27,731.16 • Bank Account Opened (Account # 9801916447) 1,041.39 • Processing opening of bank account • Bank Account Opened (Account # 9801916413) 0.00 6,956,748.73 • Processing opening of bank account 397,261.55 • Bank Account Opened (Account # 9801916389) 719,090.23 • Processing opening of bank account 499,790.46 • Processing opening of bank account (24,374.28) • Processing opening of bank account No funds have been transferred from the Consolidated Fund to the bank accounts for the True Trust.
As at 31/12/07, the total true trust amounts to $32.6 million against the net cash balance of $42.3 million.

Recommendation Separate Bank Accounts should be opened for the different Trust Funds operated by the different Ministries/Departments.

Ministry’s Comment A number of separate bank accounts have been opened so that trust monies could be deposited into them as required under the Financial Management Act (2004) and also in line with Auditor Generals recommendation in past years audits.
In its attempt to have this matter addressed, the Ministry has been putting aside funds at the Bank of Baroda (BOB) to fund the deposits.

The balance at BOB is sufficient to accommodate all main trust deposits, which we anticipate to lodge by the end of this year.

Operating trust monies will continue to be paid from the Consolidated Fund Account.

4.3 FMIS Trust Fund System Record Each month, the trust account shall be balanced and reconciled with the trust bank account.
The names and balances of each account shall be listed and the reconciliation shall be signed by the responsible officer.

Un-reconciled items should be investigated and resolved promptly.14 Details of balances must be attached to the reconciliation statement.15 The Trust Fund Account is classified in the FMIS as Standard Liability Groups (SLG) 86 and 89.
SLG 86 refers to salary deductions, deposits and retention monies whilst SLG 89 generally provides details of the Bonds, Aid Monies from Overseas donors, etc.

A scrutiny of Fund 1 SLG 89 system balances noted that most Ministries and Departments could not substantiate the balances in SLG 89 of their Operating Trust Fund account.

Most of theses items are referred to as ‘Miscellaneous Open Item’ in the system, with no details provided.

Refer to Table 4.4 for details.
14 Finance Instruction 2005 - Section 69 (3) 15 Proforma Finance Manual Whole of Government Financial Statements and Annual Appropriation Statement 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 4.4: UNSUBSTANTIATED FIGURES IN OPERATING TRUST FUND Department Account Home Affairs Prisons Information Foreign Affairs Judicial Ministry of Commerce 10610106101899988 11520171999899988 11610116999899988 10810108101890111 10810108101899988 10810380101899988 10810380701899988 11110111999899999 13410134101899988 Amount in GL Balance Not Substantiated $ 59,761.87 147,290.82 4,725.13 (462.22) (35,046.26) (5,338.23) (12,082.02) (165.00) (6,143.35) FMIS GL Balance $ 89,823.78 418,563.73 (5,752.40) 2,587,603.39 2,587,603.39 2,587,603.39 2,587,603.39 (1,036,390.95) 23,915.03 % of Unsubstantiated Amount 66.53% 35.18% 82.14% 0.01% 1.35% 0.20% 0.46% 0.02% 25.68% The Departments could not verify with their records the amounts in the FMIS general ledger.
These balances have been appearing in their accounts for some time.

Only the unsubstantiated balance of $147,290.82 representing 35% of the Department of Prison’s Operating Trust Fund has been transferred to the Consolidated Revenue in 2008.

The above is the result of the Department’s not preparing their reconciliations to reconcile their balances to the General Ledger.
Recommendation The Ministries/Departments mentioned should prepare their reconciliations and take effective actions as required by Finance Instruction 69.

Unreconciled items should be investigated and resolved promptly.

Ministry’s Comment We fully agree with the recommendation that it is the departments function to prepare monthly reconciliations.

We have been sending reminders and these issues have also been raised at every monthly accounting heads meeting.
4.4 Non Submission of Reconciliations Section 15.4 of the Finance Manual states that within 5 days after the end of each month, the Accounting Officer shall prepare a trust reconciliation to reconcile trust account balances to the ledger total, and must submit the trust reconciliation to the Chief Accountant (Treasury) within 10 days of the end of the month.16 Contrary to the above regulation, some Ministries/Departments failed to submit their 2007 Trust Fund reconciliations to the Ministry while others who submitted did not prepare reconciliations for all their trust accounts.
Despite the Ministry sending numerous requests to the Ministries/Departments, the reconciliations had still not been submitted.

Refer to Appendix 3 for the update on the reconciliation status of the Ministries/Departments.
16 Finance Manual 2005 – Section 15.4 Whole of Government Financial Statements and Annual Appropriation Statement 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ It is noted from the Appendix 4.2 that 95% of the Ministry/Department having true trust fund account, did not submit their reconciliations as required.

In the absence of proper reconciliations, the accuracy of the balances in the accounts could not be substantiated.
Recommendations • The Ministry of Finance should consistently follow up with the Ministries/Departments to ensure prompt submissions of reconciliations.

• The Accounting Officers should be disciplined for failing to submit their reconciliation statements to the Chief Accountant.

Ministry’s Comments The Ministry has been consistently following up with the agencies for the submission of reconciliations.
As mentioned at 4.3 above, accounting heads present at the monthly meetings are again reminded about the importance of preparing their reconciliations.

Sad to say, it is not only trust accounts that lag behind in submission of reconciliations.

On the recommendation of discipline action against the accounting head, the Permanent Secretary should initiate the charges by referring the matter to the Public Service Commission.

The MOF role would be to substantiate the status of the reconciliations.
4.5 Overdrawn Trust Accounts Trust money is to be accounted for separately from public money and other money,17 and by convention should always have credit balances.

Thus, the trust fund accounts should not at any time be overdrawn.18 The following Trust Fund Accounts were overdrawn as at 31 December 2007.
TABLE 4.5: OVERDRAWN TRUST FUND Title of Account Main Trust Fund Attorney-General Ministry of Commerce Department of Works Operating Trust Fund Agriculture Cabinet Elections Office Forestry Government Printing & Stationery Information Judicial Labour & Industrial Relations Meteorological Services Ministry of Finance Balance 31/12/07 $ (412.16) (24,374.28) (484,474.95) (512,485.18) (40,138.46) (507,283.93) (51,385.13) (20,468.52) (5,752.40) (1,036,390.95) (46,668.73) (46,447.90) (93,361.32) 17 Section 25(1) of the Financial Management Act 18 Finance Circular No.
4/98 of 30/03/98 Whole of Government Financial Statements and Annual Appropriation Statement 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Title of Account Multi-Ethnic affairs Presidents Office Public Enterprise Social Welfare Womens Affairs Total Balance 31/12/07 $ (2,218.22) (1,142.83) (85,731.62) (23,155.35) (10,875.48) (2,992,767.41) It was noted that 18 Ministries/Departments had overdrawn the trust fund accounts totalling $2,992,767 as at 31/12/07 contrary to Finance Circular 4/98.
Ministries/Departments could not explain why these accounts were overdrawn.

Figure 4.2 shows the trend in the Overdrawn Trust Fund Account balances for the last 10 years.

Figure 4.2: Overdrawn Trust Fund Account Balances: 1998-2007 ) m $ ( t n u o m A 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year The overdrawn trust funds more or less tantamount to unauthorised expenditures.
It indicates lack of adequate internal control and supervision and disregard of the Finance Instructions.

Recommendation Disciplinary actions should be instigated against officers for the overdrawn trust accounts and non-compliance with Finance Circular No.

4/98 of 30/03/98 and section 15.2.5 of the Finance Manual (2005).

Ministry’s Comments The overdrawn balances may have been the result of misposting by departments.
However, it is only until the departments reconcile the accounts that we would be able to ascertain the exact status of the account.

Also, the debit balances were also the result of the mapping exercise during the migration to the new chart of accounts.

Officers who have failed to prepare reconciliations should be disciplined as recommended for their failure to comply with regulations.

Their failure in adjusting the overdrawn charges has reflected in an untrue status of the trust account.
Whole of Government Financial Statements and Annual Appropriation Statement 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 5.0 REVENUE 5.1 Tax Revenue Income tax revenue includes tax paid by income earning individuals, companies, partnerships and employers in the form of “Pay as You Earn” and corporate taxes.

The Fiji Islands Revenue & Customs Authority (FIRCA) collects this revenue for Government.
The tax revenue ledgers maintained by the Ministry of Finance for 2007 does not reconcile with the amounts in FIRCA’s audited financial statements.
Table 5.1 shows the details of the differences between the two records TABLE 5.1: FIRCA VS. MINISTRY OF FINANCE RECORDS Tax Revenue Customs Income Tax VAT Total Ministry of Finance $ 326,193,974 438,337,401 465,831,990 1,230,363,365 FIRCA Variance $ 315,136,267 455,145,861 464,170,288 1,234,452,416 $ 11,057,707 (16,808,460) 1,661,702 (4,089,051) The following are the reasons for the variances: • • • timing difference in lodgements effects of refunds, that is, FIRCA records refunds at the time the cheque is released while the Ministry records refunds when the cheque is presented; and the effect of dishonoured cheques which is reflected in the Ministry’s books and then later in FIRCA’s books.
Since the revenue collections disclosed by FIRCA in its financial statements were obtained from records that were maintained on a cash basis of accounting, any variances arising should have been verifiable.

However, no such verification or reconciliation has taken place and despite it being highlighted in the previous audit memorandum, the Ministry is yet to reconcile its books with FIRCA’s.

This issue has been highlighted in the previous audit reports; however, no action has been taken by the Ministry.
Recommendation The Ministry of Finance should obtain monthly revenue reports from FIRCA and reconcile these with entries by Ministries and Departments.

Ministry’s Comments Firstly, the above table needs to be corrected.
It should have been demarcated by following items with correct amounts: Whole of Government Financial Statements and Annual Appropriation Statement 36 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 5.2 Budget Forecasts On or before 30th November in each financial year, the Minister must table in the House of Representatives and the Senate budget papers for an annual budget for the next financial year.19 Section 13(3) of the Financial Management Act states that the Budget Estimates and budget statements should be prepared as far as practicable in accordance with internationally accepted standards.
The actual revenue collected for the period 2007 has surpassed the estimated revenue to be collected.

Also there were significant variances between the budgeted and actual revenue collected.

Refer to Appendix 4 for details.

The above is an indication of poor and unrealistic budgeted revenue forecasts, which could impact the budgetary allocation of funds to government programmes.

Recommendation The budgetary forecast needs to be reviewed as it has not been adequate for the past two years.
Ministry’s Comments Agency officials are in a better position than the Ministry of Finance to determine their own revenue forecasts as they are well versed with the various variables and factors affecting their revenue items.

Given the limited information, the Ministry of Finance has continued to adopt a conservative approach by ensuring that forecasts provided by agencies are consistent with past trends.
It is also suggested that perhaps more training should be conducted within Ministries and Departments to ensure that officials responsible for forecasting their non-tax revenues are capable of providing reliable and accurate estimates on collections for the following year.
5.3 Unbudgeted Revenue Within one week of the end of each month, the Chief Accountant shall submit to the Deputy CEO (Administration), Financial Asset Management and Budget a financial performance report providing an analysis of the financial and budget position of the agency.20 The financial performance report shall include the following information: (i) (ii) (iii) actual revenue collected against forecast; actual expenditure to date against budget for each activity/output and each SEG; actual expenditure to date and commitments against budget for each output/activity and each SEG.21 The following is an example of how revenue performance may be reported in the financial performance report.22 19 Financial Management Act 2004, Part 4, 13(1) 20 Finance Manual 2005 – Section 17.1.5 21 Finance Manual 2005 – Section 17.1.6 22 Finance Manual 2005, Schedule 1 Whole of Government Financial Statements and Annual Appropriation Statement 37 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Revenue Performance for the Month of Revenue Type Monthly Revenue Forecast $ Actual Collection for the Month $ Variance Variance Reason for Variance $ % Government collected 15 classes of revenues totalling $26,436,160 that were not budgeted in 2007.
These are detailed in Table 5.2 below: TABLE 5.2: COLLECTIONS OF UNBUDGETED REVENUES Revenue Examination fees LTA Fee Sale of Government Department Sales of Companies Fumigation NBF Profits Board Member fees Training & Productivity Authority of Fiji Capital Projects – 1/3 Contributions Japan Government Grants Term Loans Receivable - Interest Interest from Overseas Banks Interest from Local Banks Interest from T/D with Local Banks Return of Surplus Capital from TMA Operations Total Estimated Revenue $ Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Actual Revenue $ 26,158 2,890,349 5,329 609 7,290 2,000,000 29,759 9,467 30,727 24,960 38,276 6,773,681 10,760,575 2,208,900 1,630,080 26,436,160 Government may not adequately allocate financial resources to deserving projects if revenue forecasting is not conducted effectively.
Also no revenue was collected for three revenue allocations forecasted to collect $274,486,800 in 2007, as illustrated in Table 5.3 below: TABLE 5.3: NIL COLLECTIONS ON BUDGETED REVENUES Revenue European Union Disposal of Investment in Infrastructure Services International Bond Market Issuance Total Estimated Revenue $ 9,000,000 6,000,000 259,486,800 274,486,800 Actual Revenue $ Nil Nil Nil The effect of the nil collections where there were budgets and collections on un-budgeted revenue is that government had to increase its borrowings by a sum of $248.1 million.
Whole of Government Financial Statements and Annual Appropriation Statement 38 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Recommendation Anticipated revenues should be identified and forecasted realistically to enable Government to allocate its financial resources accordingly.

Ministry’s Comments Comments similar to 5.2 above.


Unreliable revenue predictions identified in 5.4 (collection of unbudgeted revenues & nil collections in budgeted revenues) is mainly attributed to the failure of line Ministries and Departments to provide accurate estimates on proceeds earned from their respective revenue generating activities.
5.4 Unidentified Revenue Transactions The Finance Manual provides that where revenue is collected on behalf of other agencies, the Clerical Officer Main Accounts should make appropriate adjustments and inform the other agency of the collections received on their behalf.
The advice form will outline: (i) (ii) receipt numbers, date of receipt and amounts collected; type of revenue that was collected..23 The advice form together with the journal vouchers should be verified and signed by the Accounts Officer (AO) Main Accounts.

Immediately after signing the advice form, the AO Main Accounts must forward it to the agency concerned.24 Audit found non-compliance with the Finance Manual.
Ministries/Departments were posting revenue collections that are not in conformance with their operations.
For example, the Income Tax allocation was found to be used by other Ministry’s/Departments other than FIRCA, as follows: TABLE 5.4: MIN/DEPT POSTING TO INCOME TAX ALLOCATION Ministry/Department Account Name Health Women Energy Commerce Energy Agriculture Income tax Income tax Income tax Income tax Income tax Grants in Aid Amount $ 347,269.02 (46.54) 3,108.54 (7,519.08) (2,481.09) (7268.02) There is no restriction in the Financial Management Information System (FMIS) to capture only revenues for the particular Ministry/Department user.
This has resulted in unidentified revenue entries in the ledgers.

Recommendations • Ministry’s/Departments should strictly comply with the Finance Manual when collecting revenues for other departments.
23 Finance Manual 2005 – Section 5.5.8 24 Finance Manual 2005 – Section 5.5.9 Whole of Government Financial Statements and Annual Appropriation Statement 39 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ • The Financial Management Information System (FMIS) should have facilities to restrict revenue collections to those authorized to collect.
Ministry’s Comments All Ministries and Departments were issued with Chart of Account for revenue by Main Accounts section of Ministry of Finance.

Chart of Account were also distributed in Accounting Heads meeting.

The chart of Account is also provided on the FMIS- System; hence the Ministries and Departments should be able to use the correct allocations for postings.
Some ministries did not understand the new chart of accounts structure thus causing then to post to other accounts without recognizing them.
5.5 Payments Charged to VAT Revenue Section 177 of the Constitution states that money must not be withdrawn from the Consolidated Fund except under an appropriation made by law.25 Each accounting Head shall ensure that: (a) (b) (c) (d) revenue is recorded against the correct account; the recording of revenue is reconciled monthly with the Ministry of Finance; the Ministry of Finance is advised of any error or discrepancies within 10 working days after the end of each month; and, VAT is correctly accounted for and remitted as required.26 VAT collected for services rendered by Ministries/Department are deposited in the Consolidated Fund Account (CFA).
Audit noted that the Judicial Department when making VAT payments to FIRCA, were debiting the VAT revenue allocation.

As a result, VAT revenue for the department is understated by $158,453.85.

Refer to Table 5.5 for details.
TABLE 5.5: VAT PAYMENTS TO FIRCA Date 08/01/07 12/02/07 07/03/07 13/04/07 15/05/07 11/06/07 05/07/07 15/08/07 10/09/07 09/10/07 14/11/07 11/12/07 Total Voucher Number 014711 016123 016963 018451 019724 070829 022131 023660 024643 031760 033442 034612 Transaction Month December 2006 January February March April May June July August September October November Amount $ 11,019.54 15,288.79 9,941.58 15,245.39 10,991.53 13,380.69 13,225.22 14,331.55 13,026.54 16,412.67 11,546.02 14,044.33 158,453.85 The above indicates the laxity of the Accounting Heads in not carefully scrutinizing the reconciliation, resulting in the anomaly.
25 Financial Management Act 2004 Clause 11 (1) 26 Finance Instructions 2005 Section 30 (1) (a), (b) (c) & (d) Whole of Government Financial Statements and Annual Appropriation Statement 40 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Recommendation The Accounting Heads should regularly reconcile their records to the postings in the general ledger.
Ministry’s Comments Comments not received 5.6 Arrears of Revenue The importance of revenue in the budgetary process is imporatnt as it determines the level of spending possible.

