Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697776276296.pdf (Fiji)
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI 2017 Audit Report on General Administration Sector PARLIAMENT OF FIJI PARLIAMENTARY PAPER NO.
07 OF 2019 OFFICE OF THE AUDITOR-GENERAL – REPUBLIC OF FIJI Location : Level 8, Ratu Sukuna House 2-10 MacArthur Street Suva, Fiji PO BOX : 2214, Government Buildings Suva, Fiji TELEPHONE : (679) 330 9032 EMAIL : info@auditorgeneral.gov.fj Website : www.oag.gov.fj OFFICE OF THE AUDITOR GENERAL Excellence in Public Sector Auditing 6-8TH Floor, Ratu Sukuna House 2-10 McArthur St P. O.
Box 2214, Government Buildings Suva, Fiji File: 102 5 February 2019 Telephone: (679) 330 9032 Fax: (679) 330 3812 E-mail: info@auditorgeneral.gov.fj Website: http://www.oag.gov.fj The Honorable Speaker of the Parliament of the Republic of Fiji Government Buildings Constitution Avenue SUVA Dear Sir/Madam 2017 AUDIT REPORT ON GENERAL ADMINISTRATION SECTOR In accordance with section 152(13) of the Constitution of the Republic of Fiji, I am pleased to transmit to you my report on the General Administration Sector for 2017.
A copy of the report has been submitted to the Minister for Economy who as required under section 152(14) of the Constitution shall lay the report before Parliament within 30 days of receipt, or if Parliament is not sitting, on the first day after the end of that period.

Yours sincerely Ajay Nand AUDITOR-GENERAL Encl.


REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 The Office of the Auditor-General – Republic of Fiji The Office of the Auditor-General is established as an Independent Office by the Constitution of the Republic of Fiji.
Its roles and responsibilities include audit of the accounts of the Consolidated Fund and whole of Government financial statements and annual appropriation statement required to be included in the whole of Government annual report for a financial year under the Financial Management Act 2004.

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

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

This report satisfies these requirements.

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

The Office of the Auditor-General notes the impact of its reports to Parliament on the ordinary citizens and strives for accuracy and high quality reporting including recommendations which are not only value-adding to the entity subject to audit but its customers, the general public as well.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 TABLE OF CONTENTS 1.0 Summary – General Administration Sector .......................................................................... 3 Results of our audits ................................................................................................................... 4 Quality and timelines of financial statements ........................................................................... 4 2.0 Types of audit opinions issued .............................................................................................. 5 Introduction................................................................................................................................. 6 Conclusion ................................................................................................................................... 6 3.0 Audit Opinion results ............................................................................................................. 7 Modified opinions ....................................................................................................................... 7 Unmodified opinions................................................................................................................... 8 Quality of draft agency financial statements ............................................................................ 8 Timeliness of financial reporting ................................................................................................ 8 Year-end closing process ............................................................................................................ 9 Appendix A: Assessment of financial governance ......................................................................... 10 Internal control framework
 ...................................................................................................... 10 Internal controls ........................................................................................................................ 10 Preparation of draft 2016-2017 agency financial statements .................................................. 11 Quality of draft financial statements by entities ..................................................................... 12 Timeliness of draft financial statements for entities .............................................................. 12 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 12 Result summary ......................................................................................................................... 13 Appendix B: Audit Opinion Results ................................................................................................. 15 _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 1.0 Summary – General Administration Sector All ministries and departments prepare annual agency financial statements.
Permanent Secretaries and management of these agencies are responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards-Cash Basis and requirements of Finance Management Act 2004 and other applicable laws and regulations.
This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error, selecting appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
The General Administration Sector includes: Section 01 Section 02 Section 03 Section 05 Section 06 Section 07 Section 08 Section 09 Section 10 Section 11 Section 12 Section 13 Section 14 Section 15 Section 15A Section 16 Section 16A Section 17 Section 18 Section 19 Section 20 Section 49 Office of the Prime Minister Office of the Attorney-General Ministry of Economy Ministry of i-Taukei Affairs Ministry of Defence, National Security and Immigration Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Judiciary Parliament Office Independent Commissions Office of the Director of Public Prosecutions Ministry of Justice Fiji Corrections Service Ministry of Communication, Department of Information and Communication Department of Information Technology and Computing Services Ministry of Civil Service Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force Peacekeeping Missions However, Ministry of Economy will be reported separately with the 2017 Financial Statements of Government as soon as these reports have been finalised.
It is important to note that the deficiencies detailed in this report were identified during our audit and may have been subsequently resolved.

These have been included in this report as they impacted on the overall system of control of the ministries and departments as at 31 July 2017.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Results of our audits As at 30 September 2018, we issued audit opinions on 23 agency financial statements of ministries and departments in the General Administration Sector for the 2016-2017 financial year.
Quality and timelines of financial statements The financial statements of most ministries and departments were delayed.

The quality of agency financial statements of some ministries and departments were not of good quality.

We issued unmodified opinions on 17 of agency financial statements for 2016-2017.
In accordance with International Standards on Auditing, we express an unmodified opinion (unqualified) when the financial statements are prepared in accordance with the Financial Management Act 2004, Financial Management (Amendment) Act 2016, Finance Instructions 2010 and Finance (Amendment) Instructions 2016 and with relevant legislative requirements.
This type of opinion indicates that material misstatements, individually or in the aggregate, were not noted in our audit, which would affect the financial statements of an entity.
We issue a modified opinion (qualified) when having obtained sufficient appropriate audit evidence, we conclude that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.
Figure 1 - Independent Audit Reports issued for 2016-2017 financial year Number of audits Percentage of total Unmodified Opinion 17 74% Modified Opinion 6 26% Source: Office of the Auditor-General Majority of the ministries and departments in the General Administration Sector submitted the draft financial statements for 2017 well after the deadline of 16 October 2017 set by Ministry of Economy.

Only a few agencies submitted of their draft financial statements on or before the deadline.
The draft financial statements for 2016-2017 of 14 or 61% of ministries and departments in the General Administration Sector were not adjusted during our audit.

The remaining financial statements were adjusted through audit adjustments.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 2.0 Types of audit opinions issued In accordance with International Standard on Auditing, we express an unmodified opinion (unqualified) when the financial statements are prepared in accordance with the Financial Management Act 2004, Financial Management (Amendment) Act 2016, Finance Instructions 2010, Finance (Amendment) Instructions 2016 and with relevant legislative requirements.
This type of opinion indicates that material misstatements, individually or in the aggregate, were not noted in our audit, which would affect the financial statements of an agency.
We issue a modified opinion (qualified) when having obtained sufficient appropriate audit evidence, we conclude that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.
An adverse opinion is expressed when we, having obtained sufficient appropriate audit evidence, conclude that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

We issue a Disclaimer of Opinion when we are unable to obtain sufficient appropriate audit evidence on which to base the opinion, and we conclude that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.
We include an Emphasis of Matter paragraph in the audit report to highlight an issue that will help the user better understand the financial statements.

We also include an Other Matter paragraph to highlight a matter that is relevant to users’ understanding of the audit report.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Introduction Each year, we audit the financial statements of State-agencies to provide assurance to their reliability.

Ministry of Economy advised all Sate-agencies to provide the draft 2017 agency financial statements to the Auditor-General by 31 October 2017.
If agencies comply with the monthly and quarterly reporting requirements set by Finance Instructions 2010 throughout the year, the agencies should be able prepare high quality financial statements in a timely manner.

We assessed the quality and timeliness of financial statements prepared by 20 agencies in the General Administration Sector for financial year ended 31 July 2017 by considering: • year-end closing process – whether accounts were closed-off on the agreed date.
• timeliness – whether complete draft 2017 financial statements were submitted for our audit by an agreed date.

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

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

Conclusion A total of 23 ministries and departments were audited under the General Administration Sector.
Of these, unqualified audit reports were issued on 17 financial statements while audit reports for 6 financial statements were qualified.

It is evident from the audit, that more concert efforts need to be taken to streamline year-end account closing process, improve on the timeliness of submission of draft financial statements for audit and to improve the quality of the financial statements prepared.
It is imperative that the Heads of Ministries and Departments take proactive actions to address the issues raised in the audit reports and improve on year-end account closing process, improve on timeliness and quality of the financial statements submitted for audit.
Ajay Nand AUDITOR-GENERAL Date: 05/02/2019 _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 3.0 Audit Opinion results Table A summarises the audit opinions we issued on the 2016-2017 financial statements for State-agencies.
Table A Audit opinions issued by OAG for 2016-2017 financial year Sector General Administration Unmodified opinions 17 Modified opinions 6 Disclaimer of opinion 0 Modified opinions We issued modified opinions on 6 of the 2017 financial statements completed for various ministries and departments on the following grounds: • Ministry of Justice did not maintain detailed breakdown listings of the companies under provisional liquidations and the individuals under receiverships.
• The Judicial Department’s reconciliations for Suitors, Sundries and Maintenance Trust Fund accounts were only prepared up to January 2015, January 2000 and December 1994, respectively as at 31 July 2017.

In addition, the Department does not maintain detailed breakdown listing of funds received from FNPF, funds paid out to beneficiaries, and balance of fund to be refunded to FNPF where no application has been made to claim the funds from High Court.
• A variance of $197,953 exists between the total revenue recorded in the general ledger and subsidiary revenue records maintained by the Ministry of Rural and Maritime Development and National Disaster Management.

• The Engineers Trust Fund Account Statement of Receipts and Payments does not provide receipts and payments for each project undertaken by Fiji Military Force.

The statement only includes closing cash balance for each project.
• There was an unreconciled variance of $3,006,088 between the Integrated Border Control Management System (IBMS) which records the Department of Immigrations operating revenue and the FMIS General Ledger.

In addition, detailed listings of work permit holders for whom security bond totaling $25,215,349 was held in trust as at 31 July 2017 are not maintained by the Department of Immigration.

• The Ministry receives $70,000 annual fees from the Ministry of Civil Service under the Shared Services Agreement.
The Ministry deposited the service fees into the OHS Consultancy Trust Fund Account.

Transfer of public funds into a trust account is improper as funds in trust are those funds other than public money.

Consequently, the OHS Trust Fund Account is overstated by $70,000 and Ministry’s operating revenue is understated by the same amount.
• An unreconciled variance of $381,087 exists between the OHS Consultancy, Wages Dispute and Workmen’s Compensation Trust Fund cash at bank balance and the General Ledger (FMIS) balance.

As a result I was not able to ascertain that all receipts and payments had been accurately accounted and disclosed in the Trust Fund cash account.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Unmodified opinions We issued unmodified opinions on 17 or 74% of the 2017 financial statements various ministries and departments.

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

Fourteen (14) ministries and departments prepared good quality complete draft financial statements that did not require any adjustments.

Adjustments passed on draft financial statements for 5 ministries and departments were not material.
The most material adjustment was made for financial statements of three ministries and departments.

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

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

The deadline set by Ministry of Economy for submission of draft financial statements was 16 October 2017.
Table B Agencies which met or missed the agreed timeline for submission of draft financial statements Sector Timeline Met Timeline not Met General Administration Services 1.

Parliament Office 2.

Office of the Director of Public 1.

Ministry of Justice 2.

Ministry of Civil Service and Public Prosecutions 3.

Judiciary Department 4.

Office of the Auditor General 5.

Peacekeeping Missions Service Commission 3.

Fiji Corrections Services 4.


Ministry of Rural and Maritime Development and National Disaster Management 5.

Fiji Military Force 6.

Fiji Police Force 7.

Ministry of Communication – Department of Information 8.

Office of the President 9.

Office of the Prime Minister 10.

Ministry of i-Taukei Affairs 11.


Ministry of Defence, National Security and Immigration _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Sector Timeline Met Timeline not Met 12.

Ministry of Productivity Relations Employment, Industrial and 13.

Ministry of Foreign Affairs 14.

Independent Commission – Fiji Independent Commission Against Corruption 15.
Office of the Attorney General 16.

Fiji Elections Office of 17.

Department Technology and Services Information Computing Year-end closing process On 1 June 2017, Permanent Secretary for Economy issued Circular No.

04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Ten or 43% of the Ministries and Departments under the General Administration sector achieved all the key focus areas for closing of accounts set by Ministry of Economy while 10 or 43% managed to achieve 5 of 10 key processes within two weeks of due date.

Three Ministries could not achieve any of the key focus areas.
_____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Appendix A: Assessment of financial governance This section evaluates the effectiveness of the internal controls maintained by 20 ministries and departments.
Internal controls are processes designed and implemented by Permanent Secretaries, Heads of Departments and other personnel of ministries and departments to provide reasonable assurance about the achievement of a ministry or department’s objectives with regard to reliability of financial reporting effectiveness and efficiency of operations, and compliance with applicable laws and regulations.

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

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

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

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

It requires immediate management action.

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

These include commitment to integrity and ethical values, independence of management to exercise oversight for the development and performance of internal control, documented structures, reporting lines and appropriate authorities such as delegated levels of authority and responsibilities in the pursuit of the entity’s objectives.
It is also includes commitment to attract, develop and retain _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 competent responsibilities.
individuals, and holding them accountable for their internal control • Risk Assessment (RA) – involves a dynamic process for identifying and analyzing risks to achieve the entity’s objectives, forming a basis for determining how risks should be managed.

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

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

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

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

Findings are evaluated and deficiencies are communicated in a timely manner.
The following table outlines the rating we have used to assess internal controls: Rating Internal control assessment  Effective  Generally effective  Ineffective No deficiencies identified in internal controls Deficiencies identified in internal controls Significant deficiencies identified in internal controls Preparation of draft 2016-2017 agency financial statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Rating Year-end close process assessment  Effective  Generally effective  Ineffective All 10 key processes completed by due date Five of 10 key processes completed within two weeks of due date Less than five of 10 key processes completed within two weeks of due date Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the total expenditures, operating results or net assets of the entity subject to our audit.

Rating Quality of draft financial statements assessment  Effective  Generally effective  Ineffective No adjustments were required Adjustments on total expenditure, operating results/net assets were less than one percent Adjustments on total expenditure.
operating results/net assets were more than one percent Timeliness of draft financial statements for entities To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Rating  Effective  Generally effective  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received before or on 1 October 2017 Acceptable draft financial statements received on or before 16 October 2017 Acceptable draft financial statements received after 16 October 2017 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness for General Administration Sector as: Rating  Effective Rating  Ineffective Result summary Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing The following table summarizes our assessment of controls, the 2016-2017 financial statement preparing processes and responses to the Office of the Auditor-General across the ministries and departments in the General Administration Sector which were subject to our audit.
Ministry or Department Internal controls Financial Statement Preparation T Responses to OAG General Administration 1.

Office of the President 2.

Office of the Prime Minister 3.

Office of the Attorney-General 5.

Ministry of i-Taukei Affairs 6.

Ministry of Defence, National Security and Immigration of 7.

Ministry Employment, Industrial and Productivity Relations 8.

Ministry of Foreign Affairs 9.

Office of the Auditor-General 10.

Fijian Elections Office 11.

Judiciary 12.

Parliament 13.


Independent Commissions: Independent Commission Fiji Against Corruption Public Service Commission 14.

Office of the Director of Public Prosecutions 15.

Ministry of Justice 15A.Fiji Corrections Service 16.

Ministry of Communication 17.

Department Technology Services of & Information Computing 18.

Ministry of Civil Service 19.


Ministry of Rural and Maritime and National Development Disaster Management CE                    IC MA RA CA YE Q MC                                                                                                                                                         20.
Republic of Fiji Military Forces 21.

Fiji Police Force                 _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR   SFS                      13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Ministry or Department Internal controls Financial Statement Preparation T Responses to OAG General Administration 49.
Peace Keeping Mission CE  RA CA YE Q MC         IC MA SFS  CE=Control Environment RA=Risk Assessment Q=Quality of draft financial statements IC=Information and Communication Control CA=Control Activities YE= Year-end close processes T=Timeliness of draft financial statements MA=Monitoring Activities MC+ Management Comments provided SFS Signed Audited financial statements returned _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 Appendix B: Audit Opinion Results The following table presents the results of our audit of 2016-2017 financial statements for ministries and departments in the General Administration Sector.
Ministry/Department 1.

Office of the President 2.

Office of the Prime Minister 3.

Office of the Attorney-General 5.

Ministry of i-Taukei Affairs 6.

Ministry of Defence, National Security and Immigration Date audit report signed 08/03/18 13/02/18 29/01/18 30/04/18 03/05/18 Audit opinion type Unmodified Unmodified Unmodified Unmodified Modified 7.

Ministry of Employment, Productivity and 24/07/18 Modified Industrial Relations 8.

Ministry of Foreign Affairs 9.

Office of the Auditor-General 10.


Fijian Elections Office 11.

Judiciary 12.

Parliament 13.

Independent Commissions: Fiji Independent Commission Against Corruption Public Service Commission 14.

Office of the Director of Public Prosecutions 15.

Ministry of Justice 15A Fiji Corrections Service 16.

Ministry of Communication 16A.

Department of Information Technology & Computing Services 20/06/18 18/10/17 17/12/18 12/07/18 22/11/17 24/01/18 23/05/18 18/12/17 22/05/18 04/09/18 14/03/18 11/05/18 17.
Ministry of Civil Service 18.

Ministry of Rural and Maritime Development and 23/05/18 03/04/18 National Disaster Management 19.

Republic of Fiji Military Forces 20.

Fiji Police Force 49.
Peacekeeping Missions 16/04/18 19/03/18 03/05/18 Unmodified Unmodified Unmodified Modified Unmodified Unmodified Unmodified Unmodified Modified Unmodified Unmodified Unmodified Unmodified Modified Modified Unmodified Unmodified _____________________________________________________________________________________ SUMMARY – GENERAL ADMINISTRATION SECTOR 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 1 Office of the President Roles and Responsibilities Under the Constitution of the Republic of Fiji, the President is the Head of State and the Executive Authority of State.
The President is also the Commander-in-Chief of the Republic of Fiji Military Forces and performs ceremonial functions for the military in this capacity.

The President is also the Chancellor of the Order of Fiji and oversees the recognition of both citizens and non-citizens for their contributions at the community, national and international levels that help Fiji develop as a nation.

The President is apolitical and symbolizes national unity for all Fijians.
The President’s responsibilities include approving all Constitutional appointments, opening each annual session of Parliament with an address outlining the policies and programmes of the Government, assenting to Bills passed by Parliament, receiving the credentials of foreign diplomats and conducting State Visits to strengthen Fiji’s diplomatic and foreign relations.

The President also maintains an active programme of community engagements.
The Office of the President’s primary role is to assist the President in fulfilling all constitutional, official and ceremonial obligations.

They provide direct policy advice on matters of national interest by providing a full range of administrative, protocol, domestic and landscape services on a daily basis.

The Office of the President also coordinates security services to the President through the Republic of Fiji Military Forces and the Office of the President.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 1.1 Statement of Receipts and Expenditure .................................................................................. 2 1.2 Appropriation Statement .......................................................................................................... 2 1.3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 1.4 1.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 1.6 Quality of draft financial statements by entities ...................................................................... 6 Timeliness of draft financial statements ................................................................................... 6 1.7 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 1.8 Office of the President Section 1: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 1.1 Audit Opinion The audit of the 2017 accounts for the Office of the President resulted in the issue of an unqualified audit opinion.
1.2 Statement of Receipts and Expenditure The Office of the President recorded revenue totalling $1,040 and incurred a total expenditure of $1,958,566 for the year ended 31 July 2017.
Details are provided in Table 1.1 Table 1.1: Statement of Receipts and Expenditure for 2017 Description State revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Total Operating Expenditure 31 July 2017 ($) 1,040 1,040 634,847 189,884 465,514 380,314 184,652 1,855,211 31 July 2016 ($) 676 676 380,706 111,735 866,952 265,878 118,421 1,743,692 Value Added Tax 103,355 40,501 Total Expenditure 1,958,566 1,784,193 The financial year-end for Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

1.3 Appropriation Statement The Office incurred expenditure totalling $1.9 million in 2017 against a revised budget of $3.5 million, resulting in a saving of $1.5 million or 45%.
The large savings was due to the deferment of major capital projects namely the Coronation Ground Drainage, upgrading of the Vakatunuloa and installation of the fire alarm system to the 2017 – 2018 financial year.

Details of expenditure against the revised budget are provided in Table 1.2.
Office of the President Section 1: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 1.2: Appropriation Statement for financial year 2017 SEG Item Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Total Expenditure Capital Construction Total Capital Expenditure Value Added Tax TOTAL Operating Budget Estimate ($) 649,621 230,604 311,900 483,400 157,400 Changes ($) (6,562) (30,787) 159,054 (94,315) 32,186 Revised Estimate ($) a 643,059 199,817 470,954 389,085 189,586 Actual Expenditure ($) b 634,847 189,884 465,514 380,314 184,652 Lapsed Appropriation ($) (a-b) 8,212 9,933 5,440 8,771 4,934 1,832,925 59,576 1,892,501 1,855,211 37,290 1,492,248 1,492,248 220,000 3,545,173 (59,576) (59,576) --- --- 1,432,672 1,432,672 220,000 3,545,173 --- --- 103,355 1,958,566 1,432,672 1,432,672 116,645 1,586,607 Office of the President Section 1: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 1.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Office of the President Section 1: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 1.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Office of the President Section 1: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 1.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 1.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 1.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Within 21 days from issue of Draft Management Letter Rating  Ineffective Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Office of the President Section 1: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 2 Office of the Prime Minister Roles and Responsibilities The Prime Minister is the Head of Government and is responsible for leading Cabinet and guiding the Government’s legislative and reform agenda.
One of the Prime Minister’s primary responsibilities is to ensure that Government adopts a holistic approach to Fiji’s development by promoting close cooperation among his Ministers.

It is also the duty of the Prime Minister to ensure that his Ministers uphold their responsibilities to Parliament.

The Office of the Prime Minister [OPM] provides policy advice and administrative support to the Prime Minister and Cabinet.
It liaises with and seeks input from Government Ministries to provide the Prime Minister with policy advice.

Under the Prime Minister’s guidance, the OPM’s work includes but is not limited to projects of particular priority for Government, such as rural and outer island development, small and community grant projects and the development of specific industries which require a national focus.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 2.1 2.2 Statement of Receipts and Expenditure .................................................................................. 2 2.3 Appropriation Statement .......................................................................................................... 2 2.4 Main Trust Fund Account........................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 6 PART B: Internal Controls ........................................................................................................................ 6 2.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 7 2.6 2.7 Quality of Draft Financial Statements by Entities .................................................................... 8 Timeliness of Draft Financial Statements ................................................................................. 8 2.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 8 2.9 Office of the Prime Minister Section 2: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 2.1 Audit Opinion The audit of the 2017 accounts of the Office of the Prime Minister resulted in an unqualified audit opinion.
2.2 Statement of Receipts and Expenditure The Office collected state revenue totalling $145,991 and incurred a total expenditure of $9,078,591 for the year ended 31 July 2017.

Details are provided in Table 2.1.
Table 2.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants &Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Grants and Transfers Total Capital Expenditure 31 July 2017 ($) 145,991 145,991 31 July 2016 ($) 47,664 47,664 2,252,683 483,752 1,416,646 634,255 150,666 659,573 190,041 5,787,616 1,464,308 275,447 813,869 478,457 146,342 512,690 146,605 3,837,718 17,871 3,163,482 3,181,353 --- 2,036,944 2,036,944 Value Added Tax 109,622 90,081 Total Expenditure 9,078,591 5,964,743 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
2.3 Appropriation Statement The Office incurred expenditure totalling $9.1 million in 2017 against a revised budget of $17.6 million and carried over $5.8 million in accordance with Section 19 of the Financial Management Act, resulting in a saving of $2.7 million or 18%.

The savings was mainly attributed to operating expenditure.

Details of expenditure against the revised budget are provided in Table 2.2.
Office of the Prime Minister Section 2: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 2.2: Appropriation Statement for 2017 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure & Total Operating Expenditure 9 10 Capital Construction Capital Grants Transfers Total Capital Expenditure and 13 Value Added Tax TOTAL Budget Estimate ($) 2,936,529 537,277 Changes ($) --- --- Revised Estimate ($) 2,936,529 537,277 Actual Expenditure ($) 2,252,683 483,752 2,300,720 (20,000) 2,280,720 1,416,646 878,700 (4,500) 874,200 634,255 329,900 (26,881) 303,019 150,666 815,000 --- 815,000 659,573 Carry- Over ($) Lapsed Appropriation 683,846 53,525 864,074 239,945 152,353 155,427 --- --- --- --- --- 258,100 8,056,226 --- 9,200,000 9,200,000 339,100 17,595,326 27,731 (23,650) 23,650 --- 285,831 8,032,576 23,650 9,200,000 9,223,650 23,650 339,100 --- --- 17,595,326 190,041 5,787,616 17,871 3,163,482 3,181,353 109,622 9,078,591 --- --- --- 5,818,901 95,790 2,244,960 5,779 217,617 5,818,901 --- 5,818,901 223,396 229,478 2,697,834 The Office collected revenue totalling $145,991 in 2017, an increase of 206% from the previous year.
Carry-Over of Appropriation The carry-over of $5,818,901 in Capital Grants & Transfers (Small Grants Project) was approved by the Honourable Minister for Economy in accordance with Section 19 of the Financial Management Act 2004.

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

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

The approving authority for the funding of assistance under this trust fund account is the Honourable Prime Minister.
Office of the Prime Minister Section 2: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 2.3: Chinese Grant Trust Fund Account – Statement of Receipts and Payments Description Receipts Interest Assistance & Refunds Total Receipts Payments Withholding Tax Statement Fee Withdrawal Transfer – Bank Fees Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 496 211,434 211,930 50 3 --- 53 211,877 360,929 572,806 178 8,948 9,126 18 --- 40 58 9,068 351,861 360,929 2.4.2 Taiwan Grant Trust Fund Account – Statement of Receipts and Payments The trust fund account is used to record and maintain grants that are provided by the Taiwanese Government to the Fiji Government through bilateral agreements.
The funds are generally used to cater for those projects that are committed by the Honourable Prime Minister through request from communities and are evaluated based on its need and priority in areas of education, integrated village/settlement developments, youth developments, women’s and minority group settlement developments and are not provided for in the national budget estimates.

The approving authority for the funding of assistance under this trust fund account is the Honourable Prime Minister.
Table 2.4: Taiwan Grant Trust Fund Account – Statement of Receipts and Payments Description Receipts Interest Received Other Receipts Total Receipts Payments Withholding Tax Withdrawal Transfer – Bank Fees Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 50 --- 50 21 41,849 41,870 5 --- 5 45 50,080 50,125 --- 43 43 41,827 8,253 50,080 2.4.3 Retention Fund Account – Statement of Receipts and Payments The trust fund account is used to maintain retention monies for various projects as per the conditions of contract with the contractors.
Funds kept in this account will be paid to the contractors when certificate of completion is submitted and all conditions of the contract are met.
Office of the Prime Minister Section 2: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 2.5: Retention Fund Account – Statement of Receipts and Payments Description Receipts Interest Retention for Vatulele District School Retention for Matanuca Primary School Retention for Vunisaiki Primary School Total Receipts Payments Bank Fee Resident Withholding Tax Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 968 17,061 12,189 60,962 91,180 474 --- --- --- 474 97 4,807 4,904 86,276 40 47 87 387 953,810 953,423 1,040,086 953,810 2.4.4 Mahogany Industry Council Fund Account – Statement of Receipts and Payments The Mahogany Industry Council Trust Fund (‘Fund’) was established in July 2015 for the sole purpose of administering all license fees paid by Mahogany Industry license holders.
The license fees concept was introduced in June 2011 following the Mahogany Industry (Licensing and Branding) Act 2011.

The administration of the proceeds was handled by the Ministry of Economy and was only transferred to the Office of the Prime Minister, as Secretariat of the Mahogany Industry Council (‘Council’), in August 2015.
Table 2.6: Mahogany Industry Fund Account – Statement of Receipts and Payments Description Receipts Interest Transfer from Ministry of Economy License Fees Reversal Withholding Tax Total Receipts Payments Bank Chargers Withholding Tax Refund of License Fee Total Payments Net (Deficit)/Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 17,095 --- 8,478 44,164 178,317 1,110,987 76 1,163,705 --- 195,412 43 1,710 532,795 534,548 76 923 --- 999 (339,136) 1,162,706 2,068,910 906,204 1,729,774 2,068,910 Office of the Prime Minister Section 2: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 2.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Office of the Prime Minister Section 2: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office of the Prime Minister as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 2.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Office of the Prime Minister Section 2: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 2.7 Quality of Draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Office of the Prime Minister was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 2.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 2.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Effective Timeliness of Management Comments Received After 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Office of the Prime Minister Section 2: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 3 Office of the Attorney-General Roles and Responsibilities The Attorney-General is the Chief Legal Adviser to Government, whose Permanent Secretary is the Solicitor-General.
The Attorney-General’s Chambers seeks to continually review and improve Fijian laws to bring about a more just and secure society.

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

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

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

The Legal Aid Commission, the Fiji Intellectual Property Office and the Media Industry Development Authority also come under the Office of the Attorney-General.
Table of Contents PART A: 3.1 3.2 3.3 3.4 3.5 3.6 PART B: 3.7 3.8 3.9 3.10 3.11 FINANCIAL STATEMENTS ................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 Statement of Receipts and Expenditure – Head 03 Office of the Attorney-General .......... 2 Appropriation Statement – Head 03 Office of the Attorney General .................................. 3 Statement of Receipts and Expenditure – Head 13 (i) Fiji Human Rights Commission ....... 4 Appropriation Statement – Head 13 (i) Fiji Human Rights Commission ............................... 4 Main Trust Fund Account ........................................................................................................ 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 6 Internal Controls ...................................................................................................................... 6 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 7 Quality of Draft Financial Statements by entities .................................................................. 8 Timeliness of Draft Financial Statements ............................................................................... 8 Timeliness of Provision of Management Comments and Signing of Financial Statements 8 Office of the Attorney-General Section 3: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 3.1 Audit Opinion The audit of the 2017 accounts of the Office of the Attorney General resulted in an unqualified audit opinion.
3.2 Statement of Receipts and Expenditure – Head 03 Office of the Attorney-General The Office collected revenue totalling $306,174 and incurred a total expenditure of $13.5 million for the year ended 31 July 2017.

Details are provided in Table 3.1.
Table 3.1: Statement of Receipts and Expenditure for 2017 Description State revenue Agency revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital construction Capital purchase Capital grants and transfers Total Capital Expenditure 31 July 2017 ($) 296,663 9,511 306,174 3,488,716 304,459 524,601 468,710 955,164 7,307,304 188,983 13,237,937 --- --- --- --- 31 July 2016 ($) 187,785 8,455 196,240 1,723,001 170,292 149,504 306,894 913,153 4,680,361 282,782 8,225,987 --- --- --- --- Value added tax 244,928 243,254 Total Expenditure 13,482,865 8,469,241 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

Revenue mainly comprised of hotels and guest house license fees which are normally received in the last quarter of the calendar year resulting in a significant increase in state revenue.
Established staff expenditures increased by $1,765,715 in 2017 compared to 2016 due to the pay rise for professional officers and bonus payment for officers involved in the revision of the Laws of Fiji.
Office of the Attorney-General Section 3: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Operating grants and transfers expenditures increased by $2,626,943 in 2017 compared to 2016 due to the disbursement of the full operating grant to the Legal Aid Commission and payment of domestic air services subsidy in 2017.
3.3 Appropriation Statement – Head 03 Office of the Attorney General The Office incurred expenditure totalling $13.5 million in 2017 against a revised budget of $19.6 million, resulting in a saving of $6.1 million or 31%.

The large savings was due to vacant positions not being filled by the Office in 2017 and the partial payment of operating grant to the Civil Aviation Authority of Fiji.
Moreover, the Media Industry Development Authority was not fully active in 2017 as there were no staffs, thus grants were not released.

The Civil Aviation Authority of Fiji did not submit any further request for operating grants due to the large amount of revenue collected in 2017.

Details of expenditure against the revised budget are provided in Table 3.2.
Table 3.2: Appropriation Statement for 2017 SEG Item wage 1 2 3 Established staff Government earners Travel communication 4 Maintenance Budget Estimate ($) 5,259,134 177,362 Changes ($) (155,000) 155,000 Revised Estimate ($) 5,104,134 332,362 Actual Expenditure ($) 3,488,716 304,459 Lapsed Appropriation ($) 1,615,418 27,903 & & 226,750 326,000 552,750 524,601 372,300 171,000 543,300 468,710 28,149 74,590 6 5 operations Purchase of goods & services Operating grants & transfers Special expenditure Total Expenditure 8 Capital construction Capital purchase 9 10 Capital grants and Operating 7 Capital transfers Total Expenditure Value added tax TOTAL 13 1,783,973 (224,000) 1,559,973 955,164 604,809 9,860,825 (13,000) 9,847,825 7,307,304 2,540,521 1,205,000 18,885,344 (260,000) 945,000 --- 18,885,344 188,983 13,237,937 756,017 5,647,407 350,000 --- --- 350,000 --- --- --- --- 350,000 --- --- 350,000 --- --- --- --- 350,000 --- --- 350,000 354,500 19,589,844 --- 354,500 --- 19,589,844 244,928 13,482,865 109,572 6,106,979 The Office collected revenue totalling $306,174 in 2017, an increase of 56% from the previous year.
Office of the Attorney-General Section 3: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 3.4 Statement of Receipts and Expenditure – Head 13 (i) Fiji Human Rights Commission In 2016, less than a quarter of annual operating grant was released to the Fiji Human Rights Commission (FHRC).

The full amount which was for the whole year was paid in 2017.

Moreover, the annual budget for FHRC increased by $328,305 from 2016 to 2017.
Details are provided in Table 3.3 and Table 3.4 Table 3.3: Statement of Expenditure for 2017 Description Operating Expenditure Operating Grants and Transfer Total Expenditure 31 July 2017 ($) 31 July 2016 ($) 1,492,656 1,492,656 194,059 194,059 3.5 Appropriation Statement – Head 13 (i) Fiji Human Rights Commission Table 3.4: Appropriation Statement for 2017 SEG Item 6 Operating grants & transfers Total Operating Expenditure Budget Estimate ($) 1,492,657 Changes ($) --- Revised Estimate ($) 1,492,657 Actual Expenditure ($) 1,492,656 1,492,657 --- 1,492,657 1,492,656 TOTAL 1,492,657 --- 1,492,657 1,492,656 Lapsed Appropriation ($) 1 1 1 3.6 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.
Trust money is to be kept in a separate bank account pending its withdrawal for use.

The Office of the Attorney General operates and maintains 2 main trust fund bank accounts which includes the following; 3.6.1 Attorney General’s Conference Trust Fund Account The Trust Fund Account was established to retain surplus fund generated after the Annual Attorney General Conference to assist the next conference as the Office are only allocated $100,000 from the yearly budget allocation.
Receipts consist of $100,000 received from the Continuing Legal Education budget of the Office and fees from private practitioners attending the Conference.

Payments comprise of expenditure associated with the Attorney General Annual Conference which is usually held in December.

As at 31 July 2017, the Trust Fund Account had a balance of $156,004.
Office of the Attorney-General Section 3: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 3.5: Attorney General’s Conference Trust Fund Account – Statement of Receipts and Payments Description Receipts Budget allocation from Consolidated Fund Participants registration fees for AG’s conference Interest Total Receipts Payments Conference accommodation Conference stationery Conference transportation Conference advertising Conference incidental Conference speakers travel Meal claims Refund of registration Withholding Tax Bank charges Total Payments Net (Deficit)/Surplus Opening balance as at 1 August Closing Balance as at 31 July 3.6.2 Law of Fiji Trust Fund Account 31 July 2017 ($) 31 July 2016 ($) 100,000 385,276 2,187 487,463 460,839 16,681 1,600 6,624 21,767 16,664 774 8,874 219 143 534,185 (46,722) 202,726 156,004 100,000 95 598 100,693 --- --- --- --- --- --- --- --- 60 24 84 100,609 102,117 202,726 The Laws of Fiji Fund was established on 18 December 2016 to fund the cost of publication and printing of the Laws of Fiji and to provide funding for future law revision costs As at 31 July 2017, the Laws of Fiji Trust Fund Account had a balance of $931,143.
This balance is made up of the payments received from the respective buyers of the revised set of the “Laws of Fiji” volumes.
Table 3.6: Laws of Fiji Trust Fund Account – Statement of Receipts and Payments Description Receipts Laws of Fiji Book Order Interest Total Receipts Payments Laws of Fiji Book payments Withholding Tax Bank charges Total Payments Net Surplus 31 July 2017 ($) 31 July 2016 ($) 1,358,685 3,036 1,361,721 430,239 304 35 430,578 931,143 --- --- --- --- --- --- --- --- Office of the Attorney-General Section 3: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 3.7 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances which are aligned to the policies of the entity.
Specific control activities include those relating to Office of the Attorney-General Section 3: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR authorization, performance reviews, information processing, physical controls, and segregation of duties.

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

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

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

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

Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.
This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 3.8 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 Office of the Attorney-General Section 3: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 3.9 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 3.10 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received on or before 16 October 2017 3.11 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Office of the Attorney-General Section 3: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Accordingly, we have assessed timeliness as: Rating  Effective Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Office of the Attorney-General Section 3: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 5 Ministry of i-Taukei Affairs Roles and Responsibilities Government is committed to protecting the rights, customs and traditions of the i-Taukei.
Through the Ministry of i-Taukei Affairs, Government develops implements and monitors policies and programs for the good governance and wellbeing of the i-Taukei people.

The Ministry’s specific roles and responsibilities are outlined in the i-Taukei Affairs Act and other legislation, but its overall direction is guided by the Fijian Constitution, which recognises the i- Taukei, their ownership of land, and their unique culture, customs, traditions and language.
The Ministry’s core function is to provide the link between Government and the various institutions that govern the affairs of the i-Taukei.

The Ministry is responsible for ensuring that these institutions are well run, accountable and transparent so as to best serve the interests of all i-Taukei.

The i-Taukei administration – established across 14 Provinces in Fiji – is under the direction of the i-Taukei Affairs Board, an eight member group appointed by the Minister for i- Taukei Affairs.
The Ministry is the custodian of various registers that detail i-Taukei land ownership, customary fishing grounds, village boundaries and traditional titles, including the Vola ni Kawa Bula, known as the VKB.

As such, the Ministry has the important responsibility of resolving disputed claims in relation to these matters.
In support of its role as official record keeper, the Ministry conducts surveys of i-Taukei land, as well as demarcations of village and fishing boundaries, in areas where no records exist.

