Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697773240886.pdf (Fiji)
EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 4 Audit Report on Economic & Infrastructure Sector 2016 PARLIAMENT OF FIJI PARLIAMENTARY PAPER NO.102 OF 2017 EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Volume 4 Audit Report on Economic & Infrastructure Sector 2016 CONTENTS Volume 1: Audit Report on the Whole of Government Financial Statements and Annual Appropriation Statement 2016 Part 1: Part 2: Volume 2: 1.
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Whole of Government Financial Statements and Annual Appropriation Statement for the Republic of Fiji for the Year Ended 31 July 2016 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 Economy Ministry of i-Taukei Affairs Ministry of Defence, National Security and Immigration Ministry of Employment, Productivity and Industrial Relations Ministry of Foreign Affairs Office of the Auditor General Fijian Elections Office Judiciary Parliament Independent Commissions Office of the Director of Public Prosecutions Ministry of Justice Fiji Correction Services Ministry of Communication – Department of Information Department of Information Technology and Computing Services Ministry of Civil Service Ministry of Rural and Maritime Development and National Disaster Management Republic of Fiji Military Forces Fiji Police Force 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.
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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 – JUNE 2017___________________________ Section 30 Ministry of Agriculture Role and Responsibilities The Ministry is responsible for guiding Government’s agricultural policy, which is focused on helping Fijians provide for themselves and their families by strengthening the Fijian agricultural sector, with special attention paid to competitive exports.
The agricultural policy is also directed at responsibly managing competing demands for land and boosting Fiji’s food security.

The Ministry has gradually moved from a Government led approach to a demand driven approach, listening and responding to the needs of farmers and the opportunities in the market.
The “Green Growth Framework for Fiji” furthermore highlights the need to address food security through improved farm efficiency and the establishment of a coordinated mechanism to manage competing demands for land.
Table of Contents PART A: FINANCIAL STATEMENT ................................................................................................... 2 30.1 30.2 30.3 30.4 30.5 Audit Opinion ........................................................................................................................ 2 Statement of Receipts and Expenditure ............................................................................... 2 Appropriation Statement ....................................................................................................... 3 Trading and Manufacturing Account .................................................................................... 4 Trust Fund Accounts ............................................................................................................ 5 PART B: AUDIT FINDINGS ................................................................................................................ 6 Non- submission of Annual Accounts for audit – Agriculture Marketing Authority ............... 6 30.6 Overseas Purchase of Livestock .......................................................................................... 7 30.7 Anomalies in purchase of Rice Harvester machine.............................................................. 8 30.8 Additional costs incurred due to revised travel list ............................................................... 9 30.9 30.10 Anomalies in Local Purchase Orders ................................................................................. 10 30.11 No contract agreement signed with supplier ...................................................................... 11 30.12 Diversion of funds ............................................................................................................... 12 30.13 Unbudgeted Expenses ....................................................................................................... 12 30.14 Fixed Assets Register not updated
 .................................................................................... 13 30.15 Payments not made yet recorded in General Ledger......................................................... 14 30.16 Discrepancies in Recording of Rental Income on Government Quarters .......................... 15 30.17 Unauthorised Arrears of Revenue Write-off ....................................................................... 15 30.18 Excess cash transferred to CFA not recorded in the FMIS General Ledger ...................... 17 30.19 Delay in preparation of monthly Underline Account Reconciliations .................................. 17 30.20 Accountable Advance not cleared on time ......................................................................... 18 30.21 Bank Lodgement Clearance (BLC) Account ...................................................................... 20 30.22 Anomalies in Main Trust Fund Account .............................................................................. 20 30.23 Statement of Losses - Unauthorised Losses and Omissions ............................................. 22 30.24 Prior Year Issues ................................................................................................................ 23 Appendix 30.1: Anomalies in Local Purchase Orders ...................................................................... 25 Appendix 30.2: Diversion of Funds ................................................................................................... 26 Appendix 30.3: Unbudgeted Expenses ............................................................................................ 27 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.4: Payments not made yet recorded in General Ledger .............................................. 28 Appendix 30.5:
28 Appendix 30.5: Delay in preparation of monthly Underline Accounts Reconciliations ..................... 29 Appendix 30.6: Statement of Losses – Omissions ........................................................................... 30 PART A: FINANCIAL STATEMENT 30.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Agriculture resulted in the issue of a qualified audit report.
The qualifications were as follows: Trading and Manufacturing Account  The Ministry transferred $457,469 of excess cash from TMA operations to the Consolidated Fund Account with the Ministry of Economy.

The journal entry passed to effect the transfer had a nil effect on the general ledger.

As a result, this amount was still reflected in the Consolidated TMA Balance Sheet.
Consequently, the cash amount of $559,372 and TMA Surplus Capital Retained of $1,125,622 in the Consolidated TMA Balance Sheet as at 31 July 2016 are both overstated by $457,469.

Trust Fund Account  Appropriate supporting documents for adjustments amounting to $318,494 to the Cash account for the Trust Account were not provided to audit.

In addition, there was a variance of $354,402 between the detailed listing of beneficiaries of the Trust Account and the amount recorded in the general ledger.
As a result, I was unable to ascertain the accuracy and completeness of the closing balance of $684,162 reflected in the Trust Statement of Receipts and Payments.

30.2 Statement of Receipts and Expenditure The Ministry of Agriculture collected revenue totalling $273,783 and incurred total expenditure of $30.4 million for the seven months period ended 31 July 2016.

Details are shown in Table 30.1 below.
Table 30.1: Statement of Receipts and Expenditure Description Agricultural produce & Inspection Fees License Meat Inspection Veterinary and Animal Quarantine Sale of Sheep and Wool Rest house Rental for quarters Registration Commission 2016 ($) 203 30,662 14,336 8,518 4,660 2,651 35,344 2,154 14,221 2015 ($) 92 75,359 23,635 13,865 33,872 12,520 59,269 3,954 24,738 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Description Sale of farm produce Miscellaneous revenue Overpayment recoveries Water charges Rural electrification Miscellaneous Fees and Receipts 2016 ($) 21,935 117,693 20,767 199 344 96 2015 ($) 44,763 258,764 37,335 1,169 1,629 - TOTAL REVENUE 273,783 590,964 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 7,469,249 3,438,174 449,730 1,387,954 388,589 2,716,499 1,036,921 16,887,116 13,336,531 5,704,307 747,722 2,001,578 608,131 1,810,254 2,037,870 26,246,393 7,860,937 5,219 4,654,588 12,520,744 15,925,337 389,914 6,992,224 23,307,475 Value added tax 1,000,364 3,021,994 TOTAL EXPENDITURES 30,408,224 52,575,862 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a twelve-month period, thus the significant variances with the comparative balances.

Operating Grants and Transfers expenditure increased by $906,245 in 2016 as a result of increase in grant given to the Agriculture Marketing Authority to assist the agriculture sector in recovering from the effects of Cyclone Winston.
30.3 Appropriation Statement The Ministry incurred expenditures totalling $30.4 million against the revised budget of $76.18 million resulting in savings of $45.78 million.

The significant savings was due to the budget being for twelve months in 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditures against the revised budget are provided in Table 30.2 below.
Table 30.2: Appropriation Statement SEG Item 1 Established staff Budget Estimate ($) 14,162,452 Changes ($) - Revised Estimate ($) 14,162,452 Actual Expenditure ($) 7,469,249 Lapsed Appropriation ($) 6,693,203 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ SEG Item Government wage earner Travel and communications Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditure Capital construction Capital purchases Capital grants & transfers Total Capital Expenditure Value added tax TOTAL EXPENDITURE Budget Estimate ($) 6,112,962 797,300 2,427,081 704,800 3,564,931 4,711,500 32,481,026 28,295,400 1,426,450 10,740,300 40,462,150 3,245,700 76,188,876 ($) Changes Revised Estimate ($) 6,112,962 - 797,679 379 2,398,215 (28,866) 705,338 538 3,564,931 - 4,397,805 (313,695) 32,139,382 (341,644) 28,637,044 341,644 1,426,450 - - 10,740,300 341,644 40,803,794 3,245,700 - 76,188,876 - Actual Expenditure ($) 3,438,174 449,730 1,387,954 388,589 2,716,499 1,036,921 16,887,116 7,860,937 5,219 4,654,588 12,520,744 1,000,364 30,408,224 Lapsed Appropriation ($) 2,674,788 347,949 1,010,261 316,749 848,432 3,360,884 15,252,266 20,776,107 1,421,231 6,085,712 28,283,050 2,245,336 45,780,652 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 Gross (Loss)/profit 2016 ($) - 988,972 988,972 - 988,972 10,293 999,265 2015 ($) --- 1,035,006 1,035,006 --- 1,035,006 7,858 1,042,864 2016 ($) 1,263,688 2015 ($)
 1,239,504 709,078 999,265 1,708,343 1,465,662 242,681 1,014,577 1,042,864 2,057,441 709,078 1,348,363 - 773 1,021,007 (108,086) Sales increased by $24,184 or 2% for the seven months in 2016 compared to the twelve months in 2015 due to the significant decrease in expenditure by $199,658 or 60% for the Trading & Manufacturing Account.
____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 30.5: Profit & Loss Statement Details Income Gross Profit transferred from Trading Account Total Income Expenses Travelling & communication expenses Maintenance & operation Other expenses Total Expense Net Profit / (Loss) Table 30.6: Balance Sheet Details 2016 ($) 2015 ($) 1,021,007 1,021,007 (108,086) (108,086) 17,437 107,277 7,957 132,671 8,672 281,478 42,089 332,239 888,336 (440,325) 2016 ($) 2015 ($) Equity TMA Surplus Capital Retained Net Profit/Loss for the year TMA Surplus transferred to Consolidated Fund Write Off Total Equity 1,125,622 1,845,486 (440,325) 888,336 (23,727) 33,454 (255,813) - 2,047,412 1,125,621 Assets Cash Accounts receivable Finished goods Total Assets Liability Deposits & Retention Total Liabilities Net Assets 394,430 559,372 --- 265 1,465,662 709,078 2,025,299 1,103,508 (22,113) (22,113) (22,113) (22,113) 2,003,186 1,081,395 Cash increased by $164,942 or 42% for the seven months in 2016 compared to the twelve months in 2015 due to increase in sales for the Trading and Manufacturing Account.
30.5 Trust Fund Accounts Table 30.7: Land Water Resource Management and Land Resource Planning & Development Details Retention money Total Receipts Retention money 2016 ($) 154,676 154,676 2015 ($) (Restated) 963,831 963,831 439,095 872,901 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Details Total Payments Surplus/(Deficit) Opening balance at 1 January Closing balance 2016 ($) 439,095 2015 ($) (Restated) 872,901 (284,419) 968,581 684,162 90,930 877,651 968,581 PART B: AUDIT FINDINGS 30.6 Non- submission of Annual Accounts for Audit – Agriculture Marketing Authority The Auditor General must audit the annual accounts and other books of accounts of the Authority and prepare a report on such accounts.
The Board must prepare and submit to the Minister within 6 months after the start of each financial year its annual report (including the Auditor-General's report) for the preceding financial year.1 Annual Financial statements are the main source of accountability of management performance, and it is management’s responsibility to prepare them.

The Agriculture Marketing Authority facilitates the purchase, sale and export of agro produce.
The Ministry has been administering the operating and capital grants for the Agriculture Marketing Authority (AMA) and has given a total of $9,628,647 for the years 2010, 2011, 2014, 2015 and 2016.

The Authority did not submit its annual financial statements to the Auditor General for the years 2010 to 2015 for audit.
Enquiries made with the Senior Economic Planning Officer in the Ministry who oversees the administration of this grant revealed that, the accounting records from 2010 were held by the Fiji Independent Commission Against Corruption (FICAC) pending investigation.

In the absence of the annual financial statements the audit could not ascertain whether the grants issued to the Authority have been properly accounted for.
Recommendation The Ministry together with the Authority should make a concerted effort to obtain the accounting records from FICAC, in order for the annual financial statements to be prepared and submitted to the Auditor General for audit.

Ministry’s Comments The audit comment is noted and the annual financial statements are still outstanding.
The Ministry had followed up with the Agricultural Marketing Authority (AMA) last year to submit their unaudited Annual Financial Statement however; they informed that they could not submit any report due to the pending FICAC case.

The Permanent Secretary in his recent meeting with the Acting Chairman for AMA had discussed the urgent need to provide the outstanding financial statements including all the pending Authority’s Annual Reports mandated under the Administering Act.
The Ministry has also written to the Authority on the matter.

1 Agriculture Marketing Authority Act 2004, Sections 11(4) and 12(1) ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 30.7 Overseas Purchase of Livestock Public Tenders must be called for any procurement of goods, services or works valued at $50,001 or more.
An indent shall be issued to the Director of Procurement Office for the procurement of goods from overseas suppliers, unless a contract or agreement has been entered into.2 The Board may approve that tender procedures be waived where there is only one supplier capable of supplying the goods, services or works.
If it is impractical to comply with regulation 30 sub regulation (1) in relation to the provision of urgent infrastructure development and services, the Minister for Economy may on this basis exempt such particular infrastructural services from complying with regulation 30 sub regulation 1.3 The audit noted that the Ministry imported sheep and goats at a total cost of $407,224 from Australia on 13/04/16, through a company owned by an Expatriate Technical Advisor to the Ministry.
The invoice for the purchase was issued to the Ministry on 01/02/16, and 09/02/16 following which the Ministry sought approval from the Minister of Economy for waiver of tender process.

The approval for the waiver of tender was given on 12/02/16 based on the information that 50% needed to be paid for the animals to go into quarantine, and that the payments would be made directly to the suppliers through the Ministry of Foreign Affairs Office in Canberra.
The following anomalies were noted:  Anomaly in the waiver of tender as according to regulations, the Government Tender Board may approve the purchase or engagement if there is only one supplier for the goods;     The Minister of Economy can only approve waiver of tender in relation to the provision of urgent infrastructure development and services; The Ministry had to re-route the consignment from Sydney to Melbourne due to quarantine issues, which resulted in additional freight costs which were not budgeted for.
Payment vouchers from the Trade Commission in Sydney relating to the new route amounted to AUD $8,649.

However, invoices were not attached to support the payment.
On 31/8/16, the Ministry wrote to the Minister of Economy for approval to utilise funds of FJD$32,5904 for the balance of the additional freight costs of AUD $34,825 or FJD $53,866.98.5 Supporting documents provided by the Ministry for payments made on its behalf by the Trade Commission in Sydney did not include invoices for payments amounting to AUD$73,573.05.
Funds used for the purchase were originally budgeted and approved for the rehabilitation of the beef and dairy industries;  There was no Memorandum of Agreement between the Ministry and the supplier.

Furthermore, audit noted that although the Ministry had carried out the Annual Board of Survey as at 31 July 2016, stock-take reports were not prepared for the sheep and goats which were purchased.
2 Ministry of Agriculture Finance Manual 2013 – Part 2.3.1& 2.6.1 3 Fiji Procurement Regulation 2010 – Regulation 48 (1) & (4) 4 Based on the exchange rate stated in the letter to Ministry of Economy on 31/08/16 5 Based on the exchange rate stated in the letter to Ministry of Economy on 31/08/16 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The above findings indicate that proper planning was not carried out by the Ministry prior to undertaking purchase of livestock.
Recommendations The Principal Accountant should ensure that:    proper planning and budgeting is carried out prior to undertaking major purchases; tenders are called for procurements exceeding $50,000; and budgeted funds should be used for the purpose it was appropriated.

Ministry’s Comments The audit comment is noted.


The process of obtaining competitive (three) quotations could not be done, as the right breed of sheep/goats were hand-picked from a number of farms visited by the Ministry’s team according to the requirements both in terms of physical appearance, performance and the genetic potential of the animal.
This resulted in the payment being made directly to all the individual farmers (suppliers of the breed stock) through the Fiji Trade Commission Office in Sydney for transparency purposes.

In view of the Agriculture Sector’s growing concern regarding the disease outbreak on the live cattle coming from New Zealand, the budget for the livestock rehabilitation was used to develop the sheep and goat industries for the Meat Sector.
The Ministry of Economy approved the RIE that Sheep and Goat be part of the activity of the Livestock Rehabilitation in the 2016 financial year because of the problem encountered in the meat sector.
30.8 Anomalies in Purchase Of Rice Harvester Machine The procurement of any goods, services or works required by Ministries or Departments must be initiated either by the issue of a purchase order for any purchases of goods, services or works made locally or by the issue of an indent for any purchase of goods from overseas.6 On 8/4/16, the Ministry paid a sum of $37,000 through cheque number 28359 for the purchase of a self-propelled rice combine harvester machine for rice farmers in Dreketi.
The rice harvester was purchased to address the issue of delay in rice harvesting, poor grain quality and high cost of harvesting resulting in loss over the years.

It is hired out to farmers at a rate of $17.45 per hour by the Ministry’s agriculture station in Dreketi.
The following anomalies were noted in procurement of the rice harvester:  A local purchase order was not attached to the payment voucher which was authorised for payment by the Acting Principal Accountant;  Competitive quotations were not attached to the payment voucher.

The purchase was made upon receipt of an offer letter from the supplier on 22/09/15.
The letter offered the Ministry an opportunity to purchase a rice harvester at $37,000 which would include an additional rice harvester at no extra cost, training, set of spare parts for the harvesters, and general back-up services at minimal cost; and 6 Fiji Procurement Regulations 2010, Part 4:21(3) ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________  Although, invoice for the rice harvester was dated 31/12/15, payment was made on 8/4/16; after a delay of over three months.
The purchase of rice harvesters indicates poor planning by the Ministry.