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

Outstanding amounts due to government are classified under two categories as either ‘arrears of revenue’ or ‘other unpaid accounts’.
Arrears of revenues generally arise when credit is extended for supply of goods and services.

Other unpaid accounts include outstanding amounts under the revolving (suspense) accounts and other debt accounts Arrears of revenue for the government comprise of unpaid taxes by individuals and businesses, as well as revenue owed to Ministries and Departments in the form of fees, fines, licences and charges.
5.6.1 Fluctuating Trend of Arrears for the last 10 Years The arrears of revenue in 2007 totalled $172.4 million, a decrease of $64.9 million or 27.3% over 2006 arrears of $237.2 million.

The arrears of revenue as a percentage of total operating and investing revenue remained above 12% for the last 10 years, averaging at 16%.

This is attributed to the weak revenue collection procedures employed by Ministries and Departments.
Figure 5.1 shows the trend of debts owed to government and the operating and investing revenue collections over the last 10 years. )
m $ ( t n u o m A 1600 1400 1200 1000 800 600 400 200 0 Figure 5.1 Arrears of Revenue vs Revenue 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % a s a s r a e r r A e u n e v e R f o 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Arrears of Revenue Operating & Investing Revenue Arrears as a % of Revenue Whole of Government Financial Statements and Annual Appropriation Statement 41 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ The high level of arrears of revenue is due to substantial outstanding tax arrears owed to the Fiji Islands Revenue and Customs Authority and increasing amount of fees and charges due to the Public Works and Infrastructure, Judicial Department, Meteorological Services, Agriculture, and Crown Land rents.
5.6.2 Significant Balances of Arrears of Revenue by Departments The arrears of revenue outstanding as at 31 December 2007 totalled $172,377,495.

Table 5.6 and Figure 5.2 show debts owed to Ministries and Departments.
TABLE 5.6: ARREARS OF REVENUE Ministry/Department Fiji Islands Revenue & Customs Authority Public Works and Infrastructure Lands Crown Rent Judicial Meteorological Services Agriculture Customs and Exercise MFO Sinai Others Total 2007 Arrears of Revenue $ 105,407,504 29,636,128 11,164,679 9,487,238 4,297,547 4,060,579 3,599,648 1,325,031 3,399,141 172,377,495 % of Total Arrears of Revenue % 61.1% 17.2% 6.5% 5.5% 2.5% 2.3% 2.1% 0.8% 2.0% 100.0% Figure 5.2: Arrears of Revenue Government Printing 0.07% Government Supplies 0.25% Lands Crown Rent 7% Judicial 6% Meteorological Services 3% Public Works & Infrastructure 17% Fiji Islands Revenue & Customs Authority 61% Agriculture 2% Fijian Affairs.
0.26% Customs & Exercise 2% Other 2% FIMSA 0.07% Co-operatives 0.04% Communications 0.06% Finance 0.28% Immigration 0.01% Information Technology & Computing Services 0.01% Labour & Industrial Relation 0.05% Loans: Rewa Rice Limited 0.13% Health 0.52% Auditor General 0.25% Whole of Government Financial Statements and Annual Appropriation Statement 42 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ A sum of $105.4 million or 61% of total debt comprising income tax, VAT and customs duties was owed to the Fiji Islands Revenue and Customs Authority.
The other significant debt was water and sewerage arrears totalling $29.6 million or 17.2% of total debt owed to the Ministry of Public Works and Infrastructure.

5.6.3 Increases in Arrears of Revenue by Departments Significant increases in the arrears of revenue for Government were noted in some Ministries and Departments as shown in Table 5.7.
TABLE 5.7: SIGNIFICANT INCREASES IN ARREARS OF REVENUE Ministry/Department Office of the Auditor General Co-operatives Customs and Exercise Fiji Islands Maritime Safety Administration Fijian Affairs, Heritage & Culture and Regional Dev.
Finance Government Supplies Health Judicial Labour and Industrial Relation Lands Crown Rent Public Works 2006 $ 361,710 59,647 3,351,704 2007 $ 424,929 62,304 3,599,648 Increase $ 63,219 2,657 247,944 % The explanations provided by the respective Ministries/Departments for the significant increases in arrears of revenue are as follows: • Office of the Auditor General – The outstanding audit fees relate to 2007 and previous years.
These are dues from government commercial companies, commercial statutory authorities, statutory bodies, municipal and provincial councils.

• Co-operatives – 99% of arrears in the Department of Co-operatives relate to debts of cooperatives that are over 5 years old and have been liquidated.

• FIMSA - Due to irregularities in updating the Light Dues registers, some paid light dues are appearing as arrears.
A follow up with the owing agencies result in conflicts since paid receipt copies have already been sent to the department.

• Fiji Islands Revenue & Customs Authority – A significant amount of the arrears were cleared during the tax amnesty period.

However, some arrears remained outstanding because of objections and some have been referred to the courts, which normally takes time.
• Health – The increase in arrears of revenue is attributed to the Fiji School of Nursing (FSN), Bulk Purchase Scheme and Ba Mission Hospital.

FSN arrears are mainly school fees paid from the Fiji National Provident Fund (FNPF) but not yet cleared by the management due to delay in update from the Ministry of Health Headquarters.
Bulk Purchase Scheme arrears are due to the long outstanding arrears of its debtors which includes governments in the South Pacific, private Whole of Government Financial Statements and Annual Appropriation Statement 43 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ pharmacies, Suva Private Hospital, etc.

; and Ba Mission Hospital arrears are amount owed by the Methodist Church of Fiji for its contribution to the operational costs of the Hospital.
• Supplies – The arrears relate to credit sales made to firms, private bookshops, training institutions, schools and Supplies Co-operatives.

• Judicial – The arrears of revenue increased due to outstanding court fees and fines which were not paid to the Department within the period specified by the courts.
The reasons for the non- collection of debt are as follows: resource constraints limiting the Police department to enforce warrants resulting in substantial increase in arrears for the department; inadequate resources/funds to assign officers/vehicles for debt collection.

• Labour & Industrial Relation– increase in arrears is due to departments failing to pay OHS service fees.
• Lands Crown Rent – arrears increased due to: inadequate follow up by the Dept; increase in the number of incoming tenants and delaying settlements of lease arrangements; interests & penalties charged on overdue accounts; appreciation of land value on re-assessment.

• Public Works – outstanding arrears include water and sewerage rates.

• MFO - relate to reimbursement for expenses of troops serving in Sinai.
• Fijian Affairs - outstanding arrears includes registration fees VKB (Vola-ni-Kawa Bula), liquor license and business (trading) license.

The implication of the increasing arrears of revenue is serious and has a huge impact on revenues and cash flows of government.

Recommendations • Ministries/Departments need to redesign their revenue recovery measures such as instituting timely reminders, time to pay arrangements and warning letters to non-complying debtors.
• The Ministry of Finance should review the credit policies of Ministries/Departments.

Ministry’s Comments The Ministries of Finance fully agrees with the recommendation and Ministries and Departments have been discouraged to provide goods on credit.

With continuous monitoring by MOF many have strengthened their recovery policies that have resulted in a significant decline of $64.9m or 27.3% in arrears in 2007.
5.6.4 Arrears of Income Tax and VAT The Fiji Islands Revenue Customs Authority (FIRCA) collects tax revenue for the Government.

The tax revenue excluding customs duties, due to be collected by the Authority comprised of $105.4 million or 61% of the total arrears of revenue owed to Government as at 31/12/07.

This represents a decrease of $65,033,083 or 38.2% over the 2006 arrears.
Whole of Government Financial Statements and Annual Appropriation Statement 44 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Accounting for Arrears of Income Tax and VAT Arrears of income tax and VAT are brought into account after assessments have been carried out by the Fiji Islands Revenue and Customs Authority on the amount of taxes due and payable to government.
However, the assessments are subject to objections from taxpayers and may lead to reviews or reassessments thus altering the tax payable amounts.

The audit of FIRCA therefore cannot effectively confirm whether the arrears in question are correct.

Trend of Income Tax and VAT Arrears for the last 10 years Figure 5.3 illustrates the growth of income tax and VAT arrears over the last 10 years.
Figure 5.3 Income Tax and VAT Arrears: 1998 - 2007 ) m $ ( t n u o m A 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Income Tax VAT Composition of Tax Arrears Income tax and VAT arrears each constitute 48% and 37% respectively of the total tax arrears.

PAYE constitutes 3% while Withholding, Land Sales and Resident Interest Withholding taxes make up the remaining 12%.
Figure 5.4: Tax Arrears Provisional 1.7% Withholding 9.9% Others 0.7% Income Tax 47.9% PAYE 2.9% VAT 37.0% Whole of Government Financial Statements and Annual Appropriation Statement 45 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Income tax arrears are owed by individuals on personal income and businesses on their profits.
VAT arrears are mainly owed by business entities and VAT registered organisations, including Government Ministries and Departments.

Of the total VAT arrears, only 0.2% or $86,119 of VAT arrears is owed by Government Ministries/Departments as most of the debts were cleared during the tax amnesty period, from 15/10/07 to 31/12/07.

The arrears include Late Lodgement Penalties (LLP) and Late Payment Penalties (LPP).

For effective disclosure, penalties and tax arrears should be reflected separately.
Recommendations • A review on the effectiveness and relevance of FIRCA’s debt policies and recovery measures • is essential to managing the substantial arrears of income tax and VAT.

The Authority should design policies and procedures so that all amounts due and payable to the government are correctly identified and recorded.

• Administrative fines, late lodgement and late payment penalties should be disclosed separately to avoid inflating the true tax arrears owed to the State.
Ministry’s Comments The Ministries of Finance fully agrees with the recommendation and FIRCA would be consulted on the need to disclose Fees and penalties separately from taxes.

5.6.5 Recovery of Debt Over 1 Year Old The longer the arrears of revenue owed to government, the more costly and difficult it becomes for Government to recover them.

Debts aged over one year totalled $144 million or 84% of Government’s total arrears as at 31/12/07.
Table 5.8 shows debts that have been outstanding for more than one year as at 31 December 2007.

TABLE 5.8: ARREARS OF REVENUE OVER 5 YEARS Ministry/Department Total Arrears Agriculture Auditor-General Communications Customs and Excise Co-operatives Fiji Islands Maritime Safety Administration Fiji Islands Revenue & Customs Authority Fijian Affairs, Culture & Heritage and Regional Development Finance Government Printing and Stationery Dept.
Government Supplies Department Arrears 2 - 5 Years Arrears 1 Year & over $ 31,934 60,450 3,136 43,436 --- 26,505 $ 4,060,579 424,929 97,918 3,599,648 62,304 118,531 $ 174,444 73,870 --- 2,995,249 463 13,542 105,407,504 42,021,310 23,152,246 Arrears Over 5 Years $ 3,815,781 96,109 --- --- 61,841 1,105 23,049,096 455,065 164,126 200,649 82,797 474,063 116,519 423,605 81,326 37,751 121,826 231,540 0 11,533 --- --- 402 529,079 8,003 % of Dept Arrears (5 years & over) 94 23 99 19 22 18 --- --- --- --- 0.1 61 65 46 Health Immigration Whole of Government Financial Statements and Annual Appropriation Statement 874,258 12,376 94,002 2,015 75,007 2,359 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry/Department Judicial Labor and Industrial Relation Lands and Survey Department Loans: Rewa Rice Ltd Meteorological Services Police Total Arrears $ 9,487,238 91,185 11,164,679 225,382 4,297,547 Arrears 1 Year & over $ 775,639 --- 2,274,242 --- 340,437 Arrears 2 - 5 Years $ 4,006,932 19,950 3,892,242 --- 2,418,017 Arrears Over 5 Years $ 4,562,309 6,213 1,052,326 225,382 1,434,502 8,131 1,274 3,258 3,565 Public Works and Infrastructure 29,636,128 2,915,999 4,908,285 17,917,073 % of Dept Arrears (5 years & over) 48 7 9 100 33 44 60 The following were noted.
100% of the arrears of revenue for the Rewa Rice Ltd are over 5 years old with Government making no effort to recover this loan.

The Ministry of Finance failed to charge interest on the outstanding amount and the arrears has therefore remained the same.

99% of the arrears of Revenue for the Co-operatives were over 5 years old.

The Ministry of Finance is yet to make an assessment on a submission made by the Department to write – off arrears over 5 years.
94% of the arrears of revenue for the Ministry of Agriculture were over 5 years old.

For some arrears, submission has been made to the Ministry of Finance for the write-off whilst for the others, the solicitors advice is being sought for recovery by legal action.

33% of arrears of revenue for the Department of Meteorology are over 5 years due to non- compliance of the Cabinet decision by AFL to reimburse the Department of Meteorology for meteorological services.
Arrears of revenue that have been outstanding for more than 5 years have a high risk of becoming irrecoverable.

In such cases, administrative and recovery action if necessary can become very costly.

Recommendations • • • The Ministry of Finance should carry out an exercise to determine debts which may have become irrecoverable due to migration, death or bankruptcy or those that have become statute-barred under the Limitations Act.
It should also impose stringent actions on Ministries/Departments which employ inefficient debt recovery procedures.

There the current administration of Ministries/Departments for recovery of debts over 5 years.

Despite the accessibility of a significant number of debtors, it appears that little action has been taken to ensure that the debt levels are reduced.
is an urgent need for accountability in Ministry’s Comments Consultations were done in the first quarter of 2008 and as a result Ministries and Department are progressing towards identifying debts which are irrecoverable and which may be considered for write off.
Whole of Government Financial Statements and Annual Appropriation Statement 47 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 6.0 EXPENDITURE 6.1 Composition of Total Expenditure in 2006 The expenditure mix for 2007 was targeted at 16% and 84% for capital and operating expenditures respectively.27 Total operating expenditures amounted to $1,429,483,249.90 or 83%, capital expenditures totalled $193,683,674.43 or 11% and VAT totalled $ 103,023,281.20 or 6%.
Figure 6.1: Composition of 2007 Expenditure Capital Expenditure 11% VAT 6% Operating Expenditure 83% When compared to 2006, total operating expenditure increased by $6.3 million or 0.4% in 2007 whilst capital expenditure decreased by $18.9 million or 8.9 %.

Also in 2007, total VAT expenditure decreased by $10.7 million or 9.4% from $113.7 million to $103.0 million.
Total expenditures for 2007 amounting to $1,726.2 million had decreased by $23.3 million or 1.3% from 2006, and incurred an overall savings of $115 million compared to over-expenditures of $9.9 million in 2006.
TABLE 6.1: BUDGET AND EXPENDITURES AT SEG LEVEL FOR 2005-2007 SEG 2007 Budget Actual $m $m Over- Expenditure/ (Savings) $m 2006 Budget Actual $m $m Over- Expenditure/ (Savings) $m 2005 Budget Actual $m $m Over- Expenditure/ (Savings) $m (4.9) (7.8) (44.2) (5.1) (31.0) (3.0) (41.6) 531.2 58.6 21.5 88.1 55.8 189.5 65.5 141.0 24.0 71.8 37.6 332.9 564.5 67.0 21.0 94.6 61.3 184.3 59.7 128.9 15.9 67.9 36.5 334.3 33.3 8.5 (0.6) 6.4 5.6 (5.2) (5.8) (12.1) (8.1) (3.9) (1.1) 1.4 467.9 57.6 20.9 76.4 53.5 187.9 53.8 123.8 28.5 79.1 37.6 338.1 467.4 57.8 20.7 77.6 52.9 182.2 49.5 120.9 24.1 68.5 37.2 328.5 (0.4) 0.2 (0.3) 1.3 (0.6) (5.8) (4.3) (2.9) (4.4) (10.6) (0.4) (9.5) 27 Budget Speech and Budget Supplement 2007 as approved by Parliament Whole of Government Financial Statements and Annual Appropriation Statement 48 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ SEG 2007 Budget Actual $m $m Over- Expenditure/ (Savings) $m 2006 Budget Actual $m $m Over- Expenditure/ (Savings) $m 2005 Budget Actual $m $m 13 Total 116.70 103.02 1,841.20 1,726.19 (13.7) (115.0) 122.1 1,739.6 113.7 1,749.5 (8.4) 9.9 110.8 1,635.9 100.8 1,588.2 Over- Expenditure/ (Savings) $m 9.9 (47.7) The savings arose from savings in operating grants & transfers by $4.9m or 3%, special expenditures by $7.8m (15%), capital construction by $44.2m (32%), capital purchase by $5.1m (30%), capital grants & transfers by $31m (26%), pensions & gratuities by $3m (8%), financing of public debt by $41.6m (9%) and VAT by $13.7m (12%).
A summary of operating and capital expenditures is shown below.
TABLE 6.2: SUMMARY OF OPERATING AND CAPITAL EXPENDITURES FOR 2005-2007 2007 Budget Actual $m 1,554.5 $m 1,524.4 286.7 201.8 Over- Expenditure/ (Savings) $m (30.1) (84.9) 2006 Budget Actual $m 1,488.0 $m 1,524.9 Over- Expenditure/ (Savings) $m 36.9 2005 Budget Actual $m 1,391.0 $m 1,362.9 251.6 224.6 (27.0) 244.9 225.3 1,841.2 1,726.2 (115.0) 1,739.6 1,749.5 9.9 1,635.9 1,588.2 Over- Expenditure/ (Savings) $m (28.1) (19.6) (47.7) Operating Capital Total 6.2 Over-Expenditures Each year the Appropriation and the Budget Estimates set out details of the appropriations that Parliament has approved for spending by each agency.
No officer may incur expenditure in excess of the agency’s appropriation without the authority of the Ministry of Finance.28 A surcharge may be imposed on an officer who is directly or indirectly responsible for expenditure which has not been properly authorised in accordance with the law.29 The Departments that overspent their revised budgets as at 31/12/07 and had not obtained prior approval of the Ministry of Finance are listed in Table 6.3: TABLE 6.3: EXCESS EXPENDITURE Ministry/Department Legislature Fiji Police Force Fiji Military Forces Prisons Original Budget $ 1,485,100 69,945,300 80,739,600 13,544,100 Virement $ --- --- --- --- Revised Budget $ 1,485,100 69,945,300 80,739,600 13,544,300 Actual Expenditure $ 1,761,386 73,589,795 126,285,114 13,589,442 Over Expenditure $ 276,286 3,644,495 45,545,514 45,142 % Over- Expenditure 18.6 5.2 56.4 0.3 The following explanations were provided by the Departments that over-spent their revised budgets.
28 Finance Instruction 2005 Part 3 Div 1 (8) 29 Finance Instruction 2005 Part 11 Section 74 (1) (a) Whole of Government Financial Statements and Annual Appropriation Statement 49 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Legislature The over-expenditure resulted from salary payments to Parliament staffs who remained in Parliament in the first quarter of 2007.