The Ministry is also entrusted with preserving and promoting i-Taukei culture for the present and future generations.
It develops programs aimed at deepening the understanding of i-Taukei customs, language and traditional knowledge, as well as documents important ceremonial occasions and conducts research on a broad range of topics.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 5.1 Audit Opinion ............................................................................................................................. 2 Statement of Receipts and Expenditure .................................................................................. 2 5.2 5.3 Appropriation Statement .......................................................................................................... 2 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 5.4 5.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 5.6 Quality of Draft Financial Statements by entities..................................................................... 6 Timeliness of Draft Financial Statements ................................................................................. 6 5.7 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 5.8 Ministry of i-Taukei Affairs Section 5: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 5.1 Audit Opinion The audit of the 2017 accounts of the Ministry of i-Taukei Affairs resulted in an unqualified audit report.
5.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $15,779 and incurred a total expenditure of $11,444,306 for the year ended 31 July 2017.

Details are provided in Table 5.1.
Table 5.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Services Special Expenditure Total Operating Expenditure Capital Grants and Transfers Total Capital Expenditure Value Added Tax 31 July 2017 ($) 2,596 13,183 15,779 2,491,844 164,287 162,715 375,974 214,262 6,545,900 739,619 10,694,601 31 July 2016 ($) 17,967 1,604 19,571 1,275,161 98,642 56,793 155,490 105,788 3,272,351 603,858 5,568,083 636,546 636,546 389,586 389,586 113,159 75,922 Total Expenditure 11,444,306 6,033,591 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
5.3 Appropriation Statement The Ministry incurred expenditure totalling $11.4 million in 2017 against a revised budget of $11.5 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $75,554 or 0.7%.

Details of expenditure against the revised budget are provided in Table 5.2.
Ministry of i-Taukei Affairs Section 5: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 5.2: Appropriation Statement for 2017 Budget Estimate ($) 2,757,142 114,400 Changes ($) (247,220) 50,000 Revised Estimate ($) 2,509,922 164,400 Actual Expenditure ($) Lapsed Appropriation ($) 2,491,844 164,287 SEG Item wage 1 2 3 Established staff Government earners Travel communication 4 Maintenance & & 100,212 63,220 163,432 162,715 275,500 103,800 379,300 375,974 5 6 7 10 13 operations Purchase of goods & services Operating grants & transfers Special expenditure Total Operating Expenditure Capital grants and transfers Total Capital Expenditure Value added tax TOTAL 154,000 61,200 215,200 214,262 6,545,900 --- 6,545,900 6,545,900 770,608 10,717,762 790,608 20,000 51,000 10,768,762 739,619 10,694,601 688,798 (51,000) 637,798 636,546 688,798 (51,000) 637,798 636,546 113,300 11,519,860 --- 113,300 --- 11,519,860 113,159 11,444,306 18,078 113 717 3,326 938 --- 50,989 74,161 1,252 1,252 141 75,554 The Ministry collected revenue totalling $15,779 in 2017, a decrease of 19% from the previous year.
Ministry of i-Taukei Affairs Section 5: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 5.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of i-Taukei Affairs Section 5: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 5.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Ministry of i-Taukei Affairs Section 5: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 5.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 5.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 5.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Within 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of i-Taukei Affairs Section 5: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 6 Ministry of Defence, National Security and Immigration Roles and Responsibilities Ensuring the safety and security of the Fijian people is one of Government’s most sacred obligations.
This is something that only Government can do, and it goes to the core of people’s faith in their Government.

The Ministry of Defence, National Security and Immigration ensures peace and stability in Fiji by coordinating and supervising all activities and functions of Government concerned directly with national security.
The Ministry is responsible for the implementation of security related legislation and policy initiatives, managing national crises and emergencies, aerial surveillance and search and rescue operations.

Through the Security Forces Division, it coordinates with the Fiji Police Force and Republic of Fiji Military Forces on security matters.

The Security and Assessment Divisions are responsible for the coordination of Government’s intelligence and security requirements.
Government is also responsible for managing and protecting Fiji’s borders to ensure the legal and orderly flow of citizens and visitors in and out of the country.

The Department of Immigration is responsible for facilitating clearance of all inward and outward passengers, vessels and aircrafts, detention and deportation, combating the trafficking of persons, determining refugee status and managing migration.

The Department issues passports, visas, permits and citizenship.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 3 6.1 Audit Opinion ............................................................................................................................. 3 6.2 Statement of Receipts and Expenditure .................................................................................. 3 6.3 Appropriation Statement .......................................................................................................... 4 6.4 Main Trust Fund Account........................................................................................................... 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 6 PART B: 6.5 Internal Controls ........................................................................................................................ 6 6.6 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 7 6.7 Quality of draft Financial Statements by Entities ..................................................................... 8 6.8 Timeliness of Draft Financial Statements ................................................................................. 8 6.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 8 OTHER SIGNIFICANT MATTERS - DEPARTMENT OF IMMIGRATION ............................... 9 6.10 Variance between International Border Management System and FMIS .............................. 9 6.11 Unsubstantiated Security Bond amount ................................................................................. 11 6.12 Losses Report not prepared for Passports Damaged in Printing Process ............................. 12 6.13 Absence of Risk Management Framework ............................................................................. 13 6.14 Untimely Preparation of Reconciliations
 ................................................................................. 13 6.15 Anomalies noted in Journal Voucher Posting – Revenue ....................................................... 14 6.16 Anomalies noted in Operating Trust Fund ............................................................................... 15 6.17 Lack of Monitoring on Permit Holders .................................................................................... 17 6.18 Anomalies noted in processing of payments .......................................................................... 18 STATUS OF SECURITY BOND TRUST FUND RECONCILIATIONS....................... 20 APPENDIX 6.1: PART C: Ministry of Defence, National Security and Immigration Section 6: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.2: APPENDIX 6.3: APPENDIX 6.4: APPENDIX 6.5: STATUS OF PAYROLL RECONCILIATIONS .......................................................... 21 DETAILS OF DOUBLE POSTED JOURNAL VOUCHERS ........................................ 22 DETAILS OF OVER-STAYERS ................................................................................. 23 ANOMALIES NOTED IN PAYMENTS PROCESS .................................................... 25 Ministry of Defence, National Security and Immigration Section 6: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 6.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Defence, National Security and Immigration resulted in a qualified audit opinion.
The qualification was due to the following: • There was an unreconciled variance of $3,006,088 between the Integrated Border Control Management System (IBMS) which records the Department of Immigrations operating revenue and the FMIS General Ledger.

As a result, I was unable to substantiate the correctness of the operating revenue balance of $13,490,542 recorded in the financial statements for the year ended 31 July 2017.
• Detailed listings of work permit holders for whom security bond totalling $25,215,349 was held in trust as at 31 July 2017 are not maintained by the Department of Immigration.

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

6.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $13,507,264 and incurred a total expenditure of $7,810,488 for the year ended 31 July 2017.
Details are provided in Table 6.1.
Table 6.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchases Total Capital Expenditure 31 July 2017 ($) 13,490,633 16,631 13,507,264 4,166,371 356,428 406,373 646,282 1,080,880 56,265 662,149 7,374,748 90,647 91,291 181,938 31 July 2016 ($) 7,197,715 44,185 7,241,900 2,472,932 181,412 180,951 408,727 617,027 10,708 284,695 4,156,452 16,227 29,951 46,178 Value Added Tax 253,802 154,132 Total Expenditure 7,810,488 4,356,762 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 Ministry of Defence, National Security and Immigration Section 6: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR was for a 12-month period.

This contributed to the significant variances with comparative balances for some account areas.
6.3 Appropriation Statement The Ministry incurred expenditure totalling $7.8 million in 2017 against a revised budget of $8.6 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $0.8 million or 10%.

The savings of $358,709 under the Capital Purchases allocation was due to non-utilisation of funds allocated for the Integrated Passport Issuance System.

The funds were budgeted for additional computers and user licenses for the new Immigration office in Nadi.
Due to delays in getting suitable office space, budgeted funds could not be utilised.

Details of expenditure against the revised budget are provided in Table 6.2.
Table 6.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 4,397,710 277,249 Changes ($) (160,807) 80,061 Revised Estimate ($) 4,236,903 357,310 Actual Expenditure ($) Lapsed Appropriation ($) 4,166,371 356,428 305,000 111,924 416,924 406,373 4 Maintenance & 583,437 82,769 666,206 646,282 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 13 1,170,872 (66,569) 1,104,303 1,080,880 35,200 31,000 66,200 56,265 1,000,622 7,770,090 (78,378) --- 922,244 7,770,090 662,149 7,374,748 100,000 450,000 550,000 324.900 8,644,990 --- --- --- --- --- 100,000 450,000 550,000 90,647 91,291 181,938 324.900 8,644,990 253,802 7,810,488 70,532 882 10,551 19,924 23,423 9,935 260,095 395,342 9,353 358,709 368,062 71,098 834,502 The Ministry collected revenue totalling $13,507,264 in 2017, an increase of 87% from the previous year.
6.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

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

The Department of Immigration operates and maintains one Main Trust Fund Bank Account.
Ministry of Defence, National Security and Immigration Section 6: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 6.4.1 Immigration Bond Trust Fund Account The trust fund account is used to record and maintain bonds.

Bond is a sum of money paid by a non- citizen applying for a permit as security prior to the granting of the permit as.
The bond money is refunded when the person(s) returns to their home country at the completion of their work contract, education or other reasons.

In the event where a non-citizen breaches any of the conditions of his/her permit or the non-citizen without lawful authority remains in the Fiji Islands after the expiration of his/her permit, the bond is forfeited to the State.
Table 6.3: Immigration Bond Trust Fund Account – Statement of Receipts and Payments Description Receipts Immigration Bond Received Total Receipts Payments Immigration Bond Payment Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 9,222,553 9,222,553 4,139,196 4,139,196 4,187,530 4,187,530 1,642,177 1,642,177 5,035,023 2,497,019 20,180,326 17,683,307 25,215,349 20,180,326 Ministry of Defence, National Security and Immigration Section 6: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 6.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Defence, National Security and Immigration Section 6: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department of Immigration as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 6.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Ministry of Defence, National Security and Immigration Section 6: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 6.7 Quality of draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Department of Immigration was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 6.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 16 October 2017 6.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of Management Comments Received After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of Defence, National Security and Immigration Section 6: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS - DEPARTMENT OF IMMIGRATION The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Department as at 31 July 2017.
6.10 Variance between International Border Management System and FMIS Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at ministry/department level and/but most importantly at whole of government level.1 The Senior Accounts Officer must reconcile all accounts to be submitted to Ministry of Economy within two weeks after closing of each monthly account.2 Unreconciled variance of $3,006,087.75 exists between the total operating revenue as per the general ledger (FMIS) and the International Border Management System (IBMS) system.
Refer to Table 6.4 for details.

Table 6.4: Comparison of GL and IBMS Balances Description Balances as per General Ledger FMIS $ Balances as per IBMS $ Unreconciled Variance $ Passport Revenue 13,490,541.88 10,484,454.13 3,006,087.75 The above variance was due to the following: • The Department had engaged Informatics International Limited in 2012 to implement International Border Management System (IBMS) to automate the Department’s processes.
Of the 11 modules, one was the receipting module whereby all revenue collected by the Department was supposed to be automated.

However, receipts from appeal fee, prohibited immigrant uplift fee, issue of citizenship certificate fee and security bond are yet to be integrated in the IBMS and are collected manually in all centres.

These receipts are posted directly into the general ledger (FMIS) without being posted into the IBMS system.
1 Department of Immigration Financial Manual 2013 Section 17.2.4 2 Department of Immigration Finance Manual 2013, Paragraph 17.2.4 Ministry of Defence, National Security and Immigration Section 6: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • We could not perform alternative audit procedures to reconcile the variance as the manual revenue register for Suva was only updated from November 2016 to July 2017 and for outer stations Nadi, Lautoka, Rotuma, Levuka and Savusavu manual register was not maintained.
Therefore, the completeness and accuracy of the revenue figures recorded as per the general ledger cannot be ascertained.

• In addition, the Department did not maintain necessary supporting documents for overseas remittances (immigration revenue collected overseas) to substantiate revenue that were posted in the general ledger by the Ministry of Economy and Ministry of Foreign Affairs.
The above findings indicate that the implementation of the IBMS is incomplete and does not fully support the revenue management of the Department.

Poor record-keeping for manual receipts by the respective centres has contributed significantly towards the inability of the Accounting Head to reconcile the manual receipts and IBMS revenue to the General Ledger.

As a result, we could not ascertain the accuracy and completeness of operating revenue disclosed in the financial statements.
Recommendations The Department should: • expedite the full integration of the revenue module in the IBMS system; • update their manual records to ensure that all revenues received manually are recorded, reconciled and posted into IBMS and FMIS general ledger; and carry out monthly reconciliations of revenue and any variances to be rectified accordingly.

• Management Comments The Department acknowledges the Auditor General’s recommendations.
The system is not linked to government‘s FMIS so all revenue receipted by FMIS is journalised and posted to FMIS daily.

The Department is working on fully integrating all revenue modules in IBMS, this includes Issue fees (Permit), Appeal fee, PI Uplift, Citizenship fees and the bond, to ensure that there is no manual receipt issued for this services.

Training has already been conducted to the technical officers.

This integration will see the infrequent use of manual receipts being used.
However, in unforeseen circumstances like power outages and natural disaster that affects the supply of power, hence the cashier have to resort to manual receipts so our service can continue.

Manual receipt is not reflected on the IBMS system.

The Fiji Embassies around the world also provide Immigration service to current and former Fiji citizen in the respective countries and collect revenue for the service rendered.
The Ministry of Foreign Affairs then journalises all revenue collected to FMIS on a monthly basis.

This revenue is not reflected in the IBMS.

The way forward, the Department will ensure that; • All manual receipts to be updates into the IBMS system on daily basis.

• All revenue collected from the respective countries should be posted into IBMS system on a monthly basis.
• Revenue reconciliations are to be carried out monthly to ascertain revenue appearing in the Consolidated Fund Account is equal with the IBMS system.
The Department will ensure that the 2 reports will reconcile at the end of the financial year • Ministry of Defence, National Security and Immigration Section 6: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 6.11 Unsubstantiated Security Bond amount Where the Bond is not forfeited to the State, it is returned to the non-citizen or organisation that the Bond is payable to after the permit holder has departed Fiji.3 The Department of Immigration maintains the Security Bond Trust Fund bank account in order to facilitate the receipt and payment of these bonds from non-citizens.
As at 31 July 2017, both the security bond trust cash and trust liability general ledger had a balance of $25,215,348.86.

We noted that detailed listing of work permit holders equating to the security bond held in trust are not maintained by the Department.

As a result, the Department was unable to establish the number of work permit holders currently in the country and those that have left the country without claiming a refund.
However, the Department maintains a manual Security Bond Trust register which was not maintained up-to-date and did not record the permit file reference number.

As a result, it was difficult to relate the security bond to the permit file(s).

The above findings can be eliminated if improved supervisory checks are carried out over the management of the security bond records by the Senior Accounts Officer.
Also, prolonged delays in refund of the bond to permit holders may pose difficulties in tracing the permit holders and results in unnecessary accumulation of the bond amount and administrative work.
Recommendations The Senior Accounts Officer should: • provide a breakdown of the permit holders status and balance composition/ageing as at 31 July 2017; • ensure that the Security Bond Trust Register is maintained are up-to-date, file references are recorded appropriately and checked on a monthly basis; and • ensure the security bonds are refunded to the permit holders or organisation in accordance with Section 27 (1) of the Policies & Management guidelines on Processing & Issuance of Non- Citizen Permits, Visas & Exemptions.
Management Comments The Department appreciates the recommendation of the OAG.

Work has begun on entering all bond details in the register into Ms Excel.

The bond registers kept holds information pertaining to a permit holder and these are updated daily.

Bonds received and refunds made are recorded daily.

These will help provide the breakdown details of the permit holder’s status and balance composition.
3 Policies & Management guidelines on Processing & Issuance of Non-Citizen Permits, Visa’s & Exemptions – Part X Section 27.1 (i) Ministry of Defence, National Security and Immigration Section 6: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 6.12 Losses Report not prepared for Passports Damaged in Printing Process Officers responsible for managing assets, revenue collection or cash shall prepare a loss report whenever a loss is incurred.
The loss report shall outline the nature of the loss, circumstances leading to it and recovery measures taken, a copy of the loss report must be submitted to the Senior Accounts Officer who shall record details of each loss in the Losses Register.4 A surcharge must be imposed on an Officer who is directly or indirectly responsible for the destruction, damage, theft or other loss of property.5 We noted that a considerable number of passports were damaged during the processing stage incurring unwarranted costs and loss of revenue for the Department.
In addition, a losses report was not prepared for damaged books contrary to Section 14 of the Finance Manual to instigate recovery of losses in accordance with Section 63(1) (b) of the Finance Instructions.

According to the Department, damages to passports resulted from machine errors such as printing problems, improper lamination, overheating and inking problems while some were due to human errors such as poor judgement, typing errors and incorrectly placing the passport books in the machine.
Refer to Table 6.5 below for details.

Table 6.5: Details of Damaged Passports Year 2014 2015 2016 2017 Total Number of Damaged Passports 112 109 90 111 422 Value of Loss in Revenue ($) 8,064 7,848 6,480 7,992 30,384 Similar concern was raised in the previous audit reports and it indicates that more expertise or improved supervision is needed over the printing of the passports.

Inability to contain and mitigate losses arising from damaged passport books results in loss of revenue for the Department.
Recommendations • The Department should consider providing refresher training to officers printing passport books to minimise the passport book damage rate.

• Manager Passports should ensure that a losses report is prepared for damaged books and investigate the root-cause of the damages and consider taking appropriate action on responsible officer(s) if elements of negligence are noted.
Management Comments The Department duly notes the OAG comments and would like to add that refresher training will be conducted for officers handling passport printing.

Also measures have been taken to recover the loss from damaged passport books.

The loss recovered from the officers is the unrealised value of the damaged passport book.
A 4 Department of Immigration Finance Manual 2013 – Section 14.1.1, 14.1.2 and 14.1.5 5 Finance Instruction 2010 Section 63(1)(b) Ministry of Defence, National Security and Immigration Section 6: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR loss report is filled and the unrealised value is collected the same day from the officers for the process to continue without delay.
The recovery will be made from the staff if it is ascertained that the fault was the cause of human error however should the error be system or machine related than only a report form is filled and submitted for manager’s information and records.
6.13 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Department’s Management, and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Department.

Risk management framework would provide a platform to identify various risks affecting the Department, management of the risks, develop appropriate internal control to mitigate the risks and continuous monitoring of risks.
The mechanism to mitigate risks could include policies, procedures, training and awareness.

Our review of the Department’s Corporate Governance revealed that there is no risk management framework in place.
As a result, the Department does not have written policies, procedures or guidelines to manage risk associated with the following: fraud control and anti-corruption; • department operational and human resource planning; • • disaster recovery and business continuity, and • assessment of potential conflicts of interest .

In absence of a risk management framework, the Department may find difficulty in managing risks affecting the Department particularly risk of fraud and misappropriation of assets.
Our finding also indicates that currently the Department does not have an established governance and accountability function to drive the risk management framework.

Recommendations • The Department should work towards establishing a governance and accountability function that supports the operations of the Department by providing financial and operational risk management and management of external reporting obligations.
• Following the establishment of the governance and accountability function, a risk management framework should be developed and continuously used.

Management Comments The Department acknowledges the OAG recommendations and will ensure to put in place a governance and accountability policy.

With this in place a risk management framework will be drawn up.
6.14 Untimely Preparation of Reconciliations Within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, CO- Reconciliation/the Assistant Accounts officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.6 6 Department of Immigration Finance Manual 2013 – Section 16.3.3 Ministry of Defence, National Security and Immigration Section 6: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Our review of the Department’s payroll and main trust reconciliations revealed that monthly reconciliations were not prepared in a timely manner.
Instances were noted where reconciliations were prepared after two months of receiving the monthly general ledger reports from Ministry of Economy.

Refer to Appendix 6.1 and 6.2 for details.

Delays in preparing reconciliations may result in errors, omissions and mispostings postings not being detected and rectified on a timely manner.
Recommendation The Accounting Head should ensure that underline accounts reconciliations are prepared within three days of receipt of the monthly general ledger reports from the Ministry of Economy.

Management Comments The Department duly notes the OAG recommendation and will ensure that the reconciliation is submitted on time.
6.15 Anomalies noted in Journal Voucher Posting – Revenue Each agency must have in place a cost effective system of internal controls which; a) safeguards money and property against loss; b) avoids or detect accounting errors; and c) avoids unfavourable audit reports7.
Within five working days of the Ministry of Economy issuing the monthly General Ledger Reports, the CO- Revenue shall reconcile the revenue figures in the report to the Revenue Statement.8 Where errors or discrepancies occur, the Senior Accounts Officer shall inform the Chief Accountant in writing within 7 days of receiving the GL reports.9 Our review of the postings made in the general ledger (FMIS) audit noted that 13 journal vouchers were posted twice, hence overstating closing revenue balance by $617,697.25.
Refer to Appendix 6.3 for details.

No explanation was provided by the Senior Accounts Officer or corrective action taken to rectify the overstatement of revenue collection in the FMIS General Ledger.

In addition, for the following journal vouchers amounting to $432,155, source documents (bank lodgement, revenue collector’s cash analysis and IBMS receipts) were not provided for audit verification.
Refer to Table 6.6 below for details: Table 6.6: Records Not Provided for Audit Verification JV Number 25/08/16 Clearance of revenue for Suva on Details 24-08-16 / 31-08-16 Allocation 1-06201-70999-538101 1-06201-70999-230306 Amount ($) 235,097.00 (215,685.32) 7 Financial Instruction 2010 - Section 59 (1) 8 Department of Immigration Finance Manual 2013 – Section 5.5.12 9 Department of Immigration Finance Manual 2013 – Section 5.5.14 Ministry of Defence, National Security and Immigration Section 6: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR JV Number Details Allocation 23/08/17 Clearance of Labasa revenue from 01-03-17 / 09-03-17 25/08/17 Clearance of Labasa revenue from 21-03-17 / 29-03-17 1-06201-70999-863201 1-06201-70999-538101 1-06201-70999-230306 1-06201-70999-863201 1-06201-70999-538101 1-06201-70999-230306 1-06201-70999-863201 Amount ($) (19,411.68) 107,947.00 (99,034.00) (8,913.00) 89,111.00 (81,754.00) (7,357.00) The above findings indicate poor supervisory checks by the Senior Accounts Officer in ensuring correct postings were made by the subordinate staffs.
Failure to reconcile and rectify the misallocations would overstate the closing revenue balance.

Recommendations The Department should: • • • review and strengthen its supervisory checks in the Accounts Section; review and regularise double postings amounting $617,697.25; and locate and provide requested journal vouchers amounting $432,155 for audit verification.

Management Comments The Department acknowledges the recommendations of the OAG.
The accounts team will raise the journals to regularise the double postings.

The journal should be available for verification.

6.16 Anomalies noted in Operating Trust Fund The ledger reconciliation statement shall be forwarded to the Senior Accounts Officer.
The Senior Accounts Officer must ensure that: (i) all balances are accurate and adequately supported; (ii) any misallocations or outstanding balances from the previous month have been dealt with.10 Our review of the Operating Trust Fund Account reconciliation revealed that the “VAT from provision of goods and services” component (1-06201-70999-863201) has accumulated from previous years to $1,022,211 and comprised of 96% of the total operating trust fund account balance as at 31/07/17.
Refer to Table 6.7 below for details.
Table 6.7: Long Outstanding Operating Trust Fund Account Balance Account Description 1-06201- 70999- 863201 VAT provision goods services from of and Actual 2017 ($) (1,022,211.34) Actual 2016 ($) (765,274.08) Actual 2015 ($) (755,404.31) Actual 2014 ($) (661,137.02) Actual 2013 ($) (393,576.89) 10 Department of Immigration Finance Manual 2013 – Section 16.3.6 Ministry of Defence, National Security and Immigration Section 6: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Graph 6.1 below shows the movement of the VAT amount for the five (5) year period.
Graph 6.1: Long Outstanding Operating Trust Fund Account Balance 1,200,000.00 1,000,000.00 800,000.00 600,000.00 400,000.00 200,000.00 0.00 Actual 2017 Actual 2016 Actual 2015 Actual 2014 Actual 2013 Upon review of the postings made in the general ledger (FMIS), it was noted that 13 journal vouchers were posted twice, hence overstating “VAT from provision of goods and services” closing balance by $55,592.75.

Refer to Appendix 6.3 for details.


The Department did not rectify the misallocation which indicates that proper supervisory checks were not carried by the Senior Accounts Officer over the postings made and reconciliations prepared by subordinate staffs.

Failure to reconcile and rectify the misallocation would overstate the closing balance could also result in overpayment of VAT to Fiji Revenue and Custom Services.
Recommendations The Senior Accounts Officer should: • ensure that section 16.3.6 of the Department’s Finance Manual 2013 is complied with and proper supervisory checks are in place to ensure that all balances are accurate and adequately supported and errors and omissions noted are promptly rectified; and review the closing balance as at 31 July 2017 and regularise all misallocations.

• Management Comments The Department duly notes findings and recommendations of the OAG.
The Department would like to highlight that the increasing VAT outstanding in the Operating Trust Account is due to the revenue received from Fiji’s Trade Commission (FTC) overseas.

The Department will gradually remit this amount to the relevant authority until the outstanding is cleared.
Ministry of Defence, National Security and Immigration Section 6: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 6.17 Lack of Monitoring on Permit Holders It shall be unlawful for any person to remain in Fiji after the expiration of any permit issued to or in respect of him/her under the provisions of the Immigration Act.11 The Compliance and Investigation section of Department of Immigration has responsibility for the location, apprehension and removal from Fiji of persons who have breached conditions of their entry and further stay or who may otherwise be of health, character or security concern to the Fiji community.
Persons of interest include those who overstay their permitted stay period in Fiji, who undertake unauthorised employment, person with criminal records to criminal affiliation and those who have entered or remain in the Country by resorting to forged or false documents or by contrived arrangements.

We noted from a report generated from the IBMS system that a total of 2,008 permit holders have remained in the country despite the expiry of their permits.

Refer to Table 6.8 and Appendix 6.4 for details.
Table 6.8: Number of Over-stayers Particulars Number of Over Stayers that have not applied for extension of permit Number of Over Stayers that have applied for extension of permit Total Number 1,266 742 2,008 We noted the Compliance Unit consists of five staffs and shares one vehicle with the remaining sections which hinders the Unit’s ability to proactively follow-up on the permit holder’s permit condition and expedite the removal of over-stayers in the country.
Absence of the stringent monitoring and reliance on the permit holders and the employers/sponsors to provide the correct information could result in breaches of the permit conditions, illegal activities and over-stayers not being detected and necessary actions taken on a timely basis.
Recommendation The Department should consider enhancing its Compliance and Investigation Unit capacity with the sufficient staffing/logistics allocation to enable them to proactively monitor permit terms and condition and mitigate the overstay cases.

Management Comments The Department notes the Auditor’s recommendation.

The Department is in the process of filling the vacancies and is proactively working on the system to track permit holders.
11 Immigration Act 2003, Cap 88 –Section 14 Ministry of Defence, National Security and Immigration Section 6: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 6.18 Anomalies noted in processing of payments Each year, the Appropriation Act and Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.
The responsible authority for a budget sector agency is responsible for ensuring the proper administration by the agency of an appropriation administered by it and ensuring that money and property of or under the control of the agency are properly accounted for.12 The Senior Accounts Officer must not certify a payment as correct unless they are satisfied that: i. ii.

iii.

iv.
iii.

iv.

v. it is in accordance with an LPO/PO, indent, contract, invoice or other authorisation; there is documentation that the goods, services or works have been received; sufficient uncommitted funds are available for payment of the account; the account is not fraudulent and has not been previously paid; and the expenditure account it is charged to is correct.13 Journal voucher must be numbered in sequential order.

Supporting documents shall be attached to the voucher.
14 The Senior Accounts Officer must check that: i. ii.

iii.

all relevant details are included on the voucher; balance are adequately supported; and the correct amounts have been debited or credited.
15 Our review of the Department’s payment records noted the following anomalies in the administration and maintenance of accounting records and documents pertaining to payments made during the year; • Supporting documents such as competitive quotes/delivery dockets/ memorandum of understanding were not always attached to the payment vouchers provided for audit verification; and • Despite funds amounting to $27,061 being allocated for IBMS Project Monitoring Staff, the Department did not make any staff appointments and diverted a sum $21,874.70 or 81% of the budget to pay for expenses related to other standard expenditure groups.
Refer to Appendix 6.5 for details.

Expenditure recorded in the general ledger contrary to the budget defeats the purpose for which the budget appropriation is provided and misstates the expenditure reported in the Statement of Receipts and Expenditure against the relevant budget allocation.

The above findings indicate inadequate supervisory checks by the Senior Accounts Officer in ensuring compliance with the relevant provisions of the Department’s Finance Manual.
12 Department of Immigration Finance Manual 2013 - Section 2.1.2 13 Department of Immigration Finance Manual 2013 – Section 2.8.4 14 Department of Immigration Finance Manual 2013 – Section 16.1.3 15 Department of Immigration Finance Manual 2013 – Section 16.1.4 Ministry of Defence, National Security and Immigration Section 6: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Recommendations The Department should: • ensure that budget submission are made after a proper planning and consultations to avoid diversion of fund sfor unplanned activities unless in cases of emergencies; • ensure that public funds are used for the purpose it has been approved for in the budget; • ensure all accounting records are properly maintained; and • supervisory checks are strengthened in record keeping in the Accounts Section.
Management Comments The Department duly notes the recommendations raised by the OAG and will ensure that budget submission is made after a proper planning and consultation.
It will also ensure that public funds are used for the purpose it has been approved in the budget and strengthen its record keeping and supervisory checks Ministry of Defence, National Security and Immigration Section 6: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.1: STATUS OF SECURITY BOND TRUST FUND RECONCILIATIONS FMIS GL allocation Description GL Balance Remarks as at 31/07/17 ($) 9-06201-70002-520301 Trust Fund Bank Account - Immigration 25,215,348.86 • Reconciliations were not prepared on a monthly basis.
(that is five days after the end of each month)  August – December was reconciliation together on 08/03/17 January 2017 reconciliation was prepared on 08/03/17 2016 prepared   February 2017 reconciliation was prepared on 01/05/17  March 2017 reconciliation was prepared on 02/05/17  April 2017 reconciliation was prepared on 06/06/17 • June 2017 reconciliation was not checked and approved by Senior Accounts Officer.
9-06201-70002-895001 Immigration Trust 25,215,348.86 • Reconciliations were not prepared on a monthly basis.
 August and September 2016 prepared reconciliation was together on 20/02/17  October and November 2016 prepared on 20/02/17  December 2016 – March 2017 prepared on 04/05/17 Ministry of Defence, National Security and Immigration Section 6: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.2: STATUS OF PAYROLL RECONCILIATIONS FMIS GL allocation Description 1-06201-70999- 010101 Established Staff GL Balance as at 31/07/17 ($) 2,010,333 Remarks • Salaries reconciliations were not prepared on a fortnightly basis.
 Pay 16-26/16 was prepared on 08/02/17  Pay 1-12/17 was prepared on 27/06/17  Pay 13-14/17 was prepared on 07/08/17  Pay 15/17 was prepared on 15/08/17 • Changes in salaries for increase was documented as overtime & meal and decrease was stated as “normalise pay” reason was not but disclosed.
the actual 1-06201-70999- 020101 Government Wage Earners 74,907 • Wages reconciliations were not prepared on a weekly basis;  Pay 32 - 36/16 and 39-52/16 was prepared on 22/08/17  Pay 37-38/16 was not prepared  Pay 1-25/17 was prepared on 26/06/17  Pay 26-28/17 was prepared on 22/08/17  Pay 29-31/17 was prepared on 21/08/17 • Changes in wages were documented as increase and decrease in normal working hours and the actual reason was not disclosed.
Ministry of Defence, National Security and Immigration Section 6: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.3: DETAILS OF DOUBLE POSTED JOURNAL VOUCHERS JV Number Journal ID Particulars Allocation 02/01/17 03/01/17 04/01/17 07/08/17 08/01/17 09/01/17 10/01/17 11/01/17 12/01/17 13/01/17 14/01/17 16/01/17 17/01/17 625641 Being Clearance of Revenue for Suva on 01/08 - 08/08/16.
625642 Being Clearance of Revenue for Suva on 09/08-15/08/16.

625643 Being Clearance of Revenue for Suva on 03/08, 05/08, 10/08 and 12/08/16.
625646 Being Clearance of Revenue for Burewai Ra 625647 Being Clearance of Revenue for Lautoka on 01/08 -08/08/16 625648 Being Clearance of Revenue for Lautoka on 09/08 -16/08/16 625649 Being Clearance of Revenue for Labasa on 01/08 -08/08/16 625650 Being Clearance of Revenue for Labasa on 09/08 -11/08/16 625651 Being Clearance of Revenue for Savusavu on 01/08 -09/08/16 625652 Being Clearance of Revenue for Labasa on 12/08 -17/08/16 625653 Being Clearance of Revenue for Lautoka on 17/08-23/08/16 625655 Being Clearance of Revenue for Suva on 15/08 - 23/08/16 625660 Being Clearance of for Direct for Natasha Revenue Deposit Bird DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 DR 1-06201-70999-538101 CR 1-06201-70999-230306 CR 1-06201-70999-863201 Amount ($) Ministry of Defence, National Security and Immigration Section 6: Page 22 REPORT OF THE AUDITOR GENERAL OF THE
 REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.4: DETAILS OF OVER-STAYERS Nationality Expired Permits On-going Applications Total Afghan American Australian Austrian Bangladeshi Belgian Bosnian Brazilian British - Citizen British - National Bulgarian Cameroonian Canadian Chilean Chinese Czech Dane Dutch East German Egyptian Filipino French German Ghanaian Greek Guatemala Guyanese Indian Indonesian Irish Israeli Italian Japanese Kenyan Kiribatian Lao Latvian Malaysian Marshall Islands Mauritian Mexican Micronesian Myanmar Nauru Nepalese New Zealander Nigerian Pakistani Palauan Papua New Guinean Portuguese Republic of Korean Romanian 3 88 81 1 18 --- --- 1 33 1 1 --- 21 1 161 1 4 1 1 1 57 6 4 --- 1 --- 1 77 6 2 --- 6 22 1 108 1 2 1 1 1 2 1 2 25 --- 88 --- 6 1 28 1 42 1 --- 24 34 --- 20 2 1 --- 8 --- --- 3 6 --- 186 --- 1 1 --- --- 43 2 2 1 --- 1 --- 58 11 2 1 2 22 1 40 --- --- 1 3 --- 1 --- --- 25 1 25 1 8 --- 6 --- 57 --- Ministry of Defence, National Security and Immigration Section 6: Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Nationality Expired Permits On-going Applications Total Russian Samoan Serb Singaporean Solomon Islands South African Spanish Sri Lankan Swede Swiss Taiwanese Thai Tongan Tuvaluan Ukrainian Un Representative Vanuatu Venezuelan Vietnamese Total 2 23 1 4 67 6 4 12 3 1 4 2 43 120 5 2 53 1 1 1,266 1 2 --- --- 28 --- 1 21 1 1 3 --- 11 32 --- --- 40 --- 1 742 3 25 1 4 95 6 5 33 4 2 7 2 54 152 5 2 93 1 2 2,008 Ministry of Defence, National Security and Immigration Section 6: Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 6.5: ANOMALIES NOTED IN PAYMENTS PROCESS Cheque / JV Date 11/05/17 Cheque / JV Number 5177 Amount ($) Payee Description Anomalies 5,791.33
 Security Company Guard services provided in Suva & Nadi Office 07/06/17 06/11/17 6,985.71 IT Company A IBMS Maintenance Fees 07/08/17 58/12/17 6,847.06 IT Company A/Tax Authority Clearance withholding receipt on IMM08/17 of tax indent 27/07/17 15602 17,154.14 Office 27/07/17 15603 6,067.11 Equipment Supplier IT Company B 02/06/17 5301 2,293.58 Rubber Stamp Making Company Office Labasa Office furniture for Compactus/ conference table/ conference chair for Nadi Office 1,000 red seal 09/06/17 5338 911.52 Newspaper Company Advertisement of 8 technical & 1 GWE posts on 22/04/17 06/06/17 40/10/17 3,631.65 IT Company A/Tax Authority Being clearance of IDC for the month of May Diversion of funds: $5,791.33 posted to SEG 7: Project Monitoring Staff allocation instead of posting to SEG 4 - Detention Centre as advised by SAO due to shortage of in SEG 4 funds available allocation.
Diversion of funds: $6,985.71 posted to SEG 7: Project Monitoring Staff allocation instead of posting to SEG 5: IBMS Maintenance Fees allocation.

Diversion of funds: $6,847.06 to SEG 7: Project posted Monitoring Staff allocation instead of SEG 9: Integrated Passport as advised by SAO due to not enough funds available in that allocation.

Competitive delivery docket not provided allocation quotes and Competitive delivery docket not provided quotes and Only one quotation attached to payment voucher.
Also there was no MOA with the supplier to legally safeguard the interest of the Department.

Misposted to SEG 4: 1-06201- 70999-040708 allocation instead of SEG 5: 1-06201- 70999-050501 - Office Books, Periodical and Publication.

VAT component was posted to SEG 5: IBMS Maintenance Fees which in overstating the allocation and understating SEG 13: VAT allocation by $3,631.65.
resulted Ministry of Defence, National Security and Immigration Section 6: Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 7 Ministry of Employment, Productivity and Industrial Relations Roles and Responsibilities The Fijian Constitution guarantees every Fijian’s right to economic participation, a just minimum wage, speedy resolution of employment grievances and disputes, and fair employment practices, which include humane treatment in the workplace and proper working conditions.
Government is committed to doing everything in its power to uphold these rights for workers across the country, while at the same time helping employers grow and succeed.

The Ministry of Employment, Productivity and Industrial Relations is responsible for enacting policies and programs that support these aims.

The Ministry focuses on fostering strong relations between employees and employers, creating productive workplaces, and ensuring fair working conditions.
It also works to help Fijians find jobs, especially the country’s young people, and to create healthy and safe work environments for all workers.

The Ministry also provides social security, injury and death compensation.
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ............................................................................................................................. 2 7.1 7.2 Statement of Receipts and Expenditure .................................................................................. 2 7.3 Appropriation Statement .......................................................................................................... 3 7.4 Main Trust Fund Account........................................................................................................... 4 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 7 Internal Controls ........................................................................................................................ 7 7.5 7.6 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 8 7.7 Quality of draft financial statements by entities ...................................................................... 9 Timeliness of draft financial statements ................................................................................... 9 7.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 9 7.9 PART C: OTHER SIGNIFICANT MATTERS ............................................................................................. 10 7.10 Shared Services Revenue Recorded in OHS consultancy services Trust Fund ...................... 10 7.11 Presentation of Main Trust Accounts ...................................................................................... 11 7.12 Control weaknesses over trust fund receipts ......................................................................... 12 7.13 Original copies of cancelled receipts not attached ................................................................. 14 7.14
14 7.14 Unauthorized transfer and missing trust fund receipt books ................................................ 14 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 7.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Employment, Productivity and Industrial Relations resulted in a qualified audit report.
The qualifications were as follows: • The Ministry receives $70,000 annual fees from the Ministry of Civil Service under the Shared Services Agreement.