Furthermore, payment for invoices due in the previous year will inevitably lead to constraints in budget for the current year.

Recommendations The Ministry should:  ensure that supporting documents including purchase orders and quotations are attached to the payment vouchers while effecting payments; and  ensure that payments are made in the year in which expenses are incurred.
Ministry’s Comments The audit comment is noted and the Ministry would like to highlight the following in relation to this payment:  A Purchase Order (PO: 90810- 003287) was issued on the 15th of December 2015 for the purchase of the new Rice Harvester.

The Purchase Order was later cancelled due to closing date given by Ministry of Economy through Finance Circular 60/36 of 02/10/2015.
 The invoice dated 31/12/15 was received after the closing date for all payments to be made for the 2015 fiscal year hence the making of the payment in 2016.

The Ministry has conducted Procurement training at Divisional level to provide awareness again on Procurement guidelines and the requirements to all Officers involved.
30.9 Additional Costs Incurred Due To Revised Travel List The responsible authority for a state entity is responsible for managing the financial affairs of the entity in accordance with the requirements of this Act and with due regard to the principles of responsible financial management.7 On 05/01/16, Ministry paid a travel agency the amount of $31,234 for the return airfares for five management staff led by the Honourable Minister, to travel to Manila in the Philippines from 10/01/17 to 17/01/17.
However, this list was later revised by the Ministry to include only three members of management namely the Honourable Minister, the Deputy Secretary Agriculture Development and the Acting Director Research.

Consequently, the Ministry incurred a reissue fee amounting to $6,850 for the revised list which was paid on 20/1/16 to the travel agency.

Furthermore, the airfares of the two members of management who did not travel with the group could not be fully refunded by the travel agency.
The Ministry was informed by the travel agency in a letter dated 11/01/16 that only 50% or $4,195 of the $8,390 paid for the business class ticket for the Acting Permanent Secretary would be refunded, while only $2,250 out of $4,818 would be refunded for the economy class ticket of the Acting Director Extension.

Due to the revised travel list, the Ministry incurred losses totalling $13,613.
7 Financial Management Act 2004 – Part 2, Paragraph 7 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The above finding indicates lack of proper planning by the Ministry resulting in loss of taxpayers’ funds.

Recommendation The Ministry should ensure that proper planning of travel is carried out before payment is made.
Ministry’s Comments The audit recommendation is noted.

The change in the travel list was due to unforeseen circumstances placed on the Ministry without any prior knowledge but had to be facilitated.

After finalising the travel arrangements for the Ministry’s delegation, instructions were then received to change the delegation due to the need for our Executive Team to accompany the Honourable Prime Minister on his tour to the Northern Division during the time of the planned travel.
30.10 Anomalies in Local Purchase Orders The system generated purchase orders shall be executed once all relevant documents pertaining to a request for procurement locally has been completed and authorised by the relevant authorising officers.8 The cut-off date for the issuing of POs is 13th June 2016.
All new transactions from 13th June are to be procured through profoma invoice (to be approved by Chief Accountant - Treasury) and facilitated through direct payments till the 22nd July.9 Audit review of a sample of procurement and payment records revealed the following anomalies in purchase orders:    Local Purchase Orders were not issued for the purchase of ginger seeds, photocopy machines, water pumps and motorbikes totalling $407,510; Local Purchase Orders were not signed by an authorised officer for the procurement of water pumps totalling $48,888; and Local Purchase Orders totalling $60,165 were issued after the date of invoices.
Refer to Appendix 30.1 for details.

The above findings indicate that accounting officers lack basic procurement knowledge resulting in internal controls not being complied by the Ministry.

In addition, local purchase orders not signed indicate that the procurements were not properly authorised.

Recommendation The Ministry should ensure that requisite internal controls are implemented for all procurements and strict compliance is maintained with the Procurement Regulations.
8 Ministry of Agriculture Finance Manual 2013, Part 2.5.5 9 Finance Circular 60/36 dated 02 May 2016 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Ministry’s Comments The audit comment is noted and it must be understood that the activities for Ginger planting season begins in July and therefore with the change in Government’s fiscal year, the procurement of seeds as we have experienced now falls outside the cut off dates for issuing of Purchase Order i.e.
13 June 2016.

Any procurement after this date must be done through direct payments with a Proforma Invoice as stated in the Finance Circular 60/36 dated 02 May 2016.

Similarly the request for the procurement of photocopy machine, water pumps and motorbikes were made after the cut-off date of issuing of Purchase Order and was processed due to the urgent need at that point in time.

The Local Purchase Order for the procurement of water pumps with the amount of $48,888 was released and signed.
We agree that the Local Purchase Order should be issued before the Invoice is submitted for payment however, in this instances the Purchase Order was subsequently issued for payment purposes as per the requirement under the Procurement Regulation.

30.11 No Contract Agreement Signed with Supplier The Government Tender Board: - Approved the engagement on sole-supplier basis for the purchase of 40 tonnes of “Red Pontiac” variety potato seeds at the cost of AUD$67,200.
This approval is subject to a binding contract vetted by the Solicitor General’s Office, is entered into by both parties and the availability of funds.

A copy of the signed contract is to be submitted to the Fiji Procurement Office.10 The Ministry operates the Potato Research and Development programme from the Capital Projects allocation of its budget.
On 09/06/16, payment was made to an overseas supplier through the Fiji Procurement Office for the purchase of 40 tonnes of Red Pontiac potato seeds for $96,388.

The Government Tender Board in its meeting held on 25/11/15, had approved the waiver of tender process for this purchase.

Although the approval was based on the condition that a legally binding contract was to be entered into by both parties, this was not done by the Ministry.
The absence of a contract will result in government’s interests in terms of delivery, title, risk and warranty of goods, not being safeguarded.

Recommendations The Ministry should ensure that:   a valid contract agreement is entered into with suppliers to safeguard government’s interests; and procurement regulations are strictly adhered to by officers responsible for purchases and payments.
Ministry’s Comments In relation to the Contract Agreement on the purchase of red pontiac potato seeds the Ministry will ensure that procurement regulations are strictly adhered to by Officers responsible for purchases and payments.

The Ministry has as a guide designed a contract template which was sent to the Heads of Implementing Divisions for their necessary action.

10 GTB Meeting No.
21/2015 - Waiver of Tender Process for the Purchase of Potato Seeds – Ministry of Agriculture ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 30.12 Diversion of Funds The authorised officers must not certify a payment as correct unless they are satisfied that sufficient uncommitted funds are available for payment of the account and the expenditure account it is charged to is correct.11 The audit noted that funds amounting to $551,925 were diverted from capital project expenditure allocations and used for other purposes.
In addition, evidence of approval from the Ministry of Economy for the diversion of funds was not produced for audit verification.

Refer to Appendix 30.2 for examples.

The above indicate that internal control procedures were not followed indicating a high risk of mismanagement of funds.

Diversion of indicates funds that monies were not utilised for the purpose it was appropriated by Parliament.
Recommendations The Ministry should ensure that:   funds are utilised for the purpose it was appropriated for in the Budget; and prior approval is obtained from the Ministry of Economy for any diversion of funds.

Ministry’s Comments The audit comment is noted.

The Ministry will seek prior approval from the Ministry of Economy for future diversion of funds.

Please refer to Annexure 1 for comments on the identified vouchers.
Officers responsible will be identified and a list submitted to PS to be issued with Warning letters due to the lapse in their performance.

30.13 Unbudgeted Expenses 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 expenditure and corruption do not occur.12 Audit review of capital projects general ledger revealed that some of the expenses recorded in the general ledger were not included in the approved capital project work program thus were not budgeted for.
These include expenditures for Potato Research & Development Program and Coconut Development Program totalling to $66,540 and $1,216, respectively.

Refer to Appendix 30.3 for details.

The audit finding indicates that proper financial management was not carried out by the Ministry resulting in use of capital budget for expenditures which were not appropriated in the 2016 Budget Estimates.
11 Ministry of Agriculture Finance Manual 2013 – Part 2.8.4 12 Ministry of Agriculture Finance Manual 2013, Part 2 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Recommendations The Ministry should ensure that:   expenses incurred are budgeted for in the respective project’s work program; and proper approval is obtained for any diversion of funds.
Ministry’s Comments The audit comment is noted and the Ministry will ensure that future expenses recorded in the general ledger are included in the approved capital project work programs and that changes in activity in the approved RIE’s are appropriately approved and authorised.

30.14 Fixed Assets Register not Updated The Asset Recorder shall be responsible for maintaining the fixed assets register.

The fixed assets register shall provide the following details: i. ii.

iii.

iv.
iii.

iv.

v. date of acquisition and cost; description; serial number and model; location other relevant information (e.g.

if asset is sold or written off)13 Review of a sample of payments for fixed assets revealed that fixed assets worth $248,877 were not recorded in the Fixed Assets Register.

Refer Table 30.8 for details.

Table 30.8: Assets Not Recorded in Fixed Assets Register Date Cheque/ EFT No.
Assets Description Quantity 01/07/16 01/07/16 23/06/16 20/07/16 21/07/16 19/07/16 18/07/16 04/07/16 Total 3.6 x 3.6 x 2.2m high chiller room 2.4 x 2.4 x 2.2m high chiller/freezer trailer 1 x 20' Container Portable Race - C Grade 40mm galvanised pipe 2m x 900 x 1.3m 220806 220806 30900 32217 220999 Off road Suzuki Farm Motorbikes 32107 32087 31408 Suzuki 4wd Quad Runner 26m x 5m Tropical Greenhouse with Roof cover Konica Minolta Bizhub 554 1 1 1 50pcs 10 1 2 5 Total Cost (VEP) ($) 22,936 16,514 6,873 27,523 80,275 18,349 6,972 69,435 248,877 The above finding is an indication of ineffective controls and lack of proper supervisory checks at the Accounts and Assets Management Unit of the Ministry.
Failure to keep record and control of fixed assets increases the risk of misuse, theft, abuse and damage to Ministry’s assets.
13 Ministry of Agriculture Finance Manual 2013 – Part 11.2.1 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Recommendations The Ministry should ensure that:  all fixed assets owned by the Ministry are properly recorded in the Fixed Assets Register; and  supervisory checks and controls is strengthened in the Accounts Section and Assets Management Unit in recording of fixed assets.
Ministry’s Comments The audit comment is noted.

The Fixed Asset template is distributed to Divisional Officers to coordinate the recording of all purchases done within the Division.

Monthly returns of Assets are to be submitted to Headquarters and Asset reconciliation will be done on a monthly basis upon receipt of Monthly Returns.

The Executive Officer Asset and the Assistant Accounts Officer-Payments will be responsible for the monitoring and updating of Fixed Asset Register.
30.15 Payments not Made Yet Recorded In General Ledger Expense is recognised when cash is paid.14 The audit noted that expenses totalling $146,300 were recorded as expenses in the general ledger although payments were not made as cheques were held back by Accounts Section.

Refer Appendix 30.4 for details.

The audit finding indicates poor controls on expenditure planning and will affect cash flows for the beginning of the next financial year.
In addition, there is high possibility that the Ministry did this to utilise its budget as goods and services were yet to be received.

Recommendations The Ministry should ensure that:   expenses recorded in the general ledger are paid within the financial period; and controls relating to expenditure planning are strengthened.

Ministry’s Comments The audit comment is noted.

The Ministry withheld payments to these Companies until the services were fully provided.
For instance on the payment for the ginger planting materials, due to the nature of the ginger season the Ministry needs to process the payment in July for ginger seeds but the supply was actually made in August.

If the Ministry does not deploy this arrangement then the Agriculture Sector would eventually lose out on the planned activity and required output of the Ginger Capital program.
14 Cash Basis Accounting ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 30.16 Discrepancies in Recording of Rental Income on Government Quarters At the end of each month, the AAO payments shall prepare a Statement of Revenue comparing the types of revenue collected during the month against the forecasted revenue.
Explanations for variances between the actual and forecasted revenue must be obtained from the officers responsible for revenue collection.15 Audit review of the Ministry’s Quarterly Return revealed a significant variance of $120,924 or 77% between the budgeted rental revenue from government quarters and the actual amount recorded in the FMIS general ledger.

Details are listed below in Table 30.9.
Table 30.9: Rental Income on Government Quarters Details Forecasted Rental Income for 7 months as per the 2nd Quarter Quarters Return 2016 Rental Income recorded in FMIS General Ledger (1-30101-30999-270202) Variance Amount ($) 156,268 35,344 120,924 The audit finding indicates that proper co-ordination was not made between the Ministry’s Assets Management Team and the Accounts Section resulting in quarters rental income not being properly accounted in the general ledger.
Recommendations The Ministry should ensure that:  all officers occupying government quarters are paying rent and bond through direct deductions from their salaries or wages; and  rental income is properly recorded in the general ledger; Ministry’s Comments The audit comment is noted.

The Ministry will review the Clerical Officer-Quarters and Assistant Accounts Officer Salaries Job Descriptions to include the reconciliation of the Quarters Return against the rental income recorded in the General Ledger.
30.17 Unauthorised Arrears of Revenue Write-off Subject to this or any other Act, the Minister of Economy may – (a) write off losses in respect of public money, state assets and agency assets; the power to write off losses includes the power to abandon or discontinue the recovery of amounts of revenue.16 The Minister may delegate under this Act the Minister’s power to write off losses to the responsible authority for a budget sector agency only if satisfied that – (a) the agency has issued a finance manual 15 Ministry of Agriculture Finance Manual 2013, Part 5.5.10 16 Finance Management Act 2004 – Division 4, Section 34 (1) and (2); ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ that satisfies the requirements of the Finance Instructions; (b) the agency is maintaining a register of losses in a manner that satisfies the requirements of the Finance Instructions; and (c) other conditions specified in the Finance Instructions or determined by the Minister have been satisfied.17 The audit noted that the Ministry’s arrears of revenue for the second quarter of 2016 reported to the Ministry of Economy were $27,296.
However, a total of $777,106 in revenue arrears was not included as it was written-off by the Ministry without prior approval from the Ministry of Economy.

There was also no evidence of whether the Minister of Economy had delegated powers to the Ministry to write off losses.

Refer to Table 30.10 for details.
Table 30.10: Arrears of Revenue written-off without Ministry of Economy Approval Revenue Type Revolving Fund Account Cocoa Development Irrigation & Commercial Land Development Batiri Pineapples Total Arrears 31 Dec 2015 ($) 427,763 237,460 106,939 4,237 707 777,106 31 July 2016 ($) - - - - - - Variance ($) (427,763) (237,460) (106,939) (4,237) (707) (776,106) Review of the aging of arrears of revenue indicated that $694,611 or 89% of the Ministry’s revenue arrears that was written off had been outstanding for more than 5 years.
The arrears were mainly for the outstanding repayments from farmers for assistance provided to them under different agricultural programs in previous years.

Refer to Table 30.11 for details.


Table 30.11: Aging of Arrears of Revenue Age of Debts 31 Dec 2015 ($) 31 July 2016 ($) Less than 1 year 1 - 2 years 2 - 5 years More than 5 years Total 2,083 941 91,678 709,524 804,226 1,933 951 9,499 14,913 27,296 Variance ($) (150) 10 (82,179) (694,611) (776,930) The finding indicates weaknesses in outstanding revenue collection procedures and documentation within the Ministry.
Furthermore, the exclusion of a significant amount of arrears of revenue due to unauthorised write-off has resulted in the Ministry’s arrears of revenue balance being understated as at 31 July 2016.
Recommendations The Ministry should ensure that:    effective controls are in place to avoid accumulation of arrears of revenue; proper documentation and follow up are done to collect arrears; stringent measures are taken when arrears are not paid when due; and 17 Finance Management Act 2004 – Division 4, Section 36 (1) ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________  requisite approval is obtained for write-off of arrears of revenue.
Ministry’s Comments The audit comment is noted.

The Ministry did not include the Arrears of Revenue amounting to $777,106 since it is not captured as Arrears of Revenue in the Financial Management Information System (FMIS).

It should be noted that this Arrears of Revenue could not be written off due to lack of supporting evidence.
30.18 Excess Cash Transferred to CFA not Recorded in the FMIS General Ledger The cash basis of accounting recognises transactions and events only when cash (including cash equivalents) is received or paid by the entity.

The audit noted that the Ministry had transferred excess cash from TMA operations amounting to $457,468.80 to the Consolidated Fund Account.

The Ministry posted this to the Cash account in the FMIS but later cancelled the posting.
Consequently, this amount has not been in the FMIS general ledger.

Enquiries with the Ministry of Economy TMA Clerk on the posting revealed that it was an error on the part of the Ministry as they can only post to Cash and not Equity.

The above findings indicate that Equity and Cash in the Ministry’s TMA Balance Sheet are overstated by $457,468.80.

Recommendation The Ministry should ensure that postings are done to the correct allocation after these have been reviewed by senior officers.
Ministry’s Comments The audit comment is noted.

The Ministry is currently working with the Ministry of Economy on transactional posting in the General Ledger account of FMIS.

The excess funds from the 2016 financial year was paid to the Ministry of Economy in the 2016/2017 financial year and the same error (2016) occurred since the Ministry cannot post to Equity account thus the Ministry raised a Journal Voucher to capture this changes.
30.19 Delay in Preparation of Monthly Underline Account Reconciliations Divisional Accountants, Assistant Accountants, Clerks and Recorders shall reconcile the ledger balances to the general ledger reports and prepare a ledger reconciliation statement.