This was not budgeted for.


Fiji Police Force The establishment of the PL08 salary scale resulted in the over-expenditure.

PSC approved the establishment in 2007 but the Ministry of Finance had not provided any budget for this.

Fiji Military Forces The RFMF claimed that due to the events of 5 December 2006, lot of expenditures were incurred.

Prisons Department The over-expenditure resulted from allowance payment to the Officers due to the nature of their operation.
6.3 Coordination between FMIS and Budget Section Requests for Virements are forwarded to the Budget Division for processing.30 Once approved, the virement forms are sent to the FMIS Section for relevant shifting of funds within the financial system.31 There were cases where approved virements from the Budget Section have been cancelled at FMIS and not updated into the system.

Details are shown in Table 6.4 below: TABLE 6.4 VIREMENTS NOT PROCESSED AT FMIS Virement Not Processed at FMIS Virement No.
V04/041 V08/005 V08/006 V08/007 V08/008 Reasons Amount $ 2,000 Virement quoting the wrong account number 20,000 Duplicate of V08/001 4,000 Duplicate of V08/002 10,000 Duplicate of V08/003 30,000 Duplicate of V08/004 Cancelled virement was either a duplicate of an earlier virement that has already been posted or a wrong account number has been quoted in the virement form.
The above indicates lack of coordination between the Ministry of Finance’s Budget Section and the FMIS Section in the monitoring and posting of virements.

It also shows the laxity of officers at the Budget Section to verify details in the virement forms such as account numbers.

Lack of coordination has resulted in differences in revised budget provisions, between the FMIS, Budget and as well as in Ministries/Departments.
Recommendations • Budget Section should liaise closely with FMIS Section on any variation made to the initial budget provisions.
30 2.1 Circular No: 05/2007 of 15th of February 2007 - Amendment to the guide to preparing Virements 31 2.2 Circular No: 05/2007 of 15th of February 2007 - Amendment to the guide to preparing Virements Whole of Government Financial Statements and Annual Appropriation Statement 50 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ • Budget should periodically reconcile the revised budget provisions in its records and the Financial Management Information System.
Any discrepancies should be adjusted immediately.

Ministry’s Comments The FMIS Unit and Budget Section have already discussed these issues regarding Virement for them to return back virement to respective agencies if virement are not fully completed (allocation) should be given in full 17 digits, wrong account number with wrong description given and also some allocations without any budget.

The FMIS Units have always informed Budget of any changes regarding virement.
Agencies should have checked the system to follow up on their approved virement.

The Office of the Auditor General should not rely entirely on FMIS on all information regarding virement.

They should update their register daily and also collect virement daily rather than waiting till the end of the year and causing delay on reconciling with FMIS and also missing out on some virement which we’ve agreed should be cancelled or returned to the respective agencies.
6.4 Drawbacks of the FMIS System Reconciliation of the expenditures of the government has highlighted the following issues in the Financial Management Information System (FMIS).

(1) Virements not clearly identified in the System Journal ID’s are used for virement postings into the System.

Some virements were posted into the system using the alphabets (eg X, Q, SS, HA1 etc) as their journal ID’s whilst others were posted using a number assigned by the Budget Division.
Also some virement postings had only one entry and its corresponding entry was not updated into the system.

As a result, reconciling the expenditures to the system was difficult and time consuming.

(2) Negative and Non-Budgeted Expenditures.

For some Ministries/Departments the FMIS General Ledger reflected negative expenditures in 2007.

Furthermore, there were instances where expenditures were incurred, for which no budget allocations was provided.
The Ministry of Finance revealed that the Accounting Heads of various Ministries/Departments were not vigilant in checking and updating their monthly reconciliations promptly and identify and rectify the any discrepancies.

The FMIS is not able to stop the postings that resulted in negative expenditures and allowing expenditures which does not have a budget allocation.
(3) Batch Hitting the General Ledger Late A Batch 416378 which was scheduled by Ministry of Works on 19 January 2008, was not reflected into the general Ledger until 25 September 2008, after the audit checks of the Ministries expenditure to the General Ledger.

The total value of the Batch was $330,028.


Whole of Government Financial Statements and Annual Appropriation Statement 51 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ The FMIS Section could not provide explanations as to why Batch 416378 was not reflected immediately in the General Ledger after its scheduling.

Refer Appendix 5 for details.


Recommendations: • The FMIS Section should check that the system is capable of preventing postings of non budgeted expenses and negative expenditures as and when it arises.

• The Ministries/Departments Accounting Heads should reconcile their accounts monthly and rectify any anomalies promptly.

Ministry’s Comments There are 2 types of posting into the GL Systems.
One is by using SMARTLINK where we upload the virement by using numbers assigned by the Budget Division and another one by using GL system (GL220) where one can manually insert number (eg a,b) as long as one knows what to schedule in the system.

7.0 BORROWING FUND The Minister for Finance is authorised under Section 59 of the Finance Management Act (2004) to raise locally or from abroad loans, overdrafts or short term advances for the purposes of the Government.
These loans and advances are recorded in the accounts as receipts from government borrowings.

Public debt in 2007 totalled $2,734,471,967 and comprised of domestic loans of $2,196,208,150 or 80% of total debt; overseas loans of $397,103,384 or 15%; and Treasury Bills $141,160,433 or 5%.

These are illustrated in Figure 7.1.


Figure 7.1 Composition of Public Debt in 2007 Overseas Loans 15% Treasury Bills 5% Domestic Loans 80% The government also receives short term advances from the Reserve Bank of Fiji (RBF) referred to as Ways and Means.

The advances are raised to meet immediate cash needs of government and are cleared within a day.

During the year, government borrowed a sum of $260,200,000 from RBF through this facility and all were cleared within the year.
Whole of Government Financial Statements and Annual Appropriation Statement 52 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 7.1 Trends in Government Borrowing by Category The total Government borrowings outstanding at the end of the year and the composition over the last 15 years is summarised in Table 7.1.
TABLE 7.1: GOVERNMENT OUTSTANDING BORROWINGS (1993 – 2007) Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Domestic Bond $ 610,589,127 728,312,887 780,223,793 922,468,507 1,115,092,450 1,016,273,250 1,046,595,650 1,158,595,650 1,302,595,650 1,501,095,650 1,682,718,650 1,986,515,650 2,121,422,650 2,300,672,650 2,196,208,150 % of Total Borrowing 66 74 78 81 80 78 76 81 77 80 79 87 87 80 80 Treasury Bills $ 122,286,006 63,674,429 27,018,653 20,232,908 40,527,802 43,790,072 117,231,671 72,449,838 176,604,613 196,432,453 276,925,838 126,987,822 136,018,387 141,311,687 141,160,433 % of Total 13 7 3 2 3 3 9 5 10 10 13 6 6 5 5 Overseas Loan $ 188,807,050 187,132,643 188,292,993 187,526,025 243,748,816 245,557,713 206,036,450 207,697,167 206,889,315 193,505,879 174,125,752 168,665,379 164,050,924 416,729,200 397,103,384 % of Total Borrowing 21 19 19 17 17 19 15 14 12 10 8 7 7 15 15 Total $ 921,682,183 979,119,959 995,535,439 1,130,227,440 1,399,369,068 1,305,621,035 1,369,863,771 1,438,742,655 1,686,089,578 1,891,033,982 2,133,770,240 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 Government bonds mature between 3 to 20 years whilst the term of Treasury Bills ranges between 14 days to 182 days.
Over the last 15 years overseas loans constituted on average 14% of the borrowings.

A graphical representation of the outstanding Government borrowings position is provided in Figure 7.2.
Figure 7.2 Government Borrowings Outstanding (1993 - 2007) Treasury Bills Overseas Loans Domestic Loans Total Borrowings ) m $ ( t n u o m A 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2000 Years Government borrowings decreased by 4% in 2007 compared to 2006 because sufficient borrowing funds were raised in 2006, to cover the 2007 budget deficit.
Figure 7.3 shows the relationship between actual revenues and expenditures over the last 15 years.
Whole of Government Financial Statements and Annual Appropriation Statement 53 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.3 Revenue vs Expenditure ) m $ ( t n u o m A 1800 1600 1400 1200 1000 800 600 400 200 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Revenue Expenditure Figure 7.3 reveals that government expenditure has exceeded revenue over the last 15 years.
The excess of government expenditure over revenue is reflected in Figure 7.4.32 Figure 7.4 Deficit to be Financed from Borrowings. )

m $ ( t n u o m A 400,000,000 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Government has not been successful in increasing its revenues while at the same time reduce its expenditures.
As a result it has to rely on borrowings to deliver services to the public.

There is a need for the Government to achieve high levels of growth without heavy reliance on borrowings and this may be achieved by: • • • increasing exports (or decreasing import); encouraging domestic savings to finance investments; or implementing cost cutting measures to reduce operating expenditures.
7.2 Borrowings over the 15 Year Period The composition of the Government’s borrowings over the last 15 years is summarised in Table 7.2.

32 The significant reduction in government deficit in 1998 was due to the sale of some investments in companies..
Whole of Government Financial Statements and Annual Appropriation Statement 54 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 7.2: ADDITIONAL BORROWINGS PER YEAR 1993 – 2007 Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Domestic Bonds % Amount Change $’000 54 95,500.0 73 165,560.2 (39) 101,000.0 91 193,000.0 36 262,303.0 (60) 105,700.5 76 186,000.0 13 210,002.4 9 229,000.9 31 299,000.0 (3) 291,000.0 54 449,200.0 (29) 319,965.0 11 356,750.0 (72) 100,527.5 Overseas Loans % Change 1 144 (31) (21) (48) 54 (56) 143 (32) 156 10 (68) (7) 3178 (94) Amount $’000 13,014.6 31,789.5 22,084.8 17,531.3 9,140.9 14,117.6 6,171.5 14,997.6 10,247.0 26,196.7 28,745.3 9,267.7 8,641.3 283,258.7 18,326.5 Treasury Bills % Change 83 (48) (58) (25) 100 8 168 (38) 144 11 41 (54) 7 4 (0.1) Amount $’000 122,286.0 63,674.4 27,018.7 20,232.9 40,527.8 43,790.1 117,231.7 72,449.8 176,604.6 196,432.5 276,925.8 126,987.8 136,018.4 141,311.7 141,160.4 Total Amount $’000 230,800.6 261,024.1 150,103.5 230,764.2 311,971.7 163,608.2 309,403.2 297,449.8 415,852.5 521,629.2 596,671.1 585,455.5 464,624.7 781,320.4 260,014.4 % Change 63 (13) (42) 54 35 (48) 89 (4) 40 25 14 (2) (21) 68 (67) The Government’s financing needs were largely met from domestic borrowings.
Government borrowings in 2007 totalled $260,014,482 of which $100,527,500 or 39% was through domestic bonds, $141,160,433 or 54% treasury bills and $18,326,549 or 7% in overseas loans.

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

The terms and conditions of the loans are stipulated in the loan agreements between the Government of Fiji and the lending agencies.
The repayment of the loans of the Government of Fiji over the past 15 years is presented in Table 7.3: TABLE 7.3: REPAYMENT OF LOANS PER YEAR 1993 – 2007 Year Domestic Bonds Overseas Loans Treasury Bills Interest Principal $ $ Principal $ 23,822,557 22,841,404 26,166,844 19,669,542 15,760,301 24,273,114 36,130,378 33,342,934 20,294,173 20,772,240 16,265,941 11,173,546 12,721,412 13,459,979 17,126,498 Interest $ 14,044,643 13,344,881 13,582,512 11,170,572 10,184,128 12,209,299 12,958,164 11,404,967 9,755,046 9,297,644 7,150,813 6,114,485 5,473,517 5,737,600 22,201,747 Interest Principal $ $ Whole of Government Financial Statements and Annual Appropriation Statement 55 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Principal payments for 2006 on government borrowings totalled $908,158,986 whilst interest payments amounted to $180,738,792.
TABLE 7.4: LOANS AND INTEREST REPAYMENTS IN 2007 Description Domestic Bonds Overseas Loans Treasury Bills Principal Repayment $ 204,992,000 17,126,498 686,040,488 Interest Repayment $ 148,023,033 22,201,747 10,514,012 Total 908,158,986 180,738,792 The interest on domestic loans for 2007 was $148,023,033 compared to $22,201,747 for overseas loans and $10,514,012 for treasury bills.
The interest rate on domestic borrowings ranged from 2% to 13.6% whilst interest rates for overseas loans ranged from 1% to 10.3% with some overseas loans being interest free.

7.4 Domestic Loans The total domestic loans as at 31/12/07 stood at $2,196,208,150 and this accounts for 80% of the total Government borrowings.

Table 7.5 shows the amounts that are owed by the government of Fiji to bond holders.
TABLE 7.5: COMPOSITION OF OUTSTANDING GOVERNMENT BONDS Bond Holder Amount $ % of Outstanding Debt FNPF Insurance Commercial Banks RBF Trust Fund Unit Trust of Fiji Credit Corporation Home Finance Merchant Finance & Investment Ltd Others Total 1,607,812,300 201,400,200 87,552,000 162,116,900 34,074,200 28,122,400 2,400,000 10,950,000 3,000,000 58,780,150 2,196,208,150 73.0 9.0 4.0 7.0 2.0 1.3 0.1 0.5 0.1 3.0 100 Fiji National Provident Fund held 73% of the bonds totalling $1,607,812,300 as at 31/12/07; Insurance Companies 9%; Commercial Banks 4%; RBF 7%; the remaining 7% of the bonds are held by the Unit Trust of Fiji, Merchant Bank of Fiji, Credit Corporation and Home Finance.
The composition of outstanding government bonds is shown in Figure 7.5.

Whole of Government Financial Statements and Annual Appropriation Statement 56 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.5 Composition of Outstanding Bonds as at 31/12/07 RBF 7% Others 7% Commercial Banks 4% Insurance 9% FNPF 73% During the year the Government had borrowed $100,527,500 through the issue of domestic bonds to the public.
Table 7.6 shows the holders of these bonds.

TABLE 7.6: BONDS PURCHASED IN 2007 Summary of Bondholders Commercial Banks FNPF Insurance Companies Others Total Amount $ 8,750,000 75,340,000 13,730,000 2,707,500 100,527,500 A total of $75,340,000 or 75% of the Government bonds issued in 2007 were purchased by the FNPF, 14% by insurance companies, 9% by commercial banks, whilst the remaining 3% was purchased by individuals, trusts, Home Finance Company and others.

