Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697780175660.pdf (Fiji)
EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 4 Audit Report on the Economic & Infrastructure Sector PARLIAMENT OF FIJI PARLIAMENTARY PAPER NO.

61 OF 2017 EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 4 Audit Report on the Economic & Infrastructure Sector PARLIAMENTARY PAPER NO.
61 OF 2017 PARLIAMENT OF FIJI Foreword The 2015 accounts of Whole of Government of Republic of Fiji together with 37 Ministries and Departments were audited during 2015, with their audit reports and relevant findings on them reported in accordance with section 152 of 2013 Constitution of Republic of Fiji.

The audit of Whole of Government concludes with an unqualified audit report.
The accounts have been faithfully and properly kept in accordance with section 152(2) of the Constitution, section 6 of the Audit Act and sections 46 and 47 of the Financial Management Act 2004.

However, emphasis has been made on the need to include accounts of controlled entities with those of government ministries and departments.
In addition, variances between bank reconciliation statements and their respective general ledger accounts for Trust Fund, Trading and Manufacturing Activities, Overseas Missions bank accounts and Drawings accounts, need to be rectified.

The financial statements of the Republic of Fiji have been presented in accordance with the Financial Management Act 2004 with direct reference to the budget estimates of Government.
Presentation and certain disclosures have also been made in accordance with cash-basis International Public Sector Accounting Standards (IPSAS).
The audit reports comprise off four volumes which have been presented in accordance with the budget sectors as follows: Volume 1 Audit Report on the Accounts and Finance of Government 2 3 4 Audit Report on the General Administration Sector Audit Report on the Social Services Sector Audit Report on the Economic Services and Infrastructure Sector Volume 1 of the report should be read in conjunction with the Whole of Government financial statements, the appropriation statement of the Republic of Fiji and my opinion expressed on them for the year ended 31 December 2015.
Audit Opinion on respective Ministry/Department (Agency) Financial Statements A total of 37 Agency Financial Statements were prepared in accordance with the Financial Management Act 2004 and Finance Instructions 2010.
Of these, unqualified audit reports were issued on 20 financial statements while audit reports on 17 financial statements were qualified on the following grounds:  Variances were noted between reconciliations prepared by Ministries and Departments and FMIS Ledger maintained by Ministry of Finance;  Board of Survey was not carried out;  Financial transactions were not recorded in the FMIS Ledger;  Amounts reflected in Trust and Trading Manufacturing Accounts were not fully supported;  Funds in approved budget estimates for 2015 were used for trust account expenditures; and  Independent stock take was not done.
Page 1 of 2 Expenditure planning Ministries and Departments concentrated spending of their budgets towards the end of 2015 (December) hence indicating lack of proper financial planning during the year.

This contributed to significant unpresented cheque balance at the end of the year placing undue strain on government cash flows at the beginning of 2016.

Public debt At the end of 2015, the percentage of national debt relative to GDP was 46%, a decrease of 2% when compared to 48% 2014.
In addition, percentage growth in Government debt was less than the percentage growth in the economy indicating a slight decrease in debt burden of individuals in 2015.

The Government needs to sustain its existing resources to fund its current programs, commence new projects as well as meet existing creditor obligations in order to maintain the level of borrowings at a sustainable level.
Root Cause Analysis Root cause analysis is defined as the identification of why an issue (error, problem, missed opportunity or instance of non-compliance) occurred which is reported as audit findings in audit reports.
Analysis of audit findings reported in Volumes 1 – 4 of the 2015 Audit Reports indicate the following as key causes to the issues highlighted:  People Inability to prepare reconciliations, investigate and rectify variances o o Supervision of work of subordinates o Inability to manage capital projects o Procurement processes not followed o Payment procedures not followed o Diversion of funds o Conflict of interest not managed o Records not updated  Processes o Delay in approval of capital projects o Procedures for debt recovery not effective o Policies need to be formulated in some areas  Systems o Automated inventory management systems not used Page 2 of 2 CONTENTS Volume 1: Audit Report on the Whole of Government Financial Statements and Annual Appropriation Statement Part 1: Part 2: Volume 2: 1.
2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

15A 16.

16A 17.

18.

19.

20.

Volume 3: 21.

22.

23.

24.

25.

26.

Volume 4: 30.

32.

33.

34.

35.

36.

37.

40.

49.
Whole of Government Financial Statements and Annual Appropriation Statement for the Republic of Fiji for the Year Ended 31 December 2015 Report of the Whole of Government Financial Statements and Annual Appropriation Statement Office of the President Office of the Prime Minister Office of the Attorney General Ministry of Finance Ministry of i-Taukei Affairs Ministry of Immigration, National Security and Defence Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Elections Office Judiciary Parliament Independent Commissions Office of the Director of Public Prosecutions Ministry of Justice Fiji Correction Services Ministry of Communication Department of Information Technology and Computing Services Public Service Commission Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force Ministry of Education, Heritage and Arts Ministry of Health and Medical Services Department of Housing Ministry of Women, Children and Poverty Alleviation Ministry of Youth and Sports Higher Education Institutions Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Housing and Environment Ministry of Infrastructure and Transport Peacekeeping Missions VOLUME 4 30.
32.

33.

34.

35.

36.

37.

40.

49.
Ministry of Agriculture Ministry of Fisheries and Forests Ministry of Lands and Mineral Resources Ministry of Industry, Trade and Tourism Ministry of Sugar Ministry of Public Enterprise Ministry of Local Government, Housing and Environment Ministry of Infrastructure and Transport Peacekeeping Missions REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 30 Ministry of Agriculture Role and Responsibility The Ministry of Agriculture is responsible for maintaining food security through the provisions of extension and research services both for livestock and crops, quick economic recovery through the implementations of Demand Driven Approach Programmes and other commodity projects, assisting in poverty alleviation by building capacity of farmers to increase productions, and sustainable management of natural resources through the flood protection programmes and other sustainable land management practices.
Table of Contents PART A: FINANCIAL STATEMENT .................................................................................................................................. 1 30.1 Audit Opinion ............................................................................................................................................................ 1 30.2 Statement of Receipts and Expenditure ................................................................................................................... 2 30.3 Appropriation Statement .......................................................................................................................................... 4 30.4 Trading and Manufacturing Account ........................................................................................................................ 4 30.5 Trust Fund Accounts ................................................................................................................................................ 5 PART B: AUDIT FINDINGS ............................................................................................................................................... 6 30.6 Anomalies noted in the Trading and Manufacturing Account ................................................................................... 6 30.7 Errors in TMA Bank Reconciliation .......................................................................................................................... 7 LWRM Trust Fund Account ...................................................................................................................................... 9 30.8 30.9 Statement of Losses .............................................................................................................................................. 10 30.10 Revolving Fund Account ........................................................................................................................................ 11 30.11 Operating Trust Fund Account ............................................................................................................................... 13 30.12 Arrears of Revenue ................................................................................................................................................ 14 PART C: REGULARITY AUDIT FINDINGS ..................................................................................................................... 15 Implementation of a Succession Plan .................................................................................................................... 15 30.13 30.14 Rice Revitalization Program ................................................................................................................................... 17 30.15 Absence of Tender Boards Approval ..................................................................................................................... 18 PART A: FINANCIAL STATEMENT 30.1 Audit Opinion The audit of the 2015 accounts of the Ministry of Agriculture resulted in the issue of a qualified audit report.
The qualifications were as follows: Ministry of Agriculture Section 30: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Trading and Manufacturing Account   Included in the Trading and Manufacturing Account (TMA) Balance Sheet is Deposits & Retention of $22,113.

It was not possible during audit to verify the amounts as the Ministry did not provide appropriate audit evidence to support the balance.
As a result, the accuracy and completeness of liability in the Trading and Manufacturing Account as at 31 December 2015 could not be determined..

Included in the TMA Trading Account is Closing Stock of Finished Goods of $709,078.

It was not possible during audit to determine the accuracy and completeness of Closing Stock of Finished Goods as the Ministry did not carry out an independent stock take for the year ended 31 December 2015.
Alternative audit procedures could not be performed to confirm this balance.

 There is an unreconciled variance amounting to $263,038 between the FMIS General Ledger cash balance and the TMA bank reconciliation statement.

As a result, it was not possible to determine during audit, the accuracy and completeness of the TMA Cash at bank balance of $394,430 as at 31 December 2015.
Trust Fund Account  The closing balance of the Trust Account Statement of Receipts and Payments of $456,998 did not correspond to the Cash at Bank FMIS general ledger balance of $968,582.

Accordingly, it was not possible to determine the accuracy and completeness of the Main Trust Fund balance as at 31 December 2015.

Statement of Loss  The Ministry did not carry out a Board of Survey for 2015.
In the absence of a Board of Survey Report, the losses of fixed assets, if any, that occurred during the year could not be substantiated.

Furthermore, the Ministry’s loss report for 2015 did not include losses for the months of January to June.

Consequently, it was not possible to verify the accuracy and completeness of the Statement of Losses.
30.2 Statement of Receipts and Expenditure The Ministry of Agriculture collected revenue totalling $590,964 and incurred total expenditure of $52.58 million in 2015.

Details are shown in Table 30.1 below.
Table 30.1: Statement of Receipts and Expenditure Description 2015 ($) 2014 ($) Agricultural produce & inspection fees Registration License Water Charges Rental Revenue from rest house Commission Meat Inspection Veterinary & Animal Quarantine Sale of produce 92 3,954 75,359 1,169 59,269 12,520 24,738 23,635 13,865 44,763 2,345 4,845 60,427 4,380 80,495 6,736 13,790 20,484 32,470 97,665 Ministry of Agriculture Section 30: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Sale of sheep and wool Overpayment recoveries Rural Electrification Miscellaneous revenue 2015 ($) 33,872 37,335 1,629 258,764 2014 ($) 0 0 0 293,771 TOTAL REVENUE 590,964 617,408 Established staff Government wage earners Travel & communication Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditures Capital construction Capital purchases Capital grants & transfers Total Capital Expenditures 13,336,531 13,143,921 6,001,018 5,704,307 813,229 747,722 2,291,822 2,001,578 1,078,682 608,131 3,680,398 1,810,254 2,037,870 1,252,880 26,246,393 28,261,950 15,925,337 17,707,996 325,847 389,914 7,295,128 6,992,224 23,307,475 25,328,971 Value added tax 3,021,994 3,480,184 TOTAL EXPENDITURES 52,575,862 57,071,105 Total Revenue collected dropped by $26,444 or 4% in 2015 mainly due to the enforcement of the rent deduction percentage from 8% to 4%.
The decrease in total expenditure by $4.49 million or 8% in 2015 compared to the previous year resulted mainly from the following:     Decrease in government wage earners by $296,711or 5% compared to 2014.

The decrease is a direct result in the prudent management of overtime and related compensation.

Operating Grants and Transfers expenditure decreased by $1,870,144 or 51% as a result of the reduction in the budget for SEG 6.
Biosecurity Authority of Fiji grants of $1.6 million was reduced from the 2015 budget Authority.

Capital Construction expenditure decreased by $1,782,659 or 10% in 2015 mainly due to difficulty faced by officers in trying to implement capital programs.
Problems such as difficulties in obtaining reputable companies to provide services specifically in projects where construction of farm roads and repair and maintenances of quarters are involved and the delay from the suppliers due to non-availability of required materials.

Capital Grants and Transfers decreased by $302,904 or 4% in 2015 compared to 2014.

It was mainly attributed in and Beef Multiplication Program.
implementation of to delay the the Land Clearing Project Ministry of Agriculture Section 30: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 30.3 Appropriation Statement The Ministry incurred expenditures totalling $52.58 million against the budget of $64.97 million resulting in savings of $12.39 million.

Details of expenditures against the budget estimates are provided in Table 30.2 below.
Table 30.2: Appropriation Statement SEG Item Established staff Government wage earner Travel and communications Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditure Capital construction Capital purchases Capital grants & transfers Total Capital Expenditure Value added tax TOTAL EXPENDITURE Budget Estimate ($) 14,162,446 6,112,800 791,377 2,170,340 704,800 2,221,000 2,339,980 28,502,743 22,086,000 920,000 9,130,000 32,136,000 4,333,488 64,972,231 Changes ($) - - - - - - - - - - - - - - Revised Estimate ($) 14,162,446 6,112,800 791,377 2,170,340 704,800 2,221,000 2,339,980 28,502,743 22,086,000 920,000 9,130,000 32,136,000 4,333,488 64,972,231 Actual Expenditure ($) 13,336,531 5,704,307 747,722 2,001,578 608,131 1,810,254 2,037,870 26,246,393 15,925,337 389,914 6,992,224 23,307,475 3,021,994 52,575,862 Lapsed Appropriation ($) 825,915 408,493 43,655 168,762 96,669 410,746 302,110 2,256,350 6,160,663 530,086 2,137,776 8,828,525 1,311,494 12,396,369 30.4 Trading and Manufacturing Account Table 30.3: Manufacturing Account Details Opening raw material Add: Purchases Less: Closing raw material Raw material used Add: Direct labor Cost of manufacturing goods transferred to trading account Table 30.4: Trading Account Details Sales Opening stock of finished goods Add: Cost of manufactured goods Less: Closing stock of finished goods Cost of finished goods sold Add: Other Income Ministry of Agriculture 2015 ($) --- 1,035,006 1,035,006 --- 1,035,006 7,858 1,042,864 2014 ($) --- 1,122,045 1,122,045 --- 1,122,045 15,071 1,137,116 2015 ($) 1,239,504 2014 ($) 1,295,692 1,014,577 1,042,864 2,057,441 709,078 1,348,363 1,058,578 1,137,116 2,195,694 1,014,577 1,181,117 773 --- Section 30: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Details Gross (Loss)/profit Table 30.5: Profit & Loss Statement Details Income Gross Profit transferred from Trading Account Total Income Expenses
 Travelling & communication expenses Maintenance & operation Other expenses Total Expense Net Loss Table 30.6: Balance Sheet Details Equity TMA Surplus Capital Retained Net Loss for the year TMA Surplus transferred to Consolidated Fund Write Off Total Equity Assets Cash Accounts receivable Finished goods Total Assets Liability Deposits & Retention Total Liabilities Net Assets 2015 ($) 2014 ($) (108,086) 114,575 2015 ($) 2014 ($) (108,086) (108,086) 114,575 114,575 8,672 281,478 42,089 332,239 39,495 339,284 153,846 532,625 (440,325) (418,050) 2015 ($) 2014 ($) 1,845,486 (440,325) (23,727) (255,813) 1,125,621 2,263,536 (418,985) 220,629 --- 2,065,180 394,430 --- 709,078 1,103,508 1,031,806 18,797 1,014,577 2,065,180 (22,113) (22,113) 1,125,621 --- --- 2,065,180 30.5 Trust Fund Accounts Table 30.7: Land Water Resource Management and Land Resource Planning & Development Details Retention money Total Receipts 2015 ($) 2014 ($) 269,813 269,813 656,559 656,559 Ministry of Agriculture Section 30: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Details Retention money Total Payments Surplus/(Deficit) Opening balance at 1 January Closing balance as at 31 December PART B: AUDIT FINDINGS 2015 ($) 2014 ($) 203,063 203,063 66,750 390,248 456,998 589,809 589,809 66,750 323,498 390,248 30.6 Anomalies noted in the Trading and Manufacturing Account The Accounting Head shall appoint two stocktake officers, one of whom is independent of the inventory function, to undertake a stocktake of all inventories at least once a year.1 The stocktake report shall be signed by the stocktake officers and submitted to the Accounting Head together with the stocktake sheets.2 Divisional Accountants, Assistant Accounts, Clerks and Recorders shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.3 Any errors or misallocations must be immediately adjusted by way of journal vouchers.4 The ledger
 reconciliation statement shall be forwarded to the Senior Accountant (Operations) weekly.
The Divisional Accountants, Assistant Accounts, Clerks and Recorders must ensure that: I.

All balances are accurate and adequately supported; and II.

Any misallocations or outstanding balances from the previous month have been journalised to the correct allocation code.5 Included in the Trading and Manufacturing Account (TMA) Balance Sheet is Deposits & Retention of $22,113.
Audit noted that the Ministry did not maintain adequate accounting records to provide sufficient and appropriate audit evidence to substantiate the balances reflected in the TMA Balance Sheet.

In addition, reliance on the Ministry’s stock take balance of $709,077.85 is limited as the stock takes were not independently carried out; the stock take was done by officers directly involved in maintaining and accounting for the stock without an independent supervision.
There was no evidence to indicate officials from Ministry Economy participated in the stock take.

As a result, audit was not able to ascertain the correctness of these amounts.

There is also potential risk for mismanagement due to ineffective controls and lack of supervisory checks in the TMA operations.

Unless resolved, the issue will continue to affect the TMAs in subsequent years.
1 Pro – forma Finance Manual 2011 – Section 8.3.1 2 Pro – forma Finance Manual 2011 – Section 8.3.4 3 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.3 4 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.4 5 Ministry of Agriculture – Finance Manual 2011 – Section.16.3.6 Ministry of Agriculture Section 30: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Ministry should:  maintain proper records and provide evidence to substantiate amounts and balances reported in its Trading and Manufacturing Accounts.
  should ensure that proper reconciliations are carried out and any errors or omissions are promptly investigated and rectified.

the internal control procedures in the Accounts and TMA Section, specifically supervisory checks should be strengthened to avoid such discrepancies.

 annual stock take must be conducted by Officers who are independent from the operation of TMA stock.

Ministry’s Comments Audit comment is noted.


The Ministry is now updating its records in order to provide evidence to substantiate accounts and balances for its Trading & Manufacturing Accounts.

In an effort to ensure that proper records are maintained and reconciliation is updated, we have now appointed an assistant accounts officer to look after TMA.
For the amount of $22,113 that is highlighted in the report, is the difference between the VAT charges for provision of goods and service and VAT charges on revenue.

We are working closely with the Asset Management Unit, Ministry of Economy in trying to clear this amount by end of 2016/2017 financial year.

The MOA Accounts team that directly involved in maintaining the TMA now is not charging Vat on any TMA transaction as TMA is exempted from paying VAT as per Ministry of Economy Circular 11/2012.
Independent members have been included in the annual stock stake conducted.

As for the issue of TMA Annual Stocktake, the 2015 stocktake team includes an officer from the Ministry of Economy as an independent member.

30.7 Errors in TMA Bank Reconciliation The Assistant Accounts Officer (AAO – Ledgers) and the Bank Reconciliation Clerk shall prepare a bank reconciliation within 5 days of the end of the month.
Details of un-presented 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 Bank Reconciliation Clerk and AAO (Ledgers) and submit to Ministry of Finance through Senior Accounts Officer (Operations).
The AAO (Ledgers) 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.6 All bank accounts must be reconciled monthly.
The bank reconciliation shall list all outstanding cheques and other reconciling items and be signed and dated by the responsible officer.7 The Principal 6 Ministry of Agriculture – Finance Manual 2011 – Section 7.4.7 to 7.4.10 7 Finance Instructions 2010 – Section 32(6) Ministry of Agriculture Section 30: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Accountant shall appoint three officers to be part of a Board of Survey to conduct a physical stock-take of all money on hand and other stock held in safes.8 Review of the Ministry’s monthly TMA bank reconciliation revealed the following discrepancies:  Board of Survey was not conducted at the end of the year for the TMA cash on hand balance.
 A variance of $263,038 was noted between the cash at bank balance of $657,468 as per bank reconciliation statement and the cash balance as per general ledger (FMIS) of $394,430 as at 31 December 2015.

 Unpresented cheques totaling $87,281.89 in bank reconciliation statement as at 31 December 2015 included a stale cheque (cheque No.

843101) of $7,907 resulting in the bank reconciliation balance at the end of the year being understated.
 A TMA Bank Balance of $7,877 (allocation 4-30351-30999-540301) is included in the FMIS under the overall TMA Bank Balance of $394,430.

The details of this bank account were not made available to audit.

Failure to carry out proper bank reconciliations increases the risk of misappropriation and mismanagement of funds.

It also indicates lack of independent checks and verifications by the Accounts Section to ensure the correctness of the reconciliation prior to certification.
Recommendations The Ministry should ensure:   that the responsibility of carrying out bank reconciliations is given to Senior Accounting Officers having adequate knowledge of the bank reconciliation process.

that internal control procedures in the Accounts and TMA Section, specifically supervisory checks should be strengthened to avoid such discrepancies from recurring.

Ministry’s Comments Audits comment is noted.


The variances of $263,038 between the cash at bank balance and FMIS balance is basically the unsubstantiated figures from previous years.

We have requested a write-off amounting to $255,813 in 2015 and this was approved in the same year.

The Ministry is currently working with the Ministry of Economy Assets Management team in trying to rectify the balance.

The balance of $7225 is in the process of being cleared this will reflected in the 2016 Financial Report.
The amount of $7877 as TMA balance under allocation 4-30351-30999-540301, of this amount, $5971.55 was posted in 2013 being Post Masters pay in for Taveuni during the 2013 financial year and the balance is the amount lodged by our Taveuni office to BSP CFA bank account in 2014 financial year.

The officer concerned has been advised not to deposit TMA revenue to BSP account but to lodge revenue pay in to Post Fiji.

The outstanding amount of $7877 will be cleared by the end of 2016/2017 financial year.
An Assistant Account Officer is now in charge of carrying out bank reconciliation for TMA and IS based at the Headquarters Accounts Section.

8 Ministry of Agriculture – Finance Manual 2011 – Section 7.2.1 Ministry of Agriculture Section 30: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 30.8 LWRM Trust Fund Account All bank accounts must be reconciled monthly.
The bank reconciliation shall list all outstanding cheques and other reconciling items and be signed and dated by the responsible officer.9 The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger accounts.

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

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.10 Audit review of the Land Water Resource Management (LWRM) and Land Resettlement Planning and Development (LRPD) records revealed the following anomalies:  The FMIS division of the Ministry of Finance has been independently conducting reconciliation of the Ministry True Trust account in 2015.

However, the latest reconciliation prepared was up to only October 2015.
 A variance of $16,397 was noted between Main Trust Fund account general ledger (FMIS) balance (Account No: 9-30101-30065-895012) and the Trust Account Cash at Bank general ledger (FMIS) balance (Account No: 9-30101-30065-520301) as at 31 December 2015.

Refer to Table 30.8 for details.


Variance in MAIN Trust Fund Account FMIS balance And the FMIS Cash Table 30.8: at Bank Balance Particulars FMIS Cash at bank balance FMIS Trust Fund Account Variance Amount ($) 968,582 952,185 16,397  The closing balance of the Trust Account Statement of Receipts and Payments of $456,998 did not correspond to the Cash at Bank FMIS general ledger balance of $968,582.

 Retention fund ALTA lease (9-30101-30075 895013) had a balance of $2,530.
The Ministry failed to provide any documentary evidence to support this balance.

It was also noted that this account is not reflected in the Ministry’s Agency Financial Statement as a Main Trust Fund.

In addition, there was no movement made within the year and it could not be determined whether the allocation is still in operation or not.
As a result of the above anomalies, audit was not able to substantiate the accuracy of the Main Trust Fund Account Statement of Receipts and Payments for the year ended 31 December 2015.

Recommendations The Ministry should ensure:  monthly reconciliation process is strengthened to mitigate the various issues highlighted  above.

that errors and discrepancies identified during the reconciliation process are corrected promptly.

Ministry of Economy assistance should be sought where necessary.
9 Finance Instructions 2010 – Section 32 (6) 10 Finance Instructions 2010 – Section 58 (2& 3) Ministry of Agriculture Section 30: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  That proper books of account are maintained and provided for audit when requested.

Ministry’s Comments Audit comment is noted, we are currently working with the FMIS unit of the Ministry of Economy to try and rectify this problem.
The variance highlighted by the audit is the result of inter funding from previous years and this was not detected early because no proper reconciliation was done in previous years.

We have requested FMIS to assist us in reconciling this account and we have rectified the anomalies in 2016 financial year.
30.9 Statement of Losses Each agency must include in its annual financial statement a statement of losses.11 An annual board of survey must be conducted each year to verify the existence and condition of assets recorded on the asset register provided that, for agencies that have, in the opinion of the Permanent Secretary a large asset base, the board of survey to be conducted on a cyclical basis so that all assets are checked every three years.12 Annual boards of survey must be conducted by 3 officers who are independent of the officer responsible for the custody of the assets.
A written record must be kept of each board of survey and must be signed and dated by the officers undertaking it.13 All assets which are not accounted for in the board of survey must be investigated to determine the appropriate recovery or write-off action.14 All agencies must maintain a Fixed Asset Register until the asset module of the financial management information system is implemented.
Details to be recorded in the asset register should include, at a minimum – (a) description; (b) cost or fair value; (c) date of acquisition, where known; (d) make, model and identification number, where applicable; and (e) location.15 Assets whose value is between $200 and $2,000 must also be recorded in an Expendable Items Register.16 The following anomalies were noted regarding the maintenance of fixed assets record and the submission of Statement of losses:  The Ministry did not carry out a Board of Survey (BOS) for 2015.
 The Statement of Losses was submitted for audit for the year 2015.

However, audit noted that the Statement of Losses only reflected the losses relating to sheep from Batiri Station only.
For presentation purpose of the Ministry’s Statement of Losses, audit only managed to compile the 11 Finance Instructions 2010 – Section 71 (1) (f) 12 Finance Instructions 2010 – Section 49 (1) 13 Finance Instructions 2010 – Section 49 (2) 14 Finance Instructions 2010 – Section 49 (3) 15 Finance Instructions 2010 – Section 46 (2) 16 Finance Instructions 2010 – Section 46 (3) Ministry of Agriculture Section 30: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ losses for the months of July to December.
In addition, losses from the month of January to June 2015 were not provided for audit verification.

Thus the Statement of Losses provided in the Agency Financial Statement has been understated.

In addition, the Statement of Losses did not reflect losses to other fixed assets.
Refer to Table 30.9 below for recorded livestock losses during the six month period from July to December 2015: Table 30.9: Summary of Livestock Losses for Six Month Period 2015 Livestock Commodity Sheep Pig Cattle Goat Chicken Total Amount ($) 7,008 525 1,250 1,274 4,109 14,166 Similar audit findings have been raised in previous years.

These demonstrate lack of competence to follow procedures and ineffective supervisory checks over the control and safeguard of government property.
Ineffective controls on the management of fixed assets (property, plant & equipment) increases the risk of loss of assets through misappropriation or theft.

Recommendations The Ministry should:     ensure that all property, plant and equipment purchased by the Ministry are properly recorded in the FAR.

ensure that a Board of Survey is carried annually to take stock of all its assets and update the fixed assets records.
investigate the cause of significant delay in carrying out the Board of Survey and take necessary action against responsible officers.

ensure that monthly Losses Reports are maintained and made available for audit purposes.

Ministry’s Comments Audit comment is noted.

The ministry has set up an Asset Management Unit (AMU) and one of their primary responsibilities is to make sure that Annual Board of survey is carried out every year.
The Ministry carries out its Board of Survey to take stock of its Fixed Asset.

The unit has also opened a loss report register where by monthly losses are recorded.
30.10 Revolving Fund Account Divisional Accountants, Assistant Accounts, Clerks and Recorders shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.17 Any errors or 17 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.3 Ministry of Agriculture Section 30: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ misallocations must be immediately adjusted by way of journal vouchers.18 The ledger reconciliation statement shall be forwarded to the Senior Accountant (Operations) weekly.
The Divisional Accountants, Assistant Accounts Officer, Clerks and Recorders must ensure that: I.

All balances are accurate and adequately supported; II.
Any misallocations or outstanding balances from the previous month have been journalized to the correct allocation code.19 An accountable advance will not be approved if an officer had taken an earlier advance and has not been cleared.20 A travelling officer shall retire the accountable advance within seven days of completing travel by submission of an acquittal report with supporting documents.21 If an advance has not been fully expended, the travelling officer must repay the balance within seven of completing travel.22 Where an advance has not been acquitted within seven days after return from official travel, the AAO payments shall inform AAO (Salaries/Wages) to effect recovery of unretired amount with an interest of 12% per annum, through a salary deduction from the concerned officer’s salary within six (6) fortnights.23 The Ministry of Agriculture’s Revolving Fund Account (RFA) - Miscellaneous balance for 2015 constituted all balances appearing in the general ledger (FMIS) under accounts receivables (SAG 560000), prepayments and clearing accounts (SAG 570000) and accounts payable (SLG 840000).
Our review of the RFA – Miscellaneous, Inter Departmental Clearing and Imprest accounts records revealed the following anomalies:  Non-preparation of Reconciliations Audit noted that monthly reconciliations for the following accounts were not up-to-date.

Refer to Table 30.10 below for details.
Table 30.10: RFA, IDC and Imprest Balances Allocation Description 1-30101-30101-560203 AR Individuals 1-30101-30101-570301 Advances 1-30000-30000-840101 AP Trade – Government Department & Agencies 1-30000-30000-840102 AP Trade - Companies 1-30000-30000-840602 Withholding Tax Payable * Status - the last monthly reconciliation prepared as per date of audit Reconciliation Status* Amount ($) 33,255.87 April 10,028.97 October (1,228,864.48) October (28,271.03) October (164,125.44) October Furthermore the Ministry’s Inter Departmental Clearing and Imprest account reconciliation was prepared up to the month of September and October, respectively.
However, both have nil balances at year end.

 Due to the issues stated above, audit was not able to substantiate the general ledger (FMIS) balances as at 31 December 2015.
18 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.4 19 Ministry of Agriculture – Finance Manual 2011 – Section.16.3.6 20 Ministry of Agriculture – Finance Manual 2011 – Section 10.1.6 21 Ministry of Agriculture – Finance Manual 2011 – Section 10.1.12 22 Ministry of Agriculture – Finance Manual 2011 – Section 10.1.13 23 Ministry of Agriculture – Finance Manual 2011 – Section 10.1.15 Ministry of Agriculture Section 30: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ In the absence of proper records/explanations, it is difficult to authenticate the accuracy of balances appearing under the respective allocations in the FMIS general ledger.
Recommendations The Ministry should ensure:  monthly reconciliation process is strengthened;   all Accountable advances are retired within seven days of completion of travel; and that all the relevant supporting documents for all RFA accounts are properly maintained and produced for audit scrutiny.

Ministry’s Comments Audit comment is noted.

Monthly reconciliation of Revolving Fund Account is implemented.

Most of the advances have been retired.


The ministry has strengthened its reconciliation by making sure that any posting done into the FMIS is properly documented and also supporting documents are properly filed.
30.11 Operating Trust Fund Account Divisional Accountants, Assistant Accounts, Clerks and Recorders shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.24 Any errors or misallocations must be immediately adjusted by way of journal vouchers.25 The ledger reconciliation statement shall be forwarded to the Senior Accountant (Operations) weekly.

The Divisional Accountants, Assistant Accounts Officer, Clerks and Recorders must ensure that: I.
All balances are accurate and adequately supported; II.

Any misallocations or outstanding balances from the previous month have been journalized to the correct allocation code.26 Operating trust fund comprise superannuation contributions (FNPF), Tax Arrears/PAYE, Fines, Government Water Rates Charges and other credit union savings, which are not to be overdrawn at any time.

By its nature, Operating Trust Fund Accounts should have credit balances.
Our review of the Operating Trust Fund Accounts records revealed the following anomalies: Audit noted that the Operating Trust Fund Account reconciliations prepared were up to October 2015 only.

As a result, it was not possible to substantiate the balance of $230,422 as at 31/12/15.

Refer to Table 30.11 below for details.
Table 30.11: Operating Trust Fund Account Balance Allocation Particulars Various (SLG 86) *Status - the last monthly reconciliation prepared as per date of audit FMIS Operating Trust Fund balance Amount ($) (230,422) October Reconciliation Status* 24 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.3 25 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.4 26 Ministry of Agriculture – Finance Manual 2011 – Section 16.3.6 Ministry of Agriculture Section 30: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ In the absence of proper reconciliations, it was difficult to authenticate the accuracy of the balances appearing under Operating Trust Fund Account (SLG 86) allocations in the general ledger (FMIS).
Recommendations The Ministry should:     ensure monthly reconciliations are carried out properly and accurately; ensure that unreconciled balances between the reconciliation statements and the general ledger (FMIS) are investigated and adjusted; ensure that all the relevant supporting documents for Operating Trust Fund accounts are properly maintained and produced for audit scrutiny; and the internal control procedures in the Accounts Section, specifically supervisory checks should be strengthened to avoid such discrepancies from recurring.
Ministry’s Comments Reconciliation for this has been updated and we are currently reviewing the Agency Finance Manual in an effort to make sure that this issue is not repeated in the future and to be completed by before the end of second quarter for 2016/2017 financial year.

30.12 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:    no further credit shall be extended to the debtor; a demand notice for payment shall be sent to the debtor after his/her debt has been overdue for more than a month; if the account still remains unpaid after the first demand notice was issued, a final notice shall be issued demanding payment within fourteen days.27 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.28 The Ministry had a balance of $804,226 in arrears of revenue as at 31 December 2015.
Refer to Table 30.12 below for the balances of arrears of revenue for the past six years.
Table 30.12: Balance of Arrears of Revenue for the Past Five Years Year 2010 2011 2012 2013 2014 2015 Amount ($) 3,995,811 3,979,609 824,986 811,131 812,132 804,226 27 Ministry of Agriculture – Finance Manual 2011 – Section 9.2.1 28 Ministry of Agriculture – Finance Manual 2011 – Section 9.2.4 Ministry of Agriculture Section 30: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Audit noted that significant portion of the arrears ($709,524 or 88%) has been outstanding for more than 5 years.
The arrears mainly related to outstanding repayments from farmers for assistance provided to them under different agricultural programs in previous years.

Refer to Table 30.13 below for details.


Table 30.13: Breakdown details of the Arrears of Revenue Debtors Meat Inspection Research Analysis Test Water Rates Electricity Sale of Sheep Cocoa Development Batiri Pineapples Land Development Revolving Fund Account Irrigation & Commercial Total 2015 ($) 1,071 3,461 14,379 883 7,326 237,460 707 4,237 427,763 106,939 804,226 Ineffective debt collection strategies may have contributed to the delay in collecting of outstanding revenues.
As a result, there has been a significant accumulation of arrears of revenue over the years which may not be recovered and may require write-off.

Recommendations  The Ministry should improve its debt collection strategies to enable the recovery of outstanding revenue.

 The Ministry must ensure that adequate accounting records are maintained to substantiate arrears of revenue balances at year end.

Ministry’s Comments Audit comment is noted.


The ministry is currently working with the Ministry of Economy Assets unit in trying to identify those that owes money to the Ministry as most of this debt is over 5 years especially the Cocoa Development, Batiri Pineapples, Land Development, Revolving Fund Account and Irrigation & Commercial.

Report to be submitted by December 2016.


PART C: REGULARITY AUDIT FINDINGS 30.13 Implementation of a Succession Plan The objective of succession planning is to ensure that the organisation (or a unit of the organisation) continues to operate effectively when individuals occupying critical positions depart.
Primarily, this refers to having other staff on board who are ready to step into someone else’s shoes at the appropriate time under the appropriate circumstances with a virtually seamless transition.29 29 PSC Guide 2010 – A How - to Guide for Developing a Succession Plan – Page 2 Ministry of Agriculture Section 30: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The compulsory retirement age from the Service will be 55 years.30Any Officer may, in special circumstances, and with the approval of the appropriate Service Commission be allowed to remain in the Service after he has attained the age of 55 years.31 Since the decision for re-engagement of staff rests with the Office of the Prime Minister, addressees are advised that all requests for re-engagement be directed to the Permanent Secretary, Office of the Prime Minister who will now administer assessments and the conveyance of the Prime Minister’s decision to the respective Permanent Secretaries.32 The Ministry failed to provide a copy of its succession plan despite numerous requests and follow ups by audit.
It was noted that the Ministry continues to re – engage retired officers for long periods of time due to lack of technical officers.

Refer to Table 30.14 for details.

Table 30.14: Details of Re-engaged Officers Position EDP No.
60767 Principal Engineer – Land Mineral Resource Management 62539 Senior Engineer 64530 Technical Assistant – Horticulture 90162 Senior Engineer 58910 Principal Engineer – Land Mineral Resource Management 41308 Director – Land Minerals Resources, Management Age 69 67 58 64 66 55 The audit further noted that the Ministry failed to obtain approval from the Prime Minister’s office for the re-engagement of all of the retired officers in the Ministry.
In addition, the Ministry has not obtained approval for the re-engagement of the expatriate staffs but are paying them salary at the highest level on the salary grade.

The above finding is the result of lack of proper planning in the part of management to ensure that proper training and understudies are undertaken for critical positions which would have ensured that the Ministry continues to operate effectively when individuals occupying positions depart.
Furthermore it clearly indicates a breach of stipulated regulations on re-engagement of retired staffs.

Recommendations The Ministry should:   develop and implement a succession plan as provided for by PSC to ensure continuity in its operations; obtain approval from the Prime Minister’s office prior to the re-engagement of any retired officers.

Ministry’s Comments Audit comment is noted.


The retention of manpower scarce skill areas such as engineers is an issue that is prevalent across the public sector and is a major challenge to cope with.

The Division currently has six (6) senior positions, three occupied by expatriates and three (3) by locals, 2 local staff have resigned in 2016.
There are three (3) engineer posts, 1 30 General Orders 2011 - Section 215 (b) 31 General Orders 2011 - Section 215 (c) 32 PSC Circular 29/498 dated 14 March 2014 Ministry of Agriculture Section 30: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ filled and 2 vacant.
The Division has had to rely on expatriate staffs due to high attrition rate of local engineers and weak bond conditions which have been exploited by graduates after completing their studies.

The Division has a succession plan to fill the posts held by expatriates as shown below; however with local graduates leaving there is a need to consider factors particularly employment conditions, which attract them to the private sector such as FRA, WAF, Fulton and Higgins.
The current construction industry landscape with major funding to road and water supply with the conditions offered continually attracts graduates and staff for better opportunities.

Staff conditions, incentives and retention policies need to be developed to retain staff.
LWRM SUCCESSION STRATEGY No Engineer Post Principal (D&I) Principal (RE) Senior Engineer (RE) Engineer Engineer Senior (Design) Senior Engineer (D&I) Director Remarks SE (North) Graduate 2012, Resign August 2016 Engineer BE Graduate 2014 MSc 2015 – JICA Scholarship Engineer BE Graduate 2013, Resigned 2013 STA BE Graduate in 2015 TOHG BE graduate 2012, Resigned 2013 TO BE Graduate 2015 Engineer BE graduate 2013, Resigned 2014 TO BE graduate 2015 PAO, Promoted 2015 The Division over the past five years has sent staff abroad for training on Chinese, FAB and JICA scholarship.
The following staff graduated with Bachelor of Engineering; one staff graduated in 2011 from Malaysia and resigned within three months, three graduated from the University of Queensland in 2012, one resigned in 2013 and another in 2014.

One graduated from Tianjin University, China in 2012, resigned in August 2016.

Three staff undertaking studies at FNU under government scholarships graduated in 2015 and one staff completed MSc in Flood Disaster Management in 2015 under JICA scholarship.
Given the gap between attaining maturity and experience for senior engineer management positions, expatriate staff has continued to be recruited to fill the vacuum particularly for specialized engineering fields in river and water resource engineering.

In regards to the staff re-engagement, Management addresses this with submissions to the Office of the Prime Minister, and upon approval renews expatriate and local staff contracts.
30.14 Rice Revitalization Program A tender must be called for the procurement of goods, services or works valued at $50,001 and more.33 The procurement limit delegated to Permanent Secretaries and Government Tender Board is amended as follows:34 Responsible Authority Procurement Limit Amended Procurement Limit Permanent Secretaries Government Tender Board $30,000 and less $30,001 and more $50,000 and less $50,001 and more Ministries or Departments must not split at any stage any single requirement in order to avoid the application of the procurement limits in regulation 27 (1).35 33 Procurement (Amendment) Regulation 2012 – Section 30.1 34 Finance Circular 9/2012 & Procurement Amendment Regulations 2012 - Section 2.1 Ministry of Agriculture Section 30: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Ministry paid a sum of $59,995.50 to acompany (C14) on 15/05/15 via cheque no.
19246 for the supply of Rice Agro Inputs.

Audit noted that the total cost was split in two local purchase orders contrary to section 28.3 of the Procurement (Amendment) Regulation 2012.

Refer to Table 30.15 below for details.

Table 30.15: Details of Split Local Purchase Orders Date LPO No.
Supplier Particulars 08.05.15 07.05.15 Total PO90810 - 003077 PO90810 - 003059 Company (C14) Rice agro inputs Rice agro inputs Amount ($) 26,551.43 33,446.95 59,998.50 The stipulated rules and regulation in regards to procurement has not been complied with.

Recommendation The Ministry should ensure that tender are called for procurement above $50,001 and prevent splitting LPOs.

Ministry’s Comments Audit comment is noted.


The ministry recognizes splitting of procurement as a challenge to address given that our technical officers are involved in capital projects proposal and procurements at some stages.

More awareness is required for our technical officers together with divisional accounting personnel to acquaint themselves with financial issues and procedures and understand what actually constitute a split in procurement terms.
30.15 Absence of Tender Boards Approval The procurement limit delegated to Permanent Secretaries and Government Tender Board is amended as follows:36 Responsible Authority Procurement Limit Amended Procurement Limit Permanent Secretaries Government Tender Board $30,000 and less $30,001 and more $50,000 and less $50,001 and more The Government Tender Board shall consider tenders, indents or orders for the supply of goods, services or works and may: i.

Awards tenders or approve indents; or ii.

iii.
Ask for additional information from procuring agencies with regards to that particular Reject tenders and indents; or procurement in order to make a decision.37 In circumstances where it is necessary to make an advance payment for goods received through shipment from overseas, and for contractual agreements if stated as such, approval must be sought from the chief accountant.38 35 Procurement (Amendment) Regulation 2012 – Section 28.3 36 Finance Circular 9/2012 & Procurement (Amendment) Regulations 2012 - Section 2.1 37 Procurement Regulation 2010 Section11(1) Ministry of Agriculture Section 30: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The audit noted that the Ministry has paid an amount in excess of $50,000 to a company (C15) for building and maintenance of quarters and solar power installation without Government Tender Board approval.
The Ministry engaged the contractor for different small works, each amounting to less than $50,000 without any contract although the contractor was paid a total of $151,610.

A few of the works were also done concurrently as noted for the month of May where a total exceeding $50,000 was paid to the contractor.

Tabulated below are details of payments exceeding $50,000 made to company C15.
Table 30.16: Details of Payments a Company (C15) without Tender Board Approval Date Cheque No Particulars 18787 Payment for quarters maintenance works – Dreketi.

18969 Payment for maintenance of Kedra quarters – Macuata.

19288 Payment of quarters maintenance – Kedra Quarters (50% payment) 19417 Payment of quarters maintenance – Dreketi Rest House.

19564 Payment of quarters maintenance – Lomaivuna Quarters.
28/04/15 08/05/15 18/05/15 21/05/15 28/05/15 11/06/15 19941(A) Payment of quarters maintenance – Lomaivuna.

05/10/15 05/08/15 11/06/15 19941(B) Payment of quarters maintenance at Lomaivuna quarters.

18/05/15 19288 Payment of quarters maintenance for the Kedra quarters.

Total 23173 Payment for the maintenance work done at Lomaivuna quarters.

21453 Payment for the maintenance works at Lomaivuna quarters.
Amount ($) 17,400 17,840 22,300 21,750 7,180 10,590 7,120 10,770 14,360 22,300 151,610 Without the Tender Board approval, government may not be procuring services and works from the most economical supplier and government’s interest are not protected when payments are made without written contracts.

Recommendations  Open tenders must be called for procurements above $50,001 so that transparency and accountability of the Ministry is maintained at all times.
It will also ensure the selection of the best available contractors at the most economical cost to carry out a particular task.

Ministry’s Comment The recommendations are noted.

Explanations on the payments done to Company C15are as follows:  Company C15 No approval was sought from the Government Tender Board because the amount involved for each individual project was less than $50,000.
Although the total amount paid to the company was more than $50,000; the payments made were to individual projects, which were less than $50,000 each.

The process taken to award the works was carried out in line with Clause 4.0 of the FPO Procurement Regulation 2012 whereby at least 3 quotes to be obtained for works worth more than $1,000.00.

The process was done in a transparent manner as follows: 1.

An advertisement was published in the Fiji Sun for the Expression of Interest for quarters’ maintenance.
38 Finance Instructions 2010 – Section 14.8 Ministry of Agriculture Section 30: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 2.

A committee was set up within the Ministry (LWRM Engineer, Principal Accountant, Principal Admin Officer & Executive Officer – AMU) including the Ministry of Works official to go through the EOI and to nominate the best company.

Quotations were in sealed envelopes and opened in front of the Committee.

3.
3.

Approval of the Permanent Secretary for Agriculture was obtained for the awarding of the Contract.

4.

Contract Agreement was drawn for each individual project which was vetted by the Office of the Solicitor-General.

The Fiji Procurement Office and Ministry of Finance were also consulted during the vetting process.

5.

Funds were released by the Ministry of Finance through RIE upon fulfillment of the requirements.
The process was also done in consultation with the Office Accommodation Division at the Public Service Commission.
Ministry of Agriculture Section 30: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 32 Ministry of Fisheries and Forest Role and Responsibility The Ministry of Fisheries and Forests is responsible for the formulation of policies that promote best practices (equating conservation and utilisations) that will ensure a sustainable fisheries and forestry sectors.
The Ministry drives this through coordination, consultation and in partnership with resource owners, communities, private sector, government agencies, and non– government organisations, regional and international agencies.
Table of Contents PART A: FINANCIAL STATEMENTS................................................................................................................................ 2 32.1 Audit Opinion ............................................................................................................................................................ 2 32.2 Statement of Receipts and Expenditure ................................................................................................................... 2 32.3 Appropriation Statement .......................................................................................................................................... 3 32.4 Trading and Manufacturing Account ........................................................................................................................ 4 32.5 Trust Fund Account .................................................................................................................................................. 5 32.6 Statement of Losses ................................................................................................................................................ 6 PART B: ANNUAL FINANCIAL STATEMENT AUDIT FINDINGS .................................................................................... 6 32.7 Anomalies in the Trade and Manufacturing Account ............................................................................................... 6 32.8 Drawings Account Reconciliation ............................................................................................................................. 7 32.9 TMA Stock Figures ................................................................................................................................................... 8 32.10 Stale Cheques .......................................................................................................................................................... 9 32.11 Anomalies in the Fisheries Main Trust Fund .......................................................................................................... 10 32.12 Anomalies in the Underline Accounts Reconciliation ............................................................................................. 11 PART C: REGULARITY AUDIT FINDINGS ..................................................................................................................... 13 32.13 Medical & Police Reports for New Recruits Not Provided ...................................................................................... 13 32.14 Competitive Quotes not obtained ........................................................................................................................... 14 32.15 Misallocation of Expenditures ................................................................................................................................ 15 32.16 Use of Operational Funds (Fund 1) to cater for Trading & Manufacturing Account (Fund 4) activities.
................. 16 32.17 Consultancy Payments Anomalies ......................................................................................................................... 17 32.18 LPO raised after Invoicing ...................................................................................................................................... 17 32.19 Utilisation of Capital Expenditure Funds for Other Projects ................................................................................... 18 32.20 Settlement of Previous Years Outstanding Accounts ............................................................................................ 19 APPENDIX 32.1: Sample of Expenditure Misallocations in 2015 .................................................................................... 20 Ministry of Fisheries and Forestry Section 32: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ PART A: FINANCIAL STATEMENTS 32.1 Audit Opinion The audit of the 2015 accounts of the Ministry of Fisheries and Forests resulted in the issue of a qualified audit report.
The qualification issues are as follows: Trading and Manufacturing Activities  Included in the Trading and Manufacturing Account (TMA) Balance Sheet is Deposits and Deductions of $26,033 and Accounts Receivable of $5,745.

It was not possible to verify the amounts as the Ministry did not provide appropriate audit evidences to support the balances.
As a result, it was not able to ascertain the accuracy and completeness of the Deposits and Deductions and Accounts Receivable reflected in the Trading and Manufacturing Accounts as at 31 December 2015.

 There is an unreconciled difference of $20,320 between the FMIS general ledger cash balance and the cash book balance.
As bank reconciliations were not performed by the Ministry, it was not possible to ascertain the accuracy and completeness of the TMA Cash at bank balance of $62,115 as shown in the TMA Balance Sheet as at 31 December 2015.

 Included in the TMA Trading Account is Closing Stock of Finished Goods of $2,599 and Closing Raw Materials of $7,322.
It was not possible to ascertain the accuracy and completeness of Closing Stock of Finished Goods as the Ministry did not carry out an independent stock take for the year ended 31 December 2015.

Alternative audit procedures could not be performed to confirm these balances.

Trust Fund Account  The closing balance of the Trust Account Statement of Receipts and Payment of $193,634 did not reconcile with the Cash at Bank FMIS general ledger balance of $79,641.
Due to an unexplained variance of $113, 993, it was not possible to ascertain the accuracy and completeness of the Main Trust Fund balance as at 31 December 2015.

32.2 Statement of Receipts and Expenditure The Ministry of Fisheries and Forests collected revenue totalling $3.5 million and incurred a total expenditure of $22.9 million in 2015.

Details are shown in Table 32.1 below.
Table 32.1: Statement of Receipts and Expenditure for 2015 Description Native timber measurement Vessel registration Management fees License fishing Sale of fish and ice Miscellaneous revenue Offshore Fisheries Management Fees TOTAL REVENUE 2015 ($) 962,541 5,486 10 26,317 412,026 393,292 1,743,925 3,543,597 2014 ($) 1,002,754 71,263 102,396 280,418 294,088 413,672 0 2,164,591 Established staff 7,847,972 7,179,068 Ministry of Fisheries and Forestry Section 32: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Government wage earners Travel & communication Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditure Capital Construction Capital Purchases Total Capital Expenditure Value added tax TOTAL EXPENDITURE 2015 ($) 1,951,168 513,786 2,389,749 885,388 772,035 407,653 14,767,751 5,770,180 649,013 6,419,193 1,705,942 22,892,886 2014 ($) 1,825,734 543,104 2,268,432 821,026 370,283 152,241 13,159,888 4,026,408 791,075 4,817,483 1,295,461 19,272,832 Total revenue increased by $1.4 million or 64% in 2015 compared to 2014 mainly due to the increase in revenue generated from sale of fish and ice and offshore fisheries management fees.
Total expenditure increased by $3.6 million or 19% in 2015 compared to 2014 due to the following:  Established Staff increased by $668,904 million or 9% mainly due to the filling of vacant positions in established staffs;  Government Wage Earners increased by $125,434 or 7% due to the filling of vacant positions;  Maintenance & Operations costs increased by $121,317 or 5% due to increase in activities carried out on the maintenance of equipment, vehicles and electricity expenses for both the Department of Fisheries and Forestry;  Purchase of Goods and Services increased by $64,362 or 8% due to increase in purchases during 2015;  Operating Grants and Transfers increased by $401,752 or 108% due to increase in activities for SEG 6 including provision for Forest Subsidy on Value Adding machines as government subsidy to farmers on the procurement of equipment related to the Pine Resin Project such as portable sawmill, workshop and treatment plants.
 Special Expenditure increased by $255,412 or 168% due to increase of 2015 budget to cater for the special activity which is the data link rental that will connect forestry and fisheries stations to Govnet services.
 Capital Construction increased by $1,743,772 or 43% as a result of new projects undertaken such as Gau and Rotuma Ice Plant Project, purchase of saw mill gantry hoist, annual contributions for for Western Central Pacific Corporation and the continuation of the Pine Woodlot activities at Cicia and Gau.

32.3 Appropriation Statement The Ministry incurred a total expenditure of $22.9 million against the revised budget of $23.9 million resulting in savings of $1 million or 4.5%.
Details of expenditure against the budget estimates are provided in Table 32.2 below.
Ministry of Fisheries and Forestry Section 32: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 32.2: Appropriation Statement for 2014 SEG Item Established staff Government wage earner Travel and communications Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditure Capital Construction Capital Purchases Total Capital Expenditure Value added tax Total Expenditure Budget Estimate ($) 7,964,365 1,598,116 504,578 2,507,240 904,200 979,400 420,435 14,878,334 6,850,000 500,000 7,350,000 1,752,900 23,981,234 Changes ($) (112,380) 358,484 11,387 (118,254) (18,160) (207,364) (13,714) (100,001) (62,056) 149,013 86,957 13,044 --- Revised Estimate ($) 7,851,985 1,956,600 515,965 2,388,986 886,040 772,036 406,721 14,778,333 6,787,944 649,013 7,436,957 1,765,944 23,981,234 Actual Expenditure ($) 7,847,972 1,951,168 513,786 2,389,749 885,388 772,035 407,653 14,767,751 5,770,180 649,013 6,419,193 1,705,942 22,892,886 Lapsed Appropriation ($) 4,013 5,432 2,179 (763) 652 1 (932) 10,582 1,017,764 --- 1,017,764 60,002 1,088,348 32.4 Trading and Manufacturing Account The Trading and Manufacturing Account, located in 9 miles, Nasinu, is monitored by the Department of Forest and implemented by the Timber Utilization Research Division under its Policy Output – “Promotion of Commercial Development”.
Services provided by the TMA include sawmilling/saw doctoring, laboratory analysis, timber manufacturing, and kiln drying.

The TMA operation provides industry assistance and offering minimum fees and charges for its services.
Table 32.3: Manufacturing Account Description Opening raw material Add: Purchases Less: Closing raw material Raw material used Direct Cost Add: Direct labour Cost of manufacturing goods transferred to trading account 2015 ($) 10,728 --- 7,322 3,406 --- 112,316 115,722 2014 ($) 19,069 --- 10,728 8,341 --- 100,104 108,445 The “cost of manufacturing goods transferred to trading account” increased by $7,277 or 7% in 2015 compared to 2014.
Table 32.4: Trading Account Description Sales Opening stock of finished goods Add: Cost of manufactured goods Less: Closing stock of finished goods Cost of finished goods sold Gross Profit 2015 ($) 135,703 7,002 115,722 122,724 2,599 120,125 15,578 2014 ($) 152,495 10,125 108,445 118,570 7,002 111,568 40,927 Ministry of Fisheries and Forestry Section 32: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Gross profit for 2015 decreased by $25,349 or 62% when compared to 2014.
This was mainly attributed to the reduction in sales in 2015.