Any errors or misallocation must be immediately adjusted by way of journal vouchers.

The ledger reconciliation statement shall be signed and dated by the AAO (Ledgers).

The ledger reconciliation statement shall be forwarded to the Principal Accountant.
The Principal Accountant must ensure that all balances are accurate and adequately supported; and any misallocations or outstanding balances from the previous month have been dealt with.18 18 Ministry of Agriculture Finance Manual 2013, Sections 16.3.3 - 16.3.6 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The audit noted that all monthly underline accounts reconciliations were not prepared and endorsed by the Permanent Secretary in a timely manner.
Refer Appendix 30.5 for details.

The findings indicate poor supervisory and monitoring controls on the underline account reconciliations.

Lack of oversight could lead to discrepancies not being detected and resolved in a timely manner.

Recommendation The Accounting Head should ensure that monthly underline reconciliations are prepared and submitted to the Permanent Secretary for endorsement in a timely manner.

Ministry’s Comments The audit comment is noted.


The Ministry relies on the Financial Management Information System (FMIS), to upload final monthly reports for each period which is sometimes late as tabulated below.
Month-End Reports from FMIS Unit of MOE: Reconciled Month Jan – Feb March April May June July Date uploaded via FMIS 01/04/2016 09/05/2016 18/05/2016 10/06/2016 06/07/2016 22/09/2016 30.20 Accountable Advance not Cleared on time A travelling officer shall recoup the travel advance within seven days of completing travel by submission of an acquittal report with supporting documents.
If an advance has not been fully expended, the travelling officer must repay the balance within seven days of completing travel.

Where an advance has not been acquitted within seven days of travel, the PA shall effect recovery through a salary deduction from the concerned officer’s salary within six fortnights.

Interest on all advances will accrue at the rate set by the Minister of Economy from time to time.

The current rate is 12% per annum.


Upon clearance of the advance, the accounts officer shall update the debtors register, offset the advance account and debit the appropriate expenditure account.19 The audit noted that advance account had a balance of $9,498 as at 31 July 2016.

The audit could not substantiate this amount as the listing for outstanding advances in the reconciliation for July did not reconcile with closing balance in the general ledger.
In addition, the Advance Register was not updated and did not include relevant details.

Furthermore, opening advance balance as at 01/01/16 was $10,029.

From this, advances totalling $6,967 or 69.5% were outstanding from 2013.

Refer to Table 30.12 for details.


19 Ministry of Agriculture Finance Manual 2013, Sections 10.1.11 – 10.1.16 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 30.12: Details of Outstanding Accountable Advances Date EDP No.
Position 28/06/13 24/07/13 5/8/2013 7/8/2013 23/08/13 29/08/13 10/01/13 5/06/15 5/06/15 2/08/16 47432 62195 63516 92316 64774 40788 53215 62954 92975 46174 Total Director Research Senior Agricultural Officer Agricultural Assistant Agricultural Officer Agriculture Assistant Lau/Rotuma Rice Development Labasa Principal Agricultural Officer Principal Statistician Economic Planning Officer Agriculture Officer Amount ($) 350.00 1,670.00 417.00 1,701.00 579.00 1,800.00 450.00 2,140.00 812.00 110.00 10,029.00 Due to poor monitoring and supervision, accountable advances were not cleared on time.
Non- retirement of advances on time could lead to understatement of expenditure or the write off of advances.
Recommendations The Ministry should ensure that:  monitoring and supervision is improved in the Accounts Section so that relevant details are maintained for outstanding advances;  all advances are retired by officers within 7 days from the date of return to station; and  Necessary action is taken to clear the outstanding advances by way of salary deductions from respective officers in timely manner.
Ministry’s Comments The Ministry has noted the audit recommendations and is taking necessary measures to control Accountable Advance issued to be in-line with financial guidelines requirements.
However it is noted that some retirement of Accountable Advances were delayed due to the following reasons:  Delayed in official trips;  Acquittals/documents were not fully completed and properly justified; therefore resubmission was required for retirement purposes;  Reconciliation for Accountable Advances taken in previous years is currently under review and attempts are being made to locate source documents for proper verification and justification before necessary steps are taken for its clearance.
Accountable Advance registers have been opened and is currently updated to capture all Accountable Advance taken, retired and those that are subject to salary recoveries.

The Ministry is recovering with a 12½ percent interest from the salaries and wages of Officers who fail to clear their outstanding advances immediately after the lapse of the seven days requirement for clearance.
____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 30.21 Bank Lodgement Clearance (BLC) Account All bank lodgement clearance (BLC) Accounts must be reduced to zero balance by 3rd August 2016.
Under no circumstance, must a BLC transaction be cleared by placing it in a trust or revolving fund account.20 The audit noted that the Bank Lodgement Clearance Account has a balance of $11,975 which does not comply with the requirements of the Ministry of Economy.

The Acting Principal Accountant explained that this was due to misposting which was to be reversed in the month of August 2016.
Recommendation The Ministry should ensure that all bank lodgement clearance (BLC) accounts are cleared at the end of the accounting period, in order correctly reflect cash ledger balance.

Ministry’s Comments The audit comment is noted.

Bank Lodgement Clearance (BLC) Reconciliation for July could not be zerorised as the amount of $11,975.33 for the Trading and Manufacturing Account (TMA) was wrongly deposited into the Consolidated Fund Account (CFA) on 27/07/16.
These amounts constitute two lodgements of $9,942.33 and $2,033.00.

The Ministry of Economy advised the Ministry to raise a payment voucher to take out this amount from CFA and deposit it into the TMA.

This was done in August and was cleared in the August BLC Report.

30.22 Anomalies in Main Trust Fund Account When trust money is received, the Cashier shall issue an official trust receipt to the payer.

Details of receipts shall be entered into the trust cashbook.
The Assistant Accountant Ledger and Underline Accounts Clerk shall keep a trust ledger to record movement of trust money.

The ledger shall record the following information: i.

Name of trust account; ii.

Date and amount of receipts and payee; iii.

Date, amount paid and payer including reference number; and iv.

Balance to date.
Balance to date.

Within 5 days after the end of each month, the Underline Accounts Clerk and Clerical Officer LWRM shall prepare a trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account.21 Land Water Resource Management (LWRM) Trust Fund Account records retention monies from Contractors and funds are returned once projects are completed satisfactorily according to contracts.
The audit noted the following anomalies in the records of the LWRM Trust Fund Account:  A cash book was not maintained; 20 Finance Circular 04/2016 - Section 4.2.4 21 Ministry of Agriculture Finance Manual 2013 - Part 15.2.1, 15.3.2 and 15.4.1 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________  Retention monies deposited in the Trust bank account from 30/10/14 to 27/10/15, amounting to $781,228 were not receipted by the Ministry.
The last receipt (No.

663025) was issued on 15 July, 2014;  Monthly Trust Account Bank Reconciliations were not prepared within 5 days after the end of each month, and were also not prepared according to the standard format in the Ministry’s Finance Manual;  Trust Account general ledger records were not updated as a variance of $354,402 existed between LWRM Trust General Ledger Liability Account and Retention Funds List of Companies (subsidiary records).

No reconciliation was performed.


Refer to Table 30.13 for details.

Table 30.13: Variance between General Ledger and List of Companies with Retained Funds: Trust Fund Amount as per General Ledger ($) Amount as per List of Companies ($) Variance Remarks ($) LWRM Trust Funds 684,162 329,760 354,402 Unaccounted Trust Monies of $354,402  Journal adjustments amounting to $318,494 were made to reconcile the Trust Account Bank Reconciliation and the General Ledger.
There were no supporting documents provided for these adjustments.

The audit findings indicate poor management of trust funds by the Ministry which can result in and fraud and mismanagement of funds.
Recommendations The Ministry should ensure that:        a cash book is maintained for trust fund accounts; all retention funds are deposited directly into the trust bank account and receipted on the same day; the monthly trust fund reconciliations are prepared in a timely manner in accordance with Schedule 9 of the Ministry’s Finance Manual 2013; any discrepancies identified in the reconciliation is resolved immediately; variances in the trust ledger records is identified and rectified accordingly; any adjustments are supported with proper documentary evidence; and internal controls on management of trust funds are strengthened.
____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Ministry’s Comments The audit comment is noted.

 The Ministry now maintains the Cash Book for the 2016/2017 financial year.

 The Ministry directly deposits all retention funds into the trust bank account through Electronic Fund Transfer (EFT).
 The Ministry will improve on the submission of monthly reconciliation and ensure that any discrepancies will be resolved and variances in the Trust Ledger records is identified and adjusted accordingly with supporting documents.

 For internal control purposes the Ministry is in the process of reviewing its Management control of the Trust Fund.
30.23 Statement of Losses - Unauthorised Losses and Omissions Writing off losses shall be considered after all practical and cost-effective recovery measures have been undertaken.

Any write offs above these limits but less than $50,000 must be submitted through the PS, to the PS Ministry of Economy for approval.
Write off losses in excess of $50,000 must be referred to the Minister for Economy.22 The audit noted the following anomalies in Statement of Losses:  Losses disclosed amounting to $18,518 were not approved by the Permanent Secretary Economy for write-offs.

The losses include Loss of Assets (Office Equipment) of $2,159 and Loss of Assets (Livestock) of $16,359.

 Missing items worth $20,477 were not substantiated.
The Board of Survey conducted at financial year-end recorded these items that were missing and were approved to be written off by the Ministry of Economy.

 There were no Loss Reports to determine if any recovery action had been taken for the missing items.

Refer to Appendix 30.6 for details.

Ineffective controls on the management of fixed assets (property, plant & equipment) increases the risks of loss through theft and misappropriation of fixed assets belonging to the Ministry.
Recommendations The Ministry should ensure that:  its Finance Manual is strictly adhered to and only approved write-offs are disclosed in the Statement of Losses;  Recovery action is taken for the missing items; and  Internal controls are strengthened over the management and recording of fixed assets.
22 Ministry of Agriculture Finance Manual 2013 - Part 14.2.10 – 14.2.12 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Ministry’s Comments The audit comment is noted.

The Ministry will ensure that Officers handling losses adhere to the financial guideline in respect of loss report submissions.
The Ministry has done a Template to capture all loss reports on misappropriation of government revenue, theft, death of livestock, expired drugs, etc.

which are to be submitted on prescribed Losses Report Forms to Asset Management Unit and Principal Accountant.

30.24 Prior Year Issues During the 2015 audit, the following issues were raised and remain outstanding as no action has been taken by the Ministry to resolve them.
The status of outstanding issues is set out below: Issues Recommendations Current Status Management’s Proposed Action The Ministry still has to provide audit with its succession plan, despite numerous request and follow up.

It has also failed to obtain approval from the Prime Minister’s Office re- engagements of the retired officers and expatriate staffs who have technical skills.
the for The Ministry avoided calling a tender for procurement of Rice Agro Inputs when total cost was split in two purchase orders.

The Ministry failed to obtain Government Tender Board approval when making payment in excess of $50,000 to a contractor and a solar power provider for various building and maintenance of quarters and solar power installation.

Furthermore, all payments made to the solar power provider were without any contractual agreements.
The Ministry should: Open  develop and implement a succession plan as provided to ensure for by PSC continuity the of organisation.

Prime Minister’s office approval for 2 out of the staff highlighted were given to Audit for verification  obtain approval from the Prime Minister’s office prior to the re-engagement of any retired officers.

The Ministry should ensure that for tender procurement above $50,001 and prevent splitting LPO.

called are Open The audit comment is noted.

The audit comment is noted.


All supporting documents in regards to and approvals payments were given to the audit team for verification.

The Ministry should ensure that: Open so  open tenders must be called for procurements above that $50,001 transparency and accountability of the Ministry is maintained at all times.

It will ensure the selection of available the contractors at the most economical cost to carry out a particular task.
best  advance payments must only be made for goods procured through overseas shipments or required under a contract as per if ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Issues Recommendations Current Status Management’s Proposed Action section 14(8) of the Finance Instructions.
in ADDITIONAL AFS DAM ISSUED Included and Trading the Manufacturing Account (TMA) Balance is Deposits & Retention of Sheet $22,113.

The audit noted the Ministry did not maintain adequate accounting records to provide sufficient to and appropriate audit evidence substantiate the balances reflected in the TMA Balance Sheet.

that The Ministry should maintain proper records and be able to provide evidence to substantiate accounts and balances reported in its Trading and Manufacturing Accounts.
Open is The Ministry the in currently process of obtaining supporting documents the to substantiate TMA outstanding balance.

Review of the Ministry’s monthly TMA bank reconciliation revealed that a TMA Bank Balance of $7,877 is included in the FMIS under the overall TMA Bank Balance of $390,430.

The details of this bank account were not made available to audit.
Open The internal control procedures in the Accounts and TMA Section, specifically supervisory checks should be strengthened to avoid such discrepancies.

The Ministry as part of its TMA review is in of the process its strengthening Internal Control.
____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.1: Anomalies in Local Purchase Orders Date 22/07/16 EFT / Cheque Number 32557 21/07/16 220974 21/07/16 21/07/16 21/07/16 21/07/16 20/07/16 20/07/16 08/3/16 220993 221002 221014 221018 32221 32225 220121 04/07/16 31408 13/06/16 30391 Details Purchase of agro input under Ginger Development Program Purchase of 20,000 kg (20 tonnes) matured ginger seeds at 1.50kg Purchase of 30,000 kg ginger seeds at 1.50kg Purchase of 30,000 kg ginger seeds at 1.50kg Purchase of 15,000 kg ginger seeds at 1.50kg Purchase of 30,000 kg ginger matured seeds at 1.50kg Hire of vehicle for Vet Lab Facilitation of BTEC forum by SPC Payment for contract work at Nawaicoba Quarantine Station for the weed control and repair of fence.
Payment of 5 photocopying machine for Extension HQ, Bua, Rewa, Naitasiri and Kadavu.

Purchase of water pump with suction hose 01/07/16 220806 Payment for set-up cooler room Amount ($) Audit Observations 49,942 No LPO issued 30,000 No LPO issued 45,000 No LPO issued 45,000 No LPO issued 22,500 No LPO issued No LPO issued 45,000 14,365 LPO issued after invoice.

25,000 LPO issued after invoice.

20,800 LPO issued late when work was completed.


75,684 No LPO issued 48,888 LPO not approved by authorized officer and LPO details (quantity & unit cost) not correct.

43,000 LPO not attached to Payment Voucher to justify proper approval 18/05/16 29495 Materials and labour for repair of shed at Dobuilevu Research Station 7,695 Purchase Order description not stating material and labour cost.
10/06/16 30350 Purchase of building materials for shed at Rakiraki Office 6,792 Purchase Order description not stating material and labour cost.

21/07/16 32348 Supply of Robin water pump & accessories 6,884 No LPO Issued 21/07/16 220999 Purchase of 10 offroad Suzuki farm motorbikes for extension division under agriculture extension service program.
87,500 No LPO issued Total 574,050 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.2: Diversion of Funds Date 24/02/16 Details EFT / Cheque No.

27696 Reimbursement to Agriculture TMA Account (4- the payment of 30351-30999-260101) importation of sheep from Australia.
for ($) 407,224 Payment made Livestock Rehabilitation programme which was only for dairy and beef industries.

from Amount Remarks Ministry’s Comments The budget for the livestock rehabilitation was used to develop the sheep and goat industries for the meat sector because of the disease outbreak on the live cattle coming from New Zealand.

The request for payment was received at Headquarter after the closing of the 2015 accounts.
Due to unavailability of funds the payments were made from the capital allocation and later were to be journalised.

Due to the pressing work commitment during the closing of accounts in July, the Ministry these particular overlooked transactions.

journalising 18/03/16 220161 Payment for Flat Land Clearing Services 12,842  Payment made provided in Bua Povince in December 2015.
13/07/16 08/07/16 08/07/16 08/07/16 08/07/16 11/07/16 21/07/16 220914 Payment of air ticket for PS Agriculture and delegation to Bangkok, Thailand for the 1st Joint Agriculture Working Group (JAWG) Meeting.

220868 Payment of perdium allowances for JAWG Meeting at Bangkok, Thailand on the 09 - 21st July.

220869 Payment of perdium allowances for JAWG Meeting at Bangkok, Thailand on the 09 - 21st July.

220872 Payment of perdium allowances for JAWG Meeting at Bangkok, Thailand on the 09 - 21st July.
220873 Payment of perdium allowances for JAWG Meeting at Bangkok, Thailand on the 09 - 21st July.

220894 Payment of perdium allowances for JAWG Meeting at Bangkok, Thailand on the 09 - 21st July.

220999 Purchase of 10 off road Suzuki farm motorbikes for extension division under agriculture extension service program.

from Agriculture – Crops Extension Service programme allocation  2015 expense paid in 2016 22,700 Payment made from Sigavou Project travel and from allocation not allocation in SEG 03.
7,027 Payment made from Coconut Project travel and from allocation not allocation in SEG 03.

3,658 Payment made from Coconut Project travel and from allocation not allocation in SEG 03.

3,658 Payment made from Coconut Project travel and from not allocation allocation in SEG 03.

3,658 Payment made from Coconut Project travel and from not allocation allocation in SEG 03.

3,658 Payment made from Coconut Project travel and from not allocation allocation in SEG 03.
87,500 Payment made from Coconut Project allocation.