This is reflected in Figure 7.6.
Figure 7.6 Composition of Government Bond Holders for Bonds Issued in 2007 Others 3% Commercial Banks 9% Insurance Companies 14% FNPF 75% Whole of Government Financial Statements and Annual Appropriation Statement 57 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 7.4.1 Outstanding Domestic Loans & Interest Payments Details of outstanding loans over the past 15 years with the total interest paid and budgetary provisions is shown in Table 7.7.
Interest payments on bonds are made every six months.
TABLE 7.7: DOMESTIC LOANS OUTSTANDING, INTEREST PAID AND BUDGETARY PROVISIONS Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Domestic Loans $m 610.6 728.3 780.2 922.5 1,115.1 1,016.3 1,046.6 1,158.6 1,302.6 1,501.1 1,682.7 1,986.5 2,121.4 2,300.7 2,196.2 % Increase /(Decrease) 7 19 7 18 21 (9) 3 11 12 15 12 18 7 8 (5) Interest Paid $m 53.7 55.8 67.2 71.4 87.9 99.2 82.8 81.8 88.3 95.3 102.0 108.6 120.2 129.5 148.0 % Increase/ (Decrease) 4 4 20 6 23 13 (17) (1) 8 8 7 6 11 8 14 Budgetary Provision $m Variance $m 60.8 65.9 67.6 70.8 88.0 100.3 98.5 85.2 92.7 102.0 110.0 121.5 124.0 127.7 148.2 7.1 10.0 0.4 (0.6) 0.1 1.1 15.7 3.4 4.4 6.7 8.0 12.9 3.8 (1.8) 0.2 Despite the decrease in the outstanding Domestic Loans in 2007 compared to 2006, interest payment on the domestic loans has increased.
This is due to bonds issued in 2006 required six monthly payments in year 2007.

The Government had allocated $148,152,100 in the 2007 budget for interest payments.

However, actual interest payments for the year totalled $148,023,033 resulting in a savings of $129,067.

The interest expense and the principal repayments over the past 15 years are shown in Figure 7.7.

A total of 71 domestic bonds were redeemed/repaid in 2007 resulting in bond redemptions exceeding the interest payments during the year.
Figure 7.7 Bond Price and Interest Repayments on Domestic Bonds ) m $ ( t n u o m A 250 200 150 100 50 0 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2000 Year Principal Interest Whole of Government Financial Statements and Annual Appropriation Statement 58 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 7.4.2 Future Debt Obligations The principal component of Government borrowings are domestic loans which mostly comprises of Fiji Development Loans (Government Bonds).
Table 7.8 reflects the redemption schedule of these loans.

For example in 2008, a total of 72 government bonds totalling $191,215,150 will be redeemed.

TABLE 7.8: FIJI DEVELOPMENT LOANS REDEMPTION SCHEDULE Year Fully Redeemed 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2027 Total No.
of Loans 72 77 73 49 52 32 41 38 26 24 20 25 26 29 8 1 593 Amount $ 191,215,150 245,905,000 198,540,500 193,280,000 153,290,000 127,465,000 180,180,000 126,935,000 75,105,000 71,800,000 91,200,000 141,000,000 102,780,000 234,965,000 57,447,500 5,100,000 2,196,208,150 A graphical representation of the government outstanding debt that will be payable in the future years is shown in Figure 7.8.
Figure 7.8 Fiji Development Loans due for Redemption ) m $ ( t n u o m A 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2021 2022 2027 Years 7.5 Overseas Loans The overseas borrowing of Government as at 31 December 2007 was $397,103,384 which represents 15% of total borrowings.

Most of the overseas loans were obtained to finance capital projects.
Whole of Government Financial Statements and Annual Appropriation Statement 59 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 7.5.1 Yearly Overseas Borrowings Figure 7.9 shows the trend of the yearly overseas borrowings over the past 15 years.
Figure 7.9 Yearly Overseas Borrowings: 1993 - 2007 300 250 200 150 100 50 ) m $ ( t n u o m A 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year The Government had borrowed $18,326,549 in 2007 whilst loan repayments totalling $39,328,245 were made comprising $22,201,747 interest and $17,126,498 principal.

The details of the additional funds obtained by the Government under the existing loan agreements are as follows.
TABLE 7.9: OVERSEAS LOAN DISBURSEMENTS - 2007 Loan ADB Suva/Nausori Water Supply & Sewage Project Fiji Road Up-Grading Loan III Alternative Livelihood Project Total Amount $ 10,384,91933 9,289,839 181,05034 19,855,808 (a) (b) Loans in relation to the Road Upgrading Project comprised 22% of the total outstanding overseas loans.
The funds obtained for this project were to be used in improving the efficiency of the road sector through road upgrading and rehabilitation, and the management of road assets and sector resources.

Loans for Nadi/Lautoka Regional Water Supply and Suva/Nausori Water Supply & Sewage accounted for 14% of the total loans, which were mainly used for improving the water supply services in Nadi/Lautoka and Suva/Nausori.

The composition of the overseas loans is illustrated in Figure 7.10.
33 Of the $10,384,919, total loan disbursement, only $9,036,711 is cash loan.

The other $1,348,208 is accumulated interest on the loan for 2007.

34 This is non-cash loan in form of commitment and interest fees payable on the loan taken.
Whole of Government Financial Statements and Annual Appropriation Statement 60 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.10 Composition of Outstanding Overseas Loans E-Government Project 1% Alternative Livelihood Project 0.25% Global Borrowing 59% Rural Electrification 1.3% Road Upgrading 21% Others 1.5% Agriculture 1.3% Water Supply & Sewage Project 14% Investment/Export Programme 1% (c) (d) (e) (f) (h) (i) (h) Housing loan accounted for 0.4% of the outstanding overseas loans as at 31/12/07.
It was obtained to provide affordable housing to lower income group and to strengthen housing and urban sector institutions.

Rural Electrification Programme had outstanding loans of $5,419,117 or 1.4% of the overseas loans as at 31/12/07.

Under this project, 10% of the cost is met by the community and the balance is met by the government.

Investment and Export loans had outstanding balance of $4,429,158 or 1% of the overseas loans as at 31/12/07.
Alternative Livelihood Project had an outstanding balance of $1,011,013 or 0.3% of the overseas loans as at 31/12/07.

The project is facilitated through the Ministry of Agriculture with the objective to increase and diversify the livelihood opportunities for sugarcane farmers and others and reduce incidence of poverty for approximately 8,000 sugarcane farmers as well as other rural families.
The objective of the project is to: • maintain a healthy agriculture sector; • generate sustainable off-farm and self employment for those involved in sugarcane farming and other rural poor; provide access to savings and credit services in rural communities in order to facilitate livelihood activities; and, provide farm access infrastructure required to develop affected rural communities.

• • E-government Project had an outstanding balance of $4,628,250 or 1.2% of the overseas loans as at 31/12/07.
The project is being implemented with Ministry of Communications (ITC) of US$20 million with disbursements being in form of goods, technology and services to be purchased from China.

Fiji Government Global Borrowing had outstanding balance of $232,665,000 or 59% of the overseas loans as at 31/12/07.

This loan was raised through the issue of bonds in the international market facilitated by the RBF and agent JP Morgan.
Other loans of 1.5% of the overseas loans outstanding as at 31/12/07 comprised of loans obtained for the construction of jetties, airstrips, development of regional telecommunications network and electricity loans.
Whole of Government Financial Statements and Annual Appropriation Statement 61 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 7.5.2 Overseas Loans Outstanding & Interest Paid Table 7.10 provides details on the overseas loans outstanding over the past 15 years with the total interest paid each year.
TABLE 7.10: OVERSEAS LOANS OUTSTANDING, INTEREST PAID AND BUDGETARY PROVISION Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Overseas Loans $m 188.8 187.1 188.3 187.5 243.8 245.6 206.0 207.7 206.9 193.5 174.1 168.7 164.1 416.7 397.1 % Increase/ (Decrease) (7) (1) 1 0 30 1 (16) 1 0 (6) (10) (3) (3) 154 (5) Interest Paid $m 14.0 13.3 13.6 11.2 10.2 12.2 13.0 11.4 9.8 9.3 7.2 6.1 5.5 5.7 22.2 % Increase/ (Decrease) (1) (5) 2.0 (17.6) (9) 19.6 7 (12.0) 14 (5) (23) (15) (10) 4 289 Budgetary Provision $m Variance $m In 2007 the outstanding overseas loans decreased by 5% compared to 2006.
Interest payments on overseas loans during the year totalled $22,201,747 resulting in a saving of $1,236,653.

The principal and interest payments over the last 15 years are illustrated in Figure 7.11.
Figure 7.11 Interest Payments vs. Overseas Loan Outstanding Principal Repayments Interest ) m $ ( t n u o m A 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1993 1994 1995 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year 7.5.3 Revaluation of Overseas Loans Overseas loans are revalued each year by the RBF using the exchange rate as at 31/12/07.

Table 7.11 outlines the amounts attributed to overseas loans due to revaluation over a 15 year period.
These in turn has an effect on public debt i.e.

an increased revaluation increases the debt and vice versa.
Whole of Government Financial Statements and Annual Appropriation Statement 62 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 7.11: REVALUATION OF OVERSEAS LOANS & EXCHANGE GAINS/LOSS Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Revaluation Increase/(Decrease) $ 3,944,772 10,606,630 5,242,345 5,533,671 62,842,240 11,964,370 9,068,963 (19,589,702) (9,239,298) (18,905,125) (31,859,534) (3,554,545) (534,342) (17,120,505) (21,844,864) Overseas Loans $ 188,807,050 187,132,643 188,292,993 187,526,025 243,748,816 245,557,713 206,036,450 207,697,167 206,889,315 193,505,881 174,125,752 168,665,379 164,050,924 416,729,200 397,103,384 Exchange (Gain)/Loss as a % of Overseas Loans 2 6 3 3 26 5 4 (9) (4) (10) (18) (2) (0.3) (4.1) (5.5) A downward revaluation of $21,844,864 or 6% of the overseas loans was noted for 2007.
7.6 Treasury Bills The Government through the RBF floats treasury bills to raise funds in the domestic market to meet its short term needs.

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

During the year the government raised $692,472,750 in treasury bills of which $685,889,234 constituted net borrowings by the government whilst $6,583,516 represented discount, as summarised in Table 7.12.
Treasury bills raised in 2006 and matured in 2007 amounted to $141,311,687 of which $4,370,063 relate to interest.
TABLE 7.12: TREASURY BILL HOLDERS FOR BILLS ISSUED IN 2007 Bank Commercial Banks FNPF Others Total Face Value $ 592,336,250 60,019,000 40,117,500 692,472,750 % 85 9 6 100 Discount $ 5,559,016 739,305 285,195 6,583,516 % 85 11 4 100 Net Receipts $ 586,777,234 59,279,695 39,832,305 685,889,234 % 86 9 6 100 86% of the treasury bills raised were purchased by commercial banks, 9% by FNPF, and 5% others such as insurance companies, statutory bodies, individuals, etc.
Whole of Government Financial Statements and Annual Appropriation Statement 63 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.12 Composition of Treasury Bills Borrowing 2007 FNP F 9% Others 6% Co mmercial B ank 86% The treasury bills, which are issued by the Government through the RBF, have a maturity period of 14 to 182 days.

Table 7.13 details the total Treasury bills that were raised in 2007 together with their maturity dates and interest.
TABLE 7.13: MATURITY OF TREASURY BILLS ISSUED IN 2007 Maturity in Days 14 15 21 26 28 29 42 44 49 56 57 63 70 75 82 85 91 92 100 112 182 Total Treasury Bill Cost $ 8,979,989.15 4,499,482.25 11,067,871.31 2,483,723.11 108,401,871.45 499,873.46 2,078,651.96 1,972,653.08 6,892,950.04 118,200,888.17 4,996,933.39 5,004,471.59 5,771,844.89 10,253,452.26 14,024,429.63 3,998,466.34 241,064,635.17 14,983,073.21 1,959,698.91 19,845,202.42 98,909,072.08 685,889,233.87 Interest Face value $ 20,010.85 517.75 34,628.69 16,276.89 260,128.55 126.54 21,348.04 27,346.92 107,049.96 762,861.83 3,066.61 95,528.41 113,155.11 246,547.74 75,570.37 1,533.66 3,137,864.83 16,926.79 55,301.09 154,797.58 1,432,927.92 6,583,516.13 $ 9,000,000 4,500,000 11,102,500 2,500,000 108,662,000 500,000 2,100,000 2,000,000 7,000,000 118,963,750 5,000,000 5,100,000 5,885,000 10,500,000 14,100,000 4,000,000 244,202,500 15,000,000 2,015,000 20,000,000 100,342,000 692,472,750 The amount raised by the government through Treasury bills with varying maturity dates were evenly spread as shown in the pie chart in Figure 7.13.
The interest expense has been fluctuating as the maturity date increases as shown in Figure 7.14.
Whole of Government Financial Statements and Annual Appropriation Statement 64 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.14 Interest Expense Based on Maturity Dates ) 0 0 0 $ ( ' t n u o m A 3,500,000.00 3,000,000.00 2,500,000.00 2,000,000.00 1,500,000.00 1,000,000.00 500,000.00 0.00 14 15 21 26 28 29 42 44 49 56 57 63 70 75 82 85 91 92 100 112 182 Days 182 14.42% 112 2.89% 100 0.29% 92 2.18% Figure 7.13 Treasury Bill By Maturity Treasury Bills Over a 15-year Period Treasury bills issued and redeemed over the last 15 years is summarised in Table 7.14.
TABLE 7.14: TREASURY BILLS 1993 – 2007 Year 1993 1994 1995 1996 1997 1998 1999 2000 Balance Brought Forward $ 66,741,734 122,286,006 63,674,429 27,018,653 20,232,908 40,527,802 43,790,072 117,231,671 Issues Redemption Outstanding $ 433,218,279 300,782,830 152,986,308 106,952,131 106,961,439 401,201,683 353,841,599 129,129,145 $ 377,674,007 359,394,407 189,642,084 113,737,876 86,666,545 397,939,413 280,400,000 173,910,978 $ 122,286,006 63,674,429 27,018,653 20,232,908 40,527,802 43,790,072 117,231,671 72,449,838 Whole of Government Financial Statements and Annual Appropriation Statement 65 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Year 2001 2002 2003 2004 2005 2006 2007 Balance Brought Forward $ 72,449,838 176,604,613 196,432,453 276,925,838 126,987,822 136,018,388 141,311,687 Issues Redemption Outstanding $ 424,654,868 437,465,767 580,634,561 189,256,716 326,951,124 528,715,414 685,889,234 $ 320,500,093 417,637,927 500,141,176 339,194,733 317,920,558 523,422,114 686,040,488 $ 176,604,613 196,432,453 276,925,838 126,987,822 136,018,388 141,311,687 141,160,433 Treasury bills raised by Government over the last 15 years fluctuated significantly.
Similarly, the government deficits have also fluctuated over past 15 years.

The trend for Treasury bills issued, redemptions, the bills outstanding at the end of the financial year and the yearly deficit are shown in Figure 7.15.
Figure 7.15 Treasury Bills: 1993 - 2007 ) m $ ( t n u o m A 800000000 600000000 400000000 200000000 0 -200000000 -400000000 -600000000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Issues Redemption Outstanding Deficit 7.6.2 Treasury Bills Management The Treasury Bills are short-term financial instruments, used by the Ministry of Finance to cover shortfalls during the year.
The analysis of budgeted revenue and expenditure as provided in the Budget, and the Treasury Bills for the year is as follows.
TABLE 7.15: REVENUE VARIANCE VS. TREASURY BILLS RAISED Revenues 1995 $m 1996 $m 1997 $m 1998 $m 1999 $m 2000 $m 2001 $m 2002 $m 2003 $m 2004 $m 2005 $m 2006 $m 2007 $m Budgeted Revenue Operating Receipts & Investing 693.8 737.3 765.4 1006.8 999.0 816.3 951.7 1,011.8 1,115.8 1,149.7 1,257.4 1,346.6 1,430.0 Whole of Government Financial Statements and Annual Appropriation Statement 66 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Revenues 1995 $m 1996 $m 1997 $m 1998 $m 1999 $m 2000 $m 2001 $m 2002 $m 2003 $m 2004 $m 2005 $m 2006 $m 2007 $m Loan Receipts Total Actual Revenue Operating Receipts & Investing Loan Receipts Total Revenue Variance Treasury Bills as at 31/12/07 Excess (65.1) 176.6 13.3 196.4 (45.0) 276.9 23.5 127.0 (76.9) 136.0 294.1 141.3 [290.8] 141.2 40.3 80.4 78.6 178.2 122.7 167.0 111.5 209.7 232.0 150.5 59.1 435.4 (149.6) The operating and investment receipts should pay for operational costs of Government which include SEGs 1 - 7, 11 & 12 and capital development programs.
Treasury bills are raised to cover operational deficits provided that they are no more than the estimated operating and investing receipts to be collected during the year.

The actual revenue collections in 2007 was less than the budgeted revenue by $332,572,109.

Government revenue and loans from the domestic and the overseas market were insufficient to meet the actual expenditure, hence treasury bills amounting to $685,889,234 in 2007, an increase by 30% from 2006.
Even though treasury bills were raised during the year, it was not sufficient to cover the shortfall in the revenue collected.

This would have been avoided through efficient cash management and revenue forecasting.

When treasury bills are raised for specific purposes/projects, details should be shown with respect to the purpose and expected benefit of the projects.
Wherever possible, information should also be provided on expected revenue sources and cash flows to finance the debt, and expected life of the projects.