Table 32.5: Profit and Loss Statement Description Gross Profit/(Loss) transferred from Trading Account Total Income Maintenance & operation Special fees and charges VAT Total Expenses Net Loss 2015 ($) 15,578 15,578 59,026 --- --- 59,026 (43,448) 2014 ($) 40,927 40,927 107,215 25 --- 107,240 (66,313) In 2015 the TMA net loss reduced by $22,386 from a net loss of $66,313 in 2014.

This was mainly attributed to the reduction in expenses in 2015.
Table 32.6: Balance Sheet Description TMA surplus capital retained to CFA TMA accumulated surplus Net Loss Total Equity Cash Raw materials Accounts receivable Finished goods Total Assets Deposits and deduction Total Liabilities Net Assets 2015 ($) 213,037 (117,841) (43,448) 51,748 62,115 7,322 5,745 2,599 77,781 26,033 26,033 51,748 2014 ($) 202,067 (51,529) (66,313) 84,225 65,947 10,728 5,745 7,002 89,422 5,197 5,197 84,225 Net assets decreased by $32,477 or 39% from 84,225 in 2014 to $51,748 in 2015 due to the net loss incurred in 2015.
32.5 Trust Fund Account Table 32.7: Department of Fisheries – 1/3 Subsidy Scheme Description 1/3 Subsidy contribution Total Receipts Retention money Total Payments Surplus Opening balance at 1 January Closing balance as at 31 December 2015 ($) 63,527 63,527 5,618 5,618 57,909 135,725 193,634 2014 ($) 105,944 105,944 25,858 25,858 80,086 55,639 135,725 Ministry of Fisheries and Forestry Section 32: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 32.6 Statement of Losses In accordance with the Procurement Regulations 2010 (Clause 52), the Permanent Secretary for Finance approved the disposal and write-off of the following items upon submission of the recommendations in the Board of Survey Report.
Table 32.8: Fixed assets disposed off Description Computer Equipment Motor Vehicle Office Equipment Computer Equipment Sawmill Equipment Motor Vehicle Office Equipment Computer Equipment Land and Buildings Total 2015 ($) 181,872 --- 48,515 19,300 18,494 76,935 27,989 --- 8,100 381,205 2014 ($) 91,488 41,310 --- 43,699 --- 33,750 --- 56,915 --- 267,162 PART B: ANNUAL FINANCIAL STATEMENT AUDIT FINDINGS 32.7 Anomalies in the Trade and Manufacturing Account Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the accounts officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.1 Any errors or misallocations must be immediately adjusted by way of journal vouchers.2 The ledger reconciliation statement shall be forwarded to the Principal Accounts Officer.
The Principal Accounts Officer must ensure that: a) b) all balances are accurate and adequately supported; any misallocations or outstanding balances from the previous month have been dealt with.3 A review of Trading and Manufacturing accounts and related records revealed the following anomalies:  The Ministry did not maintain adequate accounting records to provide sufficient and appropriate audit evidence to substantiate the balances of the following Balance Sheet items.
As a result, it was not possible to ascertain the accuracy and completeness of these amounts during audit.

Refer to Table 32.9 for details.
Table 32.9: Balances that cannot be substantiated TMA Balance Sheet Items Accounts receivable Amount ($) 5,745 1 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.1 2 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.2 3 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.4 Ministry of Fisheries and Forestry Section 32: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ TMA Balance Sheet Items Deposits & Deductions Amount ($) 26,033  There was a variance of $20,320 between the FMIS general ledger and Ministry’s cash book balance.
Furthermore, bank reconciliations were not performed for the TMA cash account during 2015.

Accordingly, the audit could not ascertain the accuracy and completeness of the TMA cash at bank balance.

Refer to Table 32.10 for details.


Table 32.10: Variance in Cash at Bank Balance General Ledger Balance ($) Cash Book Balance ($) Variance ($) 62,115.00 41,794.73 20,320.27 The audit findings indicate lack of supervisory control over staffs responsible for maintaining the accounting records for the Trading and Manufacturing operations.
Recommendations The Ministry should ensure that:    monthly reconciliation process should be strengthened to mitigate the various issues highlighted above; errors and discrepancies identified during the reconciliation process are corrected promptly, and in consultation with the Ministry of Finance, where necessary; and the draft Agency Financial Statements including the Trading and Manufacturing Accounts are thoroughly checked, balances substantiated and clarified with the Ministry of Finance before they are submitted for audit.
Ministry’s Comments The TMA reconciliation has been updated and the details of the variances have been identified in the reconciliations.
32.8 Drawings Account Reconciliation Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at ministry/department level but most importantly at whole of government level.4 The Principal Accounts Officer must verify all the reconciliations before signing and submitting it to the Ministry of Finance.5 The audit noted that there were variances between the Drawings Account reconciliation and the general ledger balances as at 31/12/15.
Refer to the Table 32.11 below for details.
4 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.4 5 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.4.2 Ministry of Fisheries and Forestry Section 32: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 32.11: Variance in the Drawings Reconciliation Department Ministry of Fisheries and Forests General Ledger ($) (327,338) Ministry Record ($) (543,371) Difference ($) 216,033 It was noted that the difference was a result of cheques totalling $158,744 which were voided (cancelled) by the Ministry but were later shown as presented in the bank statement.
Necessary adjustments could not be done in 2015 as the Ministry did not have sufficient fund as all budgeted expenditure allocation had been fully utilised in 2015.

Recommendation  The Ministry should investigate and rectify the variance of $216,033 between the two records.

Ministry’s Comments Adjustments were made to rectify the variance in the 2016 accounts.
32.9 TMA Stock Figures A stocktake must be undertaken each year to verify the existence and condition of inventories on hand.6 All Permanent Secretaries shall appoint a Board of Survey annually to determine whether government plant, equipment and inventories under his or her control are – a) In working condition or serviceable b) Unserviceable or obsolete; or c) Surplus to the requirement of that agency7 An appointed Board of Survey shall consist of - a) Two officers from that Ministry or Department who are not directly responsible for the government plant, equipment and inventories being surveyed.
b) An officer from another Ministry or Department with relevant expertise in the items being surveyed.
c) An officer from the Fiji Procurement Office for Government plant, equipment and inventories worth $50,000 and above.8 The Chairperson of the Board of Survey shall not be an officer from that Ministry or Department.9 The annual profit and loss statements and balance sheet for each current financial year just ended must be prepared and submitted to the Auditor General in a form suitable for audit and inclusion in the agency’s annual report.10 6 Finance Instruction 2010 – Section 38 7 Procurement Regulations 2010 – Section 24 (1) 8 Procurement Regulations 2010 – Section 24 (2) 9 Procurement Regulations 2010 – Section 24 (3) 10 Finance Instructions 2010 – Section 30 (3) Ministry of Fisheries and Forestry Section 32: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Ministry had reported a total of $7,322 for raw materials and closing stock of $2,599 as Current Assets in the Trading and Manufacturing Account Balance Sheet for the year ended 31 December 2015.
The audit noted that an independent stocktake was not conducted on the closing raw materials and closing stock for the year 2015.

Instead, the stock certificate was signed off by the Principal Accountant and the Permanent Secretary.

Given lack of proper documentations, audit was also unable to perform alternative procedures to confirm the closing balances for inventory and raw materials.
Recommendation The Ministry should ensure that an officer who is independent of the Ministry is present to oversee the stock take process.

Ministry’s Comments Recommendations made been noted with great concern to our PSFF thus directed our SAO to manage and oversee the TMA operation in Nasinu TUD.

Board of Survey will be carried out annually as agreed between the management as well as stock take and proper management of government equipment and assets.
32.10 Stale Cheques If cheques remain in the un-presented cheque list for more than 3 months, the Principal Accounts Officer must attempt to locate the payees and have their cheques presented before they become stale.
The Principal Accounts Officer shall review the unpresented cheque list and determine whether a replacement cheque should be issued for cheques that are stale.11 The audit noted that stale cheques for the Ministry of Fisheries and Forests as at 31 December 2015 totalled $57,322.25 out of which a sum of $50,104.60 was carried forward from 2014.

Refer to Table 32.12 below for details.

Table 32.12: Stale Cheques Cheque No.
321405 321462 321458 321459 321460 Total Date Description 17/09/15 29/09/15 29/09/15 29/09/15 29/09/15 JV#32/09 Few Stale Chq June 2014 JV#98/09 Stale Chq’s July to Dec 2014 JV#94/09 Stale Chq’s Jan-March 2015 JV#95/09 Stale Chq’s Jan - March 2015 JV#96/09 Stale Chq’s - March 2015 Amount ($) 1,477.42 48,627.18 1,559.04 1,504.75 4,153.86 57,322.25 The above indicates that the stale cheque list was not regularly reviewed to determine whether adjustments or replacement cheques were required.
The unpresented cheque list has been overstated and Drawings Account closing balance understated due to stale cheques.

11 Ministry of Fisheries & Forests Finance Manual 2013 – Section 5.5.1 & 5.5.2 Ministry of Fisheries and Forestry Section 32: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Ministry should improve management of unpresented cheques by complying with Section 5 of the Finance Manual.
Ministry’s Comments Adjustment were made to rectify the variance in the 2016 accounts 32.11 Anomalies in the Fisheries Main Trust Fund 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.12 Audit review of the Department of Fisheries 1/3 Subsidy Scheme Main Trust Fund Account and related records revealed the following anomalies:  There was a variance of $1,304.22 between the Main Trust Receipts and Payment balance reflected on SLG 89 and the Main Trust Cash balance reflected under SAG 52.

Refer to Table 32.13 for details.
Table 32.13: Variance between the Main Trust General Ledgers Account Description Main Trust Balance 9-32301-78068-895005 Fisheries Main Trust Cash Balance 9-32301-76068-520301 Generated Account VARIANCE Amount ($) 78,336.95 79,641.18 (1,304.22)  The accuracy and completeness of cash at bank as at 31 December 2015 could not be ascertained as there was a variance of $113,992.82 between the cash at bank balance in the General Ledger (FMIS) and the bank reconciliation balance.
Refer to Table 32.14 for details.

Table 32.14: Variance between the GL and Bank Reconciliation Particulars Cash at Bank Reconciliation General Ledger (FMIS) Variance Amount ($) 193,634.00 79,641.18 113,992.82  The accuracy and completeness of Main Trust closing balance at 31 December 2015 could not be ascertained as there was a variance of $115,297.05 between the Main Trust balance in the General Ledger (FMIS) and the Main Trust reconciliation balance.

Refer to Table 32.15 for details.
12 Finance Instructions 2010 – Section 58 (3) Ministry of Fisheries and Forestry Section 32: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 32.15: Variance between the GL and Bank Reconciliation Particulars Main Trust Reconciliation General Ledger (FMIS) Variance Amount ($) 193,634.00 78,336.95 115,297.05  The signed monthly Trust Fund reconciliation statements for September and December 2015 were not provided for audit.
The above anomalies indicate the existence of ineffective controls and lack of supervisory checks in the operation and administration of the Main Trust Fund Account.

Recommendations The Ministry should ensure that:   Accounts Officers are proactive in resolving unreconciled balances between the Ministry’s reconciliation statements and the general ledger (FMIS).

all errors and discrepancies are corrected promptly and to seek the Ministry of Finance assistance where necessary.
Ministry’s Comments Issue is noted.

Details of the variances between Cash at Bank general ledger and Bank Reconciliations were identified but have not been adjusted in the GL.
32.12 Anomalies in the Underline Accounts Reconciliation Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the Accounts Officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.13 Any errors or misallocations must be immediately adjusted by way of journal vouchers.14 The ledger reconciliation statement shall be forwarded to the Principal Accounts Officer.
The Principal Accounts Officer must ensure that: a) b) all balances are accurate and adequately supported; and any misallocations or outstanding balances from the previous month have been dealt with.15 The following anomalies were noted when scrutinising the underline accounts and related records:  There were variances noted between the FMIS ledger and the Ministry’s reconciliation balances.

The variances were mainly due to the incomplete reconciliations submitted to the Ministry of Finance.
Refer to Table 32.16 for details: 13 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.1 14 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.2 15 Ministry of Fisheries & Forests Finance Manual 2013 – Section 13.4.4 Ministry of Fisheries and Forestry Section 32: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 32.16: Underline Accounts Anomalies Account FMIS Figure ($) Ministry’s Figure ($) 1-32201-77101-560102 641,908.69 809,918.95 1-32301-78999-840102 (60,000.00) (228,386.62) Variance Comments ($) (168,010.26) Certified reconciliations were done until the month of June 2015 only.
168,386.62 Certified reconciliations were only updated to September, even though funds were utilised up till December 2015.

1-32201-77101-570302 - 532.65 (532.65) Certified reconciliations were updated only to May 2015.

1-32102-32999-570301 2,083.00 72.00 2,011.00 Certified reconciliations were done 1-32000-00000-860000 (1,385,785.81) (1,307,129.44) until the month of May 2015 only.
(78,656.37) Certified reconciliations were done until the month of October 2015 only  Reconciliations were not provided for the following active accounts payable, advances and receivables allocations.

Refer to the Table 32.17 below for details.
Table 32.17: Accounts for which reconciliations not prepared Account 1-32101-32999-840602 1-32301-78999-840101-001 1-32301-78999-840102-005 1-32101-32999-570301 1-32301-78999-560102 1-32201-77101-560611 Description Withholding Tax Payable Information Technology Operational Support AP Trade Companies Advances AR Companies PD Employees FNPF The above anomalies indicate the existence of ineffective controls and lack of supervisory checks in the operation and administration of underline accounts.
Recommendations The Ministry should ensure that: reconciliation of underline accounts are performed monthly;   procedures relating to the preparation of reconciliation statements as stated in the Finance Manual are complied with to strengthen the reconciliation process; and Ministry’s Comments Audit issue is noted.

The Ministry will ensure that all reconciliation are updated accordingly moving forward.
Ministry of Fisheries and Forestry Section 32: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ PART C: REGULARITY AUDIT FINDINGS 32.13 Medical & Police Reports for New Recruits Not Provided Before either a letter of appointment or contract of appointment is issued, a candidate selected for appointment must undergo medical examination and be passed as being in all respects physically and mentally fit by an authorised Medical Officer.
The employee must have a satisfactory police record.16 Audit verification of staff personal files revealed that medical and police clearance reports were not filed for newly appointed officers indicating that appointments of officers were made without compliance to required vetting process Listed in Table 32.18 below are examples of new appointments not supported with medical report and/or police clearance report.

Table 32.18: Appointments without supporting medical and/or police reports EDP/ FNPF No.
94923 Position Principal Economic Planning Officer (Planning) 95112 Clerical Officer (Payments) 62013 55671 Forester Labourer LY524 Project Forester-Joiner (WUP) XV828 Fieldsmen II (MRIS) Contract Dated 11/05/15 14/09/15 15/08/15 12/01/15 06/01/15 26/03/15 MA753 Handyman (Gau Island Ice Plant Project) 09/07/15 Documents Pending Medical Report Police Clearance Medical Report Police Clearance Police Clearance Medical Report Police Clearance Medical Report Police Clearance Medical Report Police Clearance Police Clearance In the absence of medical and police clearance reports there was no assurance that persons appointed have been vetted to ensure that they are not only physically and mentally capable for undertaking the tasks at hand but also persons of integrity.
In addition, the audit finding also indicates non-compliance with section 203 of General Orders 2011.

Recommendation The Ministry should ensure that:  proper vetting of applicants is conducted prior to the appointment of officers as required under General Orders 203; and  medical reports and police clearance reports obtained and kept in the respective personal files to confirm the vetting process carried out.
Ministry’s Comments Medical and police forms are issued to the appointees when contracts are signed.

The audit concerns have been duly noted and HR will ensure that the appointees submit their medical and police clearance before contracts are signed.

The ones pending will also be issued with reminders.
16 General Orders 2011 - Section 203 Ministry of Fisheries and Forestry Section 32: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 32.14 Competitive Quotes not obtained Any procurement of goods, services or works shall be issued so as to promote the following principles: a) value for money; b) maximize economy and efficiency and the ethical use of Government resources; c) promote open and fair competition amongst suppliers and contractors; d) promote the integrity of, fairness and public confidence in the procurement process; and e) achieve accountability and transparency in the procedures relating to procurement.17 A minimum of three competitive quotes must be obtained for the procurement of goods, services or works valued at $1,000 and more but $50,000 and less.18 Audit noted that the Ministry made numerous purchases from various suppliers without obtaining competitive quotes contrary to Procurement Regulation 2010.
Refer to Table 32.19 below for details of payments made.

Table 32.19: Payments to Various Suppliers without competitive quotes Date 02/02/15 31/03/15 Payment Description Cheque No.

72941 Purchase of chainsaw parts for FTC.

2614 23/06/15 4538 Purchase and install of wireless conference sound systems.
Printing of books (import permit, export permit, landing permit, provision workbook and bunkering permit) Electrical work done at Lami office and Jetty 2220 72770 Purchase of Toners 3709 4027 2376 Purchase of stationery Being or purchases of hardware materials Being advance payment conference stakeholder Meeting room and catering for the hire of for TUD 72669 Payment of pine posts for Gau Ice Plant 4605 Payment of home appliances for seaweed value adding and processing 02/03/15 21/01/15 12/05/15 28/05/15 18/03/15 08/01/15 29/06/15 Total Amount ($) 3,249.13 8,173.90 7,000.00 1,850.00 4,610.00 1,919.15 4,630.64 2,420.00 5,100.00 3,865.00 42,817.82 Due to the lack of competitive quotes it was not possible to determine whether the goods and services received were purchased from the most economical source.
Therefore the purchases lack transparency.

Recommendation The Ministry should comply with the requirements of the Procurement Regulation 2010 by obtaining competitive quotations for purchase of goods and services.

Ministry’s Comments The Issue is noted.

Divisional Heads and supervisors have been notified on the issue of three competitive quotes for procurements more than one thousand dollars.
17 Procurement Regulation 2010 - Section 3 18 Procurement Amendments Regulations 2012 - Section 4 (a) Ministry of Fisheries and Forestry Section 32: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 32.15 Misallocation of Expenditures All business transactions must be captured by the respective appropriation code and cost centres, if applicable that are responsible for their approval and budgetary controls and management reporting.19 Details of each invoice or other source document for a payment must be promptly and accurately entered into the fields provided, including the ledger account it is charged to.20 Audit verification of the Ministry’s 2015 payment vouchers revealed that the Ministry was charging expenses to unrelated expenditure allocations.
Refer to Appendix 32.1 for examples.

The above reflects a lack of proper planning by the Ministry in identifying all necessary expenditures for a period and ensuring they are adequately budgeted for.

Failure to correctly allocate expenses to the appropriate account would result in the expenditure account being overstated thus providing inaccurate information vital for informed decision making purposes.
Recommendation The Ministry should ensure that:    all purchases made are charged to the correct allocation; all necessary expenditure to be incurred for the year is identified and adequately provided for in the Ministry’s budget; and accounting information gathered are fairly represented so that proper decision making could be made.
Ministry’s Comments For one reason, why misallocation occurs is due to the urgency of the purchases, travel or depending on the situation that we at the accounts are faced with.

Here we have a couple of misallocation made by the Ministry, noting that most of these are correlated to the expenditure allocation used.

In the case of the Minister’s perdiem, this is a clear situation where we have no choice but to pay perdiem even if there are no funds available in his appropriate allocation.
Further to this, such trips are not budgeted for however, accounts section will have to look for ways to have the payment done.

The recommendation made audit is important and needs to be addressed:  Correct charges are to be made to the appropriate allocation.

Misallocation will be journalised to correct expenditure vote.

 Way forward, it is important that expenditures are correctly charged to the appropriate allocation.

 Virement has to be prepared in future to address this misallocation.
PAO and SAO will allocate the correct expenditure allocation to the subordinates.

This minimise the misallocation.

19 Chart of Accounts (Part 2) – Reporting Structure Flowchart for Fiji Government 2005 20 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.1(g) Ministry of Fisheries and Forestry Section 32: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 32.16 Use of Operational Funds Manufacturing Account (Fund 4) activities.
(Fund 1) to cater for Trading & All business transactions must be captured by the respective appropriation code and cost centres, if applicable that are responsible for their approval and budgetary controls and management reporting.21 Each Agency operating a trading and manufacturing activity must prepare quarterly profit and loss statement.

The profit and loss statement and the balance sheet must be prepared on an accrual accounting basis.
Inter-fund transactions or posting on the FMIS between Fund 1 and Fund 4 is prohibited.22 The profit and loss statement must include all expenses that relate to the activity, and where necessary, include estimates of overheads met by the department, depreciation of assets, services provided below costs by other agencies, provision for doubtful debts, and provision for inventory to be written off.23 Audit noted that the Ministry’s TMA bank account number 191888 held by the Bank of the South Pacific (BSP) was overdrawn by $2,558 in September 2015.
To clear the overdrawn account, the Ministry transferred funds totalling $8,000 from the Operating Fund (Fund 1) to the TMA Fund (Fund).

Refer to Table 32.20 below for details.

Table 32.20: Examples of TMA Expenditures Funded from Operating Fund Date Cheque No.

22/09/15 6171 Amount ($) 8,000.00 Payee Reason PUO Payments for TMA account overdrawn for September, 2015 which will be replenished after revenues for sales of timber for Nakavu Project are realized.
Since transfer of funds between fund 1 and fund 4 is not allowed, the above transaction was therefore unauthorised.

Recommendations The Ministry should strictly comply with TMA policies and avoid inter-fund transfers.

Ministry’s Comments The $8,000 amount from Fund 1 paid to TMA fund was to reimburse the amount paid from TMA to United Apparel for the 50% down payment for the manufacture of MFF uniform.
The deductions from the employees weekly and fortnightly were then deposited to TMA account to reimburse the amount of $17,729.

The recommendation made by audit is noted and needs to be addressed:   Way forward, this mode of arrangement will be looked into thoroughly in the future.

Prior consultation with MOF to account for the GL.
21 Chart of Accounts (Part 2) – Reporting Structure Flowchart for Fiji Government 2005 22 Trading and Manufacturing Account Policy Section 7.2 23 Finance Instruction 2010 – Section 30 Ministry of Fisheries and Forestry Section 32: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 32.17 Consultancy Payments Anomalies The Assistant Accounts Officer must not certify a payment as correct unless they are satisfied that: it is in accordance with an LPO, indent, contract, invoice or other authorisation; a) b) there is documentation that the goods, services or works have been received; c) sufficient uncommitted funds are available for payment of the account; d) the account is not fraudulent and has not been previously paid; e) the expenditure account it is charged to is correct.24 The Ministry engaged a consultant to develop a competency framework for the Ministry via an Agreement dated 26/05/15 for the sum of $25,000.
The Agreement requires that prior to the first phase; payment of $6,000 should be made to the Consultant who is to provide a detailed work plan and an inception report detailing the initial findings at the end of the 2nd week from the commencement date.

Audit noted that the Consultant only provided the detailed work plan without the inception report when the first payment of $5,100 was made vide cheque number 73621 of 24/05/15.
Control procedures in place to ensure receipt of required services from consultants has not been complied with.

Recommendations The Ministry should ensure that terms and conditions of contract agreements entered into for the provision of goods and services are honoured prior to effecting payments.

Ministry’s Comments Audit issue is noted.

The Ministry ensures that in future contracts should be properly scrutinised and no advance payment before the report is submitted.
32.18 LPO raised after Invoicing All system generated purchase orders, indents and other commitments of funds must be recorded in the Financial Management Information System (FMIS) and Commitment Ledger immediately after they have been approved.

Audit noted that the Ministry did not adhere to proper accounting procedures when making part payment of $5,000 vide cheque number 73622 of 24/06/15 to a company for the gravelling and repairs of bridge at the NFMPP site in Nakavu, Namosi.
Review of supporting documents for the payment indicated that the Local Purchase Order (LPO) no.

91011-012147 of 24/06/15 was raised a day after the invoice for works done was received.

The anomaly reflects disregard of required accounting procedures and of the internal controls ensuring the integrity of the payments of goods and services system.
24 Finance Manual 2013, Section 2.9.4 Ministry of Fisheries and Forestry Section 32: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Ministry should ensure that internal control requirements for the purchase of goods and services (such as raising of LPOs prior to receiving goods and services) are upheld prior to payments being effected.

Ministry’s Comments The issue is noted.


The Ministry will ensure that LPO are raised before goods or services are invoiced.
32.19 Utilisation of Capital Expenditure Funds for Other Projects The Assistant Accounts Officer must not certify a payment as correct unless they are satisfied that: it is in accordance with an LPO, indent, contract, invoice or other authorisation; a) b) there is documentation that the goods, services or works have been received; c) sufficient uncommitted funds are available for payment of the account; d) the account is not fraudulent and has not been previously paid; e) the expenditure account it is charged to is correct.25 Expenditure must not be incurred on an item that is noted as Requisition to Incur Expenditure until written approval has been obtained from the Ministry of Finance.26 Audit noted that the Ministry has been utilising funds from some Capital project allocations for the procurement of goods and services which are not related to those projects.
Refer to Table 32.21 below for details.

Table 32.21: Mis-utilisation of capital expenditure allocations Date 30/07/15 24/06/15 Total Particulars Cheque No 73810 Payment of Telegraphic Transfer (TT) to A Co Ltd" for advance payment on the purchase of shrimp hatchery equipment and feed from Thailand as per Indent No DF 04/15.
73625 Payment of 3rd installation of 30% completion of the contracted amount for the construction of 5 ponds and water dam at Dreketi Fisheries Allocation Utilised Marine Resource Inventory Survey Correct Allocation Brackish water Development Amount ($) 30,471.43 Construction Multi Hatchery of Species Aquaculture Development 8,688.00 39,159.43 In addition, no approval was received from the Ministry of Finance for the utilisation of funds for the Construction of Multi Species Hatchery Allocation which is under Requisition in the 2015 budget.
The above finding indicates clear breaches of financial regulations which should be adhered to by the Ministry to ensure that proper controls exist on use of budgeted funds.
25 Finance Manual 2013, Section 2.9.4 26 Finance Manual 2013, Section 2.1.9 Ministry of Fisheries and Forestry Section 32: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Ministry should ensure that the funds are utilised for their intended purposes as set out in the budget.

Ministry’s Comments Audit comments are acknowledged that incorrect allocation are utilised for the project.
Audit recommendation is implemented immediately, prior approval from MoF for payment is important to eradicate such expenditures in the future.
32.20 Settlement of Previous Years Outstanding Accounts All Ministries and Departments were advised in 2014 that the Ministry of Finance would not be facilitating any requests for carry-over of funds from 2014 to the 2015 financial year.27 It was noted that the Ministry paid for outstanding accounts from 2014 in 2015 contrary to the requirements of the Ministry of Finance Circular Number 25/14.

Details of payments are listed in Table 32.22 below.
Table 32.22: Payment of Outstanding Accounts from Previous Years Date 26/02/15 Cheque No.

1931 LPO Date LPO Number Particulars 05/11/14 078999-000574 03/06/15 4048 05/12/14 03/12/14 91011-011000 91011-010952 Total Payment of outstanding account for the purchase of underwater camera and water proof bags for the Seaweed farming project.

Purchase of Rota tanks for Gau Ice Plant.


Amount ($) 3,871 9,440 13,311 The above finding indicates a lack of laxity in ensuring that accounts due are settled in a timely manner or in the year in which they are incurred.

The settling of prior year’s due accounts in the current financial year impinges on the current year’s budget and may result in over-spending of expenditure allocations.
Recommendation The Ministry should ensure that the current year’s expenditures are settled within the current financial period and not carried forward to the next financial year.

Ministry’s Comments Recommendation made herewith been noted with great concern and will strictly comply with the Ministry of Finance Circular Number 25/2014.

Officers been notified on this and not to repeat in future.

27 Finance Circular No 25/14.


Ministry of Fisheries and Forestry Section 32: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 32.1: Sample of Expenditure Misallocations in 2015 Date 21/1/15 Particulars Cheque No.
72770 Purchase of Toners Allocation Charged Amount ($) 4,610.00 1–32302–91011–050499 (Training Expenses) 16/2/15 1722 January 2015 VAT payment 3,777.68 1–32101–32101–050499 (Training Expenses) 5,000.00 1–32102–32999–071116 (Information Technology Operational Support) 5,000.00 1–32201–77101–060514 (ITTO) 5,000.00 1–32203–91071–050499 (Training Other) 5,000.00 1–32205–91071–050499 (TITC Training Expenses) 2,019.68 1–32302–91011–050499 (Training Expenses) Software 712.95 1–32304–91011–050171 and (PC Stationery) 4,312.14 1–32205–91021–050499 (No description) 1,000.00 1–32207–91021–070999 (Monitoring & Surveillance Logging) 16/2/15 1933 Purchase of Premix and Super Diesel 2/3/15 2151 Purchase of Powermate Fan and hose for refrigerator department.
10/3/15 2130 TFL bill for various Forestry departments 24/4/15 3219 Purchase of 2 Dell Desktop Computers 7/5/15 22/5/15 73405 Air passage of Hon Minister whilst attending the 11th session of the United Nations Forum on Forests, New York with effect from 13th – 14th May and two other meetings at Seoul Korea on 19th May and Jakarta, Indonesia effective from 21st – 22nd May 2015.

2303 Purchase of valve, pvc tees and seal freshwater for NRS tilapia and prawn ponds at Naduruloulou.
tapes 26/5/15 3895 Vanuabalavu TFL Bill for the month of April 2/6/15 8/6/15 4710 Lami TFL Bill for the month of May 4176 Purchase of diving equipment’s 3,650.00 1–32302–91011–040351 (Maintenance of Office Equipment) 6,805.65 1–32102–32999-071301 (Farm Activities) Management 6,805.65 1–32303–91011-049999 (Galoa Research Station) 2,593.19 1–32303–91011–051099 (Dive Insurance) 1,707.89 1–32301–78999–050501 (Office Books, Periodical and Publications) 3,003.44 1–32303–91011–040399 (Naduruloulou Fish Farm) 2,282.00 1–32303–91011–051099 (Dive Insurance) 18/6/15 73584 Conference room hire for regional 1,500.00 1–32302–91011–040205 23/6/15 observer training (50% deposit).
4538 Printing of books (import permit, export permit, landing permit, provision workbook and bunkering permit) 3/7/15 73660 Conference room hire for regional observer training.
(Protective Clothing) 3,000.01 1–32302–91011–040105 (Fuel and oil vessels) 3,999.99 1–32302–91011–040101 (Fuel and oil vehicle civil) 1,500.00 1–32302–91011–040205 (Protective Clothing) Ministry of Fisheries and Forestry Section 32: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Date Cheque No.
Particulars 21/7/15 4990 Monthly telephone bills for MFF 21/7/15 25/8/15 5673 Advertising at new Nausori fish market regarding prohibited sale and small catch fish.

5714 Air passage payment for TCC11 meeting in Pohnpei, FSM for Mr. J.A.
and Mr. A. R. Allocation Charged Amount ($) 582.53 1–32303–91011–049905 Research (Makogai Station) 8,506.26 1–32305–91011–080620 Fisheries (Coastal Development) 2,212.56 1–32204–91011–050133 (Stores & Equipment) 2,212.00 1–32206–91011–080801 of (Reforestation Degraded Forests) 1,667.24 1–32303–91011–040399 (Naduruloulou Fish Farm) 3,473.00 1–32306–91011–080628 (Seaweed Development Project) 5,340.79 1-32302-91011-040205 (Protective Clothing) 4,513.22 1–32302–91011-040364 (Vessel Spare Parts & Maintenance) 2,920.86 1–32302–91011–030101 (Travelling) Total 104,708.73 Ministry of Fisheries and Forestry Section 32: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 33 Ministry of Lands and Mineral Resources Role and Responsibilities The Ministry of Lands and Mineral Resources is made up of two Departments, namely the Department of Lands and the Department of Mineral Resources.
The Department of Lands is responsible for the administration, development and management of all state land property.

Activities include Land Valuation, Mapping, Development and Maintenance of State Land and Geographic Information System.
The Department of Mineral Resources undertake studies in relation to geological hazards, mineral prospects and groundwater development and manage the development of the Mining and Quarrying Sector with a mandate under the Mining, Petroleum (Exploration and Exploitation), Quarries, Explosive and Continental Shelf Acts.
Table of Contents PART A: FINANCIAL STATEMENTS.............................................................................................................................. 2 33.1 Audit Opinion ............................................................................................................................................................ 2 33.2 Statement of Receipts and Expenditures ................................................................................................................. 2 33.3 Appropriation Statement .......................................................................................................................................... 3 33.4 Statement of Losses ................................................................................................................................................ 3 PART B: ANNUAL FINANCIAL STATEMENT AUDIT FINDINGS .................................................................................. 4 33.5 Anomalies in Trust Fund Account (Main Trust Funds) ............................................................................................. 4 33.6 Presentation of Trust Account Statement of Receipts and Payments ..................................................................... 6 33.7 Rental Being Charged on Expired Leases ............................................................................................................... 6 33.8 Arrears of Revenue .................................................................................................................................................. 7 33.9 Anomalies in the Underline Accounts Reconciliation ............................................................................................... 8 33.10 Accountable Advance ............................................................................................................................................ 10 33.11 Stamp duty
10 33.11 Stamp duty ............................................................................................................................................................. 11 33.12 Write Off of Government Asset Accounts .............................................................................................................. 11 PART C: REQULARITY AUDIT FINDINGS ................................................................................................................... 12 DEPARTMENT OF LANDS ...................................................................................................................................................... 12 33.13 Administration of Extensions and Contracts........................................................................................................... 12 33.14 Salary and Wages Reconciliation not prepared on Time ....................................................................................... 14 33.15 Anomalies in Procurement and Payment Processes ............................................................................................. 16 33.15.1 Insufficient Supporting Documents ................................................................................................................. 16 33.15.2 Splitting of Cost ............................................................................................................................................... 18 33.15.3 Anomalies in the Payment of Rates for Crown Land – Municipal Council Allocation: 1-33301-79101-040612 33.15.3.1 33.15.3.2 Payments made after the Discount Period ............................................................................................. 19 Difference between Audit and Lands Calculation of the Rates Payable................................................. 20 33.16 Anomalies in the Receipting and Recording of Revenue - CLLS ........................................................................... 21 33.16.1 Incorrect posting of reference numbers
 .......................................................................................................... 21 33.16.2 Delays in updating lessees’ accounts in the CLLS ......................................................................................... 21 33.16.3 Lessees’ Statement of Account not updated to reflect payments made ......................................................... 22 33.16.4 No reconciliation performed between the manual receipts with the entries to CLLS ...................................... 22 33.17 Accounting for revenue received through Housing Authority of Fiji and Post Fiji Limited ...................................... 23 33.18 Record Keeping – Survey of Mahogany ................................................................................................................ 25 33.19 Legislation governing Lands Department ............................................................................................................... 26 33.20 Crown Land Lease System (CLLS) ........................................................................................................................ 26 DEPARTMENT OF MINERAL RESOURCES .......................................................................................................................... 27 33.21 Incorrect Payments of Salary ................................................................................................................................. 28 Ministry of Lands and Mineral Resources Section 33: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 33.22 Salary Reconciliation Not Prepared on Time ......................................................................................................... 29 33.23 Purchase Orders not received ............................................................................................................................... 30 Insufficient Supporting Documents
 ........................................................................................................................ 31 33.24 APPENDIX 33.1: Examples Of Rent Charged On Expired Leases ................................................................................... 33 APPENDIX 33.2: Details Of Incorrect Postings To The CLLS .......................................................................................... 34 APPENDIX 33.3: Details Of The Lessee’s Statement Of Account Not Updated – Revenue Received Through Housing Authority ................................................................................................................................... 35 APPENDIX 33.4: Details Of The Lessee’s Statement Of Account Not Updated – Revenue Received Through Post Fiji Limited ............................................................................................................................................... 36 PART A: FINANCIAL STATEMENTS 33.1 Audit Opinion Audit of the 2015 accounts of the Ministry of Lands and Mineral Resources resulted in issue of an unqualified audit report.
33.2 Statement of Receipts and Expenditures The Ministry collected revenue totalling $15.1millionand incurred a total expenditure of $25.3 million in 2015.

Details are shown on Table 33.1 below.
Table 33.1: Statement of Receipts and Expenditure for 2015 Description Land and property rent Rental for quarters Fees charges, fine and penalties Revenue from surveys & sales of nav Hire of plants & vehicles License Sale of publications Sale of photographs Mining fees Chemical Stamp duty Commission Miscellaneous Total Revenue Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers 2015 ($) 13,213,598 - 678,583 42,051 7,241 49,366 345 516 367,290 8,460 35,035 9,508 704,885 15,116,878 8,426,698 797,850 669,632 5,048,758 981,796 20,227 2014 ($) 13,851,038 958 4,693,637 - 10,209 142,058 - - 619,932 7,309 113,181 9,481 650,293 20,098,096 8,418,047 741,926 709,995 5,542,051 1,000,860 32,100 Ministry of Lands and Mineral Resources Section 33: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Special expenditures Total Operating Expenditure Capital construction Capital purchases Capital grants and transfers Total Capital Expenditure Value Added Tax Total Expenditure 2015 ($) 950,479 16,895,440 2,487,381 2,573,146 1,593,861 6,654,388 1,803,716 25,353,544 2014 ($) 131,748 16,576,727 4,583,570 352,268 971,376 5,907,214 1,843,361 24,327,302 Total revenue decreased by $4.98 million or 25% in 2015compared to 2014even though the Ministry had taken vigorous measures to collect the arrears due to Government.
The increase in number of expired leases contributed to the decrease.

Total expenditure increased by $1.0 million or 4% from the previous year and was largely due to increase in capital expenditure by 13% which was the result of the increased number of projects executed during the year.

33.3 Appropriation Statement The Ministry incurred expenditure totalling $25.4 million in 2015 against a revised budget of $33.0 million resulting in a savings of $7.6 million.
Details of expenditure against the budget estimate are provided in Table 33.2.
Table 33.2: Appropriation Statement for 2015 SEG Item Established Staff Government Wage Earner Travel and Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditures Total Operating Expenditure Capital Expenditure Capital Construction Capital Purchases Capital Grants and Transfers Total Capital Expenditure Value Added Tax Total Expenditure Budget Estimate ($) 9,092,414 859,504 666,800 6,620,050 1,075,700 32,100 1,460,165 19,806,733 4,405,150 3,155,000 3,020,000 10,580,150 2,607,429 32,994,312 Changes ($) (100,000) - 117,000 (40,000) 15,000 - (145,783) (153,783) 19,330 134,453 - 153,783 - - Revised Estimate ($) 8,992,414 859,504 783,800 6,580,050 1,090,700 32,100 1,314,382 19,652,950 4,424,480 3,289,453 3,020,000 10,733,933 2,607,429 32,994,312 Actual Expenditure ($) 8,426,698 797,850 669,632 5,048,758 981,796 20,227 950,479 16,895,440 2,487,381 2,573,146 1,593,861 6,654,388 1,803,716 25,353,544 Lapsed Appropriation ($) 565,716 61,654 114,168 1,531,292 108,904 11,873 363,903 2,757,510 1,937,099 716,307 1,426,139 4,079,545 803,713 7,640,768 33.4 Statement of Losses Misappropriation of revenue of $129,602.22 was recorded in 2015.
An internal investigation was conducted internally (Finance Section) in first week of October 2015 to authenticate the loss and an Officer was suspended with effect from 14/10/2015.

Subsequently, a Ministerial Investigation team was appointed to further investigate and collate relevant information pertaining to the loss.
An initial Ministry of Lands and Mineral Resources Section 33: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ loss notification was lodged with Fiji Police Force on 13/10/2015.A proper report was lodged on 30/11/2015.

Currently the Fiji Police Force is investigating the matter.

The Ministry of Finance approved the write off of unverifiable accounts receivable balances amounting to $6,834.10 and Lands Trust Cash of $32,049.98 in 2015.
PART B: ANNUAL FINANCIAL STATEMENT AUDIT FINDINGS 33.5 Anomalies in Trust Fund Account (Main Trust Funds) 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 Within 5 days after the end of each month, the Clerical Officer shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.2 The Accounts Officer shall certify and date the reconciliation statement after ensuring that all balances in the statement are verified to supporting documents.3 The Senior Accounts Officer must verify balances in the bank reconciliation to the cashbook, bank statements, un-presented cheque list and the previous month’s bank reconciliation before certifying it.4 The following anomalies were noted when scrutinising the trust fund accounts and related records: (i) Audit noted a variance when comparing the balances reflected in the general ledger for Cash to Trust amount for the Department of Lands It was also noted that despite the write off of Trust Cash amounting to $32,050 and an adjustment of Trust Account for $170,101 on 02/06/2016, differences were still noted.
Refer to Tables 33.3 to 33.6 below for details: Table 33.3: Variance in Trust Fund Account – Consolidated Allocation 9-33101-79001-520401 9-33101-79001-895051 Variance Before Write Off Amount ($) 5,537,654 (5,395,470) 142,184 Write-Off/ Adjustment Amount ($) 32,050 170,101 After Write Off Amount ($) 5,505,604 (5,565,571) (59,967) A difference of $212,241 also exists between the cash general ledger amount and bank reconciliation amount.
Table 33.4: Variance between Bank Reconciliation and GL SAG 52 for Lands General Ledger 9-33101-79001-520401 ($) Bank Reconciliation Difference 5,505,604 5,717,845 ($) ($) 212,241 1 Finance Instruction 2010 Section 58(3) 2 Ministry of Lands & Mineral Resources Finance Manual 2011 Section 15.4.1 3 Ministry of Lands & Mineral Resources Finance Manual 2011 Section 15.4.3 4 Ministry of Lands & Mineral Resources Finance Manual 2011 Section 7.4.11 Ministry of Lands and Mineral Resources Section 33: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The above also has resulted in a difference of $152,274 between the Bank reconciliation amount of $5,717,845 and the Trust liability of $ 5,565,571.
Table 33.5: Variance between Trust Receipts Register and GL SAG 52 for Lands Month January February March April May June July August September October November December Trust Receipts Register ($) FMIS GL Variance 44,768 81,102 42,521 274,269 309,624 95,823 107,799 113,383 298,755 45,871 791,670 ($) 43,213 88,686 70,874 263,417 309,388 102,351 113,005 113,383 319,095 43,707 845,890 2,501,500 2,943,418 4,707,085 5,256,427 ($) 1,555 (7,584) (28,353) 10,852 236 (6,528) (5,206) - (20,340) 2,164 (54,220) (441,918) (549,342) Table33.6: Variance between Trust cashbook and GL SEG 52 for Lands Month January February March April May June July August September October November December Trust Cashbook ($) 12,946 66,987 375,189 - - 605,085 56,508 28,841 39,250 45,529 126,682 2,390,332 3,747,349 FMIS GL Variance ($) 12,946 68,468 378,572 - - 607,918 64,881 28,841 39,250 51,062 126,736 2,900,015 4,278,690 ($) - (1,481) (3,383) - - (2,833) (8,373) - - (5,533) (54) (509,683) (531,341) Carrying out monthly reconciliation is ineffective if variances noted between the cashbook, reconciliation statements and the general ledger (FMIS) are not resolved or relevant accounts adjusted to reflect the correct balances.
Recommendations The Ministry should:    liaise with the Ministry of Finance on appropriate ways to account for direct deposits of operating revenue made through bank transfers; and reconcile operating revenues receipted through trust to payments made to operating revenue.
clarify with evidence the reasons for the cheques issued but not captured in the cheque register; and Ministry of Lands and Mineral Resources Section 33: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  investigate and rectify the variances noted between its manual cashbook and the cheque register.
Management Comments No comments received 33.6 Presentation of Trust Account Statement of Receipts and Payments One of the objectives of agency financial statements is to provide information that is useful to the Ministry in making economic decisions.

Audit review of the 2015 Trust Account Statement of Receipts and Payments submitted for audit revealed that the statement did not detail the types or nature of revenue received and expenditure paid from the trust accounts.
Instead, it merely reflected the different trust fund accounts maintained by the Ministry with a summary of monthly cash inflows and outflows reflected as part of the Notes.

The current presentation method limits the usefulness of the Trust Account Statement of Receipts and Payments in assisting the Ministry and other users in their decision-making process regarding the operations of the Trust Fund Accounts.
Although the issue had been raised with the Ministry in the 2012, 2013 and 2014 audit reports, changes are yet to be seen in the presentation of the financial statements.

Recommendations The Ministry should consider:   reflecting the nature or types of receipts and payments in the Trust Account Statement of Receipts and Payments.

preparing separate Statements for each Trust Fund Account.
Management Comments No comments received 33.7 Rental Being Charged on Expired Leases Lease agreements are drawn up for a specific period and yearly rental is payable to the Director of Lands during this period.

It was noted from data obtained from the Crown Land Lease System that rental revenue was being charged on expired leases.

This amounted to $1,043,573.58 as at the date the date of audit on 4 November 2015.

Refer to Appendix 33.1 for examples.


The above can result in the overstatement of arrears of revenue disclosed in the Agency Financial Statement.

Ministry of Lands and Mineral Resources Section 33: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department should ensure that:   lease rental is not charged on expired leases; and the necessary processes are taken prior and after the expiry of leases.
Management Comments The recommendation is duly noted.

With effect from last year the Ministry has taken appropriate approach and stopped charging rental on expired lease.

33.8 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.
   no further credit shall be extended to the debtor; a demand notice for payment shall be sent to the debtor after his/her debt has been overdue for more than a month; if the account still remains unpaid after the first demand notice was issued, a final notice shall be issued demanding payment within 14 days.5 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.6 The audit noted the arrears of revenue for Department of Lands as at 31/12/15 amounting to $26,980,319 included only crown land lease rent.
The Department was not able to provide details of arrears for other revenue such as Valuer and Surveyor Registration Fees, Taxi Base Fees/Narere Government Barracks rent and premium.

Refer to the Table 33.7 below for details.
Table 33.7: Details of Arrears of Revenue Arrears of Revenue Valuers Registration Arrears Surveyor Registration Arrears Taxi Base Arrears / Narere Barracks Arrears Premium Arrears Crown Lease Arrears Total 2014 Amount ($) 2015 Amount ($) - - - - 33,467.78 26,813.75 184,973.25 268,025.19 26,980,318.91 24,736,888.33 26,980,318.91 25,250,168.30 The audit also noted that procedures for recovery of arrears of revenue have not been effective as arrears of revenue have been increasing since 2010.
Refer to the Table 33.8 below for details.
5 Ministry of Lands & Mineral Resources Finance Manual 2011 Section 9.2.1 6 Ministry of Lands & Mineral Resources Finance Manual 2011 Section 9.2.4 Ministry of Lands and Mineral Resources Section 33: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 33.8: Arrears of Revenue Year Balance ($) 2010 17,970,765 2011 19,561,844 2012 22,729,013 2013 25,228,161 2014 25,250,168 2015 26,980,319 30,000,000 25,000,000 20,000,000 ) $ ( Figure 1 Arrears of Revenue from 2010 - 2015 t n u o m A 15,000,000 10,000,000 5,000,000 - 2010 2011 2012 Year 2013 2014 2015 Arrears of Revenue Recommendations The Ministry should:     arrears for all types of revenue collected are compiled on a timely basis; take appropriate steps to vigorously recover long outstanding debts; follow up the outstanding debts in accordance with the debt recovery procedures prescribed in the Ministry’s Finance Manual; and review the effectiveness of the Taskforce Unit that was established to enforce the collection of land rent.
Management Comments No comments received 33.9 Anomalies in the Underline Accounts Reconciliation Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the Accounts Officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.7 7Ministry of Lands and Mineral Resources Finance Manual 2011 Section 16.3.1 Ministry of Lands and Mineral Resources Section 33: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Any errors or misallocations must be immediately adjusted by way of journal vouchers.8 A ledger reconciliation statement shall be signed and dated by the Accounts Officer.9 The ledger reconciliation statement shall be forwarded to the Senior Accounts Officer.
The Senior Accounts Officer must ensure that: (i) (ii) all balances are accurate and adequately supported; and any misallocations or outstanding balances from the previous month have been dealt with.10 The Senior Accounts Officer shall certify and date the reconciliation.
If required by the Ministry of Finance, the reconciliation statement shall be forwarded to them by the date specified by the Ministry.11 When receipting revenue, the VAT portion should be credited to the new liability account, with natural account number [863201], and the balance to the revenue code.
At the end of the month when making VAT return payment to FRCA, the VAT portion should be debited to the same liability account thus making it zero.12 Audit noted the following anomalies:  Monthly reconciliations for the Department of Lands Operating Trust and Revolving Fund Accounts were not prepared on time.
Failure to perform account reconciliations on time is a breach of the Finance Manual which can allow material misstatements to be undetected for a considerable period of time contributing to unreconciled variances and errors in the financial statements.

 An amount of $1,317,407 was recorded as VAT from Provision for Goods & Services (account No: 1-33301-79101-863201) under the Operating Trust Fund Account.
The balance in this account has always been increasing since it was opened in 2009 to record VAT collected on revenue and the VAT payment made to FRCA.

The audit noted that the Department of Lands has not been paying the VAT collected to FRCA resulting in the outstanding balance increasing every year.

Refer to Table 33.9 for details.


Table 33.9: VAT from Provision of Goods and Services 2009 - 2015 2015 ($) (1,317,407.19) 2014 ($) (1,099,709.82) 2013 ($) (923,500.79) 2012 ($) (717,548.26) 2011 ($) (623,908.65) 2010 ($) (367,639.85) 2009 ($) (157,836.34) This balance of VAT collected and not paid to FRCA is a liability to the Ministry.
Recommendations The Ministry should ensure that:   Trust Fund Account reconciliations are prepared on a timely basis; The Ministry should ensure VAT collected is paid to FRCA on a timely basis.
8Ministry of Lands and Mineral Resources Finance Manual 2011 Section 16.3.4 9Ministry of Lands and Mineral Resources Finance Manual 2011 Section 16.3.5 10Ministry of Lands and Mineral Resources Finance Manual 2011 Section 16.3.6 11 Ministry of Lands and Mineral Resources Finance Manual 2011 Section 16.3.7 12Finance Circular No.
10/2009 - Value Added Tax (VAT) on Revenue Section 5.0 Ministry of Lands and Mineral Resources Section 33: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Management Comments No comments received 33.10 Accountable Advance A ledger shall be maintained for advances, petty cash, accounts payable, revolving fund accounts expenditure and commitment accounts.13 Any transaction raised affecting these accounts shall be entered in the appropriate ledger.14 Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the accounts supervisor shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.15 Audit noted the following anomalies from review of Revolving Fund Accounts:  The Accountable Register for the Department of Lands was not produced for audit which limited  our ability to verify retirement of advances; In addition to the above, the Department was not able to provide detailed listings of officers who were yet to retire the Accountable Advance as per the format provided by Finance Circular 02/2013; and  The detailed report attached to the December 2015 reconciliation could not be relied upon as there were credit balances indicating over-recovery of advances and debit balances with comments that the amounts have been cleared.
The audit noted that the Accountable Advance Account balance increased by $88,147 or 225% in 2015 compared to 2014.

The Ministry did not provide an explanation for the increase.

Refer to Table 33.10 below for details.

Table 33.10: Increase in Accountable Advance Account Balance in 2015 Account No.
Description 2015 ($) 2014 ($) 1-33301-79101-570301 Advances 127,349 39,202 Increase ($) 88,147 Percentage Increase 225% The above shows the ineffective internal controls exist in the Ministry in administration of accountable advances.

As a result, audit was not able to ascertain the accuracy and the completeness of the amount reflected as accountable advance for the Ministry at end of 2015.

Recommendations  The Ministry should maintain an updated Accountable Advance register.
 The Ministry should comply with the procedures relating to the preparation of reconciliation statements as stated in the Finance Manual to strengthen the reconciliation process.

Management Comments Recommendation is duly noted and as recommended Ministry is currently practicing.
13 Ministry of Lands & Mineral Resource Finance Manual 2013 Section 16.3.1 14 Ministry of Lands & Mineral Resource Finance Manual 2013 Section 16.3.2 15 Ministry of Lands & Mineral Resource Finance Manual 2013 Section 16.3.2 Ministry of Lands and Mineral Resources Section 33: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 33.11 Stamp duty On 12th February 2015, Fiji Revenue and Customs Authority (FRCA) and Ministry of Lands and Mineral Resources signed an agreement for Stamp duties to be collected by Fiji Revenue and Customs.16 The audit noted stamp duty amounting to $35,035 was still collected by the Department of Lands during 2015.
Refer to Table 33.11 below: Table 33.11: Stamp Duty in GL FMIS Allocation Description Amount 1-33301-79101-230201 Stamp Duty ($) 35,035 As a result, the Ministry’s revenue for the year 2015 has been overstated by $35,035.