The Ministry deposited the service fees into the OHS Consultancy Trust Fund Account.

Transfer of public funds into a trust account is improper as funds in trust are those which are public money.

Consequently, the OHS Trust Fund Account is overstated by $70,000 and Ministry’s operating revenue is understated by the same amount.
• An unreconciled variance of $381,087 exists between the OHS Consultancy, Wages Dispute and Workmen’s Compensation Trust Fund cash at bank balance and the General Ledger (FMIS) balance.

As a result, I was not able to ascertain that all receipts and payments had been accurately accounted and disclosed in the Trust Fund cash account.
Without further qualifying the above opinion, attention was drawn to the following: • Internal controls over management of trust fund receipts were generally found to be weak and if not addressed promptly may result in material misstatements and possible financial losses in the future.

• For OHS Consultancy Service, Workmen Compensation and Wages Disputes trust funds, the Ministry maintains one bank account.
Separate statements are not presented for each trust type with the receipts and payments to be classified by the nature of receipt and expenditure.

The current presentation of the trust fund accounts does not provide adequate and useful information to the users of the financial statements.
7.2 Statement of Receipts and Expenditure The Ministry of Employment, Productivity and Industrial Relations collected revenue totalling $9,572 and incurred a total expenditure of $12,870,152 for the year ended 31 July 2017.

Details are provided in Table 7.1.
Table 7.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers 31 July 2017 ($) 31 July 2016 ($) 947 8,625 9,572 1,793 2,142 3,935 5,496,334 288,046 433,878 621,507 1,000,582 22,697 2,454,055 202,746 158,373 310,717 785,038 137 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Description Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2017 ($) 4,691,001 12,554,045 31 July 2016 ($) 3,420,581 7,331,647 --- --- --- --- 493 493 Value Added Tax 316,107 295,934 Total Expenditure 12,870,152 7,628,074 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
7.3 Appropriation Statement The Ministry of Employment, Productivity and Industrial Relations incurred expenditure totalling $12.9 million in 2017 against a revised budget of $16.3 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $3.4 million or 21%.

The savings was mainly due to reduction in maintenance and operational costs due to minimal use of photocopying machines, lights and other electrical items.
The Ministry had also anticipated an increased pay out in workmen compensation due to the increase in quantum from $24,000 to $50,000 but this did not eventuate.

Details of expenditure against the revised budget are provided in Table 7.2.
Table 7.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 6,294,630 247,030 Changes ($) (97,000) 97,000 Revised Estimate ($) 6,197,630 344,030 Actual Expenditure ($) Lapsed Appropriation ($) 5,496,334 288,046 701,296 55,984 422,795 109,492 532,287 433,878 98,409 4 Maintenance & 527,200 256,797 783,997 621,507 162,490 5 6 7 13 Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Value Added Tax TOTAL 1,403,700 (209,878) 1,193,822 1,000,582 193,240 55,000 (30,000) 25,000 22,697 2,303 6,542,650 15,493,005 (126,411) 6,416,239 --- 15,493,005 4,691,001 12,554,045 800,600 16,293,605 --- 800,600 --- 16,293,605 316,107 12,870,152 1,725,238 2,938,960 484,493 3,423,453 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR The Ministry collected revenue totalling $9,572 in 2017, an increase of 143% from the previous year.
7.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
The Ministry operates and maintains the following trust fund bank account: 7.4.1 National Occupational Health & Safety Education and Accident Prevention Trust Fund Account This liability account is responsible for the promotion of OHS and enforcement of the Health and Safety at Work Act 1996 and its subsidiary legislations.

The Service aims to promote and maintain a working environment, which is healthy and safe for both workers and employers and directly contributes to improved productivity.
Table 7.3: National Occupational Health & Safety Education and Accident Prevention Trust Fund Account - Statement of Receipts and Payments Description Receipts OHS Trust Fund Total Receipts Payments OHS Trust Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 1,212,196 1,212,196 416,854 416,854 795,342 5,333,931 6,129,273 31 July 2016 ($) 813,827 813,827 721,833 721,833 91,994 5,241,937 5,333,931 7.4.2 Employment Relations Agency Trust Fund Account In instances whereby employment disputes and employment grievances are not resolved by the Mediation Service, the Employment Relations Tribunal assists employers or their representatives and workers or their representative trade union by adjudicating and determining the grievance or dispute between parties.
In adjudication proceedings, there is also a requirement on the Tribunal to provide mediation assistance to the disputing parties when the need arises.

In this regard the Tribunal assists disputing parties to amicably settle matters and these settlements are documented as binding awards or decisions.
Table 7.4: Employment Relations Agency Trust Fund Account - Statement of Receipts and Payments Description Receipts ERT Trust Fund Total Receipts Payments ERT Trust Fund 31 July 2017 ($) 31 July 2016 ($) 107,251 107,251 69,096 69,096 451 3,234 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Description Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 451 106,800 401,727 508,527 31 July 2016 ($) 3,234 65,862 335,865 401,727 7.4.3 National Employment Centre Trust Fund Account The National Employment Centre operates under the National Employment Centre Act 2009.
The Centre is responsible for providing employment skills training and facilitating employment opportunities for the unemployed.

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

Unemployed persons who register under the National Employment Centre undertake professional counselling, aptitude assessment, life skills training and are trained in the relevant employment skills demanded by the labour market.
Moreover, the Centre provides opportunities for the unemployed to do volunteer services, work attachment, and facilitates opportunities for employment both locally and internationally.
Table 7.5: National Employment Centre Trust Fund Account - Statement of Receipts and Payments Description Receipts NEC Trust Fund Total Receipts Payments NEC Trust Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 80,777 80,777 68,203 68,203 12,574 210,224 222,798 16,619 16,619 1,752 1,752 14,867 195,357 210,224 7.4.4 OHS Consultancy Services, Workmen’s Compensation and Wages Dispute Trust Fund Account • Occupational Health and Safety (OHS) Consultancy Trust Account: Used to facilitate the payment of overtime hours, meal allowances, transport allowances, and accommodation which is paid by companies into OHS Trust account when OHS Inspectors have performed services to the companies.
Funds are transferred from OHS Trust Account to OHS Consultancy to pay the OHS inspectors.

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

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

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

• Wages Dispute Trust Account: Wages Unit is responsible for setting minimum wages and other terms and conditions of employment in Fiji’s employment sector.
It ensures workers are Ministry of Employment, Productivity and Industrial Relations Section 7: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR actually provided with the stipulated Wages Regulations terms and conditions.

Any payment received from employer after dispute on wages is resolved by the Wages unit and is paid out to the respective employee.
Table 7.6: OHS Consultancy Services, Workmen’s Compensation and Wages Dispute Trust Fund Account - Statement of Receipts and Payments Description Receipts Workmens Compensation Wages Dispute OHS Consultancy Total Receipts Payments Workmen Compensation Wages Dispute OHS Consultancy Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 4,388,376 463,166 121,097 4,972,639 2,422,812 202,646 806,924 3,432,382 3,815,895 413,874 17,554 4,247,323 725,316 1,882,237 2,607,553 2,049,903 225,043 599,995 2,874,941 557,441 1,324,795 1,882,236 7.4.5 Child Labour Unit Trust Fund Account The Child Labour Unit is responsible for monitoring, training and development for the labour inspectorate and stakeholders on all aspects of child labour issues under the ERP 2007 and Health and Safety at Work Act 1996, for promotion and advocacy on issues of child labour in Fiji and also for the maintenance of child labour information system in Fiji with the aim of maintaining proper and effective management of the child labour cases.
The unit conducts investigation and prosecution on child labour cases, provides awareness programmes for stakeholders and members of the public on the aspects of child labour laws and ensures that issues related to child protection are properly addressed.
Table 7.7: Child Labour Unit Trust Fund Account - Statement of Receipts and Payments Description Receipts Child Labour Unit Trust Fund Total Receipts Payments Child Labour Unit Trust Fund Total Payments Net Deficit Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 133 133 2,438 2,438 (2,305) 4,647 2,342 --- --- 2,759 2,759 (2,759) 7,406 4,647 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 7.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Employment, Productivity and Industrial Relations Section 7: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 7.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 7.7 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 7.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 7.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Ineffective After 15 days from issue of Financial Statements for signing Ministry of Employment, Productivity and Industrial Relations Section 7: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2017.
7.10 Shared Services Revenue Recorded in OHS consultancy services Trust Fund Trust money is money that the agency is holding in trust (it does not include creditor payments such as salary deductions or money that is held in a separate “trust fund” which is not a true trust).
As stipulated in the Act and Finance Instructions, trust money is to be kept in a separate bank account and accounted for separately from “public money” and “other money”.1 Income is defined as increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other income than those relating to contributions from equity participants.

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

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

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

The recording of shared services revenue contradicts the nature and purpose of the OHS consultancy trust fund.
Due to this incorrect recording of revenue, the Ministry’s operating revenue is understated whilst the OHS consultancy trust fund liability is overstated by $70,000.
1 Ministry’s Finance Manual 2013 – Part 14 Trust Accounts Ministry of Employment, Productivity and Industrial Relations Section 7: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Recommendation The Ministry should reverse the shared services revenue recorded in the OHS consultancy trust fund and deposit it in the Consolidated Fund Account of government.

Management Comments Your recommendation is noted.


The key here is the idea of sharing within an organization or group.

This sharing needs to fundamentally include shared accountability of results by the unit from where the work is migrated to the provider.

The provider, on the other hand, needs to ensure that the agreed results are delivered based on defined measures (KPIs, cost, quality etc.).
The Permanent Secretary of Employment, Productivity and Industrial Relations (PSEPIR) wants to utilise this fund to benefit the both organizations by delivering and effective and efficient service to Ministry of Civil Service.

The PSEPIR realised that there is a need for additional resources to effectively execute the agreed results.

Currently there are 646 officers in the Ministry of Civil Service payroll and 2 government wages earners.
The Ministry will prepare an internal policy on how to consume the Shared Service fees as the PSEPIR has the final authority to determine on how to utilise it.

7.11 Presentation of Main Trust Accounts Trust money is to be accounted for separately from public money and other money within the meaning of this Act.

Trust money is to be kept in a separate bank account pending its withdrawal and accounted for separately from “public money” and “other money”.
The Accountant shall prepare bank reconciliation within 5 days of the end of the month.

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

Once the bank reconciliation is prepared, it should be signed and dated by the Accountant and submitted to the Senior Accountant.
The Senior Accountant must verify balances in the bank reconciliation to the cashbook, bank statements, unpresented cheque list and the previous month’s bank reconciliation before certifying it.2 As at balance date, the Main Trust Account balances for Ministry of Employment, Productivity and Industrial Relations was $9,470,495.
These funds relate to receipts and payments for Workmen’s Compensation, Wages dispute, Occupational Health and Safety Consultancy, Occupational Health and Safety Trust, Employment Relations Tribunal, National Employment Centre and Child Labour.
Our review of the current presentation of the Main Trust Fund revealed the following anomalies: • The Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one line item in the Statement even though the nature of the trust receipt and payment may vary.
• For OHS Consultancy Service, Workmen Compensation and Wages Disputes trust funds, the Ministry maintains one bank account and provides a consolidated statement of trust receipts and payments in its Agency Financial Statements.

Separate statements are not presented for each trust type with the receipts and payments to be classified by the nature of receipt and expenditure.
Moreover, with the various trust funds 2 Ministry’s Finance Manual 2013 – Section 6.4.7 - 6.4.10 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR being deposited into one bank account, there is a risk of funds for a particular trust being utilised for the other trust funds.

• A variance of $381,087 was noted between the cash at bank balance and general ledger (FMIS).
Refer to Table 7.8 below for details.

Table 7.8: Variance in cash at bank balance Particulars Cash at bank balance Balance as per general ledger (FMIS) Unreconciled Variance Amount ($) 2,226,466 2,607,553 (381,087) The current presentation of the trust fund accounts is deemed inadequate and does not provide adequate and useful information to the users of the financial statements.
As a result, the accuracy of the OHS Consultancy Service, Workmen’s Compensation and Wages Disputes trust funds cash at bank balance cannot be ascertained.

Recommendations • The Ministry should work towards maintaining separate bank accounts for each trust accounts and submit separate statements accordingly.

• The trust receipts and payments should be classified by nature.

• The variance in cash at bank balance noted should be investigated and rectified.
Management Comments Your recommendation is noted and we will communicate with Ministry of Economy for the separation of the three bank account.

Your recommendation is noted and we will abide by it once the three accounts is separated.

There was a problem with the Ministry’s report that is provided by Ministry of Economy until July 2017.

The Ministry have reconciled until July 2017 in this year’s financial period.

The Ministry is working on identifying the variance and audit will be advice accordingly.
7.12 Control weaknesses over trust fund receipts Receipt books must be issued in sequential order.

When new stock is issued to revenue clerks HQ, the Accountant shall enter details of issued stock on the appropriate acknowledgement receipt form.

The original and duplicate receipts are to accompany the issued receipt books.

The Accountant will retain the triplicate.


After checking that all stock has been received, the revenue collector will sign the acknowledgement receipts and return the original to the Accountant.3 For the financial year ended 31 July 2017, the Ministry recorded receipts totalling $6,375,366 for the seven trust fund accounts which it maintained.
Our review of the trust fund receipts noted the following control weaknesses: 3 Ministry’s Finance Manual 2013 – Section 5.2.12 – 5.2.14 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • receipt books issued for the Workmen Compensation trust, Wages Dispute trust, OHS consultancy and Employment Relations trust fund were all recorded together in the main distribution register.
There is no separate distribution register maintained for each trust account; • missing sequence from receipt books are not promptly investigated and followed up with the revenue collectors; • original copy of the signed receipt book acknowledgement form4 was not attached to the main distribution register; and • unused receipt books were not kept properly secured under a safe (lock and key) in the cashier’s office and there is a risk that the receipt books could be uplifted without the cashiers’ knowledge.
The weaknesses are attributed to the poor internal control over trust fund receipts and if not addressed, may result in misappropriation of revenue being undetected.

Recommendations The Ministry should ensure that: • receipt book stocks for each trust fund accounts are separately maintained and updated separately on the main distribution register.
• monthly returns on used receipt books are provided by the revenue collectors in each Districts to the Headquarters and used as a basis for issue of new receipt books.

• missing receipt numbers are promptly investigated and appropriate actions are taken.

• the original copy of the duly signed acknowledgement receipt form is attached to the main distribution register.

• all unused receipt books are kept under lock and key at all times.
• monthly trend analysis of receipts for each of the trust fund account is performed.

Any significant movements should be promptly investigated and justifications to be documented.

Management Comments The Ministry have been using this method since 2012 whereby all the receipts books (Workman Compensation, Arrears of Wages, OHS Consultancy and Employment Relations Trust account) were maintained in one distribution register.
• • • • The Ministry accept your recommendation and will request Ministry of Economy to separate the three bank accounts.

The Ministry accept your recommendation as monthly return on used receipts books must be submitted and be used as a basis for issue new receipt books.

The Ministry will carry out internal investigation on all missing receipt numbers and appropriate action to be taken.
The Ministry will accept your recommendation with the duly signed acknowledgment receipts form to be attached to the main distribution register.

The Ministry will accept your recommendation and act accordingly.

• • The Ministry will accept your recommendation and prepare monthly trend analysis for each trust account.
4 This outlines details of the receipt book stock issued Ministry of Employment, Productivity and Industrial Relations Section 7: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 7.13 Original copies of cancelled receipts not attached When cash or bank cheques are received, the revenue collectors shall immediately issue an official receipt.

The revenue collectors must enter relevant details specified on the receipt before signing it.
Carbon copies of the receipt should be checked to ensure that details on the original receipt are also legible on these copies.

No amendments shall be made to the carbon copies.

The original receipt should be detached from the receipt book and issued to the payer.

The revenue collectors shall retain the book copy and attach the duplicate receipt to the cash analysis sheet.
If a receipt is spoilt, it shall be marked “cancelled” and retained in the receipt book.5 Our review of the OHS trust fund receipts noted that there were many instances where original copies of cancelled receipts were not attached or retained in the receipt book to indicate that the receipts were cancelled and not issued.

This was prevalent in the Suva office only.

In most instances, the carbon copies of the receipts were either blank or stated on the receipt that there was no original copies.
The above findings indicate a high risk of misappropriation of trust revenue whereby trust funds monies may have been receipted using original receipts but not deposited in bank.

Recommendations The Ministry should ensure that: • an investigation is carried out to determine the cause and appropriate action is taken to • • address it.

receipt books are checked before being issued to OHS inspectors/revenue collectors.
revenue collectors must sign the acknowledgement receipt forms and the form is to be attached with the main distribution register.

Management Comments The Ministry will carry out investigation and appropriate action to be taken.

The Ministry accepts recommendation 2 & 3.

7.14 Unauthorized transfer and missing trust fund receipt books Under no circumstance shall any receipt book be transferred between revenue collectors unless the Senior Accountant has given approval.
6 If a revenue collector loses or damages receipt books or other revenue earning forms in his/her custody, the Senior Accountant must immediately be informed in writing.

The Senior Accountant shall make the appropriate changes to the stock register and distribution register and notify the Chief Accountant that the Treasury stock register should be amended.
7 5 Ministry’s Finance Manual 2013 – Section 5.3.1 – 5.3.5 6 Ministry’s Finance Manual 2013 – Section 5.2.18 7 Ministry’s Finance Manual 2013 – Section 5.8.5 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR If a Receipt book is missing, the Senior Accounts Officer shall arrange an advertisement in at least two daily newspapers specifying the serial numbers of the book and a statement disowning any liability incurred through unauthorized use of that receipt book.
The advertisement must be placed within two days of notification of the loss.

8 We noted the following anomalies in the maintenance of trust fund receipt books: • Two receipt books (444251 – 444300 and 503151 – 503200) initially issued for use by the Nadi office were transferred to the Lautoka office without obtaining the prior approval of the Senior Accountant.
• The OHS trust fund receipt books were used to receipt cash for the other trust funds namely the Workmen Compensation, Employment Relations Tribunal, OHS consultancy and Wages Dispute trust fund accounts.

• Two trust fund account receipt books initially issued to the Ba NEC office and Nadi office were missing hence were not provided for audit verification.

Refer to Table 7.9 below for details.


Table 7.9: Details of missing receipt books Receipt Book numbers Issued To Remarks 116451 – 116500 NEC office Ba 445151 – 445200 Nadi office The main receipt book distribution register was signed off by the former AAO reconciliations based at the Headquarters.

The Ba office confirmed that they did not receive the receipt book.

No comments provided on the missing receipt books.


This is mainly attributed to the Ministry not reconciling its revenue records on a regular basis.

There is a high risk of receipt books being issued without the actual cash being lodged into the trust fund bank account.

The above denotes that controls over trust receipts are not operating effectively.
Recommendations The Ministry should ensure that: • prior approval of the Senior Accountant is obtained before the trust fund receipt books are transferred to other districts.

the receipt books issued are used for their intended purpose.

the requirement of the Ministry’s Finance Manual Section 5.8 should be complied with.

• • Management Comments The Ministry accepts the recommendation and will be conducting refresher training to the agencies on Revenue Management process.
The Ministry is now confirming with Nadi Office, Lautoka Office and Ba Office about the receipt books and will be advertising in the two daily newspapers specifying the serial number of the books.
8 Ministry’s Finance Manual 2013 – Section 5.8.7 Ministry of Employment, Productivity and Industrial Relations Section 7: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 8 Ministry of Foreign Affairs Roles and Responsibilities The Ministry of Foreign Affairs promotes Fijian interests in other nations and on the world stage.
This includes a broad range of activities from providing consular services to Fijians living overseas to organizing high-level visits to Fiji.

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

The Ministry is focused on securing the maximum benefits for Fiji from these relationships.
The Ministry maintains diplomatic relations with as many countries as possible and in co- ordination with the line ministries focuses on promoting and advancement of Fijian interests in the areas of tourism, employment opportunities, and investment and trade.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 8.1 Audit Opinion ............................................................................................................................. 2 8.2 Statement of Receipts and Expenditure .................................................................................. 2 8.3 Appropriation Statement .......................................................................................................... 2 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B: Internal Controls ........................................................................................................................ 4 8.4 8.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 8.6 Quality of draft financial statements by entities ...................................................................... 6 8.7 Timeliness of draft financial statements ................................................................................... 6 8.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 OTHER SIGNIFICANT MATTERS ......................................................................................... 7 8.9 Unreconciled Variance in Overseas Mission Bank Reconciliation ........................................... 7 8.10 Operating Trust Balance Carried Forward from Prior Years .................................................... 8 8.11 Anomalies noted on Procurement of Goods and Services ..................................................... 10 8.12 Anomalies noted on Payroll Reconciliations ........................................................................... 11 8.13 Fixed Assets Register not updated – Headquarters ............................................................... 12 8.14 Absence of Risk Management Framework
 ............................................................................. 13 PART C: Ministry of Foreign Affairs Section 08: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 8.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Foreign Affairs resulted in an unqualified audit report.
8.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $391,279 and incurred a total expenditure of $40,406,244 for the year ended 31 July 2017.

Details are provided in Table 8.1.
Table 8.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2017 ($) 10,310 380,969 391,279 13,977,868 3,645,770 3,308,133 10,760,180 672,734 5,467,608 1,029,149 38,861,442 76,018 309,456 385,474 31 July 2016 ($) 6,512 228,862 235,374 8,112,472 2,314,685 2,213,025 7,866,241 439,574 3,709,985 622,943 25,278,925 46,927 252,278 299,205 Value Added Tax 1,159,328 593,476 Total Expenditure 40,406,244 26,171,606 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
8.3 Appropriation Statement The Ministry incurred expenditure totalling $43.4million in 2017 against a revised budget of $43.1 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $2.7 million or 6%.

Savings of $263,598 was noted under the Capital Construction allocation.

The focus of the allocation was on those Missions where the Ministry owns properties – Canberra, Wellington, London and Brussels.
For 2016-17, a major challenge faced, particularly from the Mission, was the collation of Ministry of Foreign Affairs Section 08: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR relevant documentation to ensure compliance with the RIE requirements/checklist for release of funds.
The savings of $154,415 under the Capital Purchase allocation was attributed to some purchase request by the Mission not facilitated by end of the fiscal year due to insufficient information and documentation provided.

Details of expenditure against the revised budget are provided in Table 8.2.
Table 8.2: Appropriation Statement for 2017 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure & Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 13 Budget Estimate ($) 15,439,533 3,439,925 Changes ($) Revised Estimate ($) (807,155) 14,632,378 3,733,980 294,055 Actual Expenditure ($) 13,977,868 3,645,770 Lapsed Appropriation ($) 654,510 88,210 2,757,529 766,208 3,523,737 3,308,133 215,604 10,817,451 215,293 11,032,744 10,760,180 272,564 906,159 62,314 968,473 672,734 295,739 5,691,486 (8,180) 5,683,306 5,467,608 215,698 1,708,222 40,760,305 (527,925) 1,180,297 (5,390) 40,754,915 1,029,149 38,861,442 151,148 1,893,473 798,097 - 798,097 (458,481) 463,871 5,390 339,616 463,871 803,487 76,018 309,456 385,474 263,598 154,415 418,013 1,528,900 43,087,302 1,528,900 - - 43,087,302 1,159,328 40,406,224 369,572 2,681,058 The Ministry collected revenue totalling $391,279 in 2017, an increase of 66% from the previous year.
Ministry of Foreign Affairs Section 08: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 8.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Foreign Affairs Section 08: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry of Foreign Affairs as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 8.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Ministry of Foreign Affairs Section 08: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 8.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry of Foreign Affairs was: Rating  Ineffective Quality of draft financial statements assessment Adjustments on operating results/net assets were more than one percent 8.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 16 October 2017.
8.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of Management Comments Received After 21 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of Foreign Affairs Section 08: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2017.

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

The cash held in overseas missions’ bank accounts totalled $6,892,348.

However, an unreconciled variance of $3,331,169 was noted between the FMIS general ledger balance $6,285,329 and the bank reconciliation of $2,954,160.

Refer to Table 8.3 for details.
Table 8.3: Variance in Bank Reconciliation and FMIS General Ledger Mission Fiji Consulate General Sydney Canberra Cash Account London Cash Account Tokyo Cash Account Wellington Cash Account Beijing USD Cash Account Brussels Cash Account New York Cash Account Washington Cash Account Geneva Cash Account FMIS Balance as at 31/07/17 ($) 919,008.76 435,370.40 273,160.65 1,272,157.55 530,843.40 279,935.88 209,981.97 262,496.89 80,302.34 111,342.10 Bank Reconciliation as at 31/07/17 ($) --- 335,373.94 11,751.03 1,173,131.72 408,585.51 61,897.97 46,365.40 (18,028.87) 1,351.40 109,369.26 Variance ($) 919,008.76 99,996.46 261,409.62 99,025.83 122,257.89 218,037.91 163,616.57 280,525.76 78,950.94 1,972.84 1 Finance Instruction 2010, Section 32 (6) 2 Finance Instructions 2010, Section 58 (3) 3 Ministry’s Finance Manual 2013, Section 5.3.10 Ministry of Foreign Affairs Section 08: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Mission Addis Ababa Cash Account Abu Dhabi Cash Account Seoul Cash Account Kuala Lumpur Cash Account Jakarta Rupiah Cash Account Total FMIS Balance as at 31/07/17 ($) 381,658.76 614,357.37 315,065.58 429,527.38 170,120.01 6,285,329.04 Variance ($) Bank Reconciliation as at 31/07/17 ($) 61,745.95 172,035.36 185,580.84 363,947.02 41,053.49 319,912.81 442,322.01 129,484.74 65,580.36 129,066.52 2,954,160.02 3,331,169.02 We also noted that the Fiji Consulate-General Sydney was closed and transferred to the Ministry of Industry, Trade & Tourism during the month of April 2016.
However, balance of $919,009 was still4 appearing under the Ministry’s head in the FMIS general ledger.

As a result, we could not ascertain the accuracy of the balances appearing under the above allocations in the FMIS general ledger.
Recommendations The Ministry should: • liaise with Ministry of Economy to rectify the above variance in bank reconciliation records; • ensure that overseas missions bank balance is reconciled with the FMIS general ledger bank balance on a monthly basis and any foreign exchange gain or loss are adjusted immediately; • ensure that the balance of accounts at Fiji Consulate General Sydney is transferred to the Ministry of Industry, Trade & Tourism in consultation with the Ministry of Economy.
Ministry’s Comments The Ministry has introduced a new posting method in the GL system with the objective of reconciling GL system and Mission’s bank account balance.

Although the new format of posting is being implemented, the un-reconciled variances accumulated over the years still needs to be rectified.

This is a systemic issue that will need the Ministry of Economy to address.

In this regard, the Ministry is consulting Ministry of Economy and OAG on an effective way of addressing these variances.
As for the issue of Fiji Consulate General Sydney funds still appearing in the Ministry’s GL account, the Ministry will liaise with Ministry of Economy on the clearance of the amount from our GL account.
8.10 Operating Trust Balance Carried Forward from Prior Years Within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, the Accounts Officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.5 Any errors or misallocations must be immediately adjusted by way of journal vouchers.6 4 As at the date of Audit 20/04/18 5 Ministry’s Finance Manual 2013, Section 12.3.3 6 Ministry’s Finance Manual 2013.
Section 12.3.4 Ministry of Foreign Affairs Section 08: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Operating Trust Fund Accounts facilitate transactions relating to the Ministry’s administrative role as an employer.

These transactions include deductions from employees’ salaries/wages with regards to the superannuation contributions, housing loan, repayments, insurance premiums and other deductions for onward payment to the respective payees.
Our review of the operating Trust Fund Account balances revealed that the following trust account balances have been carried forward from previous years without any or minimal movement noted during the year.

Refer Table 8.4 for details.
Table 8.4: Trust Fund Account Balances Carried Forward Account Description 1-08101-08101-861910 383 PD Sundries 1-08103-80101-863101 Admin Contributions Foreign Mission Balance at 31/07/17 ($) (212,072.61) (239,444.54) Balance at 31/07/16 ($) (212,072.61) (239,444.54) 1-08103-80102-863101 Admin Contributions (330,157.99) (330,157.99) Foreign Mission 1-08103-80201-863101 Admin Contributions (49,269.33) (49,269.33) 1-08103-80401-863101 Admin Contributions (3,261.14) (3,261.14) Foreign Mission Foreign Mission 1-08103-80701-863101 Admin Contributions (131,018.25) (131,018.25) Foreign Mission 1-08103-81001-863101 Admin Contributions (23,961.59) (23,961.59) 1-08103-81102-863101 Admin Contributions (8,100.51) (8,100.51) Foreign Mission Foreign Mission Increase/ (Decrease) ($) --- --- --- --- --- --- --- --- 1-08101-08101-864199 PSC Cuba Scholarship 1-08101-08101-861299 XXX PD Others 1-08101-08101-861902 204 PD Depst A/C Recoverable 501 PD Employees FNPF 1-08101-08101-861920 1-08101-08101-864199 Sundries (1,703.92) (20,786.23) (24,901.70) (1,703.92) (22,721.06) (16,689.16) --- (1,934.83) 8,212.54 (475,893.96) (18,795.34) (469,429.26) (40,459.44) 6,464.70 (21,664.10) The minimal movements in carried forward trust fund balances in 2017 compared to 2016 indicate that the Ministry did not give sufficient priority to address the issue during the financial year.
Recommendations • The Ministry should investigate the significant balances in the Operating Trust Fund account as at 31 July 2017 and take appropriate action.

• The Ministry should ensure that proper supervisory checks are in place to ensure that all balances are accurate, adequately supported and that errors from previous years are rectified.
Ministry’s Comments This is a system related issue which is on our agenda to discuss and finalise with MOE – reconcile and clearance of left over credits accumulated over the years as most of these accounts have been dormant for past years.
Ministry of Foreign Affairs Section 08: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 8.11 Anomalies noted on Procurement of Goods and Services All payments must be processed through payment vouchers prepared by the Clerical Officer Payments/Ledgers.
Separate vouchers are to be used for separate payees and for the payment of different services.7 The Clerical Officer Payments/Ledgers preparing a payment voucher must ensure that all information required under Finance Instruction 14-(1) has been included on the payment voucher or attached to it, before passing it to the SAO for certification.

8 The PAO, SAO & AO must not certify a payment as correct unless they are satisfied that: i. ii.

iii.

iv.
iii.

iv.

it is in accordance with an LPO, indent, contract, invoice or other authorisation; there is documentation that the goods, services or works have been received; sufficient uncommitted funds are available for payment of the account; the account is not fraudulent and has not been previously paid; the expenditure account it is charged to is correct.9 We noted that the Ministry did not comply with its Finance Manual (2013) in accounting for expenses arising from procurement of goods and services.
Refer below for details (i) Payment vouchers and other supporting payment records were not always stamped paid, checked and authorised by the supervising officers; (ii) Instances were noted where there was inadequate supporting documents attached to the payment records to justify the payment made to the supplier of goods and services; (iii) Three quotations were not obtained; and (iv) Local Purchase Orders (LPOs) were not attached to the payment vouchers.
Processing payments without proper documentation and authorisation increases the risk of double and fraudulent payments.

Non-compliance with the requirements of the Finance Manual by staffs indicates that the work of these staffs was not properly reviewed by supervising officers, Recommendations • The Director Finance should ensure that the Ministry complies with its Finance Manual, procurement procedures and instructions at all times.
• The internal control procedure in the Accounts Section, specifically supervisory checks should be strengthened and appropriate disciplinary actions taken if the responsible officers continue to breach financial regulations.
7 Ministry of Foreign Affairs Finance Manual 2013 section 2.9.3 8 Ministry of Foreign Affairs Finance Manual 2013 section 2.9.4 9 Ministry of Foreign Affairs Finance Manual 2013 section 2.9.5 Ministry of Foreign Affairs Section 08: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Ministry Comments The Ministry noted the anomalies highlighted and to ensure strict adherence and compliance, the following measures will be undertaken: a) on-going refresher training programme on procurement procedures and instructions within the Ministry; b) Bringing into HQ for specific accounts training staff and especially Locally Engaged Staff (LES) in missions whose responsibilities cover doing the books of the mission.
Part of this training will involve looking at the Ministry’s audit reports of the last five years; and c) close monitoring of the procurement procedures through enforcing the various internal checking systems 8.12 Anomalies noted on Payroll Reconciliations The salary reconciliation must reconcile the difference between the previous fortnight payroll report and the current report, and must be prepared prior to each pay date.
The salary reconciliation shall be signed by the AO and checked & signed by PAO before it is forwarded to the Ministry of Finance, within one week from the pay date.10 The wages reconciliation must reconcile the difference between the previous week payroll report and the current report, and must be prepared prior to each pay date.
The wages reconciliation shall be signed by the AAO - Ledgers and checked & signed by AO or SAO and kept for record purpose.11 Our review of the Ministry’s payroll reconciliations revealed that monthly reconciliations were not prepared in a timely manner.

Instances were noted where reconciliations were prepared after two months from the pay date and variances were noted in the closing balance of a particular pay compared to the opening balance of the following pay.
Inability to prepare the reconciliations in a timely manner may result in errors and incorrect postings not being detected in a timely manner.

Recommendations The Ministry should: • ensure that payroll reconciliations are prepared at least a day prior to each pay date in order to rectify any errors and anomalies on a timely manner; and submit a copy of the reconciliation to the Ministry of Economy on a timely manner.
• Ministry’s Comments This is a compliance issue and the delay in the preparation and submission of payroll reconciliations highlighted for 2016/2017 financial year is duly noted particularly in terms of timely and quality reporting.

For 2017/2018 financial year, the Ministry is updating Payroll reconciliations on each pay basis instead of the monthly update made in previous years.
In our effort to improve our operational efficiency particularly on reporting as such, the Ministry will undertake the following as a matter of priority in the next 3 months: a) review the Position Description of Officers within the Finance Division; 10 Ministry of Foreign Affairs Finance Manual 2013 section 3.6.4 & 3.6.5 11 Ministry of Foreign Affairs Finance Manual 2013 section 3.14.4 & 3.14.5 Ministry of Foreign Affairs Section 08: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR b) conduct internal workshop/refresher training programmes; and c) strengthen internal monitoring mechanism to ensure strict adherence to timelines.
8.13 Fixed Assets Register not updated – Headquarters Each agency must have in place a cost effective system of internal controls which safeguard money and property against loss and avoids or detect accounting errors.12 All property, plant or equipment with a value in excess of $2,000 or more must be recorded in the asset module of the financial management information system; and asset register for those without the financial management information system.13 The Asset Recorder must ensure that the fixed assets register is kept updated.14 Our review of procurement of fixed assets during the year revealed that the following items were not recorded in the Fixed Assets Register.
Refer to Table 8.5 for details.
Table 8.5: Details of Procurement not recorded in the Fixed Asset Register Date 08/06/17 10/07/17 10/05/17 25/04/17 28/06/17 25/07/17 07/07/17 Particulars Cheque/ EFT Number 35527 Purchase of office steel cabinets 85610 34946 34910 3285 3377 3292 Installation of workstation at Headquarters Installation of work stations at Headquarters Installation of work stations at Headquarters Purchase of office chairs Purchase of glass cupboards Purchase of: New Desk Tops x 10 units and New Lap- Tops x 6 units Purchase of Laptops for executives Amount VIP ($) 6,400 995 14,270 14,270 6,700 5,010 28,046 5,108 28/02/17 2936 The above finding indicates non-compliance with established policies for recording of fixed assets.
Failure to update the Fixed Asset Register on a timely manner increases the risk of misuse and loss of fixed assets through theft and damage.

Recommendation The Ministry should ensure that all items valued above $2,000 are recorded in the Fixed Asset Register immediately upon purchase.

Ministry’s Comment The monthly report submitted from each Division and Missions is to incorporate a section on fixed asset and inventory updates.
This will then be used to continually update the Ministry’s central Fixed Asset Register on a monthly basis.
12 Finance Instruction 2010 – Section 59(1) 13 Finance Instruction 2010 – Section 46(1) 14 Ministry of FA&IC Finance Manual – Section 7.2.2 Ministry of Foreign Affairs Section 08: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR In addition to the above, the Ministry will use an internal simplified version of the asset register for ease of collating information every month by Divisions and Missions.
Following this, HQ will update the collated information into the central Fixed Asset Register.

The Asset Management Unit of the Ministry of Economy has conducted a training session on the whole asset register and reassured their assistance and support through this new implementation.
8.14 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Ministry’s Management, and Internal Audit and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Ministry.

Risk management framework would provide a platform to identify various risks affecting the Ministry, management of the risks, develop appropriate internal control to mitigate the risks and continuous monitoring of risks.
The mechanism to mitigate risks could include policies, procedures, training and awareness.

Our review of the Ministry’s Corporate Governance revealed that there is no risk management framework in place.
As a result, the Ministry does not have written policies, procedures or guidelines to manage risk associated with the following: • occupational health and safety; • Ministry operational and human resource/succession planning; • • disaster recovery, IT back up and business continuity, and • assessment of potential conflicts of interest fraud control and anti-corruption; In the absence of a risk management framework, the Ministry may find difficulty in managing risks affecting the Ministry particularly risk of fraud and misappropriation of assets.
The above finding also indicates that currently the Ministry does not have an established governance and accountability function to drive the risk management framework.

Recommendations • The Ministry should work towards establishing a governance and accountability function that supports the operations of the Ministry by providing financial and operational risk management and management of external reporting obligations.
• Following the establishment of the governance and accountability function, a risk management framework should be developed, continuously used and reviewed as and when necessitated.

Ministry’s Comments The Ministry is currently working on developing a Risk Management Framework.
This is to be conducted as below: a) Consultation with Ministry of Labour on OHS Compliance b) Consultations with MOE on appropriate Internal Control procedures c) Consultation with ITC on Information System and Security d) Consultations with Solicitor General in terms of Regulations, Policy compliance Ministry of Foreign Affairs Section 08: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR e) Management Consultation on Operational and Human Resource / succession planning.
Upon securing full information and compliance of the above listed consultations, the following measures must be intact prior to finalising the framework.

1) Redeveloping of all Standard Operating Procedures (SOP) in line with current anticipated framework.