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

The Ways and Means are replenished by Government during the year and are therefore not reflected as part of borrowings.
An analysis of Ways and Means balances for the past 13 years is illustrated in Figure 7.16.
Whole of Government Financial Statements and Annual Appropriation Statement 67 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.16 Ways and Means Balances: 1994 - 2007 ) m $ ( t n u o m A 400 350 300 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year The Government borrowed $260,200,000 at a cost of $303,001 (interest) from RBF through this advance facility during the year, which was a decrease of $113,000,000 or 30% from 2006.
7.8 Flexibility Flexibility is an indicator of the degree a Government can increase its financial resources or revenue to respond to increasing financial commitments either by expanding the revenue or increasing its debt burden.

Table 7.16 contains data for the total revenue and the debt repayments of Government for a period of 15 years.

The revenue derived by the Government includes a significant portion which is derived from loans.
The revenue data included in the analysis of flexibility does include the loan component.
TABLE 7.16: COMPARISON OF REVENUE AND DEBT REPAYMENTS Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Revenue $ 654,086,766 697,810,716 718,904,280 729,884,343 803,460,047 1,141,199,759 1,004,505,216 1,135,964,892 1,139,754,743 1,363,992,433 1,386,009,960 1,634,663,320 1,550,489,828 2,035,207,842 1,510,117,312 Repayments $ 526,141,237 499,270,219 345,653,758 264,390,747 266,053,922 764,384,830 567,251,420 387,869,552 528,250,835 647,020,349 737,597,477 617,152,850 646,463,603 857,682,649 1,091,633,056 Interest Bite % 81 72 49 36 33 67 56 34 46 47 53 38 42 42 72 The Interest Bite represents the percentage of debt repayment comprising the principal and interest components of the domestic and overseas loans as well as the treasury bills redeemed.
Whole of Government Financial Statements and Annual Appropriation Statement 68 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.17 Percentage of Debt Repayments to Total Revenue e g a t n e c r e P 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Revenue for Government Programs "Interest Bite" 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years In 2007, the flexibility measure was 72% indicating that the total debt repayment was equivalent to 72% of the revenue received by the Government during the year.
Hence, only 28% of revenues collected were available for government programs.

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

A measure of vulnerability is the comparison of overseas loans to the total Government debt.

Table 7.17 compares overseas loans to total Government Borrowings for a period of 15 years.
TABLE 7.17: COMPARISON OF OVERSEAS BORROWINGS AND TOTAL BORROWINGS Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Outstanding Overseas Loans $ 188,807,050 187,132,643 188,292,993 187,526,025 243,748,816 245,557,713 206,036,450 207,697,167 206,889,315 193,505,879 174,125,752 168,665,379 164,050,924 416,729,200 397,103,384 Total Borrowings $ 921,682,183 979,119,959 995,535,439 1,130,227,440 1,399,369,068 1,305,621,035 1,369,863,771 1,438,742,654 1,686,089,578 1,891,033,984 2,133,770,240 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 % 20 19 19 17 17 19 15 14 12 10 8 7 7 15 15 Whole of Government Financial Statements and Annual Appropriation Statement 69 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ In 2007, overseas loans made up 15% of outstanding government borrowings, same as 2006.
Figure 7.18 Overseas Loan Percentage to Total Government Debt e g a t n e c r e P 0.2 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years The overall trend indicates less reliance on overseas borrowings over the years, despite the high overseas borrowings in 2006.

Another measure of vulnerability is the comparison of overseas loans to GDP.

Table 7.18 compares overseas loans to GDP for a period of 10 years.
TABLE 7.18: COMPARISON OF OVERSEAS BORROWINGS AND GDP Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Overseas Loans $ 243,748,816 245,557,713 206,036,450 207,697,167 206,889,315 193,505,879 174,125,752 168,665,379 164,050,924 416,729,200 397,103,384 Nominal GDP $ 2,571,130,000 2,792,526,000 3,238,463,000 3,049,124,000 3,199,548,000 3,442,905,000 4,325,420,000 4,539,000,000 5,010,000,000 5,431,720,200+ 5,566,057,664+ % of Overseas Loans/GDP 9 9 6 7 6 6 4 4 3 8 7 + Provisional Estimate Source: Reserve Bank of Fiji Figure 7.19 shows that the percentage of the overseas debt to GDP decreased by 1% in 2007, and this is a reflection of the nation’s capability to meet its external debt obligations.
Whole of Government Financial Statements and Annual Appropriation Statement 70 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.19 Overseas Borrowings as a % of GDP e g a t n e c r e P 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years Moreover, the comparison of the Domestic debt to GDP is another measure of vulnerability.

Table 7.19 compares Domestic loans to GDP for a period of 10 years.
TABLE 7.19: COMPARISON OF DOMESTIC BORROWINGS AND GDP Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Domestic Loans $ 1,115,092,450 1,016,273,250 1,046,595,650 1,158,595,650 1,302,595,650 1,501,095,650 1,682,718,650 1,986,515,650 2,121,422,650 2,300,672,650 2,196,208,150 GDP $ 2,571,130,000 2,792,526,000 3,238,463,000 3,049,124,000 3,199,548,000 3,442,905,000 4,325,420,000 4,539,000,000 5,010,000,000 5,431,720,200+ 5,566,057,664+ % of Domestic Loans/GDP 43 36 32 38 41 44 39 44 42 42 40 + Provisional Estimate Source: Reserve Bank of Fiji In 2007, the Domestic Loans as a percentage of GDP decreased by 2%.
Figure 7.20 Domestic Borrowings as a % of GDP e g a t n e c r e P 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years Whole of Government Financial Statements and Annual Appropriation Statement 71 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.20 shows that the Domestic Borrowing as a percentage of the GDP has been fluctuating over the years.
Although it indicates the nation’s capability to meet its internal debt obligations when due, the government needs to control its domestic loans.

Table 7.20 shows the comparison between Tax Revenue and the GDP.
TABLE 7.20: COMPARISON OF TAX REVENUE AND GDP Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Tax Revenue $ 664,763,763 723,819,630 788,503,978 713,404,155 740,454,379 789,721,816 929,900,966 1,033,319,644 1,065,808,942 1,227,220,772 1,230,363,366 GDP $ 2,571,130,000 2,792,526,000 3,238,463,000 3,049,124,000 3,199,548,000 3,442,905,000 4,325,420,000 4,539,000,000 5,010,000,000 5,431,720,200+ 5,566,057,664+ % of Tax Revenue/GDP 26 26 24 23 23 23 21 23 21 23 22 + Provisional Estimate Source: Reserve Bank of Fiji Figure 7.21 shows that the Tax Revenue as a percentage of GDP over the last 10 years, and for 2007 it was 22%.
Figure 7.21 Tax Revenue as a % of GDP e g a t n e c r e P 30% 25% 20% 15% 10% 5% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years Another measure of vulnerability is the comparison of tax revenue to debt.

Table 7.21 compares tax revenue to debt for a period of 10 years.
TABLE 7.21: COMPARISON OF TAX REVENUE AND DEBT Year 1997 1998 1999 Tax Revenue $ 664,763,763 723,819,630 788,503,978 Debt $ 1,399,369,068 1,305,621,035 1,369,863,771 % of Tax Revenue/Debt 48 55 58 Whole of Government Financial Statements and Annual Appropriation Statement 72 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Year Tax Revenue $ 2000 713,404,155 2001 740,454,379 2002 789,721,816 2003 929,900,966 2004 1,033,319,644 2005 1,065,808,942 1,227,220,772 2006 2007 1,230,363,366 Debt $ 1,438,742,654 1,686,089,577 1,891,033,982 2,133,770,240 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 % of Tax Revenue/Debt 50 44 42 44 45 44 43 45 The tax revenue as a percentage of debt has been fairly constant over the last 10 years.
It shows that 45% of the debt can be met from tax revenue.

Figure 7.22 Tax Revenue as a % of Debt e g a t n e c r e P 60% 50% 40% 30% 20% 10% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years In 2007, tax revenue as a percentage of debt increased by 2% compared to 2006.

Moreover, Table 7.22 shows the comparison of Government deficit to GDP.
TABLE 7.22: COMPARISON OF GOVERNMENT DEFICIT AND GDP Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Gross Deficit $ 278,550,632 89,079,211 199,550,066 230,607,446 339,658,246 334,367,718 380,275,486 302,912,124 366,334,029 346,769,675 334,935,764 GDP $ 2,571,130,000 2,792,526,000 3,238,463,000 3,049,124,000 3,199,548,000 3,442,905,000 4,325,420,000 4,539,000,000 5,010,000,000 5,431,720,200+ 5,566,057,664+ % of Gross Deficit/GDP 11 3 6 8 11 10 9 7 7 6 6 + Provisional Estimate Source: Reserve Bank of Fiji Whole of Government Financial Statements and Annual Appropriation Statement 73 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.23 Gross Deficit as a % of GDP e g a t n e c r e P 12% 10% 8% 6% 4% 2% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years In 2007, the gross deficit as a percentage of the GDP remained unchanged compared to 2006.
7.10 Sustainability Sustainability is defined as the ability of Government to maintain existing programs and meet existing creditor requirements without increasing the burden on the economy.

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

The total Government debt as a percentage of GDP as at 31/12/07 was 49% compared to 53% in 2006, indicating unfavourable sustainability in debt relative to the production of goods and services.
TABLE 7.23: TOTAL GOVERNMENT DEBT TO GROSS DOMESTIC PRODUCT Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Government Debt $ 1,399,369,068 1,305,621,035 1,369,863,771 1,438,742,654 1,686,089,577 1,891,033,982 2,133,770,240 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 + Provisional Estimate Source: Reserve Bank of Fiji % of Growth GDP % of Growth $ 2,571,130,000 2,792,526,000 3,238,463,000 3,049,124,000 3,199,548,000 3,442,905,000 4,325,420,000 4,539,000,000 5,010,000,000 5,431,720,200* 5,566,057,664 24 (7) 5 5 17 12 13 7 6 18 (4) 0 9 16 (6) 5 8 26 5 10 8 2 Public Debt as a % of GDP 54 47 42 47 53 55 49 50 48 53 49 Table 7.27 shows that the economy is increasing faster than the Government debt indicating that the debt burden of individuals is decreasing.
In 2007 the national debt decreased by 4% whereas the GDP increased by 2% compared to 2006.
Whole of Government Financial Statements and Annual Appropriation Statement 74 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ e g a t n e c r e P 60% 50% 40% 30% 20% 10% 0% 1997 Figure 7.24 Government Borrowings as a % of GDP 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years The Government borrowings as a percentage of GDP decreased by 4% in 2007 compared to 2006.

Total Government borrowings stood at 49% of the GDP for 2007.
The Government needs to sustain adequate resources to fund existing programs, commence new projects as well as meet existing creditor obligations in order to maintain the level of borrowings at a sustainable level.

7.11 Public Debt per Capita to GDP per Capita Ratio The ratio of Income per Capita to Public Debt per Capita measures the average debt burden of each person in the population compared to the average per capita income.
The ratio indicates the ability of the income earning population to service the debt obligations of Government.

Table 7.24 outlines the Gross Domestic Product per Capita and National Income per Capita over the 10 year period.
TABLE 7.24: GROSS DOMESTIC PRODUCT PER CAPITA AND NATIONAL INCOME PER CAPITA Debt/Capita $ Year Estimated Population Outstanding Debt $ 1,399,369,068 1,305,621,035 1,369,863,771 1,438,742,654 1,686,089,577 1,891,033,982 2,133,770,240 2,282,168,851 2,421,491,962 2,858,713,537 2,734,471,967 * The GNP for years 2002 to 2006 is not available.
+ These are provisional figures provided by Bureau of Statistics 788,918 797,643 806,212 810,421 815,013 825,478 831,343+ 838,317+ 846,085+ 853,445+ 837,271+ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1,774 1,637 1,699 1,775 2,069 2,291 2,567 2,722 2,862 3,350 3,266 Ratio of Debt/Capita to GNP/Capita 0.53 0.47 0.44 0.47 0.51 GNP/Capita $ 3,325 3,522 3,892 3,807 4,064 * * * * * The lower the ratio of debt/capita to income/capita, the favourable it is as it is an indication that the populations’ income has not been over burdened by the Government debt.
The lower the ratio the lesser the average burden of the Government debt on the population.
Whole of Government Financial Statements and Annual Appropriation Statement 75 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Figure 7.25 Ratio of Debt per Capita to Income per Capita e g a t n e c r e P 0.6 0.5 0.4 0.3 0.2 0.1 0 1996 1997 1998 1999 2000 2001 Years The ratio as at 31/12/01 was 51% representing the average burden on the population to meet the debt obligations of Government.
8.0 LENDING FUND The Minister may, on behalf of the State, make loans of public money from the Consolidated Fund on such terms and conditions as the Minister thinks fit and whether within or outside the Fiji Islands.35 Loans made by Government and outstanding as at 31/12/07 totalled $114,064,454, a decrease of $6,230,023 or 5% compared to 2006.
Repayments received in 2007 totalled $6,628,478 whilst additional loans given and interest capitalised in 2007 was $590,967.36 Lending fund account balances for the past five years is shown in Table 8.1.
TABLE 8.1: LENDING FUND BALANCES TREND Year 2003 2004 2005 2006 2007 Balance Outstanding $ 118,034,133 117,905,093 118,656,991 120,294,477 114,064,454 8.1 Loans Convertible to Grants Parliament had passed resolutions between 1995 and 2004 that approved the conversion of loans owed by the Native Land Development Corporation, the Fijian Affairs Board, and the Fiji Sugar Corporation into grants.
Despite being highlighted in previous years’ audit memorandums, the three entities are still disclosed in the Detailed Statement of Loans, as owing money to Government as at 31/12/07.

Refer to Table 8.2 below.
35 Section 61 of Finance Management Act 2004 36 Appendix 16, 2007 Whole of Government Financial Statements and Annual Appropriation Statement 76 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 8.2 LOANS CONVERTED TO GRANT Entity Date of Resolution NLDC FAB FSC Total 31/07/95 08/12/01 28/09/04 Amount $ 2,187,372 20,000,000 34,000,000 56,187,372 While it is understood that these debts would require an appropriation to write them off from Government’s ledgers, the Ministry of Finance has taken some time to take actions.
The inaction by the Ministry in converting these loans into grants as approved by Parliament has inflated debts owed to Government as at 31/12/07 by $56.2 million.

Recommendation The Ministry of Finance should take effective actions.
Ministry’s Comments The Ministry of Finance has taken are positive steps in gradually addressing these significant loans starting with the 2009 Budget 8.2 Dormant Loan Accounts All advances made by the Government are recorded in the Lending Fund Account.37 In the Detailed Statement of Loans made by Government as at 31/12/07 were 3 dormant loans for which no additional advances were made, nor interest capitalised or recoveries made over a considerable period of time.
The recovery of these loans is uncertain due to the lapse in time.

Table 8.3 shows details of these dormant loan accounts.
TABLE 8.3: DORMANT LOANS Borrowing Institution Amount Lent/ Appropriated Native Land Trust Board Production Loan to Farmers Timber Exporters $ 1,199,701 72,000 1,000,000 Balance Outstanding as at 31/12/07 $ 575,617 16,288 795,034 Interest Rate % Year Lent 6 1 Free 1979 – 1980 1990 1983 – 1984 Although raised in previous audit memorandums, the Ministry has not taken any action to deal with these inactive or dormant loans.
Recommendations The Ministry of Finance should review these loan accounts, establish their recoverability and identify options to recover them.
37 Chapter 17 of the Ministry of Finance Accounting Training Manual Whole of Government Financial Statements and Annual Appropriation Statement 77 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry’s Comments Agree with recommendations and MOF would seriously review the 1979 and 1983 loans and outcomes of the review would be reflected in the 2009 accounts.
8.3 Fiji Sports Council Any sum payable by the Government in fulfilment of a guarantee is taken to be a loan to the entity whose financial liability has been guaranteed.38 However, loans of public money under Lending Fund must be evidenced by an instrument signed by the Minister.39 The Fiji Sports Council’s $2,990,000 loan with the Fiji National Provident Fund in 1995 was guaranteed by Government.
The Council’s inability to honour its debt obligation with the Fiji National Provident Fund prompted the Fund to invoke the guarantor’s clause.

Government as guarantor had to settle the Fiji Sports Council’s debts on the due dates totalling $1,940,557 as at 31/12/07.

Refer to Table 8.4 below.
TABLE 8.4: PAYMENTS MADE TO FIJI SPORTS COUNCIL Date Cheque Number 27/07/01 28/06/02 28/06/02 14/08/02 14/08/02 19/02/03 15/07/05 01/02/06 25/08/06 31/01/07 31/07/07 Total 36408 575726 575729 584465 584466 FNPF acknowledged receipt 3280 173540 394691 396984 397751 Amount $ 364,033.23 124,038.79 60,384.72 115,247.69 62,951.07 178,198.76 321,870.03 178,198.76 179,236.22 178,198.76 178,198.76 1,940,556.79 Also variance of $1.9 million between the general ledger and the audit calculations for the Fiji Sports Council is illustrated in Table 8.5 TABLE 8.5: VARIANCES BETWEEN BALANCES Particulars Opening Balance Amount lent Amount Recovered Closing Balance Amount as per General Ledger $ 415,090,59.00 --- 357,434.95 57,655.61 Audit Calculation $ 1,584,159.27 356,397.52 --- 1,940,556.79 Variance $ 1,169,068.68 (356,397.52) 357,434.95 (1,882,901.18) 38 Financial management Act 2004, Section 62(5.b) 39 Financial Management Act 2004 Section 61(3) Whole of Government Financial Statements and Annual Appropriation Statement 78 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ The recovery of $357,435 posted in the general ledger could not be verified to the receipts.
Furthermore, the loan agreement between the Government and the Fiji Sports Council is yet to be drawn.