Recommendations  All stamp duties collected after 12 February 2015 should be paid to FRCA.
Management Comments No comments received 33.12 Write Off of Government Asset Accounts Subject to this or any other Act, the Minister of Finance may write off losses in respect of public money, state assets and agency assets.17 The Finance Instructions may require each budget sector agency: a) To undertake appropriate recovery action for losses; b) To maintain a register of losses containing the details required to be recorded by the Finance Instructions; and c) To include details about losses and recovery action in the audited financial statements to be included in the agency’s annual report.18 Audit noted that assets totalling $38,884 which were not supported by relevant documents were written off by Ministry of Finance which resulted in loss to the Ministry and to government as a whole.
Refer Table 33.12 for details.
Table 33.12: Write off Asset Account Balance Description Accounts Receivable 1-33101-33101-560601 SLG 86 CLEARING - 320 WESRAM FINANCE Amount ($) 266.38 16 Ministry of Lands and Mineral Resources Press Release No: 06/2015 12th February, 2015 17Financial Management Act 2004 – Section 34(1)(a) 18 Financial Management Act 2004 – Section 35 Ministry of Lands and Mineral Resources Section 33: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Asset Account Balance Description 1-33101-33101-560602 1-33101-33101-560603 1-33101-33101-560604 1-33101-33101-560605 1-33101-33101-560606 1-33101-33101-560607 1-33101-33101-560608 1-33101-33101-560609 9-33101-79001-520401 SLG 86 CLEARING - 202 PD OPR C/YR SLG 86 CLEARING - CARP FINANCE SLG 86 CLEARING -DOBU FINANCE SLG 86 CLEARING - PD RATES NASINU SLG 86 CLEARING - PD PUBLIC RENTAL BOAR SLG 86 CLEARING - PD FINES & TREAUSRY SLG 86 CLEARING - PD RATES LTK SLG 86 CLEARING - PD OTHERS LANDS TRUST FUND ACCOUNT Land Trust Cash Account TOTAL Amount ($) 176.05 602.27 95.00 52.47 36.28 25.00 9.75 5,570.90 32,049.98 38,884.08 In addition, an amount of $170,100.89 was adjusted into Main Trust account No.
9-33101-79001- 895051 as part of the write off.

Poor control and review of general ledger posting has resulted with some posting errors and unreconciled variances for which the Ministry sought approval from the Ministry of Finance for write- off.

The risk of fraud and errors and omission exist in the accounts which have been written-off.
Recommendation The Ministry should ensure that ledger postings are checked and proper reconciliation of accounts balances are carried out to ensure that balances are fully supported.

Management Comments No comments received PART C: REQULARITY AUDIT FINDINGS DEPARTMENT OF LANDS 33.13 Administration of Extensions and Contracts Salaries and wages largely represent the agency’s budgeted expenditure.
Salary advices must be submitted promptly to the Ministry of Finance where there is any change to personnel emoluments or deductions such as appointments, promotions, transfers, acting allowances, dismissals and resignations, income tax allowances, housing deductions, or other authorised charges or deductions.19 The audit of payroll revealed discrepancies which resulted with incorrect payment of salaries which was attributed to late or non-submission of Contract/Extension to Accounts Section, incorrect salary grade and scale used in employments contracts.
19 Finance instruction 2010 Section 17(1) Ministry of Lands and Mineral Resources Section 33: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Refer to the Tables 33.13 to 33.15 below for details.

Table 33.13: Late or Non-Submission of Contract/Extension to Accounts EDP No.
Position Over Payment /(Under Payment) ($) Late / Non-Submission to Accounts Section 61091 Senior Valuer 46311 Principal Surveyor 60662 Assistant Accountant 60481 Admin Officer 60396 Senior Surveyor 00993 Temporary Clerical Officer 53511 Chief Valuer 58850 Principal Valuer 58440 Senior Valuer 91105 Technical Assistant 63854 Executive Officer 129.19 Late Submission (2,448.96) Non submission 15.36 Late Submission (652.15) Non submission (738.95) Non submission (243.46) Late Submission 148.78 Late submission (932.78) Non submission (637.61) Late Submission (20.61) Late submission (492.29) Late submission Table 33.14: Retrospective Approval of Acting Appointments EDP No.
58519 61091 64501 46311 60662 92816 60481 58563 60396 90368 Date of Letter 19/02/2015 27/07/2015 16/04/2015 17/07/2015 7/07/2015 5/10/2015 19/03/2015 19/03/2015 18/11/2014 10/02/2015 11/08/2015 26/11/2014 7/11/2014 28/05/2015 27/07/2015 22/12/2014 1/04/2015 25/11/2014 4/08/2015 4/08/2015 Period of Acting Appointment 23/01/2015-22/04/2015 23/7/2015-22/10/2015 29/03/2015-30/06/2015 1/7/2015-30/09/2015 01/07/2015-30/09/2015 1/10/2015-31/12/2015 1/12/2014-28/2/2015 1/3/2015-31/5/2015 03/11/2014-02/02/2015 3/02/2015-2/05/2015 03/08/2015-02/11/2015 23/10/2014-22/01/2015 01/11/2014-31/01/2015 20/4/2015-19/7/2015 20/7/2015-19/10/2015 17/12/2014-16/03/2015 17/03/2015-16/06/2015 03/11/2014-02/2/2015 3/2/2015-2/5/2015 3/5/2015-2/8/2015 No.
of Days Lapsed 19 2 14 8 4 2 79 14 11 5 6 24 5 28 5 3 12 16 131 67 Table 33.15: Incorrect Salary Grade or Scale in Contract EDP No.
Position Overpayment/ (Underpayment) ($) Comment 58519 92816 00917 49840 Technical Officer II Clerical Officer Temporary Research Officer Senior Research Officer (134.33) Wrong salary grade 1,152.88 Wrong Input into Government Payroll (672.58) Wrong Salary scale $940.77 Wrong salary grade Staff of salaries unit of the Department agreed with the issues and that they will look into sorting the issue with administration section.
Ministry of Lands and Mineral Resources Section 33: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Failure to provide correct pay details of staffs resulted in significant short-payments to staffs.

Recommendation The Ministry’s Corporate Services Section, as custodians of all employment details, should perform monthly reviews of employment data and inform supervisors if acting appointments or contracts are about to expire.
Management Comments Kindly acknowledge the recommendation made by the respective auditors.

   Efforts to ensure that officers’ acting and temporary extensions are inputted on time are guided by the Ministry Quarterly Planner which depicts timelines for submission of Performance Assessments for extensions.

There are necessary processes implemented by the ministry to ensure a qualitative assessment for the extension of acting or temporary appointments.
The timeline allows for a 2 weeks submission to Accounts prior to expiry of acting or temporary appointment.

CSD is also actively pursuing in collaboration with the Ministry’s Systems Support Unit, a pop up message of alert to officers and corresponding CSD desk officer of expiry dates for all appointments.

This will assist in the early facilitation of the above with due process.
 We are currently updating the internal database HRIS which records staff information on the above, together with assignment of updating staff information to a desk officer for continuous updating of HRIS to facilitate the successful implementation of the expiry date pop up mechanism.
33.14 Salary and Wages Reconciliation not prepared on Time The Accounting Head must ensure that payroll reconciliations are carried out fortnightly for salaries and weekly for wages and copies sent to the Ministry of Finance.20 Audit noted that in a number of cases, there was significant delay in preparation of salary and wages reconciliations.

Refer to the Tables 33.16 and 33.17 below for details: Table33.16: Pay Date and Date Reconciliation Prepared Pay No.
Pay Date Date Reconciliation Prepared Finance instruction 2010 Section 17(7) Ministry of Lands and Mineral Resources Section 33: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Pay No.
Pay Date Date Reconciliation Prepared Table 33.17: Wages Reconciliation Pay No.
Pay Date 7/01/2015 14/01/2015 21/01/2015 28/01/2015 4/02/2015 11/02/2015 18/02/2015 25/02/2015 4/03/2015 11/03/2015 18/03/2015 25/03/2015 1/04/2015 8/04/2015 15/04/2015 22/04/2015 29/04/2015 6/05/2015 13/05/2015 20/05/2015 27/05/2015 3/06/2015 10/06/2015 17/06/2015 24/06/2015 1/07/2015 8/07/2015 15/07/2015 29/07/2015 5/08/2015 12/08/2015 19/08/2015 26/08/2015 2/09/2015 16/09/2015 23/09/2015 30/09/2015 14/10/2015 21/10/2015 Date of Reconciliation 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 12/05/2015 13/05/2015 25/05/2015 25/05/2015 25/05/2015 15/06/2015 9/07/2015 9/07/2015 9/07/2015 10/07/2015 10/07/2015 10/07/2015 10/07/2015 10/07/2015 10/07/2015 10/07/2015 10/07/2015 14/07/2015 30/07/2015 3/08/2015 11/08/2015 25/08/2015 25/08/2015 2/09/2015 15/09/2015 23/09/2015 29/09/2015 12/10/2015 20/10/2015 Ministry of Lands and Mineral Resources Section 33: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ As result, there is a high possibility of errors and omissions not being detected and rectified in a timely manner.
Recommendation The Ministry should ensure that regular payroll (salaries/wages) reconciliations are performed on a timely basis.

Management Comments We acknowledge the recommendation of the Auditors.

In future we are going to adhere to Finance Instruction 2010 section 17(7), which states salary reconciliation should be done fortnightly and wages weekly.

To add on, this delay was because we had to re-submit our reconciliation to Ministry of Finance again upon their request which resulted in the delay.
33.15 Anomalies in Procurement and Payment Processes Any procurement of goods, services or works shall be issued so as to promote the following principles – (a) value for money; (b) maximise economy and efficiency and the ethical use of Government resources; (c) promote open and fair competition amongst suppliers and contractors; (d) promote the integrity of, fairness and public confidence in the procurement process; and (e) achieve accountability and transparency in the procedures relating to procurement.21 Audit review of expenditure records revealed numerous breaches of procurement and payments procedures and other basic internal controls resulting in non-compliance with the Finance Instructions and the procurement regulations of Government.
These include the following: Insufficient supporting documents;   Splitting of costs; and  Anomalies in the Payment of Rates for Crown Land – Municipal Council Allocation: 1-33301- 79101-040612; 33.15.1 Insufficient Supporting Documents The PSLMR, Directors, Manager Finance, Senior Accounts Officer or Accounts Officers must not certify a payment as correct unless they are satisfied that: i. it is in accordance with an PO, indent, contract, invoice or other authorisation; ii.
there is documentation that the goods, services or works have been received; iii.

sufficient uncommitted funds are available for payment of the account; iv.

the account is not fraudulent and has not been previously paid; v. the expenditure account it is charged to is correct.22 Audit noted that payment of meal claims did not have any supporting documents except for the meal claim forms.
21 Procurement Regulation 2010 Section 3 22 Ministry of Lands & Mineral Finance Manual 2013 Section 2.8.1 Ministry of Lands and Mineral Resources Section 33: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Refer to the Table 33.18 below for details.
Table 33.18: No supporting documents for Meal Claims Payment ID 60181 60648 60649 3670 4137 60325 60359 60409 4724 4722 4721 4729 4730 3414 3674 4581 3529 4016 60652 5760 60243 4534 5231 60669 Vendor/Supplier Amount ($) Payment Date 3/03/2015 Permanent Secretary for Lands & Mineral 1,062.50 31/7/2015 Permanent Secretary for Lands & Mineral 3,683.00 31/7/2015 Permanent Secretary for Lands & Mineral 2,140.00 20/02/2015 X-61150 63.00 10/04/2015 X-91098 750.00 22/04/2015 X-00933 18.00 Permanent Secretary for Lands & Mineral 3,877.00 4/05/2015 22/05/2015 Permanent Secretary for Lands & Mineral 6,282.95 295.00 9/06/2015 262.00 9/06/2015 88.00 9/06/2015 262.00 9/06/2015 262.00 9/06/2015 396.00 23/1/2015 MK 510.00 20/02/2015 MK 159.00 6/02/2015 JV 1,020.00 2/05/2015 MR 772.00 VR 25/3/2015 1,140.00 Permanent Secretary Land Mineral 31/7/2015 627.00 14/8/2015 JD 288.00 27/03/2015 Permanent Secretary Land Mineral 603.00 26/5/2015 258.00 7/07/2015 529.00 8/07/2015 JV JT Permanent Secretary Land Mineral X-61150 X-00862 X-00848 X-QA556 X-QS559 It was also noted that there were other payments made without adequate supporting documents, lacking competitive quotations and a SEG 10 capital payment for which separate VAT was charged.
Refer to the Table 33.19 below for details.

Table 33.19: Other payment anomalies Payment ID JV31/05 Vendor/Supplier Payment Date 6/03/2015 Fiji Procurement Office (FRCA & W&G charges) JV 6/08 9/03/2015 NA Amount ($) Issues 39,436.16 Audit could not sight PV paid to FPO allocated to 1333027901090133.

20,655.66  Only PV is attached.

 No supporting documents attached to the PV.

EFT No.

5321 3/02/1913 14/07/2015 HS 15,202.09  PO not attached.
12/06/2015 W & J C  No competitive quotations were attached 73,485.00 Land Bank Investment allocation under SEG 10.

VAT amounting to $9,585.08 inclusive in the amount above has been charged SEG 13 VAT allocation.

In the absence of requisite supporting documents the authenticity of the payments could not be determined during audit.
Ministry of Lands and Mineral Resources Section 33: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Department should ensure that requisite supporting documents are attached to payments vouchers before payments are made.

Management Comments The recommendations and findings by the auditors are acknowledged.
The ministry has now put in place a payments checklist to ensure that proper checking and verification carried before payments process.

The payment checklist would ensure all relevant documents are made available in times of payments.
33.15.2 Splitting of Cost Ministries or Departments must not split at any stage any single requirement in order to avoid the application of the procurement limits in regulation 27-(1).23 The procurement authorities delegated to Permanent Secretaries and the Board when procuring goods, services or works are as follows - 24 Responsible Authority Procurement Limits Permanent Secretaries Government Tender Board $50,000 and less $50,001 and more Audit noted that the payments totalling $61,640 to a supplier for hire of helicopter during the survey of Namosi was spilt into two payments in order to circumvent approval of the Tender Board.
Refer to Table 33.20 below for details.

Table 33.20: Splitting of Cost Payment ID 3943 6645 Payment Date Vendor/Supplier Amount Issues ($) 17/03/2015 H (FIJI) L 28/10/2015 H (FIJI) L 50,000.00 There was no GTB approval and splitting of cost has occurred to make payment.

The first payment was made on 17/03/2015 11,640.00 and the next was made on 28/10/2015.

It was also noted that Maintenance of Sub division allocation was used to make payment.
Procurement regulations have been breached to facilitate the payment of services obtained without tender.
Recommendation The Ministry should ensure that approval of Government Tender Board is obtained for payments above $50,000; 23 Procurement regulation 2010 – Section 28(3) 24 Procurement regulation 2010 – Section 27(1) Ministry of Lands and Mineral Resources Section 33: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Management Comments  The division responsible have acquired the services of the company without obtaining the initial approval of the Permanent secretary in consultation with Finance section on the procurement processes and availability of funds.
 Given that the services have been provided, the ministry was obliged to execute payment with concurrence  of the head of the ministry.

Appropriate internal awareness is now been undertaken within the ministry in ensuring that such events are not repeated in future.
33.15.3 Allocation: 1-33301-79101-040612 Anomalies in the Payment of Rates for Crown Land – Municipal Council The revised 2015 budget for the Municipal Council Rates for Crown Land was $1,380,000 of which $1,365,703.58 was spent resulting in a budget savings of $14,296.92.
33.15.3.1 Payments made after the Discount Period Audit review of sample of payment vouchers for payments of rates to Municipal Councils revealed that the Department did not take advantage of the full discount offered by the Municipal Councils by paying within the discount period.

Refer to Table 33.21 for examples.

Table 33.21: Payments after the discount period Date Payee Cheque No.
Amount VEP GL ($) Amount VIP ($) Details Issues 26/02/15 Suva City Council 3743 885,058.81 1,017,817.63 GRANT-IN-LIEU  RATES 2015 for Suva, Samabula, Muanikau, Tamavua Suva Wards.

and Extension 26/02/15 Nausori 3740 40,456.65 46,525.15 GRANT-IN-LIEU  Town Council RATES 2015 25/02/14 Sigatoka 3741 33,764.30 38,828.95 GRANT-IN-LIEU  Town Council RATES 2015 3/3/2015 Labasa 3807 32,902.53 37,837.91 GRANT-IN-LIEU  Town Council RATES 2015 10% discount was applicable if the rate was paid before 31/1/15.
The Department saved have could $32,832.83.

could 10% discount was applicable if the rate was paid before 31/1/15 as per schedule.

The Department have saved $1,500.81.

10% discount was applicable if the rate was paid before 31/1/15 as per schedule.

The Department could have save $2,043.63.

10% discount was applicable if the rate was paid before 31/1/15 as per schedule.

The Department could have save $2,043.63.


Ministry of Lands and Mineral Resources Section 33: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Delay in payments of rates to Municipal Councils have resulted in the Department not taking advantage of discounts offered by Councils and eventual loss to Government .
33.15.3.2 Difference between Audit and Lands Calculation of the Rates Payable Rates payable to the Municipal Councils are calculated as a percentage of the unimproved capital value (UCV) of the land.

Audit recalculation of rates payable to Municipal Councils noted that there were differences between the amount paid and the audit calculations.

Refer to Table 33.22 below for details.
Table 33.22: Examples of Differences in Rates Payable to Municipal Councils Municipal Council Rates– Audit Calculation ($) Lautoka City Council Labasa Town Council Nasinu Town Council Nausori Town Council 94,010.05 39,489.54 Could not be verified Could not be verified Remarks Actual Rates Paid ($) $82,778.97 overpayment 176,789.02 40,685.92 $1,196.38 overpayment 30,049.65 Basis of calculation not provided 46,525.15 Basis of calculation not provided The differences noted above resulted in the overpayment of rates by the Department.
Moreover, lack of relevant information provided by the Department prevented audit verification of amounts paid to Nasinu and Nausori Town Councils.

In addition, it was further noted that for Nasinu Town Council payment, the amount used in the payment vouchers by the Department did not match with the amount initially calculated.

Refer to the Table 33.23 below for details.

Table 33.23: Payment Voucher amount does not match with initial calculation Department’s Calculation of rates.
($) 62,115.83 PV Amount Before Discount (VIP) ($) Difference ($) 30,049.65 32,066.18 Council Nasinu Town Council Recommendations The Department should:  take advantage of the discounts offered by Municipal Councils by making rate payments within the discount period; and  properly reconcile the rate payments with the respective municipal council prior to payment.

Management Comments Recommendation is taken into consideration by the department.
While we do appreciate the incentives provided by the Municipal Councils, it is also important to note that there are processes that we need to comply to before payment is facilitated.
Statements of payments are usually received within the first two weeks of January from the Municipal Councils, and they are forwarded to our Valuation Unit to carry out proper verification which usually takes another 2 weeks before the files are forwarded to the Accounts for preparation of payment Ministry of Lands and Mineral Resources Section 33: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ schedules and processing of RIE which normally takes week then is forwarded to Ministry of Finance.
However we worked to make the processes faster and efficient with the consultation from the relevant authorities.

From this year RIE was requested in early January, in order for the department to ensure that rates are paid within the discount period, using payment schedules of the previous year in order to facilitate payment to those municipalities that offer discount.

Recommendations provided are noted with appreciation.
The verifications and reconciliations of rates charged and rates payables are normally carried by the valuation divisions before the schedules are submitted to the Finance section to facilitate payment.

Variances are normally rectified before payment is made.
33.16 Anomalies in the Receipting and Recording of Revenue - CLLS The Accounting Head is responsible for the effective design and operation of internal control of the agency.25 The Department of Lands is one of the major collectors of revenue within Government Ministries and Departments.

The audit of Crown Land Lease System (CLLS) and its related records revealed the following anomalies, which indicate existence of weak internal controls over the revenue receipting processes and procedures/system.
33.16.1 Incorrect posting of reference numbers The audit noted that errors were made when receipt numbers were used as reference to update the CLLS.

All receipts used in 2015 had six (6) digits.

However, it was noted that there were entries in the CLLS that either had less or more than six (6) digits as references.

Therefore, the audit was not able to trace the entries in the CLLS to the respective manual receipts to ascertain the correctness of the entries in the CLLS.
Refer to Appendix 33.2 for details.

33.16.2 Delays in updating lessees’ accounts in the CLLS The audit noted that the updating of the lessees’ accounts in the CLLS was often delayed.

Refer to Table 33.24 for details Table 33.24: Examples of Delays in Updating of Lessee’s Account Receipt No.
555374 555375 555376 555377 555378 555379 556509 556510 Amount ($) 130.00 300.00 70.00 110.00 80.00 56.00 200.00 200.00 Date of Receipt 13/02/2015 13/02/2015 13/02/2015 13/02/2015 13/02/2015 13/02/2015 13/02/2015 14/04/2015 Account No.
32561 30409 48665 11231 48711 30611 30898 30416 Entry Date in CLLS 18/02/2015 18/02/2015 18/02/2015 18/02/2015 18/02/2015 18/02/2015 18/02/2015 17/04/2015 Remarks Delay by 5 days       Delay by 3 days 25 Ministry of Lands & Mineral Resources Finance Manual 2013 Section 17.1.1 Ministry of Lands and Mineral Resources Section 33: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Receipt No.
556511 556512 556513 556514 Amount ($) 404.50 200.00 100.00 2,070.00 Date of Receipt 14/04/2015 14/04/2015 14/04/2015 14/04/2015 Account No.

31582 44178 44194 32825 Entry Date in CLLS 17/04/2015 17/04/2015 17/04/2015 17/04/2015 Remarks     There is potential risk of lessees’ account not being updated if postings to the CCLS are delayed.
33.16.3 Lessees’ Statement of Account not updated to reflect payments made The audit noted instances where payments have been receipted but were not updated in the respective lessees’ account.

Refer to Table 33.25 for examples: Table 33.25: Examples of Lessees’ Statement of Account not updated Receipt No.

553603 553604 553609 553963 Amount ($) 90.00 100.00 122.50 100.00 Date of Receipt 02/01/2015 02/01/2015 02/01/2015 02/01/2015 Account No.
New Account New Account 20248 4/14/7912 Accounts that are not updated will show that the lessees still owe arrears therefore inflating the revenue arrears at year end.

In addition, incorrect statements of accounts will be issued to lessees and reports produced by the CLLS will be incomplete and inaccurate.
33.16.4 entries to CLLS No reconciliation performed between the manual receipts with the The audit also noted that the Department does not reconcile the amounts manually receipted with the details and balances entered into the CLLS.

In the absence of such reconciliation process, there is a high risk of the Department failing to detect, on a timely basis, possible irregularities in the receipting and posting of lease payments.
The above findings shows anomalies associated with the receipting and recording of revenue into the CLLS system.

There is also a high risk of fraud and misappropriation of lease monies received.
Recommendations The Department should ensure that:  processes and procedures relating to receipting and recording of revenue are reviewed to enhance internal controls and safeguard revenue received through land lease;  manual data is reconciled to the CLLS daily; and  lessees’ accounts are immediately updated once payments are received.
Ministry of Lands and Mineral Resources Section 33: Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Management Comments The recommendations put forth by the auditors on each scenario are acknowledged.

 The department is currently upgrading the oracle system so that we can implement the six digits CLLS into our system and this will help us to keep better records.
Once the system is upgraded it will not allow any CLLS less than six digit or more than six digits to batch into oracle system.

 We acknowledge that there was delay in posting of CLLS to lease account.

This mostly occurs when the oracle system is down and at times during the peak period for collection of revenue.

An internal process is in place to address this issue.

  We duly acknowledge the query raised by the auditor.
This occurs as new accounts cannot be updated into the oracle system until the lease is registered and noted with an account number.

The other reason as why we cannot batch CLLS into the system is due to the account being expired.

 We take on board recommendations provided by the auditors and initiate appropriate process to address  this issue from occurring.
It is acknowledge that reconciliations between manual receipts and CLLS did not happen in the past however from mid last the department has taken the initiative to reconcile the manual receipt with the entries to CLLS.
33.17 Accounting for revenue received through Housing Authority of Fiji and Post Fiji Limited The Accounting Head is responsible for the effective design and operation of internal control of the agency.26 The Housing Authority, on behalf of the Department of Lands, receipts crown land rental fees which are then paid to the Department at the end of each month.

The audit noted that even though the full amounts were receipted and lodged, the CLLS was not fully updated.
Furthermore, considerable delays were noted in the postings to the CLLS to update the lessees’ account.

Refer to Table 33.26 and Table 33.27 for details.

Table 33.26: Revenue Received through Housing Authority not fully updated in the CLLS Month Revenue Receipt No.

Date Receipt Amount Amount Batched to CLLS January 557061 12/2/2015 ($) 1,808.76 ($) 1,659.34 February 558305 10/3/2015 1,791.17 1,687.92 Remarks Amount not Batched to CLLS ($) 149.42  Payment was receipted in February.
 Entries to CLLS posted in August, September, October.
103.25  Payment was receipted in March  Entries to CLLS posted in July and August March April May June July 559408 18/5/2015 1,754.63 1,585.54 169.09  Payment was receipted in April Information not provided  Entries to CLLS posted in August and 562613 11/8/2015 1,659.30 1,619.71 39.59  Payment was receipted in August September Information not provided Information not provided 26 Ministry of Lands and Mineral Resources (2013) Section 17.1.1 Ministry of Lands and Mineral Resources Section 33: Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Month Revenue Receipt No.
Date Receipt Amount Amount Batched to CLLS ($) ($) Amount not Batched to CLLS ($) Remarks August 564080 10/09/2015 1,675.52 1,576.34  Entries to CLLS posted in December 99.18  Payment was receipted in September  Entries to CLLS posted in October and December September 564927 8/10/2015 1,675.52 1,530.34 145.18  Payment was receipted in October  Entries to CLLS posted in December Refer to Appendix 33.3 for the details of the lessees’ account that were not updated.
Table 33.27: Revenue Received through Post Fiji not fully updated in the CLLS Month Revenue Receipt No.

Date Receipt Amount January 558531 26/03/2015 251,957.34 ($) Remarks Amount not Batched to CLLS ($) 149.42  Payment was receipted in February.
February 559547 21/04/2015 110,945.73 3,091.14  Entries to CLLS posted in April  $2,942 updated in CLLS but revenue not received through Post Fiji March April May June July Information not provided 559442 21/05/2015 38,849.27 407.40  Payment was receipted in May to CLLS posted  Entries in May, September & August $1,472.50 updated in CLLS but revenue not received through Post Fiji 563331 18/8/2015 37,652.47 387.50  Payment was receipted in August Information not Provided Information not provided  Entries to CLLS posted in August & September $3,149.50 updated in CLLS but revenue not received through Post Fiji Refer to Appendix 33.4 for the details of the lessees’ account that were not updated.
The above show that Lessees’ accounts were not updated in a timely basis in CLLS.

In most cases reviewed during audit, lesser amounts were updated to the CLLS compared to the receipted amounts.

As a result, there is a high possibility of the arrears of land lease rental amounts being overstated in CLLS.
Ministry of Lands and Mineral Resources Section 33: Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department should:  prepare reconciliation for monies received through Housing Authority of Fiji and Post Fiji against CLLS accounts; and investigate and rectify anomalies noted above.

 Management Comments The Department acknowledges the recommendations made by the auditors.
The Ministry has taken appropriate action in ensuring that all payments received from both Post Fiji Limited and Housing Authority are receipted and updated in the CLLS with immediate effect and also carry out internal verification on the reasons for the delay.

33.18 Record Keeping – Survey of Mahogany Proper record keeping should be maintained for all projects.
Any projects undertaken by Ministries should be properly documented and relevant records maintained in a file with all documentations since the inception of each project.

The mahogany plantations around the country covers a vast area of 58,860 hectares and holds 105 leases (Agreement for Lease) involving 204 landowning units (LOU).

The boundary perimeter of these plantations is approximately 1,900 kilometres that need to be surveyed.

All of these plantations are on native land.


The area is to be surveyed, pegged and have survey plans drawn for each Mataqali.

The scheme plan contains 50 lots of NLC Mataqali survey for mahogany plantation which was approved in 3/7/09.

The amended scheme plan needs to be amended to show individual Mataqali land as it will be surveyed separately and the Local authorities will issue clearance certificate for individual land surveyed and approval of survey plan.
In the past six years, a total of $530,008.61 has been spent on these projects in Central/Eastern Division.

Audit reviewed the Nukurua Mahogany Project and noted that relevant records such as project information and monitoring/progress reports from the inception of the project were not held by the Ministry.

In the absence of required records not being produced by the Ministry for audit review, there is a high possibility that the project is not being properly monitored.
Recommendation Lands departments should ensure that proper documentation in respect to projects is properly maintained and made available for audit purposes.

Management Comments Kindly acknowledge the recommendation made by the respective auditors.

Relevant divisions are now taking the responsibility of safeguarding and keeping the records of the survey of Mahogany.
Ministry of Lands and Mineral Resources Section 33: Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 33.19 Legislation governing Lands Department Legislation is one of the most important instruments of government in organising society and protecting citizens.

It determines, amongst other things, the rights and responsibilities of individuals and authorities to whom the legislation applies.
Legislation is valuable to setting societal standards and norms at all levels of government, including the local, state and national level.

Legislations should be reviewed and updated on a regular basis to accommodate developments.
The Department of Lands is directly governed by the legislations listed on Table 33.28 Table 33.28: Legislations applicable to the Department of Lands Legislation Land Use Decree 2010 Lands Transfer Act Surveyors Act Subdivision of Land Act State Lands Act Agricultural Landlord and Tenants Act Valuation Registration Act State Acquisition of Lands Act Local Government Act Year 2010 1978 1978 1978 1978 1978 1986 1978 1985 While it was noted that the Decrees were issued from time to time to amend various sections of some legislation, a comprehensive review of relevant legislation is yet to be carried out.
Untimely review of legislation would result in the Department having difficulty in enforcing relevant requirements as they may have become irrelevant due to changes over time.

Recommendation The Department should consider submitting proposal to review various legislations governing the Department.

Management Comments The recommendation raised by the Auditors in regards to the Legislations governing crown Lands Act is acknowledged.
The Ministry is targeting to revise three (3) legislations (Mining Act / Surveyors Registration Act & Water Policy) and development of the Valuation Act in the next financial year depending on the provision of budgetary allocation in the next financial year.

33.20 Crown Land Lease System (CLLS) The Crown Land Lease System (CLLS) contains details of all crown land leases whether active or non-active.
The audit of Crown Land Lease System (CLLS) and its related records revealed the following anomalies, which may indicate under-utilisation of the database.
 UCV recorded in the CLLS is based on Municipal Council’s UCV and not the UCV used by the Department for the purpose of lease rental calculation; Ministry of Lands and Mineral Resources Section 33: Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  Receipting is not automated in CLLS but is done manually after which the Statement of Accounts in CLLS is then updated;  File reference has duplicate accounts;  CLLS continue to charge lease rental on expiry leases; and  CLLS does not integrate with FMIS.
The above anomalies can have various implications which include the following:      the UCV can be undervalued which can lead to loss of rental revenue for the Ministry; there is risk that CLLS is not updated on time thus indicating a huge amounts arrears of revenue (high outstanding debt amount); arrears of revenue will be inflated as duplicate accounts will continue to accrue rent – revenue will thus be overstated; arrears of revenue will be overstated as rent is charged on expired leases which can become irrecoverable; and the integrity of balances cannot be ascertained due to anomalies between CLLS and FMIS Rental revenue can be understated or overstated due to the underutilization of the CLLS database.
Recommendations The Department should consider:    recording UCV used for the purpose of lease rental calculations in the CLLS; incorporating a receipting module in CLLS to issue receipts to lessees and to automatically update their Statement of Account; consider carrying out data cleansing in CLLS.

Management Comments Recommendation of the Auditors is appreciated.
  The Ministry is currently working on upgrading the oracle system at the same time too integrates some of the fields which would capture some eminent information that are mandatory.

This would include capturing not only the municipal ratings but for rental assessment too.

The CLLS has already in place a receipting module but needs to be further developed to accommodate the Revenue Management and Revenue control measures.
 Ministry of Finance is currently pursuing the Receipting Module through FMIS to be implemented throughout the whole of Government Ministries and Department.

We appreciate this initiative of Ministry of Finance and are looking forward to its implementation to be used in the Ministry.

This cleansing of data in CLLS is currently being pursued by the Ministry.
The Ministry as part of the internal restructure had created a Policy, Planning, Quality Assurance Unit (PPQA) and one of its mandatory roles is to collate recent updated information pertaining to leases and lessee’s to be updated in CLLS.
 DEPARTMENT OF MINERAL RESOURCES Ministry of Lands and Mineral Resources Section 33: Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 33.21 Incorrect Payments of Salary Any sum due by an Officer to Government may be deducted by the Permanent Secretary for Finance from salary due to such officer.
An officer shall be given prior notice of such action being taken.27Salary advice must be submitted promptly to the Ministry of Finance where there is any change to personnel emoluments or deductions such as appointments, promotions, transfers, acting allowances, dismissals and resignations, income tax allowances, housing deductions or other charges or deductions.28 Where it becomes necessary to hold, cease or reverse an employee’s salary, the Assistant Accounts Officer (Salaries) must immediately advise the Ministry of Finance in writing.29 Audit reviewed the 2014 incorrect payment of salary and noted that it is not yet resolved by the Department’s Accounts Section.
Similar issues were also noted in 2015.

Refer to Tables 33.29 and 33.30 Table 33.29: Sample of incorrect payments of salaries in 2014 EDP No.

Amount Remarks ($) 85.15 Underpayment 1,108.50 Underpayment (901.07) Overpayment 384.07 Underpayment (2,068.44) Overpayment (62.26) Overpayment (886.98) Overpayment 421.64 Underpayment (307.50) Overpayment (1,328.90) Overpayment 92022 58309 63272 53964 92058 94356 58924 47883 53083 58341 Table 33.30: Sample of incorrect payments of salaries in 2015 EDP No.
93434 92081 MRD25 2526542 63188 Remarks Amount ($) 332.95 Underpayment (777.43) Overpayment (196.45) Overpayment (1719.67) Overpayment 611.04 Underpayment Incorrect payments of salaries that were not detected during 2015 may have resulted from the ineffectiveness of the salary reconciliation process.

As personnel expenses are a substantial component of the department’s operating expenses, it is important that supervisory controls in the administration of payroll are effectively implemented.
The above has been a recurring issue over the years.
27 General Orders 2011, Section 401 28 Finance Instructions 2010, Section 17(1) 29 Ministry of Lands & Mineral Resources Finance Manual 2013, Section 4.9.1 Ministry of Lands and Mineral Resources Section 33: Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department should:    implement an effective and efficient communication process between the Human Resource and Payroll Sections to ensure that changes in payroll are processed on time to minimize or avoid incorrect payments of salaries; take appropriate action on the incorrect payments of salaries as highlighted on Table 34 and 35; and salary reconciliations are performed on a fortnightly basis and reviewed by the Accounting Head.
Management Comments Auditors comments is duly noted.

• Departments Finance and Administration team are working together to ensure the timely processing of payroll advices on promotions, acting appointments and cessation of appointments.

It is also important to note that the payroll feeding of any appointment whether on promotion or acting basis depends on the processing and receiving of approvals from management.
Accounts Section is being vigilant to ensure arrears and or recoveries are paid out if advices are received late.

• • The Department agrees with the incorrect payment of salaries mentioned in report.

A list of overpayment and underpayment is now prepared to be submitted to management for approval for appropriate action.

Salary reconciliations is now conducted on fortnightly basis and is update till pay 12/2016.
Management has also assigned an independent officer to conduct salary reconciliation for 2015 33.22 Salary Reconciliation Not Prepared on Time 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.30 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.31 The salary reconciliation shall be signed by the Accounts Officer and forwarded to the Manager Finance or Senior Accounts Officer with a copy to the Ministry of Finance fortnightly.32 The audit noted that the 2015 salary reconciliations were not prepared by the Department.
Salaries and wages reconciliation is an important internal control mechanism and when the reconciliation process is not performed effectively, possible irregularities in the payments of salaries and wages will not be detected on time.
Recommendation 30 Ministry of Lands & Mineral Resources Finance Manual 2013, Section 4 31 Ministry of Lands & Mineral Resources Finance Manual 2013, Section 4.5.4 32 Ministry of Lands & Mineral Resources Finance Manual 2013, Section 4.5.5 Ministry of Lands and Mineral Resources Section 33: Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Department should ensure that regular payroll (salaries/wages) reconciliations are performed on a fortnightly/weekly basis and that the reconciliations are checked by the Accounting Head to minimise or avoid incorrect payments of salaries and wages.
Management Comments Auditor’s comments noted and improvement shown in salary reconciliations now conducted on fortnightly basis.
Salaries Reconciliation is updated till pay12/2016 33.23 Purchase Orders not received Upon receipt of the goods, services or works, the requesting officer shall verify that their receipt is in good order and that the invoice is in accordance with the Purchase Order.33 The PSLMR, Directors, Manager Finance, Senior Accounts Officer or Accounts Officers must not certify a payment as correct unless they are satisfied that:34 it is in accordance with an PO, indent, contract, invoice or other authorisation; there is documentation that the goods, services or works have been received; vi.
vii.

viii.

sufficient uncommitted funds are available for payment of the account; ix.

the account is not fraudulent and has not been previously paid; x. the expenditure account it is charged to is correct.

Audit noted that purchase orders were not signed by requesting officer to confirm that goods and services have been received.

This indicates that laxity of the receiving officers in not ensuring that the goods ordered were actually received.

Refer to Table 33.31 for details.
Table 33.31: Purchase Orders not received Issue Date VIP AMOUNT Payment ID 1806 22/01/2015 1905 20/02/2015 30103 11/06/2015 30107 12/06/2015 30137 18/06/2015 2162 21/04/2015 2/02/2015 1830 1834 2/02/2015 1978 12/03/2015 2024 24/03/2015 8/05/2015 2215 2214 8/05/2015 2272 21/05/2015 2450 13/07/2015 2687 9/09/2015 2725 17/09/2015 2155 21/04/2015 2171 21/04/2015 ($) 900.00 759.00 3,660.00 856.00 1,129.70 790.00 2,260.00 2,223.65 1,900.00 995.00 1,738.00 2,300.00 2,399.99 2,485.00 360.00 635.00 2206.36 3347.65 33 Ministry of Lands & Mineral Resources Finance Manual 2013 Section 2.5.8 34 Ministry of Lands & Mineral Resources Finance Manual 2013 Section 2.8.4 Ministry of Lands and Mineral Resources Section 33: Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Issue Date VIP AMOUNT Payment ID 2027 24/03/2015 2500 24/07/2015 2882 20/10/2015 3197 14/12/2015 3015 16/11/2015 3292 21/12/2015 2156 21/04/2015 2203 30/04/2015 1875 12/02/2015 1995 18/03/2015 1996 18/03/2015 1994 18/03/2015 2071 26/03/2015 2311 28/05/2015 2764 25/09/2015 2773 29/09/2015 2795 1/10/2015 2841 13/10/2015 2867 15/10/2015 30755 18/11/2015 3029 19/11/2015 30926 21/12/2015 30925 21/12/2015 ($) 1,700.00 4,025.00 5,999.40 2,185.00 971.32 2,220.01 320.00 742.75 4,800.00 19,680.01 12,000.00 4,856.00 5,604.05 5,175.00 40,850.00 4,500.00 20,000.00 16,340.00 1,131.26 3,599.99 4,900.00 9,579.50 4,375.00 Confirmation of receipt of goods and services notifies the Payments team that goods and services have been received in good order and condition and according to the specifications in the order.
Recommendation The Accounts Heads should ensure that confirmation of receipt of goods and services is provided before approving payments.

Management Comments The Department has implemented a proper checking system to ensure that all PO’s are received by Stores personnel although they had focused on signing the receivable on delivery dockets of every goods and or services supplied.

Corrective measures taken on PO’s identified by auditors and proper procedures followed on current practice.
33.24 Insufficient Supporting Documents The words "travelling on duty" are defined as: (i) (ii) (iii) (iv) Travelling on transfer from one station to another.

The period spent away from an Officer‘s station while on official duty.

The period spent in Government quarters while on tour, provided that the Officer's own dwelling is not vacated.
The period spent away from an Officer‘s station occasioned by instruction issued through his Permanent Secretary or Head of Department.35 35General Orders 2011 Edition Section 500(a) Ministry of Lands and Mineral Resources Section 33: Page 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ An evidence of an official duty would be a tour plan approved by the Head of the Department.
The audit noted that the subsistence/ meal claim form was not sufficient to verify the period an officer had claimed to be away from Officer’s station on an official duty.

Refer to Table 33.32.
Table 33.32: Meal and Subsistence Claims without supporting documents Payment ID Issue Date Vendor Name 1892 29947 2812 2827 2829 3005 3008 3053 3186 3302 3326 2196 2194 2750 2790 2734 16/02/2015 X-NILEC 8/05/2015 X-2312739 6/10/2015 X-20060 8/10/2015 X-53964 8/10/2015 X-60091 13/11/2015 X-60394 13/11/2015 X-ELENOAB 24/11/2015 X-20060 11/12/2015 X-KELRAI 21/12/2015 X-49337 23/12/2015 X-PA111 29/04/2015 X-62020 29/04/2015 X-25793 23/09/2015 X-63476 29/09/2015 X-YK282 18/09/2015 X-PA111 VIP Amount ($) 312.00 399.00 453.50 405.00 39.00 503.00 303.00 371.00 378.00 339.10 875.65 383.00 331.00 382.00 647.00 3,348.85 As majority of the staff at the Department of Minerals Resources are deployed to the field, a lot of claims are therefore submitted for payment without relevant supporting documents.
Recommendation Accounting Heads should ensure that approved tour plans are submitted with meals and subsistence claims.

Management Comments The Department had previously practiced formalising email approvals of official trips of field officers where the Accounts team is copied for reference.
This approval is used in the preparations of logistics and travel arrangements for teams when conducting field works and tour and also used when cross referencing of any claims that is submitted from officers when claiming for meals and subsistence.

However, the Auditors recommendation is noted and management has agreed that a copy of approval of trip and work plan should be attached with officers claim for reference.
Management has also instructed that officers meal and substantive claims are only signed by their respective Division Heads who approves field works and aware of staff movement.
Ministry of Lands and Mineral Resources Section 33: Page 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 33.1: Examples of Rent Charged on Expired Leases Lease_num Rent ($) Start date End date 18158 13421 AN46159 11959 AN24883 AN22613 AN 43158 013130 001655 XXX26401 000813 341950 AN 45193 000151 18176 AN 45732 46781 XXX12504 AN 45730 020204 019946 AP957 XXX10309 AN22616 TAW10278 48,300.00 01-July-2009 01-July-2012 34,500.00 01-December-1997 01-July-2009 01-July-2011 21,275.00 01-July-2006 30-September-2011 9,315.00 01-October-1981 30-September-2011 6,422.64 01-October-1981 01-July-2014 6,325.00 01-July-1974 01-April-2004 5,750.00 01-April-1999 01-April-2012 5,175.00 01-April-1987 12-April-2002 4,600.00 12-April-1927 30-September-2011 4,560.32 01-October-1981 4,105.50 30-May-1938 30-May-2013 3,576.50 01-November-1988 31-October-2009 2,875.00 01-July-2008 2,616.26 17-February-1929 2,300.00 01-July-2007 2,300.00 01-July-2007 2,300.00 01-July-2009 2,242.50 01-January-1905 2,185.00 01-July-2007 2,157.40 24-February-1939 2,116.00 01-March-1938 2,070.00 01-July-2008 2,012.50 01-January-1975 1,955.00 15-December-1987 30-June-2004 01-July-2010 1,900.00 01-July-2009 01-July-2013 16-January-2004 01-July-2012 01-July-2012 01-July-2014 31-December-2003 01-July-2012 25-January-2014 31-July-2013 01-July-2013 31-December-1977 Ministry of Lands and Mineral Resources Section 33: Page 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 33.2: Details of Incorrect Postings to the CLLS Reference No.
1184 1184 11345 11345 48300 53100 53100 53101 53140 55298 55300 55300 55544 55544 55747 56096 56096 56428 56492 56645 56645 57261 57261 62005 62005 262682 Amount ($) 1029.57 154.43 Journal Name Receipt V.A.T.

RECEIPT 3,500.00 V.A.T 525.00 100.00 RECEIPT 150.00 RECEIPT V.A.T.

22.50 RECEIPT 1,986.83 405.00 RECEIPT 100.00 RECEIPT 170.00 RECEIPT 25.50 V.A.T.

987.50 RECEIPT 148.13 V.A.T.

955.82 RECEIPT 636.64 RECEIPT 95.50 V.A.T.

230.00 RECEIPT 145.00 RECEIPT RECEIPT 2,500.00 375.00 V.A.T.
225.00 RECEIPT 33.75 V.A.T.

194.35 RECEIPT 29.15 V.A.T.

100.00 RECEIPT Reference No.

262683 262684 Journal Name Amount ($) RECEIPT 200.00 RECEIPT 125.00 262685 RECEIPT 262686 RECEIPT 262687 RECEIPT 262688 RECEIPT 262690 RECEIPT 262691 RECEIPT 262692 RECEIPT 262692 V.A.T.

262693 RECEIPT 262695 RECEIPT 262696 RECEIPT 262696 V.A.T.

262697 RECEIPT 262698 RECEIPT 262698 V.A.T.

262699 RECEIPT 262700 RECEIPT 262855 RECEIPT 264956 RECEIPT 264956 V.A.T.
363310 RECEIPT 363311 RECEIPT RECEIPT RECEIPT 363312 461477 Total 92.50 940.80 50.00 100.00 122.00 50.00 1,050.00 157.50 100.00 50.00 206.70 31.00 95.30 113.04 16.96 92.50 190.00 485.00 108.50 16.28 50.00 50.00 5.00 1,300.00 $21,864.20 Ministry of Lands and Mineral Resources Section 33: Page 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 33.3: Details of the Lessee’s Statement of Account not through Housing Updated – Revenue Received Authority Account Name Initials as per Listing Provided by Housing Authority Total Not Updated in the CLLS January ($) February ($) - 9.17 April ($) 9.17 July ($) August ($) September ($) 3.58 10.42 13.00 49.17 2.25 18.75 - 2.08 16.67 - 10.42 10.42 4.33 8.33 - 10.42 - - 2.25 18.75 14.58 2.08 - Ministry of Lands and Mineral Resources Section 33: Page 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 33.4: Details of the Lessee’s Statement of Account not Updated – Revenue Received Through Post Fiji Limited April ($) July ($) September ($) February ($) 90.00 20.00 13.25 200.00 50.00 January ($) 20.00 330.43 50.00 10.00 50.00 87.00 25.00 100.00 40.00 40.00 2,203.70 50.00 50.00 34.45 15.40 50.00 50.00 Account Name Initials as per Listing Provided by Post Fiji A N A L K Ar A V A K B Dh H A Jo J U J N K and M C L L N U N V M Y M S S P M P L R K R B R K R and R P R C R P S B S K M S K S T S L S B F R M S N and S D S K S P U R V S V V K W G Wa Total Not Updated in the CLLS 60.00 300.00 21.00 40.00 30.00 287.50 100.00 340.00 841.43 3,091.40 407.40 387.50 1,987.22 50.00 112.00 114.00 30.00 20.00 180.00 200.00 50.00 30.00 20.00 50.00 172.50 160.00 624.00 124.72 20.00
 Ministry of Lands and Mineral Resources Section 33: Page 36 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 34 Ministry of Industry, Trade and Tourism Role and Responsibilities Creating an internationally competitive economy and stimulating economic growth is one of the Government’s top priorities.
To do this, it needs to encourage investment, boost trade and support private enterprise.

The Ministry of Industry, Trade and Tourism is responsible for positioning Fiji as an internationally competitive economy.
It does this by diversifying and expanding markets, expanding exports, marketing Fiji as the ideal tourist destination, working to improve the manufacturing and commercial sector, improving investors’ and businesses’ confidence and the ease of doing business in Fiji, improving market access for Fijian-made products and services, ensuring compliance with national and international standards, and improving livelihoods of grassroots communities through cooperatives, micro and small enterprises development.
In 2015, the Ministry will launch the new Trade Policy Framework, the Fiji Tourism Development Plan, Fijian Made-Buy Fijian Campaign Audit Procedures, a review of the Department of National Trade Measurement and Standards, and the Small Micro Enterprises Start-up Grant Facility.
Table of Contents PART A: FINANCIAL STATEMENTS........................................................................................................................................... 1 34.1 Audit Opinion .................................................................................................................................................................. 1 34.2 Statement of Receipts and Expenditure ......................................................................................................................... 1 34.3 Appropriation Statement ................................................................................................................................................ 2 PART B: AUDIT FINDINGS ............................................................................................................................................................. 3 34.4 Failure to Submit Accounts ............................................................................................................................................ 3 PART A: FINANCIAL STATEMENTS 34.1 Audit Opinion The audit of the 2015 accounts of the Ministry of Industry, Trade and Tourism resulted in the issue of an unqualified audit report.
34.2 Statement of Receipts and Expenditure The Ministry collected revenue totalling $716,959 and incurred a total expenditure of $47,110,788 in 2015.

Refer to Table 34.1 below for details.
Table 34.1: Statement of Receipts and Expenditure for 2015 Description Fees – Miscellaneous Other Revenue 2015 ($) 709,746 7,213 2014 ($) 790,556 18,918 Ministry of Industry and Trade Section 34: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description 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 Purchases Capital Grants and Transfers Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 2015 ($) 716,959 3,364,079 319,683 362,710 579,805 237,409 9,588,508 5,569,452 20,021,646 810,618 25,541,000 26,351,618 737,524 47,110,788 2014 ($) 809,474 2,261,167 244,828 221,831 610,248 158,480 6,253,600 5,043,409 14,793,563 504,997 --- 504,997 820,700 16,119,260 Total revenue decreased by $92,515 or 11% compared to 2014 due to decrease in revenue collected by the Department of National Trade Measurement and Standards.
Total expenditure increased by $30,991,528 or 192% in 2015 due to the following:   Increase in Established Staff expenditure by $1,102,912 or 49% was due to the inclusion of salaries of Tourism Unit and the Honourable Minister, Assistant Minster and Senior Executive Support Officer.
Increase in Operating Grants and Transfer expenditure by $3,334,908 or 53% was due to inclusion of Tourism Fiji operating grant budget by $3m, increase in operating grant to Consumer Council and inclusion of South Pacific Tourism Organization and World Tourism Organization.

 Capital Purchases expenditure increased by $305,621 or 61% due to payment of remaining balance for Water Test Bench.
 Capital Grants and Transfers was a new expenditure of $25,541,000 due to inclusion of Tourism Fiji Marketing Grant and Small and Medium Enterprise Grant.

34.3 Appropriation Statement The Ministry incurred a total expenditure of $47,110,788 against a budget of $49,484,689 resulting in a saving of $2,373,901.

Details of expenditure against the budget estimate are provided in Table 34.2 below.
Table 34.2: Appropriation Statement for 2015 SEG Item 1 Established staff 2 Government Wage Earners Travel and communications 3 Ministry of Industry and Trade Budget Estimate ($) 4,117,564 333,574 396,300 Changes ($) --- --- 59,000 Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) 4,117,564 333,574 455,300 3,364,079 319,683 362,710 753,485 13,981 92,590 Section 34: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ SEG Item 4 Maintenance & operations 5 Purchase of goods and services 6 Operating grants and transfers 7 Special expenditures Total Operating Costs 9 Capital Purchases 10 Capital Grants and Transfers Total Capital Expenditure 13 Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) 565,300 302,500 9,512,700 7,005,621 22,233,559 1,313,530 24,500,000 25,813,530 1,437,600 49,484,689 Changes ($) 97,000 (6,000) 114,000 (1,305,000) (1,041,000) Revised Estimate ($) 662,300 296,500 9,626,700 5,700,621 21,192,559 Actual Expenditure ($) 579,805 237,409 9,588,508 5,569,452 20,021,646 --- 1,041,000 1,041,000 1,313,530 25,541,000 26,854,530 810,618 25,541,000 26,351,618 Lapsed Appropriation ($) 82,495 59,091 38,192 131,169 1,170,913 502,912 --- 502,912 --- --- 1,437,600 49,484,689 737,524 47,110,788 700,076 2,373,901 PART B: AUDIT FINDINGS 34.4 Failure to Submit Accounts An audit report on the financial activities for previous year shall be submitted to the Ministry1.
An audit report on the financial activities for previous year shall be submitted to the Ministry2.

The audit noted that National Centre for Small and Micro-Enterprise Development (NCSMED) and Real Estate Agents Licensing Board (REALB) had failed to submit audited accounts to the Ministry since 2013 and 2014, respectively as required under the grant agreement section 7.2 (v) for both entities.

The Ministry continued to release yearly grants.

Refer to the Table 34.3 below for grants released.


Table 34.3: Grants Released to NCSMED and REALB Year Actual Operating Grants ($) NCSMED 2015 2014 2013 Total REALB 2015 2014 Total 500,000.00 500,000.00 428,612.29 1,428,612.29 300,000.00 300,000.00 600,000.00 The above finding shows lack of monitoring by the Ministry prior to release of funds to NCSMED and REALB.
Failure to submit audited accounts demonstrate poor accountability and no assurance is available to confirm that public funds have been utilised according to its purpose and the grant agreement.
1 2015 Grant Agreement between MITT and NCSMED, Section 7.2 (v) 2 2015 Grant Agreement between MITT and REALB, Section 7.2 (v) Ministry of Industry and Trade Section 34: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Ministry should ensure that funds released to NCSMED and REALB are audited immediately as required under both recipients’ grant agreement section 7.2.
Management Comments In accordance to clause 5.4 of the Service Agreement, Ministry only releases quarterly grant after proper analysis of financial acquittals such as Statement of Income and Expenditure and Bank Reconciliation.

Audit comments are noted and emphasis has been made to the Statutory Authorities to provide Audit Reports.

o NCSMED audit for 2010 to 2015 is in progress by Aliz Pacific.
o REALB is completing 2014 and 2015 Financial Reports in accordance to IFRS and will submit to OAG for auditing.
Ministry of Industry and Trade Section 34: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ Section 35 Ministry of Sugar Role and Responsibility The Ministry is responsible for the coordination of the activities and functions of the various institutions that make up the sugar industry with the sole objective of ensuring that Government’s commitment to reviving the industry is achieved.
Table of Contents PART A: PART B: FINANCIAL STATEMENT .................................................................................................................................. 1 35.1 Audit Opinion ............................................................................................................................................................ 1 35.2 Statement of Receipts and Expenditures ................................................................................................................. 1 35.3 Appropriation Statement .......................................................................................................................................... 2 35.4 Statement of Losses ................................................................................................................................................ 2 AUDIT FINDINGS ............................................................................................................................................... 3 35.5 Underline Accounts Reconciliation not being prepared ........................................................................................... 3 35.6 Board of Survey ....................................................................................................................................................... 4 35.7 Variance in Drawings Account ................................................................................................................................. 4 35.8 Unexplained Account Balances ............................................................................................................................... 5 35.9 Anomalies in Payments Processes .......................................................................................................................... 5 35.10 Audited Acquittals of Grant to Sugar Research Institution of Fiji not provided ......................................................... 7 PART A: FINANCIAL STATEMENT 35.1 Audit Opinion The audit of the 2015 accounts of the Ministry of Sugar resulted in the issue of a qualified audit report.
The qualification related to annual Board of Survey not being carried out by the Ministry in 2015.