2) 3) 2nd line contingency plan if 1st line plan not successful 1st line contingency plan The Ministry wishes to assure that once the above processes are ascertained, the Framework should be completed and implemented.
Ministry of Foreign Affairs Section 08: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 09 Office of The Auditor General Roles and Responsibilities Office of the Auditor General is an independent public office established and mandated by the Fijian constitution and is responsible for; • • The inspection, audit and report on the public accounts, property and transaction of state.
To perform annual audits across various state entities, ministries, departments and whole of government accounts and fiancé.

Report on performance, environment and information technology risk assessment.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 9.1 Audit Opinion ............................................................................................................................. 2 Statement of Receipts and Expenditure .................................................................................. 2 9.2 9.3 Appropriation Statement .......................................................................................................... 2 9.4 Statement of Losses .................................................................................................................. 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 Internal Controls ........................................................................................................................ 4 9.5 9.6 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 9.7 Quality of draft financial statements by entities ...................................................................... 6 9.8 Timeliness of draft financial statements ................................................................................... 6 9.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 Office of the Auditor General Section 36: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 9.1 Audit Opinion The audit of the 2017 accounts of the Office of the Auditor General was carried out by Chartered Accounting firm, BDO1 resulted in an unqualified audit opinion.
9.2 Statement of Receipts and Expenditure The Office collected revenue totalling $549,965 and incurred a total expenditure of $3,819,777 for the year ended 31 July 2017.

Details are provided in Table 9.1.
Table 9.1: Statement of Receipts and Expenditure for 2017 Description Revenue Audit Fees Miscellaneous revenue Total Revenue Expenditure Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Operating grants and transfer Total Operating Expenditure 31 July 2017 ($) 547,559 2,406 549,965 2,998,592 31,146 136,766 109,120 486,884 5,298 3,767,806 31 July 2016 ($) 186,998 1,188 188,186 1,670,641 16,759 56,195 41,188 149,471 4,279 1,938,533 Value Added Tax 51,971 18,517 Total Expenditure 3,819,777 1,957,050 The financial year-end of Government was changed from 31 December to 31 July in accordance with Section 84 of the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

Revenue mainly comprised of audit fees and commission received for facilitating salary deductions.
9.3 Appropriation Statement The Office incurred expenditure totalling $3,819,777 in 2017 against a revised budget of $4,331,018 resulting in a saving of $511,241 or 11.8%.

Major saving was in the Personal Emolument budget due to some vacant positions which were filled during the 2017/2018 financial year.

Details of expenditure against the revised budget are provided in Table 9.2.
1 Appointed by Speaker of Parliament in accordance with Section 14 of the Audit Act 1969 Office of the Auditor General Section 36: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 9.2: Appropriation Statement for 2017 SEG Item & Established Staff Unestablished Staff Travel & Communication Maintenance Operations Purchase of Goods & Services Operating grants & Transfer Total Expenditure Value Added Tax Total Expenditure Operating Budget Estimate ($) 3,459,932 38,027 136,500 Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) --- 3,459,932 38,027 --- 141,500 5,000 2,998,592 31,146 136,766 461,340 6,881 4,734 116,200 (4,000) 112,200 109,120 3,080 506,059 (1,000) 505,059 486,884 18,175 6,000 --- 6,000 5,298 702 4,262,718 --- 4,262,718 3,767,806 494,912 68,300 4,331,018 --- 68,300 --- 4,331,018 51,971 3,819,777 16,329 511,241 The Office collected revenue totalling $549,965 in 2017.
9.4 Statement of Losses The Office of the Auditor-General did not report any loss of money or assets during the financial period ending 31 July 2017, except for normal wear and tear arising from use.
Office of the Auditor General Section 36: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 9.5 Internal Controls As part of its audit, BDO assessed the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, the operating effectiveness were tested to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

The Office of the Auditor General is in the process of implementing formal Risk Management Policy covering the years 2018 – 2021.

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

• Control Activities (CA) – these are established by policies and procedures to help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out.
Control activities are performed at all levels of an entity and at various stages within business processes, and over the technological environment.
Examples of issues which would fall under this category are general controls relating to information technology, documentation of procedures which have in-built checks and balances Office of the Auditor General Section 36: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • which are aligned to the policies of the entity.
Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
Based on the findings of the audit, a summary of assessment of key controls based on the audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, the internal controls of the Office of the Auditor General was assessed as: Rating  Effective Internal control assessment No Significant deficiencies identified in internal controls 9.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 Office of the Auditor General Section 36: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 When the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, OAG is likely to prepare accurate and timely draft financial statements for audit.
Based on the above, the year-end close process has been assessed as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 9.7 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
The quality of financial statements were assessed by the impact these adjustments had on the total expenditure, operating results or net assets of the OAG.

This was assessed as: Rating  Effective Quality of draft financial statements assessment No adjustments were required 9.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, the date the draft financial statements were due and the date it was received by Chartered Accounting firm, BDO.
Accordingly, the assessed timeliness was: Rating  Effective Timeliness of draft financial statements assessment Acceptable draft financial statements submitted to Chartered Accounting firm, BDO before or on 01 October 2017 9.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, the date the draft management letter and audited financial statements were sent to OAG by Chartered Accounting firm, BDO and the date management comments and signed accounts were submitted by OAG to the firm.
Office of the Auditor General Section 36: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Accordingly, the assessed timeliness was: Rating Effective Rating Effective Timeliness of Management Comments Provided to Chartered Accounting firm BDO Within 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements After 15 days from issue of Financial Statements for signing Office of the Auditor General Section 36: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 10 Fijian Elections Office Roles and Responsibilities The primary role of the Fijian Elections Office [FEO] is to ensure the consolidation of democracy in Fiji.
It prepares for and conducts national elections for Parliament, which occur every three- and-a half to four years.

It is also responsible for conducting elections for trade unions and their branches.

The FEO is a permanent office that keeps a full staff year round.

Its employees conduct various elections around the country and develop local expertise so that Fiji will no longer have to rely so heavily on foreign experts.

The FEO is provided with a budget of $12.7 million in 2016-2017 Budget.
This will ensure that the Office is able to operate at the necessary level to provide ongoing training to staff, conduct Trade Union and other elections and continuously seek to improve the Fijian electoral procedures.

In the third quarter of 2016, the FEO will conduct nationwide consultation on proposed polling venues for the 2018 General Election to finalize the list of polling venues for the 2018 General Election in the fourth quarter of 2016.
An interactive map of the entire country with polling venue locations identified will be accessible on the FEO’s website.

The Office will also conduct nationwide voter registration and card replacement exercises specifically targeting Tropical Cyclone Winston affected areas in the first quarter of 2017.

In the second quarter of 2017, the FEO will be launching a revamped website, including an audible website reader for disabled persons.
The FEO will also carry out procurement of generic election items such as polling kits, ballot boxes and voting screens in preparation for the 2018 General Election.

The FEO has already started its nation-wide school voter registration on 6 June 2016 and will visit all 178 secondary schools in this month-long drive.

During this registration drive, the FEO intends to register approximately 7,000 eligible voters.
Towards the end of the first quarter of 2017, the FEO will be sending out teams to register voters overseas.

Furthermore, community awareness about voter registration and voting will continue in 2016- 2017 in order to inform Fijians – especially those turning 18 – about the importance of voting.
Table of Contents PART A: FINANCIAL INFORMATION...................................................................................................... 3 10.1 Audit Opinion ........................................................................................................................... 3 10.2 Abridged Statement of Comprehensive Income ................................................................... 3 10.3 Abridged Statement of Financial Position .............................................................................. 3 10.4 Appropriation Statement ........................................................................................................ 4 PART B: Assessment of Financial Governance ..................................................................................... 5 10.5 Internal Controls ...................................................................................................................... 5 10.6 Quality of draft financial statements ...................................................................................... 6 10.7 Timeliness of Provision for Management Comments and Financial Statements for Signing .................................................................................................................................................. 7 PART C – SIGNIFICANT AUDIT MATTERS ............................................................................................... 8 10.8 Variance between Tendered and Contract Price for Election Management Software ....... 8 10.9 Expired Performance Security ............................................................................................... 11 10.10 Anomalies in procurements for the 2018 General Elections ............................................. 11 10.11 Underpayment of FNU Levy ................................................................................................... 14 Absence of Risk Management Policy and Risk Register ................................................... 15 10.12
15 10.12 Significant Error in the Financial Statements Submitted for audit................................... 16 10.13 Fijian Elections Office Section 10: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 10.14 10.15 10.16 Proper reviews and control over Posting of Journal Vouchers not done ....................... 16 Governance Issues .............................................................................................................. 17 Anomalies in Recording of Cash ......................................................................................... 18 Fijian Elections Office Section 10: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL INFORMATION 10.1 Audit Opinion The audit of the financial statements of Fijian Elections Office (FEO) for the year ended 31 July 2017 resulted in an unqualified audit opinion.
10.2 Abridged Statement of Comprehensive Income Description Government grant Donor Income Other income Total Revenue Administrative Expenses Other Expenses Total Expenditure Net Profit 2017 (12 months) ($) 11,709,603 896,860 2,688 12,609,151 8,136,061 2,816,636 10,952,697 1,656,454 2016 (7 months) ($) 3,689,412 --- 416 3,689,828 1,804,290 1,478,025 3,282,315 407,513 Total revenue substantially increased by 241% or $8.91 million while total expenditure increased by 234% or $7.67 million in 2017 compared to 2016.
The major reason for the increase was due to preparedness for the 2018 general elections.
10.3 Abridged Statement of Financial Position Description 2017 (12 Months) $ 2016 (7 months) $ 364,072 1,352,105 Cash 192,181 1,078,843 Receivables 182,774 475,287 Other current assets --- Investments 5,073 1,453,858 Property, plant and equipment 2,058,060 --- 833,726 Intangible assets 3,180,918 Total Assets 4,815,061 268,762 1,076,795 Trade and other payables 64,860 Employee entitlements 84,506 1,210,716 283,826 Deferred Income 1,544,338 1,445,127 Total Liabilities 1,636,580 Net Assets 3,369,934 1,636,580 3,369,934 Accumulated funds 1,636,580 3,369,934 Total Equity Net assets increased by $1.73m or 106% in 2017 compared to 2016.
This was mainly attributed by the increase in receivables, other current assets, property, plant and equipment and intangible assets.

Increase in receivables was largely due to receivable of grant of $1,030,319 from the Ministry of Economy for the last quarter of 2017.

Fijian Elections Office Section 10: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 10.4 Appropriation Statement The FEO was allocated $12,686,019 for the financial year 2016-2017.
Expenditure posted in the FMIS by Ministry of Economy (MoE) was $7,167,078.

However, review of records maintained by the FEO indicated that a sum $10,871,659 was received during the financial year from MoE.

This resulted in a variance of $3,704,581 between the actual amount received by FEO and amount shown in the records of MoE.

The total lapsed appropriation of $5,518,941 includes this variance.
FEO has confirmed through a letter dated 6 November 2018 that Ministry of Economy will resolve the variance through an adjustment to FMIS.

However, as at the date of issue of audit report, Ministry of Economy was yet to effect this adjustment1.

Details of expenditures against the budget estimates are provided in the appropriation statement in Table 10.1.
Table 10.1: Appropriation Statement for 2017 Item Established Staff Government Wage Earner Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditures Total Operating Expenditure Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) --- --- --- --- --- 12,686,019 --- 12,686,019 --- 12,686,019 Changes ($) --- --- --- --- --- --- --- Revised Estimate ($) --- --- --- --- --- 12,686,019 --- 12,686,019 --- 12,686,019 Actual Expenditure ($) Lapsed Appropriation ($) --- --- --- --- --- 7,167,078 --- 7,167,078 --- 7,167,078 --- --- --- --- --- 5,518,941 --- 5,518,941 5,518,941 1 23/11/18 Fijian Elections Office Section 10: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 10.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Fijian Elections Office Section 10: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Fijian Elections Office as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 10.6 Quality of draft financial statements The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for Fijian Election Office was: Rating Quality of draft financial statements assessment  Ineffective Adjustments on operating results/net assets were more than one percent Fijian Elections Office Section 10: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 10.7 Timeliness of Provision for Management Comments and Financial Statements for Signing To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Management response received within 21 days Rating  Ineffective Timeliness of Signed Financial Statements Received Signed accounts was received after 15 days Fijian Elections Office Section 10: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: SIGNIFICANT AUDIT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the FEO as at 31 July 2017.
10.8 Variance between Tendered and Contract Price for Election Management Software No alterations should be made to the basis of scope of Works on which the tender documents have been prepared and tenders invited except for purposes such classification of details or for the acceptance of alternative Scope of Works as permitted by the conditions of the Tender.2 In the event that exceptional circumstances have arisen such that part or the whole of the tender scope of works must be altered, appropriate approval should be sought to make the necessary amendments or cancel the tendering exercise which is a view to re-tendering.3 The Tender Committee comprising of Chairperson, Secretary and three independent members, in its meeting on 26/4/16 recommended that the tender for the Election Management System (EMS) Software be awarded to the supplier at a total sum of USD 262,500.
However, on 24/5/16, a contract agreement was entered into between the Supplier and Fijian Elections Office for the development of a central EMS database and software modules for Polling Venue Assessment, Logistics, Postal Voting, Party Registration, Candidate Nomination, Voter Awareness, Polling Day Worker and Electronic Voter Registration System at a total cost of USD 350,000.

The EMS software together with the source code was handed over to the FEO on the 1 June 2017.
Audit review of the procurement revealed the following anomalies: (i) (ii) We noted a variance of USD 87,500 or 33% between the tendered price of USD 262,500 and the contract amount of USD 350,000.

Upon our discussion with Director Corporate of Fijian Elections Office we were advised that there was no written documentation for the approval from the Tender Committee for the variance.
Subsequently, we were provided with a copy of a letter that was addressed to the Director Corporate Services from the Chairperson of the Tender Committee to the Director Corporate services of FEO dated 20 August 2018 (which was during the time of the audit) advising that the Tender Board had verbally agreed for the Supervisor of Elections to enter into negotiations with the supplier on the revised cost.
2 Fijian Elections Office, Tender Policy – Section 10.4.1 3 Fijian Elections Office, Tender Policy – Section 10.4.2 Fijian Elections Office Section 10: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR We further noted from the letter that the Supplier had highlighted to FEO the likely chances of numerous limitations that could impede the software from operating as per the needs of FEO and recommended a revised cost of USD 398,000 and amendment to Software Requirement Specification (SRS).
We noted that the revised cost of USD 398,000 was further negotiated by the Supervisor of Elections to an agreed price of USD 350,000 which was verbally recommended to the Tender Committee which accepted it following which the contract agreement was prepared.

Refer to Table 10.2 for details of the Pricing Summary Sheet.
Table 10.2: Details of Pricing Summary Sheet Item Provision of Services in Schedule A EVR Migration to Centralised EMS and Voter List Printing Dashboard for Portable Mobile Devices Grand Total Final negotiated price Total Cost (USD) ($) 262,500 130,500 5,000 398,500 350,000 However, we were unable to determine the reasons the limitations identified by the Supplier were not identified in the SRS when the tender was initially advertised.
We were also not able to ascertain whether the Tender Committee endorsed the change on specification and price variances, as minutes of meetings of the Committee and other related documents such as Committee papers were not sighted during our audit.
Recommendations FEO Management should ensure that for future procurements: • • • proper reviews of the specifications are carried out prior to inclusion in the Requirements for Tender; Fresh tenders are invited for any significant changes in the tender specifications; and any amendments to the specifications and tendered cost is deliberated and approved by the Tender Committee.
FEO Management should also ensure that changes to price and specifications of the EMS are properly recorded in the minutes of the Tender Committee.

Management’s Comments Fijian Election Office [FEO] has noted the comments by the audit team, our response is as follows: FEO would like to clarify that the Tender for the EMS from the supplier was for the sum of $262,000.00.
This tender was accepted by the Tender committee based on the performance of the supplier during the evaluation stage as well as during the direct face to face presentations on the eventual design of the software.

The Tender Committee employed the resources of a separate evaluation committee making up the number of people to decide on this tender up to nine [9], to make sure that the ultimate procurement process was both transparent, reconcilable as well as accountable.
Fijian Elections Office Section 10: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR The attention of Auditors are drawn to the Terms of Agreement dated 24 May, 2016 which is a total sum of $350,000.00.

The process leading up to the contract is as follows: Tender Committee approved the supplier of the EMS, dated 22 April, 2016.

The supplier arrives in Fiji with its core development and technical team on the 11 May 2016.
For the technical team to carry out extensive discussion and presentation with FEO Operations Team, FEO Technical Advisors, Finance Teams and the Supervisor of Elections [SoE].

The technical team from the supplier extensively also discussed the scope that had been published by the FEO to ensure that the technical team thoroughly understood the requirements of the scope as well as understood the end result goals of the EMS that was required by the FEO.
The scope was also analyzed for its suitability tor the platform that it required the software to be built on also determine the rigidness of the software following the 2018 General Elections.

Following the extensive discussion there was a round table agreement on the draft Software Requirements Specifications [SRS] that would be the basis for the development of the EMS between the FEO and the supplier.
Since this is the first time an EMS is being developed for Fiji, were bound to be enhancements or opportunities in the initial scope that could only be explored following the confirmation by the technical team of the supplier of the possibilities.
The supplier thereafter reverted to the FEO outlining that: There is a possibility to develop the EMS based on the initial scope at the cost of $262,000.00 but highlighted highly likely chances of numerous limitation that could inhibit the software from functioning as per the FEO needs for the 2018 General Elections The supplier further recommended that the FEO reconsider a revised cost of $398,000.00, in which the supplier will deliver to the FEO the entire amended SRS, which would permit the FEO to have the state of the art software it requires with Source Code, as well as will the ability to comprehend further enhancements, as well as changes that may facilitate the EMS into become the overall office management in the near future.
The Tender Committee deliberated over this revised bit and in its discussion considered whether it would be worthwhile to offer the Tender to the next bidder, in case the next bidder’s bid was lower than the revised cost.

The Tender Committee noted that the next bid was US$502,000.00.
The Tender Committee further deliberated that there is a highly likely chance that the second bidder would also recommend for the scope to be enhanced or changed in order to allow its technical team to build the software based on the expectation of the FEO which would more likely take the cost well above the 500,000 mark and if the supplier cost difference be taken as a base line then the cost of software would most likely exceed 600,000.
The Tender Committee thereafter recommended to the SoE as the head of the institution to negotiate the tender pricing with the supplier with the view to reduce the final price.

The SoE on receipt of the office requested negotiated the price from $398,000.00 to a round figure of 350,000.

The SoE following the negotiations recommended to the Tender Committee the price of $350,000.00 which was accepted by the Tender Committee as the appropriate round figure.
There after the contract was prepared and signed In order to reflect this discussion the FEO ensured the Terms of Agreement with the supplier, that the agreement demonstrated the tender bid of $262,000 was included in the price as well as the difference of the 350,000 with the breakdown to facilitate for proper accountability.

Once this was done the Terms of Agreement with the supplier was signed and the Software was produced.
Fijian Elections Office Section 10: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 10.9 Expired Performance Security A Performance Bond for delivery of EMS software at a rate of 10 percent of the contract price amounting to USD 35,000 (VEP) was required to be provided by the Supplier.4 The performance Bond will be returned to the Supplier at the end of the warranty period.
If the performance bond expires during the terms of the agreement, the Supplier must obtain a new bond to replace the expired performance bond prior to the expiry of the performance bond.5 The warranty period is 6 months from the date of receipt of the EMS Software by the Client.6 The warranty period was effective after the date of the Final Acceptance Certificate which was issued on 1/6/17.

The performance bond should have been effective till 1/12/17.
Audit noted that the performance bond amounting to USD 35,000 had expired on 28/9/17 which is 64 days prior to the completion of the warranty period.

The findings indicate that the Fijian Elections Office did not monitor the validity of the performance bond.

In absence of valid Performance bond, the FEO may not be able to recover any sum for non- performance.
Recommendation FEO Management should ensure that performance bonds submitted are monitored to ensure it is valid until the expiry of the warranty period.

Management’s Comments The FEO notes the findings of Audit and invites Audit to consider the following: 1.

The performance Bond was for the sum of USD 35,000.

The entire EMS software together with the source code had been handed over to the FEO on the 1st of June, 2017.
However, on the date the performance bond expired, the FEO was holding payments due to the Supplier in sum of USD 33,000.

2.

In light of the pending payments, the Performance Bond was significantly less.

In terms of the security of the FEO, due to the pending payments, the FEO was in a more stable and secure position in the event there was a need to enforce the Bond.

3.
3.

The FEO and the Supplier have had good cordial relationship and since the software was already delivered and accepted by the FEO, both parties were in stable positions for support relations if required.

10.10 Anomalies in procurements for the 2018 General Elections Variance in Tally cards for Purchase of Polling Kits There will be comprehensive records kept of all items entering and leaving the warehouse.7 No item would be removed without appropriate authorization and records being updated.
8 4 Contract Agreement between FEO and Supplier – Schedule F 5 Contract Agreement between FEO and Supplier – Section 28.3 6 Contract Agreement between FEO and Supplier - Definitions 7 Fijian Elections Office – Warehouse and Inventory Policy – Section 11.5.1 8 Fijian Elections Office – Warehouse and Inventory Policy – Section 11.5.2 Fijian Elections Office Section 10: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR On 31 July 2017, FEO purchased 3,000 Polling Kits to be used in the 2018 General Elections at a total cost of $1,431,965.08 (VIP) via EFT 143 from the Supplier.
Each Polling Kit included 62 items that will be required during the elections such as stationery and other accessories.

The polling kits are kept at the FEO warehouse.

We visited the FEO Warehouse on 08 March 2018 and noted the following: (i) Tally cards were maintained for all items in the Warehouse.

However, tally cards for Polling Kits were not updated.

All movement in inventory was recorded in an inward/outward register prior to it being entered in the tally cards.
However there was no reconciliation between the inward/outward register and the tally cards.

(ii) A variance of 167 kits existed between the tally card balance of 1,800 kits and the stock take as per stock take carried out during audit of 1,633 kits.

Refer to Table 10.3 for details of variance.


Table 10.3: Details of Variance between Tally Cards and Actual Stock Item Balance as per Tally Card Balance as per stock take by audit on 8/3/18 Variance Polling Kit 1,800 1,633 167 Discussions with the Director Corporate Services revealed that the Polling Kits were distributed for training purposes and were not recorded on the tally card.
(iii) The Quality Assurance Team for 2018 General Elections identified that some Polling Kits did not have all items which were delivered on 28 July 2017 and some had surplus items.

As of the date of audit on 8 March 2018, the Supplier was yet to provide the incomplete items in the kits which is 223 days after delivery.

Our findings indicate that the items were not properly inspected upon delivery.
In the absence of timely reconciliation and inspection of items, FEO will not be in a position to determine the correct number of items received and kept in the Warehouse.

Recommendations FEO Management should ensure that: • • reconciliations are carried out between the tally cards and the physical stock count and rectify any variances arising; and items received are inspected upon delivery.

Management’s Comments Management has noted your comments.
Stock card may not have been updated at the time stock-take was conducted by the auditors however, there was a stock-take conducted with Logistics Coordinator for handover of stock to Operations Directorate.

During this handover it was confirmed that there were no missing Kits.

As for the items missing in the Polling Kits, we wish to confirm that the Supplier had later supplied all the missing/outstanding items.
Fijian Elections Office Section 10: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Insufficient Supporting Documents for delivery of Election Items The proper management of expenditure is fundamental in ensuring value-for-money in delivering services to the nation for the grants allocated by the government and donor agencies.
Having cost- effective internal controls within the purchasing and payments system plays an important role in ensuring that misuse of funds, over-expenditure and corruption does not occur.9 The Accountant and Financial Controller must not certify a payment as correct unless he/she is satisfied that it is in accordance with the PO, contract, invoice or other documentation and authorization; and there is written evidence that goods, services or works have been received or completed to FEO’s satisfaction.10 On 27 July 2017, FEO purchased 20 Samsung Tab S3 9.7 Inch Screen Tablets costing $1,529.10 (VIP) each and 150 Samsung J5 Prime Mobile Phones costing $280 (VIP) each from the Supplier via EFT number 141.
As per delivery dockets, the items were received on the same day by the Team Leader, ICT.

During the physical verification of items on 7 March 2018, we noted that only five out of the 20 Samsung Tab S3 9.7 Inch Screen Tablets and 60 out of the 150 Samsung J5 Prime Mobile Phones were received by the Office.

Refer to Table 10.4 for details.
Table 10.4: Details of Items Not Received as at 28/9/18 Item Samsung Tab S3 9.7 Inch Screen Tablets Samsung J5 Prime Mobile Phones Total Cost Unit Cost ($) 1,529.10 280.00 Total Cost ($) Quantity Ordered Quantity Resceived Quantity yet to be received 30,582 42,000 72,582 20 150 5 60 15 90 We were not provided with any documentary evidence explaining that 15 Samsung Tab S3 9.7 Inch Screen Tablets and 90 Samsung J5 Prime Mobile Phones were yet to be received from the Supplier.
Our subsequent visit to FEO on 28 September 2018 revealed that the items were still not delivered.

Our discussions with the Director Corporate Services during the audit revealed that advance payment was made for items not delivered.

However, there was absence of written documentation to show that advance payment has been made and when the items will be delivered.

In the absence of proper documentary evidence there is a lack of audit trail for goods that are yet to be received from the Supplier.
Recommendation FEO Management should ensure that goods ordered are received on a timely basis before payment is made.

9 FEO Finance Manual Section 2.1.1 10 FEO Finance Manual Section 2.6.4 Fijian Elections Office Section 10: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Management’s Comments Management has noted your comments.

Items were procured in advance due to special price on the phones costing $280 compared to $415 from another vendor.
These phones were bought for hub and field officers who are going to start work just before elections.

There were several reasons why the phones and tablets were kept at Vodafone.

Li0sted below are the reasons: 1.

Warranty would have applied from the time of delivery.

2.

Mobile phones were purchased in bulk to benefit the FEO in terms of cost saving.
It was better to have the phones stored with Vodafone and have them delivered to us as the staff were appointed rather than have the full quantity stored with us.

If mobile phones were received immediately, their warranties would expire and in some cases, the warranty would have expired before first use.

3.

4.

The FEO has a calendar for appointment to staff and resources for these staff are allocated after their appointment.
The option taken by FEO is by far better practical options rather than the old direct supply and delivery system.

We have noted comments by audit and in respect of future purchase we will ensure that proper contracts are done to safeguard the interest of FEO.
10.11 Underpayment of FNU Levy The levy shall be equal to one per cent of the total of the gross wages paid by the employers in the period prior to the date of such assessment in respect of all employees on whom this levy is imposed.11 Any sum due and unpaid on the date shall bear interest from that date at the rate of one per cent per month or part of a month until payment.12 The Office was required to pay 1% of Gross Salary amounting to $3,309,527 amounting to $33,095 as FNU Levy to the Fiji National University.
Review of the payments made for the FNU levy revealed that there was a variance of $23,162 between the audit calculation of $33,095 and the amount paid by the Office amounting to $9,933.

Refer to Table 10.5 for details.


Table 10.5: Details of Variance between FNU Levy Payable and FNU Levy Paid FNU Levy Calculation Total Gross Salary and Wages FNU levy at 1% Total as per Audit Calculation Total as per Trial Balance Variance Amount ($) 3,309,527 0.01 33,095 9,933 23,162 The above could be attributable to non-performance of appropriate reconciliation for FNU levy.
Based on the above findings, it is evident that FEO did not comply with the statutory requirements relating to FNU Levy hence increasing the risk of possible penalties on the amount short-paid.

11 Section 4, Fiji National University Amendment Decree No.

58 of 2010 12 Section 6, Fiji National University Amendment Decree No.
58 of 2010 Fijian Elections Office Section 10: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Recommendations FEO Management should ensure that: • monthly reconciliations for FNU Levy are prepared and reviewed; and • timely payments are made for FNU Levy.

Management’s Comments FEO agrees to the audit comment that there was underpayment of FNU Levy.

FEO was not aware that FNU levy applies to all employees and not only for long term staff.
This was clarified with FNU after audit was conducted and FEO managed to clear the payment for short term staff in the next financial year.
10.12 Absence of Risk Management Policy and Risk Register It is imperative that an entity must establish and maintain an entity specific risk management policy that outlines the following at least: • defines the entity’s approach to the management of risk and how this approach supports its strategic plans and objectives; • defines the entity’s risk appetite and risk tolerance; • contains an outline of key accountabilities and responsibilities for managing and implementing the entity’s risk management framework; and is endorsed by the entity’s accountable authority.
• It was noted that the Office does not have a Risk Management Policy.

In the absence of a Risk Management Policy there is a risk that the Office will not be carrying out its risk assessment and formulating strategies to address the risks that may exist in the Office.

Consequently, when the risks are not identified and addressed early this may cause severe business disruption.
Recommendation FEO Management should consider developing and implementing a Risk Management Policy Management’s Comments The FEO notes the comments by audit.

The FEO has only been operational for the last 4 years and has been continuously building and developing its organizational policies and processes.

In some areas, the FEO has had to wait for the establishment or creation of the base processes first before devising more comprehensive overlying frameworks.
Risk Management, aversion and handing policy has been a policy that has been work in progress for the FEO.

Being an EMB, the FEO has had to consider additional matters that form the prime basis for consideration and remedial action such as polling operations, decentralization plan etc.
Fijian Elections Office Section 10: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 10.13 Significant Error in the Financial Statements Submitted for audit The Financial Controller shall be responsible for the accuracy of the books of account and financial operations of the Finance Department.

13 Significant errors were noted during our audit of the VAT.

Refer to Table 10.6 for details.


Table 10.6: Details of Items Yet To Be Received Account VAT Issues Noted VAT amounting to $562,164 is wrongly classified as an Administrative expense in the Statement of Comprehensive Income and Retained Earnings.

Our findings indicate that the financial statements were not properly reviewed by the Financial Controller before it was submitted for audit.

Recommendation FEO Management should ensure discrepancies identified are rectified before finalisation of the audit.
Management’s Comments The VAT is reported in the Financial Statement as Expenses in the Statement of Comprehensive Income.

This was recorded as Expenses in line to the budget setup and the funds that was released to FEO.

All the expenses which related to VAT was posted in GL 43502.

The audit verified that the VAT is component of Balance Sheet and it should not be classified as Expenses.

This issue was discussed with FRCS along with the consultancy advice.
It was concluded by FRCS that FEO neither qualified for refund and payable for that particular period and the VAT account was zerorised as at 31st July 2017.

We have to classify vat as part of the administrative expenses as excluding this would understate the expenditure and reclassification to respective GL could not be done as there were around 4000 entries for the year.
10.14 Proper reviews and control over Posting of Journal Vouchers not done Journal vouchers are used to correct accounting errors and make other required transfers between accounts.

Journal vouchers must be appropriately approved and then posted into the appropriate ledger.

Our audit noted several instances where the journal vouchers were posted in the Navision Software without the approval of the Financial Controller.

The journals were related to the year-end account adjustments.
Refer to Table 10.7 for examples.
Table 10.7: Examples of Journal Vouchers not approved Posting Date Journal Voucher Number Amount ($) Prepared and Posted By Approved By 31/7/17 GJ010318 781,204.29 Accountant Not Approved 13 Fijian Elections Office Finance Policy section 10.1.1 Fijian Elections Office Section 10: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Posting Date Journal Voucher Number Amount ($) Prepared and Posted By Approved By 31/7/17 31/7/17 31/7/17 31/7/17 31/7/17 31/7/17 Total (Sample Only) GJ010126 GJ010282 GJ010377 GJ009528 Not Numbered GJ009860 191,795.00 Accountant 21,175.39 Accountant 3,078.79 Accountant 16,730.18 Accounts Officer 2,198.10 Accounts Officer 3,508,815.00 Accountant 4,524,996.75 Not Approved Not Approved Not Approved Not Approved Not Approved Not Approved Our findings indicate poor oversight and review functions in the Finance Department.
Hence there is a high risk of incorrect journal entries processed and posted in the general ledger.

Recommendations FEO Management should ensure that: • Supervisory role in the Finance Department needs to be strengthened and this needs to be reviewed by the Internal Auditor; and • Accounting officers need to be informed that journals will only be posted in the ledger once it is approved.
Management Comments FEO has agreed with Audit that all journal vouchers should be checked and approved by the supervisors.

10.15 Governance Issues The Internal Auditor shall submit to the SOE an internal control report.

The review should be done annually on a timeframe approved by the SOE.
14 The report shall provide the following information: a. whether all reconciliations are up to date; b. whether financial information are submitted on time.15 All bank statements shall be reviewed and bank reconciliation performed on a monthly basis by Finance Officer Reconciliation.
Bank reconciliations must be completed no later than ten (10) working days.16 As of the date of audit on 5 March 2018, the following monthly reconciliations were yet to be prepared and reviewed: • Bank Reconciliations for the Operating Account • Wages Reconciliation • VAT Reconciliation Furthermore the Office prepared a yearly reconciliation for the Trust Fund Accounts instead of monthly reconciliations.
14 FEO Finance Manual Section 8.3.3 15 FEO Finance Manual Section 8.3.4 16 FEO Finance Manual Section 4.7.1 Fijian Elections Office Section 10: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR In the absence of appropriate supervision and proper reconciliations, the Office may not be able to detect errors, omissions or possible fraud and misappropriation on a timely basis.
Recommendation FEO Management should ensure that monthly reconciliations are properly carried out on a timely basis.

Management Comments Management has noted your comments.

However, we confirm that reconciliations were completed for the Bank.

Wages were reconciled every week before payments were signed and dispatch to bank to ensure that employees are correctly paid.
In this financial system, vat was directly posted to expense account which monthly vat returns were prepared and forwarded to Fiji Revenue and Customs Authority.

The FEO will ensure that monthly reconciliations are prepared and signed off by the supervisors.

10.16 Anomalies in Recording of Cash The Office maintains a Trust Account for receipt of refundable deposits and donor funds.

Receipts are issued for all amounts received for refundable deposits.
It is imperative that the receipts are posted in the accounting system through receipt numbers as it is the first audit trail.

We noted the following anomalies from our review of cash: (i) Cash received were posted in the Navision system via general journal instead of receipt numbers.

We further noted that the journals were neither raised nor approved for posting in the Navision System.

Refer to Table 10.8 for details.
Table 10.8: Examples of Receipts posted through Journals General Reference GJ005571 GJ006734 GJ006735 GJ006736 GJ006737 GJ006738 GJ006739 GJ006740 Amount ($) 500 General Reference GJ006741 Amount ($) 500 General Reference GJ006749 Amount ($) 500 500 500 500 500 500 500 500 GJ006742 GJ006743 GJ006744 GJ006745 GJ006746 GJ006747 GJ006748 500 500 500 500 500 500 500 GJ006750 GJ006751 GJ006752 GJ006753 GJ006754 GJ006755 GJ006756 GJ006757 500 500 500 500 500 500 500 500 Total (Sample Only) 4,000 4,000 4,500 (ii) Furthermore, monthly bank reconciliations for the trust account were not prepared.
Instead a yearly reconciliation was performed.

The above anomalies indicate generally lack of appropriate financial reviews over accounting functions.
Fijian Elections Office Section 10: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Use of journals which are not reviewed can result in incorrect accounting entries in the general ledger while absence of monthly reconciliation, potential errors, omissions or act of fraudulent activities will not be detected in a timely manner.
Recommendations FEO Management should ensure that: • Monthly trust fund account reconciliations are prepared and reviewed; • • • Review function is strengthened in the accounting function.
cash received is posted using receipts into the Navision System; journals are prepared and approved prior to these being posted in the Navision System; and Management’s Comments FEO agrees with the comments highlighted by audit on below items: • • FEO has taken up the recommendation to post the receipt number in the system so that any anomalies can be identified.

FEO has taken up recommendation that monthly reconciliation should be performed, reviewed and approved by respective staff.
• All journals will be verified and approved before it is posted in the system.

These controls are now in place to strengthen the processes in Finance.
Fijian Elections Office Section 10: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 11 Judiciary Roles and Responsibilities The Judicial Department is responsible for enhancing the quality of justice in the community by ensuring an effective and accessible Court System as the cornerstone of Justice.
The Court System will uphold the principles of impartiality, equality, fairness and access, while protecting the dignity and rights of all members of the community.

In line with the Constitution of the Republic of Fiji 2013, Chapter 5, Part A 97 (2), the courts and all judicial officers are subject only to the Constitution of the Republic of Fiji and the law, which they must apply without fear, favour or prejudice.
Table of Contents FINANCIAL STATEMENTS ................................................................................................... 2 PART A: Audit Opinion ........................................................................................................................... 2 11.1 Statement of Receipts and Expenditure ................................................................................ 2 11.2 Appropriation Statement ........................................................................................................ 3 11.3 11.4 Main Trust Fund Account ........................................................................................................ 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 7 Internal Controls ...................................................................................................................... 7 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 8 Quality of Draft Financial Statements by entities .................................................................. 9 Timeliness of draft financial statements ................................................................................ 9 Timeliness of Provision of Management Comments and Signing of Financial Statements 9 OTHER SIGNIFICANT MATTERS ........................................................................................ 10 Judicial Trust Fund Account Bank Reconciliation Variance .................................................. 10 Presentation of Judicial Trust Fund Account ........................................................................ 12 Significant Arrears of Revenue .............................................................................................. 14 Increasing VAT liability account ............................................................................................. 15 PART B: 11.5 11.6 11.7 11.8 11.9 PART C: 11.10 11.11 11.12 11.13 Judiciary Section 11: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 11.1 Audit Opinion The audit of the 2017 accounts of the Judicial Department resulted in a qualified audit report.
The qualifications are as follows: • The Department’s reconciliations for Suitors, Sundries and Maintenance Trust Fund accounts were only prepared up to January 2015, January 2000 and December 1994, respectively as at 31 July 2017.

Due to significant lapse in the years of reconciliation balance, I was unable to satisfy myself on the accuracy of the closing balance of $31,623,770 disclosed in the Judicial Trust Fund Account Statement of Receipts and Payments for the year ended 31 July 2017.
• Included in the Suitors Trust Fund Accounts are funds received on behalf of deceased persons who do not have nominees at Fiji National Provident Fund as required under section 57 of FNPF Act 2011.

The Department does not maintain detailed breakdown listing of these funds received from FNPF, funds paid out to beneficiaries, and balance of fund to be refunded to FNPF where no application has been made to claim the funds from High Court.
Hence, I was unable to establish the quantum of the amount to be refunded to the Fiji National Provident Fund.

11.2 Statement of Receipts and Expenditure The Department collected revenue totalling $5,007,515 and incurred a total expenditure of $29,362,285 for the year ended 31 July 2017.