The non disclosure of the actual debts honoured by government understates the monies lent and which may in time be inadvertently abandoned.

Recommendations • All debt obligations of the Fiji Sports Council honoured by Government should be disclosed in the Lending Fund Account so that monies lent by Government and yet to be recovered are recognised and disclosed correctly.
• To protect Government’s interests, loan agreements setting the obligations of both parties should be drawn.

Ministry’s Comments The $357,434.95 does not represent the recovery but represents the amount paid by Government in 2007 towards the loan repayment of Fiji Sports Council.

This was explained to the auditor during the audit and can be substantiated from the last 2 payment from Table 8.4.
Loan agreement would be finalised once the Legal Opinion is obtained on the legality of Government demanding payments from an entity whom it had previously granted Guarantee.

8.4 Amount Drawn in Excess of Appropriation Advances made in respect of Tertiary Education and Students Loan Schemes were granted appropriations of $5,000,000 and $1,500,000.

However lending under both schemes exceeded their appropriations as at 31/12/07 by $5,863,070 and $1,946,551 respectively.

Refer to Table 8.6 for details.


TABLE 8.6: APPROPRIATIONS EXCEEDED Account Appropriation Tertiary Education Students Loan Scheme $ 5,000,000 1,500,000 Loan Outstanding as at 31/12/07 $ 10,863,070 3,446,551 Amount in excess of Appropriation $ 5,863,070 1,946,551 Percentage excess % 117.0 130.0 Amounts spent in excess of appropriations are synonymous to unauthorised expenditure and indicate a lack of monitoring not only by the administering agency but also by the Ministry of Finance which controls the funds.
Recommendation The Ministry of Finance needs to monitor the administering agencies to ensure that funds granted have been acquitted, that sufficient recoveries have been made to enable the continuity of the schemes, and that total transactions incurred are within the approved limits before releasing subsequent funding.
Whole of Government Financial Statements and Annual Appropriation Statement 79 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry’s Comments The above schemes are directly administered by the Public Service Commission.
8.5 Aging of Debtors The Minister may make loans of public money from the Consolidated Fund on such terms and conditions as the Minister thinks fit.40 Of total amount of $114.1 million, $41.5m or 36 % was lent over 10 years ago, $41.1m or 36% was lent between 5 to 10 years ago and $8.5m or 7% between 2 to 5 years.

Table 8.7 below shows the age of amounts lent by Government to various Institutions.
TABLE 8.7: AGING OF DEBTORS Institution Total 0-1 year Fiji Sugar Corporation Limited Fiji Sugar Corporation Limited Fiji Sugar Corporation Limited Fiji Sugar Corporation Limited Fiji Pine Limited – Loan 13 Fiji Pine Limited – Loan 14 Fiji Pine Limited – Loan 15 Fiji Pine Limited – Loan 16 Fiji Pine Limited – Loan 17 Fijian Affairs Board Fijian Affairs Board Fijian Affairs Board Fijian Affairs Board Fijian Affairs Board Fijian Affairs Board Fijian Affairs Board National Trading Limited Native Land Trust Board Native Land Trust Board (NLDC) Post & Telecommunication (Loan No.5) Rabi Council of Leaders Rabi Council of Leaders Viti Corporations Company Limited Advances to Ministers & Members of House of Representatives Advances to Public Officers Consumer Co-operative Societies Copra Industry for Stabilisation of Earnings Private Students Production Loan to Farmers Corporation $ 8,500,000 8,500,000 8,500,000 8,500,000 4,750,000 2,200,000 2,200,000 2,200,000 650,000 20,000,000 2,000,000 1,500,000 1,500,000 1,500,000 1,500,000 4,658,924 2,900,000 575,617 820,000 218,656 900,000 700,000 3,576,667 247,306 $ --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 247,306 35,522 109,111 12,066,903 35,522 109,111 12,066,903 (3,823,125) 16,288 (3,823,125) --- 1-2 Years $ --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 2-5 Years $ --- --- --- 8,500,000 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 5 – 10 Years $ 8,500,000 8,500,000 8,500,000 --- --- --- --- --- --- --- --- --- 1,500,000 1,500,000 1,500,000 4,658,924 2,900,000 --- --- --- --- --- 3,576,667 --- --- --- --- --- --- 40 Clause 61.s(1) Financial Management Act 2004 Whole of Government Financial Statements and Annual Appropriation Statement 10 Years & Over $ --- --- --- --- 4,750,000 2,200,000 2,200,000 2,200,000 650,000 20,000,000 2,000,000 1,500,000 --- --- --- --- --- 575,617 820,000 218,656 900,000 700,000
 --- --- --- --- --- --- 16,288 80 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Institution Total 0-1 year Student Loan Scheme Tertiary Education Timber Exporters Fiji Sports Council Rewa Rice Limited Fiji Development Bank Total $ 3,446,551 10,863,070 795,034 57,656 1,900,000 275 114,064,454 $ 3,446,551 10,863,070 --- --- --- 275 22,945,613 1-2 Years $ --- --- --- --- --- 2-5 Years $ --- --- --- --- --- 5 – 10 Years $ --- --- --- --- --- 10 Years & Over $ --- --- 795,034 57,656 1,900,000 --- 8,500,000 41,135,591 41,483,251 Due diligence needs to be conducted prior to endorsing loans as funds are unnecessarily tied up and there is a high risk that the loans maybe irrecoverable.
The Government will stand to lose more than $91,118,842 if the recovery policy is not improved.

Recommendation The Ministry should improve on its debt and recovery policy and be stringent on defaulting institutions whose loans from Government have been stagnant for over 10 years.

Ministry’s Comments MOF notes the comments and is putting in efforts to address long outstanding loans.
8.6 Viti Corporation Limited Due to its financial difficulties, the Government and the Viti Corporation Ltd through the Public Enterprise entered into a lease agreement of the farm owned by Viti Corporation Ltd for the repayment of the $3.7 million loan for a period of 30 years at $129,000 per annum.

Loan repayments (principal and interest) from Viti Corporation Limited has not been updated in the General Ledger since 2006.

Refer to Table 8.8 for details.
TABLE 8.8: JOURNAL POSTINGS TO RECORD RECOVERY Year Recovery as per Receipt $ Principal Interest Posting in the GL (Repayments) Principal (610000) Interest (310000) 2004 2005 2006 2007 Balance b/f 123,333.32 61,666.50 123,333.32 26,667.00 123,333.32 2,833.50 5,667.00 --- --- 26,667.00 26,667.00 37,833.00 Ending Balance General Ledger 3,700,000.00 3,576,666.68 3,576,666.68 3,576,666.68 Audit 3,700,000.00 3,576,666.68 3,515,000.18 3,391,666.86 As a result of non posting of the recoveries on the term loan repayments account, Viti Corporation Limited account in the general ledger is overstated by $185,000.
Recommendation The Ministry should ensure that all recoveries receipted should immediately be posted to the general ledger to disclose accurate balances.

Whole of Government Financial Statements and Annual Appropriation Statement 81 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry’s Comments MOF agrees with recommendation and these anomalies would be rectified.
However the raising of the non postings in 2006 by OAG challenges the accuracy of the Audited and Certified accounts of Government for the year 2006 which contains balances that have should have been substantiated to the relevant years records.. 8.7 Missing Payment Vouchers In the exercise of his duties, the Auditor-General may call upon any officer for any explanation and information he may require or may authorise any officer on his behalf to conduct any enquiry, examination or audit.41 The following payment vouchers were not provided for audit verification: TABLE 8.9: MISSING PAYMENT VOUCHERS Month Account Name Account Code 01/2007 01/2007 Total Loans-Copra Industry (Punja & Sons) Loan – Copra Millers limited 1-04102-04999-620202 1-04104-04999-620205 Amount $ 15,777.70 17,657.13 33,434,.83 As a result, the general ledger balances could not be substantiated.
Also any claim of payment made by the Government would not be supported.

Recommendation The Ministry should ensure that all payment vouchers are kept properly.

Ministry’s Comments Comments are noted.

However the Payment Voucher Reference 009973 of 08/01/07 being payment made to Copra Millers for $17,657.13 was contained in a file that was produced to the Auditor during the audit verification process.
8.8 Variances in 2007 Opening Balances Recording involves keeping accurate records of what has happened, what is owned and what is owed.

These records are normally kept in terms of money but some are more statistical in nature.42 A variance of $230,346 was noted between the 2006 closing balance and the 2007 opening balance in the Lending Fund account.

Refer to Table 8.10 below for details: 41 Audit Act 7 (1) (a) & (b) 42 Ministry of Finance, Finance Manual 2005, Recording, page iv.
Whole of Government Financial Statements and Annual Appropriation Statement 82 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 8.10: VARIANCE IN 2007 OPENING BALANCE Account Post & Telecom Loan No.
5 (Under DIGS) Advances to Public Officers Total Closing Balance as at 31/12/06 $ 449,261 36,791 486,052 Opening Balance as at 01/01/07 $ Overstated/ (Understated) $ 218,656 37,050 255,706 (230,605) 259 (230,346) The above indicates the laxity of the officers responsible in not updating the general ledger, resulting in the above variances.

Recommendation The Ministry should ensure that the audited balances at the end of the financial year are carried forward as an opening balance in the following year.
Ministry’s Comments It is important to note that the 2007 Accounts and Finances balances on Lending Fund Account were based on the GL figures and therefore the variance of $230,605 between the 31/12/06 Audited balances reported in the Accounts and Finance of 2006 and 01/01/07 balance raises the issue of whether the $449,261 was extracted from the GL or may have been inputted manually without any audit verification to the GL closing balance.
The variance is the result of mis-postings in the GL system and would be rectified by MOF.

9.0 REVOLVING FUND ACCOUNT 9.1 Variances in 2007 Opening Balances Recording involves keeping accurate records of what has happened, what is owned and what is owed.

These records are normally kept in terms of money but some are more statistical in nature.43 A variance of $14,253,744 was noted between the 2006 closing balance and the 2007 opening balance of the RFA Miscellaneous account.
Refer to Table 9.1 below for details: TABLE 9.1: VARIANCE IN 2007 OPENING BALANCE Account Title Cabinet Office Attorney - General's Chamber Finance Trade and Commerce Mineral Resources Fijian Affairs Health Home Affairs Judicial Lands 2006 Closing Balance $ 122,773.59 6,371.39 9,796,403.03 (148,562.32) 7,455.79 1,492.73 327,770.32 (483.18) (32,473.76) (234,011.88) 2007 Opening Balance $ 155,582.82 (243,315.33) 14,814,996.28 (145,733.49) (16,505.51) (1,057.27) 8,431,037.84 6,101.94 32,474.26 224,917.50 Variance $ 32,809.23 (249,686.72) 5,018,593.25 2,828.83 9,049.72 (2,550.00) 8,103,267.52 6,585.12 0.50 (9,094.38) 43 Ministry of Finance Finance Manual 2005, Recording, page iv.
Whole of Government Financial Statements and Annual Appropriation Statement 83 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Account Title 2006 Closing Balance $ Marine & Civil Aviation Election Agriculture Printing and Stationery Police Public Service Commission Fiji Military Force Regional Development Social Welfare Justice Meteorological Services Public Works and Infrastructure President National Roads Water & Sewage Multi Ethnic Affairs Women and Culture Legislature Information Auditor-General National Planning Bureau of Statistics Immigration Youth, Employment Opportunities & Sports Director of Public Prosecutions ITC Services Total Variance (314,949.75) (50,033.78) 2,306,332.34 55,516.07 391,142.18 (17,203.27) (101,387.34) 1,482.73 2,112,838.22 428,791.00 --- (6,367.18) 178,009.01 11,712.74 761,779.77 965.68 --- 49,051.04 13,690.29 808.61 5,863.44 4,643.00 13,466.08 21,006.30 6,154.30 29,518.66 2007 Opening Balance $ 296,569.91 64,698.28 2,266,051.75 43,627.15 414,792.67 (8,251.99) 1,709,787.68 (22,980.20) 2,147,195.52 429,008.93 9.00 --- 191,708.98 --- (2,200.12) 6,592.68 129,718.44 51,051.04 17,946.29 78,370.12 6,763.44 85,516.89 13,701.08 20,631.30 5,854.30 28,575.07 Variance $ (18,379.84) 14,664.50 (40,280.59) (11,888.92) 23,650.49 8,951.28 1,811,175.02 (24,462.93) 34,357.30 217.93 9.00 6,367.18 13,699.97 (11,712.74) (763,979.89) 5,627.00 129,718.44 2,000.00 4,256.00 77,561.51 900.00 80,873.89 235.00 (375.00) (300.00) (943.59) 14,253,744.08 The above variance resulted from the inclusion of 2 items that were not taken into account in 2006 namely Standard Liability Group (SLG) 84 - Current Liabilities – Accrued Expenses and Deferred Income and SLG 85 - Current Liabilities – Deposits, Deductions and Retention Money.
As a result, 2006 RFA Miscellaneous account was understated in the Accounts and Finances of the government.

Recommendation The Ministry should ensure that all accounts are properly disclosed and accounted for.

Ministry’s Comments 9.2 Inoperative Accounts A number of Revolving Fund Accounts (Suspense) have been inoperative for some time now and no actions have been taken to clear these accounts.

Table 9.2 shows details of the inoperative Revolving Fund Accounts (Suspense).
Whole of Government Financial Statements and Annual Appropriation Statement 84 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 9.2: INOPERATIVE REVOLVING FUND ACCOUNTS (SUSPENSE) Account Title Fiji Military Forces Air Wing Marine Shipbuilding & Repairs PWD – Cane Trucks PWD – Gravel Washing Plant Total Limit $ 200,000 150,000 50,000 -- Balance as at 31/12/07 $ 978,585.23 3,013,633.68 842,022 203.63 4,834,444.54 Ceased Operation 1996 1998 1999 The Ministry of Finance cleared the following accounts in 2007: • • • • • Commercial Fishing Venture Drainage, Irrigation & Conservation Works Industrial Estate Development Marine Prisons.
The remaining outstanding balance from the inoperative accounts as shown in Table 9.2 is yet to be cleared.

The issue was reported in previous audit reports..

Recommendation Ministry of Finance should take necessary steps to close these accounts.
Ministry’s Comments 9.3 Monitoring of Revolving Funds Accounts Departments should forward monthly Revolving Fund Account reconciliation statements to Treasury and ensure that all TMA operators submit quarterly Trading Accounts for evaluation purposes.44 The Ministry of Finance should review the reconciliations upon receipt and highlight any discrepancies.

Numerous Ministries/Departments failed to submit their reconciliations to Treasury.

Details of these Ministries/Departments are shown in the Appendix 6.
There was no evidence Ministries/Departments for the submission of their reconciliations.

indicate that to the Ministry of Finance followed up with The operations of the above accounts have not been thoroughly scrutinised and therefore the risks of misstatement/misappropriations is high.

This issue has been highlighted in the previous audit reports, however no actions has been taken by the Ministry as yet.
Recommendation Ministry of Finance should strengthen its monitoring role on Ministries/Departments revolving fund accounts.

44 Finance Circular No.


10 of 02 April 1982 Whole of Government Financial Statements and Annual Appropriation Statement 85 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry’s Comments 9.4 Variances between Ministry of Finance and Ministries/Departments Revolving Fund Accounts The general ledgers from the Ministry of Finance shall be reconciled to the Department/Ministry’s general ledger.
Any errors or misallocations must be immediately adjusted by way of journals.

The reconciliation statements shall be signed, certified, dated and forwarded to the Ministry of Finance.45 There were significant variances between Ministries/Departments and the Ministry of Finance ledgers.

The Ministry of Finance did not verify the variances resulting in audit’s inability to verify the correctness of the amounts disclosed in the financial statements.
TABLE 9.3: VARIANCES BETWEEN MINISTRY OF FINANCE AND MINISTRIES / DEPARTMENTS RECORDS Ministry/Departments MOF Ledgers RFA Miscellaneous: Attorney General Bureau of Statistics Cabinet (Prime Minister’s Office) DPP Education Fijian Affairs Forestry Ministry of Health Information Labour Lands Marine Printing & Stationary Public Enterprises PWD Tourism Ministry of Women $ (272,966.49) 75,360.64 204,494.16 (855.00) 604,267.81 (1,054.77) (1,245.57) 2,387,407.87 10,133.53 17,255.57 268,707.68 (175,603.51) 8,425.14 (31,963.73) 34,225,243 1,271.23 122,821.60 Min/Dept Ledgers $ Variances $ 1,192.08 71,886.06 205,006.41 (555.00) 661,449.40 14,449.85 (426.00) 2,462,250.78 9,388.53 13,680.30 243,364.01 9,683.91 20,808.54 3,456.40 105.00 1,584.23 129,718.44 (274,158.57) (3,474.58) (5,12.25) (300) (57,181.59) (15,504.62) (819.57) (74,842.91) 745.00 3,575.27 25,343.67 (185,287.42) (12,383.40) 35,420.13 34,225,138 (313.00) (6,896.84) Ministries/Departments failed to provide satisfactory explanations for the variances in their RFA Miscellaneous Account balances as at 31 December 2007.
Recommendations • The Department/Ministries should take immediate actions to reconcile and rectify any errors and misallocations with Ministry of Finance.