As such the completeness and accuracy of the statement of losses could not be ascertained.

35.2 Statement of Receipts and Expenditures The Ministry of Sugar incurred expenditures totalling $10.6 million in 2015 compared to $18.6 million in 2014.

Details are shown in Table 35.1 below.
Table 35.1: Statement of Receipts and Expenditures Description Established staff Government wage earners Travel & communication Maintenance & operations Purchase of goods & services Operating grants & transfers Ministry of Sugar 2015 ($) 2014 ($) 355,591 31,932 49,843 62,214 14,110 1,429,399 429,335 25,441 48,396 44,989 11,883 1,429,400 Section 35: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ Description Special expenditures Total Operating Expenditures Capital construction Capital purchases Capital grants & transfers Total Capital Expenditures Value added tax 2015 ($) 938,170 2,881,259 2014 ($) - 1,989,444 2,099,179 - 5,000,000 7,099,179 2,145,199 - 14,150,000 16,295,199 599,767 281,700 TOTAL EXPENDITURES 10,580,205 18,566,343 The major components of expenditures in 2015 were operating and capital grants of $6.4 million to the Sugar Research Institute of Fiji ($0.9 million), Sugar Industry Tribunal ($0.5 million), Sugarcane Growers Fund ($0.3 million) and the Sugar Development Program ($5 million).
Capital Grants and Transfers decreased by $9,150,000 or 64.7% in 2015 compared to 2014 as a result of cessation of the subsidy provided to the South Pacific Fertilizers Limited which is now under Ministry of Finance.

35.3 Appropriation Statement The Ministry incurred expenditures totalling $10.6 million against the revised budget of $11.8 million resulting in savings of $1.23 million.

Details of expenditures against the revised budget estimates are provided in Table 35.2 below.
Table 35.2: Appropriation Statement SEG Item Established staff Government wage earner Travel and communications Maintenance & operations Purchase of goods & services Operating grants & transfers Special Expenditure Total Operating Expenditure Capital construction Capital purchases Capital grants & transfers Total Capital Expenditure Value added tax TOTAL EXPENDITURE Budget Estimate ($) 454,703 56,651 74,000 69,000 17,000 1,429,400 938,170 3,038,924 2,500,000 600,000 5,000,000 8,100,000 629,700 11,768,624 Changes ($) - - - - - - - - - - - - - - Revised Estimate ($) 454,703 56,651 74,000 69,000 17,000 1,429,400 938,170 3,038,924 2,500,000 600,000 5,000,000 8,100,000 629,700 11,768,624 Actual Expenditure ($) 355,591 31,932 49,843 62,214 14,110 1,429,399 938,170 2,881,259 2,099,179 - 5,000,000 7,099,179 599,767 10,580,205 Lapsed Appropriation ($) 99,112 24,719 24,157 6,786 2,890 1 - 157,665 400,821 600,000 - 1,000,821 29,933 1,188,419 35.4 Statement of Losses There was no loss of money or assets recorded for the year ended 31 December 2015.
Ministry of Sugar Section 35: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ PART B: AUDIT FINDINGS 35.5 Underline Accounts Reconciliation not being prepared Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the Accounts Officer shall reconcile the ledger balance to the general ledger reports and prepare the general ledger reconciliations1.

All underline accounts must be reconciled on a monthly basis.
The Ministry had seven (7) Operating Trust Accounts as detailed in Table 35.3 below.

The audit noted that the Ministry did not prepare monthly reconciliations for three of the seven Operating Trust Accounts for the year 2015.

For the remaining four accounts, the Ministry prepared reconciliations for months of July to December 2015 only.

Thus, reconciliations for these Operating Trust Accounts were not prepared for the months of January to June 2015.
The audit also noted that the Ministry did not prepare any reconciliation during 2015 for Revolving Fund Account and IDC account.

Refer to Table 35.3 for details of underline accounts reconciliations not prepared.
Table 35.3: Details of Underline Accounts Reconciliations for its months not Prepared Underline Account Operating Trust RFA IDC Detail Allocation PD CAR 1-35101-35101-861301 PSC 204 PD DEPST A/C RECOVERABLE 388 PD SCHOLARSHIP LOAN 501 PD EMPLOYEES FNPF 440 PD FIXED RENT 201 PD TAX ARREARS / PAYE 440 PD FIXED RENT RFA IDC 1-35101-35101-861902 1-35101-35101-861309 1-35101-35101-861920 1-35101-35101-861899 1-35101-35101-861901 1-35101-35101-861861 1-35101-35101-570000 1-35101-35101-536101 Monthly Reconciliations not Prepared January – June 2015 January – December 2015 January – December 2015 January – December 2015 As a result, the audit was not able to ascertain the accuracy of the underline account balances as at 31 December 2015.
Recommendations The Ministry must:   ensure that monthly reconciliations are prepared for all underline accounts; and investigate the matter and take appropriate action.

Ministry’s Comments The Ministry had been preparing reconciliations but was never updated due to changes in figures from FMIS reports.

The Ministry will ensure that all underline accounts are reconciled and improved in future.
1Ministry of Sugar Finance Manual 2013, Section 13.3.3 Ministry of Sugar Section 35: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ 35.6 Board of Survey Annual board of survey must be conducted by 3 officers who are independent of the officer responsible for the custody of the assets.
A written record must be kept of each board of survey and must be signed and dated by the officers undertaking it.2 The audit noted that the Ministry did not carry out the annual Board of Survey for 2015.

The Ministry did not provide explanation for not carrying out the annual Board of Survey.
In the absence of a Board of Survey Report for Assets and Drawings accounts, the Statement of Losses (Other than money) cannot be substantiated and the accuracy of the unpresented cheques could not be ascertained as at 31 December 2015.

Recommendation The Ministry should carry out its Board of Survey every year.

Ministry’s Comments The Ministry agreed that the Board of survey was not conducted.

The Ministry will ensure to conduct Board of Survey in a timely manner.
35.7 Variance in Drawings Account Within 3 days of receiving the monthly general ledger reports from the Ministry of Finance, the Accounts Officer shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.3 Any errors or misallocations must be adjusted by way of journal vouchers.4 The audit noted a variance of $10,391 between the FMIS general ledger and the Drawings Account reconciliation balance as at 31/12/15.
However, the Ministry did not provide explanations for the variance.

Refer to Table 35.4 for details.

Table 35.4: Details of Variance in Underline Accounts Underline Account FMIS Balance ($) Department Balance ($) Variance ($) Drawings (572,236) (582,627) 10,391 The findings shows that the Ministry’s Accounting Officers were not vigilant in performing their duties and failed to identify and rectify the variance.

It also indicates absence of adequate supervisory checks in Accounts Section.
Recommendations The Ministry should:  ensure that necessary supervisory checks are carried out in the accounting section; and 2 Finance Instruction 2010, Part 6, Section 49(2) 3Ministry of Sugar Finance Manual 2013, Section 13.3.3 4Ministry of Sugar Finance Manual 2013, Section 13.3.4 Ministry of Sugar Section 35: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________  ensure that the Drawings Account reconciliations are prepared and any variances noted is investigated and adjusted accordingly.
Ministry’s Comments The Ministry agreed on the variances in the Drawings Account.

The Ministry confirms to rectify with FMIS on the variance and will ensure that it is cleared.
35.8 Unexplained Account Balances The Principal Accounts Officer is responsible for maintaining ledgers and reconciling balances in such ledgers to ensure the accuracy of financial information and the timeliness of management reports.5 The audit noted that the Ministry had unexplained balances totalling $3,975,515 in the FMIS general ledger under the APP Surplus and Deficit account.

Refer to Table 35.5 for details.


Table 35.5: Unexplained Account Balance Allocation Description 1-35101-35101-910101 APP Surplus & Deficit – Prior Year 2015 ($) 3,975,515 2014 ($) 3,919,272 Variance ($) 56,243 The Ministry of Economy explained that the balances were the net reflection of the balance sheet items under the Ministry’s general ledger.

However, this could not be substantiated.

This issue was also raised in the 2014 audit report but recommendations made are yet to be implemented.
In the absence of proper records/explanations, it is difficult to authenticate the accuracy of the balances appearing under the above allocation in the FMIS general ledger.

Recommendations The Ministry should:   ensure that transactions posted to the FMIS general ledger are supported with documentary evidences which made available to audit scrutiny when requested; and seek clarifications from the Ministry of Economy on the matter.
Ministry’s Comment The Ministry does not have access to the account and had forwarded the issue to Ministry of Finance for clarification.

35.9 Anomalies in Payments Processes The Accounts Officer must not certify a payment as correct unless they are satisfied that: i. ii.
It is in accordance with an LPO, indent, contract, invoice, statement or other authorisation; There is documentation that the goods, services or works have been received; 5 Ministry of Sugar Finance Manual 2013, Part13 Ministry of Sugar Section 35: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ iii.

iv.
v. 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.6 Competitive quotes, instead of public tenders, may be called for procurements worth $50,000 and less unless; the PS has approved an exemption in accordance with Procurement Regulation 29 (3).7 The audit noted instances of double payment, delay in payment, payments made from incorrect allocation and procurements made with less than three competitive quotes.
Refer to Table 35.6 for details.
Table 35.6: Examples of Anomalies in Payments Cheque Number 1795 Cheque Date 6/5/15 Payee Amount ($) 352.61 Company A 1823 1727 26/5/15 19/3/15 165.28 Company A 1,900.00 Company B 1881 02/7/15 20,550.01 Company C 1877 30/6/15 32,500.00 Company D 1951 28/7/15 37,300.00 Company E 2159 12/11/15 21,950.00 Company F Details Remarks Payment of bills for the month of March & April Payment of bills for the month of April Being payment for upgrading cane access road at Balram Singh Road Being payment for the upgrading of the cane access road at Lomawai Sector Being payment for the upgrading of the cane access road at Lovu Sector Being payment for the upgrading of the cane access road at Tagitagi Sector Being payment for the upgrading of the cane access road at Koronubu Sector Ba The bill for the month of April was paid twice Payment was made from SEG 4 when it should have been made from SEG 8 Only 2 quotes attached Only 1 quote attached Only 2 quotes attached Only 2 quotes attached The findings indicate poor supervision and lax attitude towards work by the Accounts Officers.
There is high risk of mismanagement of public funds in the Ministry.

Recommendations The Accounts Officer should ensure that:      necessary due diligence checks are made to avoid double payments.
Double payment is recovered from the supplier or officer authorizing the payment; payments are promptly made upon receiving the invoice from the supplier or service provider; Permanent Secretary’s approval is obtained prior to making payment for expenditures from a different allocation; supervisory checks in the procurement of goods and services is strengthened; and at least three quotations are obtained for all purchases below $50,000.
6Ministry of Sugar Finance Manual 2013, Section 2.8.4 7Ministry of Sugar Finance Manual 2013, Section 2.3.2 Ministry of Sugar Section 35: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ________________________ Ministry’s Comments The Ministry agreed to the comments, for not providing three quotations.
Moreover the programme of Upgrading of Cane Access Road went through a process of Express of Interest, where the Tender Board approved a list of Contractors to work in the specific sector.

The Ministry will ensure to be in compliance with the procurement procedures.
35.10 Audited Acquittals of Grant to Sugar Research Institution of Fiji not provided Sugar Research Institution of Fiji (SRIF) must keep proper files and accounting records in relation to the Funds and make these files and records available for inspection upon request by the Ministry.8 SRIF is to submit to the Ministry a progress report on the use of Funds in accordance with this Agreement.9 The Board shall submit to the Minister for Sugar an Annual Report (including audited Financial Statement) in accordance with the requirement as set out in the Agreement.10 The Ministry provided a grant of $900,000 on annual basis to SRIF since its establishment in 2012 over the four years totalling$3.6 million.
The audit noted that the following anomaly:  Audited financials were not provided as required under section 7.2 of the agreement.

The finding shows the laxity of the Ministry in not enforcing the provision of the agreement to submit audited financial acquittals prior to release of grant monies.

Recommendations The Ministry should ensure that provision of section 7.2 of the agreement for audited financial statements to be provided by SRIF is adhered with.
Ministry’s Comments The Ministry has now been approved with 2 additional staff (AAO and CO) in the Accounts section in the budget for 2016, once Accounts unit will have the full structure they will be able to work according to their position description, share the loads and will ensure that grant monies are properly monitored.
In 2016, to ease monitoring the Ministry had required that all sugar industry stakeholders receiving grant from government through Ministry of Sugar should open an Account alone for the Grant.
8Agreement between Ministry of Sugar and Sugar Research Institute of Fiji, Section 6.4 9Agreement between Ministry of Sugar and Sugar Research Institute of Fiji, Section 7.1 10Agreement between Ministry of Sugar and Sugar Research Institute of Fiji, Section 7.2 Ministry of Sugar Section 35: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 36 Ministry of Public Enterprises Roles and Responsibilities The Ministry of Public Enterprises implement Government’s public enterprises reform programs, provide policy recommendations and monitor public enterprises portfolio to maximise returns and from corporatisation, public enterprises reforms also include the sale of certain Government assets and the partial divestment of earmarked State-owned enterprises.
increase efficiency and quality of service.

Apart The Government Printing and Stationery Department also reports to the Permanent Secretary for Public Enterprises.

The Department’s core functions include printing of legislations and publications, optimum use of resources through sound commercial discipline.
Table of Contents PART A: FINANCIAL STATEMENTS ..................................................................................................................................... 1 36.1 Audit Opinion ..................................................................................................................................................................... 1 36.2 Statement of Receipts and Expenditure ............................................................................................................................ 1 36.3 Appropriation Statement .................................................................................................................................................... 2 36.4 Manufacturing Account – Trading and Manufacturing Activity .......................................................................................... 3 36.5 Trading Account – Trading and Manufacturing Activity ..................................................................................................... 3 36.6 Profit and Loss Statement – Trading and Manufacturing Activity ...................................................................................... 4 36.7 Balance Sheet – Trading and Manufacturing Activity ........................................................................................................ 4 PART B: AUDIT FINDINGS ..................................................................................................................................................... 5 GOVERNMENT PRINTING AND STATIONERY DEPARTMENT ................................................................................................... 5 36.8 Anomalies - Trading and Manufacturing Account for 2015 ............................................................................................... 5 PART A: FINANCIAL STATEMENTS 36.1 Audit Opinion The audit of the 2015 consolidated accounts which included Ministry of Public Enterprises and Government Printing and Stationery Department was completed with issue of an unqualified audit report.
36.2 Statement of Receipts and Expenditure The consolidated revenue for the Ministry totalled $45,334 with a consolidated expenditure of $9,234,953 in 2015.Details are provided in Table 36.1.
Ministry of Public Enterprises and Government Printing and Stationery Department Section 36: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 36.1: Statement of Receipts and Expenditure for 2015 Description REVENUE Miscellaneous Total Revenue EXPENDITURE Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital Constructions Capital grants and transfers Total Capital Expenditure Value Added Tax Total Expenditure 2015 ($) 2014 ($) 45,334 45,334 180,037 180,037 2,174,400 223,242 60,227 433,120 33,105 4,190,989 43,897 7,158,980 - 2,000,000 2,000,000 2,201,443 356,967 72,330 442,806 350,161 - 38,457 3,462,164 - - - 75,973 122,204 9,234,953 3,584,368 Total revenue decreased by $134,703 or 74.8% in 2015 compared to 2014 due to no Directors Fees received for trainings undertaken at the Ministry during 2015.
Total expenditures increased by $5,650,585 or 157.6% in 2015 compared to 2014, which was largely attributed to new expenditures for Operating and Capital Grants and Transfers of $4,190,989 and$2,000,000, respectively.

36.3 Appropriation Statement The Ministry incurred expenditure totalling $9,234,953 in Head 36 in 2015 against a revised budget of $10,518,816, resulting in a saving of $1,283,863 or 12.2%.

Details of expenditure against the revised budget are provided in Table 36.2.
Table 36.2: Appropriation Statement for 2015 SEG Item Established Staff Unestablished Staff Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Transfers Special Expenditure Total Operating Costs Grants & Budget Estimate ($) 3,212,867 390,249 77,800 593,800 74,700 Changes ($) (190,990) - - - - Revised Estimate ($) 3,021,877 390,249 77,800 593,800 74,700 Actual Expenditure ($) 2,174,400 223,242 60,227 433,120 33,105 Lapsed Appropriation ($) 847,477 167,007 17,573 160,680 41,595 4,000,000 190,990 4,190,990 4,190,989 1 50,000 8,399,416 - - 50,000 8,399,416 43,897 7,158,980 6,103 1,240,436 Ministry of Public Enterprises and Government Printing and Stationery Department Section 36: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ SEG Item 9 10 13 and Grants Capital Constructions Capital Transfers Total Capital Expenditure Value Added Tax TOTAL Budget Estimate ($) - 2,000,000 2,000,000 119,400 10,518,816 Changes ($) Revised Estimate ($) - 2,000,000 2,000,000 119,400 10,518,816 - - - - - Actual Expenditure ($) Lapsed Appropriation ($) - 2,000,000 2,000,000 75,973 9,234,953 - - - 43,427 1,283,863 36.4 Manufacturing Account – Trading and Manufacturing Activity The Manufacturing Account is for Government Printing and Stationery Department.
The total production costs in 2015 amounted to $1.2 million during the year, $0.12 million for direct labour cost.

Refer to Table 36.3 for details.
Table 36.3: Manufacturing Account Description Raw Materials (01/01/15) Add: Purchases Less: Raw Materials (31/12/15) Raw Materials Used Add Work in Progress(01/01/15) Direct Cost Direct Labour Less: Work in Progress (31/12/15) 31 December 2015 ($) 31 December 2014 ($) 596,167 1,017,694 1,613,861 626,880 986,981 352,944 - 117,505 246,041 1,158,751 841,720 2,000,471 596,167 1,404,304 - - 39,326 352,944 Cost of Manufactured Goods Transferred to Trading Account 1,211,389 1,090,686 36.5 Trading Account – Trading and Manufacturing Activity The Trading Account is for Government Printing and Stationery Department.
The cost of goods sold amounted to $1.3 million whilst sales income amounted to$1.9 million, resulting in a gross profit of $0.60 million.

Refer to Table 36.4 for details.
Table 36.4: Trading Account - Government Printing & Stationery Department Description 31 December 2015 ($) 31 December 2014 ($) Sales Stock of Finished Goods (01/01/15) Add: Cost of Manufactured Goods Goods available for sale Less: Stock of Finished Goods (31/12/15) Cost of Finished Goods Sold Ministry of Public Enterprises and Government Printing and Stationery Department 1,901,530 749,851 1,211,389 1,961,240 664,111 1,297,129 1,938,555 665,696 1,090,686 1,756,382 749,851 1,006,531 Section 36: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Gross Profit Transferred to Profit and Loss Statement 31 December 2015 ($) 604,401 31 December 2014 ($) 932,024 36.6 Profit and Loss Statement – Trading and Manufacturing Activity The profit and loss statement showed a net profit of $0.52 million in 2015 compared to $0.91 million in 2014.
Total expense for 2015 was $76,676 with the major components of expenses being incurred on maintenance and operations.

Refer to Table 36.5 for details.
Table 36.5: Profit & Loss Statement - Government Printing & Stationery Department Description Income Gross Profit transferred from Trading Account Expenses Travel & Communication Maintenance & Operations Special Expenses Total Expenses Net Profit 31 December 2015 ($) 31 December 2014 ($) 604,401 932,024 0 76,670 6 76,676 527,725 260 20,208 42 20,510 911,514 36.7 Balance Sheet – Trading and Manufacturing Activity The total net assets of the Government Printing and Stationery Department during the year 2015 totalled $3.5 million compared to $3.8 million during 2014.
This was attributed to reduction in Accounts Receivable by $102,516 or 11%, Work in progress by $141,450 or 40% and finished goods for sale by $51,193 or 7%.Refer to Table 36.6 for details.
Table 36.6: Balance Sheet Description Accounts Payable Deposits & Deductions Total Liabilities Equities Accumulated TMA Surplus TMA Surplus transferred to Consolidated Fund Net Profit Total Equity 31 December 2015 ($) 31 December 2014 ($) 15,598 44,523 60,121 662 25,993 26,655 5,142,334 (2,212,543) 4,230,821 (1,352,261) 527,725 3,457,516 911,514 3,790,074 TOTAL LIABILITIES & EQUITY 3,517,637 3,816,729 Ministry of Public Enterprises and Government Printing and Stationery Department Section 36: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Current Assets Cash at Bank Account Receivable IC Raw Materials Work In progress Finished Goods for sale TOTAL ASSETS 31 December 2015 ($) 31 December 2014 ($) 1,186,488 794,117 626,880 211,494 698,658 3,517,637 1,221,134 896,633 596,167 352,944 749,851 3,816,729 The cash at bank balance decreased by $34,646 or 2.8% in 2015 compared 2014 due to inability of the Government Printing and Stationery Department to identify direct bank deposits made by customers which were subsequently not included in the general ledger.
PART B: AUDIT FINDINGS Government Printing and Stationery Department 36.8 Anomalies - Trading and Manufacturing Account for 2015 The profit and loss statement and the balance sheet must be prepared on an accrual basis.1 The annual profit and loss statements and balance sheet for each current financial year just ended must be prepared and submitted to the Auditor-General in a form suitable for audit and inclusion in the agency’s annual report.2 The audit of the Trading and Manufacturing account revealed the following anomalies:  There was an unreconciled difference of $99,551 between the FMIS general ledger and the TMA bank reconciliation statement for cash at bank.
Explanation provided by the Department revealed delays in posting of direct deposits to the general ledger as customers that made the direct deposits could not be identified.

 In addition, an unreconciled difference of $50,181 was noted between the FMIS general ledger and the Accounts Receivable listings maintained by the Department.

Furthermore, the unidentified deposits amounting to $99,551 was yet to be posted to the general ledger as customers that made the deposits could not be identified.
The above anomalies imply the lack of effective controls and lack of supervisory checks in the TMA operations.
Recommendations The Department should ensure that:  Accounts Officers take necessary action to ensure that direct bank deposits are promptly identified and FMIS general ledger is updated in a timely manner to capture the amounts received; and 1 Finance Instructions 2010, Section 30 (2) 2 Finance Instructions 2010, Section 30 (3) Ministry of Public Enterprises and Government Printing and Stationery Department Section 36: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  Bank reconciliations are properly checked and any variances are promply investigated and rectified.
Department’s Comments The difference is made up of our debtors who had made their payment through EFT.

Unfortunately, these customers haven’t disclosed the required information whilst transmitting funds through EFT.

Thus, this has prevented us from crediting their respective accounts as we need the Invoice(s) to which their payment relates to allow us to credit their accounts accordingly through the Accounts Receivable module.
The variance is due to the following: (i) On some occasions we invoice customers for the normal printing charges plus a component of overtime payment.

(ii) On other occasions customers raise one cheque for normal printing jobs plus payment for gazette subscriptions.

When receipting is done in the 2 scenarios above, the total amount inclusive of overtime payment and subscription payment is initially receipted into Fund 4 (TMA).
However, overtime payment and subscriptions needs to be accounted for in Fund 1.

Thus, we normally raise a cheque from the general ledger (Fund 4) and this is then paid into Fund 1 to offset the overtime payment made from SEG 1 and also to record the subscription as government revenue in Fund 1.
The effect of the above transactions is that the Arrears of Revenue in the G/L will always be less than the amount shown in the Aged Arrears Report maintained by the Department because the payment amount initially recorded in the GL has been split and a portion of it has been paid to Fund 1.

The Aged Arrears Report is not affected because the raising of cheques and subsequent payment into Fund 1 is not reflected in that report but only in the G/L.
This issue has been discussed with Irimaia from FMIS section at MOF and OAG staffs some years back and it was agreed by both parties that this issue be deleted and not included as a qualification issue in the Audit Report.

We had a lot of e-mail correspondences on this issue last year between Irimaia, Firoz and me.

Sairusi is also aware of this during our exit meeting • FIRCA variances – Comments noted.

We will try and substantiate the difference between the two.
Ministry of Public Enterprises and Government Printing and Stationery Department Section 36: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Section 37 Ministry of Local Government, Urban Development and Environment Role and Responsibilities The Ministry of Local Government, Urban Development and Environment is responsible for formulating and implementing local government and urban planning policies, developing Government policy for the protection of the environment and its sustainable use and policing the use of the environment to ensure compliance with Government policy.
The Ministry also partners with other authorities such as National Fire Services, Municipal Councils nationwide, as well as with international donor agencies that conduct environment and climate change programs.

The Ministry has three main Departments under its portfolio: the Department of Town and Country Planning, the Department of Local Government and the Department of Environment.
Table of Contents PART A: FINANCIAL STATEMENT ...................................................................................................................................... 1 37.1 Audit Opinion .............................................................................................................................................................. 1 37.2 Statement of Receipts and Expenditure ..................................................................................................................... 2 37.3 Appropriation Statement ............................................................................................................................................ 3 37.4 Statement of Losses .................................................................................................................................................. 3 Trust Fund Account Statement of Receipts and Payments ....................................................................................... 3 37.5 PART B: AUDIT FINDINGS ................................................................................................................................................... 4 37.6 Unreconciled Balances for the Main Trust Fund Account .......................................................................................... 4 37.7 Reconciliations not prepared ...................................................................................................................................... 5 37.8 Unreported Losses ..................................................................................................................................................... 7 37.9 No Back - Up Records for Salaries and Wages Reconciliations ................................................................................ 7 37.10 Anomalies in Extension of Current Naboro Landfill Stage 2 ...................................................................................... 8 37.11 Significant Outstanding Debtors for Naboro
 Landfill .................................................................................................. 9 37.12 Anomalies in Operations of Naboro Landfill ............................................................................................................. 11 37.12.1 Anomalies in Award of Tender for Naboro Landfill Operations .......................................................................... 11 37.12.2 Savings Foregone due to Delay in tender approval and signing of agreement ................................................. 13 Incorrect Estimation used for Total Tonnes of Rubbish for the 5 Year Period ................................................... 14 37.12.3 37.13 Delay in Finalising Draft Financial Statements for Audit .......................................................................................... 17 PART A: FINANCIAL STATEMENT 37.1 Audit Opinion Audit of the 2015 accounts of the Ministry of Local Government, Urban Development and Environment, resulted in the issue of a qualified audit report.
The qualifications are as follows:  The Environment Trust Fund Account Statement of Receipts and Payments had a closing balance of $2,894,606 as at 31 December 2015 while the cash at bank and cash book balances were $3,279,438 and $2,949,352, respectively.

The Ministry did not perform a reconciliation of the FMIS general ledger with the cash at bank and cash book balances.
Ministry of Local Government, Urban Development and Environment Section 37: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ As a result, audit was not able to ascertain the accuracy and correctness of the closing balance of $2,894,606 for the Environment Trust Fund Account Statement of Receipts and Payments for the year ended 31 December 2015.
 The correctness of the Statement of Losses could not be verified as the Board of Survey was not completed by the Ministry.

37.2 Statement of Receipts and Expenditure The Ministry collected revenue amounting to $504,231 and incurred expenditure totalling $24,585,109 in 2015.

Details are provided in Table 37.1.
Table 37.1: Statement of Receipts and Expenditure for 2015 Description RECEIPTS State Revenue Town and Country Planning Fees Commission Total State Revenue Agency Revenue Miscellaneous Revenue Total Agency Revenue TOTAL RECEIPTS EXPENDITURE Operating Expenditure Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditures Total Operating Expenditure Capital Expenditure Capital Construction Capital Purchase Capital Grants & Transfers Total Capital Expenditure 2015 ($) 2014 ($) Value Added Tax 497,263 686,584 TOTAL EXPENDITURE 24,585,109 19,018,640 The Ministry’s revenue increased by $254,781 or 102 % in 2015 compared to 2014 due to increase in Town and Country Planning Fees collected and increase in miscellaneous revenue due to regularisation of the stale cheques.
Total expenditure increased by $5,566,469 or 29% in 2015 compared to 2014 which was mainly attributed to increase in capital grants and transfers resulting from new projects undertaken including New Town Development, Nasinu Market (Laqere) and Albert Park Redevelopment.
Ministry of Local Government, Urban Development and Environment Section 37: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ 37.3 Appropriation Statement The Ministry of Local Government, Urban Development and Environment incurred expenditure totalling $24,585,109 in 2015 against a revised budget of $32,682,569 resulting in saving of $8,097,460 or 24.7%.

Details are provided in Table 37.2.
Table 37.2: Appropriation Statement for 2015 SEG Item Budget Estimate ($) Appropriation Changes ($) Revised Estimate ($) a Actual Expenditure ($) b Lapsed Appropriation ($) (a-b) Operating Expenditure Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditures Total Operating Expenditure Capital Expenditure Capital Construction Capital Purchase Capital Grants & Transfers Total Capital Expenditure 13 Value Added Tax 3,315,947 148,936 201,030 301,200 181,836 1,806,220 2,339,976 8,295,145 3,932,616 985,308 18,300,000 23,217,924 1,169,500 --- --- 1,000 10,000 --- --- (11,000) --- 3,315,947 148,936 202,030 311,200 181,836 1,806,220 2,328,976 8,295,145 2,754,337 140,795 197,771 252,868 140,179 1,315,831 1,524,562 6,326,343 3,932,616 985,308 18,300,000 23,217,924 429,765 856,781 16,474,957 17,761,503 --- --- --- --- --- 1,169,500 497,263 672,237 561,610 8,141 4,259 58,332 41,657 490,389 804,414 1,968,802 3,502,851 128,527 1,825,043 5,456,421 TOTAL EXPENDITURE 32,682,569 --- 32,682,569 24,585,109 8,097,460 37.4 Statement of Losses There was no loss reported for the Ministry in 2015.
A board of survey for the year ending 31 December 2015 was not completed by the Ministry.

37.5 Trust Fund Account Statement of Receipts and Payments The Environment Main Trust Fund Account had credit balance of $2,894,606 as at 31/12/15 compared to a credit balance of $2,871,092 in 2014.

Refer Table 37.3 for receipts and payments for the year ended 31/12/15.
Table 37.3: Trust Account Statement of Receipts & Payments for 2015 Description RECEIPTS Ozone Depletion Substance (ODS) Fines Waste and Environment Impact Assessment Environment Trust Convention on International Trade in Endangered Species Total Receipts 2015 ($) 2014 ($) 455,628 2,200,699 276,904 193,982 3,127,213 1,146,528 2,087,250 1,123,436 56,734 4,413,948 Ministry of Local Government, Urban Development and Environment Section 37: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Description PAYMENTS Ozone Depletion Substance (ODS) Fines Waste and Environment Impact Assessment Environment Trust Convention on International Trade in Endangered Species Total Payments Net Surplus Balance as at 1 January 2015 ($) 2014 ($) 773 2,500,490 601,067 1,369 3,103,699 87,469 2,923,916 264,744 --- 3,276,129 23,514 1,137,819 2,871,092 1,733,273 Closing Balance as at 31 December 2,894,606 2,871,092 The Environment Main Trust Fund Account showed a surplus of $23,514 in 2015 compared to $1,137,819 as at end of 2014.
The significant decrease was due to decrease in receipts from Ozone Depletion Substance (ODS) fines by $690,900 or 60% and Environment Trust by $846,532 or 75%.

Trust expenditures also decreased by $172,430 or 5% during 2015 compared 2014.

PART B: AUDIT FINDINGS 37.6 Unreconciled Balances for the Main Trust Fund Account Each month the trust account must be balanced and reconciled with the trust bank account.
The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.

Unreconciled items must be investigated and resolved promptly.1 The Department of Environment’s main trust fund accounts cash at bank had a balance of $2,949,352.28 in FMIS general ledger while the bank statement had a balance of $3,279,438.16 as at 31/12/15 resulting in a variance of $330,085.88.

The Department did not prepare the Main Trust Fund Account reconciliation for 2015.
Hence, the trust fund account balance as at 31/12/15 was not reconciled.

Refer to Table 37.4 for details.

Table 37.4: Variance in Cash at Bank and FMIS Balance Particulars Balance as per FMIS General Ledger Balance as per Bank Statement Variance Amount ($) 2,949,352.28 3,279,438.16 330,085.88 In addition, a variance of $54,746.23 was noted between Trust Fund Account balance (SLG 89) and the Cash at bank balance (SAG 52) in the FMIS general ledger as at 31 December 2015.

Refer to Table 37.5 for details.
1 Finance Instructions 2010, Section 58 (3) Ministry of Local Government, Urban Development and Environment Section 37: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Table 37.5: Variance in FMIS Trust Fund Account and FMIS Cash at Bank Balance Particulars FMIS Cash at Bank Balance FMIS Trust Fund Account Balance Variance Amount ($) 2,949,352.28 2,894,606.05 54,746.23 The findings show laxity of the officers responsible for not performing their duties.
As a result, audit was not able to ascertain that all receipts and payments had been accurately accounted for in the main trust fund account.
Recommendations The Ministry should ensure that:    trust fund account bank balance is reconciled with the trust fund FMIS ledger balance on a monthly basis; receipts and payments from the Environment Trust Fund account are posted to the general ledger on a timely basis; and appropriate action is taken against officers responsible for not performing their duties diligently.

Ministry’s Comments Please note the Trust Fund reconciliations have been processed up to September, 2015 and submitted to Finance.
The remaining reconciliations for October – December, 2015 are being processed for submission to Finance.

As mentioned earlier, the delay is due to staffing constraints within Accounts which is being addressed urgently by management.

Also note the variance of $330,085.88 in balances between the FMIS/GL and bank balance was inherited by the Ministry when the Trust Account was transferred to the Ministry in 2010.
It previously operated under a number of Ministries before it was transferred to the Ministry in 2010 from the Ministry of Lands.

However, the Accounts section has been liaising with FMIS to regularize the variance through a write-off submission to the Minister for Finance.

Appropriate measures are being taken to regularize the variance of $54,746.23 as highlighted.
37.7 Reconciliations not prepared Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced.
The Senior Accountant must verify all the reconciliations before signing and submitting it to Ministry of Finance.2 Each month, the Accounting Head must provide a signed and dated report to the Permanent Secretary to advice whether all reconciliations and check required in the agency’s Finance manual have been carried out.3 The audit noted that the Ministry failed to prepare and submit its monthly reconciliations for various underline accounts for the period January to December 2015.
Refer to Table 37.6 for details.
2 Ministry’s Finance Manual 2013, Section 17.2.5 3 Finance Instructions 2010, Section 60 (1) (a) Ministry of Local Government, Urban Development and Environment Section 37: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Table 37.6: Underline Accounts Balances without Reconciliations Allocation Description 1-37101-37999-570301 RFA (Advance) 1-37000-00000-530000 IDC Audit Remarks FMIS Balance as at 31/12/15 ($) (4,753.82) Reconciliations for Jan – Dec 2015 was prepared in December/January 2016 and was maintained in soft copies only.
--- 1-37101-37999-530301 Drawings (320,468.81) 1-37000-00000-860000 Operating Trust The reconciliations are not certified by Senior Accounts Officer and the Permanent Secretary.

(12,953.97) Reconciliations done till March 2015 was prepared in March/April 2016 and was maintained in soft copies only.

1-37301-37999-840602 SLG 84 – Accounts Payable (1,200) The reconciliations are not certified by Senior Accounts Officer and the Permanent Secretary.
1-37000-00000-530000 BLC 9-37000-00000-890000 Environment Main Trust - Liability (2,894,606.05) --- Reconciliations done till March 2015 was prepared in March/April 2016 and was maintained in soft copies only.

9-37301-37999-520301 Environment Main Trust – Cash 2,949,352.28 9-37301-37999-560102 Accounts Receivable 2,750.51 The reconciliations are not certified by Senior Accounts Officer and the Permanent Secretary.
Reconciliations not prepared for the 12 months Absence of reconciliations will result in the Ministry failing to detect irregularities such as errors and omissions in the respective accounts on a timely manner.

As a result, it was not possible to ascertain the correctness of the balance reflected in the Ministry’s underline accounts.
Recommendations The Ministry should ensure that:    monthly reconciliations for the underline accounts are prepared, signed and submitted to the Permanent Secretary for review and endorsement in a timely manner; all signed reconciliations are submitted to the Ministry of Finance FMIS unit for necessary action; and appropriate action is taken against officers responsible for not performing their duties diligently.
Ministry’s Comments All monthly reconciliations have been updated and submitted to FMIS which records all reconciliations submitted by Ministries.

In case of non-submissions by Ministries, FMIS takes corrective measures such as with- holding Excess approvals, RIE uploads, virement uploads, etc.

until such time Ministries comply.
Ministry of Local Government, Urban Development and Environment Section 37: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ 37.8 Unreported Losses An annual board of survey must be conducted each year to verify the existence and condition of assets recorded on the asset register provided that, for agencies that have, in the opinion of the Permanent Secretary a large asset base, the board of survey to be conducted on a cyclical basis so that all assets are checked every year.4 The audit noted that the Ministry did not complete its Board of Survey for the year ended 31/12/15.
Due to lack of proper planning and coordination by the Ministry, the Board of Survey for 2015 was not completed.

As a result the losses may not be properly disclosed by the Ministry in the Statement of Losses.

Recommendation The Ministry should ensure that annual board of survey is properly planned and conducted before preparation of agency financial statement audit to ensure losses are properly disclosed in the financial statements.
Ministry’s Comments Please note the 2015 BOS was carried out as required and the reports are being finalized before the Ministry submits to Finance.

37.9 No Back - Up Records for Salaries and Wages Reconciliations The Accounting Head must ensure that payroll reconciliations are carried out fortnightly for salaries and weekly for wages and copies sent to the Ministry of Finance.5 The Ministry paid a total of $2,754,337 in salaries and $140,795 in wages for the period 1/1/15 – 31/12/15.
However, the Ministry failed to provide salaries and wages reconciliations for the period 1/1/15 – 31/12/15 for audit verification.

Discussion with the Accounts Officer revealed that the reconciliations were maintained in soft copies which were lost when the hard disk of the computer in which it was kept crashed.

The Ministry did not maintain backups of the reconciliations.
In the absence of the reconciliations, it was not possible to ascertain during audit that payroll reconciliations were regularly prepared and reconciled with the amount of salaries and wages paid by the Ministry.

Recommendations The Ministry should ensure that:   salaries and wages reconciliations are regularly prepared and hard copies of all reconciliations are maintained for audit purposes.

regular backups are done for all critical data held in the Ministry’s computers.
4 Finance Instructions 2010, Section 49 (1) 5 Finance Instructions 2010 – Section 17 (7) Ministry of Local Government, Urban Development and Environment Section 37: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Ministry’s Comments Please note our Salaries and Wages reconciliations are being updated with copies submitted to FMIS/Finance with copies retained on files for record purpose.
Please note soft copies were submitted to FMIS which is a more convenient way of delivery.

Delays in compilation and submission have been due to staffing constraints in our Accounts Section for the last 2 years or so.
37.10 Anomalies in Extension of Current Naboro Landfill Stage 2 The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.6 The Ministry of Local Government, Urban Development and Environment were allocated $2,932,616 in the 2015 budget for the extension of the current Naboro Landfill Stage 2.

The Government Tender Board (GTB) on 6/8/14 awarded the design tender to Contractor A for a sum of $255,025 VIP with a contingency sum of $25,502.50.
The contract was signed between the Ministry and Contractor “A” on 11/5/15 after a lapse of nine months from the date tender was awarded by the GTB.

The delay was due to the disagreements between the contractor and the Ministry over the payment of 15% non-resident miscellaneous withholding tax.

As a result of the delay in construction, the land fill space available at Naboro landfill reached at critical level.
To address the situation, the Ministry submitted request for waiver of tender which was approved by Minister of Economy on 25/11/15.

The tender was awarded to Contractor B for the construction of the Naboro Landfill Stage 2 Cell 1.

Audit review of the project records and contract documents revealed the following anomalies.
a) The disagreement over the payment of withholding tax by the contractor and the Ministry agreeing to pay the 15% withholding tax on behalf of the Contractor A to FRCA totalling $44,118.09 as at 31/12/15.

Hence, the Ministry paid total of $280,527 to Contractor “A” inclusive of provisional tax of $44,118.09 not being deducted.
b) The nine months delay to finalise the agreement resulted in having variations in designs to be provided by the contractor to breakdown the Stage 1 design into 3 phases instead of the initial agreement to have one design.

As a result, the Ministry had to pay $25,502.50 as cost of variations from the contingency sum.

The findings indicate that the Ministry did not foresee and adopt proactive approach for the construction of the 2nd phase of the landfill which resulted in additional costs.
6 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013 Part 2 Ministry of Local Government, Urban Development and Environment Section 37: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Recommendation The Ministry should ensure that capital projects are properly planned and managed in order to avoid delays and incurring additional costs in the completion of projects.
Ministry’s Comments The Ministry fully acknowledged the recommendations of the OAG.

Please note the Ministry was only aware of the 15% WHT and the 15% VAT Reverse charge requirements following GTB approval and during the vetting of the draft Contract by the office of the Solicitor General in 2014.

Please note that it would not have become an issue should the Fiji Procurement Office had included the 15% WHT for non-residents in the Bidder’s checklist.
The Ministry had raised its concerns to the FPO in 2015 and requested that such condition be considered.

The Consultancy for the designs for Naboro Landfill Stage 2 was then for five months beginning from 8th May, 2015 until 8th October, 2015.
Due to the delays in obtaining the designs consultancy, the Ministry had therefore requested for the consultant, Contractor A to provide an immediate designs (Stage 2- Cell 1) to cater for the much needed landfill space which has resulted in the variations to the contract.
The Ministry has therefore had no option but to request for waiver of tender for the construction of the first cell of Stage 2 due to the limited airspace at the landfill and the timelines for adhering to the tender process which normally takes another 3- 6 months.

The Ministry received Minister of Finance approval on the waiver of tender on 25th of November, 2015 and the contract was then finalized and signed on 29th January, 2016.
The Ministry is now fully aware of the 15% WHT requirements for future tender works.

37.11 Significant Outstanding Debtors for Naboro Landfill All refuse accepted on credit shall be the responsibility of the Contractor.

The acceptance of cheques for payment of fees, the recovery of fees from users who do not have sufficient cash and the recovery of bad debts shall be the responsibility of the Contractor.7 The Contractor allowed rubbish to be disposed at Naboro Landfill on credit.
The audit noted that the total debtor’s balance for the Naboro Landfill as at 31/12/15 was $471,364.01 out of which $191,189.85 was outstanding for more than 90 days.

The audit also noted that $384,993.97 or 81.7% of the total debts was owed by the four Municipal Councils out of which $189,778.65 were outstanding for more than 90 days.

Refer to Table 37.7 for the details.
Table 37.7: Breakdown Details of Outstanding Debt Debtor Nasinu Town Council Nausori Town Council Lami Town Council Suva City Council Amount Owed as at 31/12/15 ($) 249,876.64 32,930.33 4,664.45 97,522.55 Percentage of Total Debtors (%) 53.0 7.0 1.0 20.7 7 Contract Agreement between Contractor and MLGUDHE clause 2.5 Ministry of Local Government, Urban Development and Environment Section 37: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Debtor Private Companies Total Amount Owed as at 31/12/15 ($) 86,370.04 471,364.01 Percentage of Total Debtors (%) 18.3 100.0 The Ministry does not maintain any evidence to substantiate that the Contractor has been following up with the debtors to recover the amount owed.
In addition, the audit noted that the Naboro Landfill debtors is significantly contributing to large amount of subsidy paid by the Ministry to meet the short fall in the monthly gate fees collected.

For the financial year 2015, the Ministry paid a sum of $713,545.41 as subsidy to the Contractor which could have been saved if debts amounting to $471,364.01 had been recovered.
The above finding indicates that the Contractor’s debt recovery procedures are ineffective as significant amount of debtors balance is outstanding for more than 90 days.

In addition, the findings also indicates that the Contractor does not recognize the importance of recovering debts as the Ministry has been continuously meeting the short fall in the gate fees through subsidy payment.

Similar observation was made in previous years audit report but no improvement has been noted.
Failure by the Contractor to effectively manage the debtor balances will increase the risk of bad debts and will exert pressure for the Ministry to meet the shortfall.

Recommendations The Ministry should:   ensure that the Contractor complies with all aspects of the contract agreement and effectively manages the Naboro Landfill Debtors; and consider assisting the Contractor in collecting the debts from municipal councils as majority of the debts are owed by the councils.
Ministry’s Comments The Ministry fully acknowledged the recommendations of the OAG.

As per our response in the 2014 Audit Report: The contractor as per the conditions of Contract has to pass all revenue from the operations of the Naboro landfill to the principal and assumes responsibility for recovering all debts that are incurred for customers allowed on credit basis.
The specifications state that the contractor must ensure that there are sufficient funds in the nominated trust fund to ensure payment to the contractor for the previous month’s; this in itself acts as a control for requiring the contractor to recover a minimum of $230k-$250k from its creditors.
We also note that majority of the debtors are municipal councils and the Ministry also being responsible for the affairs of Local Governments appreciates the variable and volatile cash flows experienced by the councils mentioned.
Ministry of Local Government, Urban Development and Environment Section 37: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ The subsidy is relied on regardless of the state of the creditors as the revenue in any given month is certain not to exceed the contractual costs; this is due to the fact that the gate fees are set at a level whereby revenue does not break even with the costs.
To address the above disparity, cabinet had approved on 23rd June, 2015 an increase in gate fee thus the Landfill is in a position to break even with the contractual costs for the first time in its history.

The increase in gate fees will come into effect on 23rd June, 2016.

37.12 Anomalies in Operations of Naboro Landfill On 22/7/2005, the Ministry of Local Government, Urban Development and Environment entered into a five year contract agreement with Contractor A for the operation of Naboro Landfill.
Consequently, the contract was extended for another term of 5 years with a contract price of $5,834,070 (VIP) and the current contract agreement expired on 30/6/15.

Further extension of three months and additional extension of eight months was given to the Contractor A and after the extension the contract will expire on 31/5/16.
37.12.1 Anomalies in Award of Tender for Naboro Landfill Operations The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.8 The current Naboro Landfill Operations contract with Contractor “A” expired on 30/6/15.

Audit review of the tender documents and awards revealed the following anomalies.
 The Tender Evaluation Committee (TEC) after its evaluation on 19/1/15 recommended Contractor B for a contract sum of $10,822,730.50 VIP for a period of 5 years.

On 5/8/15, the Ministry on behalf of the Government Tender Board (GTB) wrote to Contractor “A” requesting them to further reduce its tendered price.

On 18/8/15, Contractor A agreed to reduce the initial tender price to $11,339,362.25 VIP after which the GTB awarded the contract to Contractor “A” on 28/9/15.
However, there was no evidence if similar price negotiation were made with the Contractor “B” by GTB.

The audit noted that the price offered by Contractor “B” was lower than the revised price submitted by Contractor “A” with a difference of $516,631.

Refer to Table 37.8 for details.


Table 37.8: Tendered Amount by Contractor “A” and Contractor “B” Contractor Contractor A (Revised Amount) Contractor B Difference Price ($ VIP) 11,339,362.25 10,822,730.50 516,631.75 Audit review of the TEC minutes further revealed that Contractor “B” had the relevant experience, track record, technical skills and tendered the lowest bid.
8 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013 Part 2 Ministry of Local Government, Urban Development and Environment Section 37: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ However, the GTB awarded the contract to Contractor “A” without any valid explanations provided by GTB to the Ministry.
 The Ministry paid a total of $1,409,387.79 to Contractor “A” for a period of six months from July 2015 to December 2015 for the overall landfill operations rates after the expiry of its agreement on 30/6/15.

The Ministry could have saved $365,328.39 VIP or 25.9% of the total payments made to Contractor “A” up till 31/12/15 if the tender for the operation of the Naboro Landfill was awarded to Contractor “B” as recommended by the Tender Evaluation Committee.

Refer to Table 37.9 for details.
Table 37.9: Savings from July 2015 – December 2015 if Contractor “B” was engaged Months Tonnes of Waste Processed Contractor B ($) Total Expected Cost Overall Monthly Total Cost for Contractor B Cost Savings Actual payment to Contractor A ($) ($) ($) ($) to to to to to to July Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 August Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 September Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 October Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 November Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 December Up to 4,200 tonnes Between 4,200 5,000 Greater than 5,000 Total Savings VEP VAT (15%) Total Savings VIP Ministry of Local Government, Urban Development and Environment Section 37: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ The above finding indicates that there was lack of consultation with the Ministry and proper cost analysis was not carried out to determine the most economical contractor for Naboro Landfill operations.
Recommendation The Ministry in consultation with Fiji Procurement Office should obtain justification on the decision of the GTB.

Ministry’s Comments The Ministry fully acknowledges the recommendations of the OAG.

The Ministry has taken on board the findings of the audit report in particular the cost savings analysis for the purpose of engaging a most economical contractor for Naboro Landfill Operations.
37.12.2 Savings Foregone due to Delay in tender approval and signing of agreement The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.9 The agreement with Contractor “A” for the operation of Naboro Landfill expired on 30/6/15.

The final tender evaluation for the Naboro landfill operation was finalised on 19/1/15 and Tender Evaluation Committee (TEC) recommended Contractor “B”.
However, after a lapse of 8 months the Government Tender Board (GTB) on 28/9/15 awarded the tender to Contractor “A”.

The audit noted that as at the date of audit on 3/2/16, the Ministry had not entered into a contract agreement with Contractor “A”.

However, the Ministry engaged Contractor “A” without a valid agreement and paid a total of $708,802.16 for a period of three months from October 2015 to December 2015 for the overall landfill operations at the existing rates.
Audit review noted that the Ministry could had saved $72,192.77 VIP based on new rate on the total payments made between July 2015 to December 2015 if the new contract was finalised from 1/7/15.

Refer to Table 37.10 for details.
Table 37.10: Savings if Contractor “A” was Engaged Based on the New Tendered Price Months Tonnes of Waste New Tendered Rate by Contractor A ($) Total Cost For the Month Overall Total Cost For the Month Based on New Tendered rate Actual Payment Made to Contractor A Cost Savings ($) ($) ($) ($) July Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 August 4,200 800 1,799.80 33.65 20 18 141,330.00 16,000.00 32,396.40 189,726.40 201,998 12,271.60 9 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013 Part 2 Ministry of Local Government, Urban Development and Environment Section 37: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Months Tonnes of Waste Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 4,200 800 1,860.68 New Tendered Rate by Contractor A ($) 33.65 20 18 Total Cost For the Month Overall Total Cost For the Month Based on New Tendered rate Actual Payment Made to Contractor A Cost Savings ($) 141,330.00 16,000.00 33,492.24 ($) ($) ($) September Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 October Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 November Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 December Up to 4,200 tonnes Between 4,200 to 5,000 Greater than 5,000 Total Savings VEP VAT (15%) Total Savings VIP 194,410.18 204,600.10 10,189.92 198,398.98 206,816.10 8,417.12 191,465.56 202,964.20 11,498.64 197,954.92 206,569.40 8,614.48 62,776.32 9,416.45 72,192.77 The above finding shows significant delays by GTB in making its decision.
As a result, savings of $72,192.77 as at 31/12/15 were foregone by the Ministry for not having the agreements signed prior to the expiry of the operations contract agreement on 30/6/15.

Recommendation The Ministry should ensure that valid agreements are in place prior to the expiry of the current agreements.

Ministry’s Comments The Ministry fully acknowledges the recommendations of the OAG and has taken on board the findings for our necessary action.
37.12.3 Incorrect Estimation used for Total Tonnes of Rubbish for the 5 Year Period The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.10 10 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013 Part 2 Ministry of Local Government, Urban Development and Environment Section 37: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ The tender specifications required the bidders to submit tender price based on an estimated 310,000 tonnes of rubbish for a 5 year period.
Refer to Table 37.11 for details.

Table 37.11: Tonnage Used for Tender Item Overall Landfill Operations rates Up to 4,200 tonnes per month Greater than 4,200 and less than 5,000 Over 5,000 tonnes Total Tonnes for 5 Years Total tonnes per month Quantity (tonnes) 252,000.00 48,000.00 10,000.00 310,000.00 5,166.67 Review of the tender documents revealed the following anomalies.
 As per the tender specifications, the Contractors were required to submit their bids based on 310,000 tonnes of waste for a period of 5 years which equates to 5,166.67 tonnes of waste per month.

However, the total tonnes of waste processed for the year ended 31/12/15 were 84,759.70 which equates to an average of 7,063 tonnes per month.

Refer to Table 37.12 for details.


Table 37.12: Tonnes of Rubbish per Month for Year 2015 Month Tonnes of Rubbish January February March April May June July August September October November December Total 6,876.30 7,627.14 8,101.62 6,383.61 6,364.06 7,251.51 6,799.80 6,860.68 7,060.01 7,281.61 6,896.42 7,256.94 84,759.70 The above findings indicate that the total tonnage of rubbish as per tender specifications was grossly understated.
 The Naboro Landfill Operations contract was awarded to Contractor “A” by the GTB on 28/9/15 based on the price submitted for 310,000 tonnes of rubbish as per the tender documents.

The audit noted that the total waste expected for the next 5 year period based on the 2015 figures of the total tonnage of waste processed was approximately 423,798.50 tonnes.