Details are provided in Table 11.1.
Table 11.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2017 ($) 4,496,946 510,569 5,007,515 19,965,063 1,222,471 1,912,631 988,476 1,485,422 1,209,134 26,783,197 1,628,228 478,946 2,107,174 31 July 2016 ($) 2,513,075 193,093 2,706,168 11,764,622 679,488 1,130,737 508,421 442,198 426,320 14,951,786 645,931 99,913 745,844 Value Added Tax 471,914 185,255 Total Expenditure 29,362,285 15,882,885 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 Judiciary Section 11: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
For Maintenance and Operations, there was an increase in power supply expenditure in 2017 which was attributed to increase in use of electrical equipment.

There was also an increase in the purchase of stationery and toner due to increase in volume of court cases administered.

Purchase of Goods and Services expenditure increased by $1,043,224 in 2017 compared to 2016, which was mainly due to the purchase of the revised version of the Laws of Fiji.
For Special Expenditure, Employment Relations Tribunal was the new inclusion in the 2017 budget, thus the increase.

Also, increases were noted in the operational cost of the Fine Enforcement Unit, Legal Practitioners Unit and the Fiji Mediation Centre.

Increase in Capital Construction was due to the refurbishment of existing court complex around Fiji and the old parliament complex in Veiuto.
11.3 Appropriation Statement The Department incurred expenditure totalling $29.3 million in 2017 against a revised budget of $40.2 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $10.9 million or 27%.

Savings in the Established Staff allocation was mainly attributed to vacancies which were yet to be filled.
The savings noted in the Special Expenditure was mainly due to reduction in vessel hire cost in facilitating island court sittings, reduction in Arbitration Court and Fine Enforcement Unit related costs.

For Capital Construction, some of the Capital projects for the Department were not implemented because of adverse weather conditions while some projects were in the initial stage of consultations and tendering process which resulted in t savings of $4,621,772.
Details of expenditure against the revised budget are provided in Table 11.2.
Table 11.2: Appropriation Statement for 2017 SEG Item & Established Staff Government Wage Earners Travel Communication Maintenance Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure & Budget Estimate ($) 25,383,527 1,057,495 Changes ($) Revised Estimate ($) (1,397,700) 23,985,827 1,272,495 215,000 Actual Expenditure ($) 19,965,063 1,222,471 Lapsed Appropriation ($) 4,020,764 50,024 1,688,098 478,500 2,166,598 1,912,631 253,967 941,000 150,000 1,091,000 988,476 102,524 981,600 610,980 1,592,580 1,485,422 107,158 3,000 - 3,000 - 3,000 2,579,461 (337,780) 2,241,681 1,209,134 1,032,547 Judiciary Section 11: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR SEG Item Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 8 9 13 Budget Estimate ($) 32,634,181 Changes ($) Revised Estimate ($) Actual Expenditure ($) (281,000) 32,353,181 26,783,197 Lapsed Appropriation ($) 5,569,984 6,250,000 200,000 6,450,000 - 281,000 281,000 6,250,000 481,000 6,731,000 1,628,228 478,946 2,107,174 4,621,772 2,054 4,623,826 1,137,600 40,221,781 - 1,137,600 - 40,221,781 471,914 29,362,285 665,686 10,859,496 The Department collected revenue totalling $5,007,515 in 2017, an increase of 85% from the previous year.
11.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

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

The Judicial Department operates and maintains 3 main trust fund bank accounts which include the Judicial Trust Fund Account, the Judiciary Trust Fund Account and the Legal Practitioners Unit Fund Account.
The Trust Fund Account Statement of Receipts and Payments is now presented separately in the current year for transparency purposes and to correctly reflect the trust monies received and paid out of the three separate bank accounts maintained for the various trust funds being administered by the Department.

In comparison to the prior year, a consolidated statement was presented for the three trust accounts.

This is noted as an improvement in disclosure by the Department in the 2017 financial statements.
11.4.1 Judicial Trust Fund Account The Judicial Trust Account consisted of four trust fund accounts namely; Suitors Trust, Maintenance Trust, Sundries Trust and Deposit Retention for project funds.

(i) (ii) (iii) (iv) The Suitor’s Trust comprise of monies received from FNPF on behalf of deceased who did not have nominees for their FNPF accounts.

According to current procedures, the High Court makes a determination on the distribution of the deceased FNPF member’s account balance among the family members.
The Maintenance Trust comprise of monies received from maintenance payments by defendants to their spouses based on the judgements passed by the Family Law Court.

The Sundries Trust comprise of monies received from civil and criminal cases based on Court judgements.

These include compensations, LTA fines, cash bail, court fees, bailiff fees and small claims.
The Deposit Retention for projects comprises of funds retained for projects that are being carried out by the contractors and are paid back to them after the defects liability period.

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

The funds are kept in this account because some projects defects liability period lapses in the following financial year.
Judiciary Section 11: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 11.3: Judicial Trust Fund Account – Statement of Receipts and Payments Description Receipts Suitors Fund Maintenance Fund Sundries Deposit Retention for Project Funds Total Receipts Payments Suitors Fund Maintenance Fund Sundries Retention paid for Project Funds Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 11.4.2 Judiciary Trust Fund Account 31 July 2017 ($) 16,493,671 4,385,693 4,266,256 58,029 25,203,649 11,012,496 3,702,031 3,665,638 18,126 18,398,291 6,805,358 24,818,412 31,623,770 31 July 2016 ($) 6,452,122 2,216,257 1,771,676 --- 10,440,055 6,356,592 2,182,229 1,468,044 --- 10,006,865 433,190 24,385,222 24,818,412 The Trust Fund comprise of funds received from an audit firm for interest received from the Law Society Account to meet the costs and expenses for improving court premises, purchase of equipment for various courts in all the divisions including acquisition of equipment for the Judiciary, implementation of electronic recording of court proceedings and on the discretion of the Chief Justice.
Table 11.4: Judiciary Trust Fund Account – Statement of Receipts and Payments Description Receipts Judiciary Trust Fund Account Total Receipts Payments Judiciary Trust Fund Account Total Payments Net Surplus/(Deficit) Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 1,189,335 1,189,335 1,007,226 1,007,226 182,109 401,462 583,571 199,907 199,907 261,076 261,076 (61,169) 462,631 401,462 11.4.3 Legal Practitioners Unit Fund Account The Trust Fund comprise of funds received from an audit firm for interest received from the Law Society Account to meet the costs and expenses of the Legal Practitioners Unit in the Office of the Chief Registrar in the performance of the functions and duties of the Chief Registrar under the Legal Practitioners Act 2009 and other expenses on the discretion of the Chief Registrar.
Judiciary Section 11: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 11.5 Legal Practitioners Unit Fund Account – Statement of Receipts and Payments Description Receipts Legal Practitioners Unit Fund Total Receipts Payments Legal Practitioners Unit Fund Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 259,717 259,717 157,935 157,935 33,681 33,681 226,036 545,865 771,901 48,089 48,089 109,846 436,019 545,865 Judiciary Section 11: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 11.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Judiciary Section 11: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Rating Internal control assessment  Ineffective Significant deficiencies identified in internal controls 11.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments by 31 July 2017 and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Judiciary Section 11: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 11.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Department was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 11.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received before or on 16 October 2017 11.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Within 21 days from issue of Draft Management Letter Rating  Ineffective Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Judiciary Section 11: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Department as at 31 July 2017.

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

Un-reconciled items must be investigated and resolved promptly.1 The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.

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

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.2 The Department maintains Judicial Trust Fund Account which consists of four trust fund accounts: Suitor’s Trust, Maintenance Trust, Sundries Trust and Deposit Retention for Projects Trust accounts.
As at 31 July 2017, the General Ledger for respective trust fund account had the following balances: Table 11.6: Details of the Judicial Trust Fund Account Description Description of Trust Account Suitors Trust Maintenance Trust Sundries Trust Trust account comprises monies pending from Suva, Lautoka and Labasa High Court cases on; FNPF, Public Trustee and Civil and Criminal cases.
Trust account comprises monies from maintenance payments by defendants to their spouses based on the judgments passed by the Family Law Court.

Trust account comprises monies from pending Civil and Criminal cases awaiting Court judgments.
General Ledger Balance as at 31/07/17 ($) 24,286,148.18 2,215,160.21 5,082,559.62 1 Finance Instructions 2010, Section 58 (3) 2Finance Instructions 2010 – Section 58 (2& 3) Judiciary Section 11: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Description Description of Trust Account Deposit Retention for Projects Trust TOTAL Trust account comprises funds retained for projects that are being carried out by the contractors and are paid back to them after the defects liability period.
General Ledger Balance as at 31/07/17 ($) 39,902.04 31,623,770.05 We noted that the Department had prepared monthly bank reconciliations as at 31 July 2017 for the above accounts.

Our review of the bank reconciliations revealed the following anomalies: • There is a balance of $734,667 that is appearing in the Judicial Trust account bank reconciliation as “Adjustment by Ministry of Economy in December 2013”.

This amount has been appearing in the Judicial Trust reconciliation since 2013.
We were not provided confirmation that the physical cash amounting to $734,667 has been transferred by Ministry of Economy.

It was noted that the Department has raised the matter with the Ministry of Economy on numerous occasions but the issue still is yet to be resolved.

As a result, the cash at bank general ledger is overstated by the same amount as there is no actual cash held against this balance.
• Included in the trust fund account reconciliation as at 31 July 2017 is a reconciling balance of $49,774 for which relevant details were not provided by the Department.
• Moreover, while monthly bank reconciliations are being carried out by the Department to reconcile the receipts and payments made out of the bank account, it was noted that the trust liability reconciliations for the Suitors, Sundries and Maintenance Trust Fund accounts were only prepared up to January 2015, January 2000 and December 1994, respectively.
As a result, we could not obtain the detailed breakdown listing of those beneficiaries and ascertain their respective balances being held by Department as trust as at 31 July 2017.

• A variance of $12,786 was also noted between the Trust Fund Account balance (SLG 89) and the Cash at bank balance (SAG 52) in the FMIS general ledger as at 31 July 2017.

Refer to Table 11.7 for details.
Table 11.7: Variance in FMIS Trust Fund Account and FMIS Cash at Bank Balance Description FMIS Cash at Bank Balance FMIS Trust Fund Account Balance Variance *excludes project retention balance $39,902.04 Amount ($) 31,596,654.31* 31,583,868.01 12,786.30 In the absence of monthly reconciliations, we were not able to ascertain the correctness of the balance reflected in the Judicial Trust Fund accounts and if not addressed, there is a high risk of fraudulent payments being made as the detailed current listing of the beneficiaries and their respective balances as at year end are not available.
Judiciary Section 11: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Recommendations The Department should; • • liaise with the Ministry of Economy to rectify the variances noted above; consider establishing a reconciliation team immediately to undertake the exercise of updating the backlog in the trust account detailed reconciliations; and • ensure that trust fund account bank statement balance, trust fund cash at bank balance in FMIS general ledger and trust fund account balance in FMIS general ledger is reconciled on a monthly basis and any errors or omissions are investigated and resolved.
Department’s Comments Comments of the Auditors have been noted • Department is liaising with MOE to provide the funds amounting to $734,667 • We are also working with MOE to rectify the variance of $12,786.30 which has occurred due to inter-funding • As for $49,774 we are going through our records from 2009 again to verify what this balance is made up of and will then action accordingly.

Department is in the process of recruiting seven (7) TRCO’S on Project to assist in the reconciliation process.
These staff will start work from 5 pm – 10 pm on Mondays to Fridays and from 8 am to 1 pm on Saturdays.

Due to shortage of office space we are unable to recruit staff on full time basis.

Current staffs have started the reconciliations from January 2016 and any errors found are adjusted as they go along.

Since the reconciliations are quite behind and with the limited resources, we are trying our best to bring the reconciliations up-to-date in time to come.
11.11 Presentation of Judicial Trust Fund Account Trust money is to be accounted for separately from public money and other money within the meaning of this Act.

Trust money is to be kept in a separate bank account pending its withdrawal and accounted for separately from “public money” and “other money”.

The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.

Each month, the trust account must be balanced and reconciled with the trust bank account.
The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.

Un-reconciled items must be investigated and resolved promptly.3 We noted that the Department maintains Judicial Trust Fund Account which consists of four trust fund accounts: Suitor’s Trust, Maintenance Trust, Sundries Trust and Deposit Retention for Projects accounts.
All funds related to the above trusts are deposited in one bank account and a consolidated statement of trust receipts and payments is prepared by the Department in its Agency Financial Statements.
As at 31 July 2017, the General Ledger for respective trust fund account had the following balances: 3Finance Instructions 2010 – Section 58 (2& 3) Judiciary Section 11: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 11.8: Details of the Judicial Trust Fund Account Description Description of Trust Account Suitors Trust Maintenance Trust Sundries Trust Deposit Retention for Projects Trust TOTAL Trust account comprises monies pending from Suva, Lautoka and Labasa High Court cases on; FNPF, Public Trustee and Civil and Criminal cases.
Trust account comprises monies from maintenance payments by defendants to their spouses based on the judgments passed by the Family Law Court.

Trust account comprises monies from pending Civil and Criminal cases awaiting Court judgments.

Trust account comprises funds retained for projects that are being carried out by the contractors and are paid back to them after the defects liability period.
General Ledger Balance as at 31/07/17 ($) 24,286,148.18 2,215,160.21 5,082,559.62 39,902.04 31,623,770.05 Currently, separate statements are not presented for each trust type with the receipts and payments to be classified by the nature of receipt and expenditure.

However, the current presentation in the Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one line item on the Statement even though the nature of the trust receipt and payment may vary.
In addition, the retention money is kept in the Judicial Trust Fund bank account for following three capital projects amounting to $39,902.04.
Refer to Table 11.9 below for details; Table 11.9: Details of Retention Monies in Judicial trust bank account Project Refurbishment and alteration to the existing Taveuni Court house Refurbishment works at Fiji Mediation Centre (Tabatolu House) Refurbishment and alteration to the existing Levuka Court house Total Retention Balance ($) 18,126.53 12,795.51 8,980.00 39,902.04 With the various trust funds being deposited into one bank account, there is a high risk of funds for a particular trust being utilised for the other trust funds especially when there is backlog in the reconciliation for each of the trust types.
With the current presentation, the trust fund accounts disclosures are deemed inadequate and does not provide adequate useful information to the users of the financial statements.

Recommendation The Department should work towards maintaining separate bank accounts for all new trust accounts created and submit separate statements accordingly.
Judiciary Section 11: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Department’s Comments Comments of the Auditors are noted.

However, once all reconciliations are updated then we would know actually how much is for each different account and then consideration can be given to open separate bank accounts.

Currently all monies are received on Court Orders thus deposited in one Account.
Also awareness will have to be conducted to all registries as they collect the monies.

11.12 Significant Arrears of Revenue The credit officer must promptly follow up accounts that fall due.
If the recovery is unsuccessful after one month, the following actions shall be taken: • a demand notice for payment shall be sent to the debtor after his/her debt has been overdue for more than a month; and • if the account still remains unpaid after the first demand notice was issued, a final notice shall be issued demanding payment within fourteen days.4 If a final notice had been issued to one of the debtors listed, the Principal Accounts Officer may approve the case to be referred to the Solicitor General or the Small Claims Tribunal, after considering the cost implication and the probability of recovery.5 The arrears of revenue comprises of arrears arising from court fees, fines and costs awarded to the state.
A slight decrease of $10,464 in arrears of revenue was noted in 2017 when compared to 2016.

Refer to Table 11.10 for details.
Table 11.10: Arrears of Revenue over Nine Financial Years Year Balance ($) Change ($) Percentage Change (%) Arrears of Revenue 2008 2009 2010 2011 2012 2013 2014 2015 31/07/16 31/07/17 10,574,640 10,828,342 10,970,177 11,397,061 11,341,730 11,968,031 13,345,569 13,215,858 13,461,155 13,450,691 253,702 141,835 426,884 (55,331) 626,301 1,377,538 (129,711) 245,297 (10,464) 2 1 4 0 6 12 1 2 0 t n u o m A 16,000,000.00 14,000,000.00 12,000,000.00 10,000,000.00 8,000,000.00 6,000,000.00 4,000,000.00 2,000,000.00 - Year Arrears of Revenue Moreover, the arrears of revenue owed to the Department between 1-2 years and more than 5 years had also decreased by $21,739(2%) and $316,985(3%), while the arrears of revenue between 2-5 years had increased by 44%.
4 Judicial Department Finance Manual 2013, Section 9.2.1 5 Judicial Department Finance Manual 2013, Section 9.2.4 Judiciary Section 11: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Refer to Table 11.11 for Aging of Debtors.
Table 11.11: Aging of Debtors Year 31/07/17 ($) 31/07/16 ($) Change ($) Less than 1 year 1 – 2 years 2 – 5 years More than 5 years Total Debtors 1,075,186 934,580 1,856,513 9,584,412 1,312,624 956,319 1,290,815 9,901,397 13,450,691 13,461,155 (237,438) (21,739) 565,698 (316,985) (10,464) Percentage Change (%) (18%) (2%) 44% (3%) 0.08% Our audit noted that the Department has established a Fine Enforcement Unit in prior years to manage the arrears of revenue.
However, the arrears of revenue for the Department remains substantial and indicates that debt recovery procedures employed can be further improved.

Further delay in collecting the outstanding revenue increases the risk of revenue not likely to be collected which may require write-offs resulting in loss of revenue for government.
Recommendations The Department should: • work closely with Fine Enforcement Unit in an effort to recover the arrears of revenue from • the defaulters; and consult all relevant stakeholders and outline the roadmap on ways to recover the arrears of revenue from the defaulters in a more cost-effective manner.
Department’s Comments The Department is working with the Police Department to increase the Number of execution runs such as having a full time transport allocated by the Police to do day time executions during the week whilst the department provides the transport for the evening executions.

On Fridays, the Police Department provides two vehicles to do day time executions to decrease the outstanding arrears of revenue.
In addition, the department is collecting the arrears of revenue information with the intention of carrying out an analysis to make a submission for Write off of arrears of Revenue which are over 5 years and which may not be recoverable.

11.13 Increasing VAT liability account When receipting revenue, the VAT portion should be credited to the new liability account (863201) and the balance to the revenue code.
At the end of the month, when making VAT return payment to FRCS, the VAT portion should be debited to the same liability account whilst VAT on expenditure will continue to be met from agencies budgetary funds (SEG 13).

6 The Department has been submitting its monthly VAT returns on a monthly basis.

However, audit review of the operating trust balances noted the increasing balance of VAT from provision of goods and services.
The balance as at 31 July 2017 amounted to $37,361.69 which has accumulated over the years.

Refer to Table 11.12 below for details.
6 Finance Circular no 10/2009 – paragraph 5.0 Judiciary Section 11: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 11.12: Long Outstanding VAT Account Account Description 31/07/17 ($) 31/07/16 ($) 31/12/15 ($) 31/12/14 ($) 31/12/13 ($) 1-11101-11999- 863201 VAT from Provision of Goods & Services (37,361.69) (25,777.23) (26,963.05) (25,645.90) (16,138.16) It was noted that the increase in the balance was due to the non-recognition of VAT receivable in the FMIS GL by the Department for those months in which a receivable is recorded from the VAT returns.
Recommendation The Department should liaise with the Ministry of Economy and rectify the VAT accounting issues and appropriate action is taken to correct the general ledger.

Department’s Comments Comments of the Audit are noted.

Necessary adjustments will be made in due course.
Judiciary Section 11: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 12 Parliament Office Roles and Responsibilities The primary function of the Parliament is provided for under Section 46(1) of the Constitution of the Republic of Fiji which states that “the authority and power to make laws for the State is vested in Parliament consisting of the Members of Parliament and the President and is exercised through the enactment of Bills passed by Parliament and assented to by the President”.
The core business of the Parliament is to provide secretariat support and services to enable the Parliament of Fiji to perform the above functions.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 12.1 Audit Opinion ............................................................................................................................. 2 12.2 Statement of Receipts and Expenditure .................................................................................. 2 12.3 Appropriation Statement .......................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 PART B 12.4 Internal Controls ........................................................................................................................ 4 12.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 12.6 Quality of Draft Financial Statements by entities..................................................................... 6 12.7 Timeliness of Draft Financial Statements ................................................................................. 6 12.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 Parliament Office Section 12: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 12.1 Audit Opinion The audit of the 2017 accounts of the Parliament Office resulted in an unqualified audit opinion.
12.2 Statement of Receipts and Expenditure The Office collected revenue totalling $11,674 and incurred a total expenditure of $10.8 million for the year ended 31 July 2017.

Details are provided in Table 12.1.
Table 12.1: Statement of Receipts and Expenditure for 2017 Description State revenue Agency revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital Purchase Total Capital Expenditure 31 July 2017 ($) 11,523 151 11,674 4,523,347 387,200 2,068,416 686,670 545,203 437,500 1,485,628 10,133,964 261,651 261,651 31 July 2016 ($) 17,129 1,390 18,519 2,608,147 196,070 724,319 414,333 616,446 750,000 72,800 5,382,115 --- --- Value Added Tax 440,157 193,838 Total Expenditure 10,835,772 5,575,953 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

Revenue mainly comprised of refunds from accountable advance and recoveries arising from losses and damages.
The increase in expenditure for Travel and Communication resulted from the enactment of the new determination of allowances and benefits for Members of Parliament.

This increased local subsistence, accommodation and meals.

Increase in overseas travel led to increase overall expenses in this allocation due to increase travel cost, insurance, per diem and roaming charges.
The increase in expenditure for Special Expenditure resulted from the hosting of the 25th Asia Pacific Parliamentary Forum at the Intercontinental Resort and the increase in Members of Parliament sitting allowance from $80 to $200.

Parliament Office Section 12: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Funds allocated for Capital Purchase were used for the installation of CCTV cameras and upgrading of cameras in the common room.
12.3 Appropriation Statement The Office incurred expenditure totalling $10,835,772 in 2017 against a revised budget of $10,838,878.

Details of expenditure against the revised budget are provided in Table 12.2.
Table 12.2: Appropriation Statement for 2017 SEG Item Budget Estimate ($) Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) Established Staff Unestablished Staff Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Exp Capital Constructions Capital Grants Transfers Total Expenditure Value Added Tax TOTAL Capital and --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 10,838,878 --- 10,838,878 10,395,615 443,263 --- 10,838,878 --- --- --- --- --- 10,838,878 --- --- --- --- --- 10,395,615 --- --- 443,263 --- --- --- --- --- 10,838,878 --- --- --- 10,838,878 440,157 10,835,772 (440,157) 3,106 Parliament Office Section 12: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 12.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Parliament Office Section 12: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 12.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 Parliament Office Section 12: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 12.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 12.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 12.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Parliament Office Section 12: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 13 Independent Commissions Roles and Responsibilities Fiji’s independent commissions directly serve the people in specialised areas where objective and non-political judgment is required.
These commissions apply the law independently, and are valuable tools for transparent and accountable governance.

They share the larger purpose of defending the rights and dignity of individuals and communities consistent with the Fijian Constitution, keeping institutions and the people who serve the public accountable and serving as a constant reminder that Government serves the people.
A sum of $16.2 million is provided to fund the operations of the five Independent Commissions: the Human Rights and Anti-Discrimination Commission, the Accountability and Transparency Commission, the Freedom of Information Commission, Public Service Commission and the Fiji Independent Commission Against Corruption.
Table of Contents FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION ................................................................. 2 FINANCIAL INFORMATION ................................................................................................. 2 PART A: 13.1 Audit Opinion ............................................................................................................................. 2 13.2 Abridged Statement of Comprehensive Income ..................................................................... 2 13.3 Abridged Statement of Financial Position ................................................................................ 2 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 3 PART B: 13.4 Internal Controls ........................................................................................................................ 3 13.5 Quality of Draft Financial Statements by Entities .................................................................... 4 13.6 Timeliness of Draft Financial Statements ................................................................................. 4 13.7 Timeliness of Management Comments and signed Financial Statements ............................. 5 OTHER SIGNIFICANT MATTERS ......................................................................................... 6 13.8 Zero Written Down Values ........................................................................................................ 6 13.9 Risk Management Framework .................................................................................................. 7 PUBLIC SERVICE COMMISSION ............................................................................................................. 8 FINANCIAL STATEMENTS ................................................................................................... 8 PART A: 13.10 Audit Opinion
 ............................................................................................................................. 8 13.11 Statement of Receipts and Expenditure .................................................................................. 8 13.12 Appropriation Statement – Head 13 .......................................................................................... 8 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 9 PART C: Independent Commissions Section 13: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION PART A: FINANCIAL INFORMATION 13.1 Audit Opinion The audit of the financial statements of Fiji Independent Commission Against Corruption for the year ended 31 July 2017 resulted in an unqualified audit opinion.
The Commission prepares its financial statements in accordance with International Financial Reporting Standards for Small and Medium-sized entities.
13.2 Abridged Statement of Comprehensive Income Description Government grant Other income Total Revenue Administrative Expenses Other Expenses Total Expenditure Net Profit/(Loss) 2017 (12 months) ($) 2016 (7 months) ($) 8,215,437 136,729 8,352,166 719,976 7,581,863 8,301,839 50,327 4,301,208 3,667 4,304,875 412,022 4,191,242 4,603,264 (298,389) The financial year end for the Commission was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the year ended 2017 is for a 12-month whereas the financial period for 2016 reflect transactions for a seven- month period, thus the significant variances with the comparative balances are noted.
13.3 Abridged Statement of Financial Position Description 2017 (12 Months) $ 2016 (7 months) $ 1,113,928 1,068,206 Cash 31,119 53,119 Receivables 121,807 Other current assets 263,455 1,516,630 Property, plant and equipment 1,599,308 517,237 416,108 Intangible assets 3,300,721 Total Assets 3,400,196 Trade and other payables Employee entitlements Total Liabilities Net Assets 207,827 334,813 542,640 2,857,556 211,459 282,033 493,492 2,807,229 Accumulated funds Total Equity 2,857,556 2,857,556 2,807,229 2,807,229 Independent Commissions Section 13: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 13.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Independent Commissions Section 13: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

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

Our assessment for the Commission was: Ratings Internal control assessment  Effective No adjustments were required 13.6 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Ratings Internal control assessment  Ineffective Acceptable draft financial statement received after one month from the end of financial year.
Independent Commissions Section 13: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 13.7 Timeliness of Management Comments and signed Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Rating  Effective Timeliness of Management Comments Received Management response received within 14 days Timeliness of Signed Financial Statements Received Signed accounts was received within 5 days Independent Commissions Section 13: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Commission as at 31 July 2017.
13.8 Zero Written Down Values Factors such as a change in how an asset is used, significant unexpected wear and tear, technological advancement, and changes in market prices may indicate that the residual value or useful life of an asset has changed since the most recent annual reporting date.

If such indicators are present, an entity shall review its previous estimates and, if current expectations differ, amend the residual value, depreciation method or useful life as a change in an accounting estimate.
Included in the fixed assets register are assets with zero written down value (WDV) amounting to $1,051,779 or 21% of total fixed assets, which is still being used in the Commission’s operating activities.

When fully depreciated assets are still used, it suggests that management’s initial estimate of the useful lives of these assets may not have been correct or had not been revised to take account of revision in the estimated useful life.
Non-revision of the estimated useful life of the assets would result in an overstatement of depreciation expense in prior periods and understatement of the written down value of property, plant and equipment.

In addition to the above, since no depreciation is charged on assets with zero WDV, the expenditure is understated and operating results overstated by the amount of depreciation which would have been charged if the assets were revalued and depreciated.
Recommendation The Commission should review the estimated useful lives of significant assets that have not yet been fully depreciated and ensure that the estimated useful life remains appropriate.

Where the useful life has changed, the remaining book value should be depreciated prospectively over the remaining (revised) useful life.
Independent Commissions Section 13: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Commission’s Comments An asset assessment was made by the Commissioner’s BOS Committee.

None of the Commission’s significant assets experienced a significant wear and tear, change in market demand/price or technological change that would indicate that the useful life of an asset has changed.
The Commission is not an income generating organization and does not consider it worthwhile to hire an expert to assess useful life of an asset.

The Commission is in process of revising the policy to adopt a cost model for fully depreciated assets and will continue to use it until derecognized on disposal or when no future benefit is expected from its use or disposal.
13.9 Risk Management Framework It is a good practice to establish a risk management framework to have Commission’s management, and Internal Audit, to jointly plan, implement, monitor, and take action on evolving risks affecting the Commission.

Our audit noted that the Commission does not have a risk management framework in place.

In absence of a risk management framework the Commission may find difficulty in managing risks affecting the Commission particularly risk of fraud and misappropriation of assets.
Recommendation The Commission should work towards developing a risk management framework.

Commission’s Comment The recommendation by OAG is duly noted and the Commission is working on its internal risk management procedure.
Independent Commissions Section 13: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PUBLIC SERVICE COMMISSION PART A: FINANCIAL STATEMENTS 13.10 Audit Opinion The audit of the 2017 accounts of the Public Service Commission resulted in an unqualified audit report.
13.11 Statement of Receipts and Expenditure The Public Service Commission allocation caters for the salaries, allowances and other expenses for contracted Permanent Secretaries in civil service.

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

The Commission incurred a total expenditure of $4,983,911 for the year ended 31 July 2017.

Details are provided in Table 13.3.
Table 13.3: Statement of Receipts and Expenditure for 2017 Description Operating Grants and Transfers – Salaries for Permanent Secretaries Total Operating Expenditure Total Expenditure 13.12 Appropriation Statement – Head 13 31 July 2017 ($) 4,983,911 4,983,911 4,983,911 31 July 2016 ($) 2,193,373 2,193,373 2,193,373 The Commission incurred expenditure totalling $4,983,911 in 2017 against a revised budget of $5,502,530 in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $518,619 or 9%.
Details of expenditure against the revised budget are provided in Table 13.4.
Table 13.4 Appropriation Statement for 2017 SEG Item 6 Operating grants & transfers Total Operating Expenditure Total Expenditure Budget Estimate ($) 5,502,530 Changes ($) --- Revised Estimate ($) 5,502,530 Actual Expenditure ($) 4,983,911 Lapsed Appropriation ($) 518,619 5,502,530 --- 5,502,530 4,983,911 518,619 5,502,530 --- 5,502,530 4,983,911 518,619 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
Independent Commissions Section 13: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE The assessment of financial governance for the Public Service Commission was performed together with the assessment of Ministry of Civil Service.

The results are included under section 17 of this report.
Independent Commissions Section 13: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 14 Office of the Director of Public Prosecutions Roles and Responsibilities The Director of Public Prosecutions (DPP) is responsible for instituting and conducting criminal proceedings in Fiji.

The office does not conduct criminal investigations.
In most cases the investigation is done by the Fiji Police Force, which then presents the DPP with a brief containing the evidence it has collected.

The Office prosecutes all criminal trials before the High Court, as well as criminal appeals before the Court of Appeal and High Court.

The Office also takes over cases of special difficulty or those relating to the public interest in the Magistrates Courts.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 14.1 Audit Opinion ............................................................................................................................. 2 14.2 Statement of Receipts and Expenditure .................................................................................. 2 14.3 Appropriation Statement .......................................................................................................... 2 14.4 Trust Fund Accounts .................................................................................................................. 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 5 14.5 Internal Controls ........................................................................................................................ 5 14.6 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 6 14.7 Quality of Draft Financial Statements by entities..................................................................... 7 14.8 Timeliness of Draft Financial Statements ................................................................................. 7 14.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 7 Office of the Director of Public Prosecutions Section 36: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 14.1 Audit Opinion The audit of the 2017 accounts of the Office of the Director of Public Prosecutions resulted in an unqualified audit opinion.
14.2 Statement of Receipts and Expenditure The Office collected revenue totalling $6,556 and incurred a total expenditure of $5.2 million for the year ended 31 July 2017.

Details are provided in Table 14.1.
Table 14.1: Statement of Receipts and Expenditure for 2017 Description Revenue State revenue Agency revenue Total Revenue Expenditure Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Special expenditures Total Operating Expenditure Value Added Tax Total Expenditure 31 July 2017 ($) 31 July 2016 ($) 5,967 589 6,556 2,789,866 193,972 341,940 392,186 1,192,106 120,165 5,030,235 182,041 5,212,276 8,830 685 9,515 1,520,985 111,494 156,083 290,283 604,984 --- 2,683,829 96,545 2,780,374 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

Revenue amounting to $6,556 in 2017 mainly comprised of disclosure fees, refund from travel and accommodation and commission.
Special expenditures increased by $120,165 in 2017 compared to 2016 due to separate funds provided for Serious Fraud Division, Child Protection Division and General Crimes Division.

14.3 Appropriation Statement The Office incurred expenditure totalling $5.2 million in 2017 against a revised budget of $5.7 million, resulting in a saving of $572,867 or 10%.
The savings was due to items that were budgeted and could not be purchased due to unavailability of stock and payment for Queen Counsels hired from abroad depended on the trial dates set by the court.

Details of expenditure against the revised budget are provided in Table 14.2.
Office of the Director of Public Prosecutions Section 36: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 14.2: Appropriation Statement for 2017 SEG Item & Established Staff Unestablished Staff Travel & Communication Maintenance Operations Purchase of Goods & Services Special Expenditure Total Operating Expenditure Value Added Tax TOTAL Budget Estimate ($) Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) 3,398,481 188,032 244,930 (538,019) 2,860,462 194,720 345,869 6,688 100,939 2,789,866 193,972 341,940 337,200 85,569 422,769 392,186 70,596 748 3,929 30,583 1,315,000 341,823 1,656,823 1,192,106 464,717 120,000 5,603,643 181,500 5,785,143 1,000 121,000 (2,000) 5,601,643 120,165 5,030,235 2,000 183,500 --- 5,785,143 182,041 5,212,276 835 571,408 1,459 572,867 14.4 Trust Fund Accounts As at 31 July 2017, funds amounting to $265,778 were maintained in trust fund accounts which consisted of funds amounting to $82,916 for DPP Trust Account and $182,862 for Forfeited Assets Fund Account.
14.4.1 DPP Trust Account The purpose of this fund is to administer the trainings normally conducted by the Office.

Money received in this account from parties such as Police Force, lawyers and other participants and payments are made for provision of the trainings and bank interest.

Payments of $437 were for refund of prosecution course fees and bank fees.
Details are provided in Table 14.3 14.3 Director of Public Prosecutions – Statement of Receipts and Payments Description 31 July 2017 ($) 31 July 2016 ($) Receipts Lawyers’ Prosecution Training Fees Interest Total Receipts Payments 300 Refund of Lawyers’ Prosecution Training Fees 137 Bank Fees 437 Total Payments 831 Net Surplus 82,085 Opening balance as at 1 August 82,916 Closing balance as at 31 July 1,219 49 1,268 2,700 47 2,747 300 79 379 2,368 79,717 82,085 14.4.2 Forfeited Assets Fund Account Proceeds of Crime Act 2004 and Proceeds of Crime Act Amendment No.7/2005, Section 71 (A) established the trust fund account for the purpose of keeping funds received from a person instead Office of the Director of Public Prosecutions Section 36: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR of a forfeited order as per section 16 of the act, proceeds of pecuniary penalty orders and money receive by the state from a foreign country for mutual assistance on criminal matters.
The purpose of this fund is to make payments to the person if a forfeiture order is discharged, make payments to foreign countries with approval of the Minister of Economy in the obligation with respect of a registered foreign forfeiture order and registered foreign pecuniary order.

Receipts consist of $644 for bank interest and payments of $171,628 were made for purchase of second- hand containers for Fiji Police Force, hand held analyser for Fiji Revenue & Customs Service and bank fees.
Details are provided in Table 14.4 14.4 Forfeited Assets – Statement of Receipts and Payments Description Receipts Proceeds from sale of forfeited assets Proceeds of the mortgagee sale Interest Error in deposit of prosecution fees Total Receipts Payments Purchase of second hand containers Purchase of hand held analyser Bank fees Transfer to DPP Trust Account for error in deposit Total Payment Net (Deficit)/Surplus Opening balance as at 1 August Closing balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) --- --- 344 300 644 49,327 122,000 1 300 171,628 (170,984) 353,846 182,862 205,440 89,623 110 --- 295,173 --- --- --- --- --- 295,173 58,673 353,846 Office of the Director of Public Prosecutions Section 36: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 14.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

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

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

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

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

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

Communication occurs both internally and externally and provides the entity with the information needed to Office of the Director of Public Prosecutions Section 36: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR carry out day-to-day controls.
Communication enables personnel to understand internal control responsibilities and their importance for the achievement of objectives.

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Office as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 14.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Office of the Director of Public Prosecutions Section 36: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 14.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Office was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 14.8 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Acceptable draft financial statements received before or on 16 October 2017 14.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Office of the Director of Public Prosecutions Section 36: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 15 Ministry of Justice Roles and Responsibilities The Ministry of Justice is responsible for the efficient and effective administration of the legal registries under its portfolio.
The Ministry deals specifically with the registration of land titles, births, deaths, marriages, companies, business names, credit unions, money lenders, bankrupt people, wound up companies.
Table of Contents PART A: FINANCIAL STATEMENTS .................................................................................................... 1 15.1 Audit Opinion .............................................................................................................................. 1 15.2 Statement of Receipts and Expenditure ................................................................................... 1 15.3 Appropriation Statement .......................................................................................................... 2 15.4 Main Trust Fund Account........................................................................................................... 3 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 5 PART B Internal Controls ........................................................................................................................ 5 15.5 15.6 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 6 15.7 Quality of draft financial statements by entities ...................................................................... 7 15.8 Timeliness of draft financial statements ................................................................................... 7 15.9 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 7 OTHER SIGNIFICANT MATTERS ......................................................................................... 8 15.10 Absence of Detailed Listing for Official Receivers Trust Fund Account Balance.................... 8 15.11 Outstanding VAT Liability .......................................................................................................... 9 PART C: PART A: FINANCIAL STATEMENTS 15.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Justice resulted in a qualified audit opinion.
The qualification was due to the Ministry not maintaining detailed breakdown listings of the companies under provisional liquidations and the individuals under receiverships.

Consequently, I was unable to substantiate the completeness of the closing balance of $587,437 and $255,603 reflected in the Statement of Receipts and Payments for the Official Receiver Liquidation Trust Fund Account and the Official Receiver Bankruptcy Trust Fund Account, respectively for the period ended 31 July 2017.
15.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $2,385,560 and incurred a total expenditure of $4,732,335 for the year ended 31 July 2017.

Details are provided in Table 15.1.
Ministry of Justice Section 15: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 15.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchases Total Capital Expenditure 31 July 2017 ($) 2,385,560 2,385,560 2,305,416 139,050 119,887 409,650 99,668 11,500 851,821 3,936,992 524,039 121,031 645,070 31 July 2016 ($) 1,418,274 1,418,274 1,189,941 108,126 82,922 307,213 69,248 - 216,434 1,973,884 207,238 36,927 244,165 Value Added Tax 150,273 74,672 Total Expenditure 4,732,335 2,292,721 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
Special Expenditure increased by $635,387 in 2017 compared to 2016 due to the increase in project staff establishment for the digitisation program from 30 to 60 project staffs as a result of the large volume of documents to be scanned.