Total (Sample only) 551,925 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.3: Unbudgeted Expenses (1) Potato Research and Development Program Date EFT No.
Description 09/05/16 17/05/16 07/06/16 08/06/16 13/06/16 13/06/16 15/06/16 17/06/16 20/06/16 26/04/16 23/05/16 07/06/16 07/06/16 14/06/16 21/06/16 28/06/16 05/07/16 12/07/16 18/07/16 22/07/16 Tent & Marquee - SRS Supply of two seed tractors DRI Catering – SRS Hard Drive For ATO Tavua, ATO B Pine Post 4.0X150mm for SRS US 29221 Crates 29412 Fuel for BA Dredge 30196 30225 Jacket with Pants 30391 Water Pump - SAO Potato 30493 30606 30702 30744 220311 Wages 220502 Wages 220624 Wages 220624 Wages 220664 Wages 220734 Wages 220762 Wages 220836 Wages 220900 Wages 220936 Wages 221036 Wages Total Amount ($) 1,054 1,266 3,627 1,284 44,851 2,743 4,000 550 757 81 27 18 529 607 934 1,663 646 808 810 285 66,540 (2) Coconut Development Program Date 14/06/16 22/07/16 14/06/16 17/05/16 07/06/16 28/06/16 07/06/16 12/07/16 12/07/16 Total Cheque No.
220664 221036 220664 220439 220624 220762 220624 220900 220900 Particulars Amount ($) Wages Wages Wages Wages Wages Wages Wages Wages Wages 604 243 183 54 54 27 21 21 9 1,216 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.4: Payments not made yet Recorded in General Ledger Date 21/07/16 21/07/16 21/07/16 21/07/16 22/07/16 21/07/16 22/07/16 22/07/16 22/07/16 Total Cheque No.
220974 221002 221014 221018 221052 220990 221024 221029 221072 Details Purchase of 20,000 kg (20 tonnes) matured ginger seeds @ 1.50kg Purchase of 30,000 kg ginger seeds @ 1.50kg Purchase of 15,000 kg ginger seeds @ 1.50kg Purchase of 30,000 kg ginger matured seeds @ 1.50kg Purchase of Toners Repair of vehicle GM 503 Purchase of 2 x 1 timber Purchase of 15,000 dalo suckers Meal Claim Amount ($) Audit Observations 30,000.00 Cheques were held back as at date of audit it was 08/09/16, yet recorded as already the in expenditure general ledger for the seven months ending 31 July 2016.
45,000 22,500 45,000 916 400 300 1,800 384 146,300 ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.5: Delay in Preparation of Monthly Underline Accounts Reconciliations January February March April May June July Date Prepared Date endorsed by PSA[1] Date Prepared Date endorsed by PSA Date Prepared Date endorsed by PSA Date Prepared Date endorsed by PSA Date Prepared Date endorsed by PSA Date Prepared Date endorsed by PSA Date Prepared Date endorsed by PSA 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 8/06/16 15/06/16 11/07/16 15/07/16 Not finalized and filed Monthly Reconciliations 18/05/16 1/06/16 18/05/16 1/06/16 18/05/16 1/06/16 18/05/16 1/06/16 10/06/16 15/06/16 11/07/16 15/07/16 Not finalizedq and filed 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 5/06/16 15/06/16 11/07/16 15/07/16 Not finalized and filed 12/05/16 1/06/16 12/05/16 1/06/16 12/05/16 1/06/16 12/05/16 1/06/16 8/06/16 15/06/16 11/07/16 15/07/16 Not finalized and filed 3/05/16 1/06/16 3/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 10/06/16 15/06/16 13/07/16 15/07/16 Not finalized and filed Not dated 12/04/16 Not dated 12/04/16 Not dated Not dated Not dated Not dated Not dated Not dated Not dated Not dated Not finalized and filed 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 31/05/16 1/06/16 8/06/16 15/06/16 11/07/16 15/07/16 Not finalized and filed Underline Accounts Revolving Fund Account (RFA) Inter- Department Clearance Account (IDC) SLG 84 Imprest Drawings Bank Lodgment Clearance Account (BLC) Operating Trust Fund Account ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Appendix 30.6: Statement of Losses – Omissions Agriculture Station
 Item Quantity Value of Losses ($) Date of Board of Survey Date Approved by Ministry of Finance to Write-Off Qarani Station Levuka Station Taveuni Koronivia - Farm Management Lomaivuna Anchor & Cable Mirror Torch Fire Extinguisher Extension Cord 20m HP Laptop Power Board 6 Pin Calculator - Sharp 334T Calculator - Casio MX125 Digital Camera - Olympus Digital Measuring Wheel USB Flashdrive Tosiba 32G Flashnet Huawei Connect Invertor - 500wts Power Board Lead Wire Letter Trays - 3 sets Clamp 'G' Clamp Sliding Hammer Claw Pinch Bar Pliez Fencing Saw Cross Scal Hanging 100kg Scal Hanging 10kg Tubelight frame 4'' Measuring Tape 100m Wrench Pipe 18'' Spanner Ring 22-24 Spanner Set 12-10 Spanner Set 10-8 Shifting Spanner 10'' Angle Grinding Mach Brushcutter Yanmar Robin Generator Yanmar Generator Lister Pump Executive Chair Audit Remarks Not on disclosed Statement of Losses and no Loss Reports determine to recovery actions taken.


Not on disclosed Statement of Losses and no Loss Reports determine to recovery actions taken.

27/06/16 17/11/16 04/07/16 17/11/16 18/05/16 17/11/16 26/08/16 17/11/16 Not on disclosed Statement of Losses and no Loss Reports determine to recovery actions taken.
05/08/16 17/11/16 on disclosed Not Statement of Losses and no Loss Reports determine to actions recovery ____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Agriculture Station Item Quantity Value of Losses ($) Date of Board of Survey Date Approved by Ministry of Finance to Write-Off Audit Remarks taken.
Chainsaw "Johnsered'' Hacksaw ''Timbersaw'' Cyclone Cutter Bow Saw Brushcutter "Johnsered'' Swetting Box Blankets Husqvarna Chainsaw Sharp Photocopier Steelframe chair Bevel Chisel Solo Knapsack Sprayer Cut Saw Hand Brace Handle Gauge Hammer Hoe Iron Jack Planner 250mm Iron Jack Planner 450mm Mallet Motise Chisel 16'' Motise Chisel 10'' Pipe Range 12' Spring Cliper 6' Canvas Bag Cupboard Large Brush Cutter TH34 Kawasaki Dog Trap Outboard Engine 25hp Yamaha Vunidawa Total Losses 08/08/16 17/11/16 Not disclosed on Statement of Losses and no Loss Reports to determine recovery actions taken.
____________________________________________________________________________________ Ministry of Agriculture Section 30: Page 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Section 32 Ministry of Fisheries and Forests Role and Responsibilities 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............................................................................................................................................ 5 PART B: AUDIT FINDINGS ............................................................................................................................................... 6 32.7 Governance Issues ............................................................................................................................................. 6 32.8 Operating Fund Account (OFA)........................................................................................................................... 6 Trading and Manufacturing Account ................................................................................................................. 15 32.9 32.10 Trust Fund Account ........................................................................................................................................... 19 32.11 Follow Up On Previous Year Issues.................................................................................................................. 21 Ministry of Fisheries and Forests Section 32: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ PART A: FINANCIAL STATEMENTS 32.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Fisheries and Forests resulted in the issue of a qualified audit opinion.
The qualification issues are as follows: 1.

There is an unreconciled variance of $224,312 between the fishing license fees of $405,640 and FMIS general ledger balance of $629,952.

Consequently, I could not confirm the accuracy of revenue amount.

2.

There was no independent audit verification carried out for the Raw Material account balance of $16,792 and Finished Good account balance of $1,229 in TMA Balance Sheet as at 31 July 2016.
Consequently, I could not confirm the accuracy and completeness of inventory amount.

3.

There is an unreconciled variance amounting to $113,993 between the opening FMIS general ledger balance of $79,641 and the opening balance of the Trust Account Statement of Receipts and payments of $193,634.

The Ministry of Economy adjusted the FMIS general ledger but did not provide the relevant audit evidence to support the adjustments.
As a result, I was not able to ascertain the accuracy and completeness of the Main Trust Fund balance.

32.2 Statement of Receipts and Expenditure The Ministry of Fisheries and Forests recorded revenue totalling $1,388,702 and incurred expenditure totalling $16,914,837 for the seven months period ended 31 July 2016.
Table 32.1: Statement of Receipts and Expenditure for 2016 Description RECEIPTS Native timber measurement Vessel registration Management fees License fishing Sale of fish and ice Offshore Fisheries Management Fees Drying & Storage Facilities Miscellaneous revenue TOTAL REVENUE EXPENDITURE Operating Expenditure Established staff Government wage earners Travel & communication Maintenance & operations Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditure 31 July 2016 ($) 31 December 2015 ($) 228,092 7,034 --- 13,799 232,490 750,878 263 156,146 1,388,702 962,541 5,486 10 26,317 412,026 1,743,925 --- 393,292 3,543,597 4,801,264 1,278,765 412,304 1,791,308 779,516 690,517 955,788 10,709,462 7,847,972 1,951,168 513,786 2,389,749 885,388 772,035 407,653 14,767,751 Ministry of Fisheries and Forests Section 32: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Description Capital Expenditure Capital Construction Capital Purchases Total Capital Expenditure Value added tax TOTAL EXPENDITURE 31 July 2016 ($) 31 December 2015 ($) 4,824,823 539,040 5,363,863 841,512 16,914,837 5,770,180 649,013 6,419,193 1,705,942 22,892,886 The financial year end for Government was changed from 31 December to 31 July as stipulated in the Financial Management (Amendment) Act 2016.
The financial statement for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a twelve month period, thus the significant variances with comparative balances.

The increase in expenditure for Special Expenditure was due to increase in spending for the REDD Plus Project.
32.3 Appropriation Statement The Ministry of Fisheries and Forests incurred a total expenditure totalling $16,914,837 against the revised budget of $26,256,262 resulting in savings of $9,341,425 or 36%.

The significant savings was primarily due to the budget being for twelve months while expenditures incurred were only for the seven months up to 31 July 2016.

Details of expenditure against the budget estimates are provided in Table 32.2.
Table 32.2: Appropriation Statement for 2016 SEG Item Operating Expenditure Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Expenditure Capital Expenditure Construction Purchases Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) 7,903,478 1,881,684 639,578 2,717,040 1,073,830 804,524 3,246,729 18,266,863 6,280,000 600,000 6,880,000 1,109,399 26,256,262 (1,948,244) 103,131 (9,371) (24,772) (2,770) --- (104,370) (1,986,396) 1,986,396 --- 1,986,396 --- --- Ministry of Fisheries and Forests Section 32: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ 32.4 Trading and Manufacturing Account The Department of Forestry operates a trading and manufacturing activity account under the Fiji Pine Scheme.
The Department provides assistance in the processing and selling of the pine products at the Department’s timber yards based in Nasinu.
Table 32.3: Manufacturing Account Description 31 July 2016 ($) 31 December 2015 ($) Opening raw material Add: Purchases Less: Closing raw material Raw material used Direct Cost Add: Direct labour Cost of manufacturing goods transferred to trading account 7,322 --- 16,791 (9,469) --- 52,087 42,618 10,728 --- 7,322 3,406 --- 112,316 115,722 Table 32.4: Trading Account Description Sales Opening stock of finished goods Add: Cost of manufactured goods Less: Closing stock of finished goods Cost of finished goods sold Gross Profit 31 July 2016 ($) 54,141 2,599 42,618 45,217 1,229 43,988 10,153 31 December 2015 ($) 135,703 7,002 115,722 122,724 2,599 120,125 15,578 Total sales decreased by $81,562 or 60% in 2016 as resources were deployed for the Tropical Winston Rehabilitation works.
Table 32.5: Profit and Loss Statement Description Income Gross Profit/(Loss) transferred from Trading Account Total Income Expenses Fuel & Oil Office upkeep and supplies Fixed asset replacement and improvement Total Expenses Net Loss 31 July 2016 ($) 31 December 2015 Restated ($) 10,153 10,153 --- 3,990 39,273 43,263 (33,110) 15,578 15,578 900 58,126 --- 59,026 (43,448) Ministry of Fisheries and Forests Section 32: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Table 32.6: Balance Sheet Description EQUITY TMA surplus capital retained to CFA TMA accumulated loss Net Loss Total Equity ASSETS Cash Raw materials Accounts receivable Finished goods Total Assets LIABILITIES Deferred Income Deposits and deduction Total Liabilities Net Assets 31 July 2016 ($) 31 December 2015 Restated ($) 229,846 (161,289) (33,110) 35,447 2,548,201 16,792 5,745 1,229 2,571,967 2,500,000 36,520 2,536,520 35,447 213,037 (117,841) (43,448) 51,748 62,115 7,322 5,745 2,599 77,781 -- 26,033 26,033 51,748 The TMA Cash at bank increased by $2,486,086 as at 31 July 2016 due to injection of $2.5 million from the Operating Fund Account to the TMA account for the Tropical Cyclone Winston rehabilitation projects.
32.5 Trust Fund Account The Department of Fisheries maintains a trust account for the one-third subsidy scheme to help rural based fishermen with funding assistance for boat and engine.

The scheme was discontinued by government in 2009.
Table 32.7: Department of Fisheries – One-third Subsidy Scheme Description One third Subsidy contribution Total Receipts Retention money Total Payments Surplus/(Deficits) Opening balance at 1 January Closing balance as at 31 December 32.6 Statement of Losses 31 July 2016 ($) 31 December 2015 ($) 112 112 1,824 1,824 (1,712) 193,634 191,922 63,527 63,527 5,618 5,618 57,909 135,725 193,634 In accordance with the Procurement Regulations 2010 (Clause 52), the Permanent Secretary for Economy approved the disposal and write-off of items worth $203,319 following the recommendation in the Board of Survey Report.
Details of assets approved for write-off is shown in Appendix 32.1.

Ministry of Fisheries and Forests Section 32: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ PART B: AUDIT FINDINGS 32.7 Governance Issues Each agency must have in place a cost effective system of internal controls which safeguards money and property against loss; avoids or detects accounting errors and avoids unfavourable audit reports.
The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.1 The following governance issues were noted:   the Ministry’s Strategic Plan for the period 2016-2021 were yet to be finalised as at the date of audit; 2 and internal control deficiencies existed in the Operating Fund Account, Trading and Manufacturing Account, and Trust Account.

Refer to Paragraph 32.8.1, 32.9.1, 32.10.1, for details.
Furthermore, some of the audit recommendations for the 2015 financial year are yet to be addressed.

Refer to Paragraph 32.11 for details.

Without the strategic plan, the Ministry does not have identifiable objectives and lacks the focus needed to achieve corporate goals and develop plans that will move the Ministry towards achieving its strategic objectives.

Moreover, the presence of weak or ineffective controls could lead to poor accountability and loss of funds in future.
Recommendations  The Ministry must ensure that the strategic plan for the period 2016 -2021 is finalised as soon as possible; and  The Ministry must also ensure that there is regular evaluation of internal controls and corrective action is taken to resolve the weaknesses identified.

Management Comments   The Ministry concurs with the audit findings and has been working on the 2016 – 2021 strategic plans and this will be finalised by end of June 2017.
Internal Audit Inspection and surprise checks on revenue on all divisions been conducted and will be done on a regular basis.

32.8 Operating Fund Account (OFA) The Ministry incurred expenditure totalling $16,914,671 in 2016 against the budget of $26,256,262 resulting in savings of $9,341,425.

The following audit findings were noted in relation to the Operating Fund Account.

1 General Orders No.

118 2 11 November, 2016.


Ministry of Fisheries and Forests Section 32: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ 32.8.1 Weaknesses in Internal Control for Operating Fund Account Each agency must have in place a cost effective system of internal controls which safeguards money and property against loss, avoids or detects accounting errors and avoids unfavourable audit reports.
The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency3.
All property, plant or equipment with a value in excess of $2,000 or more must be recorded in the assets module of the FMIS and the asset register.4 All Permanent Secretaries and Head of Department are required to submit monthly reconciliations to the Ministry of Economy by the 15th of each month.5 Audit review of the Operating Fund Account internal controls systems revealed the following weaknesses:  Furniture and equipment purchased during the year were not recorded in Fixed Asset Register (FAR).
Refer to Table 32.8 for details.