Thus, this could result in the Ministry paying Contractor “A” an extra $2,355,628.95 VIP above its tendered price for the 5 year period.
Ministry of Local Government, Urban Development and Environment Section 37: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Refer to Table 37.13 for details.
Table 37.13: Difference between Expected tonnage of Waste and tendered tonnage of Waste Item Quantity (tonnes) 5 year Contractor A Rate per tonne ($) Total Cost for 5 years as per Audit Estimate 240,515.00 Total Cost for 5 Years as per Bid Submitted by Contractor A 240,515.00 Additional Cost to 4,200 tonnes per Provisional Items Overall Landfill Operations rates Up month Greater than 4,200 and less than 5,000 Over 5,000 tonnes – As per Audit Estimate Over 5,000 tonnes – As per Tender submitted Total VEP VAT (15%) Total VIP 252,000.00 33.65 8,479,800.00 8,479,800.00 48,000.00 20.00 960,000.00 960,000.00 123,798.50 18.00 2,228,373.00 --- 10,000.00 18.00 --- 180,000.00 11,908,688.00 1,786,303.20 13,694,991.20 9,860,315.00 1,479,047.25 11,339,362.25 2,048,373.00 307,255.95 2,355,628.95 The above findings indicate that the total tonnage of rubbish as per the tender specifications was unrealistic and was made without considering the population growth and developments within Lami - Nausori corridor over the next 5 years.
 Cost analysis carried out during audit based on the expected tonnes of rubbish for the five year period of 423,798 tonnes charged by Contractor “A” in comparison to the tendered rate provided by Contractor “B” revealed; that in the long run, the Ministry would have saved $2,806,826 VIP if the contract would have been awarded to Contractor “B” contrary to the initial difference in price of only $516,632 VIP based on 310,000 tonnage.

Refer to Table 37.14 for details.
Table 37.14: Contractor “A” and Contractor “B” Rate Analysis Item Quantity (tonnes) 5 year Contractor A Contractor B Difference Rate per Tonne ($) Total Cost for 5 years ($) Rate per tonne ($) Total Cost for 5 years ($) 240,515.00 388,070 (147,555) Landfill Provisional Items Overall Operations rates Up to 4,200 tonnes per month Greater than 4,200 and less than 5,000 Over 5,000 tonnes Total VEP VAT (15%) Total VIP 252,000.00 33.65 8,479,800.00 35.50 8,946,000 (466,200) 48,000.00 20.00 960,000.00 1.50 72,000 888,000 123,798.50 18.00 2,228,373.00 11,908,688.00 1,786,303.20 13,694,991.20 0.50 61,899.25 9,467,969.25 1,420,195.39 10,888,164.64 2,166,473.75 2,440,718.75 366,107.81 2,806,826.56 Ministry of Local Government, Urban Development and Environment Section 37: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ The above finding indicates that analysis was not done on the realistic tonnage by the Ministry while awarding the tender to Contractor “A”.
As a result, the Ministry would incur significant additional cost over the five year period compared to the lowest bidder.

Recommendations   The Ministry should ensure that value for money is obtained from expenditures incurred.

Proper cost and benefit analysis should be carried out based on the realistic data in future.

Ministry’s Comments The Ministry fully acknowledges the recommendations of the OAG and has taken on board the findings for our necessary improvements in future tender works.
37.13 Delay in Finalising Draft Financial Statements for Audit The recipient of the Grant Assistance shall provide financial statement (audited if practicable) for grants of $20,000 or more.11 The Ministry provided grants to various Municipal Councils and to National Fire Authority for capital works.

The audit noted that various Municipal Councils and National Fire Authority failed to provide detailed outline of expenditure incurred to carry out capital projects or audited financial statements.
Refer to Table 37.15 for details of grant assistance provided: Table 37.15: Examples of Grant Recipient not submitting draft account for audit Grant Recipient Suva City Council Levuka Town Council Nausori Town Council Nadi Town Council Labasa Town Council Lautoka Town Council Lami Town Council National Fire Authority Last Audited Account 2010 2010 2012 2012 2013 2013 2013 2013 Grant Provided Since Last Audited Account 2012 ($) 400,000 n/a n/a n/a 2013 ($) 452,355 52,500 1,500,000 215,325 n/a n/a 1,746,329 2014 ($) n/a 245,774 1,579,249 844,000 252,500 500,000 143,160 3,900,000 2015 ($) Total Grant Provided ($) 10,000,000.00 10,452,355.00 1,013,718.08 3,331,899.00 1,354,735.00 541,595.00 793,250.00 756,160.00 9,122,417.00 315,444.08 252,650.00 295,410.00 289,095.00 293,250.00 613,000.00 3,476,088.00 In the absence of audited financial statements, the Ministry cannot establish whether grants were used for the intended purpose.
Recommendation The Ministry should liaise with grant recipients and enure that audited financial statements are received prior to release of further grant payments.
11 Ministry of Local Government, Urban Development, Housing and Environment Finance Manual 2013 Section 3.3.1 Ministry of Local Government, Urban Development and Environment Section 37: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017____________________________ Ministry’s Comments The Ministry fully acknowledges the report of the OAG, please note that the Ministry is aware of the status of the financial accounts of the Municipal Councils and has also instructed all Councils to have their accounts audited.
A few of the Councils mentioned in the are awaiting the respond from the OAG on the draft accounts submitted for auditing, this included Levuka, Nausori and Nadi.

Councils have engaged professional accounting firms to carry out the preparation of their draft accounts.
On the above note, the Ministry noting this progress and the need for the basic infrastructures to be developed have given funds to Council on the conditional that Councils submit acquittals on quarterly basis and the continuous monitoring of the grants.
Ministry of Local Government, Urban Development and Environment Section 37: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 40 Ministry of Infrastructure and Transport Roles and Responsibilities The Ministry of Infrastructure and Transport plans, regulates and carries out activities that help drive economic growth, protect and raise the country’s standard of living, and ensure public health and safety.
It is the key to many activities carried out by other Ministries and the private sector.

Overall, the Ministry is the lead agency for the condition and performance of the nation’s infrastructure and the efficient operation of the transport sector.

The Ministry has authority for the Departments of Transport, Meteorological Services, Public Works, Energy, Water and Sewerage, and Government Shipping Services.
It also oversees the Land Transport Authority, the Maritime Safety Authority of Fiji, the Water Authority of Fiji, and the Fiji Roads Authority.

The Ministry’s budget for 2015 totals $113 million, with $57.3 million allocated for operations and $50.2 million allocated for capital expenditures.

The Ministry, through the Department of Transport, provides the regulatory framework that allows for the most efficient and affordable land and maritime transport systems possible.
The transport sector is one of the principal drivers of economic growth because it provides the mobility and infrastructure that link people with jobs and goods with markets.

Government Shipping Services provides Government with a specialized fleet of ten vessels that allow it to transport Government officials as well as machinery, building supplies, rural development materials, livestock and other cargo needed for development projects.
The Department of Meteorology is critical to a nation that is dispersed among more than 100 islands in the middle of an area that is prone to violent storms.

It is committed to providing timely and reliable weather, hydrology and climate information to the public on both normal and extreme weather conditions.

The public needs to be warned well in advance in order to prepare for extreme events like cyclones, storm surges and flooding, and as quickly as possible in the event of a tsunami.
Special emphasis is being placed on disaster preparedness and on mitigating the effects of rising sea levels as a result of climate change.

The Department of Works is the only engineering arm of Government, and is responsible for planning, designing, building, operating, maintaining and upgrading Government buildings, quarters, and electrical services, and for providing electricity in five rural Government stations.
The Department of Energy will focus on policy directions stipulated in the revised Energy Policy and also the recently established Green Growth Framework for Fiji.
Initiatives include transfer of the regulatory role from the Fiji Energy Authority to the Department of Energy, provision of electricity services to remote rural areas, research and development of renewable energy sources such as geothermal, wind, hydro, biofuel and biomass, research into alternative fuels for the transport and fuels (electric/hybrid), and also more vehicles running on biofuels.
industrial sectors and introduction of transport, land flexi for The Department of Water and Sewerage is responsible for the development of water supply and sanitation sector policies to ensure the provision of safe, clean drinking water and efficient sanitation services to all communities.
Ministry of Infrastructure and Transport Section 40: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table of Content PART A: FINANCIAL STATEMENTS .......................................................................................................................... 4 40.1 40.2 40.3 40.4 Audit Opinion ......................................................................................................................................................... 4 Statement of Receipts and Expenditures .............................................................................................................. 4 Appropriation Statement ....................................................................................................................................... 5 Trade and Manufacturing Account (TMA) ............................................................................................................. 6 40.5 Department of Energy Trust Fund Account ......................................................................................................... 8 PART B: AUDIT FINDINGS ......................................................................................................................................... 8 DEPARTMENT OF WORKS ...................................................................................................................................................... 8 40.6 40.7 40.8 40.9 40.10 40.11 40.12 Trading and Manufacturing Account (Fund 4) ....................................................................................................... 8 40.6.1 TMA with no Cash at Bank Account .............................................................................................................. 8 40.6.2 Variance between Consolidated TMA Bank Account balance and FMIS General Ledger balance .............. 9 40.6.3 Variance between Accounts Receivable Schedule and FMIS General Ledger Balances........................... 10 40.6.4
 Transfer of Operating Funds (Fund 1) to the Trading and Manufacturing Account (Fund 4) ...................... 12 40.6.5 Annual Stock Take Not Observed By the Auditors...................................................................................... 13 40.6.6 TMA Sales Revenue Understated in VAT Returns ..................................................................................... 13 40.6.7 Sales Recorded at VIP Amounts ................................................................................................................. 14 40.6.8 Receipts and Payments not posted into FMIS General Ledger (Building and Mechanical TMA Bank accounts) ................................................................................................................................................................... 15 40.6.9 Understated Cash Account balance ............................................................................................................ 17 Trust Fund Accounts ........................................................................................................................................... 17 40.7.1 Main Trust Fund Account for Security and Retention Deposits................................................................... 17 40.7.2 Variances in Main Trust Fund Cash at Bank and Liability Accounts (Department of Energy) .................... 19 40.7.3 Main Trust Reconciliations (Department of Energy).................................................................................... 20 Underline Accounts ............................................................................................................................................. 20 40.8.1 Underline Account Anomalies ..................................................................................................................... 20 Headquarters
20 Headquarters ...................................................................................................................................................... 24 40.9.1 Delay in Award of Tender ............................................................................................................................ 24 40.9.2 Anomalies in Contract Agreement............................................................................................................... 25 40.9.3 Diversion of Funds to Other Projects .......................................................................................................... 26 40.9.4 Construction of Light Houses ...................................................................................................................... 28 Divisional Engineer Western ............................................................................................................................... 31 40.10.1 Weaknesses in Control of Stores .............................................................................................................. 31 40.10.2 Anomalies in Project Records .................................................................................................................... 33 Divisional Engineer Northern .............................................................................................................................. 35 40.11.1 Surplus Materials upon Completion of Project ........................................................................................... 35 40.11.2 Store cards not properly maintained .......................................................................................................... 37 40.11.3 Items Not Taken On Charge at the Project Site ........................................................................................ 37 40.11.4 Delay in Supply of Hardware Items By Approved Contracted Suppliers ................................................... 39 40.11.5 Highly Overstated Project Cost
 Estimates ................................................................................................. 39 Divisional Engineer Central Eastern ................................................................................................................... 41 40.12.1 Non Compliance to Project Implementation Schedule .............................................................................. 41 GOVERNMENT SHIPPING SERVICES ................................................................................................................................... 43 40.13 Non Payroll .......................................................................................................................................................... 43 40.13.1 Progress Reports Not Prepared ................................................................................................................. 43 40.13.2 Non Compliance with GTB Approval ........................................................................................................... 44 40.13.3 Anomalies in Purchase of Generators......................................................................................................... 45 40.13.4 Delay in Supply of Used Straight Steel Tramline Rails ............................................................................... 46 40.13.5 Advance Payment for Fuel and Lubricants ................................................................................................. 47 40.13.6 Significant Loss in Drum Deposit ................................................................................................................ 49 40.13.7 Anomalies in Maintenance of Tally Cards ................................................................................................... 50 40.13.8 Anomalies in Payment................................................................................................................................. 50 FIJI METEOROLOGICAL SERVICES
 ..................................................................................................................................... 52 Ministry of Infrastructure and Transport Section 40: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.14 Non Payroll....................................................................................................................................................... 52 40.14.1 Anomalies in Construction of Archive Facility ............................................................................................. 52 40.14.2 Upgrading of Outer Island Works Not Properly Planned ............................................................................. 53 40.14.3 Building Works Carried Out Without Any Agreement .................................................................................. 55 40.14.4 Journal Vouchers Not Adequately Supported ............................................................................................. 55 DEPARTMENT OF WATER AND SEWERAGE ...................................................................................................................... 56 40.15 Non Payroll....................................................................................................................................................... 56 40.15.1 Refurbishment of Office (Water and Sewerage Department) ...................................................................... 56 40.15.2 Construction of Portable Lab ....................................................................................................................... 57 40.15.3 Items not received for Payments made in Advance .................................................................................... 59 40.15.4 Installation of Ecological Purification System (EPS) in Rural Areas ............................................................ 59 Actual Costs of Projects exceeding estimated costs
 ............................................................... 60 40.15.4.1 DEPARTMENT OF ENERGY ................................................................................................................................................... 62 40.16 40.17 40.18 40.19 40.20 40.21 40.22 40.23 Rural Electrification Unit ................................................................................................................................... 62 40.16.1 Anomalies in Community Contribution ........................................................................................................ 62 40.16.2 Additional Expenses Incurred Due to Delay in Formulating Contract ......................................................... 63 40.16.3 Anomalies in Contractual Agreement .......................................................................................................... 64 40.16.4 Delay in Project Completion Due To Non Supply of Materials by the Approved Supplier........................... 66 40.16.5 No Delay Damages Charged for Delay in Project Completion .................................................................... 66 Solar Home System Scheme ........................................................................................................................... 67 40.17.2 Items Not Taken on Charge ........................................................................................................................ 67 40.17.3 Significant Delays in Renewal of Solar Home System Maintenance Contracts .......................................... 70 40.17.4 Revenue Arrears for Solar Home System Scheme ..................................................................................... 71 FEA Grid Extension projects ............................................................................................................................ 73 40.18.1 Missed out Schemes/Tee offs (Seaqaqa/Dreketi Grid Extension Projects)
 ................................................ 73 40.18.2 Flaws in Grid Extension Payments.............................................................................................................. 74 Renewable Energy Development Projects ................................................................................................ 76 40.19.1 Bidder Engaging Officers of the Ministry in Preparing the Tender Document ............................................. 76 40.19.2 Losses Incurred on Installation of Wind Monitoring Systems (WMS) .......................................................... 77 Biofuel Implementation Programme ................................................................................................................. 78 40.20.1 Failure of biofuel mills operations in outer islands....................................................................................... 78 40.20.2 Demolition and Reconstruction of the Moala and Matuku Biofuel Mills....................................................... 79 40.20.3 Delay in Installation of Dual Fuel Kits and Power Converters ..................................................................... 81 Major/Minor Electrical House Wiring Works ..................................................................................................... 82 40.21.1 Inconsistencies in Basis for Award of House Wiring Works through Expression of Interest ....................... 82 40.21.2 Inspections on House Wiring Works not carried out ................................................................................... 82 Bukuya Hydro Scheme .................................................................................................................................... 83 40.22.1 Anomalies in Awarding of Contract ............................................................................................................. 83 Project Administration Issues
 ........................................................................................................................... 86 40.23.1 Roll Over of Projects ................................................................................................................................... 86 40.23.2 Poor Project Record Keeping ...................................................................................................................... 86 40.23.3 Composition of Tender Evaluation Committee (TEC) ................................................................................. 87 APPENDIX 40.1 Details of Unreconciled TMA Sales Revenue for the Ministry in 2015 ................................................. 88 APPENDIX 40.2: Unaccounted Items ................................................................................................................................... 89 APPENDIX 40.3: Anomalies Per Project .............................................................................................................................. 92 APPENDIX 40.4: Details of Procurement Made and Time Taken to Supply the Materials Ordered ............................... 93 APPENDIX 40.5: Examples of Anomalies In Payment ........................................................................................................ 96 APPENDIX 40.6: Financial Reports Submitted to the Department of Energy in 2015 ..................................................... 98 APPENDIX 40.7: Details of Quotes Submitted Through EOIS ......................................................................................... 100 APPENDIX 40.8: Examples of Payments Made Relating to Prior Years Projects .......................................................... 102 Ministry of Infrastructure and Transport Section 40: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ PART A: FINANCIAL STATEMENTS 40.1 Audit Opinion The audit of the 2015 accounts of the
 Ministry of Infrastructure and Transport resulted in the issue ofa qualified audit report.
The qualification issues were as follows: 1.

Several Trading and Manufacturing Accounts (TMA) did not have cash at bank account in the TMA Balance Sheet as at 31 December 2015.

However, significant amount of receipts and payments were recorded in the TMA Profit and Loss Statements for which separate cash account general ledgers were not maintained.
In addition, Consolidated TMA Balance Sheet had cash at bank balance of $5,285,919 while consolidated cash at bank reconciliation balance was $4,041,812 as at 31/12/15 resulting in a variance of $1,244,107.

2.

The subsidiary debtor records showed debt of $414,692 while the FMIS accounts receivable showed nil balance as at 31December 2015.

The Ministry did not reconcile the two records.

3.
3.

The Ministry did not invite the auditors to observe the annual stock take carried out at the end of year 2015 for any of its three divisions.

40.2 Statement of Receipts and Expenditures The Ministry collected revenue totalling $2,454,574 and incurred a total expenditure of $104,634,654 in 2015.

Details are shown in Table 40.1.
Table 40.1: Statement of Receipts and Expenditure Description Miscellaneous Revenue Reimbursements for Meteorological Services Commission Registration TOTAL REVENUE Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods and Services Operating Grants and Transfers Special Expenditure Total Operating Expenditure Capital Construction Capital Purchase Capital Grants and Transfer Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 2015 ($) 1,868,425 565,854 19,445 850 2,454,574 11,527,198 6,951,361 1,164,965 8,165,823 1,417,207 19,446,939 860,868 49,534,361 15,718,627 8,701,101 25,438,773 49,858,501 5,241,792 104,634,654 2014 ($) 296,013 480,426 8,653 1,700 786,792 7,971,839 6,243,152 833,407 4,205,583 1,053,227 16,237,939 540,496 37,085,643 3,488,381 3,208,307 5,990,927 12,687,615 2,471,259 52,244,517 Ministry of Infrastructure and Transport Section 40: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Revenue collection increased by $1,667,782 or 212.0%in 2015compared to 2014 due to the following:  payments received for Rural Government Stations collected by Post Fiji Ltd and remitted to the Ministry;   increase in reimbursement of Meteorological Services revenue; and increase in commission revenue.
Total expenditure increased by $52,390,137 or 100% in 2015 compared to 2014.
This was largely due to the following:     increase in established staff costs for public officers; increase in travel and communications costs to inspect capital projects at main inland and maritime zones; increase in maintenance and operations costs for the existing Department’s fleets, vessels, meteorological equipment, energy development projects, desalination plants and procurement of building accessories; increase in operating grants and transfers to Land Transport Authority, Maritime Safety Authority of Fiji, payment for shipping franchise scheme and annual subscription for meteorology;  increase in the number of capital construction projects;  movement of Departments of Energy, and Water and Sewerage to Org 40 from Org 41; and  increase in capital projects and capital grants for Land Transport Authority, Maritime Safety Authority of Fiji and rural electrification projects.
40.3 Appropriation Statement The Ministry of Infrastructure and Transport incurred expenditure totalling $104.63 million in 2015 against a revised budget of $113.02 million resulting in a savings of $8.38 million or 8%.

Details of expenditure against the revised budget estimates are provided in Table 40.2.
Table 40.2: Appropriation Statement SEG Item of Goods & Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase Services Operating Transfers Special Expenditures Total Operating Costs Construction Grants & Changes ($) Revised Estimate ($) Actual Expenditure ($) Carry Over ($) Budget Estimate ($) 15,541,271 9,337,086 1,207,120 8,665,719 1,594,982 (1,523,093) 14,018,178 7,819,961 (1,517,125) 1,225,120 18,000 8,484,143 (181,576) 1,563,035 (31,947) Lapsed Appropriation ($) 2,490,980 868,600 60,155 318,320 145,828 210,858 917,652 5,012,393 1,837,985 - - - - - - - - - 11,527,198 6,951,361 1,164,965 8,165,823 1,417,207 19,446,939 860,868 49,534,361 15,718,627 19,657,797 1,311,323 57,315,298 17,278,670 467,197 - 19,657,797 1,778,520 (2,768,544) 54,546,754 277,942 17,556,612 Ministry of Infrastructure and Transport Section 40: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ SEG Item 9 10 13 Purchases Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) 7,055,360 25,882,197 50,216,227 5,492,057 113,023,582 Changes Revised Estimate ($) 9,215,360 25,882,197 52,654,169 5,822,677 18 113,023,600 ($) 2,160,000 - 2,437,942 330,620 Actual Expenditure ($) 8,701,101 25,438,773 49,858,501 5,241,792 104,634,654 Carry Over ($) Lapsed Appropriation ($) 514,259 443,424 2,795,668 580,885 8,388,946 - - - - - 40.4 Trade and Manufacturing Account (TMA) Trading & Manufacturing Accounts are operated on a semi-commercial basis and within the limits of a prescribed ceiling set by the Minister for Finance; to provide goods, services or works cost- effectively, whilst increasing the returns that are realized from them.
There are 17 TMA accounts operated by the Ministry and are as follows: 1) Plumber Shop Divisional Engineer Central/Eastern (DECE) 2) Plumber Shop Divisional Engineer Western (DEW); 3) Plumber Shop Divisional Engineer Northern (DEN); 4) Workshop Wages DECE; 5) Workshop Wages DEW; 6) Workshop Wages DEN; 7) Plant Hire DECE; 8) Plant Hire DEW; 9) Plant Hire DEN; 10) Fuel and Oil DECE; 11) Fuel and Oil DEW; 12) Fuel and Oil DEN; 13) Joinery DECE; 14) Joinery DEW; 15) Joinery DEN; 16) Lubrication DECE; and 17) Block Shed DEN.
Table 40.3: Manufacturing account Opening Raw materials Add: Purchases Less: Closing Raw Materials Raw Materials Used Direct Labour Opening Work in Progress Less: Closing Work in Progress Cost of Goods Manufactured transferred to Trading Account Ministry of Infrastructure and Transport 2015 ($) 340,123 2,367,908 2,708,031 253,933 2,454,098 2,841,617 85,606 5,381,321 44,203 5,337,118 2014 ($) 235,644 3,109,181 3,344,825 340,123 3,004,702 3,176,476 25,327 6,206,505 85,605 6,120,900 Section 40: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.4: Trading account Sales Finished Goods (01/01/14) Add: Cost of Manufactured Goods Cost of goods available for sale Less: Finished Goods (31/12/13) Cost of Goods Sold Gross Profit transferred to profit & loss Table 40.5: Profit & Loss Statement Income Gross Profit transferred from Trading A/C Other income OPR from previous years Total Income Expenses Travel and communications Maintenance and operation Purchase of Goods and Services Special Expenses Rent & Hire Total Expenses Net Profit/(Loss) Table 40.6: TMA balance sheet Liabilities Accounts Payable Accrued Expenses Total Liabilities Equity TMA Accumulated Surplus TMA Surplus Total Equity Total Equity and Liabilities Assets Cash at Bank Accounts Receivable Deposits, Deductions & Retention money Inventory Total Assets 2015 ($) 9,070,829 277,391 5,337,118 5,614,509 244,586 5,369,923 3,700,906 2015 ($) 3,700,906 616 - 3,701,522 165,803 1,504,555 12,193 1,669 - 1,684,220 2,017,302 2014 ($) 9,004,949 146,817 6,120,900 6,267,717 277,392 5,990,325 3,014,624 2014 ($) 3,014,624 1,115 - 3,015,739 194,299 1,670,951 16,590 1,338 - 1,883,178 1,132,561 2015 ($) 2014 ($) 27,143 1,157,097 1,184,240 34,024 4,693,201 4,727,225 5,911,465 5,285,919 - 82,824 542,722 5,911,465 27,143 243,893 271,036 355,684 4,693,306 5,048,990 5,320,026 2,555,211 2,114,178 (52,784) 703,121 5,320,026 Ministry of Infrastructure and Transport Section 40: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC
 OF FIJI – MARCH 2017 ____________________________ 40.5 Department of Energy Trust Fund Account 2015 ($) 2014 ($) 1,857,303 1,857,303 1,547,940 1,547,940 1,564,500 1,564,500 809,889 809,889 292,801 738,052 3,344,443 3,637,244 2,606,391 3,344,443 Receipts Total Receipts Payments Total Payments Net Surplus Opening Balance at 1 January Closing Balance at 31 December PART B: AUDIT FINDINGS DEPARTMENT OF WORKS 40.6 Trading and Manufacturing Account (Fund 4) 40.6.1 TMA with no Cash at Bank Account A separate bank account shall be maintained for each TMA operated by the Ministry.
Any balance either credit or debit shall be correctly stated in the balance sheet.

The Ministry maintained only five bank accounts for the 17 TMA’s that are in operation.

However, audit noted that out of the 17 TMA’s only five TMA’s have Cash at Bank account in the Balance Sheet.

The remaining 12 TMA’s did not have Cash at Bank account in the Balance Sheet.

Refer to Table 40.7 for details.
Table 40.7: Details of No Bank Account or Nil Cash Balance Account Remarks Plumber Shop DECE Plumber Shop DEW Plumber Shop DEN Plant Hire DECE Plant Hire DEW Plant Hire DEN Fuel and Oil DECE Fuel and Oil DEW Fuel and Oil DEN Joinery DEW Joinery DEN Block Shed DEN Nil Cash Balance in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet Nil Cash Balance in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet No Bank Account in TMA Balance Sheet The finding indicates lack of knowledge on the operation, preparation and presentation of the TMA accounts.
As result, several TMA’s are incorrectly presented in the Balance Sheet.
Ministry of Infrastructure and Transport Section 40: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Ministry should:  maintain proper records of cash received and paid for every TMA;   ensure that cash at Bank account is also updated and included in the TMA Balance Sheet for all TMA’s; and take appropriate action to ensure that a correct set of accounts are presented for audit in future.
Ministry’s Comments Maintaining separate bank accounts for individual TMA entities is not feasible.

Ministry of Finance (FMIS) has setup only one General Ledger Cash at Bank Account since the inception of the TMA entities which records all the receipts and payments.

40.6.2 Variance between Consolidated TMA Bank Account balance and FMIS General Ledger balance 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 The Ministry stated cash at bank balance of $5,285,919 in its consolidated TMA Balance Sheet as at 31/12/15.

However, the consolidated cash at bank reconciliation had a balance of $4,041,812 resulting in a variance of $1,244,107 between the two records.
The variance was due to revenue receipts totalling$1,160,221.39 and payments totalling $2,404,238.76 were not posted into FMIS general ledger.

Refer to Table 40.8 for details.
Table 40.8: Details of Un-posted receipts and payments Buildings TMAs (Plumber shop/Joinery) Mechanical TMAs Divisional Engineer Western - Works Total Unposted Receipts ($) 1,133,752.39 - 26,469.00 1,160,221.39 Variance Unposted Payments ($) 1,904,819.10 499,509.66 - ($) 771,066.71 499,509.66 (26,469.00) 2,404,328.76 1,244,107.37 The audit further noted that the receipts totalling $309,419.54 and payments totalling $174,861.95 were carried forward from prior years in the bank reconciliation without any corrective action taken by the Ministry.
Due to lack of supervisory checks by the Senior Accounts Officer the inaccuracy in the bank reconciliations were not detected by the Ministry.

Failure to address the above anomalies would result in fraudulent activities not being detected on a timely basis.
1 Finance Instructions 2010, Section 32 (6) Ministry of Infrastructure and Transport Section 40: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Ministry should ensure that:  all reconciliations prepared are thoroughly checked by the Senior Accounts Officer; and  variances are investigated and rectified.
Ministry’s Comments The Cash at Bank figures cannot be adjusted since the Ministry (MoIT) is awaiting the outcome of this case under FICAC investigation from 2009; this had been explained as a note in the AFS after discussions with OAG.

It was advised by them that disclosing it under the notes will eliminate the issue from qualification.
40.6.3 Balances Variance between Accounts Receivable Schedule and FMIS General Ledger Each agency operating a trading and manufacturing activity must prepare: (a) Quarterly profit and loss statement; and (b) A balance sheet on an annual basis.2 The profit and loss statement and the balance sheet must be prepared on an accrual basis.3The annual profit and loss statements and balance sheet for each current financial year just ended must be prepared and submitted to the Auditor-General in a form suitable for audit and inclusion in the agency’s annual report.4 An audit review of the Accounts Receivable balance revealed the following anomalies:  The Account Receivables Schedule should be reconciled with the FMIS general ledger balance on a monthly basis.
The Account Receivables Schedule total for all the TMA’s was$414,962.65 while the Ministry’s FMIS general ledger balance for all TMA’s had a NIL balance as at 31/12/15.

Refer to Table 40.9 for details.
Table 40.9: Details of variances in accounts receivable TMA DECE- Joinery DEN – Joinery DECE- Plumber shop DEN- Plumber shop DECE - Fuel and Oil DEW - Fuel and Oil Account Receivables balance as per GL ($) Account Receivables balance as per AR Schedules ($) Difference ($) 0.00 0.00 0.00 0.00 0.00 0.00 94,796.00 0.00 0.00 0.00 2,999.94 0.00 94,796.00 0.00 0.00 0.00 2,999.94 0.00 2 Finance Instructions 2010, Section 30 (1) 3Finance Instructions 2010, Section 30 ( 2) 4Finance Instructions 2010, Section 30 ( 3) Ministry of Infrastructure and Transport Section 40: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ TMA DEN - Fuel and Oil DECE - Plant Hire DEW - Plant Hire DEN - Plant Hire DECE- Workshop Wages DEN - Workshop Wages DECE – Lubrication DEN – Block shed Total Account Receivables balance as per GL ($) Account Receivables balance as per AR Schedules ($) Difference ($) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 257,918.88 12,480.75 25,938.91 7,680.32 12,877.85 0.00 0.00 414,692.65 0.00 257,918.88 12,480.75 25,938.91 7,680.32 12,877.85 0.00 0.00 414,692.65  Revenue should be recorded in the period it is earned.
However, plant hire charges totalling $20,112.07 earned in 2015 by the Divisional Engineer Central Eastern (DECE) was receipted as revenue in the Plant Hire TMA for 2016.

Plant hire charges totalling $20,112.07 was not included in the Accounts Receivable schedule and the Plant Hire TMA for the year ending 31/12/15.

The findings indicate that finances were not properly managed and work of subordinates in the Accounts Section was not properly supervised.
As a result, the audit could not ascertain the correctness of the Accounts Receivable balance of $2,114,181 stated in consolidated TMA balance sheet as at 31/12/15.

Recommendations The Ministry should:  ensure that accounts receivables schedules are updated and reconciled with the FMIS general ledger on a monthly basis;  investigate the variance and take appropriate action to resolve it; and  take appropriate action against officers responsible for poor record keeping .
Ministry’s Comments Debtors show a nil balance due to the nature of recording sales.

All sales in the TMA are recorded on cash basis.

Once the entities receive money, it’s receipted and recognized as sales or revenue.

Under the cash basis of accounting, transactions are only recorded when there is a related change in cash.

This means that there is no accounts receivable to record on the balance sheet, since they are not realized until such time as they are paid by customers.
Ministry of Infrastructure and Transport Section 40: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.6.4 Transfer of Operating Funds (Fund 1) to the Trading and Manufacturing Account (Fund 4) If an amount appropriated by an Annual Appropriation Act for a financial year (a) has not been used in that financial year; or (b) is unlikely to be used in that financial year; The Minister may authorize the carry over to the following year of all or part of the unused appropriation that relates to known liabilities as at a particular date and the amount authorised for carry over may be used accordingly in that following year, subject to such conditions as the Minister specifies in the authorisation.5 The Ministry withheld $448,680 from the Department of Water and Sewerage 2015 budget allocation to undertake Eco Purification System projects in 2016.
The funds were allocated in the Department of Water and Sewerage 2015 budget but was not utilised.

The audit noted that the Ministry transferred a sum of $448,680 from the Department of Water and Sewerage Operating Fund Account (OFA) (i.e.

Fund 1) to the DECE Plumber Shop TMA (Fund 4) on 31/12/15 without approval of the Minister.
Refer to Table 40.10 for details Table 40.10: Details of OFA Funds Transferred to the TMA at Year End Village Name Province Division Serua Naitasiri Naitasiri Serua Namosi Tailevu Vunaniu Savu Nabaitavo Navutulevu Waivaka Naveicovatu Subtotal for Central/Eastern Nalele Draubuta Vatukarasa Subtotal for Western Cakaudrove Korotasere Macuata Visoqo Nawailevu Bua Subtotal for Northern Total Nadroga Navosa Nadroga Central Western Northern Amount ($) 37,810.00 37,810.00 37,810.00 37,810.00 37,810.00 37,810.00 226,860.00 36,647.00 36,647.00 36,647.00 109,941.00 37,293.00 37,293.00 37,293.00 111,879.00 448,680.00 The audit also noted that the amount transferred from Department of Water and Sewerage was recorded as Unearned Revenue for DECE Plumber Shop TMA balance sheet.
However, the cash at bank account had a nil balance as at 31/12/15.

Hence, the Ministry did not account for the sum of$448,680 in the cash at bank account in the DECE Plumber Shop TMA balance sheet.

The Ministry was not able to provide details of where the cash transferred was accounted for.

The Ministry did not follow proper procedures to hold back unused funds at the end of the year to be used in the following year.

Hence the transfer of funds was unauthorised and improper.
In addition, the DECE Plumber Shop for cash at bank as reflected in the TMA balance sheet has been understated.

5Financial Management Act 2004, Section 19(1) Ministry of Infrastructure and Transport Section 40: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Ministry of Economy should investigate the unauthorised retention of funds and take appropriate disciplinary action against those responsible.
Ministry’s Comments TMA activity operates as a normal commercial business and generates revenue from private and public entities.

All jobs received by TMA entities, funds are required to expedite the works hence in this instance, the Department of Water and Sewerage needed the job to be done by experts who are well experienced in this field of work thus the Plumbershop – TMA Entity was engaged and payment made accordingly.
The Plumbershop TMA undertakes most of the ministries plumbing works for maintenance and new projects.

Furthermore, the Plumbershop TMA had licensed and expert plumbers and like any other business, TMA receives funds from Government Ministries/Departments and other entities and records revenue accordingly.

40.6.5 Annual Stock Take Not Observed By the Auditors Annual boards of survey must be conducted by 3 officers who are independent of the officer responsible for the custody of the assets.
A written record must be kept of each board of survey and must be signed and dated by the officers undertaking it.6 A stock take must be undertaken each year to verify the existence and condition of inventories on hand.7 The Ministry did not invite the auditors to observe the annual stock take carried out for any of its three divisions towards the end of the year 2015.
In the absence of an independent stock take, the audit could not determine the correctness of the Closing Inventory balance of $542,722 stated in the Consolidated TMA Balance Sheet as at 31/12/15.

Recommendation The Ministry should ensure independent annual stock take is undertaken in future.

Ministry’s Comments The stock take was carried out in a transparent manner as per the Ministry’s Finance Manual.
The Ministry maintains credibility of the independent BOS report carried out as per requirements by FPO.

40.6.6 TMA Sales Revenue Understated in VAT Returns The PAO, SAO, AO and AAO is responsible for maintaining ledgers and reconciling balances in such ledgers to ensure the accuracy of financial information and the timeliness of management reports.8 The total sales amount for all TMA as per the FMIS general ledger as at 31/12/15 was $9,070,829.
However, the Ministry stated total sales of $7,202,702.92 in its VAT return for the year 2015.
The audit noted that the total sale amount was under stated by $1,868,126 by the Ministry it its VAT 6Finance Instructions 2010, Section 49(2) 7 Finance Instructions 2010, Section 38 8Ministry of Infrastructure and Transport Finance Manual, Part 16 Ministry of Infrastructure and Transport Section 40: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Return for the year 2015.

Refer to Table 40.11 for a summary of the variances.
Further details are provided in Appendix 40.1.
Table 40.11: Un-reconciled TMA Sales revenue as at 31/12/15 Divisions DECE DEW DEN Total for Divisions Sales as per VAT Returns ($) 3,774,801.20 1,750,249.99 1,677,651.72 7,202,702.92 Sales as per GL Difference ($) 4,830,102.00 2,616,127.00 1,624,600.00 9,070,829.00 ($) (1,055,300.80) (865,877.01) 53,051.72 (1,868,126.08) The finding shows that the Ministry did not disclose correct sales revenue in its VAT returns for the year 2015 to understate revenue by $1,868,126 and pay less VAT to FRCA.
Recommendations The Ministry should:   state correct sales revenue in its VAT returns to FRCA; and investigate this matter and take appropriate action to ensure correct VAT is paid to FRCA.

Ministry’s Comments No comments provided.
40.6.7 Sales Recorded at VIP Amounts Subject to the provision of the VAT Decree 1991, the tax shall be charged in accordance with the provisions of this Decree at the rate of fifteen percent on the supply (but not including an exempt supply) in Fiji of goods and services, by a registered person in the course or furtherance of a taxable activity carried on by that person, by reference to the value of that supply.9 VAT payable and refundable will be determined by the balance sitting in natural account number 863201 at the end of the month.10 The audit of the TMA revenue receipts revealed that the sales revenue was recorded and posted into the FMIS general ledger at VAT inclusive prices (VIP).
The VAT portion was not deducted nor was it posted to the VAT on Revenue allocation.

Refer to Table 40.12 for details.


Table 40.12: VIP Amount posted to Sales Revenue Allocation Date Revenue Receipt Number 07/09/15 08/09/15 EFT EFT Amount as per Bank Statement/Receipt ($) Amount Posted FMIS GL ($) VAT Amount to Allocation ($) 58,720.00 12,151.53 58,720.00 12,151.53 7,659.13 1,584.98 4-40251-91011-240199 4-40252-91011-240199 9Value Added Tax Decree 1991, 4th Edition, Revised on 30/04/04 , Section 15.1 10Ministry of Finance Circular No.
11/2012, Section 3.1 Ministry of Infrastructure and Transport Section 40: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Date 06/01/15 26/01/15 30/01/15 27/01/15 27/01/15 27/01/15 03/12/15 Revenue Receipt Number 774697 774766 774774 631843 631842 631844 632013 Amount as per Bank Statement/Receipt ($) Amount Posted FMIS GL ($) 75,319.00 3,131.25 53,000.00 20.00 123,901.50 320.00 500.00 75,319.00 3,131.25 53,000.00 20.00 123,901.50 320.00 500.00 Total VAT Amount to Allocation ($) 9,824.22 408.42 6,913.04 2.61 16,161.07 41.74 65.22 42,660.43 4-40251-91011-240199 4-40251-91011-240199 4-40252-91011-240199 4-40258-91011-260201 4-40262-91011-240202 4-40262-91011-240202 4-40262-91011-240202 The audit also noted that Revenue Receipt Number 774773 dated 30/01/15 amounting to $64,500 was not posted to the FMIS general ledger.
Failure to properly account for VAT on revenue implies that the VAT payable to Fiji Revenue & Customs Authority is being understated by $42,660.43 and sales revenue reflected in the financial statements was overstated by the same amount.

Recommendations The Ministry should ensure that:  VAT is properly recorded in the FMIS general ledger under the VAT allocations; and  monthly VAT reconciliation is carried out and checked by supervising officers for accuracy.

Ministry’s Comments No comments provided.


40.6.8 Receipts and Payments not posted into FMIS General Ledger (Building and Mechanical TMA Bank accounts) 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.11 Audit review of the TMA highlighted the following anomalies:  Variances of $367,523.40 existed between the revenue amounts as per the Buildings bank account (Joinery & Plumber Shop TMA) reconciliation and the amounts as per the actual receipts.

Refer to Table 40.13 for details.
11 Finance Instructions 2010, Part 6: Assets – Division 1 – Cash Management – Bank Accounts 32 (6) Ministry of Infrastructure and Transport Section 40: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.13: Variance in Receipt Amounts Date Receipt Number Amount as per Reconciliation 30/12/15 30/12/15 31/12/15 01/12/15 08/09/15 546041 546044 546048 546024 EFT ($) 539.00 51.46 81,005.00 3,203.77 12,721.26 Amount as per Receipt/Bank Statement ($) 559.20 151.46 448,680.00 3,500.00 12,153.23 Variance ($) (20.20) (100.00) (367,675.00) (296.23) 568.03  The bank reconciliation for Buildings bank account (Joinery & Plumber Shop TMA) with FMIS general ledger included receipts totalling $1,133,752.39 which were not posted (Receipts Not Posted) into FMIS general ledger.
However, receipts totalling $309,419.54 included in the Receipts Not Posted listing were actually posted into the FMIS general ledger.

In addition the bank reconciliation for Buildings bank account (Joinery and Plumber shop TMA) also included payments totalling $1,904,819.10 as Payments Not Posted into the FMIS general ledger.

However, payments totalling $174,861.95 included in the Payments Not Posted listing were actually posted into the FMIS general ledger.
The audit could not substantiate the correctness of these amounts as the Ministry did not have the breakdown of the amounts and records were with FICAC.

 The bank reconciliation for Mechanical bank account (Workshop Wages, Fuel and Oil, Plant Hire and Lube Bay) with FMIS general ledger included payments totalling $499,509.66 as Payment Not Posted into FMIS general ledger.
However, the audit could not substantiate the correctness of these amounts as the Ministry did not have the breakdown of the amounts and records were with FICAC.

The findings indicate that the accounting officers at the Ministry lack basic accounting knowledge, especially in TMA.
Recommendations The Ministry should ensure that:  necessary action is taken to rectify the anomalies;  appropriate disciplinary action is taken against the Assistant and Senior Accounts Officer for failing to carry out their duties diligently; and  adequate training is provided to accounting officers in TMA.

Ministry’s Comments No comments provided.


Ministry of Infrastructure and Transport Section 40: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.6.9 Understated Cash Account balance For every accounting transection there is a debit entry and a contra credit entry to balance the accounts.
The audit noted that a number of TMAs had Unearned Income in their respective balance sheet as at 31/12/15 for which there was nil balance in the cash at bank account in respective TMA’s.

Except for the Unearned Income balance of $448,680 in Plumber Shop (DECE) TMA, the Ministry was not able provide details of the Unearned Income balance totalling $185,255 noted in other TMA’s.

Refer to Table 40.14 for details.
Table 40.14: Details of Unearned Income with Nil Cash TMA’s Plumber Shop DECE Plumber Shop DEW Plumber Shop DEN Plant Hire DEW Joinery DEW Unearned Income Balance ($) Cash at Bank Account Balance ($) Source of Fund 448,680 40,652 3,217 60,980 80,406 Nil Nil Nil Nil Nil Transfer from Fund 1 to Fund 4 No explanation provided by the Ministry No explanation provided by the Ministry No explanation provided by the Ministry No explanation provided by the Ministry The finding indicates that accounting staff lack competence and basic accounting knowledge in TMA.
As a result, the audit could not substantiate the Unearned Income totalling $185,255.

Recommendations The Ministry should:    ensure that a correct set of accounts is presented for audit; take appropriate action to rectify the anomalies highlighted above; and ensure that adequate training is provided in TMA accounting to accounting staff.

Ministry’s Comments No comments provided.


40.18 40.7 Trust Fund Accounts 40.7.1 Main Trust Fund Account for Security and Retention Deposits Trust money is money that the agency is holding in trust.

Trust money is to be kept in a separate bank account and accounted for separately from “public money” and “other money”.
A bank account for public money, other money or trust money must only be established with the approval of the Chief Accountant, who must inform the bank of the agency officers authorised to operate with it.

12 The audit noted that the Department of Water and Sewerage collected security deposits totalling $1,161,883.81 from the contractors engaged by the Department for water and sewerage projects.
The 12 MOIT Finance Manual 2015, Part 15 Ministry of Infrastructure and Transport Section 40: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ security deposits were deposited into the Consolidated Fund account and recorded in the Operating Trust Fund account number 1-41201-85999-860101.
The audit also noted that the security deposits were still recorded under Head 41 (Water Authority of Fiji) although the Department of Water and Sewerage became part of the Ministry of Infrastructure and Transport (Head 40).

The audit further noted that the Ministry maintained retention sum for contractual projects totalling $1,952,172.19 for other departments within the Ministry in the Fiji Procurement Office Main Trust Account.
Refer to Table 40.15 for details of security deposit and retention sums held by the Ministry.
Table 40.15: Details of Security Deposit/Retention Sum Held by the Ministry Department Department of Water and Sewerage Department of Energy Divisional Engineer Works – Western Divisional Engineer Works – Central/Eastern Government Shipping Services Fiji Metrological Service Total Security/Retention Deposits ($) 1,161,883.81 1,492,852.51 92,732.17 27,929.00 255,737.75 82,920.76 3,114,056.00 The audit further noted that the Ministry did not maintain a separate Main Trust Fund bank account for the security deposits and retention sums received from the contractors and did not prepare a Main Trust account Statement of Receipts and Expenditure for the year ended 31 December 2015.
Failure to maintain a separate main trust fund bank account could result in trust monies being used for purposes other than what was intended.

Recommendations The Department should:  liaise with Ministry of Economy to open up a Main Trust Fund account for receipt and payment of security deposits from contractors; and  prepare a Trust Fund Account Statement of Receipts and Payments.
Ministry’s Comments The Ministry’s special purpose financial statements did not include the Security Deposits collected by Department of Water & Sewerage i.e.

Retention Security Deposits existed with Department of Water & Sewerage (DWS) when Water Rates Department (WRD) was still in existence before the transition towards the formation of Water Authority of Fiji (WAF).
This retention security deposit is a non-cash deposit received from the contractors but instead is the sum retained from the contract sum which is payable to the Contractor after completion of the project and its defect liability period.

The transfer of assets and liabilities of WRD to WAF is still pending with government awaiting prior approval from Minister for Finance & Attorney General’s Office.
On the same, the Ministry had submitted the request for transfer of credit balances from Operating Trust Account under Department of Water & Sewerage.
Ministry of Infrastructure and Transport Section 40: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The retentions sum retained from the 2015 released projects funds amounting to $1,952,172.79 which are held with Fiji Procurement Office Main Trust Fund account to avoid mastication of 2016 budgetary funds for the projects whose retentions sums are due in 2016.
The other operating revenues for the Ministry are captured under Consolidated Receipts and Payments account including for Department of Works, Government Shipping Services and Fiji Metrological Services.

The Ministry’s Main Trust Receipts and Payments captured only receipts and payments of public funds only for Department of Energy as the Ministry has only one Main Trust Account.

As result a total trust fund balance of $3,114,056 was captured appropriately under relevant accounts.
40.7.2 (Department of Energy) Variances in Main Trust Fund Cash at Bank and Liability Accounts The receipt and payment of trust money must be recorded in a separate cashbook or set of ledger account.

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

The names and balances of each account must be listed and the reconciliation shall be signed by the responsible officer.
Un-reconciled items must be investigated and resolved promptly.13 An unreconciled variance of $889,161 existed between the Main Trust Fund account Statement of Receipts and Payments and the FMIS general ledger.

The audit also noted variances of $276,122.22 between the total receipts as per the Main Trust Fund Liability FMIS general ledger in SLG 89 and the trust receipts database.
Similarly, a variance of $1,070,108.24 was noted between the total payments as per the Main Trust Fund liability general ledger in SLG 89 and the Trust payments cash book.

Refer to Table 40.16 for details.


Table 40.16: Details of Variances in Main Trust Fund Cash Book and Trust Fund Liability Item Receipts Payments Amount as per Receipt Database and Payment Cash Book ($) 1,581,181.23 494,391.81 Amount as per SLG 89 Variance ($) ($) 1,857,303.45 276,122.22 1,564,500.05 1,070,108.24 The above variance has been carried forward from prior years without any corrective action taken by the Ministry.
Despite the issue being raised in prior year audits for the Ministry to reconcile the differences before the submission of the Agency Financial Statements for audit, the variances still exist.

Recommendations The Ministry should ensure that:  proper monthly reconciliations between cash book, general ledger, and trust fund liability account are carried out; and  variances are investigated and resolved accordingly.
13 Ministry of Finance Instructions 2010, Section 58 (1- 4) Ministry of Infrastructure and Transport Section 40: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Ministry’s Comments The unreconciled variance of $889,161 had been reconciled and “Written Off” via approval of Minister for Finance in 2016.

The revised Bank Reconciliation has been prepared for December 2015 where the Trust Fund revenue and bank account both reconciles.
40.7.3 Main Trust Reconciliations (Department of Energy) Within 5 days after the end of each month, the Clerical Officer (Trust) shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.

The Clerical Officer (Trust) shall certify and date the reconciliation statement after ensuring that all balances in the statement are verified to supporting documents.
The Clerical Officer (Trust) must submit the trust reconciliation to the PAO, SAO and AAO within 10 days after the end of the month.

The Trust reconciliation shall be in accordance with the format provided in Schedule 9.

A duplicate must also be submitted to PSIT and to the Ministry of Finance.

14 The audit noted that the Main Trust Liability and Trust Bank account reconciliations were not prepared by the Department of Energy on a monthly basis for whole of 2015.
However, an annual reconciliation was prepared by the Ministry of Finance.

In addition the posting of main trust receipts for 2015 were done in batches in the FMIS general ledger.

In the absence of monthly reconciliations and transaction details in the FMIS general ledger there is a risk of misstatement of trust funds.
Recommendations The Ministry should ensure that:   trust fund reconciliations are prepared monthly by the Department; the posting of main trust receipts are done at transaction level and not in bulk amounts; and  appropriate disciplinary action is taken against staffs responsible for monthly preparation of reconciliations and timely positing of receipts.

Ministry’s Comments No comments provided.
40.8 Underline Accounts 40.8.1 Underline Account Anomalies The Clerical Officer (Ledgers) must ensure to reconcile the ledger balances to the General Ledger Reports and prepare a Ledger Reconciliation Statement within 5 days of receiving the monthly general ledger reports from the Ministry of Finance.15 Any misallocations or outstanding balances from the 14 2015 MOIT Finance Manual, Section 15.4 (1-4) 15 Ministry of Infrastructure and Transport Agency Finance Manual 2015,Section 16.3.3 Ministry of Infrastructure and Transport Section 40: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ previous month have been dealt with.16 Write-offs losses in excess of $50,000 must be referred to the Minister for Finance.17 Audit review of the Ministry’s underline accounts revealed the following anomalies:  The Department reconciliation balance must match the FMIS general ledger balance.
However, variance existed between the FMIS general ledger and the respective Department’s reconciliations for the underline accounts as at 31/12/15.

Refer to Table 40.17 for details.
Table 40.17: Variances in Underline Accounts Underline Account Department Drawings Drawings Drawings Drawings Drawings Operating Trust SLG 84 SLG 84 SLG 84 Shipping Meteorological Services Transport Government Services Energy Water & Sewerage DEWN HQ Works DEWW DE\WCE Department Balance Variance FMIS General Ledger Balance ($) (728,884) (90,710) - ($) (795,256) (91,682) (342,875) (1,714,838) (553,079) (13,046) (930,953) (303,440) 297,497 (1,717,090) (553,118) (14,336) - - - ($) 66,372 972 (342,875) 2,251 39 1,290 (930,953) (303,440) 297,497  Reconciliation is an internal control mechanism established to ensure the accuracy of financial reports being produced not only at Ministry/Department/Divisional level and/but most importantly at whole of government level.18 Several underline account reconciliations for the year 2015 were not provided by the Ministry for audit review.
Refer to Table 40.18 for details.
Table 40.18: Reconciliations Not Provided For Audit Department Underline Account Monthly Reconciliations not Provided HQ Works Divisional Engineer Works Central Eastern Transport Government Shipping Services Meteorological Services Energy SLG 84 Drawings Operating Trust SLG84 (95214) SLG84 (95991) Operating Trust Drawings Drawings Operating Trust Drawings IDC True Trust Operating Trust January April February, September and December February, June, July and November January, February, March and September July April January, February, March, June and July March, May, November and December August November August June 16 Ministry of Infrastructure and Transport Agency Finance Manual 2015,Section 16.3.7 17 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 14.2.12 18 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 17.2 Ministry of Infrastructure and Transport Section 40: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Department Underline Account Monthly Reconciliations not Provided Water SLG84 Drawings Operating Trust March, May and June and July December January to May March to  For several underline account reconciliations the closing balance from the last month’s reconciliation was not carried forward as opening balance for the next month’s reconciliation.
Refer to Table 40.19 for details.
Table 40.19: Variances between Closing and Opening Balances Department Underline Account Details DEWW Drawings DEWCE Drawings Water RFA Operating Trust DEWN Operating Trust Transport Operating Trust Balance as at 31/10/15 Balance as at 01/11/15 Variance Balance as at 31/11/15 Balance as at 01/12/15 Variance Balance as at 31/09/15 Balance as at 01/10/15 Variance Balance as at 31/08/15 Balance as at 01/09/15 Variance Balance as at 30/09/15 Balance as at 01/10/15 Variance Balance as at 31/10/15 Balance as at 01/11/15 Variance Balance as at 30/11/15 Balance as at 01/12/15 Variance Balance as at 30/04/15 Balance as at 01/05/15 Variance Balance as at 31/05/15 Balance as at 01/06/15 Variance Balance as at 31/07/15 Balance as at 01/08/15 Variance Balance as at 31/10/15 Balance as at 01/11/15 Variance Balance as at 30/11/15 Balance as at 01/12/15 Variance Balance as at 31/07/15 Balance as at 01/08/15 Variance Balance as at 31/10/15 Amount ($) 40,944.89 33,274.73 7,670.16 108,153.89 107,238.93 914.96 208,192.59 192,475.35 15,717.24 51,935.75 (100.00) 52,035.75 972.00 812.00 160.00 652.00 2,395.00 (1,743.00) 3,894.00 1,947.00 1,947.00 8,756.77 (1,162,227.57) 1,170,984.34 1,153,238.15 13,241.71 1,139,996.44 556,891.78 546,967.33 9,924.45 (23,028.48) (23,240.76) 212.28 (17,657.07) (26,479.62) 8,822.55 (9,699.52) (5,250.85) (4,448.67) (15,816.57) Ministry of Infrastructure and Transport Section 40: Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Department Underline Account Details Energy Operating Trust True Trust 89 True Trust 52 Meteorological Operating Trust GSS Operating Trust Water Operating Trust Works HQ SLG84 DEWCE 95214 SLG84 GSS SLG84 Water BLC as as verified verified Balance as at 01/12/15 Variance The December 2014 balance and the January 2015 balances could not be the reconciliations were not provided Balance as at 30/04/15 Balance as at 01/05/15 Variance Balance as at 31/12/14 Balance as at 01/01/15 Variance Balance as at 31/12/14 Balance as at 01/01/15
 Variance The December 2014 balance and the January 2015 balances could not be the reconciliations were not provided Balance as at 31/12/14 Balance as at 01/01/15 Variance Balance as at 31/12/14 Balance as at 01/01/15 Variance Balance as at 30/06/15 Balance as at 01/07/15 Variance Balance as at 31/08/15 Balance as at 01/09/15 Variance Balance as at 30/09/15 Balance as at 01/10/15 Variance Balance as at 31/10/15 Balance as at 01/11/15 Variance Balance as at 30/11/15 Balance as at 01/12/15 Variance Balance as at 31/03/15 Balance as at 01/04/15 Variance Balance as at 30/11/15 Balance as at 01/12/15 Variance Balance as at 30/09/15 Balance as at 01/10/15 Variance Balance as at 31/10/15 Amount ($) (15,784.07) (32.50) (15,350.41) (7,700.85) (7,649.56 3,344,442.98 - 3,344,442.98 2,242,372.91 - 2,242,372.91 2,607.91 - 2,607.91 (1,162,227.57) (1,161,883.81) (2,324,111.38) (101,439.96) (1,743,692.32) 1,642,252.36 (183,617.82) (160,159.96) (23,457.86) (347,725.42) (349,719.31) 1,993.89 (391,886.20) (346,991.42) (44,894.78) (306,034.02) (284,837.02) (21,197.00) (67,346.00) (68,812.01) 1,466.01 (58,446.43) (57,888.43) (558.00) 1,063.78 - 1,063.78 1,072.93 Ministry of Infrastructure and Transport Section 40: Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Department Underline Account Details Balance as at 01/11/15 Variance Balance as at 30/11/15 Balance as at 01/12/15 Variance Amount ($) - 1,072.93 1,072.93 - 1,072.93  The Ministry opened a Revolving Fund Account for the Department of Water without the approval from the Ministry of Economy.
The Revolving Fund account had a closing balance of $52,521.75 as at 31/12/15.