Capital Construction costs increased by $316,801 in 2017 compared to 2016 due to the upgrading and refurbishment of headquarters and decentralisation of Births, Deaths and Marriages services to Nabouwalu, Sigatoka, Navua and Korovou.
15.3 Appropriation Statement The Ministry incurred expenditure totalling $4.7 million in 2017 against a revised budget of $6.6 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $1.9 million or 28%.

The savings was mainly attributed to operating expenditure.

The savings under Established Staff allocation was mainly due to vacancies which were yet to be filled at year-end.
The savings under Special Expenditure was mainly attributed to the non-utilisation of consumer tribunal funds allocation due to no cases received during the financial period, less refund of revenue made in contrast to estimation made and savings made under anti-corruption awareness and digitisation program.

Details of expenditure against the revised budget are provided in Table 15.2.
Ministry of Justice Section 15: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 15.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 2,846,213 147,514 Changes ($) (18,121) 8,075 Revised Estimate ($) 2,828,092 155,589 Actual Expenditure ($) Lapsed Appropriation ($) 2,305,416 139,050 522,676 16,539 276,000 --- 276,000 119,887 156,113 4 Maintenance & 627,000 (18,034) 608,966 409,650 199,316 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL 13 181,500 8,500 190,000 99,668 90,332 11,500 --- 11,500 11,500 --- 1,440,870 5,530,597 (8,500) (28,080) 1,432,370 5,502,517 851,821 3,936,992 580,549 1,565,525 600,000 185,000 785,000 297,900 6,613,497 --- 28,080 28,080 600,000 213,080 813,080 524,039 121,031 645,070 75,961 92,049 168,010 --- --- 297,900 6,613,497 150,273 4,732,335 147,627 1,881,162 The Ministry collected revenue totalling $2,385,560 in 2017, an increase of 68% from the previous year.
15.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

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

The Ministry of Justice operates and maintains two main trust fund bank accounts, which include the Official Receiver Liquidation Trust Fund Account and the Official Receiver Bankruptcy Trust Fund Account.
The Official Receiver administers Liquidation and Bankruptcy Accounts in accordance with the Companies Act 2015 and Bankruptcy Act 1944, respectively.

The creditor files the petition against the debtor by paying a sum of $150 for individual debtors and $700 for Companies.

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

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

Money received from Liquidated Companies on the other hand is deposited into the Liquidation Trust Bank Account for payment to creditors.
Ministry of Justice Section 15: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 15.4.1 Official Receiver Liquidation Trust Fund Account Table 15.3: Official Receiver Liquidation Trust Fund Account – Statement of Receipts and Payments Description Receipts Debt Collected Petition Search Fees Proof of Debt Total Receipts Payments Debt Payment Company Operational Expenditure Debtor Refund Petition Refund Valuation Costs Publication Costs Bank Fees & Charges Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 1,461,819 31,416 6,233 2,004 1,501,472 993,143 520,542 7,953 3,788 3,850 1,456 551 1,531,283 (29,811) 617,248 587,437 938,335 9,800 1,436 500 950,071 247,506 730,231 --- --- --- 1,197 1,397 980,331 (30,260) 647,508 617,248 15.4.2 Official Receiver Bankruptcy Trust Fund Account Table 15.4: Official Receiver Bankruptcy Trust Fund Account – Statement of Receipts and Payments Description Receipts Debt Collected Search Fees Official Receiver Fees & Costs Petition Proof of Debt Total Receipts Payments Debt Payment Debtor Refund Publication Costs Petition Refund Bank Fees & Charges Total Payments Net Surplus Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 102,356 29,410 29,037 7,618 64 168,485 101,722 24,908 3,044 2,375 463 132,512 35,973 219,630 255,603 58,666 20,870 9,299 3,000 19 91,854 44,767 1,014 1,588 --- 1,375 48,744 43,110 176,520 219,630 Ministry of Justice Section 15: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B ASSESSMENT OF FINANCIAL GOVERNANCE 15.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Justice Section 15: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 15.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of un-presented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Ministry of Justice Section 15: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 15.7 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 15.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 16 October 2017 15.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Rating Timeliness of Signed Financial Statements Received  Generally effective Within 15 days from issue of Financial Statements for signing Ministry of Justice Section 15: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2017.
15.10 Absence of Detailed Listing for Official Receivers Trust Fund Account Balance Within 5 days after the end of each month, the Assistant Accounts Officer shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.1Details of balances must be attached to the reconciliation statement.2 The Ministry maintains two separate Bank Accounts for the Official Receiver Bankruptcy Accounts and the Official Receiver Liquidation Accounts.
The Bankruptcy Accounts maintains records of receipts and payments for individuals under receivership whilst the Liquidation Accounts maintains records of receipts and payments for companies under provisional liquidations.

The details of cash at bank balances for the Official Receivers Bankruptcy and Liquidation Trust Fund Accounts are shown in Table 15.5.
Table 15.5: Official Receiver Trust Account Balance Description Liquidation Trust Bankruptcy Trust Total Amount ($) 587,436.88 255,602.64 843,039.52 Our audit noted that detailed accounts listing of the balances for companies and individuals under provisional liquidation and receivership as at 31 July 2017 were not maintained.

Discussion with the Acting Official Receiver revealed that the detail listings were maintained in soft copies which were lost when the computer in which it was held crashed.
The Ministry did not maintain a hard copy of the detail listings.

1 Ministry of Justice Finance Manual 2011, Section 14.4.1, p 89 2 Ministry of Justice Finance Manual 2011, Section 14.4.2, p 89 Ministry of Justice Section 15: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR In the absence of detailed listings, we were not able to ascertain the correctness of the balance reflected in the Liquidation and Bankruptcy Trust Fund accounts.
Recommendations The Ministry should ensure that the manual records of individuals under receivership and companies under provisional liquidations are up to date, consolidated and reconciled with the respective Trust Fund Account balances.

Ministry’s Comment The recommendations of the auditors are noted.

The Ministry has an updated statement of individual debtors in their respective files while the Ministry is currently preparing the consolidated list of all debtors by checking individual files.
In addition to this, the Ministry is liaising with the software developers to develop software for recording and maintaining the Trust Fund Account.

15.11 Outstanding VAT Liability When receipting revenue, the VAT portion should be credited to the new liability account (863201) and the balance to the revenue code.
At the end of the month, when making VAT return payment to FRCS, the VAT portion should be debited to the same liability account whilst VAT on expenditure will continue to be met from agencies budgetary funds (SEG 13).

3 The Ministry has been submitting its monthly VAT returns on a monthly basis.
However, audit review of the Operating Trust Fund Account balances revealed outstanding accumulated balance of VAT on revenue which comprises of 74% of Operating Trust Fund Account closing balance of $349,211 as at 31/07/17.

Refer to Table 15.6 for details.
Table 15.6: Long Outstanding VAT Account Account 11510191991863201 11510191992863201 11510191996863201 11510191997863201 11510192992863201 11510192995863201 11510193992863201 Total 31/07/17 ($) 31/07/16 ($) 31/12/15 ($) 31/12/14 ($) 31/12/13 ($) (798.91) (55,499.25) (45,974.00) (45,800.20) (63,667.22) (9,542.36) (35,567.20) (256,849.14) (33.34) (51,918.72) (38,061.63) (51,268.18) (83,639.24) (6,344.91) (33,356.12) (264,622.14) (9.33) (59,480.87) (36,837.87) (51,542.34) (81,652.52) (4,675.96) (30,137.77) (264,336.66) (6,746.75) (50,416.33) (28,617.67) (31,661.60) (81,673.20) (3,487.99) (20,576.02) (223,179.56) (8,644.77) (5,252.11) (33,986.60) (40,558.94) (69,277.13) (1,677.80) (27,590.70) (186,988.05) Significant balances in the VAT on revenue indicates that monies kept in the trust fund were not promptly paid to Fiji Revenue and Custom Services (FRCS) on time and/or unaccounted balances are maintained in the Operating Trust Fund account.
Non-payment of VAT to FRCS on time could result in penalties being imposed by the FRCS.

3 Finance Circular Number 10/2009 – paragraph 5.0 Ministry of Justice Section 15: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Recommendation The Ministry should investigate the significant balances in the VAT on revenue account as at 31/07/2017 and take appropriate action to clear the balances.
Ministry’s Comments The recommendations of the auditors are noted.

The Ministry is currently liaising with Ministry of Economy in order to clear the balances.
Ministry of Justice Section 15: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 15A Fiji Corrections Service Roles and Responsibilities The Fiji Corrections Service is responsible for the safe, secure and humane treatment of persons in custody by providing opportunities to correct offending behaviour, develop work and life skills and perform community service.
Under the framework of the Fiji Corrections Act 2006, the Fiji Corrections Service works towards enhancing the quality of custodial responsibilities, improve inmate rehabilitation programmes, developing human resources, effective use of resources and modernising the service.
The Fiji Correction Service, like any other corrections jurisdiction in the Pacific region and abroad is a key component within the Government administration of criminal justice and is responsible for the custody of those persons referred to it by the courts.
The Fiji Corrections Service has performed this role within the framework of the Constitution of Republic of Fiji 2013, the new Corrections Act 2006 and within International norms and conventions in particular the United Nations Minimum Standard Rules for Treatment of Offenders.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 15A.1 Audit Opinion ........................................................................................................................... 2 15A.2 Statement of Receipts and Expenditure ................................................................................ 2 15A.3 Appropriation Statement ........................................................................................................ 2 15A.4 Main Trust Fund Account ........................................................................................................ 3 15A.5 Consolidated Trading and Manufacturing Account .............................................................. 4 ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 7 PART B: 15A.6 Internal Controls ...................................................................................................................... 7 15A.7 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 8 15A.8 Quality of Draft Financial Statements by entities .................................................................. 9 15A.9 Timeliness of Draft Financial Statements ............................................................................... 9 15A.10 Timeliness of Provision of Management Comments and Signing of Financial Statements 9 OTHER SIGNIFICANT MATTERS ........................................................................................ 10 15A.11 Anomalies in the Prisoner’s trust fund balance .................................................................... 10 PART C: Fiji Corrections Service Section 18: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 15A.1 Audit Opinion The audit of the 2017 accounts of the Fiji Corrections Service resulted in an unqualified audit report.
15A.2 Statement of Receipts and Expenditure The Fiji Corrections Service collected revenue totalling $66,383 and incurred a total expenditure of $33,972,721 for the year ended 31 July 2017.

Details are provided in Table 15A.1.
Table 15A.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax Total Expenditure 31 July 2017 ($) 64,779 1,604 66,383 18,275,010 31,721 473,504 1,890,104 4,349,534 9,623 359,071 25,388,567 31 July 2016 ($) 63,076 457 63,533 11,205,824 20,361 261,005 1,291,048 2,047,053 4,821 125,256 14,955,368 6,844,787 364,890 7,209,677 1,275,618 157,521 1,433,139 1,374,477 472,946 33,972,721 16,861,453 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

15A.3 Appropriation Statement The Fiji Corrections Service incurred expenditure totalling $33.9 million in 2017 against a revised budget of $40.9 million, resulting in a saving of $7 million or 17%.
The significant savings of $3.2 million or 15% in Established Staff resulted from vacant positions which were not filled during the financial year.

Funds allocated under operating grant and transfers are used to pay those inmates with formal qualifications who provide services to institutions while in custody.
The funds are released to Fiji Corrections Service Section 18: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR inmates upon their discharge from the care of Fiji Corrections Service.

For the financial year, there were less inmates released hence savings were noted for the funds allocated under operating grants and transfers.
Savings in Special Expenditure amounting to 41% was due to reduction in self-help projects, businesses and rehabilitation programs provided to sustain inmates when integrating into the community.

Savings in Capital Construction budget resulted from the delay caused by vetting of contracts from SGs Office, tender process for approval, bond payment from contractors and drawing amendment approval from GTB or FPO for change of scope and cost.
Details of expenditure against the revised budget are provided in Table 15A.2.
Table 15A.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 22,824,859 34,656 Changes ($) Revised Estimate ($) (1,288,000) 21,536,859 34,656 --- Actual Expenditure ($) 18,275,010 31,721 Lapsed Appropriation ($) 3,261,849 2,935 490,670 --- 490,670 473,504 17,166 4 Maintenance & 1,873,000 138,000 2,011,000 1,890,104 120,896 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Expenditure Value Added Tax TOTAL Capital 3,476,232 1,050,000 4,526,232 4,349,534 176,698 46,260 --- 46,260 9,623 36,637 605,650 29,351,327 9,775,700 370,000 10,145,700 --- 605,650 --- 29,251,327 359,071 25,388,567 9,775,700 --- --- 370,000 --- 10,145,700 6,844,787 364,890 7,209,677 1,493,200 40,990,277 100,000 1,593,200 --- 40,990,227 1,374,477 33,972,721 246,579 3,862,760 2,930,913 5,110 2,936,023 218,723 7,017,506 The Department collected revenue totalling $66,383 in 2017; an increase of 4% from the previous year.
15A.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

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

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

For commercial wage job placements, the wage rate depends on Section 18: Page 3 Fiji Corrections Service REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR the rate offered by the company.

For the art gallery, 60% of sale goes to the prisoner while 40% is used to purchase gallery items.
The hours worked by the prisoners are recorded in the timesheets and receipted when deposited into the Prisoners Trust Account.

Any pay out for prisoners upon discharge is taken out from the Trust Account upon production of receipts by a prisoner.

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

If there are discipline issues during imprisonment these are accounted for when making payments to prisoners during release but upon Commissioner’s discretion.
All payments are supported by receipts and approved by the Commissioner before payment is made.
Table 15A.3: Prisoners Cash Trust Fund – Statement of Receipts and Payments Description Receipts Receipts Total Receipts Payments Payments Total Payments Net surplus/ (Deficit) Balance as at 1 August Closing Balance as at 31 July 2017 31 July 2017 ($) 31 July 2016 ($) 389,987 389,987 169,024 169,024 220,963 440,360 661,323 26,730 26,730 43,759 43,759 (17,029) 457,389 440,360 15A.5 Consolidated Trading and Manufacturing Account The Fiji Corrections Service operates the Trading and Manufacturing Account (TMA) and is guided by its legal mandate to operate its Commercial Enterprises Unit as stipulated under the Fiji Corrections Act 2006 under Part 10 Clause 45 (a) to (d).
The Department’s TMA consists of six Small Business Units (SBUs) namely the Bakery, Joinery, Piggery, Poultry, Tailor and Crops.

The summary of the activities are presented in a consolidated form as there is only one bank account for all the SBUs.

The operation of these TMA helps in the rehabilitative work programs with key objective of teaching and developing inmates with basic industrial and agricultural skills.
The TMA also generates much needed revenue through the sale of agricultural products, joinery, tailor and bakery materials.

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

Bakery unit is located within the Maximum Correction facility.

This is the only product currently produced at the bakery.
The production is to cater for the demand from the corrections institution and two main external customers which are the Fiji Military Forces and Fiji Navy.

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

Crops - does farming of crops and vegetables such as ginger, cassava, dalo and many other products according to seasons.

The produce are mostly used to cater for institutional needs and also for sale to local buyers.
Fiji Corrections Service Section 18: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Joinery - comprises of inmates who are involved with the construction of furniture items for institutional and commercial use.

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

Piggery - is responsible for breeding pigs and supplying pig meat to buyers along the Navua to Nausori corridor.
The unit breeds pigs from weaner to baconer.

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

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

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

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

Garments are mostly bought by clothing retail shops around Fiji.

The unit also specializes in custom made designs and modifies the designs according to customer needs.
The operating results for each business unit are tabulated below: Bakery Crops Joinery Piggery Poultry Tailoring Consolidated Business Units 207,096 81,517 (38,498) 230,868 278,912 15,650 775,545 32,836 94,990 9,561 69,828 31,874 14,290 253,379 32,836 94,990 9,561 69,828 31,874 14,290 253,379 $174,260 $(13,476) $(48,059) $161,041 $247,038 $1,361 $522,166 Income Gross Profit Expenses Maintenance and Operations Total Expenses Net Profit/(Loss) As can be seen from the table above, losses incurred in operation of Crops and Joinery business units were financed from surpluses in other operations.
The consolidated Trading and Manufacturing Accounts are presented in the tables below: Table 15A.4: Manufacturing Account – Consolidated Trading Activity Description Opening Raw Materials Add: Purchases Less: Closing Raw Materials Raw Materials Used Add: Opening Work in Progress Add: Direct Cost – Labour Less: Closing Work in Progress Cost of Manufactured Goods Transferred to Trading Account 31 July 2017 ($) 142,969 1,066,375 1,209,344 44,019 1,165,325 108,721 37,153 95,424 31 July 2016 ($) 150,988 872,459 1,023,447 142,969 880,478 58,031 10,905 108,721 1,215,775 840,693 Fiji Corrections Service Section 18: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 15A.5: Trading Account – Consolidated Trading Activity Description Sales Total Sales Opening Stock Add: Cost of Manufactured Goods transferred from Manufacturing Account Less: Closing Stock of Finished Goods Cost of Goods Sold Gross Profit transferred to Profit & Loss Account 31 July 2017 ($) 2,033,087 2,033,087 396,308 1,215,775 354,541 1,257,542 775,545 31 July 2016 ($) 1,508,348 1,508,348 459,387 840,693 396,308 903,772 604,576 Table 15A.6: Profit and Loss Account – Consolidated Trading Activity Description Income Gross Profit Transferred from Trading Account Total Income Expenses Maintenance and Operations Total Expenses Net Profit Table 15A.7: Balance Sheet – Consolidated Trading Activity Description Assets Cash at Bank Debtors Raw Materials Works in Progress Finished Goods VAT Receivable Total Assets Net Assets Equity TMA Accumulated Surplus TMA Surplus transferred to Consolidated Fund Net Profit Total Equity 31 July 2017 ($) 31 July 2016 ($) 775,545 775,545 253,379 253,379 522,166 604,576 604,576 169,008 169,008 435,568 31 July 2017 ($) 31 July 2016 ($) 753,527 218,558 44,019 95,424 354,541 13,390 1,479,459 1,479,459 950,397 6,896 522,166 1,479,459 639,420 241,118 142,969 108,721 396,308 2,303 1,530,839 1,530,839 972,388 122,883 435,568 1,530,839 Fiji Corrections Service Section 18: Page 6
 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 15A.6 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Fiji Corrections Service Section 18: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 15A.7 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Fiji Corrections Service Section 18: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 15A.8 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Department was: Rating Quality of draft financial statements assessment  Ineffective Adjustments on operating results/net assets were more than one percent 15A.9 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 15A.10 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Generally effective Within 21 days from issue of Draft Management Letter Rating  Effective Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Fiji Corrections Service Section 18: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Fiji Corrections Service as at 31 July 2017.
15A.11 Anomalies in the Prisoner’s trust fund balance Within 5 days after the end of each month, the reconciliation clerk shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.1 Details of balances must be attached to the reconciliation.2 Review of the Prisoner’s trust fund account revealed that the beneficiaries listing was not updated for the year ended 31 July 2017.
The General Ledger (FMIS) for the trust account recorded a balance of $661,323.80.

In addition, stale cheques amounting to $11,269.95 was still appearing in the unpresented cheque listing of the Prisoner’s Trust Fund bank reconciliation as at 31 July 2017.

The above findings indicate that proper controls and supervisory checks were not put into place for the record keeping and administration of Prisoner’s Cash Trust Account.
In the absence of updated beneficiaries’ listings, it will be difficult for FCS to verify claims made by beneficiaries.

As a result the accuracy of the Prisoner’s Trust Fund Accounts could not be substantiated.

Recommendations • The Department should identify all the beneficiaries and reconcile their record against the general ledger (FMIS) balance.

• The Department should verify the trust fund reconciliation and make adjustments accordingly.
Management Comments The audit comments and recommendations are noted.
We have completed identifying funds in the Trust account for the following years: 1 Fiji Corrections Service Finance Manual 2016 Part 15, Section 15.4.1 2 Fiji Corrections Service Finance Manual 2016 Part 15, Section 15.4.2 Fiji Corrections Service Section 18: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • • • 1 August 2017 till April 2018 - $68,284.24 1 August 2016 to 31 July 2017 - $220,963.24 1 August 2015 to 31 July 2016 - $125,723.26 Facilitating the above has been a challenge as we had to locate receipts for previous years to identify these beneficiaries.
Be assured that these records are properly maintained into these years and identified easily.
ACTION TAKEN: Beneficiaries identified for the following years: 1 August 2017 till April 2018 – separated accounts in trust account 1 August 2016 to 31 July 2017 - $220,963.24 1 August 2015 to 31 July 2016 - $125,723.26 Fiji Corrections Service Section 18: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 16 Ministry of Communication Department of Information and Communication Roles and Responsibilities Modern technology can create many opportunities for media, businesses, education, health and finance.
It provides access to a world of information and helps keep families and communities, often separated by vast distances, connected.

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

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

The Ministry comprises the following Departments: Information, Communication and Information Technology and Computing Services.
Table of Contents PART A: FINANCIAL STATEMENT ....................................................................................................... 2 16.1 Audit Opinion ............................................................................................................................. 2 16.2 Statement of Receipts and Expenditure .................................................................................. 2 16.3 Appropriation Statement .......................................................................................................... 3 16.4 Main Trust Fund Account .......................................................................................................... 3 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ....................................................................... 5 16.5 Internal Controls ........................................................................................................................ 5 16.6 Submission of FY 2016-2017 Draft Agency Financial Statements ............................................ 6 16.7 Quality of Draft Financial Statements by entities .................................................................... 7 16.8 Timeliness of draft financial statements .................................................................................. 7 16.9 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 7 Department of Information and Communication Section 16: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENT 16.1 Audit Opinion The audit of the 2017 accounts of the Department of Information and Communication resulted in an unqualified audit opinion.
16.2 Statement of Receipts and Expenditure The Department of Information and Communication collected revenue totalling $24,547 and incurred a total expenditure of $9,589,654 for the year ended 31 July 2017.

Details are provided in Table 16.1.
Table 16.1: Statement of Receipts and Expenditure for 2017 DESCRIPTION State Revenue Revenue from Production of Film Licence Telecom and TV Other State Revenue Total State Revenue Agency Revenue Miscellaneous Total Agency Revenue TOTAL REVENUE Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Construction Total Capital Expenditure 31 July 2017 ($) 31 July 2016 ($) 413 --- 20,341 20,754 3,793 3,793 24,547 1,078,089 148,439 253,981 97,774 770,654 549,142 2,205,091 5,103,170 4,014,641 4,014,641 606 42 --- 648 8,080 8,080 8,728 632,650 78,164 114,302 57,463 395,590 283,150 150,665 1,711,984 --- --- Value Added Tax 471,843 59,243 TOTAL EXPENDITURE 9,589,654 1,771,227 The financial year-end for Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
Department of Information and Communication Section 16: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 16.3 Appropriation Statement The Department incurred expenditures totalling $9.59 million in 2017 against a revised budget of $17.9 million, resulting in a savings of $8.3 million or 47%.

The savings was mainly attributed to capital expenditure Details of expenditures against the revised budget are provided in Table 16.2.
Table 16.2: Appropriation Statement for 2017 SEG Item Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure 8 Capital Construction Total Capital Expenditure 13 Value Added Tax TOTAL Budget Estimate ($) 1,652,292 156,613 283,782 203,520 Changes ($) (25,000) 25,000 25,000 --- Revised Estimate ($) 1,627,292 181,613 308,782 203,520 Actual Expenditure ($) 1,078,089 148,439 253,981 97,774 Lapsed Appropriation ($) 549,203 33,174 54,801 105,746 1,040,072 (25,000) 1,015,072 770,654 244,418 1,297,598 --- 1,297,598 549,142 748,456 2,880,000 7,513,877 9,160,000 9,160,000 1,221,000 17,894,877 2,880,000 --- 7,513,877 --- 9,160,000 --- 9,160,000 --- --- 1,221,000 --- 17,894,877 2,205,091 5,103,170 4,014,641 4,014,641 471,843 9,589,654 674,909 2,410,707 5,145,359 5,145,359 749,157 8,305,223 The Department collected revenue totalling $24,547 in 2017, an increase of 181% from the previous year.
16.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
The Office of the Prime Minister operates and maintains four main trust fund bank accounts which includes the following; 16.4.1 Telecommunication Development Trust Fund Account The Telecommunication Promulgation and the Telecommunications (Trust Fund) Regulations 2016 established the Trust Fund Account for the purpose of imposing a levy on the interconnections to fund National developments in telecommunication such as Telecentres and the Digital Television expenditures.
Carriers such as telecommunication companies are liable to pay to the Ministry a levy at such rate as may be specified by order to be published in the Gazette and different rates may be specified in respect of different types of interconnection.

Funds are used for Information Communication Technology development purposes.

Details of receipts against payments are provided in Table 16.3.
Department of Information and Communication Section 16: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 16.3: Telecommunication Development Trust Fund Account - Statement of Receipts and Payments Descriptions Receipts Telecommunication Companies Levies Pay Reimbursement Interest Refund from JICA Project Total Receipts PAYMENTS DTV Expenses Tele-centre Expenses Bank Fees VAT Payment to FRCA Total Payments Net Surplus/(Deficit) Balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 6,320,657 188 12,708 1,312,320 7,645,873 23,671,568 507,861 225 1,291,940 25,471,594 (17,825,721) 21,428,144 3,602,423 3,781,662 73 12,291 --- 3,794,026 1,881,838 371,221 93 --- 2,253,152 1,540,874 19,887,270 21,428,144 One of the core responsibilities of the Department of Communication is the implementation of the Digital Television Infrastructure.
This involves the migration of television broadcasting from analogue to digital which ensures equal and equitable access to all operators.

The Department of Communication utilised a sum of $23,671,568 from the main trust fund account during the financial year 2016-2017 for the Digital Television Infrastructure project which includes a grant of $21,300,024 paid to Walesi Limited.
Department of Information and Communication Section 16: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 16.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Department of Information and Communication Section 16: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Ratings Internal control assessment  Effective No deficiencies identified in internal controls 16.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 Department of Information and Communication Section 16: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Ratings Internal control assessment  Effective All 10 key processes completed by due date 16.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an Department’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the department was: Ratings Internal control assessment  Effective No adjustments were required 16.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Ratings Internal control assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 16.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Timeliness of Management Comments Received Management response received within 14 days Rating  Generally Effective Timeliness of Signed Financial Statements Received Signed accounts was received within 10 days Department of Information and Communication Section 16: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 16A Department of Computing Services Information Technology and Role and Responsibilities Modern technology can create many opportunities for media, businesses, education, health and finance.
It provides access to a world of information and helps keep families and communities, often separated by vast distances, connected.

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

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

The Ministry comprises the following Departments: Information, Communication and Information Technology and Computing Services.
Table of Contents PART A: FINANCIAL STATEMENT ......................................................................................................... 2 16A.1 Audit Opinion ............................................................................................................................. 2 16A.2 Statement of Receipts and Expenditure ................................................................................. 2 16A.3 Appropriation Statement .......................................................................................................... 2 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ........................................................................ 4 16A.4 Internal Controls ....................................................................................................................... 4 16A.5 Submission of FY 2016-2017 Draft Agency Financial Statements ............................................ 5 16A.6 Quality of draft financial statements by entities ..................................................................... 6 16A.7 Timeliness of Draft Financial Statements ................................................................................. 6 16A.8 Timeliness of Provision of Management Comments and Signing of Financial Statements .. 6 PART C: SIGNIFICANT AUDIT FINDINGS .............................................................................................. 7 16A.8 Human Resource Constraint ..................................................................................................... 7 16A.9 Processing and Holding Cheques for Work Not Done ........................................................... 11 Department of Information Technology and Computing Services Section 16A: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENT 16A.1 Audit Opinion The audit of the 2017 accounts of the Department of Information Technology and Computing Services resulted in an unqualified audit opinion.
16A.2 Statement of Receipts and Expenditure The Department collected revenue totalling $20,502 and incurred a total expenditure of $10,142,510 for the year ended 31 July 2017.

Details are provided in Table 16A.1 below.
Table 16A.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Commission Total State Revenue Agency Revenue Miscellaneous Revenue Total Agency Revenue Total Revenue Operating Expenditure Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditure Total Operating Expenditure 31 July 2017 ($) 31 July 2016 (Re-stated) ($) 69 69 20,433 20,433 20,502 130 130 15,804 15,804 15,934 1,570,594 17,748 1,334,290 1,213,312 3,274,015 1,217,068 8,627,027 915,699 19,639 836,909 884,631 2,213,462 1,314,153 6,184,493 Capital Purchases Total Capital Expenditure 793,468 793,468 18,072 18,072 Value Added Tax 722,015 519,079 Total Expenditure 10,142,510 6,721,644 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
16A.3 Appropriation Statement The Department of Information Technology and Computing Services incurred expenditure totalling $10.1 million in 2017 against a revised budget of $18.4 million resulting in savings of $8.3 million or 45%.

Department of Information Technology and Computing Services Section 16A: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Details of expenditure against the revised budget are provided in Table 16A.2.
Table 16A.2: Appropriation Statement for 2017 SEG Item Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditure Total Operating Cost Capital Purchase Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL Budget Estimate ($) 3,219,765 32,172 1,614,392 2,186,000 4,304,760 Revised Estimate ($) 3,219,765 32,172 1,614,392 2,186,000 4,304,760 2,000,000 2,000,000 13,357,089 13,357,089 2,904,639 1,000,000 3,904,639 1,170,900 18,432,628 18,432,628 2,904,639 1,000,000 3,904,639 1,170,900 Actual Expenditure ($) Lapsed Appropriation ($) 1,570,594 17,748 1,334,290 1,213,312 3,274,015 1,217,068 8,627,027 793,468 --- 793,468 722,015 10,142,510 1,649,171 14,424 280,102 972,688 1,030,745 782,932 4,730,062 2,111,171 1,000,000 3,111,171 448,885 8,290,118 The Department collected revenue totalling $20,502 in 2017, a decline of 28.7% from the previous year.
Department of Information Technology and Computing Services Section 16A: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 16A.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Department of Information Technology and Computing Services Section 16A: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment  Risk Assessment  Control Activities  Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Department as: Ratings Internal control assessment  No deficiencies identified in internal controls 16A.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Department of Information Technology and Computing Services Section 16A: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Ratings Internal control assessment  Effective All 10 key processes completed by due date 16A.6 Quality of draft financial statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the below department was: Ratings Internal control assessment  Effective No adjustments were required 16A.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Ratings Internal control assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 16A.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective Management response received after 21 days Rating  Ineffective Timeliness of Signed Financial Statements Received Signed accounts was received after 15 days Department of Information Technology and Computing Services Section 16A: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: SIGNIFICANT AUDIT FINDINGS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2017.

16A.8 Human Resource Constraint It is imperative that vacant positions are filled within reasonable time frame to ensure smooth operation of the Department and timely delivery of services.
We noted that sixty (60) vacant positions or 56% of 108 approved positions of the Department were not filled as at the date of audit1.
Refer table below for details: Table 16A.1: Details of Vacant Positions Post Number of Posts Established Manager ITCS Assistant Manager Director – Project Manager – Project Senior Systems Analyst / Programmer System Analyst / Engineers System Analyst / Programmer Analyst Programmer / Engineer Assistant Programmer Computer Operator Supervisor Computer Operator Accounts Officer Clerical Officer Senior Project Administrator Secretary Government Wage Earner Driver TOTAL 1 2 1 3 2 7 11 4 11 1 10 1 1 2 1 2 60 1 The audit verification were done on19/09/2017.
Department of Information Technology and Computing Services Section 16A: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Delay in the filling of the vacant positions could impact on the service delivery of the Department and as such it may not be able to achieve the desired outputs as per their Annual Corporate Plan.

Recommendation The Department should prioritize filling the vacant posts which are in need as soon as possible.
Management Comments Creation of Teams and Reclassification and Renaming of Posts The department has created five (5) teams and reclassified or renamed seventeen (17) posts to handle most of the critical work at ITCS.

We had lost a lot of key staff to the corporate and private sectors for various reasons.
Below are some of the teams that we have been created and the jobs and the job descriptions (JD) have been re-aligned to the actual work that the teams and the team members will perform: Team Website e-Services Business Solutions Facilities Procurement Number of Staff Critical Roles Performed 3 4 4 2 4 and government Creating maintaining departments/ministries websites Providing local support to the users of e-Services applications that we developed by Yalamanchili Develop and maintain government departments/ministries applications developed locally To support and maintain the Data Center facilities To facilitate the procurement process for all IT and IT related equipment requests from government ministries/departments.
1.

Website – we have advertised the 3 posts (Senior Web Designer, Website Developer, and Junior Website Developer) for the team.

SC submission was made and approved for the appointment of the Website Developer but unfortunately the appointee turned it down because the salary offered was lower than what existed outside government.

In addition to this, the benefits offered by the corporate and private sectors were very attractive.

The post will now have to be re-advertised.


2. e-Services – the four (4) posts have been advertised and applications have been received.

3. Business Solutions - the four (4) posts have been advertised and applications have been received.

4.

Facilities – two officers have been recruited and have settled in well at the DC 5.

Procurement – two (2) of the four (4) positions advertised have been recruited i.e.

both Assistant Procurement Officers.


The interview for the Manager Procurement post has been completed and the report will be finalized shortly.

The appointment paper for the Senior Procurement Officer is with the Steering Committee for the endorsement of the post holder.

In total, four (4) officers have been recruited to fill the re-classified/renamed posts.
One appointment paper is with the Committee for approval and one will be submitted this week bringing a total of recruited officers to 6 out of the 17 advertised.

We hope to fill the remaining eleven (11) posts which were already advertised before end of this fiscal year.
Department of Information Technology and Computing Services Section 16A: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Apart from the technical staff, a Driver (GWE) was also recruited.

The officer’s appointment was later terminated when he failed his police clearance.

The post will be re-advertised.


Expiry and Renewal of Contracts Apart from advertising and trying to fill the substantively vacant posts, the department was also advertising the posts which were expiring.

Below are some of the posts that expired and recruitment have been carried out: Post Network Engineer Post holder(s) Employee A Date Contract Expired 28/10/2017 Comment Process was completed.

Employee A was the most meritorious and his SC appointment.
he refused to take the position and will be re- advertised.

approved However had Computer Operator (Client Support) 1.

Employee B 2.

Employee C 3.

Employee D Computer Operator (ServiceDesk) 1.

Employee G 2.

Employee H 3.

Employee I Computer Operators (Procurement) 1.

Employee J 2.

Employee K 31/8/2017 31/8/2017 31/8/2017 The following officers were appointed: 1.

Employee E 2.

Employee B 3.

Employee F The following officers were appointed: 1.

Employee G 2.

Employee H 3.


Employee I The following officers were appointed: 1.

Employee J 2.

Employee L Technician Employee J 31/8/2017 Employee K Senior Engineer – Networks Network Engineer Network Technician Employee L .

Employee M 1.

Employee N 2.

Employee O DC Engineer 1.

Employee P 2.


Employee Q 11/10/2017 • extended to 11/1/2018 • extended to 11/4/2018 • extended to 11/6/2018 31/10/2017 • extended to 31/1/2018 • deceased 31/10/2017 • extended to 4/1/2018 • extended to 31/4/2018 31/10/2017 • extended to 4/1/2018 • extended to 2/4/2018 2/10/2017 • extended to 2/1/2018 • extended to 2/4/2018 is yet to be advertised.

Post Interview will be held in April Post advertised.

Interview will be held in April Post advertised.


Interview will be held early March Post advertised.

Interview will be held early March Department of Information Technology and Computing Services Section 16A: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Post Post holder(s) Date Contract Expired 2/10/2017 Comment 3.
Employee R Senior Systems Analyst Employee S Technician (Lautoka Office) Employee T Clerical Officer Employee U Systems Analyst (DBA) Engineer Employee V Employee W 31/1/2016 • extended to 2/1/2018 • extended to 2/4/2018 30/10/2017 • extended to 30/1/2018 • extended to 30/4/2018 31/10/2017 • extended to 03/1/2018 • extended to 03/4/2018 31/10/2017 • extended to 31/1/2018 • extended to 31/4/2018 • extended to 15/7/2018 31/10/2017 • extended to 31/1/2018 • extended to 31/03/2018 1/1/2017 Post advertised.
Interview will be held in April Post is yet to be advertised.

Post advertised.

Interview will be held in March Employee V Employee W was appointed but he has resigned and the post will not be advertised.

A total of twenty two (22) contracts expired and the OMRS system was carried out to have the posts filled.

Challenges faced by ITCS when trying to fill the vacant posts 1.

Salary – government salary is much lower that the salaries offered outside government.
Even with the new salary bands, government salary for IT professionals is still not attractive Incentives – government does not offer any incentive compared to other organizations who offer very attractive salaries 2.

3.

Resignations – departures to join other organizations, migration or to pursue studies and business careers 4.

Job security – the three years contract is too short for some officers so they leave before the end of their contracts to sign up with other organizations.
As much as the department wants to fill up all the vacant positions, it is easier said than done.

Some of the best people recruited or appointed through the OMRS process, opt not to sign the government contract due low salaries and non-attractive conditions.

Some of those who do accept the contracts leave when they find a better offer outside government.
IT or ICT is a very lucrative profession and retaining officers for longer periods can be quite difficult given some of the challenges as highlighted above.

However, ITC continues its drive in trying to fill as many vacant posts as possible and satisfy the IT needs of the government ministries/departments with its limited human resources.
Department of Information Technology and Computing Services Section 16A: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 16A.9 Processing and Holding Cheques for Work Not Done The guiding principles of procurement requires that any procurement of goods, services or works shall be issued so as to promote value for money and maximize economy and efficiency and the ethical use of government resources.
2 The Accounting Head must not certify a payment as correct unless they are satisfied that there is documentation that the goods, services or works have been received.3 The Department awarded contract to the Contractor for supply and installation of fiber cabling works for Government Central Business District (CBD) areas a total cost of VIP FJD $871,000 4 as per payment schedule below: Table 16A.2: Payment Schedule Project Phase Total Amount Phase I Phase II Phase III Total ($) 258,500 277,500 335,000 871,000 The quotation from the Contractor states that 50% of the payment are to be made on placement orders and the other 50% are to be made upon the successful completion of contract.5 We noted that the Department processed payments totaling $306,250 as 50% for phase two and three of fiber works without any work carried out by the contractor.
The cheques were converted into bank cheques and retained in the Department’s safe at the time of audit6.
The Department revealed that the cheques would be released later once the work is completed.7 Refer Table 16A.3 below for details of the cheque: Table 16A.3: Detail of Advance Cheques Processed causing over expenditure Date Cheque Number 27/07/2017 20286 Total Amount ($) 167,500 Details • Paid to BSP to convert into a bank cheque for 50% payment for installation of phase 3 fibre works from Sukuna House to Fiji Corrections Services to ITC Data Centre as the contract.
• Cheques were processed and held at HQ Accounts.