Table 32.8: Examples of Furniture & Equipment not updated in FAR Date 29/01/2016 06/04/2016 12/04/2016 03/05/2016 03/05/2016 20/05/2016 21/06/2016 25/08/2016 06/05/2016 19/05/2016 01/06/2016 21/06/2016 17/06/2016 Total Cheque/ EFT No.
Particulars 7 Portable Sawmills 9107 Office Furniture 10274 5 Door Access Devices (Multi Bio 700) 10655 Fiberglass Boat for Makogai Research Station 75429 75424 75541 75677 76107 75465 20 Forest Cover Maps 11051 10 STIHL Chainsaw 11469 1 Yamaha Ultra Long Outboard Engine 11989 1 Ford Ranger 2.2L Twin Cab 11892 1 Kio Rio 1.4L Unleaded Fully Loaded Sedan Modulised CCA Timber Treatment Plant Amount ($) 29,385 7,890 33,680 265,745 133,591 88,231 158,845 69,328 19,572 25,711 24,124 66,100 43,055 965,257.91  Monthly underline reconciliations were not submitted to the Ministry of Economy on a timely basis.
Refer to Table 32.9 for details.
Table 32.9: Details of late submission of reconciliation of Underline Accounts Month Operating Trust Date Submitted to Ministry of Economy Drawings IDC Imprest BLC Accounts Receivable January Reconciliation submitted on 08/04/16 Reconciliation not prepared 01/03/16 09/03/16 Submitted to MOE on 3 Finance Instruction 2010 – Section 59 4 Finance Instruction 2010 – Section 46(1) 5 Finance Circular No.2/13 Ministry of Fisheries and Forests / Prepaym ents Advance s Submitted to MOE SLG 84 one Only reconciliati Section 32: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Month Operating Trust Date Submitted to Ministry of Economy Drawings IDC Imprest BLC Accounts Receivable February March April May June July 29/06/16 Reconciliation s submitted on 05/10/16 08/04/16 26/05/16 26/05/16 23/06/16 04/08/16 20/09/16 06/04/16 24/10/16 27/05/16 20/04/16 27/06/16 13/07/16 Reconciliation not prepared 30/05/16 13/07/16 25/07/16 19/04/16 20/05/16 14/06/16 20/07/16 14/09/16 / Prepaym ents Advance s on 24/10/16 SLG 84 on for the 7 months- Submitted to MOE on 4/10/16  Wages reconciliations for Pay 18 to 32 were yet to be prepared by the Ministry as at the date6 of the audit.
The above findings are an indication of the ineffective controls and lack of supervisory checks by the accounting officers in the Ministry.

Failure to keep proper record and control of fixed assets increases the risk of loss of assets through misuse, theft and damage.

Lack of timely reconciliations increases the risk of errors and omissions not being detected and rectified on a timely basis.
Recommendations The Ministry should ensure that:  assets with a value in excess of $2,000 are recorded in the FAR;  monthly reconciliation of Underline Accounts is prepared and submitted to Ministry of Economy before the 15th of each month; and  wages reconciliation for Pay 18 to 32 are prepared and submitted to Ministry of Economy.
Management Comments The Ministry of Economy conducted two days training 20th to 21st April 2017 and has amended the Fixed Asset Template into 2 phases – 1st template is the Fixed Assets Template and 2nd template is Strategy and Policy.

Once the template has been approved by the Ministry of Economy, we start working on the input of all fixed assets for both Ministries.
Due date for the final submission of stock take of all fixed assets is on 31 August 2017 32.8.2 Trading and Manufacturing Activity Support Initiative Each year the Appropriation Act and the Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.7 It is approved for the Ministry to inject $2.5m into its TMA and ensure that the fund is utilised for the intended purpose and provide returns as remittance to the Ministry of Economy in future.
The Ministry 6 02/12/2016 7 Finance Instructions 2010 – Part 3: Expenditure No.
7 Ministry of Fisheries and Forests Section 32: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ is advisable to source the funds from within its 2016 Budget and we are looking forward in realising the positive impacts of this support.8 The audit noted that the Ministry paid a total of $2.5million to the Trading and Manufacturing Activity (TMA) account without Cabinet approval.

The expenditure was not provided for in 2016 budget estimates.
Although, the Ministry of Economy approved the injection of funds to the TMA account, the proposal for the utilisation of the funds was not included in the TMA Support Initiative submissions made to the Ministry.

There is a high risk of funds not being utilised for the intended purpose due to weak controls noted in the operation of Trading and Manufacturing Activity account.

Refer to Paragraph 32.9.1 for details.


Recommendations The Ministry should ensure:  that Cabinet approval is obtained for unbudgeted expenditure;  work plans are developed to ensure proper utilisation of funds and a detailed acquittal is prepared for the utilisation of the funds; and  internal control weaknesses within the TMA account are strengthened prior to the implementation of the project.

Management Comments  The concerns raised are acknowledged.
Our Ministry was working in collaboration with the DISMAC on the rehabilitation activities and we were one of the first agencies out in the affected areas to clear debris in critical public amenities such as roads, to make way for the DISMAC and other critical services under the State of Emergency Decree.
 The Concept Paper for the $2.5 million was prepared based on the damage assessments done by our Technical personnel on salvaging fallen trees within our Reserves and the Resource Owners Pine Schemes under the Fiji Pine Trust, in the interior and maritime areas.

The main idea of the Concept Paper was to salvage and process fallen trees at our Timber Utilisation Division facility, in order to meet the demand for housing needs post STC Winston in February 2016.
 The Ministry notes the issues of concern raised and is taking measures in tightening its internal controls and processes on this issue.

 Precautionary measures have been undertaken whereby the PSFF has directed our SAO to oversee all the  TMA operations including drawing up control systems.

Standard Operating Procedures have also been prepared on all TMA processing units including the store man, log unit, timber tallyman, sawmill section, workshop etc.
32.8.3 Payment of Subsistence Allowance No Officer, who is absent from his headquarters for a period of more than three months (90 consecutive days), may draw subsistence allowance in respect of the excess period unless prior approval has been obtained from the Permanent Secretary for the Public Service.9 8 Ministry of Economy Memorandum No.

78/3/16 dated 16th May 2016.


9 General Orders 2011 – Section 502 Ministry of Fisheries and Forests Section 32: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Contrary to the requirements of General Order 502, the audit noted that the Ministry paid subsistence allowance of $13,384 to the Temporary Relieving Assistant Officer (EDP No.

93439) for the period 5 October 2011 to 24 March 2013.
The audit further noted that:  The officer was appointed on 9 September 2011 and was posted to Vanuabalavu;  There was only one staff quarters available which was occupied by the officer in charge hence the officer was accommodated in the conference room;  The subsistence allowance paid was not budgeted for in the 2016 budget.

However, payment was made from the Coastal Fisheries Development allocation.
The payment of subsistence allowance to the officer is a serious breach of the instructions stipulated in the General Order.

Recommendation The Ministry must ensure that written directions in the General Order are complied with at all times.
Management Comments  The Ministry respects the recommendation made to comply with General Order 502, but looking from the side of a worker (Temporary Relieving Fisheries Assistant), it is the responsibility of the Ministry to accommodate an Officer whilst posted to an outside station.
 The Officer was promised by the Department of Fisheries that he will be provided accommodation whilst staying as Temporary staff in the first 3 months; this did not materialise as the officer was there for almost 3 years staying in the conference room.

 The Officer missed the benefits and democratic rights of being able stay in Government quarters for almost 3 years.

 Under the Employment Relation Act 2010 an Officer which is a worker has the full right to claim the subsistence allowance.
32.8.4 Provisional Tax Not Deducted A business making commission payment or payment under a contract for services where there is a written agreement is required to withhold 5% withholding tax (also known as provisional tax).10 The audit noted that the Ministry did not withhold 5% provisional tax on the contractual payments.

Refer to Table 32.10 for details.

Table 32.10: Contractors Whose Provisional Tax was not deducted Date Cheque/ EFT No.
Contractors Particulars Total Amount Paid 07/04/2016 18/05/2016 10407 11134 Contractor A Construction of Fisheries Office and Standard Grade 6 staff ($) 92,999 92,214 Amount Subject to Provisional Tax ($) 4,266 4,230 10 Fiji Revenue and Customs Authority – Fiji Tax and Customs Summary – 2016 – No.

19 Ministry of Fisheries and Forests Section 32: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Date Cheque/ EFT No.
Contractors Particulars Total Amount Paid 22/07/2016 15/03/2016 14/04/2016 14/03/2016 75861 9949 75308 9924 Contractor B 08/04/2016 10341 Contractor C 03/02/2016 9142 quarters at Navukailagi, Gau Refurbishment works at Level 3, Takayawa Building, Toorak Second phase of labour cost for the construction of Bund walls for the Nasinu Treatment Plant Last phase for the completion of the construction Bundwalls for the Nasinu Treatment Plant Construction of Research Bure at TUD Office, Nasinu ($) 61,927 7,400 9,250 5,500 5,500 4,000 Amount Subject to Provisional Tax ($) 2,841 339 424 252 252 183 The Ministry has breached the statutory requirement relating to Fiji Income Tax Act and hence is exposed to penalties.
Non-deduction of the tax has also resulted in loss of revenue for government.

Recommendation The Ministry should comply with the requirements of FRCA for Provisional Tax deductions from payments to all contracted service providers.

Management Comments The Ministry acknowledges the recommendation made and will comply with the requirements of FRCA on 5% provisional tax deduction on all contracted service providers.
32.8.5 Revenue 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.11 Each agency must maintain a Debtors Register within the FMIS or an accounts receivable ledger for licenses, debts, court fees and other State or agency revenues receivable.12 The audit noted the following anomalies from the review of revenue records:  A variance of $224,312 was noted between the audit calculation and FMIS general ledger balance for fishing license fees.
Refer to Table 32.11 for details.
11 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.4 12 Finance Instructions 2010 – Section 40 Ministry of Fisheries and Forests Section 32: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Table 32.11: Details of variance of fishing license fees Total license issued for fishing beyond Fiji (A) Rate (VEP) Total for the period F/license issued within Fiji Total F/License FMIS balance Variance (B) ($) C= (A x B ) ($) (D) ($) (C+D) ($) ($) ($) 24 7,831 187,947 217,693 405,640 629,952 224,312 Fishing License Fees  The Timber Revenue System (TRS) has not been integrated with the FMIS general ledger.
Consequently, a variance of $74,566 was noted between the audit calculation and the FMIS general ledger.

Refer to Table 32.12 for details.

Table 32.12: Details of variance of timber measurement fees Total volume logged (A) Rate (VEP) (B) Timber Measurement Fees 30,705 $ 5 Total for the period (A x B ) $ 153,525 FMIS balance Variance $ 228,091 $ 74,566 Furthermore, the TRS was not able to generate the arrears of revenue report nor the debtors register was maintained by the Ministry.
Consequently, the Ministry was not able to determine the total arrears of revenue for timber measurement fees.

Lack of proper monitoring of fees and receivables for timber measurement could result in loss of state revenue.
Recommendations The Ministry should ensure that:  debtors register is maintained for the timber measurement fees;   regular reports showing arrears of fees are prepared; and reconciliation is prepared between the TRS system and the FMIS general ledger and the variances noted are investigated and rectified.

Management Comments  The Ministry concurs with the recommendation made and now maintains a Debtors Register to record timber measurement fees.
 Reconciliation and monthly monitoring of TRS - timber revenue system done to rectify these ongoing issues and also to be accounted and reconciled in the FMIS.
Ministry of Fisheries and Forests Section 32: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ 32.8.6 Anomalies in Underline Accounts 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.13 The Principal Accounts Officer must verify all the reconciliations before signing and submitting it to the Ministry of Economy.14 Travelling advances must be recouped within 7 days of the completion of travel by submission of a voucher with documents to support the claim.
Where a travelling advance has not been fully expended, it must be repaid to the agency within 7 days of the completion of travel.
Where a travelling advance is not cleared within 7 working days of the completion of travel, recovery must be made from the concerned officer’s salary within 6 fortnights.15 The following anomalies were noted from an audit review of the Underline Accounts:  Variances were noted between the total debits and credits of the Drawings Account reconciliation statement and FMIS general ledger.

Refer to Table 32.13 for details.


Table 32.13: Details of total debits and credits variance between Reconciliation Statement and the FMIS General Ledger Account Total Drawings Debits Credits Reconciliation Statement ($) 14,643,280 (14,941,852) FMIS Variance ($) 14,581,482 (14,498,943) ($) (61,798) 442,908  Variances also existed between the reconciliation statement and FMIS general ledger for Operating Trust Account.

Refer to Table 32.14 for details.
Table 32.14: Variances between FMIS Ledger and Ministry’s reconciliation Reconciliation Operating Trust SLG 84 5th Pacific Tuna Forum Biological Sampling Initiative Purchase New Computers Seaweed Farming Project Community Based Restoration FMIS Reconciliation Statement ($) 1,480,229 1,379,735.47 ($) (8,536) 1,091 (12,250) 1,898 38,581 --- --- --- --- --- Variance ($) 100,494 (8,536) 1,091 (12,250) 1,898 38,581  Included in the Unpresented Cheques listing of $244,799 are Electronic Fund Transfer (EFT) payments amounting to $38,219 which were yet to be cleared by the bank.
Refer to Appendix 32.2 for details.

 Travel advances totalling $ 443,497 were not cleared within the stipulated seven days resulting expenditure for the year ended 31 July 2016 being understated.
13 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.4 14 Ministry of Fisheries & Forests Finance Manual 2013 – Section 14.4.2 15 Finance Instruction 2010 – Section 44 Ministry of Fisheries and Forests Section 32: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ The above findings indicate lack of supervisory checks on the reconciliations prepared.
Failure to retire advances within the financial year has resulted in material misstatement of expenditure.

Similarly, variances not investigated and rectified on time may result in write offs in future.

Recommendations  The Drawings, Operating Trust and SLG 84 account prepared by the Ministry should be reconciled to the FMIS general ledger.

Any variances noted should be investigated and necessary adjustments made.
 The Ministry should also ensure that travelling advances are cleared within 7 days of the completion of the travel or recovery should be made from the salaries of staffs concerned.

Management Comments The Ministry acknowledges the recommendation made:  Uncleared advances been recovered from officer’s salary within 6 fortnights.

 Adjustments have been made with assistance of the FMIS to rectify the variances in the Drawings Account, Operating Trust and SLG 84.
32.8.7 Inappropriate Usage of Project Funds Provided Through SLG 84 Over the years, it has been noted that recipient agencies under the facility have not been transparent in providing required information when requested.

In some cases, funds were neither used for the intended purpose, nor properly acquitted to support the allocated Standard Liability Group (SLG) 84 transaction and balances.
16 The funds provided by the ITTO under this Agreement shall be used solely to meet those direct Project costs assigned to ITTO which are itemised in the agreed budget of the Project Document.

Funds allocated to one budget heading or subheading item shall not be transferred to another without the express prior approval of ITTO.

All materials, equipment, supplies and services purchased or rented using ITTO resources shall be used exclusively for the implementation of the project.
17 The Ministry received a total of $48,211 for the ITTO project (Community based Restoration and Sustainable Management of Vulnerable Forests for the Rewa Delta).

The audit noted that funds amounting to $18,358 were diverted from the ITTO project and used for other purposes without the prior approval of ITTO.

Refer to Table 32.15 for details.

Table 32.15: Details of Diversion of Funds Payment Date EFT No.
17/05/2016 11048 Amount ($) 8,168 Purchase Details Purchase of following computer items for REDD+ Project 1 x Dell XPS 15.6 touchscreen laptop 2 x HP r100 23-101 System Units 1 x Samsung LED Monitor 17/06/2016 12129 10,190 Purchase of air conditions units for SEPO, L2, Minister's Conference Room, L1 Small Office, Minister's Room, Minister's PA's office.
16 Finance Circular 11/2013 ODA Revised Checklist – Accessing SGS Facility under Head 50 – Clause 1.4 17 ITTO Project Agreement PD 696/13 Rev.2 (F) between ITTO & Ministry of Fisheries and Forests dated 06/10/2014 – Section 4.01 Ministry of Fisheries and Forests Section 32: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Moreover, the following anomalies were noted from the review of the other financial assistance received by the Ministry:  A total of $12,060 was received from the Ministry of Economy for the purchase and installation of air conditions units of which $1,55018 was used to pay the airfare of an officer to attend a training workshop in Noumea, New Caledonia.
 The agreement between the Ministry and the donor agencies was not provided for audit verifications for the following assistance received during the year: a).

Community Based Restoration and Sustainable Management of the Vulnerable Forests of the Rewa Delta - $48,211 (1-32301-78999-840102-006) b).

Carryover - Purchase of Computers - $7,967 (1-32301-78999-840102-007) c).
Regional Observers Program - Data Entry Technicians - $44,456 (1-32301-78999-840102- 008) As at the date of this report19, the Ministry is yet to provide the agreements for audit verification.

Diverting funds for other purposes increases the risk of abuse and mismanagement of funds and may result in donor agencies refusing to provide further financial assistance for the projects with the Ministry.
Recommendations The Ministry should ensure:  that project funds are only used for the purpose it was provided for by the donor agencies or other government departments; and  agreements between donor agencies and the Ministry are made available for audit verification.

Management Comments  The Ministry acknowledges the recommendation made and will ensure prior approval is received from the donor agencies before committing their funds.
 Proper monitoring and control is done to avoid recurrent of such issues.

32.9 Trading and Manufacturing Account 32.9.1 Weaknesses in internal controls for TMA operations Each agency must have in place a cost effective system of internal controls which safeguards money and property against loss, avoids or detects accounting errors and avoids unfavourable audit reports.
The Accounting Head of an agency is responsible to the Permanent Secretary for the effective design and operation of internal controls across the agency.20 18 EFT No 11608 dated 7 June 2016 19 21 April, 2017 20 Finance Instruction 2010 – Section 59 Ministry of Fisheries and Forests Section 32: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ The TMA Manager shall prepare and submit to the Ministry an Annual Business Plan documenting the planned performances and profit target for each TMA activity before the end of October each year.21 The TMA Manager shall ensure that all monthly, quarterly and annual financial reports are submitted before the due dates and consistent with the standard format prescribed by the Ministry.22 The TMA Manager shall ensure that a stock take report is submitted and endorsed by the stocktaking officers, with a copy to the Accounting Head within three (3) days after the end of the stocktake.23 The TMA Manager shall maintain and update a Fixed Assets Register for recording purposes.24 The authorised revenue collector shall bank money received on a daily basis at least.
The lodgement form shall be prepared in triplicate detailing the deposits to be made.