However, the balance of $52,521.75 was written off by the Ministry without the approval of the Ministry of Economy.

As a result, the closing balance for Revolving Fund Account for the Department of Water was nil as at 31/12/15.
The anomalies highlighted showed that the Ministry’s accounting officers were not vigilant in performing trust account reconciliations and identifying errors, omissions and variances and rectifying them.

It further indicates the absence of adequate supervisory checks in the Accounts Section.
Recommendations The Ministry should ensure that:  the respective Department reconciliation balances reconcile with the FMIS general ledger balance;  all reconciliations are properly prepared and maintained up-to-date;  the closing reconciliation balance is carried forward as opening balance for the next month; and  all write offs above $50,000 is approved by the Minister for Economy.
The Ministry for Economy should investigate the write off of Revolving Fund account balance for the Department of Water and take appropriate disciplinary action.

Ministry’s Comments No comments provided.

40.9 Headquarters 40.9.1 Delay in Award of Tender Proper planning for projects is to be carried out as soon as the Parliament approves the National Budget so that the funds allocated are effectively used within the fiscal year and that the objective of funds allocated is met.
A sum of $1,379,283 was allocated in the Ministry’s 2015 budget for the Rebuilding of the Plumbing Workshop and the Construction of the Office for the Divisional Engineer Western (DEW) at Lautoka Depot.

Ministry of Infrastructure and Transport Section 40: Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Work Programme for the above construction works was as following.
 First Quarter – $579,283 to be utilized for the completion of costing for material, labour, & plant schedules; procurement of materials for the rebuilding of plumbing workshop and office building DEW; engagement of labour workforce; and construction and monitoring of the new building.

 Second Quarter – $800,000 to be utilized for procurement of materials; engagement of labour workforce; construction & monitoring; and practical completion of the project.
The audit noted a significant delay in the Rebuilding of the Plumbing Workshop and the Construction of the Office for the DEW at Lautoka Depot.

Although the project was supposed to be completed by end of June 2015, it was noted that the Ministry called for tenders on 1/8/15 and awarded the contract to CCLon 2/11/15.

The actual construction works commenced on 2/11/15.As at 31/12/15, the physical progress was as follows.
 Rebuilding of the Plumbing Workshop - 50% portal frames erected including purlins and floor slab done,  Construction of the Office - 20% paid and column to ground tie beam done The delay in completion of the project indicates poor planning and monitoring of capital projects by the Ministry.

The Ministry’s 2015 capital works programme seems to be prepared only to facilitate the budget process.
Since the project was not completed in 2015, the Ministry paid $927,522 in advance to Cope Construction to complete the project in 2016.

Even though the advance payment was approved by the Ministry of Economy such practises should not be condoned.
Recommendations The Ministry must ensure capital works programme is strictly followed to ensure that projects are completed within the financial year; and Management Comments The Class A Estimate was prepared and submitted for the DEW’s Office and New Plumber Shop.

The estimates were provided to the Department of Works with the understanding that the Ministry had the capacity in-house to carry out these works and construct its own buildings.
The Ministry therefore had opted to request a waiver of tender procedures to carry out these works.

Upon the advice of the Ministry of Economy (formerly Finance), the Ministry advertised for tenders which further delayed the commencement of this project.

40.9.2 Anomalies in Contract Agreement A written contract or agreement must be entered into with the approved bidder for the supply of the goods, services or works tendered.
Legal advice from the Solicitor General’s (SG) Office must be obtained on the contract or agreement document.19 19 Ministry of Infrastructure & Transport Agency Finance Manual 2015, Section 2.4.8 Ministry of Infrastructure and Transport Section 40: Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The audit review of the contract documents for both the Rebuilding of the Plumbing Workshop and the Construction of the Office for the Divisional Engineer Western highlighted the following anomalies:  There was no evidence that the contract agreement was vetted by the Solicitor General’s office.
 The start and completion dates were not specified in the contract.

 There was no Schedule of Works summary specified in the contract upon which the progress payments were to be made.

The audit also noted that the Ministry did not obtain approval from the Department of Town and Country Planning and the Lautoka City Council on the building plans for both the projects.

The finding indicates poor planning for capital works by the Ministry.
Hence, the interest of government may not be fully protected and non-compliance to legislation relating to construction of buildings.

Recommendation The Ministry must ensure that due diligence processes are properly followed at all times.

Management Comments All contract agreement is vetted by the Solicitor General’s office.

The start and completion date would be taken from the date it was signed in the contract and often the completion worked out from the duration agreed by the Government Tender Board.
Exemption would be if the mobilization to site was done later.

The progress payment would be based on the Progressive Payments thus the reason why there was no schedule of works summary included.

40.9.3 Diversion of Funds to Other Projects Proper planning for projects is to be carried out as soon as the Parliament approves the National Budget so that the funds allocated are effectively used within the fiscal year and that the objective of funds allocated is met.
A sum of $3,000,000 was provided to the Ministry of Infrastructure and Transport in the 2015 budget to carry out the repairs, upgrade of public buildings and water and sewer lines.

Details are as follows.


 Repair and Upgrading of Public Buildings - $1,000,000  Routine and Special Upgrading of Public Buildings - $1,500,0000  Upgrading of Water Supply and Sewer Lines of Public Residential Buildings - $500,000 A detailed listing of projects to be undertaken in 2015 was submitted by the Department of Works to the Ministry of Finance and Strategic Planning as per the three-year Public Sector Investment Programme (PSIP) for 2015.
The audit noted that total of $1,033,478 or 34% of the total funds allocated for repairs and upgrade of public buildings and water and sewer lines were diverted to projects in other groups/areas which were not in the Ministry’s PSIP submission for 2015.

These projects were not approved by the Permanent Secretary for Infrastructure and Transport and the Ministry of Finance.
Ministry of Infrastructure and Transport Section 40: Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ In addition, the diversion of funds was also not approved by the Permanent Secretary for Infrastructure and Transport.

Refer to Table 40.20 for details.
Table 40.20: Details of Diversion of Funds to Unplanned Projects Programme Approved Projects Budgeted Costs($) Projects Diverted to Funds Amount Diverted($) Repair and Upgrade of Public Buildings (Special Maintenance) Nawaicoba Station Agricultural Routine Upgrade Buildings and of Special Public PA’s Office Sigatoka Ono I Lau Met Office and Quarters Group 4B, Namosau Group 7C,Mua Coconut Research Group 3C, DEN yard Group 13A Government Buildings and Environment Water Supply and Sewer Line Aldata Street, Natabua 100,000 Group DEW 5M Mechanical Yard Phase 2 60,000 Group 120,000 5M DEW Mechanical Yard Phase 2 - Electrical Section 192,667 Group 5 Nabouwalu 55,946 DEN yard Group 3B- Phase II 50,518.82 36,324.19 345,720.00 113,035.55 264,172 Group Joinery 44,687.64 Maintenance Phase 2 125,000 Group Maintenance at Plumber Shop Group Korovou MAFF 68,883 Raman Nair Street Phase 1 69,684.01 127,968.14 49,110.00 Mua Coconut Centre 46,810 Raman Nair Street 17,172.80 Phase 2 Nawaicoba Agricultural Station Lawaqa Phase 3 Nabouwalu Group 5 Sewer line 64,500.00 119,908.69 216,200.00 Total 1,033,478 1,254,829.8420 The finding shows poor planning for capital projects to be undertaken by the Ministry.
As a result funds were not used for the projects it was approved in the 2015 Budget Estimates.

Recommendations  The Ministry of Infrastructure and Transport must ensure that funds provided are utilised for the purpose it is provided for in the budget; and  The Ministry of Finance should investigate the diversion of funds and take appropriate action against Officers responsible for diversion of funds.
Management Comments The audit recommendations are acknowledged, however as stated in earlier response that the projects highlighted by OAG were undertaken subsequent to the withdrawal of the allocated projects; the substitute projects undertaken were as follows: Repair and upgrading 1.

Joinery Shop (phase 2), DECE 2.


Plumber shop, DECE 20 Total of $221,351.84 was used from other allocations Ministry of Infrastructure and Transport Section 40: Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Routine and Special upgrading 1.

Grp 30 – Mech Yard, DECE (phase1) 2.

Grp 5M – Mech Yard, DEW (phase 3) 3.

Grp 3B – DEN Yard, DEN (phase 2) Water and Sewer lines 1.
Ono-i-Lau – please note that this project was also carried out with the available materials from plumber shop; it was the wages component only that was allocated from Maintenance and Operations of Public Buildings.

2.

Domain (phase 2 & 3) 3.

Delainamasi (phase 2) 4.

MRD The Delainamasi (phase 2) and MRD projects were carried out to replace the project for Toorak area that was in the 2015 PSIP.

There are only (2) projects under water and sewer lines that replaced the Toorak area project.
These projects was prioritized due to the need at hand and since the PSIP is a (3) years project, we will consider the Toorak area in the next financial year.

40.9.4 Construction of Light Houses The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
As well, as 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.21 The Ministry constructed several lighthouses around Fiji.

The funds for the construction of these lighthouses were initially provided by the Maritime and Safety Authority of Fiji (MSAF) to the Ministry.
However, the audit noted that two of the lighthouses constructed by the Ministry between 2013 and 2014 collapsed while another two were leaning to one side and were about to collapse.

For the two collapsed light houses, the Ministry diverted funds from Repairs and Upgrading of Public Buildings (SEG 8) allocations to reconstruct the lighthouse.

Refer to Table 40.21 for details of constructing light houses.
Table 40.21: Details of the Lighthouse Constructed by the Ministry Lighthouse Cakaumomo Estimated Cost ($) 182,191 2012 – $169,564 Actual Cost ($) no ledger 2013 – maintained the Department and hence cost cannot be determined by 2015 – $60,995 worth of materials purchased for the reconstruction in 2016.

Anomalies   Construction work started in 2012.

The Ministry spent total of $169,564 but could not complete the light house due to extreme weather conditions.
In 2013 DECE constructed a single culvert tower structure.

The DECE did not maintain proper records of the cost of this light house, hence the actual cost of construction was not provided to Audit.

However the lighthouse collapsed later.

In 2015 the Ministry diverted funds from Repairs and Upgrading of Public Buildings (SEG 8) allocation totalling $199,215 to reconstruct the lighthouse.
The  21 Ministry of Infrastructure and Transport Finance Manual 2015, Part 2 Expenditure Ministry of Infrastructure and Transport Section 40: Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Lighthouse Estimated Cost ($) Actual Cost ($) Total - $230,559 Curacoa 165,035 2011 – $99,407 2012 – $47,824 2013 – $193,607 Total - $340,838 Anomalies DECE purchased materials costing $60,995 for the reconstruction of light house.
However the Ministry later called for tenders for the construction of the light house.

The Ministry to outsource or DECE to reconstruct the lighthouse.

The materials purchased are stored at the shipping and mechanical yard.

is not certain whether The construction work began on 21/11/11.

A total of $99,407 was utilised as at 31/12/11.

An additional $47,824 was used in 2012.

However the structure collapsed after cyclone Evans in 2012.
The Ministry reconstructed the lighthouse in 2013 with a total cost of $193,607.

However funds were diverted from Repairs and Upgrading of Public Buildings (SEG 8) allocation.

   Mali Passage East 250,557 Narara Island 197,607 $225,859.01  The light house was initially designed for a tripod structure with estimated cost of $250,557 The materials were purchased for the tripod structure.

However the Ministry built a single pile structure in 2013 without any structural design.
Total of $225,859 was used to construct this lighthouse.

193,607  A single pile structure lighthouse was constructed in 2014 costing $193,607.

However lighthouse collapsed in February 2015. the Vomo Island South Reef 197,607 193,607  lighthouse was designed for a single pile The structure.

However a tripod structure lighthouse was built and handed over to MSAAF on 17/12/14.

The Department did not prepare the design for tripod structure.
Tivoa Island 197,607 193,607  A single pile structure light was constructed in 2014 with a total cost of $193,607.

However as at the date of audit the lighthouse was leaning to one side and is about to collapse.

Total 1,190,604 1,378,077 For the sample of 16 lighthouses reviewed by audit, the total budgeted cost of construction was $3,080,899.

However, the actual cost of construction or reconstruction of these the lighthouses was $3,722,888.88 which was $726,279 or 24% more than the budgeted amount.
The findings indicate poor quality of work performed by the Ministry in constructing the lighthouses.

As a result, funds provided by MSAF were not properly utilised and the Ministry incurred additional expenditure to reconstruct the light houses.
Ministry of Infrastructure and Transport Section 40: Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Ministry should:   ensure that all factors are considered to minimize risks during the construction phase; ensure that all future designs and plans are formally approved by the Permanent Secretary of Infrastructure and Transport; and  appoint an independent committee to investigate all the light house that collapsed or are leaning and about to collapse and submit a report to the Ministry of Economy for appropriate disciplinary action for poor performance and loss of funds through reconstructions.
Management Comments Cakaumomo lighthouse Cakaumomo is regarded as the most unfavorable site out of the three lighthouses constructed due to extreme weather conditions and strong sea currents.

Twice during construction, the workers had to retrieve the barge back to the original position, as the rope snapped and allowed the barge to drift.

The vessel itself needed to move out from the reef before night falls thus restricting the team to maximize the opportunity of any good weather conditions.
Due to reasons mentioned above particularly in the difficulty faced in constructing a tripod, a single pile structure was recommended.

The Department received the allocation of $57,164.

In addition $50,266.66 was transferred to TC Evans Rehabilitation works.

Funds to rehabilitate Cakaumomo Light house were sourced from Repair and Upgrading of Public Buildings (SEG 8).

A sum of $199,215 was approved by MoE for the rehabilitation works.
Initially, the Ministry has sought for waiver of the tender to the Ministry of Finance to carry out this project in-house.

This was not approved hence the tender was called for outsourcing.

DEWCE bids with the total cost of $377,954 which was awarded to the Division as they were the only bidder.

Currently a team from DECE is reconstructing the light house on site.

Some of the materials are stored at the shipping yard for safe keeping and culverts at the mechanical yard.
Currently a team from DECE is reconstructing the light house on site.

Curacoa Due to destruction of all project records in a fire at DEW in 2014, the audit query cannot be substantiated.

Mali Passage East Due to extreme weather conditions and strong sea currents at the location, Management recommended that another location within the vicinity of the initial be identified and which would meet the conditions for a single pile structure.
Narara Island During the course of construction, the team was instructed to report back to Lautoka due to the drought experienced in the Yasawas.

Ministry of Infrastructure and Transport Section 40: Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The vessel was requested by the Commissioner Western to cart water.

The abandoned incomplete structure was exposed to extreme conditions and sea water hence compromising on the structural integrity.
This may have caused the structure to collapse.

Vomo Island South reef A suitable location within the vicinity of the initial was identified which had the required depth and met the conditions for the construction of a tripod structure.

Tivoa Island The site had been determined by MSAF however when the team mobilized to the site there were further changes made by MSAF.
Please note that the Ministry had carried out its investigations and submitted the report with recommendations to Ministry of Economy (formerly MoF).

40.10 Divisional Engineer Western 40.10.1 Weaknesses in Control of Stores Materials purchased for different projects are received at the Transit Stores (DEW Depot) before they are delivered by the Ministry to the respective project sites.
At the project sites, the Site Storeman should record all items received and return leftover items to the Transit Stores when a project is completed.

The audit noted the following anomalies in the stores maintained at the Western Division.

 The Storeman or the Officer in Charge of inventory shall keep a tally card for each inventory item to determine the value of items.

Each card must provide the following details: i. ii.

iii.

iv.
iii.

iv.

Date and description of each item purchased; Quantity purchased and cost price; Quantity sold and at which price; Quantity remaining and price.22 However, the Storeman did not maintain tally cards at the Transit Stores in the Divisional Engineer Western Depot for hardware stores purchased for various projects.
 The Storeman must ensure that the records are properly maintained and up to date.23 The Purchase Order Register maintained at the Transit Stores was not updated with the delivery numbers for the materials delivered to various projects sites.

Refer to Table 40.22 for details.
22Ministry of Infrastructure & Transport Agency Finance Manual 2015, Section 8.1.6 23Ministry of Infrastructure & Transport Agency Finance Manual 2015, Section 6.33 (iii) Ministry of Infrastructure and Transport Section 40: Page 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.22: Purchase Order Registers with Deliveries not updated Project Project Details Ecological Purification System Water and Sewer Relining This project was undertaken in 14 villages where Ecological Purification System was constructed in the Western Division at a total cost of $620,725.
This project was undertaken in Tabua Road Natabua, Raman Nair Street and Vomo Street at a total cost of $272,943.

 Hardware inventory items stored in the Transit Stores should be segregated into buildings, plumbing and joinery items.

Hardware items stored in the transit stores were all mixed together and not separated as required.

 Materials delivered to project sites should be taken on charge by the site Storeman and recorded in the tally card.
The Department purchased and supplied materials costing $7,199 and $80,000 for Neilawa Ecological Purification System project and Buildings Yard Fencing, respectively at the Divisional Engineer Western Depot.

However, no tally cards were maintained for the materials delivered to project sites from the transit stores.

In addition, a few delivery dockets were also missing.

Hence, no records were maintained for the materials received and issued and materials in stock at Transit Stores.
Refer to Table 40.23 for details.
Table 40.23: Anomalies for Stores at the Sites Project Anomalies Neilawa Ecological Purification System Buildings Yard Fencing Vatubalavu Infant School St Francis College No tally card on site The Storeman does not have copies of the following delivery dockets on site:  Delivery 731492 – 16/11/15  Delivery 731493 – 16/11/15 No tally card on site The following items were not updated in the tally card on site: Delivery 718553 – 25/10/15  Cement 50kg – 15  6” St Block – 26  Fine sand – 20 bags The following items were not updated in the tally card on site.
Delivery 718582 – 3/11/15  Fine sand – 20 bags  Loose timber – 20 L/M  8 blade louver frame wind – 59 pairs  610x152x5mm louver blade – 472  On the completion of a project, leftover materials should be returned to the transit stores for safe keeping.
Ministry of Infrastructure and Transport Section 40: Page 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Although items were returned from various project sites to the Transit Stores upon completion of projects, the Store man based in Transit Stores did not maintain any record of the returned items.

Refer to Appendix 40.1 for details The findings show poor control over hardware stores at the Divisional Engineer Western Office.
There is a high risk of theft and misappropriation of hardware materials.

Recommendations The Ministry should:   ensure that all hardware items are appropriately recorded upon receipt of items from the supplier, delivery of items to the project site and the return of leftover items to the transit stores when the project is completed; and take appropriate disciplinary action against the Storeman and the Construction Engineer at the depot for not performing their duties diligently.
Management Comments The present transit stores were temporarily built to accommodate the operational needs of the Department after the fire.

The construction of a new building is in progress which will accommodate Plumber shop and Transit stores thus it will eliminate the current problems faced by the storeman.

Currently one Established Storeman is looking after both Building Transit Stores and TMA Plumber shop (EPS and Sewer Riling) for the Division.
Due to cost cutting measures, no Store man/Clerks were engaged since the foreman and the Supervisors were responsible for their stores.

Although the tally cards were issued to various projects, due to other assigned responsibilities the technical officers had failed to maintain and update the tally cards.

The Ministry will conduct spot checks to ensure that proper stock records are maintained in all stores.
40.10.2 Anomalies in Project Records The Foreman and Supervisor must record all manufacturing jobs on a job record sheet.

The job record sheet shall provide the following details: i. ii.

iii.

iv.

Job number; Type of work carried out; Number of hours spent on job; Materials used and the costs.24 The PAO/SAO/AO/AAO must make sure the following checks are done before authorising any payment: i. ii.

iii.
iii.

Review vendor invoices for accuracy by comparing charges to purchase order; Verify that the goods and services purchased have been received; Perform monthly reconciliation of operating ledgers to ensure accuracy and timeliness of expenses; 24Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 6.2.3 Ministry of Infrastructure and Transport Section 40: Page 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ iv.
v. Make sure that the expense accounts used have enough funds and are correct; Make sure that invoices are paid in a timely manner.25 Audit review of the project records maintained by the Divisional Engineer Western Office revealed that project records were not properly maintained.

The following anomalies were noted.

 Out of 14 projects reviewed by the audit, 7 projects had variance in project cost compared with the project job record sheet and the project cost in the Western Division.
 For some projects such as Fencing of Mechanical Yard, Fencing of Building Yard, Group 5M (DEW Yard) Phase1 and Group 4A Varadoli, the commitment ledgers were not up to date.

Hence the total amount committed for the projects was not known.

 Two job record sheets had same job number indicating two job sheets were maintained for one job.

 The total cost for Group 4A Varadoli projects were more than the budgeted cost.

Hence the DEW incurred over expenditure for this project.
Refer to Appendix 40.2 for details.

The above findings indicate poor project management by the DEW.

There is a high risk of misappropriation of public funds and project cost overruns.

Recommendations The Ministry should:   ensure that project records are properly maintained; and investigate and take appropriate disciplinary action against officers for poor record keeping.
Management Comments The mentioned statement on the over expenditure is incorrect as expenditure incurred were due to Management’s advice to undertake additional works whilst the team was carrying out programmed maintenance work in the area, even though this was not factored in the initial estimate/scope.

It should be noted that funds are being controlled by the Work Study Unit and released according to stages of works as was done in this case.
Upon receipt of materials, store man updates the records and forwards the invoices for ledger update, verification by inspection team and payment purposes.

Due to non-receipt of all items as ordered, the store man withhold the invoices in anticipation of full delivery, hence there are delays in updating ledgers.
The issues raised by the auditors in regards to JRS and commitment ledger have been noted and the division has strengthened the inadequacies by implementing proper procedures and monitoring to ensure that financial records are updated regularly.
25Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 17.2.4 Ministry of Infrastructure and Transport Section 40: Page 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.11 Divisional Engineer Northern 40.11.1 Surplus Materials upon Completion of Project Storage of inventories shall be the responsibility of the storeman or the Officer in Charge of inventory.
The store man or the Officer in Charge of inventory must ensure that quantity of stock is closely monitored to avoid excess holdings or shortages.26 Inventory purchasing, storage and recording should be efficiently managed to ensure that there is sufficient level of inventories when needed, while minimising the cost of holding inventory and the risk of stock becoming obsolete or damaged.

The DEN implemented several projects in the Northern Division.
The audit reviewed a sample of projects that were completed or near completion27 as at the date of audit on 3/12/15.

The audit noted that large quantities of materials purchased for these projects were not used.

This indicated that excessive materials were purchased by the DEN for these projects.

Refer to Table 40.24 below.
Table 40.24: Materials Purchased in Excess of Requirement Items Quantity On Site as per Handing Over Statement Cost of Excess Materials($) Nabouwalu Group Maintenance 193 cans Acrylic undercoat white paint 30 cans Enamel gloss white paint 61 cans Acrylic white H/G paint 38 cans H/G pearl lustre paint 21 cans H/G Berge 75 cans Red oxide 60 cans Grey green acrylic 16 cans Clear vanish 49 cans Enamel undercoat 20 cartons Rubber tiles 55 bags C.T.F 13 sheets 12ft galvanized roofing iron – 3.6576m 10ft galvanised roofing iron – 3.0480m 11 sheets 9ft galvanised roofing iron – 2.7432m 16 sheets 24 cans Galvo one metal primer 3 coils Gauze wire – (cycemrald) Hand gloves (Leather) 8 pairs Nabouwalu Group Upgrade of Water and Sewer lines 28 lengths 15mm PVC pressure pipe 13 lengths 40mm PVC waste pipe 26 lengths 12mm deformed bars 6 cartons 150*150mm white glaze tile 300*200mm white glaze tiles 78 sheets Dama Research Station Upgrade of Water and Sewer lines Chain link Binding wire Barricuda 1 coil 1 coil 1 coil 6,793.60 1,126.72 2,525.40 2,042.50 831.06 2,160.53 2,354.40 497.90 1,676.70 900.00 1,320.00 592.02 417.45 546.40 609.90 1,260.00 38.40 119.28 155.74 304.20 52.14 76.44 191.50 29.99 88.00 26Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 8.2.1 27Kavula/Banikea and Wainunu Infant School were just nearing completion as at the date of audit on 3/12/15 Ministry of Infrastructure and Transport Section 40: Page 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Items Total Quantity On Site as per Handing Over Statement Cost of Excess Materials($) 26,710.27 The unused excess materials were recorded in the handing over statement at the site before they were returned to the Stores at the DEN depot.
The audit noted that several items returned to the DEN depot for Nabouwalu Group maintenance were less than the items recorded in the handing over statement at the site.

Refer to Table 40.25 below for the items short returned.
Table 40.25: Items Short Returned (Nabouwalu Group Maintenance Only) Items Enamel gloss white paint H/G Berge Red oxide Clear vanish Enamel undercoat Galvo one metal primer Gauze wire – (cycemrald) Hand gloves (Leather) Totals Quantity On Site As Per Handing Over Statement Quantity Received At Stores Materials not Received at Stores($) Cost of Materials not Received at Stores($) 30 cans 21 cans 75 cans 16 cans 49 cans 24 cans 3 coils 8 pairs 28 cans 19 cans 71 cans 13 cans 45 cans 19 cans 0 0 2 cans 2 cans 4 cans 3 cans 4 cans 5 cans 3 coils 8 pairs 80.48 87.48 121.72 114.90 149.04 160.50 1,260.00 38.40 2,012.52 The finding shows that the Estimation section overstated the quantity of materials required for these projects.
As a result public funds were tied up in the surplus materials which could have been better utilised in other projects.

In addition, some excess stores were also missing and unaccounted hence resulting in loss of public funds.
Recommendations The Ministry should:    ensure that bill of quantities are properly prepared to avoid unnecessary purchase of materials; investigate purchase of excessive materials and take appropriate disciplinary action against officers responsible; and investigate the missing items and take appropriate disciplinary action against the stores Officer.
Management Comments The audit recommendations are noted and investigations will be carried out to ascertain anomalies as reported and appropriate disciplinary actions will be undertaken.

Upon completion of projects DEN will ensure that proper handing over and accounting of surplus will be undertaken.

Initial estimate was done for 10 buildings but only seven buildings were maintained under the Group.
The other three buildings were not maintained since there were occupied by FRA contractors and were not in a position to vacate.
All materials purchased for the project was delivered to the site on supervisor authority including Ministry of Infrastructure and Transport Section 40: Page 36 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ materials purchased for the 3 excluded Buildings.Un-used materials for the three excluded buildings were returned to Depot stores after completion of Nabouwalu Group Project.
The audit comments are noted and investigations will be carried out to ascertain anomalies as reported and appropriate disciplinary actions will be undertaken.

Upon completion of projects DEN will ensure that proper handing over and accounting of surplus will be undertaken.

40.11.2 Store cards not properly maintained Storage of inventories shall be the responsibility of the Storeman or the Officer in Charge of inventory.
The Storeman or the Officer in Charge of inventory must ensure that quantity of stock is closely monitored to avoid excess holdings or shortages.28 The audit noted that the site stock cards were maintained by the Leading Hand on the site and not the site Storeman.

The audit also noted that the items received and issued from the site stores were not always recorded in the stock cards by the Leading Hand.

Hence the Leading Hand did not properly maintain the store cards.
The irregularity indicates poor supervision in the Stores at the Wainunu Infant School and Kavula/Banikea Infant School project sites.

In absence of up to date stock cards, there is a risk of pilferage of stores.
Recommendations The Ministry should ensure that:   stocks are properly recorded when received or issued; stock cards are maintained up to date at all times; and  appropriate disciplinary action is taken against the supervisor for poor supervision and the Leading Hand for not updating the stock cards.

Management Comments The audit recommendations are noted and DEN will ensure that random checks are carried out at all project sites to ensure that physical stocks are correctly accounted with tally cards.
Supervisors and Project Foremen will be tasked to ensure that appropriate site stock records are maintained at all times.

40.11.3 Items Not Taken On Charge at the Project Site The Storeman or the Officer in Charge of inventory shall keep a tally card for each inventory item to determine the value of items.

Each card must provide the following details: i. ii.

iii.

iv.
Date and description of each item purchased; Quantity purchased and cost price; Quantity sold and at which price; Quantity remaining and price.29 28Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 8.2.1 29Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 8.1.6 Ministry of Infrastructure and Transport Section 40: Page 37 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Construction of Wainunu Infant School and Kavula/Banikea Infant School commenced in 2014 and was completed in 2015.
The review30 of the records of building materials at the project sites for Wainunu Infant School and Kavula/Banikea Infant School revealed several anomalies.

Refer to Table 40.26 for details.

Table 40.26: Details of Anomalies Noted in Stores Projects Anomalies Noted Wainunu Infant School.

 Tally cards for all the materials at the job site were not updated while in some instances, tally cards were not maintained at all.
This includes tally cards for materials such as cement, treated pine posts, glaze tiles and diesel.

 Carbon (pink) copies of the delivery books were not signed by the person receiving the materials on the site, however, the materials were received by the driver or leading hand from the Divisional Engineer Northern depot (loading point).

The 2014 tally cards were not provided by the Divisional Engineer Northern, hence the carried forward opening balance of materials in 2015 cannot be verified.
 Kavula/ Banikea School.

Infant  Tally cards for all the materials kept at the job site were not maintained at all.

The cards were only delivered to the site on 1/12/15 for the Leading Hand to update.

 Although, items were taken on charge in a register, the issuance of items from the store room was not properly updated.

 Carbon (pink) copies of the delivery books were not maintained at the site, and were still  attached in the delivery books held at the main depot building stores.
The 2014 tally cards were not provided by the Divisional Engineer Northern nor were there was any stock take done to verify the quantity of materials on site when workers pulled out in 2014.

Hence the correctness of the carried forward opening balance of materials in 2015 could not be determined.

There is lack of control over the management of materials at DEN Stores and project sites.

There is a high risk of materials being stolen.


Recommendations The Ministry should:     ensure that a site Clerk/Storeman is appointed at all major project sites; ensure that copies of delivery books are signed at the project site when materials are delivered; ensure that tally cards are maintained and updated regularly; and take appropriate disciplinary action against the Storeman for not updating the stock cards.
303/12/15 Ministry of Infrastructure and Transport Section 40: Page 38 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Management Comments The audit recommendations are noted and DEN will ensure that random checks are carried out at all project sites to ensure that physical stocks are correctly accounted with tally cards.
Supervisors and Project Foremen will be tasked to ensure that appropriate site stock records are maintained at all times 40.11.4 Delay in Supply of Hardware Items By Approved Contracted Suppliers The Government Tender Board (GTB) in its meeting no.

16/2013 held on 21/8/13 approved the tender for the supply of hardware items for Whole of Government to various companies.

In addition, the contract for supply of timber was also awarded to hardware Company C as a first choice supplier.
The second choice supplier was only to be used if hardware Company C provided in writing that they are not able to supply the timber.

The hardware Company C was to supply hardware items to the Northern Division within 2 – 3 days and 4 – 5 days as per the approved tender 86/2013.

The audit noted that hardware Company C was not able to provide building materials to DEN on several occasions within the agreed time frame of 2 – 3 days and 4 – 5 days.
Significant delays were noted for supply of building materials to the DEN by hardware Company C. The delay was recurring throughout the year and in most cases, it took the contractor more than 10 days to supply the materials ordered.

Refer to Appendix 40.3 for details.

The audit also noted that the DEN did not advice Fiji Procurement Office about the delays in supply of materials by hardware Company C. The delay in the supply of materials delayed several projects undertaken by the DEN.
Recommendations The Ministry should:  discuss the matter with Fiji Procurement Office to ensure materials are supplied on time; and  seek approval from FPO to purchase materials from second choice supplier, where the first choice supplier is unable to provide them.

Management Comments Delay in the supply of materials by the contracted suppliers has been addressed with FPO and upon advice materials have been procured accordingly.
40.11.5 Highly Overstated Project Cost Estimates An estimate is a computation or calculation of the quantities required and expenditure likely to be incurred in the construction of a work.

The estimate is the probable cost of a work and is determined theoretically by mathematical calculation based on the plans and drawing and current rates.
The approved estimates are basis upon which funds are released by the client Ministries to Ministry of Infrastructure and Transport to carry out the construction works.

Ministry of Infrastructure and Transport Section 40: Page 39 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Ministry was provided funds totalling $3m under SEG 8 in the 2015 Budget Estimates.
The DEN was to implement eight projects in the Northern Division as per the Ministry’s three-year PSIP submission to the Ministry for Economy from these funds.

31 The projects to be implemented using funds provided under SEG 8 were as following.
Repair and Upgrading of Public Building - Northern Buildings 48A & B Building 52 Buildings 53A & B $90,000 $60,000 $90,000 Routine & Special Upgrading of Public Buildings - Northern Group 7C Mua Coconut Research Group 3B, DEN yard $55,946 $264,172 Upgrading of Water Supply and Sewer lines of Public Residential Buildings Dama Research station Building 93 & 94 Vaturekuka Mua Coconut Centre $35,000 $46,810 $18,190 The audit noted that the DEN did not implement two of these projects, namely Group 7C Mua Coconut Research and Mua Coconut Centre in 2015 with budget estimates of $55,946 and $18,190, respectively.
These projects were not implemented because they were located far from Taveuni and due to time constraints were placed last to be carried out in 2015.

The audit also noted significant savings in actual cost of implementing four out of the eight projects compared to the project cost estimates.

The savings were as high as 48%.

This shows that project costs estimates were not properly prepared and were highly overstated.

Refer to Table 40.27 below for details.


Table 40.27: Details of Variances Project Group 01 Township area, Qtrs.

53A & B special maintenance Group 01 Township area, Qtrs.
48A & B special maintenance Group 3B DEN yard (depot) routine maintenance Group 5 Nabouwalu routine maintenance Total Savings (Sample Only) Estimate (PSIP) ($) 92,927 99,757 327,206 416,564 936,454 Actual Expenditure ($) 71,818 90,272 229,873 216,200 608,163 Saving % ($) 21,109 9,485 97,333 200,364 328,291 23 10 30 48 35 The audit further noted that the cost estimates and the building materials schedules for each project was not verified and approved by the Acting Divisional Engineer Northern.
The findings show that incorrect project estimates resulted in significant savings which could have been utilised for other critical projects.
31Ministry of Infrastructure and Transport Agency PSIP Submission (2015 – 2017) Ministry of Infrastructure and Transport Section 40: Page 40 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Ministry should:   ensure that project cost estimates are reasonable and not highly overstated; ensure that all project cost estimates and materials are reviewed and approved by the DEN; and  investigate and take appropriate disciplinary action for poor cost estimates.
Management Comments The audit recommendations are noted and appropriate actions will be implemented by DEN.

Estimates are prepared as a guide to ensure that expenditure is within the ambits.

Funds are released according to the implementation stages of the project to ensure that expenditure is prudently maintained.

Other means of saving that is achieved through reduction in the number of workmen engaged on the project.
40.12 Divisional Engineer Central Eastern 40.12.1 Non Compliance to Project Implementation Schedule Agencies should prepare their budget submissions in accordance with the Finance Circulars issued by the Permanent Secretary for Finance from time to time32, separately showing operating and capital expenditure.33 All capital expenditure submissions must be done through the Public Sector Investment Program process.34 The capital budget for each year is drawn from the Public Sector Investment Program (PSIP) and Ministries and Departments are required to clearly identify the cost components of all capital works programs and projects to be undertaken.
A total of seven projects were identified to be carried out under the PSIP in 2015 by the Divisional Engineer Central/Eastern.

Out of these, four projects were for Routine and Special Upgrading of Public Buildings and three were for the Repair and Upgrading of Public Buildings.

Refer to Table 40.28 for details.
Table 40.28: Details of Projects Identified Under PSIP Projects Routine and Special Upgrading of Public Buildings Group 5 Koronivia Research Station ( Phase 5) Group 25B Geological Survey Group 20B Mechanical Yard Group 13A Government Buildings and Environment Repair and Upgrading of Public Buildings MAFF Yard and Korovou Court House 32 Finance Instructions 2010, Section 6(2) 33 Finance Instructions 2010, Section 6(3) 34 Finance Instructions 2010, Section 6(5) Ministry of Infrastructure and Transport Cost ($) Implementation Schedule as per PSIP for 2015 72,665 208,766 251,789 125,000 1st quarter 2nd quarter 4th quarter 3rd quarter 100,000 3rd quarter Section 40: Page 41 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Projects Cost ($) Joinery Shop and Plumber Shop in DECE yard Ono-i-Lau Met Office and Quarters 185,000 120,000 Implementation Schedule as per PSIP for 2015 1st and 2nd quarter 4th quarter The audit noted that a project for Routine and Special Upgrading of Public Buildings was not implemented in 2015.
It was also noted that the remaining six projects were completed but after significant delays compared to the completion timeline as per the PSIP schedule for the year 2015.

Refer to Table 40.29 for delays in project completion.
Table 40.29: Details of Projects Not Completed On Time Projects Implementation Schedule as per PSIP Date Actual Projects Implemented Date Projects Completed Projects Delayed By Routine and Special Upgrading of Public Buildings Group 5 Koronivia Research Station (Phase 5) Group 25B Geological Survey Group 20B Mechanical Yard Group 13A Government Buildings and Environment Repair and Upgrading of Public Buildings Projects Joinery Shop Plumber Shop MAFF Yard Korovou Court House Ono-Lau Met Office and Quarters 1st quarter 19/3/15 18/6/15 77 days 2nd quarter 4th quarter 3rd quarter 25/3/15 8/10/15 not implemented 24/6/15 16/12/15 31 days 69 days 1st quarter 2nd quarter 3rd quarter 3rd quarter 4th quarter 22/10/15 08/10/15 2/7/15 9/3/15 22/8/15 16/12/15 16/12/15 1/10/15 29/4/15 16/12/15 294 days 190 days 91 days 51 days 116 days The projects were delayed due to delays in receiving funds from the Ministry for Economy when requested.
As a result these projects were not implemented as planned.

Recommendation The Ministry should apply for release of funds from Ministry for Economy in advance to ensure that projects are implemented and completed in accordance with the PSIP schedule.

Ministry’s Comments The compilation of PSIP schedule is compiled by DBGA and his team (Work-study Section) acted upon the allocation of funds submitted by the Work-study Section.
Commencement of all specified projects according to PSIP depends on the allocation of funds from HQ that is upon the approval from Ministry of Finance.

Request for release of funds from Ministry of Finance are to be submitted well before time so funds can be available for commencement of projects as according to PSIP schedule.

Also even when DEWCE managed to receive funds in time another obstacle that we also faced is that the 3 months’ time period contract given for all the project workers.
Once their term are expired so there is also a standstill of all the half completion projects as there is no man power to continue the work.

Completion of jobs would only continue once appointments of project workers are received.
We agree with the audit team on the Ministry of Infrastructure and Transport Section 40: Page 42 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ total of (7) projects that were supposed to be implemented under the Maintenance and Operations of Public Buildings vote.

In response to the audit comments on the non-implementation of (1) project namely Grp 13A – Government Buildings and Environment.
Please be advised that the subject project was not being implemented after funds were stalled for a period of time.

In response to the audit team’s comments on the significant delays to complete project refers.
Please be advised that the delay in carrying out projects was due to the following challenges:  Delay in supply of materials from contracted suppliers  Delay in the process of releasing approval for contracted items to request for (3) quotations  Delay in engagement process and approval It should also be noted that the implementation schedules may differ because projects to be carried out are again prioritized in terms of the need at hand.
Audit’s comment is noted and we will work on improving the implementation process.

GOVERNMENT SHIPPING SERVICES 40.13 Non Payroll 40.13.1 Progress Reports Not Prepared A representative of the Department should be present to supervise the works that are carried out by the Contractors.

This would ensure that Contractors carry out work according to the project design and use materials as specified in the design35.
The audit noted instances where the works carried out by the Contractor was not reviewed or supervised by a representative of the Department either on a daily, weekly or fortnightly basis.

The Department reviewed the progress of works after receiving claims from the Contractor for payments.

The claims were endorsed by the Acting Director Buildings and Government Architect (DBGA).
Apart from the project reports for the payments, the Department did not prepare any periodic progress reports on the progress of works carried out by the Contractors.

Refer to Table 40.30 for details.


Table 40.30: Projects not reviewed or Supervised by the Department Project Name Construction of New Offices and Workshops Jetty Refurbishment at GSS Walu Bay Dredging of Walu Bay Jetty (Phase 1) Dredging of Walu Bay Jetty (Phase 2 and 3) Total (Sample Only) Contractor Contractor A Contractor B Contractor B Contractor B Contract Sum ($) 3,663,715.00 4,169,330.58 412,248.07 286,225.80 8,531,519.45 The findings indicate lack of monitoring and supervision by the Department.
Failure by the Department to review and supervise the works carried out by Contractors may result in non- compliance to the project designs and material specifications.

35General conditions of Contract, Section 6(1).


Ministry of Infrastructure and Transport Section 40: Page 43 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department should ensure that:  all projects are supervised by the Department on a regular basis; and  periodic progress reports are prepared by the Department for all the projects.
Department’s Comments The works on site have been regularly monitored by the nominated representative of DBGA’s office which usually from the Architect Section.

As a monitoring mechanism, photographs are taken by the DBGA Architect throughout the duration of the projects.

These photographs are maintained at DBGA’s office for assessment of project progress purposes.
40.13.2 Non Compliance with GTB Approval The GTB approved that a Clerk of Works is to be assigned to monitor and endorse the satisfactory completion of construction stages prior to release of payments.36 The Department did not appoint a Clerk of Works to be based at the project sites to monitor the progress of the capital works undertaken by the Contractors.
Instead, the Acting DBGA from the Ministry of Infrastructure and Transport who was not based at the site verified the work completed for release of payments.

Refer to Table 40.31 for details of projects for which no Clerk of Works was appointed.
Table 40.31: Details of Projects with No Clerk of Works Project Name Construction of New Offices and Workshops Jetty Refurbishment at GSS Walu Bay GTB Approval Date 18/6/15 4/8/15 Contract Sum ($) 3,663,715.00 3,790,300.53 The finding shows poor project management and supervision and non-compliance to GTB directives by the Department.

This may result in use of substandard materials and poor quality of workmanship.
Recommendations The Department should:   comply with GTB approval at all times; and ensure that Clerk of Works is appointed at the commencement of the project until the project is completed.

Department’s Comments The GTB had recommended for the need of having a Clerk Of Works on site however it was not budgeted for thus there was no allowance made for it.

The Department will ensure that this is provided for in future projects.
Ministry of Infrastructure and Transport Section 40: Page 44 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.13.3 Anomalies in Purchase of Generators GTB in its meeting on 25/11/15 awarded the contract for the Purchase of 1 Mirrlees Blackstone Main Engines, 1 Mirrless Blackstone Gearbox and 2 Cummins Generators to Supplier A at the cost of GBP 125,900, GBP 73,187 and USD 50,100 respectively.
37 Review of the contract documents and project files revealed the following anomalies.

 The GTB required the Supplier to provide a surety of FJD76, 109.66 as performance bond within 14 days of being notified prior to signing of contract.38 The contract agreement between the Department and the Supplier was signed on 7/12/15 and concluded on 31/5/16.

The Department did not obtain the performance bond amounting to $76,109.66 from the Supplier.
The Department did not comply with the GTB’s directive and no surety was held against the Supplier.

 The terms and conditions in the contract should specify the delivery timeframe for the supply of goods and services.

The contract agreement between the Department and Supplier did not state the expected delivery timeframe for the supply of 1 Mirrlees Blackstone Main Engines, one Mirrless Blackstone Gearbox and two Cummins Generators from the Supplier.
As at the date of audit on 20/4/16, only the 2 Cummins Generators ordered were received by the Department.

The two Cummins Generators were received by the Department on 28/4/16.

The Department is yet to receive the Mirrlees Blackstone Main Engine and Gearbox.
 A second payment of 60% of the total sum of GBP199, 087 will be made upon the successful inspection test conducted by the purchasers’ engineer in the United Kingdom for the Mirrlees Blackstone Marine Main Engine ESL6 MK2 and Gearbox MN3 and a second payment of 45% of the total sum of USD50,100 which is a sum of USD22,545 will be made upon the successful inspection test conducted by the purchaser’s engineer in Malaysia for the two Marine Cummins Generator 6BT5.9D(M).39 The Department on 31/12/15 paid 60% of the total sum of GBP199,087 amounting to FJD380,804.83 and 45% of the total sum of USD50,100 amounting to FJD48,327.26 to the Supplier .
The audit noted that the Department made the payment to the Supplier without carrying out the inspection test for the Mirrlees Blackstone Main Engine and Gearbox.

In addition, the inspection for the two Marine Cummins Generator was carried out on 27/1/16 in Malaysia after a lapse of 27 days of making the advance payment.

The Department made advance payments to the Supplier amounting to FJD429, 132.09 to utilise the funds at the close of the financial year 2015.
However, the payments were made without carrying out the inspection test as required under the contract.

37GTB Letter Dated 26/11/15 38GTB Letter Dated 26/11/15 39Contract Agreement between the Department and Supplier A, Section 3.21(ii) and Section 3.22(ii) Ministry of Infrastructure and Transport Section 40: Page 45 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Department did not follow proper procurement procedures.
Recommendations The Department should:      comply with GTB approval at all times; ensure that the performance bond is obtained from the Suppliers in future; include the delivery timeframe in all supply contracts; comply with the contract clauses at all times; and take appropriate disciplinary actions against those responsible for not following proper procurement procedures.
Department’s Comments The OAG auditor was clarified of this issue during audit that as per Ministry of Finance Memorandum Ref: Fin 60/13 dated 29/12/2015, the Chief Accountant (Treasury) had approved the waiver of advance payment security as per the Advance Payment Policy (paragraph 6.2).

The Ministry had retained the sum of $38,293.15 and transferred this to FPO Trust Fund Account on 31/12/2015.
The Ministry also reiterates that due to very limited suppliers of particular make and model of engines and parts, few suppliers resort to ‘strong-arm tactics’ to dictate their terms and conditions to their customers.

The Contractor performed its duties like an indent agent hence it was not feasible to ascertain definite delivery dates of the ship engines.
It should be noted that the Mirrlees Blackstone engine was been built specially for GSS after Generators Direct Ltd. (GDL) had received the advance payment.

The Cummins generators were been procured from Malaysia by the Contractor (GDL), hence definite delivery time could not be confirmed.
40.13.4 Delay in Supply of Used Straight Steel Tramline Rails GTB in its meeting on 22/4/15 approved to award the contract for the supply of 173 pieces of used straight steel tramline rails for beacon piles to Supplier B. Ltd at a cost of $198,950 VIP.

The delivery time was 5 – 7 weeks.

Supplier B was required to submit a surety of $4,468.50 as performance bond.40 The review of the contract documents and project files revealed the following anomalies.
 In order to safeguard the interests of the Purchaser, the agreement should include penalties for any delay by the Supplier in supplying the goods after the specified date of delivery in the agreement.

The Department ordered the tramline rails on 29/6/15.

The tramlines were expected to be delivered between 3/8/15 to 17/8/15.

However the tramlines were received by the Department on 1/10/15 after a delay of 45 days.
The contract agreement did not include any penalties for delays in the delivery of tramlines and hence the Department did not take any actions against the Supplier for not adhering to the agreed timelines.
40GTB Award Letter Dated 23/4/15 Ministry of Infrastructure and Transport Section 40: Page 46 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  Materials purchased by the Department need to be used within a reasonable time to ensure that value for money is obtained on a timely basis.

The beacon piles were to be used for major beaconing works in the main and secondary ports, reef passages and sea routes that are vital for domestic and international shipping.
As of the date of audit on 13/5/16, none of the tramline rails purchased were used.

The tramline rails were stored in the Department’s Mechanical workshop at Walu Bay, Suva.

The findings indicate disregard by the Department on the directives given by the GTB.

As a result, the agreed timelines for delivery were not met.

In addition, the Department did not plan the procurement of the tramlines as a result the tramlines were lying idle resulting value for money not being realised from public funds.
Recommendations The Department should ensure that:  penalties for delay in supply are included in the contract and charge delay damages for any delay in supply of goods and services; and  projects and procurements are properly planned so that materials purchased are used within a reasonable timeframe.

Department’s Comments The delay was in the process of payments as the contractor needed the Ministry to make an advance payment to confirm on the order.
Later it was then approved and agreed after several correspondences via email, as per table below, that the Ministry will only make full payment upon delivery of goods.

This was approved and formalized after a month upon signing of the contract between the Ministry and the contractor RC Manubhai Company Limited.

Another added factor was the delay in shipment of the materials into the country.
40.13.5 Advance Payment for Fuel and Lubricants The payment to the Supplier will be made by the client within 30 days after receipt of goods in compliance with the prices which is directed by the Fiji Commerce Commission during the contract period.41 In circumstances where it is necessary to make an advance payment for goods received through shipment from overseas, and for contractual agreements if stated as such, approval must be sought from the Chief Accountant.42 The audit noted that the Department made advance payments totalling $367,913 to Supplier C for the supply of fuel and lubricants without obtaining approval from the Chief Accountant.
Refer to the Table 40.32 below for details.
41 Contract Agreement between the Government of Fiji and Supplier C, Appendix C, Payment Schedule 42 Finance Instructions 2010, Section 14 (8) Ministry of Infrastructure and Transport Section 40: Page 47 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.32: Details of Advance Payment for Fuel and Lubricants EFT Number 4248 4210 EFT Date Voucher Description 23/12/15 Payment for fuel and oil for all vessels as per PO 40401-000931 9/12/15 Payment of Gas Oil 500 PPM for Sigavou as per PO 40401-000903 Total Payment (Sample Only) Amount ($) 206,242.26 161,671.21 367,913.47 In addition, the Department overpaid $9,654 to Supplier C by paying VAT at 15% instead of 9% and using the old fuel and lubricants price and not the new rate in 2016.
The invoice was issued in 2015 and 2016 and fuel and lubricants was fully supplied by 11/2/16.

Refer to Table 40.33 for details.
Table 40.33: Overpayment Details Invoice Date 10/12/15 21/12/15 29/12/15 30/12/15 08/01/16 14/01/16 29/01/16 29/01/16 11/02/16 04/01/16 23/11/15 24/11/15 22/12/15 22/12/15 24/12/15 29/12/15 Total Invoice Total Payment Overpayment Invoice Number 4019247192 4019248184 4019248744 4019248939 4019250674 4019249782 4019251271 4019251232 4019252219 4019250913 4019245698 4019246393 4019248354 4019248382 4019248530 4019248745 Amount ($) 29,235.30 6,078.56 43,852.95 46,045.60 11,418.51 13,244.92 7,919.07 27,864.18 20,176.42 51,926.01 57,593.54 14,617.65 44,822.40 29,881.50 58,866.75 2,241.12 465,784.48 475,438.52 9,654.04 The Director confirmed that the Department wanted to utilize the funds available in the fuel and oil allocation for the year 2015.
The findings indicate laxity of the Accounting Officers when making payments for purchase of goods and services.

Recommendations The Department should ensure that:     advance payments are made only with the approvals of the Chief Accountant; the department comply with the contract clauses; responsible officers should monitor and reconcile the invoices to avoid overpayment; and investigate the overpayment and take appropriate action.
Ministry of Infrastructure and Transport Section 40: Page 48 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Department’s Comments The bulk purchase of fuel was made in December to cater for the vessels till end of the year as this is one of the busiest periods whereby vessels are in high demand.