• The contractor had not commenced on work for phase 2 and phase 3 of the project.
27/07/2017 20287 138,750 • Paid to BSP to convert into a bank cheque for 50% payment for installation of phase 2 fibre works from PSC HQ to President Office to GCC Complex to Police Nasova as per the contract • Cheques were processed and held at HQ Accounts 2Fiji Procurement Regulation 2012, section 3 (1) 3 ITC Department Finance Manual 2014- Section 2.8.4 4 Contract dated 12.07.2017 between the Contractor and Ministry of Communications (Department of Information and Technology Services) on ITC-Supply & Installation of fiber Cabling Works for Government Central Business District (CBD) Areas- Page 2- clause 1.1 5Response of Quotation from the Contractor Solutions for Supply & Installation of Fibre cabling Works for Government Central Business District (CBD) Areas-Page 15 6 The audit verification were conducted 22/02/2018 until the transfer on 23/02/2018.
7 Work has not been completed as at 22/02/2018 Department of Information Technology and Computing Services Section 16A: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Date Cheque Number Total Amount ($) Details • The contractor had not commenced on work for phase 2 and phase 3 of the project.
Total 306,250 We also noted that the Department with the assistance of Ministry of Economy took action on 23/02/2018 to rectify the overstatement in the general ledger system after the audit inquiry.

The cash cheques held were deposited back into the Government consolidated fund bank account.

While the adjustments have been made after audit notification, the above practises increase the risk of fraud and misappropriation of funds without being detected in a timely manner.
Recommendation The Department should strengthen internal control to ensure that the above is not repeated and ensure cheques are processed and released to the contractor after the successful completion of the work with necessary documentation in place to justify the processing of payments.
Management’s Comments • • Phase 2 of the project had already started and was half way through the work; FRA intervened because there was no agreement done between the department and FRA as the work would be affecting the road condition.

This was rectified and the project recommenced.

The timeframe specified for each phase was given and we were sure that it would be completed before the end of July so we discussed with management to prepare the cheque.
• Also the closing of accounts circular in regards to date of advance payment closing and FMIS not been available for 1 week were factors of preparing advance cheque and payment processes were followed as advance payment was approved by the chief Accountant.
• Budget for the new financial year for Government Fiber was reduced and could not cater for the balance of the remaining phases and also the process we followed was discussed in the Accounting Head forum and it was shared by our colleagues from Ministry of Lands.

• As this process has been raised by the OAG, we will ensure that it will not be repeated and will also inform the Accounting Head forum to avoid using this process in future.
Department of Information Technology and Computing Services Section 16A: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 17 Ministry of Civil Service Roles and Responsibilities The Ministry of Civil Service has been created to oversee and implement the necessary central guidelines in line with the Government’s view of Civil Sector Reform, which was undertaken to produce a more accountable, effective and professional Civil Service with the ultimate aim of improving service delivery to the public.
The Ministry comprises three main divisions: the Policy Division, responsible for the assessment of overarching government policies to ensure consistency and fairness within the Civil Sector’s Human Resource policies; the Central Training Division, to coordinate central training programs that are necessary to facilitate the up skilling of civil servants; and the Corporate Service Division, to administer the day-to-day activities of the Ministry.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................... 2 17.1 Audit Opinion ............................................................................................................................. 2 17.2 Statement of Receipts and Expenditure .................................................................................. 2 17.3 Appropriation Statement .......................................................................................................... 2 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE .................................................................... 4 Internal Controls ........................................................................................................................ 4 17.4 17.5 Submission of FY 2016-2017 Draft Agency Financial Statements............................................. 5 17.6 Quality of Draft Financial Statements by entities..................................................................... 6 17.7 Timeliness of draft financial statements ................................................................................... 6 17.8 Timeliness of Provision of Management Comments and Signing of Financial Statements ... 6 Ministry of Civil Service Section 5: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 17.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Civil Service resulted in an unqualified audit report.
17.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $42 and incurred a total expenditure of $43,383,399 for the year ended 31 July 2017.

Details are provided in Table 17.1.
Table 17.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Services Special Expenditure Total Operating Expenditure Value Added Tax 31 July 2017 ($) 31 July 2016 ($) 42 --- 42 40,789,894 34,629 121,948 142,172 1,079,021 1,047,988 539 43,216,191 167,208 --- 1,002,443 1,002,443 1,221,347 57,617 86,150 80,692 13,049 475,863 --- 1,934,718 33,500 Total Expenditure 43,383,399 1,968,218 17.3 Appropriation Statement The Ministry incurred expenditure totalling $43,383,399 in 2017 against a revised budget of $45,451,168 million in accordance with Section 19 of the Financial Management Act 2004, resulting in a saving of $2,067,769 or 4.5%.
in allocations for government wage earners, travel and Significant savings were noted communication, maintenance and operation, purchase of goods and services and special expenditure.
This was mainly due to contracting a company to provide security at the Centre for Training and Development complex instead of hiring individual security guards and reduced operational costs on telephone, printing, procurement of office supplies and stationeries and minimal hiring of volunteers from the National Employment Centre.

Included in the established staff expenditure is a sum of $40,283,910.03 for personnel emoluments and FNPF for doctors employed by Ministry of Health and Medical Services.
The Ministry of Civil Service is responsible for the administration of this fund in accordance with the budget appropriated by Parliament.

Details of expenditure against the revised budget are provided in Table 17.2.
Ministry of Civil Service Section 5: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 17.2: Appropriation Statement for 2017 SEG Item 5 3 1 2 Established Staff Government Wage Earners Travel & Communication 4 Maintenance & Operations Purchase of goods & services Operating grants & transfers Special expenditure Total Operating Expenditure Value added tax TOTAL 6 7 13 Budget Estimate ($) 41,844,468 48,700 Changes ($) Revised Estimate ($) --- 41,844,468 48,700 --- Actual Expenditure ($) 40,789,894 34,629 Lapsed Appropriation ($) 1,054,574 14,071 160,000 30,000 190,000 121,948 68,052 205,000 37,488 242,488 142,172 100,316 1,797,700 (77,488) 1,720,212 1,079,021 641,191 1,200,700 --- 1,200,700 1,047,988 152,712 - 45,256,568 10,000 10,000 --- 45,256,568 539 43,216,191 194,600 45,451,168 --- 194,600 --- 45,451,168 167,208 43,383,399 9,461 2,040,377 27,392 2,067,769 The Ministry collected revenue totalling $42 in 2017, a decrease of 99.9% from the previous year due to the transfer of the PSC scholarship bond recovery previously recorded in the Ministry’s general ledger to the Fiji Revenue and Custom Services.
Ministry of Civil Service Section 5: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 17.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.

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

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

It requires immediate management action.

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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Civil Service Section 5: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating  Effective Internal control assessment No deficiencies identified in internal controls 17.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments by 31 July 2017 and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 Ministry of Civil Service Section 5: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 17.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.

Our assessment for the Ministry was: Rating  Effective Quality of draft financial statements assessment No adjustments were required 17.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 17.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Effective Rating  Ineffective Timeliness of Management Comments Received Within 14 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Ministry of Civil Service Section 5: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 18 Ministry of Rural and Maritime Development and National Disaster Management Roles and Responsibilities The Ministry of Rural and Maritime Development and National Disaster Management manages and coordinates Government’s rural and maritime development programs.
Guided by the socio- economic rights enshrined in the Fijian Constitution, the Ministry is focused on providing Fijians with the things they need to empower themselves and support their families.

The Ministry’s programs are targeted at generating economic growth and improving living standards in Fiji’s rural and maritime communities.

This includes self-help programs and work on non-cane access roads, maritime roads and housing assistance.
The Ministry runs the Committee for the Better Utilization of Land Program which is tasked to help landowners put their land to productive use.

The Ministry also provides support services to rural, peri-urban and maritime communities such as registration of births, deaths, marriages, issuing licences and collecting licence and permit fees.
The Ministry is also responsible for the implementation of the National Disaster Management Strategy as required by the 1995 National Disaster Management Plan and the National Disaster Management Act 1998, covering disaster prevention, mitigation, preparedness, response, emergency operations, relief and rehabilitation.

Correspondingly, the Ministry implements climate change mitigation programmes.
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 18.1 Statement of Receipts and Expenditure ................................................................................ 2 18.2 18.3 Appropriation Statement ........................................................................................................ 3 18.4 Main Trust Fund Account ........................................................................................................ 4 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 7 Internal Controls ...................................................................................................................... 7 18.5 18.6 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 8 18.7 Quality of Draft Financial Statements by entities .................................................................. 9 Timeliness of draft financial statements ................................................................................ 9 18.8 Timeliness of Provision of Management Comments and Signing of Financial Statements 9 18.9 PART C: OTHER SIGNIFICANT MATTERS ............................................................................................. 10 18.10 Variance in Operating Revenue ............................................................................................. 10 Procurements facilitated from the Inter-Departmental Clearance (IDC) Account ............. 11 18.11 18.12 Unauthorised Journal Vouchers ............................................................................................ 12 18.13 Anomalies in Provisional Tax ................................................................................................. 14
14 18.14 Absence of Risk Management Framework ........................................................................... 15 18.15 Presentation of Main Trust Account ..................................................................................... 15 ANOMALIES IN THE DEDUCTION OF PROVISIONAL TAX ................................... 17 APPENDIX 18.1: Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 18.1 Audit Opinion The audit of the 2017 accounts of the Ministry of Rural and Maritime Development and National Disaster Management resulted in a qualified audit report.
The qualification was as follows: A variance of $197,953 exists between the total revenue recorded in the general ledger and subsidiary revenue records maintained by the Ministry.

Consequently, I could not confirm the accuracy and completeness of the operating revenue of $1,417,065.
Without further qualifying the opinion above, attention was drawn to the following matter: Internal controls over revenue, expenses and trust fund accounts were generally found to be weak and if not addressed promptly may result in material misstatements and possible financial losses in the near future.

18.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $1,417,065 and incurred a total expenditure of $24,310,769 for the year ended 31 July 2017.
Details are provided in Table 18.1.
Table 18.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Capital Grants and Transfers Total Capital Expenditure 31 July 2017 ($) 1,340,496 76,569 1,417,065 5,422,886 1,477,614 510,798 981,759 887,833 398,507 824,755 10,504,152 1,570,783 198,834 11,566,666 13,336,283 31 July 2016 ($) 689,683 105,056 794,739 3,845,814 1,297,563 391,995 871,284 729,762 307,089 14,440,892 21,884,399 795,898 192,740 6,672,186 7,660,824 Value Added Tax 470,334 1,858,671 Total Expenditure 24,310,769 31,403,894 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
Revenue mainly comprised of business and liquor licences and registration of marriage/birth fees collected on behalf of other government agencies.

The Liquor License revenue increased by $426,956 in 2017 compared to 2016 because of the renewal of license fee which is prepared on an annual basis and processed during the month of October.

Thus all renewal of liquor license was received during the last quarter of the calendar year for 2017 rather than 2016.
Established staff expenditure increased by $1,577,072 in 2017 compared to 2016 due to the payment to officers’ salaries for outstanding annual and long service leave.

The Ministry was included in Tranche 1 for the Job Evaluation Exercise which resulted in increase in staff salaries.

Special expenditure decreased by $13,616,137 in 2017 compared to 2016 because provisions in 2016 had increased dramatically due to virement of funds to meet expenses relating to the Tropical Cyclone Winston operations.
Capital construction expenses increased by $774,885 in 2017 compared to 2016 because of the change in financial year from twelve months in 2017 against the seven months in 2016.

In 2017 about 43 projects were implemented in the Non-Cane Access Road program compared to 29 projects implemented in 2016 which resulted in the large increase.

Capital Grants & Transfer expenses increased by $4,894,480 in 2017 compared to 2016 due to the change in financial year.
The total number of capital projects implemented in 2017 averaged to 219 compared to 130 projects in 2016 which increased the utilisation of funds.

In 2017, payments were inclusive of 1st and 2nd quarter projects except in 2016 where only the 1st quarter projects were implemented due to the change in financial year.
18.3 Appropriation Statement The Ministry incurred expenditure totalling $24.3 million in 2017 against a revised budget of $31.9 million in accordance with section 19 of the Financial Management Act 2004, resulting in a saving of $7.6 million or 24%.

The savings of $284,997 under the Operating Grants and Transfers allocation was mainly due to the non-payment of District Advisory Councillors (DAC) allowances during the year for non-submission of reports.
As per the Terms of Reference for payment of allowance to DAC members, payments can only be effected after the DAC member’ reports are received and verified by the Provincial Administrators and District Officers.

The Emergency Water Supplies budget was not fully utilized in 2017 as no major drought was recorded during the year.
This resulted in a saving of $467,025 under the Special Expenditure allocation as the fund is maintained at Headquarters and is only released to Divisional Commissioners upon request.

The savings of $769,217 under the Capital Construction allocation was due to under-utilisation of funds appropriated for the Nacula Health Centre project and the non-execution of the Kubulau Government Station (Construction of Post Office and Staffs Quarters) project due to the delay in the tender process.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR There was a saving of $5,714,852 under the Capital Grants and Transfers allocation.
This resulted from the following: (i) (ii) (iii) the under-utilisation of budgeted funds allocated to each divisions for Project Preparatory Works for those projects intended to be carried out in the 2017/2018 financial year; the non-execution of the various appropriated Divisional Development Projects due to the delay in the tender processes; and the non-execution of the various Disaster Risk Rehabilitation Projects in the respective divisions due to the delay in submission of project documents such as plans and costing to facilitate the tender process and submission of RIE from the divisions and for some projects, no bids were received after the projects were placed on tender.
Details of expenditure against the revised budget are provided in Table 18.2.
Table 18.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & 4 Maintenance & 5 6 7 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure` Capital Construction Capital Purchase 8 9 10 Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL 13 Budget Estimate ($) 5,461,409 Changes ($) - Revised Estimate ($) 5,461,409 Actual Expenditure ($) 5,422,886 1,546,577 (27,921) 1,518,656 1,477,614 435,160 97,862 533,022 510,798 975,900 67,682 1,043,582 981,759 Lapsed Appropriation ($) 38,523 41,042 22,224 61,823 1,140,110 (108,943) 1,031,167 887,833 143,334 683,504 - 683,504 1,320,460 (28,680) 1,291,780 398,507 824,755 284,997 467,025 11,563,120 2,340,000 200,000 17,281,518 19,821,518 577,100 31,961,738 - 11,563,120 10,504,152 1,058,968 - - 2,340,000 200,000 1,570,783 198,834 769,217 1,166 - 17,281,518 11,566,666 5,714,852 - 19,821,518 13,336,283 - 577,100 - 31,961,738 470,334 24,310,769 6,485,235 106,766 7,650,969 The Ministry collected revenue totalling $1,417,065 in 2017, an increase of 78% from the previous year.
18.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

Trust money is to be kept in a separate bank account pending its withdrawal for use.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR The Ministry of Rural and Maritime Development and National Disaster Management operates and maintains two main trust fund bank accounts which include the Provincial Development Trust Fund Account, and the PM’s Office Disaster and Rehabilitation Trust Fund Account.
The Trust Fund Account Statement of Receipts and Payments is presented separately in the current year for transparency purposes and to correctly reflect the trust monies received and paid out of the two accounts.

This is an improvement by the Ministry when compared to 2016 when a consolidated statement was presented for both the accounts.
18.4.1 Provincial Development Trust Fund Account The Provincial Development Trust Account comprise of the following funds which are all kept in one bank account: (i) (ii) (iii) (iv) Tender Deposit Trust Fund: for tender deposits which are refunded to unsuccessful tenderers or at the expiry of the contracted tender; Rural Housing Deposit Trust Fund Account: a scheme where rural dwellers are assisted by Government in the building of their homes and they are required to meet one third of the cost; Unclaimed Wages Trust Fund Account: is where the wages of an employee is kept and this is then paid to the legal beneficiaries in the event of the death of a worker; PM Relief and Rehabilitation Trust Fund Account: is where the rural dwellers deposit the full cost of building materials for their houses.
Government would negotiate and get cheaper quotes for the materials and also provide free transportation for the delivery of the materials; and (v) Special Purpose Trust Account – Vatukoula: is to cater for Vatukoula Housing Clients Assistance which consists of two-thirds government contribution.
Table 18.3: Provincial Development Trust Fund Account – Statement of Receipts and Payments Description Receipts Tender Deposits Rural Housing Deposit Scheme II Unclaimed Wages Rural Housing Scheme I / PM Relief & Rehab Committee Special Purpose Trust Account – Vatukoula One – Third Self Help Projects Cities Trust Total Receipts Payments Tender Deposits Rural Housing Deposit Scheme II Rural Housing Scheme I / PM Relief & Rehab Committee Special Purpose Trust Account – Vatukoula One – Third Self Help Projects Total Payments 31 July 2017 ($) 31 July 2016 ($) - 411,314 - 72,324 163,038 108,739 999 756,414 - 210,220 71,819 - 86,906 368,945 64,556 166,245 14,403 40,289 - 31,770 - 317,263 89,039 161,438 59,817 - 61,165 371,459 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Description Net Surplus/(Deficit) Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 387,469 1,871,135 2,258,604 (54,196) 1,925,331 1,871,135 18.4.2 Prime Minister’s Office Disaster and Rehabilitation Trust Fund Account The Trust Fund comprise of money from the Ministry’s annual budget (usually $1 m) and donations from the public or other countries during times of disasters.
Table 18.4: Prime Minister’s Office Disaster and Rehabilitation Trust Fund Account – Statement of Receipts and Payments Description Receipts Prime Minister’s Office Disaster & Rehabilitation Trust Fund Total Receipts Payments Prime Minister’s Office Disaster & Rehabilitation Trust Fund Total Payments Net Surplus/(Deficit) Opening balance as at 1 August Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 1,924,774 10,898,368 1,924,774 10,898,368 230,916 12,461,703 230,916 12,461,703 (1,563,335) 2,687,036 1,123,701 1,693,858 1,123,701 2,817,559 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 18.5 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.
Communication occurs both internally and externally and provides the entity with the information needed to carry out day-to-day controls.

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

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

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

• Examples of issues which would fall under this category are self-assessment by agencies to determine whether internal controls are present and function.
This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Ministry as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 18.6 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of un-presented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Submission of arrears of revenue returns by 31 August 2017 When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Ineffective Year-end close process assessment Less than five of 10 key processes completed within two weeks of due date 18.7 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Ministry was: Rating  Ineffective Quality of draft financial statements assessment Adjustments on operating results/net assets were more than one percent 18.8 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Timeliness of draft financial statements assessment Acceptable draft financial statements received after 16 October 2017 18.9 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating Timeliness of Management Comments Received  Ineffective After 21 days from issue of Draft Management Letter Rating  Ineffective Ministry of Rural and Maritime Development and National Disaster Management Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Section 18: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Ministry as at 31 July 2017.

18.10 Variance in Operating Revenue Each Accounting Head must ensure that the recording of revenue is reconciled monthly with the Ministry of Economy.
1 An unreconciled variance of $197,953 exists between the total operating revenue recorded in the revenue reports maintained by the Ministry and the total revenue as per the FMIS general ledger.

Refer to Table 18.5 below for details.
Table 18.5: Variance in Operating Revenue Description Revenue Reports HQ ($) 32 2,500 1,514 6,881 28,334 511 --- --- --- 755 Western ($) Northern ($) Eastern ($) Central ($) --- 11,178 13 198,654 169,049 1,084 --- --- --- 1,300 549 4,344 1,096 46,330 82,461 2,151 --- --- --- 11,000 --- 722 17,528 --- 66 6,768 17,615 527,526 61,465 15,838 401 756 --- --- --- --- --- --- --- 690 Fees-Cemetery Registration Fees-Misc (Pub Trustee) License Liquor License Trading License Others Commission Commission Commission Miscellaneous Revenue Total Revenue Total as per Revenue Reports ($) 581 18,810 26,920 797,006 357,147 4,903 --- --- --- 13,745 FMIS Balance ($) Variance ($) 539 21,305 87,394 42 (2,495) (60,474) 815,110 404,962 5,215 5,299 260 412 76,569 (18,104) (47,815) (312) (5,299) (260) (412) (62,824) 40,527 381,278 147,931 53,149 596,226 1,219,112 1,417,065 (197,953) Details to explain the variance were not provided by the Ministry.
However, we were informed that not all receipts have been included in revenue reports due to the delay in the submission of the relevant documents relating to revenue by various District Offices to Headquarters.
1 Finance Instruction 2010 – Section 21 (1) (c) Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR The above finding indicates that proper reconciliations and supervisory checks were not carried out to ensure that the subsidiary revenue records are updated on a regular basis.
In the absence of subsidiary records, there is a risk that fraud, errors and omissions will not be detected in a timely manner.
Recommendations The Ministry should ensure that: • strict timelines are set for all District Offices to submit the carbon copies of the receipts and related source documents to the Headquarters on a timely basis and appropriate actions are taken for any non-compliance; and • all revenue receipts are updated in the subsidiary revenue reports and posted into the general ledger and reconciled on a regular basis.

Any variances identified should be investigated and promptly rectified.
Ministry’s Comments The Ministry has noted the audit comments and recommendations.

The Ministry have put in place a paperless system to address this.

18.11 Procurements facilitated from the Inter-Departmental Clearance (IDC) Account The IDC Account is maintained to record transactions effected by one department on behalf of another such as re-allocation of costs and reversal of salaries.
Transactions are charged to the agency’s IDC Account pending clearance by that agency.2 The Manager Finance or Accounts Officer must not certify a payment as correct unless they are satisfied that the expenditure account it is charged to is correct.3 Our review of IDC account reconciliation noted that the Ministry had incorrectly cleared its IDC Account allocation at the end of the financial year.
It was noted that a sum of $52,067.35 was journalised from the IDC account allocation (1-18101-68999-536101) to the VAT on revenue allocation (1-18101-68999-863201) through the journal voucher reference number 139/07 of 2017 in order to clear the IDC account at year-end.
We further noted that the sum of $52,067.35 relates to the unreconciled difference in the total salaries and wages of Fiji Roads Authority (FRA) staffs which was paid by the Ministry on behalf of the FRA and the total amount reimbursed by the Authority for the period January to July 2017.

Salaries and wages were paid were charged to the Ministry’s IDC Account and cleared upon receipt of reimbursements from the Authority.
Our audit also noted that during the year, the Ministry processed payments directly from the IDC Account instead of charging expenses incurred directly to the relevant expenditure allocations.

Refer to Table 18.6 below for examples of payments.
2 Ministry of Rural and Maritime Development and Disaster Management, Finance Manual 2013, Schedule 5 3 Ministry of Rural and Maritime Development and Disaster Management, Finance Manual 2013, Section 2.8.4 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 18.6: Examples of procurements made from the IDC account Date EFT Number JV number 19/06/17 5822 11/11/16 35181 11/07/17 02/02/17 08/02/17 31/03/17 13/04/17 5937 4520 4558 4785 5637 Particulars Payment for bills from 28 April - 30 May.
This was later credited via JV 71/06 and debited 1-18101- 68999-040421 allocation.

Payment of airfare for CED & CWD attending rapid disaster resp.

toolkit, Indonesia Purchase of 4 tyres - GP967 Purchase of ration (50 kg sugar) for Qamea Island Purchase of ration for Qamea Island landslide victims Purchase of ration for Qamea Island Retention payment for construction of stone masonry wall at Kumi village.
Amount ($) 5,713 7,650 2,320 2,281 11,141 6,685 7,167 It was noted that this was done due to unavailability of funds in the relevant expenditure allocations.

The above anomalies indicate that procurement planning was not done and cash flows were not properly managed to ensure that sufficient funding was available when required.

The absence of proper supervisory checks to ensure that proper reconciliations are carried out is another contributing factor.
Whilst adjustments to correct these charges have been made at year-end, the above practice indicates that the IDC Account was not used solely for the purpose it was established.
Recommendations The Ministry should ensure that: • • the practice of directly processing payments from the IDC Account is ceased and proper cash flow forecasts are done to ensure that funds are available for required expenditures; and supervisory and control checks in the operation of the IDC Account are strengthened to avoid discrepancies highlighted above from reoccurring in the future.

Ministry’s Comments The Ministry has noted the audit comments and recommendations.
The Ministry will ensure planning for procurement is done and proper management of cash flow is implemented to avoid using IDC allocation.
18.12 Unauthorised Journal Vouchers Only the Manager Finance or Accounts Officer shall approve journal adjustments.4 Once the journal voucher has been approved, it shall be posted into the appropriate ledger and the general ledger system.5 4 Ministry of Rural and Maritime Development and Disaster Management, Finance Manual 2013, Section 14.1.2 5 Ministry of Rural and Maritime Development and Disaster Management, Finance Manual 2013, Section 14.1.5 Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Our review of a sample of journal vouchers noted instances of journal adjustments being done into the general ledger (FMIS) without the approval of Manager Finance or Accounts Officer.
The journal vouchers were prepared and posted into the General Ledger by the Revenue Clerical Officer.

As a result of the above, misallocations in the general ledger were prevalent which had to be corrected through audit adjustments and in some cases remained unadjusted due to the non- provision of relevant source documents.

Refer to table 18.7 for examples.
Table 18.7: Examples of Journal Voucher not approved Date Journal Voucher Number 29/08/16 BLC 67/08/16 29/08/16 BLC 69/08/16 06/10/16 BLC 236/10/16 04/11/16 BLC 406/10/16 04/11/16 BLC 419/10/16 03/02/17 BLC 846/02/17 13/03/17 BLC 1019/03/17 No date BLC 1107/03/17 No date BLC 1110/03/17 No date BLC 1724/03/17 No date BLC 2684/07/17 No date BLC 2688/07/17 25/04/17 JV01/04/17 Reason for adjustment Revenue clearance for Headquarters Revenue clearance for Headquarters Clearance for emergency water carting and revenue as at 06/10/16 Revenue clearance for Commissioner Northern Office as at 14/10/16 Revenue clearance for Headquarters as at 21/10/16 Revenue clearance for Qamea rations received from PM’s Rehab and relief fund Revenue clearance on the transfer of fund from DRRF to the PMNDRRF Revenue clearance for RHU scheme 1 contribution as at 27/03/17 Revenue clearance for RHU scheme 1 contribution as at 31/03/17 Revenue clearance on liquor license and retail license Revenue clearance for reimbursement of wages from FRA for the month of Jan – Jul Revenue clearance for special trust account Adjustment of misposting Amount ($) 49,946 85,018 406,470 12,000 52,027 170,950 1,000,000 11,000 45,454 34,026 272,026 144,201 6,861 The magnitude of the unapproved adjustments denotes weaknesses in controls over the posting of journals in the general ledger and raises serious concerns on the lack of oversight by the Manager Finance or Accounts Officer on the processing of journal vouchers.
There is a high risk of fraudulent or incorrect journal entries being posted into the general ledger therefore resulting in revenue balances being misstated.

Recommendation The Ministry should ensure that all journal vouchers are verified and approved by authorised officers before they are posted into the general ledger.

Ministry’s Comments The Ministry has noted the audit comments and recommendations.

The Ministry have put in place a paperless system to address this.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 18.13 Anomalies in Provisional Tax A resident person or a permanent establishment in Fiji of a non-resident person making a payment under a contract of services, including progress payments, must withhold tax from the gross amount of the payment as prescribed.6 A person is required to deduct 5% Provisional Tax from the gross amount payable for service fees or commission.
The sum deducted is remitted to FRCA by the collection agent or responsible person and the tax collected is given as credit to the recipient’s or payee’s tax liability at the end of the year when the tax return is lodged.

Provisional Tax will only be applicable if the parties have a written agreement for the supply of services or for payment of commission; and the person hiring the service is a business; and the total to pay to a person in one year will be $1,000 or more.
7 Our audit noted that the Ministry did not deduct provisional tax from all the contractual payments made during the financial year.

For those payments where provisional tax was deducted, instances were noted where incorrect percentage was used for calculating the provisional tax amount resulting in overpayment of the tax.

It was further noted that provisional tax deducted were incorrectly posted to the expenditure allocation and not the SLG 848 account.

Refer to Appendix 18.1 for details.


Our findings indicate lack of proper checks by supervising officers in ensuring that provisional tax payments are correctly processed and posted to the correct allocations.

As a result, the Ministry did not comply with Section 114(2) of the Income Tax Act.
If the anomalies highlighted above are not promptly addressed, there is a high risk of incorrect tax payments being made, misallocations in the general ledger and penalties from Fiji Revenue and Customs Service (FRCS).
Recommendations The Ministry should ensure that: supervising officers are vigilant in performing their supervisory check; • • provisional tax deductions are correctly made from payments made to contractors for providing services to the Ministry; and • provisional tax is charged to the correct expenditure general ledger and remitted to FRCS on a timely basis.

Ministry’s Comments The Ministry has noted the audit comments and recommendations.
The Ministry will be vigilant in checking payments in ensuring that the 5% Provisional Tax is deducted from the VEP amount and not the VIP amount and that the correct allocations are posted.
6 Income Tax Act 2015 – Section 114(2) 7 Tax Talk – Provisional tax 8 The SLG 84 account is a liability account in used to record all Accounts Payable including Provisional Tax payable (840602) Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 18.14 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Ministry’s Management, and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Ministry.
Risk management framework would provide a platform to identify various risks affecting the Ministry, management of the risks, develop appropriate internal control to mitigate the risks and continuous monitoring of risks.

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

Our review of the Ministry’s Corporate Governance revealed that a risk management framework was not in place.
As a result, the Ministry does not have approved written policies, procedures or guidelines to manage risk associated with the following: • occupational health and safety (still in draft); • Ministry’s operational and human resource planning; • • disaster recovery and business continuity, and • assessment of potential conflicts of interest.
fraud control and anti-corruption; In absence of a risk management framework, the Ministry may find difficulty in managing risks affecting the Ministry which include risk of fraud and misappropriation of assets.

Our findings also indicate that currently the Ministry does not have an established governance and accountability function to drive the risk management framework.
Recommendations • The Ministry should work towards preparing a risk management framework; and • Following preparation of the framework, a governance and accountability function that supports the operations of the Ministry by providing financial and operational risk management and management of external reporting obligations, should be established.

Ministry’s Comments The audit’s comments and recommendations are noted.
The Ministry admits that it does not have a specific Risk Management Framework in place; however there are provisions in the Ministry policies and procedure guidelines (Finance, HR and Admin Policies, Disaster Act and plan) that addressees risks that may arise in the delivery of services.

Currently, the Ministry’s OHS policy has been approved.

The Ministry is also in the process of formulating the Ministry’s Strategic plan which will incorporate risks and mitigating factors.
Furthermore, the Ministry is also working towards formulating a Risk Management Policy and plan.

18.15 Presentation of Main Trust Account Trust money is to be accounted for separately from public money and other money within the meaning of this Act.

Trust money is to be kept in a separate bank account pending its withdrawal and accounted for separately from “public money” and “other money”.
The Provincial Development Trust Fund Account includes Tender Deposits, Rural Housing Deposits Schemes, Unclaimed Wages, one-third Self Help Projects and the Vatukoula Special Purpose trust.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR All funds related to the above trusts are deposited in one bank account and a consolidated statement of trust receipts and payments is prepared by the Ministry in its Agency Financial Statements.
In addition the current presentation of the Statement of Trust receipts and payments classifies the trust receipts and payments by trust types as a one-line item in the statement even though the nature of the trust receipts and payments may vary.

With the various trust funds being deposited into one bank account, there is a high risk of funds for a particular trust being utilised for the other trust funds.
The current presentation and the trust fund accounts disclosures are deemed inadequate as it does not provide adequate information to the users of the Ministry’s financial statements.

Recommendation The Ministry should work towards opening separate bank accounts for various trust fund currently recorded under the Provincial Development Trust Fund Account and prepare separate statements of receipts and payments.

Ministry’s Comments The Audit’s comments and recommendations are noted.
The Ministry is currently liaising with the Ministry of Economy for the opening of separate accounts for the various trust fund accounts maintained in the Ministry.
Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR APPENDIX 18.1: ANOMALIES IN THE DEDUCTION OF PROVISIONAL TAX Date Cheque / EFT Number Commissioner Western Division Amount ($) Payee Remarks 4726 21/12/16 24,852.00 Company A 4915 02/02/17 22,500.00 Company B 5270 21/03/17 24,177.95 Company C 4877 23/01/17 24,177.95 Company D 19422 12/05/17 24,177.95 Company E 4688 15/12/16 6,000.00 Company F Commissioner Central Division 3766 19/07/17 35,837.32 Company G 3111 03/02/17 38,475.00 Company H 3097 27/01/17 39,240.00 Company I 3042 18/01/17 40,099.50 Company J 3695 07/07/17 13,765.50 Company K 3602 13/06/17 13,775.00 Company L the the The Ministry did not deduct provisional tax.


The 5% provisional deducted.

The 5% provisional deducted.

The 5% provisional deducted.

The 5% provisional deducted.

tax was not tax was not tax was not tax was not The 5% provisional tax deducted was incorrectly calculated as 5% of the VIP amount instead of the VEP amount.

The 5% provisional tax deducted was incorrectly calculated as 5% of the VIP amount instead of the VEP amount.

PT was posted as a credit to SEG 8.


The 5% provisional deducted The 5% provisional tax deducted was incorrectly calculated as 5% of the VIP amount instead of the VEP amount.

tax was not Provisional tax was posted as a credit to SEG 8.

The 5% provisional deducted The provisional tax was also posted to SEG 10 and 5% provisional tax was incorrectly from VIP calculated amount.
tax was not Ministry of Rural and Maritime Development and National Disaster Management Section 18: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 19 Republic of Fiji Military Forces Roles and Responsibilities The RFMF is charged with, and responsible for the defence and state security of Fiji, in the maintenance of Law and Order in land and sea and provision of maritime surveillance of Fiji’s maritime zone.
It improves the living standards of rural community through infrastructure development and youth training of life skills provided by the Engineering Corp through its Trade Training.

It also provides services to mariners through the coastal radio station (Suva Radio 3DP) for all vessels within Fiji waters as required under the International Law of the Sea and the surveying and charting of Fiji’s Exclusive Economic Zone.
Table of Contents PART A: FINANCIAL STATEMENTS ....................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 19.1 Statement of Receipts and Expenditure ................................................................................ 2 19.2 Appropriation Statement ........................................................................................................ 3 19.3 19.4 Main Trust Fund Account ........................................................................................................ 3 Consolidated Trading and Manufacturing Account .............................................................. 4 19.5 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 6 Internal Controls ...................................................................................................................... 6 19.6 19.7 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 7 19.8 Quality of Draft Financial Statements by Entities .................................................................. 8 19.9 Timeliness of draft financial statements ................................................................................ 8 19.10 Timeliness of Provision of Management Comments and Signing of Financial Statements 8 PART C: OTHER SIGNIFICANT MATTERS .............................................................................................. 9 19.11 Anomalies in the Main Trust Fund – Engineers Project Fund Account ................................. 9 19.12 Absence of Risk Management Framework ........................................................................... 11 19.13 Effectiveness of the Internal Audit Function ........................................................................ 11 Republic of Fiji Military Forces Section 19: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 19.1 Audit Opinion The audit of the 2017 accounts of the Republic of Fiji Military Forces resulted in a qualified audit report.
The qualification was as follows: The Engineers Trust Fund Account Statement of Receipts and Payments does not provide receipts and payments for each project undertaken by the Force.

The statement only includes closing cash balance for each project.
As a result, I was unable to determine whether any adjustment might have been necessary in respect of the Engineers Trust Fund Account cash at bank balance at year end and any corresponding adjustments to the elements making up the statement of income and expenditure.

19.2 Statement of Receipts and Expenditure The Republic of Fiji Military Forces collected revenue totalling $476,480 and incurred a total expenditure of $91,058,298 for the year ended 31 July 2017.

Details are provided in Table 19.1.
Table 19.1: Statement of Receipts and Expenditure for 2017 Description State Revenue Agency Revenue Total Revenue Established Staff Government Wage Earners Travel and Communications Maintenance and Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditures Total Operating Expenditure Capital Construction Capital Purchase Total Capital Expenditure 31 July 2017 ($) 335,115 141,365 476,480 69,829,823 333,974 2,799,216 3,795,084 6,982,964 42,375 1,771,837 85,555,273 1,210,317 2,584,580 3,794,897 31 July 2016 ($) 158,215 81,630 239,845 40,997,731 198,841 1,228,969 2,521,670 3,990,946 --- 1,594,725 50,532,882 1,228,066 1,508,146 2,736,212 Value Added Tax Total Expenditure 1,708,128 1,002,847 91,058,298 54,271,941 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.
Republic of Fiji Military Forces Section 19: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 19.3 Appropriation Statement The Republic of Fiji Military Forces incurred expenditure totalling $91.1 million in 2017 against a revised budget of $96.4 million in accordance with section 19 of the Financial Management Act 2004, resulting in savings of $5.3 million or 6%.
The savings was mainly due to the Life Extension Programme on patrol boat being taken through aid to Australia to complete works.

Other projects were not completed due to delay in approval from agencies such as the Construction Implementation Unit, lengthy time taken by Government Tender Board in the awarding of contract, call for re-tender due to lack of bids and deployment of RFMF Engineers Personnel for Tropical Cyclone Winston rehabilitation work.
Details of expenditure against the revised budget are provided in Table 19.2.
Table 19.2: Appropriation Statement for 2017 SEG Item 1 2 3 Established Staff Government Wage Earners Travel Communication & Budget Estimate ($) 74,550,392 256,531 Changes ($) Revised Estimate ($) (4,053,170) 70,497,222 352,531 96,000 Actual Expenditure ($) 69,829,823 333,974 Lapsed Appropriation ($) 667,399 18,557 1,246,890 1,639,510 2,886,400 2,799,216 87,184 4 Maintenance & 4,153,710 (246,555) 3,907,155 3,795,084 112,071 Operations Purchase of Goods & Services Operating Grants & Transfers Special expenditure Total Operating Expenditure Capital Construction Capital Purchase Total Expenditure Value Added Tax TOTAL Capital 5,420,511 1,626,173 7,046,684 6,982,964 63,720 50,000 (7,625) 42,375 42,375 --- 1,433,000 87,111,034 354,667 1,787,667 (591,000) 86,520,034 1,771,837 85,555,273 6,864,500 650,000 7,514,500 (3,275,000) 3,866,000 591,000 3,589,500 4,516,000 8,105,500 1,210,317 2,584,580 3,794,897 1,779,300 96,404,834 --- 1,779,300 --- 96,404,834 1,708,128 91,058,298 15,830 964,761 2,379,183 1,931,420 4,310,603 71,172 5,346,536 The Force collected revenue totalling $476,480 in 2017, an increase of 99% from the previous year.
19.4 Main Trust Fund Account Trust money is to be accounted for separately from public money and other money.