• Ministry of Finance should be more vigilant when checking reconciliations and investigate reasons for any variance.
45 Finance Manual (16.3.3 – 16.3.7) 2005 Whole of Government Financial Statements and Annual Appropriation Statement 86 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry’s Comments Comments not received 9.5 Un-retired Petty Cash Our cashier must retire their petty cash before the end of the financial year i.e.
by the first week of December.46 Contrary to the above regulation, the following ministries/departments had outstanding balances in their imprest accounts as at 31/12/07, which should have been retired: TABLE 9.4: UN-RETIRED IMPREST ACCOUNT Department/Ministry Receipts Payments Education Agriculture Home Affairs Information Police Treasury Water Total $ 5,656.41 25,227.73 6.40 --- 6,765.23 --- 730.50 38,386.27 $ 6,750.00 25,254.59 --- 17.78 3,000.00 200.00 740.50 35,962.87 Balance Outstanding as at 31/12/07 $ 1,093.59 26.86 (6.40) 17.78 (3,765.23) 200.00 10.00 (2,423.40) Ministries/Departments failed to provide satisfactory explanations for the outstanding balances in their RFA Imprest Accounts at 31 December 2007.
The lack of controls and supervision resulted uncleared imprest accounts.

Recommendations • Ministries and Departments should be required to provide explanations as to why the imprest accounts were not retired at the end of the year.

• Section 7.3.25 of the Finance Manual 2005 should be strictly complied with.

Ministry’s Comments Comments not received 10.0 CONTINGENT LIABILITIES 10.1 Terminated Guarantee The following government guarantees which were unutilised have been terminated by Cabinet47 in 2007.
46 Section 7.3.25 - Finance Manual 2005 47 Cabinet Decision IGCP (07) 316.

Extract from Minutes Held on Tuesday 28th August, 2007 at 9.00am Whole of Government Financial Statements and Annual Appropriation Statement 87 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ TABLE 10.1: TERMINATED GUARANTEES.
Institutions Details International Hotel Limited Richmond Fiji Limited Pacific Cogeneration Limited Home Finance Company Guarantee terminated Guarantee no longer required.
Cancelled and given to Fiji Sugar Corporation interest No guarantee no longer required government and Government Guarantee $ 25,000,000 12,765,957 53,900,000 409,524 10.2 Guarantee of Members contributions to Fiji National Provident Fund The government guarantee of members’ contribution to the Fiji National Provident Fund (FNPF), totalled $2,481,084,497 or 76% of total government guarantees as at 31 December 2007.
The maintenance of this guarantee may not depend on the liquidity of the reserves of the Fund but on the responsibility the Fund exercises as custodian of employee funds.48 Apart from guaranteeing the members contributions, the government owes $1,607,812,300 to FNPF, which is 73% of total domestic borrowings in bonds as a means of investing members’ contributions.
10.3 Increased Liabilities for Government Guarantees Audit noted increase in liability for the following Government guarantees as at 31st December 2007.
TABLE 10.2 INCREASED LIABILITIES FOR GOVERNMENT GUARANTEES Institutions Legislation FDB FEA FNPF Fiji Pine Ltd FSC NBF PAFCO Approval of House of Representatives 28/11/06 Approval of House of Representatives IGCP 26/02/08 Act No 19 of 1966 Section 9 Approval of House of Representatives 17/08/05 Approval of House of IGCP Representatives 20/05/08 Act No 14 of 1996 Approval of House of Representatives Government Guarantee 2007 $ Liability as at 31/12/06 Liability as at 31/12/07 Variance % change 415,168,199 271,569,000 415,168,199 $ $ $ Government guarantees the Fiji National Provident Fund members annual contribution as stipulated under Legislative Act No 19 of 1966, Section 9.
Whole of Government Financial Statements and Annual Appropriation Statement 88 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Institutions Legislation 31/08/00 Government Guarantee 2007 $ Liability as at 31/12/06 Liability as at 31/12/07 Variance % change $ $ $ 10.4 Invoked Guarantee for Fiji Sports Council Subject to any other Act, the Government may guarantee the financial liability of an entity in respect of a loan or otherwise, but only if the giving of the guarantee is authorized by the House of Representatives.
A guarantee given should be evidenced in writing by the Minister.49 The guarantee clause for the Fiji Sports Council loan was invoked by the lender in 2001 thereby committing the government to meet all payments owed.

To date, the Fiji Sports Council has failed to meet any payments and has become a debtor to the government owing $1,412,065 as at 31 December, 2007.

Total scheduled instalments are estimated at $5.3 million to be paid by 31 July 2014.
The Council’s inability to meet any repayments reflects the poor assessment and financial forecasting carried out and as such has burdened the government.

The current status of the council makes it highly unlikely to meet their future repayments.

Recommendations • Future projects requiring government guarantees should be thoroughly scrutinised.
• Given Fiji Sports Council’s inability to pay, it may be advisable for the government to provide for future loan repayments as operating grant to the Fiji Sports Council.

Such treatment will avoid accumulation of additional bad and doubtful debt.

Tight budgetary controls over the past years has been restricting the provision of budgetary allocations for approved debt write offs and conversions to grants required under the cash-basis of accounting.
Other mitigating factors to be considered are: - - - - future loan repayments commitment cannot be avoided by the government; settlement by the council is now doubtful.

various debts approved for writing-offs or conversion to grant are still outstanding as budgetary provisions are not made because of the huge sum involved.
The current arrangement with Fiji Sports Council will only increase the unsettled debts; the loan was obtained for the development of sports infrastructure thus contributed positively to social development of the country.

Ministry’s Comments: MOF fully concurs with the recommendation that all future projects requiring Government Guarantees will be thoroughly scrutinised in line with the Revised Government Guarantee Policy of 2008.

49 Section 62 (1) & (2) of the Financial Management Act of 2004.
Whole of Government Financial Statements and Annual Appropriation Statement 89 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ 10.5 National Bank of Fiji Guarantee The repayments of all moneys deposited in the bank, together with such interest as may be due thereon, is guaranteed by the state.50 These are term deposits outstanding with the then National Bank of Fiji.51 Colonial National Bank is now administering this account.
Colonial has undertaken to use all reasonable endeavours to ensure that the business of the Bank will be carried out in such a manner that the State will not be called upon under or in relation to the guarantee, until the State no longer has any liability under the guarantee.52 It was established that upon corporisation of the National Bank of Fiji, the NBF has disposed majority of its share to the Colonial National Bank.

However, the Government is still providing guarantee to the Bank.
Deposits guaranteed as at 31 December 2007 amounts to $7,159,221, an increase of $1,234,512 or 21% compared to the 2006 guarantee of $5,924,709.

Furthermore, the increase in government guarantee of the deposits could not be substantiated as the bank is reluctant to provide information on the guaranteed deposits stating that these are confidential information, questioning the validity of the government guarantee obligation.

A legal opinion in the matter has been sought.


Recommendation The Government should review the legislation governing the guarantee of Colonial National Bank deposits.

Ministry’s Comments: MOF will further liaise with S.G’s office on the relevant provisions of the National Bank of Fiji Restructuring Act 1996.
50 Section 62 (1) of Act 14 of 1996 51 This is in reference to section 63(3) of the National Bank of Fiji Restructuring Act 1996,whereby all monies deposited between 1September 1998 and 28 February are subject to the guarantee provided by the state under this Act.

52 Clause 7.2 of the 2nd February 1999 Shareholders Agreement.
Whole of Government Financial Statements and Annual Appropriation Statement 90 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ APPENDIX 1.1(a): Operating Fund – Expenditures [Schedule 1 - Appropriation Promulgation 2007] Ministry/Department Head No.
Office of the President and Office of the Prime Minister Public Service Commission Office of the Attorney-General Ministry of Finance, National Planning, Public Enterprise and Sugar Industry Ministry of Fijian Affairs, Heritage, Provincial Development and Multi-Ethnic Affairs Department of Defence Ministry of Labour, Industrial Relations, Productivity, Tourism and Environment Ministry of Foreign Affairs and External Trade Office of the Auditor-General Elections Office Judiciary Legislature Office of the Ombudsman Office of the Director of Public Prosecutions Department of Justice Department of Information Fiji Military Forces Fiji Police Force Ministry of Education Ministry of Health Ministry of Local Government, Urban Development and Public Utilities Ministry of Women, Social Welfare and Housing Ministry Opportunities Ministry of Agriculture, Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Commerce, Communications Ministry of Transport, Works and Energy Miscellaneous Services of Youth, Sports and Employment Investment and Industry, 30 33 34 40 50 Total 5,402,241 23,683,665 16,947,213 2,815,580 707,463 12,119,767 1,485,127 1,421,572 3,888,130 15,664,456 6,464,876 80,739,673 69,946,851 320,678,356 150,808,447 118,771,504 29,281,924 7,732,326 62,035,967 43,810,121 16,639,050 Appropriation Amount $ 7,306,063 12,197,387 6,422,874 105,959,137 Actual Expenditure 2007 $ Savings / (Over-Spent) $ 4,898,609 10,829,114 5,927,408 90,115,142 2,407,454 1,368,273 495,466 15,843,995 % (276,259) 34,904 166,402 (21,863) 938,750 (45,545,441) (3,642,944) 9,753,650 11,324 41,644,068 26,568,649 6,303,962 2,713,275 1,428,364 53,148,099 42,399,999 13,333,530 8,887,868
 1,410,122 3,305,520 9.6 1.4 28.7 4.5 (18.6) 2.5 4.3 (0.1) 14.5 (56.4) (5.2) 3.0 0.0 35.1 9.3 18.5 14.3 3.2 19.9 3.5 0.5 5.2 118,635,388 59,120,486 1,355,342,025 114,430,091 58,808,866 1,285,029,477 4,205,297 311,620 70,312,547 Whole of Government Financial Statements and Annual Appropriation Statement 91 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ APPENDIX 1.1(b): Lending Fund Account [Appropriation Promulgation 2007] Ministry/Department Re-current Loans Loans to Public Officers Production Loans to Farmers Loans to Consumer Co-operatives Societies Loans to Copra Industry for Stabilisation of Earnings Loans to Students attending Tertiary Education Institutions Loans to Private Students Loans to Timber Industry for Stabilisation of Earnings Loans to Ministers and Members of Parliament Fiji Sports Council Non-Recurrent Loans Students Loan Scheme Total Appropriation Amount $ Recovery 2007 $ Additional Loans 2007 $ 1,000,000 72,000 250,000 13,500,000 5,000,000 500,000 1,000,000 1,100,000 --- 22,422,000 7,133 --- 12,092 170,005 4,065,951 599,508 --- 35,356 357,435 5,247,480 1,500,000 1,380,997 23,922,000 6,628,477 5,605 11,277 53,466 17,194 81,295 --- --- --- 168,837 421,855 590,692 APPENDIX 1.2: Variances in Balances in Ministeries/Departments and General Ledger Department Drawings Trust Fund Attorney General Bureau of Statistics Cabinet Commerce, Business Development & Investment DPP Education Fijian Affairs Foreign Affairs Forestry Home Affairs Information Justice Labour Lands Legislature Local Government, Housing & Environment Marine Ministry of Health Ministry of Women Multi - Ethnic Affairs National Roads National Planning Office Office of the Auditor General Printing & Stationary Prisons Public Enterprise (102,126) (12,713) (23,376) 123 (7,630) 731,758 (90,187) (3,767) 40,969 9,961 (109,856) (470) 404,024 (216,918) (1,000) 11,198 277,390 (4,723) 767 176 RFA Miscellaneous (274,159) (3,475) (512) (300) (57,182)
 (15,505) (820) 745 3,575 25,344 (185,287) (12,383) 35,420 Whole of Government Financial Statements and Annual Appropriation Statement 92 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Department Drawings Trust Fund PWD Salaries Social Welfare Tourism Transport & Civil Aviation (Marine) Treasury (#149268) Treasury (#108651) Women's Affairs Youth, Employment Opportunities & Sports ITC (1,076) (2,893) 855 33,434 (15,179) 33 14,802 24,533 11,822 RFA Miscellaneous 34,225,138 (313) (6,897) The unresolved variances as mentioned above indicate that the ministries/departments have not taken any actions to rectify or correct the errors.
The records maintained in the general ledger could therefore not be relied upon to be correct.

APPENDIX 1.3: Reconciliations not Prepared Within five days after the issue of the monthly general ledger report by the Ministry of Finance, the accounts officer shall prepare reconciliations to reconcile the ‘department records’ to the general ledger balances.53 Contrary to the above regulation, it was noted that numerous Ministries/Departments failed to submit their reconciliations to Ministry of Finance.
Table below highlights ministries/departments that have not submitted their reconciliations for various accounts.
APPENDIX 1.3: ACCOUNTS FOR WHICH NO RECONCILIATION SUBMITTED BY MINISTRIES/DEPARTMENTS Department Drawings NS Trust Fund (Operating Trust) Oct-Dec NS RFA Imprest NC RFA Miscellaneous NS NS Trust Fund (Main Trust) NS NS NS NS NS Agriculture Attorney General Cabinet Commerce Director of Public Prosecution Education Elections Energy Fiji Military Forces Fijian Affairs FIMSA (Civil Aviation) Finance Fisheries & Forestry Home Affairs Immigration Information ITC Services Judicial Justice Lands NS NS NS NS NS NS NS NS NS SANS Nov-Dec NS Oct-Dec NS SANS NS NS NS Dec NS NC NC NC NS NS NS NS NS NS NS NS NS NS NS 93 53 Finance Manual 2005 – sections 4.6; 7.3.24; 7.4.11; 15.4.1 & 16.3.3 Whole of Government Financial Statements and Annual Appropriation Statement REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Department Drawings Labour Local Government Legislature Marine Meteorological Services Mineral Resources Multi-Ethnic Affairs National Planning Office National Roads Office of the Auditor General Ombudsman Police President's Office Prisons Public Service Commission Public Works & Infrastructure Provincial Development Salaries Social Welfare Supplies Tourism & Environment Trade and Commerce Treasury Water & Sewerage Women & Culture Works Youth & Sports Trust Fund (Operating Trust) RFA Imprest RFA Miscellaneous Trust Fund (Main Trust) NS NS NS NS NS NS NS NS NS NS NS Dec NS NS SANS SANS SANS NC Nov-Dec NS NC NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS Keys: NS – Not Submitted SANS – Some Accounts not Submitted NC – Not Cleared The operations of the above accounts have not been thoroughly scrutinised and therefore the risks of misstatement/misappropriations is high.
APPENDIX 1.4: Summary of Audit Opinions Issued Head No 1 2 3 4 Ministry/Department Consolidated Complete FS Adverse Opinion (No opinion expressed) Office of the Prime Minister Office of the President Public Service Commission Office of the Attorney General Ministry of Finance, National Planning, Public Enterprise and Sugar Industry Finance FMR National Planning Office Bureau of Statistics × N/A N/A √ √ √ × × × × √ Qualified Opinion (Except for opinion) √ √ √ Whole of Government Financial Statements and Annual Appropriation Statement 94 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Head No Ministry/Department Consolidated Complete FS Adverse Opinion (No opinion expressed) Qualified Opinion (Except for opinion) Supplies Printing & Stationery ITC Treasury Public Enterprises Ministry of Fijian Affairs, Heritage, Provincial Developments and Multi Ethnic Affairs Multi Ethnic Affairs Provincial Development Fijian Affairs Ministry of Defence Immigration Department Department of Home Affairs Industrial Ministry of Labour, Relations, Productivity, Tourism and Environment Labour Tourism Environment Ministry of Foreign Affairs and External Trade Office of the Auditor General Elections Office Judiciary Legislature Office of the Ombudsman Office of the Director of Public Prosecution Department of Justice Fiji Prisons Services Ministry of Information & National Archives Fiji Military Forces Fiji Police Force Ministry of Education Ministry of Health Ministry of Local Government, Urban Development and Public Utilities Ministry of Women, Social Welfare and Housing Ministry of Youth, Sports and Employment Opportunities Ministry of Agriculture, Fisheries and Forests Agriculture Fisheries Forestry Ministry of Lands and Mineral Resources Lands 30 33 √ √ √ N/A N/A N/A N/A N/A N/A × N/A N/A N/A N/A N/A N/A N/A N/A × × × × × × × × × × √ × × × × × √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Whole of Government
 Financial Statements and Annual Appropriation Statement 95 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Head No 34 40 Ministry/Department Consolidated Complete FS Adverse Opinion (No opinion expressed) √ √ Mineral Resources Ministry of Commerce, Industry, Investment and Communications Commerce Communication & Telecom Auth Cooperative Ministry of Transport, Works and Energy Met Services FIMSA √ Qualified Opinion (Except for opinion) √ √ √ √ GSS Civil Aviation Roads Works - Ministry Energy Transport APPENDIX 1.5: Summary of Financial Statements submitted for 2007 Head No.
Ministry/Department Financial Statements Submitted Receipts & Expend.
Office of the Prime Minister Office of the President Public Service Commission Office of the Attorney General Ministry of Finance, National Planning, Public Enterprise and Sugar Industry Finance FMR National Planning Office Bureau of Statistics Supplies Printing & Stationery ITC Treasury Public Enterprises Ministry of Fijian Affairs, Heritage, Provincial Developments and Multi Ethnic Affairs Multi Ethnic Affairs Provincial Development Fijian Affairs Ministry of Defence Immigration Department Department of Home Affairs √ √ √ √ √ √ √ Statement of Output Costs √ × √ √ √ × √ Approp.
Statement Losses P & L - TMA Trust Accounts √ √ √ √ √ √ √ × × √ √ √ × × N/A N/A N/A N/A √ N/A N/A × × × × √ × × Whole of Government Financial Statements and Annual Appropriation Statement 96 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Head No.