25 Audit review of the internal controls for the Trading and Manufacturing Account revealed the following weaknesses:  The planned performances and profit target for each TMA activity was not documented in the business plan;  The quarterly performance report for the TMA account was not prepared by the TMA Manager.
 Contrary to Section 8.8 of the TMA Policy 2015, the TMA Manager did not maintain a Fixed Asset Register;  The stock listing to substantiate inventory balance of $18,021 was not provided for audit verification.

As such, audit could not confirm the accuracy and completeness of inventory in the stocktake report;  Official invoices were not issued for sale of timber.

Instead, tally sheets for sawn timber were being used as invoice for timber sales.
Furthermore, the register for sawn timber was not updated to indicate the number of timber sold.

As such, audit could not ascertain the completeness of accounts receivable/debtors in the TMA Balance Sheet;  The order book for recording the furniture requested by the customers was not maintained by the TMA Manager.
Furthermore, the quotations were used as invoices to bill customers; and  Bank lodgements were not done on a daily basis hence monies receipted for the months of March to July were lodged at the end of July 2016.

The above findings indicate the existence of weak internal controls in the operation of the TMA which if not addressed may result in loss of funds through fraud and misappropriation.
Recommendations The TMA Manager must ensure:  that the business plan is prepared in accordance with the TMA policy;  performance report is prepared and submitted to the Ministry of Economy;   stock listing is provided and submitted together with the stocktake report; internal controls within the trading and manufacturing activity are strengthened; and  daily bank lodgements are done.
21 Trading and Manufacturing Account Policy 2015 – Section 8.1(1) 22 Trading and Manufacturing Account Policy 2015 – Section 8.3(2) 23 Trading and Manufacturing Account Policy 2015 – Section 8.2(2) 24 Trading and Manufacturing Account Policy 2015 – Section 8.8 25 Department of Fisheries Finance Manual 2013 – Section 4.4.2 Ministry of Fisheries and Forests Section 32: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Management Comments   The issue on the above is of grave concern for the Ministry.
The issue of lack of monitoring is one contributing factor due to the lapse of responsibilities of our Operational Technical personnel, who are also involved in the TMA Operations as a result of under staffing and staff turnover within the Timber Utilisation Division of the Ministry.
The Ministry concurs with the audit findings due to the changes in TMA normal operations, with the additional injection of the unforeseen $2.5 million due to TC Winston rehab works done in salvaging fallen trees and processing operations.

The Ministry had to review its Business Plan given the magnitude of the TMA Initiative Operations and is putting its strategies together in order to manage better its changing business environment and widening of its business scope and direction.
  On the issue of raising Invoices on our timber sales, the practice is that we only issue Invoices for Credit Sales with Government Agencies and reputable companies but we issue receipts based on cash sales on verified timber tally supplied.

The late lodgments of revenues was due to the unforeseen early maternity leave of the substantive Clerical Officer prior to the arrival of the Temporary Relieving Clerical Officer hence no proper handing over was done.
Also, the Safe maintained at TUD, Nasinu has a knob of combination/dial of numbers before it can be opened with the Key.

When the knob was accidentally tampered or turned, the safe could not be opened and without any knowledge of the combination, the bank lodgments were not consistent until the incumbent resumed work from Maternity Leave.
 With the above, the Ministry is now vigilant of this aspect and we have conducted regular monitoring of the revenue activities and the bank lodgments have been consistently done on a regular basis and this aspect has improved in line with the current policies in place.
32.9.2 Anomalies in the Trading and Manufacturing Account The profit and loss statement and the balance sheet must be prepared on an accrual basis.26 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.27 The audit of the Trading and Manufacturing Activity account revealed the following anomalies:  The raw material used had a credit balance of $9,469 contrary to the nature of the account being an expense account.
 There were unsupported cash balances in the cash book and unadjusted balance in the FMIS general ledger.

Refer to Table 32.16 for details.
Table 32.16: Details of Unjustified Cash Balance and Unadjusted Balances Months January February March April May June July Unsupported balance Cash book ($) Unadjusted balance GL ($) (36,138) (36,442) (34,650) (34,650) (34,654) (34,554) (32,059) (21,585) (21,989) (21,989) (21,989) (21,989) (21,989) (20,755) 26 Finance Instructions 2010, Section 30 (2) 27 Department of Fisheries Finance Manual 2013 – Part 13 Ministry of Fisheries and Forests Section 32: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ The above anomalies imply that the Trading and Manufacturing Accounts may not fairly reflect the financial performance and position of the TMA operations.
There is also potential risk for mismanagement due to ineffective controls and lack of supervisory checks in the TMA operations.

Unless resolved, the issues will continue to affect the TMAs in subsequent years.

Recommendations The Ministry should ensure that:  TMA balances are properly supported and rectify errors detected to ensure balances are correct; and  proper reconciliations are carried out and any variances noted are investigated and adjusted accordingly.
Management Comments The issues raised are of grave concern to the Ministry as it is a recurring issue due to the set-up of the TMA FMIS system.
The Ministry is now working closely with the Ministry of Economy‘s Asset Management Unit and the FMIS Unit in trying to rectify technical issues of the TMA FMIS set-up and to streamline the processes in order for the FMIS system to reflect the true performance of our TMA in its Income Statement and Balance Sheet reports as it had reflected distorted figures as a result of this FMIS set technical issues.
32.9.3 Unsupported petty cash expenditure The proper management of expenditure is fundamental to ensuring value-for-money in delivering services to the community.

As well, having cost-effective internal controls within the purchasing and payments system plays an important part in ensuring that waste of funds, over-expenditures and corruption do not occur.28 Petty cash are relatively small amount of cash kept at hand for making immediate payments for small expenses.
The Principal Accounts Officer approved a substantial amount of $20,00029 as petty cash for the TMA operations in Nasinu and Dawasamu.

The audit noted that supporting documentation pertaining to the utilisation of the funds and petty cash reconciliations were not provided for audit verification.

Non-availability of supporting documentation and reconciliations creates risk of fraud and misappropriation of funds.
Recommendations The Ministry should ensure that:  an imprest is only held for incidental payments;  proper procedure for holding an imprest account as per the Department of Fisheries Finance Manual is followed; 28 Department of Fisheries Finance Manual 2013 – Part 2 Introduction 29 Cheque No: 6759 dated 20th July, 2016 Ministry of Fisheries and Forests Section 32: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________  petty cash reconciliation is submitted on a timely basis; and  relevant supporting documents are provided for petty cash expenditures.
Management Comments  The Ministry notes with concern the issues raised on this.

The main purpose of issuing $20,000 was for stand-by funds to support and sustain the TC Winston rehab work and processing at our TUD facility due to the 2016 Closing of Accounts Circular whereby all processing of payments were ceased with effect from 24/07 – 31/07/2016.

This was to support the rehabilitation operations such as in Dawasamu Pine Scheme and to facilitate our personnel’s’ deployments for this exercise speedily.
The delay in submitting source documents as acquittals from Technical personnel in carrying out their activities was the contributing factor to this.

 The Ministry has since gathered all its source documents of its expenditures for record purposes and will be vigilant in reporting on this should there be any petty cash issued in the future.
32.10 Trust Fund Account 32.10.1 Anomalies in the Fisheries 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.
Un-reconciled items must be investigated and resolved promptly.30 Audit review of the Department of Fisheries One-third Subsidy Scheme Main Trust Fund account and related records revealed the following anomalies:  A variance of $113,993 was noted between the audited balance and the opening balance in the general ledger for the cash at bank account.

Refer to Table 32.17 for details.


Table 32.17: Details of variance between audited balance and opening balance Account Cash at Bank Account Audited balance 2015 ($) 193,634 Opening balance 2016 FMIS ($) 79,641.18 Variance ($) 113,993  Although there was no receipt of money nor payments made for the Fisheries Main Trust Fund account during the year, there was a net movement of $112,281 in cash at bank and trust accounts in FMIS general ledger.

Refer to Table 32.18 for details.
Table 32.18: Details of Movement in the General Ledger Account Allocation Cash at Bank Account Trust 9-32301-76068-520301 9-32301-76068-895005 Debit ($) 122,388 10,187 Credit ($) 10,107 123,772 Movement ($) 112,281 113,585 30 Finance Instructions 2010 – Section 58(3) Ministry of Fisheries and Forests Section 32: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ However, an amount of $1,824 was disclosed as a retention payment in the Trust Statement of Receipts and Payments.
Discussion with the Accounts Officer confirmed that the Ministry of Economy had adjusted the FMIS general ledger.

However, the supporting documentation for the adjustment in the general ledger was not provided for audit verification.

 The listings of the one-third contributions for the trust balance of $191,922 were not maintained by the Ministry.

The above anomalies indicate the existence of ineffective controls in the operation and administration of the Main Trust Fund Account.
As such, there is a high risk of abuse and mismanagement of funds.

Recommendations The Ministry should ensure that:  The variance highlighted is investigated and rectified;  Supporting documentation is maintained for adjustments made and provided for audit review when required; and  a proper trust listing is maintained.

Management Comments  Ministry of Economy (FMIS Unit) has been assisting the Ministry in reconciling of variances in this Trust Fund Account.
 Could not obtain a correct trust listing as this has been carried forward figures from the Fisheries 1/3 Subsidy Scheme.

 We are now maintaining a fortnightly reconciliation on this Trust Fund with FMIS and also maintain a Register to record the movement of funds.

32.10.2 Authorised cheque signatory list not up-to-date The Principal Accounts Officer shall keep an up-to-date file of the names, designations and signatures of officers authorised to operate bank accounts31.
The audit noted that the file for recording the names, designations and signatures of officers authorised to operate the bank account was not updated.

Moreover, three of the cheque signatories are no longer employed by the Ministry.

The above anomalies indicate ineffective controls in the operation and administration of the Main Trust Fund Account.

As such, there is a high risk of abuse and mismanagement of funds.
Recommendations The Ministry should ensure that: 31 Department of Fisheries Finance Manual 2013 – Section 5 (4) (1) Ministry of Fisheries and Forests Section 32: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________   file of the names, designations and signatures of officers authorised to operate bank accounts are updated; and cheques signatories for the Trust account are changed.
Management Comments The Ministry concurs with the audit findings and have changed the cheque signatories of the Trust Account and submitted details of signatories to Treasury Unit, Ministry of Economy.

32.11 Follow Up On Previous Year Issues During the 2016 audit, the status of the matters reported in the previous year was followed up.

The matters highlighted in Table 32.19 have remained outstanding as actions are yet to be taken by the Ministry to resolve them.
Table 32.19: Details of Outstanding Issues Issues Recommendations Current Status Management’s Proposed Action/Comments the various - Errors sufficient - monthly reconciliation process to should be strengthened mitigate issues highlighted TRADING AND MANUFACTURING ACTIVITY ACCOUNT Following anomalies were noted in the Trade and Manufacturing accounts.
- the Ministry did not maintain adequate accounting records to provide and appropriate audit evidence to substantiate following balance sheet items accounts receivable $5,745 and Deposits and Deductions $26,033.
(qualification issue) - there was a variance of $20,320 between the FMIS GL and Ministry’s cash book there was also no balance, bank reconciliation performed for the TMA cash account discrepancies highlighted the reconciliation process should be corrected promptly, and in consultation with the Ministry of Economy where necessary.
- The draft Agency Financial Statements including the Trade and Manufacturing Accounts are checked, substantiated and balances the Ministry of clarified with they are Economy before submitted for audit thoroughly during and The Ministry should ensure that an officer who is independent of the Ministry is present to oversee the stock take process.

independent TMA Stock Figures (Qualification issue) No stocktake conducted on the closing raw materials of $7,322 and closing stock $2,599 for the year 2015.
Furthermore, the stock certificate was signed off by the Principal the Accountant.

Contrary Procurements there were no independent officers from another Ministry to oversee the stocktake.

regulation to Open variance was of Open.


A $17,015.88 noted between FMIS GL and Ministry’s Cash book Open of - Ministry has requested the assistance Asset Management Unit (TMA Unit) of the Ministry of Economy to resolve these long outstanding issues on reconciliation, keeping proper records and stock take our TMA in Nasinu.

- The Ministry agrees with the findings as PSFF has to directed our SAO TMA oversee operation.
AMU (TMA Unit) of the Ministry of Economy been assisting in the training and stock take and proper recording of stock and equipment.

the the - The Ministry agrees with the findings as PSFF has to directed our SAO TMA oversee operation.

AMU (TMA Unit) of the Ministry of Economy been assisting in the training and stock take and proper recording of stock and equipment’s at our TMA Unit in Nasinu.
has Ministry of Fisheries and Forests Section 32: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Issues Recommendations Current Status Management’s Proposed Action/Comments Open Open - Anomalies in the Fisheries Main Trust Fund (Qualification issue) Review of the Fisheries 1/3 Subsidy Scheme Main Trust Fund Account revealed the following anomalies - Ministry only submitted their signed bank reconciliation up to the month of May Medical and Police Reports for New Recruits not Provided Medical and police clearance reports for newly appointed officers were not obtained prior to No appointment of officers.
efforts were also made to obtain the documents after the signing of the contracts.

to The Ministry should ensure that: - Proper vetting of applicants is conducted the prior appointment of officers as required under General Orders 203 - Medical reports and police clearance reports are obtained and kept in the respective files to support vetting process carried out No Individual Work Plan Staff personal files had no IWPs Audit was for prior years.
informed that the Ministry advises each employee to develop their own IWP’s developed by staff were not reviewed, approved and signed by authorised relevant the officers.

However, IWP.

Open The Ministry should ensure that: - IWPs are developed by each employee and are agreed to by the Ministry and the employees; - A copy of the IWP is maintained in the employee’s personal file.
Anomalies in the Underline Account Reconciliation Drawing Reconciliations Variance between the drawings reconciliation and the general ledger balances of $216,033.

- the Ministry should investigate and rectify the variances noted reconciliation between the general statements and ledger FMIS its - the Ministry should ensure that are and reconciliations properly out monthly carried accurately.
Following anomalies were noted The Ministry should ensure that: Open The variance consists of: - $158,744 voided cheques but were later presented to the bank and - Journal adjustment 57,322.25. voucher $ of The voided cheques could not be adjusted in 2015 as the Ministry did not have any this was savings 2016 adjusted the these expenditure.

Hence unbudgeted are expenditures Open thus in The Ministry concurs with the findings.
HR Officers have been following up on update on the medical form and police clearance form for the new officers.

Staff turnover and shortage of staff in the HR has caused the inability to follow up on these reports.

have The Ministry concurs with the Audit findings with this new OMRS Divisional Heads AND Heads of Divisions been encouraged to draw up IWP for all positions under their jurisdiction.

This is one of the criteria in the OMRS that all positions under the Ministry should have a valid IWP.
in 2015 due The Ministry concurs with the findings as necessary adjustments could not be to done insufficient funds.

Adjustments were made in 2016 with the assistance of FMIS team.
Training on the new Ministry of Fisheries and Forests Section 32: Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Issues Recommendations Current Status when scrutinising the underline accounts and related records: - and ledger Variances noted between the the FMIS Ministry’s reconciliation balances.
Variances were mainly due to the incomplete reconciliations submitted by the Ministry No reconciliations provided the accounts payable, for advances and receivables allocations - - - - to Reconciliation of all underline performed are accounts monthly, properly checked and approved on time Procedures relating the preparation of reconciliation statements as stated in the Finance Manual are complied with the reconciliation process; and All balances in its books of accounts are accurate and adequately supported strengthen to Misallocation of Expenditures Ministry was charging expenses to expenditure allocations unrelated The Ministry should ensure that: - All purchases made are charged Open Refer to Appendix 32.3 for examples of misallocations of expenditures.
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 that fairly represented so proper decision making could be made Utilisation of Capital Expenditure Funds for Other Projects Open Open The Ministry should ensure that the funds are utilised for their intended purposes as set out in the avoid unnecessary over expenditures.
budget and to The Ministry should ensure that the currents years expenditures are settled within the current financial period and not carried forward to the next financial year Settlement of Previous Years Outstanding Accounts for outstanding Ministry paid accounts in 2015 from 2014 contrary to the requirements of the Ministry of Economy Circular Ministry of Number 25/14.
Economy advised all Ministries and Departments in 2014 that they would not be facilitating any requests for carry-over of funds from 2014 to the 2015 financial year.

Management’s Proposed Action/Comments Drawings Reconciliation format was instigated by the FMIS team in 2017, as way forward to curb this issue.

The Ministry agrees with the findings.

Virements have been prepared to address the misallocation.
Clerks and Divisional Heads been to request HQ notified the correct Accounts for expenditure allocation to use in order to minimize this misallocation issue.

The Ministry acknowledges the findings and warrants that this will not be a recurring issue in future.

The Ministry will abide by the Ministry of Fisheries Finance and Manual.