Fuel is also stored for emergency use during the cyclone season which is from November to April.
Fuel had been supplied to GSS on piecemeal basis because the fuel tank at GSS could only accommodate 55,000 litres and fuel cannot be supplied directly from the fuel truck to the vessels.

Total Fiji Ltd’s fuel truck had the capacity to deliver only 33,000 litres of fuel per delivery thus the reason for piecemeal supply.

The audit recommendations are noted and the Ministry will ensure that officers will reconcile the invoices against the purchase orders to avoid the risk of any overpayments.
40.13.6 Significant Loss in Drum Deposit In the event that fuel is purchased in packed/drums, a drum deposit of $50 VEP is charged and refunded upon the return of drums in good conditions.

Additionally, if the lubricants drums, 200, 205, 208 litres is refunded to Supplier C in good condition, a credit note of $20 VEP will be issued to the Government of Fiji.

43 The Department paid drum deposit of $22,885 during 2015 to Supplier C for the fuel and lubricants it purchased.
The Department was eligible for drum deposit refund of $19,090 for 2015 if the drums were returned in good condition.

However, the audit noted that no drum deposit was refunded to the Department as drums provided by the Department for refund were rejected by Supplier C since they were not in a good condition.

Refer to the Table 40.34 for details of drum deposits paid.
Table 40.34: Drum Deposit for the Year 2015 Fuel/Lubricants Number of Drums Rate (VIP)/Drum ($) Total Drum Deposit Paid ($) Refund Rate (VIP)/Drum ($) Unleaded Premix Rubia S30 Rubia S40 Azolla 46 Azolla 2568 Super out board oil Total Deposit Refundable (VIP) ($) 4,830.00 11,730.00 1,518.00 92.00 253.00 644.00 23.00 19,090.00 The above finding indicates laxity by the Department in ensuring that drums were returned in good condition.
As a result, public funds totalling $19,090 were lost due to Department’s negligence and improper handling of drums.
Recommendations The Department should ensure that:  the empty drums are handled with care and kept in good condition; and 43 Contract Agreement between the Government of Fiji and Supplier C Ministry of Infrastructure and Transport Section 40: Page 49 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  Officers responsible for improper handling of drums are surcharged the amount of refund.
Department’s Comments Since the drums are flammable they are stored on the ford deck exposed to various conditions therefore these cannot be stored in any other compartment on the vessel.

When vessels returns from trips, the empty drums are assessed on shore by Total Fiji Ltd. whereby most drums get rejected due to corrosion caused by exposure to marine conditions.
40.13.7 Anomalies in Maintenance of Tally Cards Inventory purchasing, storage and recording should be efficiently managed to ensure that there is a sufficient level of inventories when needed, while minimising the cost of holding inventory and the risk of stock becoming obsolete or damaged.

44 The Department keeps four different types of stores which comprise of Office Supplies, Fuel and Lubricants, Repair and Maintenance materials and Docking and Maintenance materials.
The Department did not maintain tally cards for Office Supplies and Repair and Maintenance materials during 2015.

The Department started maintaining the tally cards for these stores from 2016.

However, it was noted that the tally cards for Office Supplies, Fuel and Lubricants, Repair and Maintenance materials stores were not updated by the storeman as of the date of audit on 31/3/16.

The finding shows laxity in proper record keeping indicating a high risk of theft and misappropriation of stores.
Recommendations The Department should ensure that:  tally cards are updated regularly to record movement of stores; and  appropriate disciplinary action is taken against those responsible for not performing their duties diligently.

Department’s Comments The audit recommendations are noted.

The Department will ensure that a Storeman is appointed to fill the vacant Storeman post to ensure regular update for movement of stores.
40.13.8 Anomalies in Payment The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.
As well as 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.45 44 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Part 8 45 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Part 2 Ministry of Infrastructure and Transport Section 40: Page 50 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The clerical officer 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 PAO, SAO, AO, AAO for certification.46 The PAO, SAO, AO, AAO must not certify a payment as correct unless they are satisfied that: i. ii.
iii.

iv.

v. vi.
It is in accordance with a PO, contract, invoice, statement or other authorization; 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; The delivery docket/invoice must be verified by the receiving officers.47 The audit noted several instances of local purchase orders issued by the Department after invoices were received.
Purchase orders were issued by the Department just to regularise the procurement process.

In addition, several payments made by the Department were not supported with delivery dockets.

Refer to Appendix 40.5 for details.

The findings indicate that proper procurement procedures were not followed lack of supervision by Senior Officers and disregard to accounting procedures.

Purchase of goods and services without issuing purchase orders may result in fraudulent purchases.
In the absence of delivery dockets it would be difficult to substantiate whether the items ordered were received by the Department.
Recommendations The Department should ensure that:     local purchase orders are issued for purchases of all goods and services; delivery dockets are obtained for all items purchased; supervisors carry out their duties vigilantly; and take appropriate disciplinary action against responsible officers for not issuing purchase orders and obtaining delivery dockets when acquiring goods and services.

Department’s Comments The audit recommendations are noted.
Some suppliers cannot estimate the cost of the repairs and services beforehand therefore they carry out the services first then they issue the invoices based on the cost of the services rendered and once the department receives the invoice then the purchase order is generated to regularize the procurement process.

For Government Shipping Services, the delivery dockets are obtained for all items and maintained by the Storeman and only submitted to accounts upon request.
The department will ensure that delivery dockets are obtained and submitted together with invoices to accounts.
46 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 2.8.3 47 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 2.8.4 Ministry of Infrastructure and Transport Section 40: Page 51 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ FIJI METEOROLOGICAL SERVICES 40.14 Non Payroll 40.14.1 Anomalies in Construction of Archive Facility The Department was allocated $950,000 in the 2015 budget for the construction of the Archive facility in Nadi.
The Government Tender Board (GTB) in its Meeting No.

17/2015 held on 28/9/15 approved to award the contract for the construction of the new archive facility to a Contractor for a sum of $866,898.90 (VIP) including retention sum of $86,689.89 and excluding contingency sum of $86,689.89.

Thus, the total contract sum inclusive of contingency and retention sum was $953,588.79 (VIP).

Audit review of the construction of the archive facility revealed the following anomalies.
 GTB’s endorsement is to be sought prior to the utilization of any portion of the contingency sum.48 The Department paid a total of $858,229.35 to the Contractor which included contingency sum of $78,020.34 as at 31 December 2015.

However, no variations to the initial scope of work were noted as at 31 December 2015.

As a result, the Department overpaid the contractor by $78,020.34 as at 31 December 2015.

Refer to Table 40.35 for details.
Table 40.35: Overpayment Details for Construction of the Archive Facility Details Total Contract Sum (VIP) Less: 10% Retention (VIP) Total Payment to be made to the Contractor (VIP) Less: Total Payment made to the Contractor: Cheque Number: 21768 Cheque Number: 21807 Cheque Number: 21821 (Advance Payment) Total Payment Made to the Contractor Total amount overpayment Amount ($) 866,898.90 86,689.89 780,209.01 268,152.86 51,963.87 538,112.62 858,229.35 78,020.34 In addition, no approval was sought from the GTB for the utilization of the contingency sum.
 Upon it becoming reasonably apparent that the progress of the works is delayed, the Contractor shall forthwith, give written notice of the cause of the delay to the Architect/Supervising Officer.
The Architect/Supervising Officer shall so soon as he is able to estimate the length of the delay beyond the date or time aforesaid make in writing a fair and reasonable extension of time for completion of the works.49 The tender for the construction of archive facility was awarded to the Contractor for a period of 15 weeks.

The GTB on 29/9/15 also wrote to the Contractor that the Company has been awarded the tender for a period of 15 weeks.
However, the Contract Agreement dated 2/10/15 between the Contractor and the Ministry of Infrastructure and Transport stated the project commencement date of 2/10/15 and project 48GTB Letter dated 28/9/15 for the Construction of new Archive Building to FCL 49Contract Agreement Between Ministry of Infrastructure and Transport and FCL for the Construction of Archive Facility, Clause 23 Ministry of Infrastructure and Transport Section 40: Page 52 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ completion date of 25/3/16.
Hence the project completion period in the agreement was 25 weeks and not 15 weeks as approved by GTB.

The Department did not obtain approval from the GTB for increasing the project completion period from 15 weeks to 25 weeks.
 If the Contractor fails to complete the Works by the Date for Completion stated in the Appendix to these conditions or within any extended time fixed under Clause 23 of these conditions and the Architect/Supervising Officer certifies in writing that in his opinion the same ought reasonably so to have been completed then the Contractor shall pay or allow to the Employer a sum calculated at the rate stated in the said Appendix as Liquidated and Ascertained Damages for the period during which the Works shall so remain or have remained incomplete , and the Employer may deduct such sum from any monies due or become due to the Contractor under this contract.
50The rate of liquated damages is $1,000 per day as per the Appendix to the contract agreement.

Despite the contractor was allowed 25 weeks to complete the project it was not completed as at the date51 of audit, the Department did not take any action against the Contractor for the delay in completing the project.

The above finding indicates poor financial and project management by the Department.
Recommendations The Department should ensure that:  the overpayment made to the Contractor is recovered;  proper monitoring of the projects are done at all times to ensure its timely completion; and  the contract clause such as delay damages are applied for the failure on the part of the Contractor.

Department’s Comments The audit recommendations are acknowledged and the Ministry had formally requested the contractor via letter dated 29th July 2016 to refund the Contingency Sum of $78,020.34.
The General Manager for the Contractor in a meeting with DBGA had agreed to issue a refund cheque on 2nd August 2016.

The Ministry ensures that as per audit recommendations, proper monitoring of projects will be done at all times to ensure timely completion and contract clause such as delay damages will be applied for failure on the part of the contractor.
40.14.2 Upgrading of Outer Island Works Not Properly Planned Proper planning for projects is to be carried out as soon as the Parliament approves the National Budget so that the funds allocated are effectively used within the fiscal year and that the objective of funds allocated is met.
50Contract Agreement between Ministry of Infrastructure and Transport and FCL for the Construction of Archives Facility, Clause 21 51 06/05/15 Ministry of Infrastructure and Transport Section 40: Page 53 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ As per the Department’s Public Sector Investment Programme (PSIP) for capital upgrading works, the Department was allocated $150,000 to carry out seven upgrading project activities at outer island Meteorology Station during the year 2015.
Refer to Table 40.36 for details.
Table 40.36: Capital Upgrading Works to be Carried Out in 2015 at Upgrading Works Capital Meteorology Station Scoping Works Fencing / footpath works at Ono-i-lau Fencing / footpath works at Yasawa Fencing / footpath works at Viwa Fencing / footpath works at Vanuabalavu Fencing / footpath works at Matuku Fencing / footpath works at Vunisea Fencing / footpath works at Udu point Total Amount ($) 10,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 150,000 However, the audit noted that a sum of $147,431 or 98% of the total budget for Capital Upgrading Works was utilised for the construction of footpath and fencing works at Ono-I-Lau Meteorology Station only.
The tender process was waived and works were carried out by the Ministry of Infrastructure and Transport.

Since majority of funds made available in the 2015 Budget Estimates were used for Ono-I-Lau Meteorology Station, fencing and footpath works for other stations were not undertaken during the year.

The above finding indicates that the Department did not carry out proper cost estimates for capital works before submitting its budget request to the Ministry of Finance.
As such, the Department failed to achieve its stated objectives due to poor planning and budgeting.

Recommendation The Department should ensure that the project cost estimates are properly carried out and funds are properly managed to ensure projects are completed within the approved budget.

Department’s Comments The breakdown of the $150,000.00 was not submitted by DBGA’s office to FMS thus the breakdown cannot be used as a basis of project cost with the estimate from DBGA’s office.
The improvements at Ono-i-Lau itself exhausted the available funds, thus not allowing for other stations to be undertaken within the allocated funds.

Since then the funding has been utilized at each of the stations.

The $147,431.00 was the estimate for Ono-i-Lau alone which covered the total breakdown i.e.

only material cost was estimated excluding cartage, labour, geographical location, transportation, etc.
The Department ensures that projects cost estimates are now properly carried out and have a realistic cost that includes labour, transportation and other logistics to account for the remote locations of the stations.
Ministry of Infrastructure and Transport Section 40: Page 54 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.14.3 Building Works Carried Out Without Any Agreement A Memorandum of Agreement (MOA) must be in place between the Department and the Contractor in absence of any other form of agreements.

A MOA is a formal agreement between two or more parties.

It expresses a convergence of will between the two parties indicating an intended common line of action.
It helps to keep track on what the two parties have agreed on.

The audit noted that a few building works were carried out without any formal agreement between the Department and the Contractor.

Refer to Table 40.37 for building works carried out without any agreement in place.
Table 40.37: Building Works without Any Memorandum of Agreement Project Cleaning and Painting of Nausori Radar Tower Fencing of automatic weather station at Saqani Fencing of automatic weather station at Wainikoro Fencing of automatic weather station at Kabulau Project Cost ($) 36,981.80 9,340.50 7,840.50 9,840.50 Without the MOA, important aspects of the agreements between the Department and the contractor such as scope of work, the duration of the work, project cost, dispute resolution procedure and roles, responsibilities and obligations of both parties are not clearly specified and agreed.
Hence the Department’s interest is not protected and the Contractor may not fulfil its obligation as expected resulting in delays and disputes.

Recommendation The Department should ensure that at a MOA is signed with the Contractor for all works valued less than $50,000.

Department’s Comments The Department will ensure that MOA is signed with the Contractor(s) for all works valued less than $50,000 and more than $5,000.
40.14.4 Journal Vouchers Not Adequately Supported The Clerical Officer (Ledgers) must ensure that the Journal Vouchers are numbered in sequential order with all supporting documents attached to the voucher.52 The SAO, AO and AAO must ensure to check and verify that: i. all relevant details are included on the voucher; ii.

GL balances are adequately supported; and iii.


the correct allocations have been debited and credited.53 52 Department’s Agency Finance Manual 2015,Section 16.1.2 53Department’s Agency Finance Manual 2015,Section 16.1.3 Ministry of Infrastructure and Transport Section 40: Page 55 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The audit noted that the Department raised several journal vouchers to make accounting adjustments.
However, the journal vouchers lacked adequate supporting documents.

Refer to Table 40.38 for examples.
Table 40.38: Examples of Journal Vouchers without Adequate Supporting Documents JV Number 403384 403377 403403 403337 403339 403352 403353 403363 403368 403378 403387 403888 403389 403390 403427 403429 Amount ($) 15,182.23 35,163 8,619.13 13,778.00 3,3470.17 2,193.95 4,924.00 1,502.85 6,000.00 3,375.00 130,434.87 950.00 1,141.64 8,173.92 2,777.39 5,554.78 JV Approved by AO AO AO AAO AAO AAO AAO AAO AAO AAO AAO AAO AAO AAO JV not approved AAO The above finding indicates poor supervision in the Accounts Section.
In the absence of adequate supporting documents, the authenticity of the adjustments could not be determined during audit.

Recommendation The Department should ensure that journal vouchers have adequate supporting documents.

Department’s Comments The Department certifies that the transactions were correctly journalized however, there was an oversight to attach the supporting documents as evidence.

The oversight is attributed to lack of monitoring and also lack of appropriate staff.
There is a need for a ledger clerk at FMS and this will be further explored with management.

In the meantime, the work has been delegated to the newly transferred in AAO from HQ who is an experienced officer who will ensure the proper recording of process with supporting documents as required.
DEPARTMENT OF WATER AND SEWERAGE 40.15 Non Payroll 40.15.1 Refurbishment of Office (Water and Sewerage Department) The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
As well, as 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.54 54 Ministry of Infrastructure and Transport Finance Manual 2015, Part 2 Expenditure Ministry of Infrastructure and Transport Section 40: Page 56 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Water and Sewerage Department was relocated from Richards Road, Domain to Gaunavou House at Ratu Mara Road, Samabula in December 2014.
The Department paid a total $43,086.45 on 30/12/14 for the refurbishment of the office and network cabling at Gaunavou House.

Refer to Table 40.39 for details.


Table 40.39: Details of Payments for the Refurbishment of the Office and Network Cabling At Gaunavou House Date 30/12/14 30/12/14 Total Cheque Number 740401 740404 Payee TFL DECE Purpose Amount ($) 13,086.45 Network Cabling at Gaunavou House 30,000.00 Office Refurbishment at Gaunavou House 43,086.45 The refurbishment and network cabling works at the Gaunavou House commenced on 23/2/15 and included installation of workstations, electrical and telephone cabling.
In October 2015, the Water and Sewerage Department vacated the Office at Gaunavou House and moved to Nasilivata House.

The Department once again paid a total $44,005 to the Divisional Engineer Central/Eastern (DEC/E) for the refurbishment and electrical works at Nasilivata House.

Therefore expenses totalling $43,086.45 incurred to refurbish the Office space at Gaunavou House was a waste of public funds as the Department occupied the Office for only 10 months before moving to Nasilivata House.
The finding indicates that the decision to relocate the Department of Water and Sewerage from Richards Road, Domain to a new Office was not properly considered resulting in the wastage of public funds.

Recommendations  The Department should properly plan the relocation of office to avoid wastage of public funds in future; and  Ministry of Economy should investigate the waste of public fund and consider surcharge action against those responsible.
Department’s Comments The DWS was first relocated from Richards Road in Domain to Gaunavou House upon the mandatory directive from PSC.

Later on the Department was relocated to Nasilivata House as a cost cutting measure whereby in doing so the government had saved monthly rentals and the department had saved on expenditure on hired security services and utility bills.
Furthermore it should be noted that upon refurbishment works at Level 3, Nasilivata House, more unutilised office space was created for which rental was being paid.

In view of the above, the Department was relocated to Nasilivata House; hence the savings outweighed the cost involved in the relocation.

40.15.2 Construction of Portable Lab The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
As well, as having cost-effective internal controls within the purchasing and payments system plays an important part in ensuring that waste of funds, over-expenditures and Ministry of Infrastructure and Transport Section 40: Page 57 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ corruption do not occur.55 Divisional Engineer Central Eastern (DECE) shall complete the project within 7 weeks from the date of signing the agreement.56 The Water and Sewerage Department, in 2014, engaged DECE for the conversion of a 40 feet container to a portable Water Laboratory with the approval of the Ministry of Finance.
The initial cost quoted by DECE in 2014 was $70,000.

The Department on 10/4/15 received a revised estimate of $88,720 from DECE to construct the portable lab.

The audit noted that following anomalies:  DECE initially constructed the base for the portable water laboratory behind DECE office at Walu Bay at a cost of $2,717.

However, the location of the lab was later changed to another place within the DECE’S compound.
Hence $2,717 used for constructing the lab base was wasted due to relocating the lab site.

 The construction of the laboratory was supposed to be completed in seven weeks on 5/10/15.

However the project was completed after a delay of 85 days on 29/12/15.

 Some of the equipment purchased for the laboratory costing $19,829.95 were not installed and were still packed in cartons stored at the DECEs.
Hence the lab was not fully used and the Department did not obtain value for money from public monies spent.

The findings indicate that the construction of the portable lab was not properly planned and proper procurement procedures were not followed resulting in waste of public funds.
Recommendation The Department should:    call for tenders to select the most economical and efficient contractor for any project to be completed on time and within the approved contract sum; ensure that lab is used to obtain value for money; and take appropriate disciplinary action against responsible officers for additional costs incurred.
Department’s Comments The initial location identified (which had been unoccupied upon vacation by DNR) for construction of portable lab was ideal since it was in isolation and enough space around it.

Later on whilst base was being casted it was established that due to movement of heavy vehicles, vibrations were experienced which would have distorted the test results.

It was then decided to relocate and construct the lab on a more stable and firm foundation.
This is in line with the Ministry of Finance Circular on the Engagement of Government Agencies for Work (FIN 21/2/6).The delay in completion of the project was due to time taken to identify a new suitable site for relocation.

The field equipment from the purchase have been used by staff, however the bench equipment required a laboratory setup and these are now in use (after the completion of the laboratory at DECE, Walu Bay).
Note, all equipment are in use except for spare stock such as glass wares and chemicals which are kept in the original cartons for safe storage till the lab shelves are constructed by Joinery shop in the coming weeks.
55 Ministry of Infrastructure and Transport Finance Manual 2015, Part 2 Expenditure 56 Agreement between Department of Water and Sewerage and DECE, Terms and Conditions, Section 4.0 Ministry of Infrastructure and Transport Section 40: Page 58 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.15.3 Items not received for Payments made in Advance It is the responsibility of the Procuring or Contracting Agency to ensure that goods, services or works are delivered or completed according to plan and set timelines.57 The Department of Water and Sewerage made an advance payment of $19,829.95 on 29/12/15 to a supplier for the purchase of laboratory items.
The suppliers estimated delivery date was by mid to late February 2016.

It was noted that the laboratory items were not supplied as at the date of audit58.

Furthermore, the Department paid $9,900 to a supplier on 29/12/15 for purchase of 9 x 1000 litres portable septic tanks.

However as at the date of audit59 only 4 portable septic tanks were received by the Department.

It was noted that the Department made advance payment to the supplier without approval of Ministry for Finance.
The findings indicate that the Department did not follow proper procedures for advance payment.

Recommendations The Department should:    follow up with the suppliers for not supplying the items ordered; take disciplinary action against Officers responsible for advance payment without following proper procedures; consider surcharge action against officers responsible for advance payment for items not delivered.
Department’s Comments The department has received all the items that were ordered except for the two items which needs to clear as it is listed under dangerous goods and the supplier is awaiting Belgium Customs to approve the freight.

Listed below are the two chemicals that we have not received as yet.
The supplier is regularly updating the Department on the status of the chemicals; • • Hydrogen Sulphide Kit N.N DiphenylDiamine 40.15.4 Installation of Ecological Purification System (EPS) in Rural Areas To provide safe water to the rural communities and healthy environment, the Ministry through the Department of Water and Sewerage (DWS) under its monitoring and regulatory roles in the Rural Water and Sanitation Policy of 2012 proposed the implementation of this policy provisions in line with the provisions the 2013 Constitution that all rural water schemes supply safe and clean water to the people of Fiji.
The construction of EPS water treatment plant appropriate for rural vulnerable villages was for the reduction of water borne diseases, meet National Drinking Water Quality Standards and to meet the national policies set up by Government.
57 Advance Payment Policy, Section 7.1(vii) 58 8/3/16 598/3/16 Ministry of Infrastructure and Transport Section 40: Page 59 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ A budget of $2,000,000 was provided under the Capital Construction allocation for the Installation of EPS which was later revised to $1,953,233.07.

The audit of the EPS projects revealed the following anomalies.
40.15.4.1 Actual Costs of Projects exceeding estimated costs The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.

As well, as 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.60 The Department implemented 28 EPS projects in 10 Provinces.
The audit noted that actual cost for all the EPS projects exceeded the estimated cost prepared by the Divisional Engineers.

Although the total estimated cost for 28 projects was $981,030, the actual cost of implementation was $1,228,031.27.

The Department incurred over expenditure of $247,001.27 compared to the total estimated cost.

Refer to Table 40.40 for details of cost overrun.
Table 40.40: Details of actual Costs in Excess of Estimated Cost Divisions Province Divisional Engineer Works Central/Eastern Eastern Naitasiri Tailevu Serua Namosi Lomaiviti Divisional Engineer Works Northern Macuata Bua Cakaudrove Divisional Engineer Works, Western Ba Ra Nadroga Navosa Total Name Village of Cost as per Estimation Actual Cost of Completed Projects ($) ($) Naqali Navolau Nadakuni Nakorosule Nasautoka Savu Sote Namaqumaqua Namosi Koro Nakavu Toki Lovoni Nabavatu Nasawana Batinivurewai Banikea Vivili Nagigi Bagasau Bukuya Koroboya Nadelei Natawa Nabalabala Nalidi Naiserelagi Komave Nalebaleba Actuals in Excess of Estimated Costs ($) 7,636.00 7,636.00 7,636.00 5,297.00 7,636.00 7,636.00 5,297.00 7,636.00 7,636.00 5,297.00 22,492.00 22,492.00 3,606.26 3,606.27 3,606.27 3,606.27 3,606.27 3,606.27 3,370.00 16,736.14 4,806.14 4,151.14 9,526.14 29,768.00 18,210.00 5,661.10 9,419.00 9,389.00 247,001.27 60Ministry of Infrastructure and Transport Finance Manual 2015, Part 2 Expenditure Ministry of Infrastructure and Transport Section 40: Page 60 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The finding indicates poor financial management by the department resulting in cost overruns.
Recommendation The Department should investigate the cost overruns and take appropriate action to complete the projects within the estimated cost.

Department’s Comments In order to make the EPS projects operate more efficiently and provide better quality and safe drinking water for rural populations, design of the systems had to be reviewed by JICA counterparts taking into consideration the quality of water source, environment and the community need.
The JICA counterpart also joined the Department whilst the EPS projects were underway and thus the original designs had to be amended based on his expertise.

In view of these, the designs were amended for successful operations of the EPS projects, hence additional costs were incurred.

It is to be further noted that the actual costs for implementation were based on cost estimates for initial designs submitted by the respective Divisional Engineers.
40.15.4.2 Additional Cost Incurred on Changes to the Design of the EPS Project The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.
As well, as 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.61 The audit noted that for the Northern Division changes were made to the design of the project by the EPS expert (JICA).

The change in project design led to additional expenses incurred by the Department totalling $48,581.88.

Refer to Table 40.41 for details.


Table 40.41: Details of Additional Expenses Incurred Name of Village Nabavatu Village Banikea Village Nasawana Village Batinivurewai Nagigi Village Bagasau Village Vivili Village VAT Total Additional Cost ($) 6,315.84 6,315.84 6,315.84 6,315.84 6,315.84 6,315.84 6,315.84 4,371.00 48,581.88 The funds were paid through SLG84 under the Northern Division.
The additional expenses were incurred for purchase of additional materials, installation works and more time was required to complete the projects.

The finding shows lack of consultations during the planning stage with other stakeholders resulting in additional costs incurred for the projects.
61Ministry of Infrastructure and Transport Finance Manual 2015, Part 2 Expenditure Ministry of Infrastructure and Transport Section 40: Page 61 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendation The Department should ensure that interested stakeholders are consulted during project planning phase to avoid additional costs.
Department’s Comments Management has noted the recommendations made and will ensure stakeholders are consulted during project planning phase to avoid additional costs.
Management also advises that since EPS is a relatively new technology that has been trialled for the first time for rural communities in Fiji as compared to anywhere else in the world, review of designs are necessary to ensure systems operate effectively and efficiently and best designs and practices are able to be replicated in other countries elsewhere.
DEPARTMENT OF ENERGY 40.16 Rural Electrification Unit 40.16.1 Anomalies in Community Contribution Every year Government allocates an amount in its annual national budget for the rural electrification programme.

Thus for the major electricity provider projects in which the total costs are equal to or less than the maximum provision of $6,000/customer, the Government contributes 95% and the customers pay 5%.
The Naiyala to Nayavu grid extension project was completed by a major electricity provider in February 2015 at a total cost of $1,381,713.The Department’s contribution was 95% or $1,312,627.35 while the community contribution was 5% or $69,085.65 and an additional $7,493.60 was for deposit required by the electricity provider.

However, the audit noted that the community only contributed $66,865.86 or 88% of the total required contribution.
The Department paid the community contribution of $69,085.65 which was to be recovered later.

The project was completed in February 2015.

However, as of the date62 of audit, the community still owe a sum of $9,713 to the Department $9,713 for its contribution.

Refer to Table 40.42 for details.


Table 40.42: Details of Contribution owed by the Community Project Name Total Cost on Completion ($) Department Contribution ($) Community Contribution Due ($) Contribution paid by the Community ($) Amount Owed by the Community ($) Naiyala to Nayavu Grid Extension 1,381,713 1,312,627.35 76,579.25 66,865.86 9,713.39 The finding indicates that government’s interest was not fully protected by the Department.
This could result in write off of the arrears if efforts are not made to collect the remaining community contribution.
62 23/02/16 Ministry of Infrastructure and Transport Section 40: Page 62 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department should ensure that:    community contributions are received in full before projects are implemented; concerted efforts are made to recover the outstanding contributions from the community to avoid write offs; and investigate and recover the outstanding community contribution from the Officers responsible for allowing this project to commence without collecting the full community contribution.
Department’s Comments This was a Prime Minister’s initiative project and we were instructed verbally to commence all project processes and receive the contribution simultaneously as we were to provide power to the community before Christmas of 2014.

We managed to supply Nayavu Village by the Christmas time and the other communities from Wailotua thereafter.

The Total Required Community Contribution is $76,579.25, which is the contribution for 232 consumer houses.
We have managed to recover all these contribution in 2015.

There were additional houses which we had assisted during the implementation of these projects; to date the total amount collected from the project is $81,584.22.

The community contribution has been fully paid and there is no basis to recover from the project officers.
40.16.2 Additional Expenses Incurred Due to Delay in Formulating Contract Every year the Government allocates funds to the Department of Energy in its annual budget for the rural electrification programme.

Under this programme the DOE contributes 95% while the community contributes 5% as a cost-sharing scheme.

The major electricity provider provided its first quotation for the grid extension to Vatubalavu Village and nearby settlements on 17/12/13 of $399,651.
Out of this, a sum of $379,668.45 was the Government’s contribution while the balance of $26,766.55 was through community contribution.

The quotation was valid for a year.

Refer to the Table 40.43 for DOE offer for the contribution amount.
Table 40.43: DOE Offer for Contribution Description Number of Customers Major electricity provider Extension- Scheme Number SG11/13 Estimate of House Wiring works Total Capital Cost Government’s Contribution – 95% Community’s Contribution – 5% Estimate for major electricity provider Consumer Deposit and Connection Fee Total Contribution Required by Village Communities Amount ($) 210 231,651.00 168,000.00 399,651.00 379,668.45 19,982.55 6,783.00 26,766.55 Ministry of Infrastructure and Transport Section 40: Page 63 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The total community contribution of $26,766 was paid to the major electricity provider within the timeframe by 17/12/14.
However, the DOE did not pay its contribution of $379,668.45 to the electricity provider due to delay by the Department in finalising the contract with the provider which led to the expiry of the quotation.

The major electricity provider submitted a revised quotation of $958,845.90 on 26/2/15.

Under the revised quote the 5% community contribution increased to $47,942.29 and the DOE 95% increase to $910,903.61.
As a result of delay in finalising the contract with the major electricity provider, the Department incurred additional cost of $559,194.90 compared to the initial quote of $399,651.

This included additional community contribution of $21,176.29 which was also paid by the Department.

The finding indicates laxity by the Department in timely finalisation of the contract which resulted in the Department incurring additional expenses.
Recommendations The Department should ensure that when community contributions are fully received:  contract is finalised and appropriate approvals are obtained without delay;  payments are made without delay to avoid extra costs; and  appropriate disciplinary action is taken against responsible officers for delays which resulted in additional cost for the government.

Department’s Comments The Vatubalavu FEA Grid Extension project was quoted in the 4th Quarter of 2013.
The community contribution was fully paid by the community on 17/12/2014 the same day the FEA quotation expired.

This was also the Christmas period where most staff from all agencies took their annual leave.

The FEA quotation was revised in February 2015 and the request for approval sent to the Government Tender Board.

The GTB sent their approval and then the draft contract is sent to the Solicitor General’s office for vetting.
The appropriate approvals were obtained in due course and the contract was finalized.

The extra cost to the project was incurred because the contribution was paid in full on the same day as the FEA quotation expired.

We do not have any time to process for payment approval but to get a revised quotation first.

In 2015 we had asked all our project communities to pay us in full six months before the expiry date of quotation to give us ample time to process for payment approvals.
40.16.3 Anomalies in Contractual Agreement Every year Government allocates an amount in its annual national budget for the rural electrification projects.

Hence even though the 95%:5% part of the policy is widely advertised and is popular, there are constraints and other considerations to reflect on.
The Department is tasked with the responsibility to ensure that: (i) (ii) the funds are put to optimum use, and the maximum number of customers are served and provided with electricity under the annual budget allocation for rural electrification.
Ministry of Infrastructure and Transport Section 40: Page 64 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The following anomalies were noted in the audit of contract documents of different projects:  Contract agreements should clearly state the Date of Commencement and the Date of Completion of the project.

Contract agreements signed between Department and the contractors for the Rural Electrification Projects did not state the project commencement dates.
Refer to Table 40.44 for examples.
Table 40.44 Examples of Project Commencement Dates not Stated in Contracts Contracts CTN 68/2013 – Contract for Kadavu and Koro Hydro Overhead Grid Construction CTN 51/2013 – Contract for Mauna Hydro Overhead Grid Line Construction CTN 51/2015 – Agreement for the Designing and Formulation of Construction Works for Nukuloa Micro Hydro Project Contracted Amount ($) 48,543.20 510,416.00 80,000.00  Contract agreements for procurement of equipment should state the delivery timelines.
The contract agreement signed between the Department and supplier for the supply and installation of 23KW Hydro Turbine for the Kadavu and Koro Hydro Project costing $337,593.35 did not state the delivery timeline.

In addition the contract for supply and installation of 23KW Hydro Turbine expired on 29/02/16 however as at audit date63the Turbine was not received by the Department.

The Department had already paid a sum of $236,315.34 to the supplier.
The findings indicate laxity on the part of the Department.

In the absence of an agreed timeline, the Department would not be able to hold the contractor liable for delays in the project, non-delivery and non-performance.

Recommendations The Department should ensure that:  contract agreements clearly state the project commencement and completion dates with delivery timelines; and  projects are properly planned and monitored to avoid delays.
Department’s Comments The audit recommendation is acknowledged.

Clause 1.0 H clearly defines the duration of the contract; “Duration of Contract” shall be when the Agreement commences on the __________ and expire on __________ unless varied by agreement in writing between the parties or unless terminated in accordance with this Agreement by the Ministry.

The auditor comment is noted.

The project has been successfully completed pending commissioning.
63 10/03/2016 Ministry of Infrastructure and Transport Section 40: Page 65 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.16.4 Approved Supplier Delay in Project Completion Due To Non Supply of Materials by the All Government contracts must be prepared by the organization and should be vetted by the Solicitor General.64 The contract must clearly outline all the necessary terms and conditions of the agreement.

The GTB in its meeting no.


13/2015 held on 05/08/15 approved the purchase of overhead transmission line and transformer materials for the Muana Hydro Project from the major electricity provider at a cost of $118,456.04 (VIP) on sole-supplier basis.

The Department paid a sum of $118,456.04(VIP) to the supplier in advance on 02/09/15.

The advance payment was approved by Ministry of Economy.
The audit noted that as at the date of audit on 19/02/16, the major electricity provider did not supply the overhead transmission line and transformer materials to the contractor.

The project was only 50% complete and the Contractor was awaiting the materials from the supplier in order to complete the project.
The audit further noted that the Department did not have a written contract agreement with the supplier for the purchase of overhead transmission line and transformer materials for the Muana Hydro Project.

The finding indicates laxity by the Department.

In the absence of a contract agreement, the Department may not be able to take any action against the supplier for delays in the delivery of the items.
Recommendation The Department should ensure that an agreement is entered into with the suppliers of materials in future.

Department’s Comments FEA is the sole supplier of this material, ordering these materials from other agents result in the supply of materials with different specifications.

Paying in advance confirms the supply of materials especially when it is a sole supplier.
The payment was done to FEA on 02/09/15; please note that FEA orders their materials overseas and by the date of audit (17 days after payment) the materials were not supplied which should be the case in this scenario.

The materials have been supplied and project completed on the Muana Transmission lines.
40.16.5 No Delay Damages Charged for Delay in Project Completion The GTB award the tender number CTN 68/2013 for construction of Electrical Overhead Grid Extension Works and Connection to 24hr Supply to Kadavu to PEL and Muana Hydro to a contractor for $53,543.20 and $510,416, respectively.

The construction of Electrical Overhead Grid Extension Works and Connection to 24hr Supply to Kadavu and Muana Hydro project was to be completed by 31/08/1465 and 31/07/14 66 respectively.
A penalty charge of $200 per day is to be incurred by the Contractor if any aspect of the work is not completed on time.
67 64 PSC Circular No 23/2001 65 Contract Agreement, Kadavu Koro Hydro Project, Kadavu, section 2.1 66 Contract Agreement, Muana Hydro Project, Tunuloa Cakaudrove, section 2.1 67 Contract Agreement, Kadavu Koro Hydro Project, Kadavu, section 8.1 Ministry of Infrastructure and Transport Section 40: Page 66 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The audit noted that as per the inspection report after the completion date, the works were still in progress.
Refer to Table 40.45 for details.
Table 40.45: Details of Delays in Project Completion Contract CTN 68/2013 – Contract for Kadavu, Hydro Koro Overhead Grid Construction CTN 51/2013 – Contract for Mauna Hydro Overhead Grid Line Construction Completion Date as per Contract Inspection Date 31/08/14 17/03/15 Delay in Completion 198 days 31/07/14 22/11/15 478 days Outstanding Works The completion of the construction of the the Power House and installation of aerial main from Grid line to households Joint testing of the systems to be conducted once DOE completes its turbine and penstock repairs.
The Department was not able to provide the actual completion date of the project and the completion certificate.

However, the DOE paid 90% of the project cost and the 10% retention sum to the contractor for Muana Grid Extension.

In addition, the DOE also paid 90% of the project cost to the contractor for Kadavu and Koro hydro Overhead grid project.

The Department did not claim damages for the delay by both contractors.

The findings show laxity by the Department in project management.
As a result, both projects were delayed.

Recommendations The Department should ensure that:  capital projects are properly planned and reviewed to avoid delays;  delay damages are claimed from the contractors for works not completed as per the contract; and  terms and conditions of the contract are complied with at all times.

Department’s Comments The audit recommendation is acknowledged.

The delay is mainly for the late supply of materials from FEA who is a sole supplier.
The delay is for the late supply of materials; the department is responsible for the supply of materials for the two project and not the contractors themselves.

40.19 Solar Home System Scheme 40.16.6 Items Not Taken on Charge The contract CTN 167/2014 for the supply of 3,200 solar home systems equipment valued at $10,803,113.88 was awarded to the following companies with the quantity for each company to supply.
Supply of 1,000 solar home systems equipment to CBSPS; Supply of 1,000 solar home systems equipment to OECL; and Supply of 1,200 solar home systems equipment to PGCL.

I. II.

III.

Ministry of Infrastructure and Transport Section 40: Page 67 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  The Storeman or the officer in charge of inventory shall maintain the inventory register to record the incoming and outgoing inventories.
The inventory register shall provide the following information: i. ii.

iii.

iv.

v. vi.

vii.
iv.

v. vi.

vii.

Date of acquisition and order number reference; Number of items received and cost price; Supplier details; Date of issue of inventory and nature of issue (for example, transfer or for processing); Issue reference (authority such as requisition order); Quantity issued; Serial number of item.68 It was noted that the 3,200 solar home system equipment costing $10,803,113.88 received by the Department on 22/10/15 were not taken on charge in the Department’s inventory ledger or the tally cards.
As at the date of audit on 19/02/16 all the items were yet to be installed as the contract for the installation of equipment was yet to be finalized.

 Storage of inventories shall be the responsibility of the Storeman or the Officer in Charge of Inventory must ensure that: i. ii.

iii.

iv.
iii.

iv.

v. Adequate storage space is available for incoming stock as and when required; Storage facilities are properly secured; Stocks are kept in an orderly manner allowing for safe access; Stocks are handled with care and well stored so as to reduce the risk of damage; Quantity of stock is closely monitored to avoid excess holdings or shortages.

69 The items received from the three companies were stored at the Department’s warehouse at Walu Bay.
Some of the items received from PGCL and CBSPS were stored at the FRA premises at Walu Bay.

Furthermore, the site visit by audit70 revealed that items delivered by OECL were still stored at the company’s warehouse in Nakasi which was not fenced, therefore not properly secured.

Some of the items were lying outside exposed to extreme weather conditions.

Refer to Figure 40.1 for illustration.
Figure 40.1: Solar House System Items Lying Outside 68 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 8.1.2 69 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Section 8.2.1 70 19/02/16 Ministry of Infrastructure and Transport Section 40: Page 68 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  The PAO, SAO, AO, AAO must not certify a payment as correct unless they are satisfied that: i. ii.
it is in accordance with a PO, contract, invoice, statement or other authorisation; there is documentation that the goods, services or works have been received71 However, variances were noted between the solar home systems equipment ordered and received by the Department.

Refer to Table 40.46 for details.
Table 40.46: Details of Items with Variances in Quantities Item Aluminium Post (sleeves & non-sleeves) MC3 Plug Three Direct Links Grease/ Petroleum Jelly 2.5mm TPS cables 1.5mm TPS cables 6.0mm 2 core cables 6" cable ties 12" cable ties pine poles 5/32 machine screw Delivery Book Quantity Company Confirmation Quantity Contract List Quantity Remarks 583 1000 1000 800 50,000mtr 1,0000mtr 50,000mtr 20,000 10,000 1,000 25,000 1000 1000 800 583 582 Over supply by 1 - The items delivered not stated in - the contract 2000 Oz Under supply by 1200 50,000mtr 10,000mtr Over supply by 40,000 1,0000mtr 2,000mtr 20,000 10,000 - - The items delivered not stated in the contract 2,000mtr Over supply by 48,000 - the contract - The items delivered not stated in - - 28,000 Under supply of 3,000 The above finding shows unavailability of adequate space for the storage of the solar home system equipment.
Even though the items stored at the company’s warehouse were at no extra cost to the Department, these were stored outside and were exposed to extreme weather conditions and which may further deteriorate the condition of the equipment.

There is a high risk of the inventory items being misplaced, damaged or stolen.
71 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Part 2 Ministry of Infrastructure and Transport Section 40: Page 69 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Recommendations The Department must ensure that:  all equipment purchased are updated in the inventory ledger and or tally cards to avoid losses;   there is proper and adequate storage space for inventory items; items purchased are received and securely stored at the Department’s own storage facilities; and  That all items ordered are received.
Department’s Comments The audit recommendation is acknowledged.

DoE has requested for the use of FRA and the supplying contractors yards for storage spaces due to limited space at DoE warehouse.

Even though the containers are not in DoE yard, the keys to the container lock are with DoE Storeman.

Nobody has access to this container except the Storeman.

All items ordered are received by our storeman; as for the 3200 SHS the equipment’s are verified in the containers and locked for safekeeping by storeman.
40.16.7 Contracts Significant Delays in Renewal of Solar Home System Maintenance The GTB awarded tender number CTN 48/2013 ‘Contract for Maintenance of 4,610 Solar Home Systems’ to CBSPS and PFL for sum of $268,359.40 and $185,646.63, respectively.

As per the GTB approval, the tender was for three years and was subject early renewal based on the performance of the contractors.

The performance review shall be submitted to the GTB at the end of the contract.
The audit noted significant delays in the approval for the renewal of contracts from the date of submission of the performance review to GTB after the contracts were vetted by the Solicitor General’s Office.

Refer to Table 40.47 for examples.
Table 40.47: Examples of Significant Delays in Renewal of Contracts Service Area Contract Expiry Date Date Performance Review Submitted to GTB Date GTB Approved for Renewal Date Contract sent for Vetting Date Contract Vetted Date Contract Renewed Delay in Submitting Performance Review 20/08/14 09/02/15 02/03/15 14/05/15 22/05/15 26/08/15 173 days Delay in Submission of Contract for Vetting after GTB Approval 73 days Delay in Signing on Contracts after Vetting 96 days 20/08/14 09/02/15 02/03/15 14/05/15 22/05/15 26/08/15 173 days 73 days 96 days 05/09/14 09/02/15 02/03/15 14/05/15 22/05/15 29/07/15 157 days 73 days 68 days 20/08/14 09/02/15 02/03/15 14/05/15 22/05/15 26/08/15 173 days 73 days 96 days 20/08/14 09/02/15 02/03/15 14/05/15 22/05/15 26/08/15 173 days 73 days Section 40: Page 70 96 days Ministry of Infrastructure and Transport Area 1 - CBSPS Area 2 - CBSPS Area 3 - PFL Area 4 - CBSPS Area 5 - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Service Area Contract Expiry Date Date Performance Review Submitted to GTB Date GTB Approved for Renewal Date Contract sent for Vetting Date Contract Vetted Date Contract Renewed Delay in Submitting Performance Review Delay in Submission of Contract for Vetting after GTB Approval Delay in Signing on Contracts after Vetting CBSPS Area 6 - PFL 05/09/14 09/02/15 02/03/15 14/05/15 22/05/15 29/07/15 157 days 73 days 68 days As per the GTB approval the Department was supposed to submit the performance review to GTB at the end of the contract period.
However, the Department submitted the performance review after lapse of more than five months from the date the contracts expired.

Furthermore, the Department took more than two months to submit the contracts for vetting and more than two months for signing the contracts after vetting by the Solicitor General’s Office.

Due to laxity on the part of the Department, the overall renewal of the contract took more than a year for service areas 1, 2, 3 and 5 while it took almost a year for Service Areas 2 and 6.
Hence, no maintenance was carried out on the solar photovoltaic systems in 2015 and the whole project was delayed.

Delays in renewal of maintenance contracts led to delays in service delivery to the customers hence deprived the Department of potential revenue.
Recommendations The Department should ensure that:  performance review of contractors are properly planned to avoid delays in service delivery; and  contracts are submitted on a timely basis for vetting by the Solicitor General’s Office after GTB approval is obtained.

Department’s Comments The audit recommendation is acknowledged.
The Department is improving on the working relations and timelines with the Office of the Solicitor General which is anticipated to improve the turnaround time for vetting of contracts.

40.16.8 Revenue Arrears for Solar Home System Scheme Participants of the Solar Home System program are required to pay a monthly fee of $14 for Type 1 photovoltaic systems and $18 for Type 2 photovoltaic systems.
The audit noted that the arrears of revenue for the Solar Home System Scheme fees were prepared up to 30/6/15 only.

The Department was still in the process of updating the arrears records.

The Department’s arrears of revenue for the Solar Home System Scheme as at 30/6/15 was $548,124.

Refer to Table 40.48 for details.
Ministry of Infrastructure and Transport Section 40: Page 71 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.48: Arrears of Revenue for Solar Home System as at 30/6/15 Area Arrears as at 30/06/15 Ba and Yasawa Lomaiviti Kadavu Rewa Lau Vanua Levu Rotuma Total 60,302.00 67,951.00 81,479.00 1,188.00 40,880.00 237,104.00 59,220.00 548,124.00 Arrears Recovered as at 31/01/16 13,516.00 10,552.00 6,558.00 1,188.00 4,428.00 87,880.75 31,325.05 155,447.80 Balance of Arrears 46,786.00 57,399.00 74,921.00 - 36,452.00 149,223.25 27,894.95 392,676.20 In addition, out of the total arrears of revenue $548,124 for Solar Home System Scheme as at 30/6/15 the Department managed to recover only $155,447.80 or 28% as at 30/1/16.
The balance of $392,676.20 or 72% of the total arrears of $548,124 was yet to be recovered by the Department.

The findings indicate ineffective debt recovery procedures adopted by the Department.

Debts may become irrecoverable if not collected on a timely basis.

Recommendations The Department should:  update its arrears records on a monthly basis to fairly represent arrears of revenue; and  ensure that concerted effort is made to recover the arrears to avoid write offs.
Department’s Comments The audit recommendation is acknowledged.

The Department is working on improving the processes of collecting the monthly bills.

Most of the forecasted arrears were based on 100% operational of the SHS projects although some of the systems were not fully operating due to faulty lights, batteries, panels, controllers or inverters hence these were the main reasons customers were not willing to pay their monthly bills.
The SHS projects are Government owned and customers were advised to pay their bills on a 6 monthly basis when systems were operational.

Most of the arrears accumulated were when systems were down and this did not warrant DoE to collect these bills.

Recommendation was made to write off these arrears.
Ministry of Infrastructure and Transport Section 40: Page 72 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.20 FEA Grid Extension projects 40.20.1 Missed out Schemes/Tee offs (Seaqaqa/Dreketi Grid Extension Projects) Prior to finalizing and signing contracts, government agencies shall ensure that mandatory requirements for due diligence are satisfied.
This is to ensure that governments interest are protected and that tenders awarded to Suppliers by the Government Tender Board are financially and legally sound72 Implementation of the project means that the major electricity provider will: 1) 2) 3) need to construct the extensions of its overhead power lines to the project sites commission the power lines; and connect the customers’ homes to its low voltage lines.
The Department and the major electricity provider agreed to connect 640 household to the major electricity providers grid under Seaqaqa/Dreketi grid extension project.

The Department was to pay 50% or $7,150,000 of the grid extension cost while the other 50% cost was to be borne by the major electricity provider.

The Department paid its 50% or $7,150,000 to the major electricity provider.
The audit noted that although the Department completed the electrical wiring for 634 households, only 549 household were connected to the power grid.

The remaining 91 households were not connected to the grid because they were located far from the major electricity providers grid.

Refer to Table 40.49 for details.
Table 40.49: Details of Missed out Schemes Village / Settlement Vesidrua village Vesidrua village (Vuditoka) Valoca settlement Naua settlement Naua settlement Basikalave settlement Balabala settlement - Vunicagi Vunicagi settlement – main road Dogiyaga settlement Namatakitu settlement Nasigasiga subdivision Naqaraniqoli settlement Malawai Settlement Malawai Settlement Malawai Settlement Malawai Central Muanidevo settlement Muanidevo settlement Number of Households Missed 2 4 2 1 1 9 11 5 22 5 4 2 1 5 6 3 1 5 Pending Scope of Works String 8 span LV conductor, Route length – 758metres Install 5Kva transformer, String 1 span HV, String 11 span LV, Route length – 956m Install 5Kva transformer, String 1 span HV, String 4 span LV, Route Length – 329m String 3 span LV, Route length – 250m String 1 span HV, Install 5Kva transformer, Route length – 250m String 9 span LV, Route length – 641m String 7 span LV, Route length – 631m String 3 span LV, Route length – 285m String 7 span LV, Route length – 563m String 1 span HV and 11 span LV, Install 5Kva transformer, Route Length – 902m String 4 span LV, Route Length – 300m String 1 span HV and 6 span LV, Install 5Kva transformer, Route Length – 700m String 1 span LV, Route Length – 100m String 2 span LV, Route Length – 158m String 2 span LV, Route Length – 165m String 2 span LV, Route Length – 180m String 1 span LV, Route Length – 100m String 2 span LV, Route Length – 150m 72Finance Circular 8/2013 Ministry of Infrastructure and Transport Section 40: Page 73 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Village / Settlement Muanidevo settlement Total number of households Number of Households Missed 2 91 Pending Scope of Works String 2 span LV, Route Length – 200m The finding indicates that the grid extension works carried out by the major electricity provider was not properly monitored by the Department.
As a result value for money, was not obtained by the Department as the intended services were not provided to the communities funded by the government.
Recommendations The Department should ensure that:  all grid extension work is carried out in consultation with the electricity supplier;  the grid extension drawings and cost estimates are agreed by both parties before the contract agreement is signed; and  actual construction works by electricity supplier are closely monitored to ensure that the grids are constructed according to the approved drawings.
Department’s Comments The usual procedures for application of rural electrification schemes were applied in the Seaqaqa/Dreketi project.

This is also one of the projects which the Department was instructed verbally to get it commissioned as soon as possible.

The project officer migrated to New Zealand halfway through the project without proper hand over of scope of work and responsibilities.
The electricity provider commences actual works including drawings after receiving the payment and nothing is agreed before that.

The project implementation was closely monitored however unfortunately the electricity supplier had exhausted all funding for this work with pending poles to be constructed.

Moving forward, the supplier has submitted quotation for additional poles which the Department will fund in year 2016.
40.20.2 Flaws in Grid Extension Payments Prior to finalizing and signing contracts, government agencies shall ensure that mandatory requirements for due diligence are satisfied.

This is to ensure that governments interest are protected and that tenders awarded to Suppliers by the Government Tender Board are financially and legally sound73 The Department in 2015 paid a total of $5,913,499.28 to the major electricity provider to carry out various grid extension projects.
Audit review of payments made during the year to the major electricity provider for grid extensions revealed the following anomalies.
73Finance Circular 8/2013 Ministry of Infrastructure and Transport Section 40: Page 74 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________  Contract prices for the various individual grid extension projects were determined on the strength of the quotations submitted by the major electricity provider together with the attached household listing.
However, the major electricity provider can always make amendments to project scope and price without consulting the Department.

For instance, the Department and the major electricity provider agreed to connect 640 household to the major electricity providers grid under Seaqaqa/Dreketi grid extension project.

However only 549 household were connected to the power grid by the major electricity provider.
The other 91 households were not connected to the grid at all despite it was part of the initial contract.

Similarly the Department paid $1,530,628.85 to the major electricity provider on 31/12/14 for 17 grid extension projects.

However the Department paid additional $514,272.05 to the major electricity provider in 2015 as variation costs for 15 out of the 17 projects submitted by the major electricity provider.
 The approved grid extension drawings were not provided by the major electricity provider to the Department before signing the contract.

In absence of the approved grid extension drawings, there is risk of amendments to the scope of the works and design without the knowledge of the Department.
 The major electricity provider was solely responsible for the inspection of construction works including necessary preliminary ground works.74Therefore the Department did not have any control over the grid extension project works despite significant financial contribution to fund the project.

The findings indicate that the Department does not have full control over electricity projects contracted to the major electricity provider.
As a result, there is overreliance on project cost and completion timelines on the major electricity provider.

Recommendations The Department should ensure that:  approved drawings and cost estimate details are jointly approved by both parties before contracts are signed;  mandatory requirements for due diligence are satisfied to ensure that the interests of government is protected at all times; and  inspection of construction work is carried out regularly by the Department.
Department’s Comments Drawings are done when the payment is made to FEA and this is after contract is signed.

No drawing is prepared without payment.

In this case the 1 year quotation validity period is critical as it will ensure all proper approvals are acquired before quotations expire.

A submission had been sent to FEA Board to increase the validity period of quotations to two years.

This will ensure the processing of payments without the need for revised quotations.
74Clause 4.0 of the contract Ministry of Infrastructure and Transport Section 40: Page 75 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Department is working closely with the Office of the Solicitor General in improving all requirements in the draft contract.