Ministry/Department Financial Statements Submitted Receipts & Expend.

Statement of Output Costs Approp.
Statement Losses P & L - TMA Trust Accounts 30 33 34 40 Ministry of Labour, Industrial Relations, Productivity, Tourism and Environment Labour Tourism Environment Ministry of Foreign Affairs and External Trade Office of the Auditor General Elections Office Judiciary Legislature Office of the Ombudsman Office of the Director of Public Prosecution Department of Justice Fiji Prisons Services Ministry of Information & National Archives Fiji Military Forces Fiji Police Force Ministry of Education Ministry of Health Ministry of Local Government, Urban Development and Public Utilities Ministry of Women, Social Welfare and Housing Ministry of Youth, Sports and Employment Opportunities Ministry of Agriculture, Fisheries and Forests Agriculture Fisheries Forestry Ministry of Lands and Mineral Resources Lands Mineral Resources Ministry of Commerce, Industry, Investment and Communications Commerce Communication & Telecom Auth Cooperative Ministry of Transport, Works and Energy Met Services FIMSA GSS Civil Aviation Roads √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ × × √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ × × √ × √ × × × × × √ √ × × √ √ √ √ × × × √ √ × × × × √ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A √ N/A N/A × × N/A N/A √ N/A √ N/A N/A √ × × × × × × √ × × × × × √ × × √ × × × × × × × √ √ √ √ √ × Whole of Government Financial Statements and Annual Appropriation Statement 97 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Head No.
Ministry/Department Financial Statements Submitted Receipts & Expend.

Statement of Output Costs Approp.
Statement Losses P & L - TMA Trust Accounts Works - Ministry Energy Transport APPENDIX 2: Trust Fund Details Main (True) Trust Fund Balances as at 31/12/07 Ministry/Department Cabinet Director of Public Prosecutions Department of Energy Ministry of Finance Government Supplies Provincial Development Immigration Department Ministry of Labour & Industrial Relations Judiciary Ministry of Local Government Ministry of Agriculture Ministry of Fisheries & Forestry Mineral Resources Department of Social Welfare Tourism and Environment Less: Overdrawn Account Attorney-General Ministry of Commerce Department of Works Total Main Trust Fund Balance $ 8,172 1,041 1,239,202 10,397,312 821,234 2,027,319 9,404,239 397,262 6,956,749 36,921 499,790 27,731 719,090 --- 101,882 (412) (24,374) (484,475) 32,128,683 Operating Trust Fund (Payroll Deductions) Balances as at 31/12/07 Ministry/Department Agricultural Tribunal Attorney-General Auditor-General Bureau of Statistics Co-operatives Commerce, Business Development and Investment Director of Public Prosecution Education, Women, Culture, Science and Technology Energy FMF Fijian Affairs FIMSA (Civil Aviation) Foreign Affairs Balance $ 716 313,336 31,339 60,027 7,430 23,915 114,683 1,378,864 438,990 2,074,387 56,570 12,683 2,587,603 Whole of Government Financial Statements and Annual Appropriation Statement 98 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministry/Department Government Supplies Health Home Affairs Immigration Information Technology & Computing Services Justice Lands Legislature Local Government, Housing and Environment Mineral Resources National Planning Office National Roads Ombudsman's Office Police Prisons Provincial Development Public Service Commission Public Works Transport & Civil Aviation (Marine) Tourism & Environment Water & Sewage Youth, Employment Opportunities & Sports Less: Overdrawn Account Agriculture Cabinet Elections Office Forestry Government Printing & Stationery Information Judicial Labour &
 Industrial Relations Meteorological Services Ministry of Finance Multi-Ethnic affairs Presidents Office Public Enterprise Social Welfare Womens Affairs Total Operating Trust Fund Balance $ 88,669 7,481,525 89,324 4,495 47,555 38,357 1,372,965 171,141 43,846 19,378 13,630 11,999,457 9,009 1,693,937 418,564 9,075 317,028 1,333,028 33,830 51,897 2,093,014 367,270 (512,485) (40,138) (507,284) (51,385) (20,469) (5,752) (1,036,391) (46,669) (46,448) (93,361) (2,218) (1,143) (85,732) (23,155) (10,876) 32,314,031 APPENDIX 3: Submission of Reconciliations Main (True) Trust Fund Account Title of Account Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cabinet DPP Department of Energy Ministry of Finance Government Supplies.
Provincial Development NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS Whole of Government Financial Statements and Annual Appropriation Statement NS NS NS NS NS NS NS NS NS NS NS NS 99 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Title of Account Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Immigration Department Ministry of Labour & Industrial Relations Judiciary Ministry of Local Government Ministry of Agriculture Ministry of Fisheries & Forestry Mineral Resources Department of Social Welfare Tourism and Environment NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS Attorney-General Ministry of Commerce Department of Works NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS Operating Trust Fund Account NS NS NS NS NS NS NS NS NS NS NS NS Title of Account Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Energy FMF FIMSA (Civil Aviation) Immigration.
Lands National Planning Office Provincial Development Public Service Commission Public Works Water & Sewage NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS S S NS S NS S S NS S NS S S NS S NS S NS S NS S S NS S NS S S NS S S S S NS S NS S S NS S NS S NS NS S NS S NS NS S S NS NS NS S S NS NS NS NS NS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NS NS NS NS S S S S S S S S S S NS NS Elections Office Information Judicial Ministry of Finance President's Office NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NAAS NS NS NS NS NS NS NS NS NS NS NS NS Key S: NS: NAAS: Submitted Not Submitted Not All Accounts Submitted Whole of Government Financial Statements and Annual Appropriation Statement 100 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ APPENDIX 4: Estimated Collections for 2007 to Actual Revenue Collection Revenue OPERATING REVENUE Value Added Tax Fiscal Duty Export Duty Import Duty Hotel Turnover Tax Miscellaneous Fees and Receipts Fees, Fines & Charges Stamp Duty Produce and Inspection Native Timber Measurement Land and Survey Fees Mining Fees Passports Town Planning Fees Examination Fees Government Day Schools-Fees.
Health Fumigation and Quarantine Fiji School of Nursing Departure Tax Audit Fees Registration.

LTA Fee Arms Banks Coasting Liquor Trading Dogs Hotels and Guest Houses Telecommunications and Television Fishing Other Water & Sewerage Rates and Charges Sewerage Charges Royalties Timber Royalties - Sand, Coral, Metal, etc.

Fines Overdue, lost & damaged library books.


Administrative Fines and Forfeiture Total Fees, Fines & Charges Operating Revenue - Sales Sales of Govt Dept Sales of Companies Total Sales Revenue Other Revenue and Surpluses RBF Revaluation Reserve Account.
Estimated Revenue 2007 $ 517,890,800 230,951,644 6,474,000 19,305,908 16,780,800 3,438,073 Actual Revenue 2007 $ 465,831,990 201,670,706 8,266,216 15,691,415 13,381,358 2,886,479 20,408,700 486,700 853,700 359,000 2,400 7,208,900 321,700 --- 822,800 503,600 244,600 7,888,300 506,400 594,500 --- 112,100 --- 9,800 230,500 201,900 9,700 5,100 3,302,800 679,900 278,500 19,501,800 2,200 600 137,300 1,110,700 1,700 26,700 70,567,800 --- --- --- Variance $ % Variance (52,058,810) (29,280,938) 1,792,216 (3,614,493) (3,399,442) (551,594) (6,267,212) 573,420 (374,712) (61,258) 74,393 (637,127) (99,666) 26,158 (177,797) (337,552) (22,478) 1,509,040 (67,956) (140,231) 2,890,349 (86,021) 82 (3,059) 195,428 (21,963) 2,443 132,170 (1,449,796) (494,761) (243,332) (2,660,714) 103,730 (191) (108,216) 1,327,224 (498) (13,658) (6,373,942) 5,329 609 5,938 (10) (13) 28 (19) (20) (16) (31) 118 (44) (17) 3,100 (9) (31) no budget (22) (67) (9) 19 (13) (24) no budget (77) no budget (31) 85 (11) 25 2,592 (44) (73) (87) (14) 4,715 (32) (79) 119 (29) (51) (9) no budget no budget no budget 7,000,000 4,151,589 (2,848,411) (41) Whole of Government Financial Statements and Annual Appropriation Statement 101 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Revenue Fumigation Woodwork and Materials NBF Profits Land.
Building Hire of Plant and Vehicles Revenue from Rest Houses Crown Schedule 'A' Land Rents Commission Photographs Sales of Publications Revenue from Production of Films Survey & Sales of Navigation Publications Meat Inspection Veterinary and Animal Quarantine Freight and Charter Receipts Chemical Assay Valuation Fees Produce-Agricultural Experimental Stations Agricultural Commercial Undertakings Sale of Fish and Ice Sale of Sheep and Wool Fiji College of Agriculture Agricultural Landlord and Tenant Tribunal Board Member Fees Other Reimbursement and Recoveries Reimbursement of Services Reimbursement for Meteorological Services Reimbursement of Services Reimbursement of Debt Servicing Refund of Payments Training & Productivity Authority of Fiji.
Government Employees' Provident Fund Recoveries of Overpayments in Previous Years Contributions for Capital Projects Village Water Supplies Rural Electrification 1/3 Contributions Multinational Force and Observers Total Reimbursement and Recoveries Grant In Aid Australian Development Grants New Zealand Bilateral Aid Programme United Nations Development Programme European Union Japan Government Grants Other Grant in Aid Total Grants In Aid INVESTING REVENUE Repayment Of Term Loans Receivable Repayment of Loans Estimated Revenue 2007 $ --- 100 --- 8,127,500 91,300 32,400 2,300 300 1,143,400 300 208,500 29,100 905,200 12,200 48,600 128,500 7,100 8,300 56,100 4,200 307,100 41,800 31,200 1,000 --- 11,695,900 191,700 25,000 373,600 --- 200 Actual Revenue 2007 $ Variance $ % Variance 7,290 (57) 2,000,000 906,191 31,186 (22,578) 359 10,579 (107,528) (210) (42,269) (10,957) (622,967) 22,264 (27,711) 18,003 3,491 1,369 (16,660) (3,865) (73,382) (11,685) (8,514) 335 29,759 1,251,940 3,223,971 (13,860) 74,167 no budget (57) no budget 11 34 (70) 16 3,526 (9) (70) (20) (38) (69) 182 (57) 14 49 17 (30) (92) (24) (28) (27) 34 no budget 11 1,682 (55) 20 9,467 (170) no budget (85) 3,054,000 1,559,166 (1,494,834) (49) 322,000 500 --- 7,000,000 10,967,000 110,900 1,217,300 802,700 9,000,000 --- 2,246,500 13,377,400 55,665 101 30,727 12,451,382 17,981,117 30,967 2,163,000 154,621 --- 24,960 1,145,131 3,518,679 (266,335) (399) 30,727 5,451,382 7,014,117 (79,933) 945,700 (648,079) (9,000,000) 24,960 (1,101,369) (9,858,721) (83) (80) no budget 78 64 (72) 78 (81) (100) no budget (49) (74) Whole of Government Financial Statements and Annual Appropriation Statement 160,800 845 (159,955) (99) 102 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Revenue Interest Total
 Repayments of Term Loans Receivable Sale Of Government Assets Disposal of Investments in Infrastructure Services Dividends From Investments Investments in Social Services Investments in Economic Services Investments in Infrastructure Services Total Dividends from Investments Interest from Bank Balances Interest from Local Banks Interest from T/D with Local Banks Total Interest From Bank Balances Return of Surplus Capital from TMA Operations TRANSFEERED FROM BORROWING FUND ACCOUNT Overseas Loans International Development Bank Loans Project (FRUP III) ADB Loan Suva/Nausori Water Supply International Bond Market Issuance Total Overseas Loans Domestic Loans Development and Conversion Loans.
TOTAL REVENUE FROM LOANS --- --- --- Estimated Revenue 2007 $ --- 160,800 6,000,000 3,151,600 9,943,000 15,735,000 28,829,600 Actual Revenue 2007 $ Variance $ % Variance 38,276 39,121 38,276 no budget (121,679) (76) --- (6,000,000) (100) 526,948 2,824,298 18,619,912 21,971,159 10,760,575 2,208,900 6,773,681 (2,624,652) (7,118,702) 2,884,912 (6,858,441) (83) (72) 18 (24) 10,760,575 2,208,900 6,773,681 no budget no budget no budget - 1,630,080 1,630,080 no budget 8,400,000 22,000,000 259,486,800 289,886,800 81,158,300 371,045,100 9,289,839 9,036,711 - 18,326,550 889,839 (12,963,289) (259,486,800) (271,560,251) 100,536,321 118,862,870 19,378,021 (252,182,230) 11 (59) (100) (94) 24 (68) APPENDIX 5: Details of Batch 416378 Account No Amount $ Account No 40-5-1-1 40-5-1-1 40-5-1-1 40-5-2-1 40-5-2-1 40-5-2-2 40-5-2-2 40-5-2-2 40-5-2-2 40-5-2-3 40-5-2-3 40-5-2-1 40-5-2-2 40-5-2-1 40-5-2-1 40-5-3-8 Whole of Government Financial Statements and Annual Appropriation Statement 40-5-4-4 40-5-4-4 40-5-4-4 40-5-4-13 40-5-5-5 40-5-5-4 40-5-5-2 40-5-5-1 40-5-6-1 40-5-6-2 40-5-6-8 40-5-6-8 40-5-6-2 40-5-6-3 40-5-6-3 40-5-6-1 (6,661.47) 5,449.97 240.00 (1,971.87) (64.08) 1,971.87 64.08 358.60 587.65 (358.60) (587.65) 157.50 (157.50) 161.92 (161.92) (372.00) Amount $ 215.08 316.80 119.69 426.00 120.00 (120.00) (2,439.22) 2,439.22 (9,584.33) 55.11 29,000.00 29,000.00 (4,376.71) 55.11 800.00 9,584.33 103 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Account No 40-5-3-8 40-5-4-2 40-5-4-2 40-5-4-4 40-5-4-4 40-5-4-4 40-5-4-4 40-5-4-8 40-5-4-4 40-5-4-4 Amount $ (54.00) (119.69) 164.56 (426.23) (161.62) (215.08) (316.80) (164.56) 426.23 161.62 Account No 40-5-6-1 40-5-6-1 40-5-6-1 40-5-7-2 40-5-7-4 40-5-7-4 40-5-7-1 40-5-8-4 40-5-10-2 40-5-10-2 Amount $ 1,206.00 (7,833.00) 7,833.00 908.97 (226.65) (226.65) 908.97 (352.00) 2,370.71 352.00 APPENDIX 6: Reconciliations Not Submitted Ministries/Departments RFA - Imprests Attorney General Home Affairs Judicial Lands Police Public Works &
 Infrastructure Regional Development Supplies RFA-IDC Agricultural Tribunal Auditor - General Elections Energy Fiji Military Forces Fisheries and Forestry Home Affairs Information ITC Services Judicial Justice Marine Meteorological Services National Roads President’s Office Prisons Public Works & Infrastructure Regional Development Salaries Tourism Treasury Women Months not Submitted 2007 November - December January - July January - February January None for 2007 January None for 2007 March April, May, August & September November - December None for 2007 November - December October - December November October December October - December None for 2007 November May May, July & August December None for 2007 January - February October January, February, November & December March December None for 2007 December Whole of Government Financial Statements and Annual Appropriation Statement 104 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – OCTOBER 2008 __________________ Ministries/Departments Months not Submitted 2007 Youth & Sports October - November RFA-Miscellaneous Agriculture Attorney-General Auditor-General Elections Energy Environment Fiji Military Forces Fijian Affairs FIMSA Finance Home Affairs Immigration ITC Services Judicial Lands Legislature Meteorological Services Multi-Ethnic Affairs National Planning National Roads Ombudsman Police President Prisons Public Service Commission Regional Development Social Welfare Supplies Trade and Commerce Water & Sewage Youth & Sports May - December January September - December None for 2007 None for 2007 None for 2007 December July - September None for 2007 None for 2007 November - December December November - December January - March None for 2007 January – April January – April & November - December None for 2007 July - December April – May & November None for 2007 January - March None for 2007 None for 2007 October - December January December June & November October - December None for 2007 November
 Whole of Government Financial Statements and Annual Appropriation Statement 105