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

The Republic of Fiji Military Forces operates and maintains the following trust fund bank account: 19.4.1 Engineer Project Trust Fund Account In July 2017, the Force obtained approval from Ministry of Economy to open the Engineer Project Trust Fund Account.
The Statement of Receipts and Payments for this Trust Fund Account only reported the balances of the individual projects and did not include the receipts and payments incurred during the year.
Republic of Fiji Military Forces Section 19: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 19.3: Engineer Project Trust Fund Account – Statement of Receipts and Payments Description Receipts Rural Development PM’s Office Miscellaneous Project Rotuma Hospital Total Receipts Payments Rural Development PM’s Office Miscellaneous Project Rotuma Hospital Total Payments Opening balance as at 1 August Closing Balance Rural Development PM’s Office Miscellaneous Project Rotuma Hospital Closing Balance as at 31 July 31 July 2017 ($) 31 July 2016 ($) 34,095 24,868 17,661 3,815,000 3,891,624 --- --- --- --- --- --- 34,095 24,868 17,661 3,815,000 3,891,624 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 19.5 Consolidated Trading and Manufacturing Account The Force has two trading activity accounts under its Consolidated Trading and Manufacturing Account.
These are the Engineers Plant Troop and the Nautical Chart.

a) The Engineers Plant Troop trading account was formed in 1978 to construct and develop roads to the inaccessible parts of rural areas in Fiji.

b) The Nautical Chart trading account was transferred to the RFMF’s naval division in 2010 to provide accurate oceanographic and hydrographic information and services.
Table 19.4: Trading Account – Consolidated Trading Activity Description Sales Plant Hire Sale - Charts Opening Finished Goods Add: Cost of Manufactured Goods Goods Available for Sale Less: Closing Finished Goods Cost of Goods Sold Gross Profit Transferred to Profit and Loss Statement 31 July 2017 ($) 31 July 2016 ($) 824,489 32,787 857,276 25,362 --- 25,362 22,524 2,838 854,438 51,461 17,017 68,478 23,342 --- 23,342 25,362 (2,020) 70,498 Republic of Fiji Military Forces Section 19: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Table 19.5: Profit and Loss Account – Consolidated Trading Activity Description Income Gross Profit Transferred from Trading Account Total Income Expenses Fuel and Oil Repairs and Maintenance Freight Office Upkeep and Supplies Fixed Asset Replacement and Improvement Minor Improvement Consultant and Expert Fees Total Expenses Net Profit Table 19.6: Balance Sheet – Consolidated Trading Activity Description Assets Cash at Bank Accounts Receivable Inventory VAT Receivable Total Assets Liabilities Accrued Expenses Total Liabilities Net Assets Equity TMA Accumulated Surplus Transfers to Consolidated Fund Net Profit/(Loss) for the Period Total Equity 31 July 2017 ($) 31 July 2016 ($) 854,438 854,438 85,625 265,401 45,675 454 81,947 46,287 75,320 600,709 253,729 70,498 70,498 48,905 92,816 26,519 --- 69,917 --- 30,660 268,817 (198,319) 31 July 2017 ($) 31 July 2016 ($) 956,418 289 22,524 138,163 1,117,394 25,539 25,539 1,091,855 838,126 --- 253,729 1,091,855 669,224 290 25,362 143,250 838,126 --- --- 838,126 1,077,195 (40,750) (198,319) 838,126 Republic of Fiji Military Forces Section 19: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 19.6 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Republic of Fiji Military Forces Section 19: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Force as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 19.7 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Republic of Fiji Military Forces Section 19: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 19.8 Quality of Draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Force was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 19.9 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 19.10 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Ineffective Timeliness of Management Comments Received After 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received After 15 days from issue of Financial Statements for signing Republic of Fiji Military Forces Section 19: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Force as at 31 July 2017.

19.11 Anomalies in the Main Trust Fund – Engineers Project Fund Account The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.
Each month, the trust account must be balanced and reconciled with the trust bank account.

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.1 The Chief Staff Officer Finance is responsible for the effective design and operation of internal control of the agency.2 When cash or bank cheques are received, the revenue collector shall immediately issue an ‘official receipt’.3 Our audit noted the following anomalies while reviewing the Main Trust Fund Account records: (i) (ii) The Engineers Trust Fund Account Statement of Receipts and Payments does not provide details of funds received and expended for each project undertaken by the Force.
The statement only includes the closing cash at bank balance for each project; The cash book balance should be reconciled on a monthly basis with the bank statement balance.

However, our audit noted that monthly bank reconciliations are only prepared from details appearing in the bank statement.
There is no reconciliation of the details appearing in the bank statement against details in the Engineers Project Trust Fund Account cashbook; and (iii) The Engineers Project Trust Fund Account cashbook was not properly maintained and updated whereby monthly opening cash book balance, monthly totals of receipts and payments were not included in the cashbook.
We further noted the following weaknesses in the review of internal controls of the Main Trust Fund Account: 1 Finance Instructions 2010 Section 58 (2), (3) 2 RFMF Finance Manual 2014, Section 17.1.1 3 RFMF Finance Manual 2014 – Part 5.3.1 Republic of Fiji Military Forces Section 19: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR (i) (ii) (iii) direct deposits of $6,300.00 dated 14/09/16 and $169.25 dated 24/07/17 appearing in the bank statement were not receipted; as of July 2017, although revenue receipting was transferred to Headquarters, unused receipts remained at the Engineering Unit; and fourteen blank cheques were pre-signed by a cheque signatory increasing the risk of misuse of funds and fraud.
The above findings indicate that the management of the Force did not properly review, identify and address the weak internal controls on a timely basis.

As a result of the above findings, the accuracy and completeness of the Engineers Project Fund Account cash at bank balance of $3,891,624 could not be ascertained.
In addition, our audit was also unable to determine whether any adjustment might have been necessary in respect of the Engineers Trust Fund Account cash at bank balance at year-end and any corresponding adjustments to the elements making up the statement of income and expenditure.
Recommendations The Force must ensure that: • monthly bank reconciliations for the Engineers Project Fund Account is correctly carried out; • • cash book or the Engineers Project Fund Account is properly maintained and updated; instructions and requirements stipulated in the Finance Instructions and Finance Manual are complied with; immediate action is taken to address the control weaknesses highlighted; and there is regular evaluation of internal controls to determine their effectiveness, identify weaknesses and implement measures to address them.
• • Management Comments OAG findings and recommendations are noted.

Previously the Engineer’s Project Fund account was operating as a private fund.

This was an audit issue for the past 3 years.

RFMF regularised this in July of the 2016/2017 financial year.

With the approval of the Ministry of Economy the account is operating under FMIS as a True Trust.

Final balances of each project were reconciled and recorded into FMIS.
As this was an on-going exercise no monies for new projects was received in the 2016/2017 financial year.

All funds donated from agencies for projects are deposited into one bank account but when preparing monthly reconciliation, individual project reconciliation is prepared in order to identify each financial balance.

The monthly bank reconciliation prepared was for the management’s information however the Force will review its monthly bank reconciliation for the Engineers Project Fund Account.
Reconciliation of the cash book was done against the bank statements.

The funds were for the Nasova project which was directly deposited to the Private Account by the donor which was the Police Department.

The change over process is still on-going and RFMF will ensure that all unused accounting books will be returned to Accounts Section for safekeeping.
Republic of Fiji Military Forces Section 19: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR This was done to ensure that payments continued as 3 of the four signatories were suddenly deployed overseas on training and Middle East appointment.
19.12 Absence of Risk Management Framework It is a good practice to establish a risk management framework to have the Force Management, and Internal Audit and respective Divisional Heads, to jointly plan, implement, monitor, and take action on evolving risks affecting the Force.

Risk management framework would provide a platform to identify various risks affecting the Force, management of the risks, develop appropriate internal control to mitigate the risks and continuous monitoring of risks.
The mechanism to mitigate risks could include policies, procedures, training and awareness.

Our review of the Force’s Corporate Governance revealed that there is no risk management framework in place.

As a result, the Force does not have written policies, procedures or guidelines to manage risk associated with the following: • occupational health and safety; • Force operational and human resource planning; • • disaster recovery and business continuity; and • assessment of potential conflicts of interest.
fraud control and anti-corruption; In absence of a risk management framework, the Force may find difficulty in managing risks affecting the Force particularly risk of fraud and misappropriation of assets.

Recommendation The Force should work towards establishing a risk management framework that would support the operations by providing financial and operational risk management and management of external reporting obligations.
Management Comments The RFMF operations is administered by various documents such as the Commander RFMF Intent; the Standing Orders Vol.

I – Admin Matters and Standing Orders Vol.

II – Support Matters, Camp Standing Orders, and various SOPs for various specialized groups and tasking’s.

Most of these SOPs cover risks managements for those particular tasks.

As a way forward RFMF acknowledges that a review and documenting of an overall Risk Management Framework should be put in place for the Force.
19.13 Effectiveness of the Internal Audit Function Internal audit is a key pillar of good governance.

It inspects an organisation’s systems and processes and provides the board of directors, the audit committee, senior management, with objective, independent assurance on how well they are working, and aim to add value and improve the organisation’s operations.
Internal audit also provides a view on whether an entity has appropriate controls, practices and procedures both to minimise the risk that an adverse event will occur and to reduce the potential consequences if it does.
Republic of Fiji Military Forces Section 19: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR The Force has an Internal Audit Unit that is handled by three civilian staff who report directly to the Director Finance, Logistic and Acquisition.

Our review of the work of internal audit function noted that audits were not carried out to review the effectiveness of the internal controls, systems and process of the Force in 2017.
In addition, the Force does not have an internal audit charter defining the internal audit’s purpose, authority, responsibility and position within the Force.

In the absence of assurance on the effectiveness of Force’s internal controls and processes by internal audit, the management would not be in a position to act promptly to rectify any deficiency existing in the Force’s internal control and processes.
Recommendations • The Force should develop an internal audit charter outlining the internal audit functions purpose, authority, responsibility and position within the Force; • Following the establishment of the internal audit charter, an annual audit program should be • developed based on risk assessment of key functional units within the Force; Internal Audit team should carry out reviews on the effectiveness of its internal controls, systems and processes particularly in the areas of risk and provide recommendation where deficiencies exist; and • For the purpose of effectiveness and accountability, the Internal Audit function should directly report to the Force Commander.
Management Comments The Internal Audit Unit of RFMF was established in 2010 comprising of one civilian staff and three military staff.

Due to issues with high staff turnover of military staffs, because of Peacekeeping duties abroad, the recruitment of two civilian staffs was completed in August 2017.

Though the internal audit team reports directly to Commander RFMF, the team is administered under the Director Finance Logistic and Acquisition.
Due to the lack of staff in 2016 the Audit team conducted only two routine audits for the RFMF – LSU and Engineers.

Apart from that, the Audit team conducted special investigations as instructed by HQ RFMF.

With the recruitment of 2 civilian auditors’ routine checks and reviews on internal controls in RFMF units is now being carried out in accordance with the audit plans.

In addition RFMF is developing an audit charter for endorsement by the Commander by December 2018.
Republic of Fiji Military Forces Section 19: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Section 20 Fiji Police Force Roles and Responsibilities The Fiji Police Force has the important responsibility of keeping the people of Fiji safe by maintaining law and order, protecting property and upholding the law.
All Fijians should feel secure in their homes and free to go about their daily business without any form of criminal violence or intimidation.

Crimes need to be properly investigated, wrongdoers need to be quickly identified, and reduction in crime against women and children and cases need to be brought to trial through Criminal Justice System.

To do this, Fiji needs a Police Force that is professional, well equipped and trained, adequately compensated and supported by appropriate technology.
Table of Contents FINANCIAL STATEMENTS ............................................................................................... 2 PART A: Audit Opinion ........................................................................................................................... 2 20.1 Statement of Receipts and Expenditure ................................................................................ 2 20.2 Appropriation Statement ........................................................................................................ 3 20.3 ASSESSMENT OF FINANCIAL GOVERNANCE ................................................................ 4 PART B: Internal Controls ...................................................................................................................... 4 20.4 20.5 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 5 20.6 Quality of Draft Financial Statements by entities .................................................................. 6 Timeliness of Draft Financial Statements ............................................................................... 6 20.7 Timeliness of Provision of Management Comments and Signing of Financial Statements 6 20.8 OTHER SIGNIFICANT MATTERS ..................................................................................... 7 PART C: 20.9 Anomalies noted in the Revolving Fund Account.................................................................. 7 20.10 Irregularities in the Operating Trust Fund Accounts ............................................................. 8 20.11 Non-Clearance of Withholding Payable Account ................................................................... 8 Fiji Police Force Section 20: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART A: FINANCIAL STATEMENTS 20.1 Audit Opinion The audit of the 2017 accounts for the Fiji Police Force resulted in the issue of an unqualified audit opinion.
20.2 Statement of Receipts and Expenditure The Fiji Police Force recorded revenue totalling $2,547,774 and incurred a total expenditure of $120,451,024 for the year ended 31 July 2017.

Details are provided in Table 20.1.
Table 20.1: Statement of Receipts and Expenditure for 2017 Description State revenue Agency Revenue Total Revenue Established staff Government wage earners Travel and communications Maintenance and operations Purchase of goods and services Operating grants and transfers Special expenditure Total Operating Expenditure Capital construction Capital purchase Total Capital Expenditure 31 July 2017 ($) 2,299,786 247,988 2,547,774 95,077,397 627,403 4,187,359 6,684,422 5,184,797 61,945 1,399,253 113,222,576 877,374 4,416,095 5,293,469 31 July 2016 ($) 1,276,233 20,590 1,296,823 55,524,329 389,751 2,286,845 3,464,932 1,380,823 3,023 495,221 63,544,924 200,000 1,605,941 1,805,941 Value Added Tax 1,934,979 704,644 Total Expenditure 120,451,024 66,055,509 The financial year-end for Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

Revenue mainly comprised of police clearance fees, license fees and overpayment recoveries.
Purchase of goods and services increased by $3,803,974 in 2017 compared to 2016 due to procurement of items required for special operations, increase in court witness fee and purchase of uniforms.
Fiji Police Force Section 20: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR 20.3 Appropriation Statement The Force incurred expenditure totalling $120.4 million in 2017 against a revised budget of $131.7 million, resulting in a saving of $11.3 million or 9%.
The large savings was due to a number of projects earmarked for the Force were not undertaken due to Tropical Cyclone Winston Rehabilitation process where priorities were given to Education and Health sector by the Construction Implementation Unit under the Ministry of Economy.

In addition, a number of vacant positions were not filled during the year.

Details of expenditure against the revised budget are provided in Table 20.2.
Table 20.2: Appropriation Statement for 2017 SEG Item Wage Established Staff Government Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating transfers Special expenditure Total Operating Exp Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL grants & Budget Estimate ($) Changes ($) Revised Estimate ($) a Actual Expenditure ($) b 102,526,427 637,576 (3,337,590) --- 99,188,837 637,576 95,077,397 627,403 Lapsed Appropriation ($) (a-b) 4,111,440 10,173 3,684,000 6,179,000 4,730,241 588,810 1,476,000 733,000 4,272,810 7,655,000 5,463,241 4,187,359 6,684,422 5,184,797 85,451 970,578 278,444 90,000 (27,500) 62,500 61,945 555 1,216,650 119,063,894 6,750,000 3,581,500 10,331,500 2,350,400 131,745,794 327,500 (239,780) (1,240,000) 1,350,000 110,000 129,780 --- 1,544,150 118,824,114 5,510,000 4,931,500 10,441,500 2,480,180 131,745,794 1,399,253 113,222,576 877,374 4,416,095 5,293,469 1,934,979 120,451,024 144,897 5,601,538 4,632,626 515,405 5,148,031 545,201 11,294,770 Fiji Police Force Section 20: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 20.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Fiji Police Force Section 20: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within entities which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Force as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 20.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Fiji Police Force Section 20: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating Year-end close process assessment  Generally effective Five of 10 key processes completed within two weeks of due date 20.6 Quality of Draft Financial Statements by entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Force was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 20.7 Timeliness of Draft Financial Statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Acceptable draft financial statements received after 16 October 2017 20.8 Timeliness of Provision of Management Comments and Signing of Financial Statements To assess the timeliness of provision of management comments and signing of financial statements, we have compared the date the draft management letter and audited financial statements were issued to entity and the date management comments and signed accounts were received.
Accordingly, we have assessed timeliness as: Rating  Ineffective Rating  Effective Timeliness of Management Comments Received After 21 days from issue of Draft Management Letter Timeliness of Signed Financial Statements Received Within 5 days from issue of Financial Statements for signing Fiji Police Force Section 20: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Force as at 31 July 2017.

20.9 Anomalies noted in the Revolving Fund Account The travel advance shall be charged to the advances account until cleared through submission of the acquittals.1 The Force Accountant must ensure that: i. ii.
All balances are accurate and adequately supported; Any misallocation or outstanding balances from the previous month have been dealt with.2 We noted that the Revolving Fund Account allocation (1-20101-20101-570301 - Advances) for the Force had a debit balance of $30,405.30 as at 31 July 2017 of which $17,595.88 or 58% has been carried forward from previous years.
The Force did not maintain the detailed breakdown of the carried forward balances, hence the correctness of the balances could not be substantiated.

Despite the issue being raised in previous years audit reports, necessary action has not been taken to address the issue.

The above findings show that the administration of accountable advances by the Force needs to be strengthened.
As a result of the above finding, public funds are held up as outstanding accountable advance and total expenditure is understated.

There is also a high risk of non-recovery of outstanding accountable advances due to unavailability of records to substantiate the monies paid.

Recommendations The Force should: • review and rectify the long outstanding balances in the Revolving Fund Account; and • properly maintain all relevant supporting documents for the Revolving Fund Account.
1 Fiji Police Force Finance Manual 2014 Section 9.1.9 2 Fiji Police Finance Manual 2014 Section 15.3.6 Fiji Police Force Section 20: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Management Comments A task force team has been formed to verify the long outstanding anomalies from previous years (2006-2013) which are in the Revolving Fund Account.
Appropriate adjustment will be made after consultation with Ministry of Economy since these are long outstanding debts.

The responsible officers are informed that details of relevant supporting documents, etc.

are to be maintained in the reconciliation files.
20.10 Irregularities in the Operating Trust Fund Accounts The Force Accountant is responsible for maintaining ledgers and reconciling balances in such ledgers to ensure the accuracy of financial information and the timeliness of management reports3 Within 3 days of receiving the monthly general ledger reports from the Ministry of Economy, the Assistant Accounts Officer Ledgers shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.
4 Our review of the Operating Trust Fund Account noted that the account had a credit balance of $2,203,982.99 as at 31 July 2017 which included significant outstanding balances from prior years which had not been cleared.

Refer to Table 20.3 for details.
Table 20.3: Details of Accounts with Significant Balances carried forward to 2017 Account Number Description 1-20101-20101-863201 1-20101-20101-861517 1-20101-20101-861902 1-20101-20101-861917 VAT from Provision of Goods & Services 307 PD Police Service Credit Union 204 PD Deposit A/C Recoverable 437 PD Improved Forestry Amount ($) 1,000,753.80 799,034.76 86,941.35 97,755.08 The above findings indicate that controls and supervisory checks in the administration of the operating trust fund account need to be improved.
Recommendation The Force should review and rectify the carry forward balances from prior years.

Management Comments A task force team has been formed to verify the long outstanding anomalies from previous years (2006-2013) which are in the Operating Fund Account.

Appropriate adjustment will be made after consultation with Ministry of Economy since these are long outstanding credits.

The responsible officers are informed that details of relevant supporting documents, etc.
are to be maintained in the reconciliation files.
20.11 Non-Clearance of Withholding Payable Account At the end of each project, agencies are required to ensure proper clearing of the SLG84 account; and any outstanding balance in the SLG84 account are to be accounted for.5 3 Fiji Police Force Financial Manual 2014 Section 15 4 Fiji Police Force Finance Manual 2014 Section 15 3.3 5 SLG 84 Reporting Guide 2013 Section 9.5 Fiji Police Force Section 20: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – GENERAL ADMINISTRATION SECTOR Audit noted the following anomalies in the Withholding Payable Account (1-20101-20999-840602) for the Force: • contrary to the liability nature of the account, a debit balance of $16,106.07 was recorded as at • • 31 July 2017. the account was not cleared to zero as required by the SLG84 policy.
the account had an opening balance of $17,997.42 and closing balance of $16,106.07 indicating that only $1,891.35 was cleared during the year.

• detailed breakdown of the carried forward balances was not maintained to substantiate the balances.

The above findings indicate that controls and supervisory checks in the administration of the Withholding Payable Account needs to be improved.
Recommendations The Force should: review and rectify the anomalies noted in the Withholding Payable Account; and • • properly maintain all relevant supporting documents to substantiate the balances reflected in the reconciliations.

Management Comments A task force team has been formed to verify the long outstanding anomalies from previous years (2006-2013) which are in the Withholding Payable Account.
Given that partial works had been completed, payments of only $680,232.48 was released as we were not in a position to action on full payment as works had not been completed and no completion certificate had been provided.

Given availability of funding this Financial Year, pending payments has been facilitated.
Fiji Police Force Section 20: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR Section 49 Peacekeeping Missions Roles and Responsibilities For more than three decades, Fiji has responded to the call of the United Nations [UN] to serve in some of the most difficult circumstances around the world.
Fiji has proudly contributed troops to successive peacekeeping operations in Lebanon, Sinai, Iraq, Syria, Timor Leste, South Sudan, Darfur, Liberia, Bosnia, Kosovo, Kuwait, Namibia, Cambodia and the Solomon Islands.
The UN Security Council mandate for peacekeeping operations calls for security personnel deployed to conflict zones under UN authority to maintain or restore international peace and security, exclusively in the common interest of the international community; disengage the conflict parties; create conditions for peaceful settlement of a conflict; monitor cease-fire peace agreements; and render humanitarian assistance to civilian population in the area of deployment.
Table of Contents PART A: FINANCIAL STATEMENT ......................................................................................................... 2 Audit Opinion ........................................................................................................................... 2 49.1 49.2 Statement of Receipts and Expenditure ................................................................................ 2 49.3 Appropriation Statement ........................................................................................................ 2 PART B: ASSESSMENT OF FINANCIAL GOVERNANCE ......................................................................... 4 Internal Controls ...................................................................................................................... 4 49.4 49.5 Submission of FY 2016-2017 Draft Agency Financial Statements .......................................... 5 49.6 Quality of draft Financial Statements by Entities .................................................................. 6 Timeliness of draft financial statements ................................................................................ 6 49.7 Timeliness of Management Comments.................................................................................. 6 49.8 Timeliness of Signed Accounts Received ............................................................................... 6 49.9 PART C: OTHER SIGNIFICANT MATTERS .............................................................................................. 8 49.10 Anomalies in Procurement of Winter Clothing ...................................................................... 8 49.11 Prior Year Payments & Misallocation of Expenditure .......................................................... 10 49.12 Board of Survey not Conducted ............................................................................................ 10 49.13 Variance between Payroll Report and FMIS ......................................................................... 11 Peacekeeping Missions Section 49: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR PART A: FINANCIAL STATEMENT 49.1 Audit Opinion Audit of the 2017 accounts of the Peacekeeping Mission resulted in an unqualified audit opinion.
However, attention was drawn to the following matter: • The Peacekeeping Missions did not carry out a board of survey to verify the existence and condition of the assets under its authority contrary to Section 49 of the Finance Instructions 2010.

49.2 Statement of Receipts and Expenditure The Peacekeeping Missions incurred expenditure totalling $75,266,026 for the year ended 31 July 2017.

Refer to Table 49.1 for details.
Table 49.1: Statement of Receipts and Expenditure for 2017 Description RECEIPTS State Revenue Total Revenue EXPENDITURE Operating Expenditure Established Staff Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditures Total Operating Expenditure Capital Expenditure Capital Purchase Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 31 July 2017 ($) 31 July 2016 ($) --- --- --- --- 61,854,644 39,524,162 119,031 27,354 1,674,140 247,280 67,164,315 41,591,967 301,772 47,856 3,993,097 966,946 6,878,905 6,878,905 1,222,806 --- --- 168,398 75,266,026 41,760,365 The financial year-end of Government was changed from 31 December to 31 July in accordance with the Financial Management Act.
The financial statements for the period ended 2016 reflected transactions for a seven-month period whereas the financial statements for the year ended 2017 was for a 12-month period.

This contributed to the significant variances with the comparative balances for some account areas.

49.3 Appropriation Statement The Mission incurred expenditure totalling $75,266,026 in 2017 against a revised budget of $78,972,375 resulting in a savings of $3,706,349 or 5%.
Review of the FMIS General Ledger revealed that significant savings were in the following areas: Personal Emoluments (SEG 1) by $1,569,630, Allowance (SEG 1) by $608,355, Standby for Rapid Deployment (SEG 7) by $202,000 and Standby Arrangement RDPM (SEG 7) by $250,000.
Peacekeeping Missions Section 49: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR Officers serving in Peacekeeping Missions overseas were from the Republic of Fiji Military Forces and Fiji Police Force and expenditures incurred was charged to Head 49, Programme 1 and Programme 2, respectively.
Republic of Fiji Military Forces Savings were due to the following reasons: • Savings of $1,052,458 in Personal Emoluments and $436,704 in various allowances was due to decrease in the number of officers serving in Middle East from 338 to 170.

• SEG 7 allocation namely Standby Arrangement Rapid Deployment to Peacekeeping Missions (RDPM) budgeted funds of $250,000 was not utilised since there was no rapid deployment to Peacekeeping Missions.
Fiji Police Force Savings were due to the following reasons: • Savings of $517,172 in Personal Emoluments was a result of some officers being paid from Appropriation Head 20 (Fiji Police Force) in the 2016/2017 financial year.

• Lodging Allowance allocation had savings of $143,387 since some officers serving in overseas missions were not eligible to lodging allowance because they were staying in quarters.
• SEG 7 allocation namely Standby for Rapid Deployment budgeted funds of $202,000 was not utilised since there was no rapid deployment of officers to the UN mission.

Details of expenditures against the budget estimates are provided in Table 49.2.
Table 49.2: Appropriation Statement for 2017 SEG Item 1 3 4 5 7 9 13 & & Established Staff Travel Communications Maintenance Operations Purchase of Goods & Services Special Expenditures Total Operating Costs Capital Expenditure Capital Purchases Total Expenditure Value Added Tax TOTAL EXPENDITURE Capital Budget Estimate ($) 72,574,879 122,758 Changes ($) Revised Estimate ($) (8,165,000) 64,409,879 307,042 184,284 Actual Expenditure ($) 61,854,644 301,772 Lapsed Appropriation ($) 2,555,235 5,270 180,146 (73,000) 107,146 47,856 3,264,192 808,325 4,072,517 3,993,097 59,290 79,420 2,302,200 78,444,175 (845,150) 1,457,050 (8,090,541) 70,353,634 966,946 67,164,315 490,104 3,189,319 --- --- 6,955,000 6,955,000 6,955,000 6,955,000 6,878,905 6,878,905 76,095 76,095 528,200 78,972,375 1,135,541 1,663,741 --- 78,972,375 1,222,806 75,266,026 440,935 3,706,349 Peacekeeping Missions Section 49: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR PART B: ASSESSMENT OF FINANCIAL GOVERNANCE 49.4 Internal Controls During our audits, we assess the design and implementation of controls to ensure that they are suitably designed to prevent, detect and correct material misstatements.
Where audit strategy requires, we also test the operating effectiveness to ensure the internal controls are functioning as designed.

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

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

It requires immediate management action.


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

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

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

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

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

Specific control activities include those relating to authorization, performance reviews, information processing, physical controls, and segregation of duties.
Peacekeeping Missions Section 49: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR • Information and Communication Control (IC) – information is necessary for the entity to carry out internal control responsibilities in support of achievement of its objectives.

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

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

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

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

This may include the establishment of independent internal audit functions within agencies which would assist in identifying any gaps in controls.
A summary of assessment of key controls based on our audit was as follows: Control Environment Risk Assessment Control Activities    Information & Communication Control  Monitoring Activities  In view of the above, we have assessed the internal controls of the Mission as: Rating Internal control assessment  Generally effective Deficiencies identified in internal controls 49.5 Submission of FY 2016-2017 Draft Agency Financial Statements On 1 June 2017, Permanent Secretary for Economy issued Circular No.
04/2017 to Permanent Secretaries, Heads of Departments, High Commissioners and Ambassadors in Fiji Overseas Missions in which procedures for closing of 2017 accounts and times were detailed.

The final day for closing the 2017 accounts was 4 August 2017.
The key focus areas in the circular were: • Closing date for journal adjustments by 11 August 2017 • Clearance of Inter-departmental clearance accounts by 4 August 2017 • Monitoring of unpresented cheques by 31 July 2017 • Clearance of stale cheques by 4 August 2017 • Annual Board of Survey on Drawings Account cheques by 29 September 2017 • Retirement of imprests by 21 July 2017 • Cancellation of unprocessed purchase orders by 14 July 2017 • Processing of payments and virements by 21 July 2017 • Completion of reconciliations by 29 September 2017 • Submission of arrears of revenue returns by 31 August 2017 Peacekeeping Missions Section 49: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR When ministries and departments achieve the key focus areas highlighted by the Permanent Secretary for Economy by the given dates, they are more likely to prepare accurate and timely draft financial statements for audit.
Based on information received, we have assessed the year-end close process as: Rating  Effective Year-end close process assessment All 10 key processes completed by due date 49.6 Quality of draft Financial Statements by Entities The extent of audit adjustments made to draft financial statements indicates the effectiveness of an entity’s internal review processes before the accounts are submitted for audit.
We assessed the quality of financial statements by the impact these adjustments had on the operating results or net assets of the entity subject to our audit.
Our assessment for the Mission was: Rating Quality of draft financial statements assessment  Generally effective Adjustments on operating results/net assets were less than one percent 49.7 Timeliness of draft financial statements To assess the timeliness of acceptable draft financial statements, we have compared the date the draft financial statements were due and the date it was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally Effective Acceptable draft financial statements received before or on 16 October 2017 49.8 Timeliness of Management Comments To assess the timeliness of management comments, we have compared the date agency financial statement draft management letter (DML) was issued and the date management comments was received.
Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Ineffective Management comments received after 21 days from the date agency financial statement draft management letter (DML) was issued 49.9 Timeliness of Signed Accounts Received To assess the timeliness of signed accounts received, we have compared the date financial statements were sent to ministries/departments for signing and the date signed financial statements was received.
Peacekeeping Missions Section 49: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR Accordingly, we have assessed timeliness as: Rating Timeliness of draft financial statements assessment  Generally effective Signed financial statements received within 15 days Peacekeeping Missions Section 49: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR PART C: OTHER SIGNIFICANT MATTERS The Audit Act 1969 requires, amongst other things, that the Auditor-General must report on other significant matters which the Auditor-General wishes to bring to the attention of Parliament.
Other significant matters highlighted in this report, include control weaknesses which could cause or is causing severe disruption to the process or on the ability of an auditee to achieve process objectives and comply with relevant legislation.

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

These have been included in this report as they impacted on the overall system of control of the Mission as at 31 July 2017.

49.10 Anomalies in Procurement of Winter Clothing The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
As well, having cost-effective internal controls within the purchasing and payments system plays an important part in ensuring that waste of funds, over-expenditures and corruption do not occur.1 The inventory bookkeeper should maintain the inventory register to record incoming and outgoing inventories.

The inventory register shall provide the following information: i.

Date of acquisition and order number reference; ii.

Number of items received and cost price; iii.

Supplier details; iv.


Date of issue of inventory and nature of issue; v. vi.

Quantity issued.2 Issue reference; and The Minister for Economy through a letter dated 4 February 2016 approved for the waiver of tender process for the purchase of winter clothing by Peacekeeping Missions from Vendor A based in Israel at a total cost of USD 231,282.50 or FJD 494,510.37.
Contrary to the Minister of Economy’s approval, the Mission paid a sum of USD 253,796.02 for the purchase resulting in an additional payment of USD $22,513.52 or 10% of the approved amount to the supplier.

Refer to Table 49.3 for details.

Table 49.3: Payments to Vendor A Date Cheque No.
15/03/16 73980 Vendor A Payee Particulars 18/10/16 75191 Vendor A 15/09/17 19602 Total Vendor A 50% advance payment for winter clothing Final payment for purchase of winter clothing Payment of VAT charges Amount (USD) Amount (FJD) 115,641.25 247,280.18 115,641.25 243,480.26 22,513.52 46,544.39 253,796.02 537,304.83 1 RFMF Finance Manual 2014, Expenditure Introductory Paragraph 2 RFMF Finance Manual 2014, Section 8.1.3 Peacekeeping Missions Section 49: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR The Mission confirmed that approval for variation to the initial approved purchase amount was not obtained from the Minister.
Moreover, the stock cards maintained at RFMF Headquarter Nabua, for winter clothing were not updated.

In the absence of an updated stock card, we could not verify the quantities of winter uniform received by the Mission.
Recommendations The Mission should: • Ensure that purchase of goods and services are made within the approved limits; • Obtain retrospective approval from the Minister for variation to the initial approved purchase amount for winter clothing; and • Update the inventory cards and maintain proper documents for items purchased from overseas.

Mission’s Comments OAG findings and recommendations are noted.
It is to be noted that the first and second payment to Vendor A totalling FJD 490,760.44 which were paid vide Cheque Nos.

73980 and 75191 dated 15 Mar 16 and 18 Oct 16 respectively were for payments on the initial quotation supplied by the company thus the approval of waiver of tender was obtained from the Minister of Economy.

The total cost was computed on the initial agreement that the winter clothing will be delivered directly from the supplier to the respective missions i.e.
UNDOF, MFO, UNIFIL and UNAMI through Jordan.

When payments of the items were received by the company and for security reasons, the Customs of Jordan prohibited the supply of the items to the UNIFIL and UNAMI missions and only allowed the items for UNDOF and MFO missions.

Because the items had been fully paid and were really needed by the missions, arrangements were being made to sea freight items for UNIFIL and UNAMI from Israel to Fiji in time for the two missions’ rotation.
This was not part of the initial arrangements made.

However this did incur VAT cost by the Israel Customs to the company with total cost of FJD 46,544.39.

The Force on the understanding that this extra expenditure was below FJD 50,000 and was not part of the initial agreement made to the company, this extra cost of FJD 46,544.39 was paid vide Cheque No.

19602 dated 15 Mar 2017 on the approval of the Commander RFMF.
The staffs concerned had been advised to regularly update tally cards and maintain proper documentations for items purchased from overseas as recommended.

The unit’s QM and staffs are updating clothing cards where all incoming stores are recorded, obsolete stores are boarded prior to disposal before the replacements are being ordered.
Peacekeeping Missions Section 49: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR 49.11 Prior Year Payments & Misallocation of Expenditure Each year, the Appropriation Act and Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.
No officer may incur expenditure which results in the agency’s appropriation being exceeded without the authorisation of the Ministry of Economy, pending approval by Cabinet.3 Our audit noted that the Mission paid a sum of $242,789 Value Added Tax (VAT) arrears on Fringe Benefit Tax for the years 2012 to 2016 to Fiji Revenue & Customs Service.

The VAT on fringe benefit tax was related to Appropriation Head 19 (RFMF).
Discussion with the officer-in- charge revealed that due to unavailability of funds in the RFMF budget, the payment was sourced from the Peacekeeping Missions budget allocation.

Refer to Table 49.4 for details.

Table 49.4: Details of VAT Payment on Fringe Benefit Tax Date 20/07/2017 Particulars Cheque No.

76467 Payment of VAT on Fringe Benefit Amount ($) 242,789.43 The above expenditure has resulted in the overstatement of the Peacekeeping Missions expenditure for the year ended 31 July 2017.
Recommendation The Mission should ensure that expenditures are charged to the correct Appropriation Head.

Mission’s Comments OAG findings and recommendations are acknowledged.

Arrears of FBT were paid from Head 49 due to the unavailability of funds in Head 19.
49.12 Board of Survey not conducted The Accounting Head shall nominate two board of survey officers to undertake an annual board of survey of fixed assets and expandable items at a specified date as required by Procurement Regulations 24-(1)-(4).4 The board of survey officers shall physically identify each item, note its working condition and verify its existence to the fixed assets register and expandable items register.
Details of the board of survey must be entered on the appropriate board of survey sheets and signed by the board of survey officers.

5 We noted that the last Board of Survey for the Mission was carried for the financial year ended 31 December 2015.

Without a Board of Survey report for the year, the existence and condition of assets of the Mission could not be substantiated.
3 RFMF Finance Manual 2014, Section 2.1.2 4 RFMF Finance Manual 2014, Section 11.4.1 5 RFMF Finance Manual 2014, Section 11.4.2 Peacekeeping Missions Section 49: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – 31 JULY 2017 – INFRASTRUCTURE SECTOR Recommendations The Mission should ensure that: • Board of Survey is carried out in accordance with its Finance Manual Policies Section 11.4 and Finance Instruction Section 49; and • a copy is made available for audit verification.
Mission’s Comments OAG findings and recommendations are noted.

It is to be noted that the Force’s fixed asset register is maintained, monitored and updated by the Force Inventory Management Cell (IMC) at the Strategic Headquarter.

It also to be noted that the Unit do not have proper storeroom for storage of stores.

The stores are ordered as and when a rotation is due and all items received are issued accordingly.
49.13 Variance between Payroll Report and FMIS Salaries and wages constitute a major portion of the agency’s budget.

Proper controls over engaging new employees, salary payments and resignations reduce the risk of fraudulent or unauthorised payments, inaccurate payroll reports and invalid pay rates.6 Our audit noted variances totalling $117,756 between Mission’s payroll report balance and FMIS general ledger.

Refer to the Table 49.5 below for details.
Table 49.5: Revised Variance in Payroll Report and FMIS after Reconciliation SEG 1 Breakdown Payroll Report ($) FMIS General Ledger Balance ($) Variance ($) Personal Emoluments Location Allowance Lodging Allowance Service Allowance Total 17,238,475 38,500,320 2,138,991 1,218,009 59,095,795 17,286,403 38,554,390 2,145,127 1,227,631 59,213,551 (47,928) (54,070) (6,136) (9,622) (117,756) Variances in the above records indicate non-reconciliation and inadequate supervisory checks which increases the risk of errors and omissions in the accounting of payroll for Peacekeeping Missions.
Recommendation The Mission should ensure that regular reconciliation is carried out between the payroll report and the FMIS general ledger and the variances noted are investigated and rectified by supervising officers on a timely basis.

Mission’s Comments After reconciliation of SEG 1 the variance amount reported of $919,484 was reduced to $117,755.91.

RFMF will endeavour to attain zero variance in the next financial year.
6 Republic of Fiji Military Forces, Finance Manual 2014 – Part 4 Payroll Peacekeeping Missions Section 49: Page 11 www.oag.gov.fj