The vetted contracts for FEA Grid Extension are being improved by the SG’s Office to safeguard government’s interest.
FEA has its own team to inspect the transmission and distribution lines to comply with standards outlined in the Overhead Materials Construction Manual.

This was an isolated case whereby funds had been exhausted before completion of the project.

The department does not have a mandate under the Electricity Act to inspect these grid lines while they are in construction however DOE receives physical progress updates from FEA every month.
40.21 Renewable Energy Development Projects 40.21.1 Document Bidder Engaging Officers of the Ministry in Preparing the Tender An employee must disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with employment in the public service.75 The tender for the Designing and Formulation of Construction Works for Nukuloa Micro Hydro Electric Power Project (Tender no.

51/2015) closed on 29 April 2015.


Upon the closing of the tender, bids were received from two companies.

Audit review of the bid documents submitted by both companies revealed that one of the companies indicated in the bid document that it will engage three of the Ministry’s staff who works in the Technical Section, if awarded the tender.
The three officers will be assisting in the dam and powerhouse drawings, material schedule and work program and project supervision, electro mechanical, and other associated works.

The audit also noted that these officers did not inform the Ministry about their involvement with one of the bidding companies.

The findings indicate breach of the Public Service Code of Conduct and there is a high risk that officers are not working in the best interest of the government.
Recommendation The Department should investigate the matter and take appropriate action.

Department’s Comments The audit recommendation is acknowledged.

The Ministry will refer the issue to the Ministry’s Discipline Unit for investigation and recommendation based on the findings.
75Public Service Code of Conduct, section 7 Ministry of Infrastructure and Transport Section 40: Page 76 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.21.2 Losses Incurred on Installation of Wind Monitoring Systems (WMS) Prior to finalizing and signing contracts, government agencies shall ensure that mandatory requirements for due diligence are satisfied.
This is to ensure that governments interest are protected and that tenders awarded to Suppliers by the Government Tender Board are financially and legally sound76 The initial contract for the supply and installation of 15 x 34 metres WMS was signed by the Department of Energy with CEL on 1/12/2011 at a total cost of $282,625.

Payment was made to CEL in 2011.

Audit review of the Wind Monitoring Systems project noted the following anomalies.
 The contractor imported the 34m tower materials from RNRGS (USA) after contract for the project was signed by Department and contractor.

However, the Department later decided to install a 50m tower rather than a 34metres tower as approved by the Government Tender Board in its Meeting no 06/2012 on 20/03/12.

As a result, the Department incurred an additional $83,852 in 2015 to return 15 x 34m complete sets of Automated/Telemetry Wind Monitoring Systems.
 The GTB withdrew the award for the supply and installation of the 15 x 34m WMS from the contractor to replace it with the 50m systems.

A new contract for $832,947 was signed on 12/4/2013 by the Department and the company which was awarded the initial contract.

The project cost in the new contract was $550,322 or 195% higher than the original contract price.

However, the Department did not call for fresh tenders despite significant change in project cost and specification.
The above anomalies show poor project planning and implementation by the Department.

As a result, the Department had to incur additional costs and it took over 5 years (2011 – 2015) to complete the project.

Recommendations The Department should:   ensure that all project ground work is sorted prior to calling of tenders for capital projects; and ensure mandatory requirements for due diligence are satisfied to ensure that governments interest are protected.
Department’s Comments The audit recommendation is acknowledged.

The requirements for banks concerning the funding of renewable energy projects for project developers are constantly reviewed.

As such the requirements for World Bank and other donor agencies had been revised for such feasible studies.

Upon realisation of the World Bank requirements, the Ministry had made the submission for the 50m wind Telemetry Systems to be effective and viable for data collection and collaboration.
76Finance Circular 8/2013 Ministry of Infrastructure and Transport Section 40: Page 77 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The Ministry is now ensuring that all relevant information required by the Donor Agencies is collated before any such project submission is made.

Furthermore, the payment for the shipping cost of $83,852 was paid to Clay Engineering Ltd upon the GTB approval dated 4/1/2013.
40.22 Biofuel Implementation Programme 40.22.1 Failure of biofuel mills operations in outer islands The proper management of expenditure is fundamental to ensuring value for money in delivering services to the community.
As well, as 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.77 The government invested $7,910,316.22 from 2010 – 2015 for purchase of bio fuel equipment, construction of bio fuel mill shed in several outer islands and establishment of the biofuel laboratory at the University of the South Pacific.

Refer to table 40.50 for details.
Table 40.50: Details of Capital Investments in Biofuel Setup Year Project Biofuel Equipment 267,650.00 229,900.00 229,900.00 85,690.73 260,768.88 260,768.88 260,768.88 201,058.04 201,058.04 Koro 2010 Rotuma 2011 2011 Cicia 2013 Gau Rabi 2013 Lakeba 2013 2013 Vanuabalavu 2014 Moala 2014 Matuku Biofuel mills Variation for biofuel mills construction Establishment of biofuel laboratory (USP) Total Biofuel Mill Shed 52,453.26 208,292.00 208,292.00 296,152.00 305,595.00 307,484.00 325,232.70 584,782.68 685,611.82 Start-up Capital 23,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 - - Total Project Cost 343,103.26 468,192.00 468,192.00 411,842.73 596,363.88 598,252.88 616,001.58 785,840.72 886,669.86 5,174,458.91 100,366.50 2,635,490.81 7,910,316.22 Despite the huge capital investment made by government over the years in biofuel production in the outer islands, the audit noted that the 5 out of the 9 biofuel mills were not operational as at the date of audit on 11/02/16.
The total funds spent on these bio fuel mills as at 31/12/15 were $3,298,607.77 or 42% of the total investment over the past 5 years.

Refer to Table 40.51 for details.

Table 40.51: Details of Biofuel Mills not in Operation Biofuel Mill Location Vanuabalavu Lakeba Remarks Mill not in operation in 2015 due to land lease issues.

Mill not in operation from June 2015 due to Control Board failure.
Discussion with the officer responsible noted that the defective component (VLT Drive) is available overseas only.
Moreover, the manager is no longer managing the mill operations and is currently Cost ($) 616,001.58 598,252.88 77 Ministry of Infrastructure and Transport Agency Finance Manual 2015, Part 2 Ministry of Infrastructure and Transport Section 40: Page 78 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Biofuel Mill Location Gau Moala Matuku Total Remarks working for another company.
Non operation from November 2015 due to the absence of a manager to manage the mill operations.

No start-up capital to commence operation No start-up capital to commence operation Cost ($) 411,842.73 785,840.72 886,669.86 3,298,607.77 The audit also noted that the biofuel mills in Koro, Cicia, Rabi and Rotuma were in operation.

However, minimum sales were recorded due to lack of demand for biofuel in the islands.
The audit further noted that the submission of the monthly financial reports by the biofuel mill managers to the Department of Energy was very poor.

Most of the mill managers did not submit the reports at all and those that were submitted were received very late.

Refer to Appendix 40.6 for monthly financial reports received by the Biofuel Development Unit in 2015.
Recommendations The Department must ensure that:  the mill’s financial reports are submitted by mill managers on a timely basis; and  a review of the biofuel mill operations is conducted immediately to evaluate its viability and take appropriate action.

Department’s Comments The audit recommendation is acknowledged.
Mill Managers have been constantly reminded to submit reports on time regardless of issues faced on the islands, such as logistical cost to post offices, fax the reports and communication issues.

The Department will work on improving the submission of financial reports by further training, awareness and disciplinary actions where necessary in the future.
The Department with the funding assistance of Global Green Growth Institute (GGGI) funding and Ministry of Economy is currently working on the engagement of a consultant (August to December 2016) to review the whole biofuel programme and recommend actions to be taken.

40.22.2 Demolition and Reconstruction of the Moala and Matuku Biofuel Mills The GTB awarded the contract for the construction of two wooden biofuel sheds in Moala, Lau for $219,507.04 and in Matuku, Lau for $220,972.04 to FBCL on 18/09/12.
Prior to finalizing and signing contracts, government agencies shall ensure that mandatory requirements for due diligence are satisfied.

This is to ensure that governments interest are protected and that tenders awarded to Suppliers by the Government Tender Board are financially and legally sound.78 A contract was signed by the Department and the contractor on 25/10/12 and the practical completion certificates were submitted by the contractor on 11/3/13 for both projects.
78 Finance Circular 8/2013 Ministry of Infrastructure and Transport Section 40: Page 79 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ However, at the time of installation of biofuel equipment at the project site on 4/4/13, several structural defects were noted by the Biofuel Development unit.

The Department then engaged a structural engineer to inspect both projects.

The engineer recommended that both buildings to be demolished and reconstructed.
The audit noted that the Department paid $5,876.50 to the engineer for the project inspection and $752,502 to DECE to demolish and reconstruct the biofuel sheds.

Hence, the Department incurred $758,378.50 additional expenses for the bio fuel projects at Moala and Matuku, Lau.
Refer Table 40.52 for details Table 40.52: Breakdown of Costs Incurred for Moala/Matuku Mills Year Project 2014 Moala 2014 Matuku Cost of inspection Total Biofuel Equipment 201,058.04 201,058.04 Mill Shed Construction 219,507.04 220,972.04 Mill Shed Demolition and Reconstruction 376,251.00 376,251.00 402,116.08 440,479.08 752,502.00 Project Cost ($) 826,816.08 828,281.08 5,876.50 1,660,973.66 The audit also noted that although both the bio fuel project was completed on 18/06/15, as at the date of audit, none of the mills were in operation.
The above findings indicate that the construction works carried out by the contractor was not properly monitored and supervised by the Department.

Hence public funds totaling $752,502 was wasted in reconstructing the sheds.

Recommendations The Department should:  Ensure that all capital works are properly planned, approved and supervised in future; and  Seek assistance from relevant authorities when implementing such projects in future.
 Ministry of Finance should investigate the matter and take appropriate action against officers responsible for waste of public funds.

Department’s Comments The audit recommendation is acknowledged.

The Department ensures that biofuel projects were properly planned, approved and supervised which saw the successful completion of the reconstruction works on the two sites in 2015.
The Department had sought the assistance of the Divisional Engineer Works - Central/Eastern for the reconstruction works hence the successful completion of the works.

The Ministry had terminated two officers in 2013 regarding the biofuel project issue from Moala and Matuku and the same is currently being handled by the Office of the Solicitor General in recovering funds from the Contractor.
Ministry of Infrastructure and Transport Section 40: Page 80 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.22.3 Delay in Installation of Dual Fuel Kits and Power Converters The supplier must bear all costs involved in packing, storing and delivering the Equipment to delivery point within 14 weeks from the date of signing of the agreement.79 The Department purchased 40 sets of Vegetable Oil Dual Fuel Kit (DFKs) costing $232,000 as per the GTB approval dated 16/04/14.
The Vegetable Oil Dual Fuel Kit sets were received by the Department on 21/11/14, after delay of seven weeks.

In addition, as at the date of audit, only seven out of the 40 sets were installed by the Department at the various locations.

Refer to Table 40.53 for details.


Table 40.53: DFK Installation Progress Location Quantity Remarks Mechanical Workshop Gau Biofuel Mill Koro Biofuel Mill Cicia Biofuel Mill Rabi Biofuel Mill Vanuablavu Biofuel Mill Rotuma Biofuel Mill Lakeba Biofuel Mill 1 1 1 1 2 2 5 6 This is connected in a generator in the mechanical workshop used for testing.
Installed in the mill Installed in the mill Installed in the mill 1 Installed in the mill and one will be installed in the village generator This was stored in the Mill for installation but the DFK was damaged and destroyed during hurricane Winston with the whole Mill.

1 is installed in the mill and 4 are in the mill awaiting installation in the village generators 1 installed in the mill and 5 are currently being installed in the villages in Lakeba.
The remaining 21 Vegetable Oil Dual Fuel Kit sets were stored at the Department’s warehouse while 12 sets were taken to the Islands for storage.

However the Department was not able to confirm as to when the remainder of the 19 Vegetable Oil Dual Fuel Kit sets would be installed.

In addition, 40 power convertors were also purchased by the Department costing $30,000 via EFT no.

1132 of 23/12/15.

However, as at the date of audit on 11/02/16 the items were yet to be installed.
The above denotes the laxity of the officers responsible in ensuring that the above items are installed at the identified sites.

Recommendation The Department should ensure that the above items are installed at the identified sites without any further delay.

Department’s Comments The audit recommendation is acknowledged.

The Department is working towards 100% installation by July 2017.
79 Contract agreement, section 6.1 Ministry of Infrastructure and Transport Section 40: Page 81 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.23 Major/Minor Electrical House Wiring Works 40.23.1 Expression of Interest Inconsistencies in Basis for Award of House Wiring Works through For works or services that do not exceed $50,000 in cost or value, the procuring ministry or department will be responsible for evaluating and selecting a bidder that best qualifies or is compliant with all requirements.80 Audit review of quotations and the TEC meeting minutes for house wiring electrical works obtained through EOI’s from the GTB approved penal of contractors noted inconsistencies in the basis for awarding house wiring works.
These inconsistencies were mainly most expensive bidders were selected compared to other bidders, 2nd most expensive bidders were selected, bidders with outstanding works were not selected and the cheapest bidder selected.

Refer to Appendix 40.7 for details.


In addition, in most cases, invitations for obtaining quotations were sent only two to four days before the closing date of the quotations and in some instances, these quotations were evaluated by the TEC within two to four weeks after the closing date of the quotations.

The audit further noted that all the members of the TEC for the House Wiring Works were officers from within the Department.
The Department did not follow proper process of calling of Expression of Interest for capital woks.

As a result, the selection and appointment of electrical contractors for various house wiring projects was not carried out in an open and transparent manner.
Recommendations The Department must ensure that:    the basis for awarding house wiring works is consistent; reasonable time is given for companies to submit their quotation before the closing date; and independent members of the TEC committee are appointed.

Department’s Comments No comments provided.
40.23.2 Inspections on House Wiring Works not carried out Officers will also have to identify that the right quantum of work specified in the contract is satisfactorily done before vouching that a certain percentage of the job is complete, and that the appropriate payment as per the contract may be made.81 The audit noted instances where payments were made to house wiring electrical contractors for house wiring projects without inspection reports from Departments officials.
Refer to Table 40.54 for examples of payment made without inspection reports.
80EOI Guide, Section 5.2.15 81Rural Electrification Unit Standard Operational Procedures,Section 5b(D) Ministry of Infrastructure and Transport Section 40: Page 82 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.54: Examples of Projects with no Inspection Reports EOI Number Project Purchase Order Number Not provided Nayavu Village WainibukaHousewiring 15/05 15/07 1 of 15 Housewiring-Vunimoli, Bucalevu, Vakativa, Tabia,Nasaqa Housewiring at Nukubalavu/ Dreketi/ Nakama HousewiringKasavu Settlement –Rewa PO41999-001204 PO41999-001292 PO41999-001322 PO41999-000902 Amount Paid ($) 10,335.87 14,823.00 5,415.20 6,311.50 The finding indicates that inspections were not carried out by the Department before payments were made to the contractors for work completed.
Failure to inspect the projects may lead to payment for substandard work carried out by the contractors.

Recommendations The Department should:   carry out inspections for house wiring projects to ensure that it has been carried out as per the contract; ensure that all payment for the projects are made on the basis of recommendations as per inspection reports; and  inspection reports are produced for audit verification on request.

Department’s Comments The audit recommendation is acknowledged.
40.24 Bukuya Hydro Scheme 40.24.1 Anomalies in Awarding of Contract The Government Tender Board in its meeting held on 21/01/15 approved to award the Contract for house wiring for the Bukuya Hydro System in Ba at a cost of $58,744.53 to AEL.The contract agreement was signed on 14/04/15.

Audit review of the project revealed the following anomalies.
 All tenders advertised must be evaluated and submitted to the Government Tender Board (GTB) for a decision within three (3) months from the tender closing date.82Agency should issue contracts to successful bidders two weeks after the GTB approval.

Significant delays were noted for the GTB in evaluating and approving the tenders.

In addition, significant delays were also noted for the DOE in signing the contract from date the GTB approved the Contractor.

Refer to Table 40.55 for examples.


82 Finance Circular 21/2014 – section 3.1 Ministry of Infrastructure and Transport Section 40: Page 83 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Table 40.55: Details of Delayed Capital Projects Project Date Tender Awarded Contract Amount ($) Remarks Contract for house wiring for the Bukuya Hydro System in Ba 18/2/15 $58,744.53 The tender submission closed on 5/11/14.
The GTB selected and approved the contractor after 99 days on 12/2/15.

In the Department to signed the contract with the contractor on 14/4/15 which was 61 days after the GTB’s selection and approval of the contractor on 18/2/15.

04/08/15 80,000 The signing of the contract was delayed for five months despite the tender awarded to the HZDICL on 04/08/15.
Designing and formulation of construction works for Nukuloa Hydro Project Good International Project Neighbour Biogas N/A The contract was signed on 06 January 2016 between the Ministry and contractor due to the delay in the vetting of the contract document by the Solicitor General’s Office.

As of audit date (10/02/16), the design is yet to be completed Timeframe provided by the bidder to complete the work was 8 weeks.
33,600 As per clause 3.3 of the contract, the timeline of the Biogas Project shall commence on the 12 day of October 2015 and shall terminate on the later of 10 day of November 2015.

However, as at audit date (17/02/16) or three months after the contract termination date, the biogas project for the Good Neighbour International was not undertaken despite funds were provided to the Divisional Engineer Central Eastern.
 In view of the substantial amount of Government funds involved in the procurement process, Ministries and Departments must ensure that:83 i. a draft contract is submitted to the Office of the Solicitor General for vetting simultaneously as the Request for Tender (RFT) is made to the Fiji Procurement Office; ii.

the contract is signed with the supplier of goods, services or works before any procurement commences; and iii.
a copy of the duly signed contract is submitted to the Fiji Procurement Office within three (3) days after execution.

The penalty sum was not correctly stated in the signed contract between the Department and the contractor.

Although, the correct penalty sum was $200, the signed contract stated the penalty sum of $100.

In addition, 17 clauses in the Terms and Conditions were missing in the signed contract compared to a total of 32 clauses.
This was due to the Department printing the draft copy of the contract and 83Finance Circular No.

3/2013, Section 4.

Ministry of Infrastructure and Transport Section 40: Page 84 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ not the copy vetted by the Solicitor General’s Office.

Hence the officers responsible for finalising the contract were negligent.
 The contract agreement should clearly outline the Date of Commencement and the Date of Completion of the project.

These dates should be in line with the time frame provided by the contractor in its bid.

The Tender Evaluation Committee meeting minutes revealed that the contractor was awarded the tender as it offered the lowest cost and minimum timeframe of two weeks.

However, the contract agreement specified the Date of Commencement as 20/04/15 and Date of Completion as 31/12/15.
Hence, the project completion period was 33 weeks which was not in line with the contractors tender bid in which the Contractor provided the completion period of only two weeks.

In addition, the contractor signed the contract on 14/04/15 and the Department on 02/07/15 which was 79 days or 11 weeks after the commencement date stated in the contract agreement.

This compromised the fairness of the tender procurement process.
The above findings indicate laxity on the part of the Department in ensuring that proper project implementation procedures are followed.

Recommendations The Department should ensure that:  all tenders called are evaluated and awarded on a timely basis to avoid delays;  Officers responsible for signing contracts are diligent in performing their duties;   investigate and take appropriate disciplinary action against Officers for their negligence.
the contract agreement clearly outlines the project commencement and completion date which is in line with the contractor’s tender bid; and  the contract is duly signed by both the parties on the same date or in few days’ time.

Department’s Comments The audit recommendation is acknowledged .The Ministry will refer the issue to the Ministry’s Discipline Unit for investigation and recommendation based on the findings.
Ministry of Infrastructure and Transport Section 40: Page 85 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ 40.25 Project Administration Issues 40.25.1 Roll Over of Projects The GTB approval for any tender submission is only valid for the fiscal year in which it was given, as funding will also lapse at the end of that financial year.84 The audit noted that a total of $8,617,980.41 or 30% of the total Capital Expenditure budgetary allocations in 2015 was utilized to pay for projects rolled over from prior years.
Refer to Appendix 40.8 for examples.

This resulted in burden on the 2015 capital expenditure budgetary allocations.

In addition, the GTB approvals obtained from the prior years were used to make payments from the 2015 capital expenditure allocations.

In this regard, the Department failed to comply with the requirements of the Finance Circular 21/2014.
The findings indicate laxity and poor project planning on the part of the management of the Department in ensuing that projects are completed within the financial year.

Moreover, funds allocated in the 2015 Budget Estimates were not utilized for the intended purpose.

As a result, a number of capital projects planned for 2015 were either not implemented or not completed.
Recommendations The Department should ensure that:  all projects are properly planned for implementation within the financial year;  current year budgetary allocations are not committed for prior year projects; and  only valid or current years GTB approvals are used for payment purposes and funds allocated are utilized for the intended purpose.

Department’s Comments The audit recommendation is acknowledged.
All projects will be aligned with the Department’s Annual Work Programme and monitored accordingly and in line with budget provisions.

Payments will be made based on GTB approval and funds will be expended in line with the budget and AWP.

40.25.2 Poor Project Record Keeping The Department Head is responsible for the safekeeping and proper maintenance of all records and documents.85 The audit noted that capital project records were not properly maintained by the Department.
In most cases, project files were only kept on the workstations of the responsible officers and were not securely filed in cabinets.

In addition, records of capital projects that were in progress at the time of audit were not centrally maintained in the Department.
Instead each unit maintained its own progress reports which in most instances were not up to date as at the date of audit86 84Finance Circular 21/2014 85Ministry of Infrastructure and Transport Finance Manual 2015, Section 19.2 86 11/02/16 Ministry of Infrastructure and Transport Section 40: Page 86 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ The above denotes the laxity of officers to ensure that proper records of capital projects are maintained and progress reports are centrally maintained and updated on a regular basis.
Project records not properly and securely maintained can lead to critical project information being lost or misplaced.

Recommendations The Department should ensure that:  All project records are properly filed, indexed and stored securely; and  progress reports for each capital projects are centrally maintained and updated on a regular basis.

Department’s Comments The audit recommendation is acknowledged.

The Department now has new mobile compactors for filing of records.
40.25.3 Composition of Tender Evaluation Committee (TEC) The Tender Evaluation Committee should comprise of representatives as follows: i.

Directors and Divisional Heads (Chairperson); ii.

Ministry’s technical representative; iii.

Ministry of Industry and Trade; iv.

v. Fiji Procurement Office; and Secretary (Department/Division rep).

87 Audit review of minutes of TEC meeting minutes revealed that most of the TEC meetings were not chaired by the Directors and Divisional Heads.
Instead, the meetings were chaired by the Principal Technical Officer from Department of Energy.

The finding indicates laxity and non-commitment on the part of the Directors and the Divisional Heads to ensure compliance with Ministry’s Finance Manual.

Moreover, it indicates delegation of authority by the Directors and Divisional Heads without proper consideration and justification.

As a result, deliberations and decisions made by the TEC may lack proper authority and commitment.
Recommendations The Department should comply with the requirements of the Finance Manual at all times.

Department’s Comments The audit recommendation is acknowledged.
The Department ensures that Finance Manual requirements will be complied with at all times 87Ministry of Infrastructure and Transport Finance Manual 2015, Section 2.4.3 Ministry of Infrastructure and Transport Section 40: Page 87 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 40.1 Details of Unreconciled TMA Sales Revenue for the Ministry In 2015 Trading & Manufacturing Units Sales as per VAT Return ($) Sales as per General Ledger System ($) Difference ($) Division DECE Total DEW Total DEN Joinery Plumbershop Fuel & Oil Plant Hire Lubricant Bay Workshop Wages Joinery Plumbershop Fuel & Oil Plant Hire Lubricant Bay Workshop Wages Joinery Plumbershop Fuel & Oil Plant Hire Lubricant Bay Workshop Wages Blockshed Total Overall Division Total (992.45) (1,973.12) 151,358.04 2.54 0.19 (1,203,696.00) (1,055,300.80) 33,834.40 (431,927.40) (55,822.54) (51,787.47) 0.00 (360,174.00) (865,877.01) (3,909.20) (156.94) (13,927.67) 321,681.53 0.00 (210,425.00) (40,211.00) 53,051.72 (1,868,126.08) Ministry of Infrastructure and Transport Section 40: Page 88 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 40.2: Unaccounted Items Project Materials Quantity Group 5M and Mechanical Fencing Painting Enamel White Pearl Lustre Picnic Primer Enamel Beige Acrylic Undercoat White Clear Vanish Metal Rush Primer Acrylic White Paving Paint 4” Brush 3” Brush 2” Brush 9” Paint tray 7” Paint tray 9” Roller Frame 7” Roller Frame 9” Roller Sleeve 7” Roller Sleeve Cooking
 Utensils 50KG Cylinder 4 Ring Burner Cooking Pot Plastic Basin (Large) E/Urn 20 Ltr Power Tools Circular Saw (Hitachi) Circular Saw (Small) Mitre Saw E/ Drop Saw Tile Cutter Chain Saw E/ Impact Drill Extension Cord (30mm) H/ Tools Digging Spade Digging Fork L/H Shovel Crow Bar Galv Bucket Safety Helmet Gum Boot Safety Glass (Dark) Safety Glass (Clear) Hose Pipe 1/2 “ Ext Ladder A Truss Ladder Rain Suit with Logo Reflector Vest with Logo Wheel Barrow Back Support Belt Ministry of Infrastructure and Transport Section 40: Page 89 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Project Materials Quantity Buildings Yard Fencing Ecological Purification System - - Nalebaleba Komave Ecological Purification System - - Natawa Nadelei Power Tools Lead Wire Circular Saw Drop Saw Power Board E/Drill (Hitachi) Welding Machine Chain Saw Electric Grinder (Hitachi) H/ Tools L/H Shovel D/ Fork D/ Spade Wheel Barrow Crow Bar Industrial Rake Plastic Rake Mall Hammer Pick with Handle Safety Equipment Safety Helmet Rain Coat Reflective Vest Back Support Belt Rain Suit Leather Hand Gloves Rubber Hand Gloves Cooking Pot Ring Pressure Cemestic Cement 50KG Galv Nail 3” Wheel Barrow D/ Fork Spade Shovel Back Strap 50mm P/Pipe Valve Socket 50mm Paint Brush Tank Fitting Mattress 4” Single Boxing Timber Tool Box No 8 Wire Green House Netting Lead Wire Electric Drill Mattress Wheel Barrow Wheel Tyre Cooking Pot Cooking Spoon Gum Boots Rain Suits ½ ½ 1 8 1 1 1 1 6 8 Ministry of Infrastructure and Transport Section 40: Page 90 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Project Materials Quantity Ecological Purification System - - Koroboya Bukuya Reflector Vest First Aid Kit Wooden Tool Box Digging Spade
 Digging Fork L/ Handle Shovel Crow Bar Empty Sacks Materials 75mm Concrete Nail Barbed Wire No 8 Wire 2” PVC P/Pipe 6 x 1 Boxing Timber Pine Post Lockwood Padlock T Hinges Heavy Duty Generator Power Board 4 ftTubelight with wire Fork Spade Shovel Gum Boots Cooking Pot Cooking Spoon Crow Bar Rain Coat Reflector Vest Back Support Belt Electric Drill Ext Cord (White) 30 Mtrs Mattress 4” Single Materials 50 mm PVC P/Pipe Boxing Timber 6 x 1 Green Netting No 8 Wire 8 1 1 3 3 3 2 2KG 1 Coil 15 Mtr 16 Length 15 Mtrs 4 7 4 1 1 3 3 3 3 6 2 1 2 8 8 8 1 1 10 10 30 L/M ½ Roll ½ Coil Ministry of Infrastructure and Transport Section 40: Page 91 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ APPENDIX 40.3: Anomalies per Project Project Budget Amount Total As Per JRS ($) 118,634.00 to Fencing Mechanical Yard ($) Over/Under Expenditure Total As Per Ledger ($) Comments 42,202.30 118,634.00 -  Variance of $76,431.70 between the total JRS amount and the total expenditure  Variance of $76,431.70 between the total JRS and the total budget.
 Commitment ledger was not updated as of the  date of audit on 4/12/15.

The total expenditure incurred was $118,634 but the commitment ledger was updated till 13/7/15 for commitments up to $92,068.36 Fencing to Building Yard 5M Yard Group DEW (Mechanical Phase 1) 131,400.00 126,330.00 131,400.00 -  Commitment ledger was updated till 30/09/15 as of 4/12/15.
 Total expenses in the ledger was $131,400 but commitment ledger recorded commitments of $108,358.41 203,300.00 469,775.25 197,478.37 5,821.63  There are two JRS with the same number but different amounts.

JRS no.

052/15 of 14/04/15 was for $60,087.50 whereas JRS no.

052/15 of 14/04/15 was for $71,012.50 Group Varadoli 4A 240,438.00 250,262.50 260,161.80 Total JRS = 469,775.25  Variance between the total JRS amount and the total expenditure.

(19,723.80)   Commitment ledger not yet updated.


Only updated till 21/07/15 – 144,762.31 There are two JRS with the same number but different amounts JRS #: 051/15 JRS Date: 14/04/15 JRS Amount: $54,625.00 JRS #: 051/15 JRS Date: 14/04/15 JRS Amount: $71,012.50 Total JRS = 250,262.50  Variance between the total JRS amount and  the total expenditure Ledger not yet updated.
Only updated till 12/08/15 – 201,363.31  Over-expenditure Tabua Road - Natabua Water Supply & Sewer Line 95,200.00 90,440.00 30,569.00  Variance between the total JRS amount and the total budget Ministry of Infrastructure and Transport Section 40: Page 92 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Project Budget Amount Total As Per JRS ($) ($) 123,076.50 124,477.91 123,076.50 Total As Per Ledger ($) Over/Under Expenditure Comments  Variance between the total JRS amount and the total budget 68,750.00 65,312.50 30,767.00  Variance between the total JRS amount and the total budget.
Raman Nair Street Lautoka - Phase 1 Water Supply & Sewer Line Vomo Street (Sukanaivalu) Water - Supply & Sewer Line APPENDIX 40.4: Details of Procurement Made and Time Taken to Supply the Materials Ordered Date Cheque no.

Amount ($) LPO no.

LPO date Invoice no.

Invoice Date 15/04/15 651632 2,245.43 97991-025118 20/2/15 3499419 9/3/15 No.
Of Days Taken To The Supply Materials Ordered 17 days 3492685 27/2/15 3509832 23/3/15 97991-025132 20/2/15 3492427 26/2/15 3492427 26/2/15 97991-025310 26/3/15 3515608 1/4/15 17/04/15 651651 4,339.03 97991-025124 20/2/15 3507848 19/3/15 17/04/15 651653 15,048.65 97991-025164 27/2/15 3499788 9/3/15 17/04/15 651654 751.95 97991-025164 27/2/15 3512459 27/3/15 3495671 3/3/15 3492653 27/2/15 3492653 27/2/15 3511162 25/3/15 3509704 23/3/15 3509709 23/3/15 3510632 24/3/15 3511145 25/3/15 3509715 23/3/15 3515857 1/4/2015 3504719 16/3/15 05/05/15 651726 392.40 97991-025338 31/3/15 3519771 3499830 9/3/15 9/4/15 05/05/15 651733 4,323.05 97991-025354 7/4/15 3523143 14/4/15 97991-025362 15/4/15 3525709 17/4/15 7 days 31 days 6 days 6 days 6 days 27 days 11 days 7 days 7 days 10 days 32 days 30 days 28 days 28 days 29 days 30 days 28 days 37 days 21 days 14 days 9 days 2 days 7 days Ministry of Infrastructure and Transport Section 40: Page 93 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Date Cheque no.
Amount ($) LPO no.

LPO date Invoice no.
Invoice Date 3523160 14/4/15 3520733 10/4/15 05/05/15 651736 10,475.97 97991-025339 31/3/15 3524174 15/4/15 3524190 15/4/15 3521249 10/4/15 3523180 14/4/15 3520779 10/4/15 3520726 10/4/15 3520707 10/4/15 06/05/15 651742 7,914.85 97991-025115 16/2/15 3510620 24/3/15 3512456 27/3/15 3511142 25/3/15 3488626 20/2/15 3488779 21/2/15 3519927 9/4/15 3491797 26/2/15 3490990 25/2/15 12/05/15 651761 464.19 97991-025387 15/4/15 3528453 21/4/15 97991-025394 15/4/15 3528451 21/4/15 97991-025405 22/4/15 3537392 4/5/2015 97991-025416 23/4/15 3537380 4/5/2015 04/06/15 651869 587.85 97991-025381 15/4/15 3528456 21/4/15 97991-025445 28/4/15 3538473 97991-025451 28/4/15 3538477 6/5/15 6/5/15 97991-025539 22/5/15 3552074 25/5/15 16/06/15 651919 8,556.96 97991-025199 05/3/15 3499447 3499455 3516284 97991-025264 17/3/15 3515569 97991-025419 23/4/15 3537437 9/3/15 9/3/15 1/4/15 1/4/15 4/5/15 97991-025428 23/4/15 3533046 28/4/15 3553594 27/5/15 19/06/15 651951 5,403.88 97991-025526 20/5/15 3554686 29/5/15 97991-025588 8/6/15 3562822 10/6/15 97991-025591 8/6/15 3566058 15/6/15 97991-025597 8/6/15 3562799 10/6/15 97991-025609 9/6/15 3562970 10/6/15 97991-025618 11/6/15 3566775 16/6/15 24/06/15 651975 85.48 97991-025513 18/5/15 3568621 18/6/15 97991-025603 9/6/15 3566079 15/6/15 97991-025616 09/06/15 3566083 15/6/15 No.
Of Days Taken To The Supply Materials Ordered 7 days 3 days 15 days 15 days 10 days 14 days 10 days 10 days 10 days 36 days 39 days 37 days 4 days 5 days 52 days 10 days 9 days 6 days 6 days 12 days 11 days 6 days 8 days 8 days 3 days 4 days 4 days 27 days 15 days 11 days 34 days 5 days 9 days 2 days 7 days 2 days 1 day 5 days 31 days 6 days 6 days Ministry of Infrastructure and Transport Section 40: Page 94 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Date Cheque no.
Amount ($) LPO no.

LPO date Invoice no.

Invoice Date 07/07/15 652016 988.98 97991-025592 08/06/15 3570607 22/6/15 No.
Of Days Taken To The Supply Materials Ordered 14 days 97991-025628 12/6/15 3567650 17/6/15 97991-025649 18/6/15 3573807 25/6/15 97991-025653 18/6/15 3576726 1/7/15 97991-025668 19/6/15 3574066 25/6/15 30/07/15 652125 3,752.20 97991-025683 25/6/15 3576448 30/6/15 97991-025743 7/7/15 3588447 17/7/15 97991-025793 22/7/15 3593667 24/7/15 05/08/15 652148 8,764.95 97991-025677 29/6/15 3578333 3577639 3580790 3/7/15 2/7/15 7/7/15 10/08/15 652164 1,664.56 97991-025528 20/5/15 3552484 26/5/15 97991-025776 16/7/15 3589871 20/7/15 3554672 29/5/15 97991-025593 8/6/15 3589866 20/7/15 97991-025662 18/6/15 3573822 25/6/15 97991-025600 8/6/15 3568615 18/6/15 31/08/15 652225 4,068.85 97991-025816 30/7/15 3607408 13/8/15 97991-025818 29/7/15 3598488 31/7/15 97991-025861 12/8/15 3610014 18/8/15 08/09/15 652260 202.80 97991-025858 12/8/15 3619001 31/8/15 97991-025869 24/8/15 3614774 25/8/15 5 days 7 days 13 days 6 days 5 days 10 days 2 days 4 days 3 days 8 days 4 days 6 days 9 days 42 days 7 days 10 days 14 days 2 days 6 days 19 days 1 day Ministry of Infrastructure and Transport Section 40: Page 95 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ APPENDIX 40.5: Examples of Anomalies in Payment Cheque/ EFT Number 4248 Cheque/ EFT Date Amount ($) Voucher Description Anomalies 23/12/15 241,556.12 Being payment for fuel and oil for all vessels as per PO 40401-000931 4210 9/12/15 233,882.40 Being Payment of Gas Oil 500 PPM for Sigavou as per PO 40401-000903 4145 6/11/15 177,931.84 Being payment for fuel as per PO 1445 18/9/15 40401-000699 97,098.39 Being payment of fuel as per PO 40401-000694 and Gasoil for Vunilagi / Rogovoka as per PO 40401-000570 1800 27/11/15 73.088.26 Being payment of Gas Oil for Vunilagi / Rogovoka as per PO 40401-000570 1592 12/10/15 47,968.80 Being payment of fuel for Rogovoka as per PO 40401-000772 1830 1/12/15 16,272.82 Being payment of fuel for Rogovoka as 455 1/4/15 669 6/5/15 1013 2/7/15 1282 25/8/15 286 26/2/15 per PO 40401-000772 6,498.01 Being payment
 for instalment of Davit Winches for LCT Vunilagi&Sigavou as per PO 40401-000141 and Inv # 6170 6,880.90 Being payment for supply of re-build compressor for Sigavou Reefer Container and replace shaft seal for Iloilovatu as per PO 40401-000235 and Invoice no.
11598 and 11599.

6,244.50 Being payment of Life Jackets Lights for all vessels as per PO 40401- 000442.

11,805.01 Being payment of supply and install covers for LCT Sigavou as per PO 40401-000568.

14,984.33 Being payment of supply of Assorted Marine Paints for various govt.

vessels as per PO 40401-000090 and Invoice no.


IN0000000170448 1425 11/9/15 5,620 Being payment of chemicals for all vessels as per PO 40401-000674 1388 9/9/15 5,145.02 Being payment of chemicals for all 1922 14/12/15 1038 6/5/15 1108 24/7/15 vessels as per PO 40401-000614 14,890 Being payment replacement of both main engines silencers for Vunilagi as per the attached PO 40401-000979 4,140 Being Payment of 2 Cylinder Head for MV Rogovoka as per PO No.
40401- 000403 11,485 Being payment supply and installation of upholstery materials for MV Rogovoka as per the attached PO 40401-000485 and Inv 0328 for Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.


to to to to to to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.

Delivery docket not attached payment voucher.

to to to Delivery docket not attached payment voucher.
to Ministry of Works and Transport Section 35: Page 96 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ Cheque/ EFT Date Amount ($) Voucher Description Anomalies Cheque/ EFT Number 1109 24/7/15 1709 5/11/15 1989 17/12/15 4122 20/10/15 3972 30/7/15 144 26/1/15 10,589.10 Being payment for supply of assorted Expandable items for Stores as per the attached PO 40401- 000519 and Inv # PD2867 10,473.11 Being payment of Marine Paints for Iloilovatu as per PO NO.
40401-000829 8,175.82 Being payment of Paints for MLC VUNILAGI & MV CAGIVOU As per PO No.

40401-001 000 43,016.36 Being supply of Reverse Osmosis Water Maker for IVT & VLG as per the attached PO 40401-000809 43,016.30 Being 50% advance payment for the supply of Reverse Osmosis Water Maker for IVT & VLG as per the attached PO 40401-000547 and Inv OWG 944 7,435.60 Being payment of service of 1 x 25 & 1*15 per 3ND Life-rafts for Sigavou and M Rogovoka as per PO 40401-000021 and Invoice no.
21501234 & 21501235.

Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to Delivery docket not attached payment voucher.

to  Delivery docket not attached to payment voucher.
 LPO raised after invoice LPO raised after invoice LPO raised after invoice Ministry of Works and Transport Section 35: Page 97 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ APPENDIX 40.6: Financial Reports Submitted to the Department of Energy In 2015 Biofuel Mill Period Cicia Biofuel Mill Total Koro Biofuel Mill Total Rabi Biofuel Mill 02/03/15-06/03/15 09/03/15-13/03/15 16/03/15-20/03/15 23/03/15-27/03/15 30/03/15-03/04/15 13/04/15-17/04/15 20/04/15-24/04/15 27/04/15-01/05/15 04/05/15-08/05/15 11/05/15-15/05/15 18/05/15-22/05/15 6/12/2015 6/19/2015 6/20/2015 7/3/2015 7/10/2015 7/17/2015 7/24/2015 7/31/2015 8/7/2015 8/14/2015 8/21/2015 25/08/15-04/09/15 23/10/15-27/11/15 7/27/2015 8/24/2015 9/7/2015 9/21/2015 10/5/2015 10/19/2015 20/10/15-02/11/15 03/11/15-16/11/15 17/11/15-30/11/15 01/12/15-14/12/15 15/12/15-24/12/15 25/02/15-03/03/15 04/03/15-10/03/15 11/03/15-17/03/15 18/03/15-24/03/15 25/03/15-31/03/15 06/04/15-10/04/15 13/04/15-17/04/15 20/04/15-24/04/15 27/04/15-01/05/15 11/05/15-15/05/15 25/05/15-29/05/15 Sales ($) 186.00 74.00 190.00 141.00 60.00 230.00 136.00 48.00 48.00 90.00 96.00 45.00 261.00 240.00 188.00 200.00 130.00 220.00 195.00 402.00 289.00 151.00 255.00 0 3,875.00 10.00 - - 3,516.50 606.00 118.00 536.00 6.50 48.00 510.00 200.00 5,551.00 858.75 317.20 964.50 438.80 1,397.60 5,521.00 278.80 4,536.20 177.50 3,472.40 5,532.20 Expenditure ($) 83.30 109.30 73.30 93.30 111.30 95.30 110.30 118.30 118.30 168.60 93.30 83.30 116.60 116.00 136.95 76.00 204.00 128.30 103.30 79.30 170.25 87.64 36.60 19.80 2,532.64 - - 70.00 313.50 - 148.40 56.30 - - - - 588.20 383.05 291.50 660.95 942.40 806.90 610.30 327.80 426.35 292.15 2,366.85 1,071.80 Ministry of Works and Transport Section 35: Page 98 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ Sales Biofuel Mill ($) Expenditure ($) Period 01/06/15-05/06/15 08/06/15-12/06/15 15/06/15-19/06/15 22/06/15-26/06/15 29/06/15-03/07/15 06/07/15-10/07/15
 13/07/15-17/07/15 20/07/15-24/07/15 27/07/15-31/07/15 03/08/15-07/08/15 10/08/15-14/08/15 17/08/15-21/08/15 24/08/15-28/08/15 31/08/15-06/09/15 07/09/15-11/09/15 14/09/15-18/09/15 19/09/15-25/09/15 28/09/15-02/10/15 05/10/15-09/10/15 23/02/15-27/02/15 02/03/15-06/03/15 16/03/15-20/03/15 23/03/15-27/03/15 31/03/15-02/04/15 07/04/15-10/04/15 13/04/15-17/04/15 20/04/15-24/04/15 28/04/15-01/05/15 04/05/15-08/05/15 11/05/15-15/05/15 18/05/15-22/05/15 20/03/15-26/03/15 13/04/15-21/05/15 5/31/2015 08/05/15-01/06/15 02/06/15-23/07/15 12.50 85.00 4,694.50 4,253.00 - 1,260.00 1,170.00 4,273.50 177.95 2,030.00 70.00 3,988.50 - 671.85 3,982.50 - 3,049.50 551.00 45.00 53,809.75 - 29.00 - - 9.00 - 14.00 58.00 37.60 2.00 - 55.60 205.20 241.50 411.00 - 10.00 779.50 1,442.00 645.35 500.55 1,477.95 1,200.35 1,114.55 217.20 1,051.60 1,922.80 - 583.00 167.00 1,516.80 85.00 24.00 1,960.10 4.00 1,173.60 686.15 86.95 22,597.00 6.60 95.75 94.10 219.35 - 124.10 151.40 151.20 147.50 121.20 121.30 121.30 1,353.80 1,050.90 120.00 1,418.90 630.60 578.80 3,799.20 Total Gau Biofuel Mill Total Lakeba Biofuel Mill Total Ministry of Works and Transport Section 35: Page 99 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ APPENDIX 40.7: Details of Quotes Submitted Through EOIS EOI no.
Description Bidders Name (Date Quotes Received) Bid Amount Basis for award Remarks 15/11 Ba &NadrogaHousewiring OECL-23/4/2015 15/10 15/06 Serua-Tokotoko/ Dranikula/ Culanuku 2-Wailoku, Naitasiri Sakoca, Drekewaila,Sarava,Serea Qtn 3/15 Sariyawa, Nadi Baleinakula NadiHousewiring Settlement 15/08 HousewiringTailevu 2- Waicoka/ Dravo/ Savu/ Naitalasese SES- 23/4/2015 PEL- 23/4/2015 OECL -23/4/2015 SES - 23/4/2015 PEL - 23/4/2015 OECL.-23/4/2015 AES - 23/4/2015 SES - 23/4/2015 PEL - 23/4/2015 LL-9/2/2015 AES -9/2/2015 SES - 9/2/2015 OECL-9/2/2015 SES 15/7/2015 OEL- 14/7/2015 LL -13/7/2015 RE -13/7/2015 SES -23/4/2015 PEL - 23/4/2015 AES-23/4/2015 OECL-23/4/2015 3,186.50 To be awarded to OECL since it has no outstanding works with DOE.
2,984.70 2,783.60 8,337.50 To be awarded to OECL since it has no outstanding works with DOE.

8,030.47 8,150.00 12,532.40 Chose OECL, 12,502.50 12,433.37 13,059.80 11,773.29 Awarded to LL because it has quoted for 13 houses, SES only quoted for 12 houses.

AES has outstanding works with DOE.

the cheapest, they still have outstanding work with the department therefore Omega was the best option.
though AES is 11,535.00 10,974.00 15,239.10 7,219.15 Awarded to LL since it was the cheapest 7,041.90 6,885.65 bid 22,082.96 TEC recommended SES since it was the cheapest, have and 22,727.10 outstanding works with DOE 23,612.50 23,736.80 don’t they OECLs’ bid was the most expensive compared to the other two bidders.

OECLs’ bid was the most expensive compared to the other two bidders.

OECLs’ bid was compared to the other three bidders.
the second most expensive Outstanding works is not a proper basis for not awarding as the company had expressed interest for the work, which indicates that they are able to complete the work as per specifications tendered at the given price.

Awarded because it was the cheapest bid Outstanding works is not a proper basis for not awarding as the company had expressed interest for the work, which indicates that they are able to complete the work as per specifications tendered at the given price.
1 of 15 HousewiringKasavuSettlem SES - 28/1/15 6,311.50 Though PEL is the cheapest, they still Outstanding works is not a proper basis for not Ministry of Works and Transport Section 35: Page 100 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ EOI no.

Description Bidders Name (Date Quotes Received) Bid Amount Basis for award Remarks ent –Rewa PEL - 28/1/15 AEL - 28/1/15 5,766.00 had outstanding works Therefore SES was chosen for DOE.
2 0f 15 HousewiringNaitasiri/ Tailevu/ Rewa/ Serua/ Ba SES (03/02/2015) LL (02/02/2015) LMWS (02/02/2015) 15,621.00 Awarded to SES because they have no 16,949.68 19,811.00 outstanding works awarding as the company had expressed interest for the work, which indicates that they are able to complete the work as per specifications tendered at the given price.
Outstanding works is not a proper basis for not awarding as the company had expressed interest for the work, which indicates that they are able to complete the work as per specifications tendered at the given price.

Ministry of Works and Transport Section 35: Page 101 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ APPENDIX 40.8: Examples of Payments Made Relating to Prior Years Projects Date Chq/EFT no.
Project 05/03/15 18/09/15 6 1143 Supply of Ethanol Fuel Being payment for 75% of Tender value on receipt and testing of Generator CTN 25/2014 18/12/15 1098 23/12/15 1132 01/06/15 28870 24/08/15 29216 17/09/15 604 23/10/15 793 20/11/15 924 05/12/15 29510 08/06/15 28856 05/08/15 29058 24/08/15 29217 03/11/15 29435 05/12/15 29539 15/07/15 28998 04/08/15 407 06/08/15 411 24/12/15 29618 05/12/15 29540 Being stage 2 payment Ethanol Tank Dispenser - CTN 110/14 for installation of Being payment for supply of 40x12VC-DC Power Converter Being payment for 30% Tender value - confirm placement of order - CTN 167/2014 Being payment for sighting of bill of lading for CTN167/14 Being payment for 20% of Tender value upon sighting Bill of Landing - CTN 167/2014 Being payment for 80% tender value for supply of replacement component CTN 190/14 Being payment for 40% Tender Value for supply of 1000 SHS Equipment CTN 167/2014 into DOE main Being payment of retention sum from DOE drawings - CTN167/14 Being payment for 30% tender value confirm placement of order - CTN 167/2014 trust account Being payment for 10% house wiring work for Project 4 - CTN 46/14 Being payment for sighting of bill of lading for CTN167/14 Being payment for 40% tender value for supply of 1000 SHS equipment - CTN167/14 into DOE main Being payment of retention sum from DOE drawings - CTN167/13 Being 70% payment Naitasiri - Project 9 (CTN 169/2014) for house wiring at trust account Being 70% payment for Bukuya house wiring - CTN 160/14 Being payment of 70% house wiring work at Nadi - CTN 169/14 Being payment for supply of materials for Muana Hydro Being payment for HV & LV Overhead Grid Construction work - CTN 51/13 GTB Approval Year 2014 2014 2014 2014 Amount paid in 2015 ($) 153,124.80
41,121.17 35,972.85 20 10,600.24 2013 153,124.80 Ministry of Works and Transport Section 35: Page 102 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – SEPTEMBER 2015 ____________________________ Date Project Chq/EFT no.
GTB Approval Year Amount paid in 2015 ($) 05/12/15 29512 23/12/15 29616 into DOE main Being payment of retention sum from DOE drawings - CTN51/13 Being payment for supply and installation of pipe joint for Muana Hydro trust account 25/11/15 907 Being payment for servicing of Transformers for Bukuya Hydro Project 91,874.88 2013 51,041.60 2013 2014 21,300.00 27,132.75 31/12/15 29665 Being payment for Bukuya overhead grid repair 2014 22,146.75 24/07/15 29024 07/08/15 29143 24/0915 638 02/11/15 818 06/12/15 28880 06/12/15 28880 18/06/15 28906 07/08/15 29144 26/08/15 29228 Total Being payment for installation of Delaitagololi wind monitoring station VAT payment for zero rated SHS UAE funded Project Being payment for 10% retention for supply & installation of 15 wind sites Being payment for 90% of Tender value on receipt of SHS replacement component - CTN 190/2014 Being payment for installation of Kaba Wind Monitoring Station Being payment for installation of Tuvavatu and Narara Wind Monitoring Station Being 90% payment for overhead grid extension work at Kadavu Hydro Project - CTN 68/13 Being payment of 70% house wiring work at Tuvu Village (CTN 101/13) Being payment for 40% house wiring for CTN 160/2013 2011 8,329.47 2014 714,742.51 2011 2014 2011 2011 2013 2013 2013 83,294.70 16,511.35 8,329.47 16,658.94 43,688.88 20,525.89 42,533.21 8,617,980.41 Ministry of Works and Transport Section 35: Page 103 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Section 49 Peacekeeping Missions Roles and Responsibilities The Fiji Military Forces and Fiji Police Force provides international peacekeeping operations for the United Nation (UN) sanctioned missions (UNDOF,UNAMI,MFO) in Syria, Iraq and Sinai.
Under the UN Security Council mandate for the deployment of UN security personnel in those war zones provide: disengaging the conflict parties; creating conditions for peaceful settlement of a conflict;  maintaining or restoring international peace and security;    monitoring ceasefire peace agreements; and  rendering humanitarian assistance to civilian population in the area of deployment.
Table of Contents PART A: FINANCIAL STATEMENT ...................................................................................................................................... 1 49.1 Audit Opinion ............................................................................................................................................................... 1 49.2 Statement of Receipts and Expenditure ...................................................................................................................... 1 49.3 Appropriation Statement ............................................................................................................................................. 2 PART A: FINANCIAL STATEMENT 49.1 Audit Opinion The audit of the 2015 special purpose financial statement of the Peacekeeping Mission resulted in the issue of an unqualified audit report.
49.2 Statement of Receipts and Expenditure The Peacekeeping Mission incurred a total expenditure of $68,611,388 in 2015.

Refer Table 49.1 for details.
Table 49.1: Statement of Receipts and Expenditure for 2015 Description EXPENDITURE Operating Expenditure Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Peacekeeping Missions 2015 ($) 2014 ($) 66,632,091 - 159,635 38,152 1,109,406 - 63,516,990 - 97,802 111,178 2,820,699 - Section 49: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – MARCH 2017 ____________________________ Description Special Expenditures Total Operating Expenditure Capital Expenditure Capital Construction Capital Purchase Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 2015 ($) 476,610 68,415,894 2014 ($) 1,457,601 68,004,270 - - - 195,494 68,611,388 - - - 1,954,083 69,958,353 49.3 Appropriation Statement The Peacekeeping Mission incurred expenditures totalling $68,611,388 in 2015 against a revised budget of $72,626,918 resulting in a savings of $4,015,530 or 5.5%.
Details of expenditures against the budget estimates are provided in Table 49.2.
Table 49.2: Appropriation Statement for 2015 SEG Item Budget Estimate ($) Changes ($) Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Special Expenditures Total Operating Expenditure Capital Expenditure Capital Construction Capital Purchase Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 66,536,779 - 122,758 117,250 3,205,631 1,850,200 71,832,618 - - - - 794,300 72,626,918 1,225,754 - 65,000 (10,000) (1,280,754) - - - - - - - - Revised Estimate ($) a 67,762,533 - 187,758 107,250 1,924,877 1,850,200 71,832,618 - - - - 794,300 72,626,918 Actual Expenditure ($) b 66,632,091 - 159,635 38,152 1,109,406 476,610 68,415,894 - - - - 195,494 68,611,388 Lapsed Appropriation ($) (a-b) 1,130,442 - 28,123 69,098 815,471 1,373,590 3,416,724 - - - - 598,806 4,015,530 Peacekeeping Missions Section 49: Page 2