Forests Ministry concurs with the findings with great anxiety and we will put stringent measures in place to avoid such practices in future.
Ministry of Fisheries and Forests Section 32: Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Appendix 32.1.
Details of Items Approved for Write-Off No Location / Station Item Ba Caboni Station Colo I Suva HQ, Takayawa Bldgs Korovou Forestry Office Labasa Fisheries Labasa Forestry Lakeba Forestry Office Lami Fisheries Office 1 2 3 4 Galoa 5 Garage Colo I Suva Fisheries Lautoka 13 Forestry Lautoka 14 Fisheries Makogai 15 Forestry MSD Office – Colo I Suva 16 Fisheries Nabouwalu 17 Fisheries Naduruloulou 18 Fisheries Nausori 19 Forestry Nausori 20 Fisheries Navua 21 Forestry Navua 22 Fisheries Rabi 23 Fisheries Savusavu 24 Forestry Sigatoka 25 Forestry Siviculture 26 Fisheries Taveuni 27 Forestry Nasinu 28 Forestry Nasinu TUD 29 Fisheries Wainikoro 30 Forestry Korotari 31 Forestry Garage 32 Fisheries Savusavu 33 Fisheries Savusavu 34 Fisheries Savusavu 35 Fisheries Savusavu 36 Fisheries Labasa 37 Fisheries Rabi 38 Fisheries Taveuni 39 Fisheries Nabouwalu 40 Fisheries Lekutu 41 Fisheries Wainikoro 42 Fisheries Dreketi 43 Forestry Sigatoka 44 Fisheries Caboni 45 Forestry Nadarivatu 46 Fisheries Ba 47 Fisheries Lautoka 48 Forestry Lautoka 49 Forestry Ba 50 Fisheries Namarai 51 Fisheries Tavua 52 Fisheries Rakiraki Desktop and Monitor Notebook Desktop, Monitor & Notebook Desktop and Monitor Printer Desktop, Monitor & Notebook Desktop Camera, Projector Desktop, Monitor & Notebook Notebook Desktop, Monitor & Notebook Desktop, Monitor & Notebook Desktop, Monitor & Notebook Notebook Desktop, Monitor & Notebook Printer Desktop, Copier Desktop, Copier Desktop Camera Printer Desktop, Copier Desktop, Monitor & Notebook Desktop, Monitor & Notebook Desktop Desktop, Monitor & Notebook Fax, copier Desktop, Monitor & Notebook Desktop, Monitor & Notebook Camera Garden Tools & Equipment Garage Tools Office Stationeries Office Stationeries Office Stationeries Office Stationeries Office Stationeries Camera Camera Office Equipment’s Office Equipment’s Office Equipment’s Cabinets Office Equipment’s Blower, Camera, Water Urn Office Equipment’s Office Equipment’s Office Equipment’s Office Equipment’s Office Equipment’s Wheel
 Barrow Office Equipment’s Office Equipment’s Purchase Price ($) Ministry of Fisheries and Forests Section 32: Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ No Location / Station Item 53 Fisheries Sigatoka Desktop, Monitor & Notebook Total Purchase Price ($) 628 203,319 Ministry of Fisheries and Forests Section 32: Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Appendix 32.2.
Detailed EFT cheques not cleared by the Bank from January to July 2016.

EFT No.
Date 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 7/01/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 30/06/2016 24/05/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 Amount ($) Ministry of Fisheries and Forests Section 32: Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ EFT No.
Date 9688 9689 9690 9691 9692 9693 9694 9695 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 1/03/2016 Amount ($) 350 75 243 306 193 629 18 850 38,219 Ministry of Fisheries and Forests Section 32: Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Appendix 32.3.

Examples of Misallocation of Expenditure in 2016 Particulars Amount Allocation Charged Date 29/01/2016 Cheque /EFT No.
9107 02/02/2016 74976 26/02/2016 9586 15/03/2016 9949 14/04/2016 75308 03/05/2016 75424 transfer for Permanent Being payment Secretary's office furniture.

for telegraphic Being membership contribution for 2016 and 2015.

Being 1st progressive payment for the construction of bund walls for treatment plant in Nasinu Being 40% progress payment for refurbishment works at Level 3 Takayawa building.

the final payment Being contractor upon 100% satisfactory refurbishment works at Level 3 Takayawa Building.
Being payment 2nd progressive payment the purchase of Mobilised CCA Timber Treatment Plant.

for to 03/05/2016 75429 Being payment for the purchase of 7 portable sawmills 01/06/2016 11469 14/06/2016 75650 16/06/2016 11851 15/06/2016 75648 21/06/2016 75677 Being payment for the purchase of new Yamaha 115HP Ultra Long Outboard Engine for Makogai Fiberglass Boat.

Being payment for a brand new 19 footer Fiber Glass boat with portable flooring, anchor, rope and all safety equipment Kit.
Being payment for 3 23 ft fiberglass boat with 2 seats.

Being payment for 3 40HP engines for the 3 23 ft fiberglass boat Being payment 3rd progressive payment the purchase of Modiulised CCA Timber Treatment Plant.

for 22/06/2016 12038 23/06/2016 12049 22/07/2016 75861 Being 2nd and 3rd progressive payment for labour cost for the construction of shed and bund walls in Gau.

Being payment for the purchase of 60HP outboard Motor.
Being progress payment # 3 for the the project - Construction of ($) 29,385 1-32205-91071-080699 – Research and Development of Wood and Non Wood 20,235 1-32102-32999-071301 – Trade Shows 3,817 1-32206-91011-080801 – Reforestation of Degraded Forests 6,789 1-32306-91011-080627 – Brackish Water Development 8,486 1-32206-91011-080801 – Reforestation of Degraded Forests.
52,249 1-32207-91021-090132 – Pine Woodlot Logging Package 19,469 1-32206-91011-080801 – Reforestation of Degraded Forests 16,514 1-32207-91021-090119 – Purchase – Lakeba Pine Scheme 183,486 1-32207-91021-090119 – Purchase - Lakeba Pine Scheme 8,225,896 1-32207-91021-090132 – Pine Woodlot Logging Package 26,295 1-32305-91011-080211 - Land Office (As per budget book: Preparatory Works - Cicia Ice Plant) 7,523 1-32304-91011-040105 – Fuel and Oil Vessels 23,670 1-32304-91011-040105 – Fuel and Oil Vessels 18,782 1-32304-91011-040105 – Fuel and Oil Vessels 3,683 1-32207-91021-090132 – Pine Woodlot Logging Package 140,187 1-32201-77101-060514 – ITTO: International Tropical Timber Organisation 15,000 1-32205-91071-080411 – Upgrading of Forestry Institute 11,875 1-32201-77101-060514 – ITTO: International Tropical Timber Organisation 8,609 1-32305-91011-040333 – Ice Plants 61,927 1-32305-91011-040333- Ice Plants Ministry of Fisheries and Forests Section 32: Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Date Cheque /EFT No.
Particulars Amount Allocation Charged Fisheries Office and Standard Grade VI (6) staff quarters at Navukailagi, Gau ($) Ministry of Fisheries and Forests Section 32: Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Section 33 Ministry of Lands and Mineral Resources Role and Responsibilities The Ministry of Lands and Mineral Resources plays a pivotal role in national development and in supporting its economic growth.
The Ministry is focused on developing, reviewing and adopting flexible and market- driven policies to address the challenges faced by land developers, tenants, investors and indigenous landowning units in terms of accessing and utilizing land.

The state owns 4 per cent of land in Fiji.

The State’s land is located within major urban centres around the country; its effective management is crucial to the national development.
The Ministry of Lands and Mineral Resources is made up of two Departments: the Department of Lands and the Mineral Resources Department.

The Department of Lands is responsible for the effective and efficient administration, development and management of all state land in Fiji.
The new Land Use Division, which was established in 2010, helps indigenous landowners put viable land that is currently idle and un-utilized to productive use, under terms and conditions which are attractive to both the landowners and tenants.

The Mineral Resources Department oversees and facilitates the development of the country’s mineral sector and groundwater resources.

It undertakes studies in relation to geological hazards and mineral and groundwater development.
It also manages the development of the mining and quarrying sector.
Table of Contents PART A: FINANCIAL STATEMENTS ................................................................................................2 33.1 Audit Opinion .............................................................................................................................2 33.2 Statement of Receipts and Expenditure ...................................................................................2 33.3 Appropriation Statement ...........................................................................................................3 33.4 Statement of Losses .................................................................................................................3 33.5 Statement of Trust Receipts and Payments .............................................................................4 PART B: AUDIT FINDINGS ...............................................................................................................4 33.7 33.6 Administrative Issues ................................................................................................................4 33.6.1 Governance Issues .......................................................................................................................................... 4 Department of Lands ...............................................................................................................6 33.7.1 Failure to Deposit the Retention Sum in the Trust Fund Account .................................................................... 6 33.7.2 Double posting in General Ledger ................................................................................................................... 8 33.7.3 Main Trust Fund Account not properly maintained .......................................................................................... 8 33.7.4 EFT Payments Unpresented as at 31/7/16 ...................................................................................................... 9 33.8 Department Of Mineral Resources
 ......................................................................................... 10 33.8.1 Main Trust Fund Account not properly maintained ........................................................................................ 10 33.9 Prior Year Issues ...................................................................................................................... 12 Appendix 33.1: Trust Fund Account – Department of Lands ........................................................... 16 Appendix 33.2: Trust Fund Account – Mineral Resources Department ........................................... 17 Appendix 33.3: Incomplete Adjustments in Accounts Receivables (SAG 56) .................................. 18 Appendix 33.4: Postings in General Ledger that could not be Substantiated .................................. 19 Appendix 33.5: Unpresented EFT Payments as at 31/7/16 ............................................................. 21 Ministry of Lands and Mineral Resources Section 33: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 PART A: FINANCIAL STATEMENTS 33.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Lands and Mineral Resources (Ministry) resulted in issue of an unqualified audit opinion.
33.2 Statement of Receipts and Expenditure The Ministry recorded revenue totalling $9.0 million and incurred a total expenditure of $15.4 million for the seven months period ended 31 July 2016.

Refer to Table 33.1 for details.
Table 33.1: Statement of Receipts and Expenditure for 2016 Description RECEIPTS State Revenue 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 Valuation Fees Total State Revenue Agency Revenue Miscellaneous Fees Total Revenue EXPENDITURE Operating 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 Expenditure Capital construction Capital purchases Capital grants and transfers Total Capital Expenditure Value Added Tax 2016 ($) 2015 ($) 6,982,873 --- 501,839 125,478 --- 32,867 --- 9 420,426 661 --- 6,810 10,912 8,081,875 13,213,598 --- 678,583 42,051 7,241 49,366 345 516 367,290 8,460 35,035 9,508 --- Ministry of Lands and Mineral Resources Section 33: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Description Total Expenditure 2016 ($) 15,405,989 2015 ($) 25,353,544 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.

33.3 Appropriation Statement The Ministry incurred expenditure totalling $15.4 million in 2016 against a revised budget of $31.0 million resulting in a savings of $15.6 million or 50%.
The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the budget estimate are provided in Table 33.2.
Table 33.2: Appropriation statement for 2016 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 ($) 8,883,499 859,503 687,800 6,868,550 639,000 32,100 660,165 18,630,617 7,207,000 880,000 2,790,000 10,877,000 1,524,900 31,032,517 Changes ($) (138,560) 137,784 1,553 (2,197) 1,420 --- --- --- Revised Estimate ($) 8,744,939 997,287 689,353 6,866,353 640,420 32,100 660,165 18,630,617 Actual Expenditure ($) 4,938,536 601,682 373,944 4,199,700 428,920 21,069 194,931 10,758,782 Lapsed Appropriation ($) 3,806,403 395,605 315,409 2,666,653 211,500 11,031 465,234 7,871,835 --- --- --- --- --- --- 7,207,000 880,000 2,790,000 10,877,000 1,524,900 31,032,517 2,683,696 811,072 127,111 3,621,879 1,025,328 15,405,989 4,523,304 68,928 2,662,889 7,255,121 499,572 15,626,528 33.4 Statement of Losses The Ministry recorded no loss for the seven months period ended 31 July 2016.
However, the annual Board of Survey resulted in write-off of various assets totalling $190,003.

Refer to Table 33.3 for details.


Table 33.3: Statement of Losses for 2016 Divisions Lands Department Minerals Department Total Item Various Various Amount ($) 187,363 2,640 190,003 Ministry of Lands and Mineral Resources Section 33: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 33.5 Statement of Trust Receipts and Payments The Department of Lands had a trust account balance of $4,230,897 as at 31 July 2016.
The Department recorded total receipts of $2,096,622 and incurred total payments of $3,431,296 in the trust account during the year.

Refer to Appendix 33.1 for details.

The Mineral Resources Department had a trust account balance of $4,482,035 as at 31 July 2016.

The Department recorded total receipts of $716,567 and incurred total payments of $354,220 in the trust account during the year.

Refer to Appendix 33.2 for details.
PART B: AUDIT FINDINGS 33.6 Administrative Issues 33.6.1 Governance Issues Each month, the Accounting Head must provide a signed and dated report to the Permanent Secretary to advise whether all reconciliations and checks required in the agencies finance manual have been carried out; and the current status of any unresolved issue external or internal audit issue.1 An effective and cost effective system of internal control will ensure that wastage of funds, over expenditure and abuse of system, processes and resources do not occur.2 The Accounts Officer must reconcile all accounts to be submitted to Ministry of Finance within two weeks after the closing of each monthly account.3 The Senior Accounts Officer is responsible for the safekeeping and proper maintenance of all accounting records or documents.4 The audit noted that the monthly report of the Accounting Head was not provided to the Permanent Secretary.
As such, the following internal controls were either not complied with or were not in place for the financial year ended 31 July 2016:  The Ministry does not maintain a Gift Register as stipulated in section 5.3.13 of the Ministry’s Finance Manual 2013;  Reconciliations were not performed on a timely basis.

Refer to Tables 33.4 and 33.5 for details.
1 Finance Instructions 2010 - Section 60 2 Ministry’s Finance Manual 2013 – Part 17: Internal Controls – Introductory Paragraph 3 Ministry of Lands and Mineral Resources Finance Manual 2013 - Section 17.2.4 4 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 18.1.3 Ministry of Lands and Mineral Resources Section 33: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Table 33.4: Monthly Reconciliation Dates for Bank Lodgement Clearance Account Month January - April May - June July Date Reconciliation Prepared 08/6/16 23/8/16 24/8/16 Table 33.5: Monthly Reconciliation Dates for Inter-Departmental Clearance Accounts Month Date Reconciliation Prepared Department of Lands January - July Department of Minerals January February March April May June July 18/8/16 20/6/16 21/6/16 22/6/16 23/6/16 24/6/16 25/6/16 26/6/16 - Imprest Account reconciliations for Department of Lands were not prepared in a timely manner while no dates were stated in the reconciliations for Mineral Resources Department.
Refer to Table 33.6 for details.

Table 33.6: Monthly Reconciliation Dates Month January - April May - June July Date Reconciliation Prepared 23/5/16 1/8/16 Date not stated - The reconciliation for Department of Lands Accounts Receivable Standard Asset Group (SAG) 56 was not performed.

The Department had an unreconciled balance of $24,225 in the general ledger as a result of mispostings and reversals not properly carried out for double postings.

Refer to Appendix 33.3 for details.


- The reconciliation for Standard Liability Group (SLG) 84 ledger account 1-33101-33101- 840101 was not prepared in a timely manner.

The reconciliations for the month of January to July were prepared on 12/8/16.

In addition, the audit noted no reconciliation was prepared for SLG 84 general ledger account 1-33301-91011-840602 (withholding tax payable account) which had a closing balance of $7,584 as at 31/7/16.
Absence of regular reconciliations will result in the Ministry failing to detect irregularities, errors and omissions in the respective accounts in a timely manner.

Ministry of Lands and Mineral Resources Section 33: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Recommendation The Ministry must ensure that a Gift Register is maintained and reconciliations are prepared in a timely manner as required by the Finance Manual 2013 and Finance Instructions 2010.
Ministry’s Comments The recommendation of the Auditors is acknowledged and noted.

Management duly acknowledge the recommendation made, ministry will in future adhere to Finance manual 2013 and Finance instruction 2010 in regards to reconciliation policy and will update in timely manner.

One of the reasons for delay in submission is due to resubmission of reconciliation again and again due to adjustment done during closing of accounts.
33.7 Department of Lands 33.7.1 Failure to Deposit the Retention Sum in the Trust Fund Account Retention sum should be deducted from progress payments at the correct rates and shall be reimbursed to the contractor at the conclusion of the defect liability period of the project.
This money should be kept in a trust fund account separate from the entity’s operating account to ensure funds are available when defect liability period of the project is completed, particularly when the defect liability period rolls over to next year.
Retention (10%) of the progress payment, as certified in the Interim Certificate shall be retained by the Ministry of Lands as security for the rectification of any defects.5 In respect of contract works, a percentage of 10% is to be retained from each progress payment.6 The audit noted that the Ministry did not transfer the retention funds deducted from the capital projects to the Retention Trust Fund Account.
The retention sum was not paid to the Contractors as at 31/7/16 and remained in the capital project budget allocation.

This budget allocation was not carried over to the next financial year.

As a result, the Ministry will have to divert funds from other allocations to pay for the retention sum in the future.

Refer to Table 33.7 for sample of retention fund deducted but not transferred to the trust fund account.
Table 33.7: Details of Retention Sums Not Transferred to Trust Fund Account Project Name Details of the Project Development of State Land Maintenance of Existing Subdivision Field 40 Residential Subdivision Drainage improvement at Cautata, Tailevu Total Cost Paid in 2016 (VIP) Percentage of Retention ($) 672,078 10% Retention Amount Deducted in 2016 ($) 68,509 Amount Paid in 2016 Balance as at 31.7.16 ($) - ($) 68,509 64,919 10% 6,492 3,246 3,246 5 Contract No WSC - 138/2015 & 139/2015 – Clause 6.4 6 Contract No WSC - 11/2016, Vakamasisuasua Subdivision Tender Documents – Clause 12.3.1 Ministry of Lands and Mineral Resources Section 33: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Project Name Details of the Project Maintenance of Existing Subdivision Total Drainage improvement at Raiwaqa, Navua Total Cost Paid in 2016 (VIP) Percentage of Retention ($) 90,403 827,400 10% Retention Amount Deducted in 2016 ($) 9,040 Amount Paid in 2016 Balance as at 31.7.16 ($) 4,520 ($) 4,520 84,041 7,766 76,275 In addition to the above, the Ministry does not maintain a Trust Fund Account for keeping the retention funds and also did not utilise the trust fund account maintained by the Fiji Procurement Office for the retention funds.
Moreover, the audit noted that the Department did not maintain a Retention Fund Register to record funds retained as retention sum but reliance was being placed on the Project Consultant to maintain all the details in respect to the retention sum.

In the absence of a Retention Funds Register, the Ministry does not know how much is owed to which Contractor and will process payments without verification when received by the Project Consultant.
Furthermore, the audit noted that contrary to the contract agreement between the Ministry and the Contractor in the Vakamasisuasua Industrial Subdivision Project, retention funds were not deducted from the progressive claims.

Refer to Table 33.8 for details.


Table 33.8: Details of Retention Funds Not Deducted Project Name Details of the Project Development of State Land Vakamasisuasua Industrial Subdivision Project Cost (VIP) Percentage of Retention ($) 1,513,863 10% Payment as at 31/7/16 ($) 261,258 Retention to be Deducted ($) 26,126 The above finding indicates that payments were not properly monitored resulting in overpayment of $26,126 to the contractors for the Vakamasisuasua Industrial Subdivision project.
Recommendations The Ministry should:  ensure that the retention sum deducted from the progress payments are deposited into the trust fund account;  maintain a register to record details of all retention sum deducted; and  ensure that the clauses in the contractual agreement in relation to deduction of retention sums are strictly adhered to.

Ministry’s Comments The recommendation of the Auditors is acknowledged and noted.
The Ministry will further liaise with Ministry of Economy on the recommendation given as this issue has been already discussed with them and the advice received that carry over is not allowed hence the need for the Ministry Ministry of Lands and Mineral Resources Section 33: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 to seek funding in the next Budget year to cater for those payments.

Going forward that’s the process the Ministry will practice.
33.7.2 Double posting in General Ledger 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 Any errors or misallocations must be immediately adjusted by way of journal vouchers.8 The Ministry made a payment of $189,739 (VIP) to iTaukei Land Trust Board for payment of native land leased to state for Northern Division for the period 1/1/16 – 30/6/16.
The payment was facilitated from Standard Expenditure Group 4 (natural account number 040707).

The audit noted that in July, the Ministry of Economy posted $189,739 to Standard Expenditure Group (SEG) 8 (natural account number 089901) for payment of native land leased to state for Northern Division for the period 1/1/16 – 30/6/16 with journal reference number ‘Draw 12’.
Discussion with the officer responsible revealed that the payment was incorrectly listed in the Unpresented Cheques list as at July 2016 and Ministry of Economy adjusted it to SEG 8.

As a result, SEG 8 is overstated by $189,739.

The finding indicates that the Accounts Officer did not reconcile the ledger balances to the general ledger report.

As such, the double posting was not identified and corrected in a timely manner.
Recommendation The Ministry should ensure that the ledger balances are reconciled to the general ledger reports in a timely manner and errors or misallocations are adjusted accordingly.

Ministry’s Comments Management duly acknowledge the recommendation made.
In future the Ministry ensures that proper reconciliation is being done for General Ledger to avoid any misposting or double posting as the case for due to some misunderstanding between Ministry of Economy and the Ministry which resulted in that double posting.

33.7.3 Main Trust Fund Account Not Properly Maintained When trust money is received, the Clerical Officer shall issue an official trust receipt to the payer.
Details of receipts shall be entered into the trust cashbook.9 The Clerical Officer shall keep a trust ledger to record movement of trust money.10 7 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 16.3.3 8 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 16.3.4 9 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.2.1 10 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.3.2 Ministry of Lands and Mineral Resources Section 33: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 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.11 The Trust reconciliation shall be prepared in accordance with the format provided in Schedule 9 of the Ministry’s Finance Manual.12 Audit review of trust fund account revealed the following anomalies:  Monthly Trust Fund Account reconciliations was not prepared within five days after the end of each month.
The reconciliations for January to June 2016 were prepared on 23/8/2016.

The bank reconciliation for July was prepared on 24/11/2016 while the July reconciliation for SLG 89 was not provided for audit verification;  Trust Bank Account reconciliation (SAG 52) was not prepared using the standard format as in the Ministry's Finance Manual Schedule 9 (pg.
117);  Trust cash books were not maintained;  The Ministry did not maintain an updated trust ledger; and  The postings in the general ledger could not be substantiated due to inadequate supporting documents.

Refer to Appendix 33.4 for sample postings in the general ledger that could not be substantiated.

The above anomalies could have been avoided if the responsible officers had been more vigilant in the performance of their duties.
Recommendations The Ministry should ensure that:  the monthly trust fund reconciliations are prepared in a timely manner in accordance with Schedule 9 of the Ministry of Lands and Mineral Resources Finance Manual 2013; and  the trust cash book and trust ledger records are properly maintained and updated.

Ministry’s Comments Management duly agrees with the recommendation made.

The trust cash book and ledger has been updated from the FMIS.
33.7.4 EFT Payments Unpresented as at 31/7/16 Direct cheque deposits or Electronic Fund Transfers into the bank account of suppliers are encouraged to avoid unpresented cheques.13 During the review of the Department of Land’s unpresented cheque listing, the audit noted that the unpresented cheque listing consists of Electronic Fund Transfer (EFT) payments totalling $439,587 as 11 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.4.1 12 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.4.4 13 Finance Circular 04/2016 - Unpresented Cheques Clause 5.1.3 Ministry of Lands and Mineral Resources Section 33: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 unpresented.
However, the EFT payments should have been cleared at least a day after the EFT list was sent to the bank.

Refer to Appendix 33.5 for details of EFT payments shown as unpresented.

In addition, the audit conducted a subsequent testing for sample of unpresented EFT payments and noted that the EFT payments were not appearing in the consecutive month’s bank statement (July to December 2016).
The Ministry could have avoided the above anomalies had they been more vigilant while performing the reconciliations and resolving the errors, omissions and variances identified.

Absence of proper supervisory checks in the Accounts Section was a major contributing factor to the anomalies noted.

Recommendations  Supervisory controls and checks should be strengthened in the Accounts Section to avoid such discrepancies from occurring in future.
 The Department should ensure that the Drawings Account is reconciled monthly and any errors, omissions or misallocations noted are investigated and adjusted accordingly.

Ministry’s Comments We would like to acknowledge the recommendation by auditors.
The Ministry noted that some of the reason for un-presented cheques while doing the bank reconciliations was that it could not match the batch postings in the bank statements to the EFT numbers generated in the FMIS (Financial Management Information System) ledger.

This had resulted in the overstatement in the un-presented cheques.
Also the increase in amount of Un-presented Cheque list is when we process payment at the end of the month it does not show in the Bank Statement for that month but it appears in the upcoming months.
33.8 Department Of Mineral Resources 33.8.1 Main Trust Fund Account Not Properly Maintained 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.14 Details of balances must be attached to the reconciliation statement.15 All stale cheques must be cleared by 5 August 2016.16 Audit review of Mineral Resources Department’s trust fund accounts revealed the following anomalies:  Monthly trust fund account reconciliations were not prepared within five days after the end of each month.
Reconciliations for the months of January to March were prepared on 18/7/16 while the reconciliations for the months of April and May was prepared on 27/7/16.

The unsigned soft copies of the reconciliation were provided for the month of June and July; and 14 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.4.1 15 Ministry of Lands and Mineral Resources Finance Manual 2013 – Section 15.4.2 16 Finance Circular No.
4/2016 – Clause 5.1.2 Ministry of Lands and Mineral Resources Section 33: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017  The stale and voided cheques were appearing in the unpresented cheque listing.

Refer to Table 33.9 for details of stale and voided cheques.

Table 33.9: Details of Stale and Voided Cheques Date Chq No.
Amount ($) 24/11/2011 01/12/2011 01/12/2011 02/12/2011 07/12/2011 07/12/2011 09/12/2011 09/12/2011 19/12/2011 29/12/2012 25/07/2014 23/12/2014 29/12/2014 23/06/2016 1009 1023 1024 1026 1034 1035 1048 1051 1066 1271 1580 1719 Adjust rev 23/12 1843 26 441 143 244 79 673 513 131 275 1,080 99 40,000 (34,692) 2,524 The above anomalies could have been avoided if the responsible officers had been more vigilant in the performance of their duties.
Recommendations The Ministry should ensure that:   the monthly trust fund reconciliations are prepared in a timely manner; and stale and voided cheques are cleared in a timely manner.

Ministry’s Comments Auditor’s comments noted and improvement shown in the update of Trust Fund Account for current financial year.

Voided cheques are always captured in GL when transaction occurred.

However, the Department needs to write- on all stale cheques and to be removed from reconciliation statement.
Ministry of Lands and Mineral Resources Section 33: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 33.9 Prior Year Issues Issues Rental Being Charged on Expired Leases Recommendations The Department should ensure that: From data obtained from the Crown Land Lease System, the audit noted that the rental revenue was being charged on expired leases.

This amounted to $1,043,573.58 as at the date (4/11/15) of audit.
 Lease rentals are not charged on expired leases; and  Necessary processes are taken after the expiry of leases Arrears of Revenue Accounting Heads to: The audit noted that the arrears of revenue for Department of Lands as at 31/12/15 which totalled $26,980,319 only included crown land lease.

The Department was not able to provide arrears figures for the other revenues.

The audit also noted that the recovery of arrears of revenue have been slow as the arrears of increasing.
Although a revenue have been to Taskforce Unit was established enforce collection of land rent, arrears of revenue continue to increase.
in 2008   are the  Ensure figures finalizing correct supported before arrears of revenue report Take appropriate steps vigorously follow up for recovery of long outstanding debts; Follow up the outstanding debts in accordance with the debt recovery the procedures prescribed Ministry’s Finance Manual and  Review the effectiveness of the was Unit the to Taskforce established collection of land rent that enforce in Anomalies in Reconciliation the Underline Accounts Audit noted the following anomalies: • The preparation of monthly reconciliation the Department of Lands statements Operating Trust and Revolving Fund Account were not performed on time.
for • An amount of $1,317,407 was recorded as Vat • Reconciliation statements should be prepared on a monthly basis and the statements should be properly checked and signed off.

• 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 • The Ministry should ensure that all balances in its books of accounts are 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 Action Taken As per discussion with Acting SAO, these expired leases are continually being charged by the system.

To which they have to manually inactive the expired lease accounts.

The occupants are still there but have applied for a new lease term and a new account is created in the system.
duly note to address the Ministry We the recommendation being made, is currently appropriate considering measures the collection of revenue arrears / how to minimise the arrears of better reflection of report we are preparing monthly arrears of the revenue report variance between revenue collected and revenue that are due.

revenue, to see for note of duly We recommendation The Auditors.

currently practices preparing reconciliation.

the the ministry this by monthly The arrears of revenue still exist.
The balance for arrears of revenue as at 31/7/16 was $20,778,013.

In addition, the audit noted a variance of $289,900 between the arrears of revenue quarterly report and the lease arrears listing provided as at 31/7/16.

Discussion with the Senior Accounts Officer revealed that the balance stated in arrears of revenue report is correct and they have to relook at their lease arrears listing.
Also, the A/SAO agreed that Valuers' Registration, Surveyor Registration, Narere Barracks and Premium Arrears should be accounted in the Arrears of Revenue Report for 2015 & 2016.

The Ministry will look into it.

The issues are recurring: trust monthly reconciliations for • The operating Department of Lands were not performed in a timely manner.
The reconciliations for January to May were prepared on 29/6/16, June reconciliation was performed on 30/7/16 while July reconciliation was performed on 31/8/16; and • The revolving fund reconciliations were not prepared Ministry of Lands and Mineral Resources Section 33: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues 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 the VAT collected on revenue and the VAT payment made to FRCA.

The audit noted that the Department of Lands had been short debiting this account when payment is made to FRCA resulting in the outstanding balance increasing every year.

This balance may be regarded as the amount owed to FRCA.
Department of Lands – Regularity Audit Issues Salary and Wages Reconciliation not prepared on Time Audit noted that some salary and wages reconciliations were performed and statements prepared very late which would have made it difficult for the Department to detect and act upon any payroll discrepancy in a timely manner.
Payments made after the Discount Period From the review of sample of payment vouchers for payments of rates to Municipal Councils, audit noted that the Department did not take advantage of the full discount offered by the Municipal Councils by paying within the discount period.
Recommendations accurate and adequately supported • The Ministry should ensure correct calculation of VAT payments made to FRCA Management Comments Action Taken for Department of Lands while the reconciliations for Mineral Resources Department were prepared but not in a timely manner.

• The balance of $1,210,899.40 still exist as VAT from Provision for Goods & Services (account No: 1-33301- 79101-863201) under the Operating Trust Fund Account.
 The wages reconciliations for Department of Lands the Finance were not prepared, contrary Instruction 2010 Section 17 (7).

to payroll • The Department should ensure that regular (salaries/wages) reconciliations are performed on a fortnightly/weekly basis and that the reconciliation statements are thoroughly checked by the Principle Accounts Officer to minimize or avoid incorrect payments of salaries and wages.
should • The Department take advantage of the discounts offered by the by the Councils requisitioning of funds with the Ministry of Economy within the discount period given by the Municipal Councils planning In 2010 the acknowledge We of the recommendation Auditors.

future we are going to adhere to Finance Instruction 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 Economy again upon their request which resulted in the delay.

taken Recommendation into consideration by the department.

While we do incentives appreciate the provided by the Municipal Councils, it is also important to note there are that processes that we need to comply with before payment is facilitated.
Statements of usually are payments is The Department is yet to take full advantage of the discounts offered by the Municipal Councils by paying within the discount period.

Ministry of Lands and Mineral Resources Section 33: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Issues Recommendations Legislation Governing Crown Lands Act • The Department should consider making proposals to review legislations Economy.
to of files forwarded Action Taken Management Comments received within the first two weeks of January from the Municipal Councils, and they are our Valuation Unit to carry out verification which proper takes another 2 usually weeks are before forwarded to the Accounts for preparation payment schedules and processing of RIE which normally takes week then is forwarded to Ministry of 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 those facilitate payment municipalities offer discount.
Recommendations provided are noted with appreciation.

and verifications The reconciliations rates of charged and rates payables are normally carried by the valuation divisions before the schedules are submitted to the Finance to facilitate Variances rectified before payment made The recommendation rose by to the Auditors to that in regards section are payment.

normally is The legislations are yet to be reviewed.
Ministry of Lands and Mineral Resources Section 33: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 the legislations Issues Legislations should be reviewed and updated on a regular basis to accommodate changing developments.
The Department of Lands is directly governed by listed below: - - - - - - Land Use Decree 2010 (2010) Lands Transfer Act (1978) Surveyors Act (1978) Subdivision of Land Act (1978) State Lands Act (1978) Agricultural Landlord and Tenants Act (1978) Valuation Registration Act (1986) State Acquisition of Lands Act (1978) Local Government Act (1985) - - - Recommendations governing the Department to ensure that all the different legislations are harmonized.
Action Taken Act/ Management Comments Legislations governing crown Lands Act is acknowledged.

The Ministry is targeting to revise three (3) legislations Surveyors (Mining 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.

The audit however noted that the Decrees were released from time to time to amend various sections within the legislations.
The whole legislation needs to be reviewed.

No evidence existed to indicate that proposals have been made to review the entire legislation.

The review of the legislation needs to be done to ensure that the various requirement and amendment to the legislations are harmonized the main legislation governing the Department of Lands.

into Recommendation The Ministry should ensure that corrective actions are taken to resolve recurring issues.

Ministry’s Comments The Auditor’s recommendation is duly noted.
The Ministry is taking appropriate approaches to address the prior year recurring issues highlighted by the Auditors.
Ministry of Lands and Mineral Resources Section 33: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Appendix 33.1: Trust Fund Account – Department of Lands Account Receipts Compensation Other Revenue Fisheries Impact Lease Offer Priority plan Royalty Sand Gravel Total Receipts Payments Bank fees Meal/Mileage Claim Priority Plan Royalty Fisheries Impact Compensation Airstrip payments 2016 ($) 2015 ($) 254,791 154,489 921,678 196,545 157,485 403,015 8,619 2,096,622 5,256,427 157 8980 30,596 96,135 47,392 2,905,159 342,877 Total Payments 3,431,296 4,246,639 Net (Deficit)/Surplus (1,334,674) 1,009,788 Balance as at 1 January 5,565,571 4,357,767 Adjustment --- 198,016 Closing Balance as at 31 July 2016 4,230,897 5,565,571 Ministry of Lands and Mineral Resources Section 33: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Appendix 33.2: Trust Fund Account – Mineral Resources Department Account Receipts Mining Mining Bond SPL Renewal Fees Mining Tender Fees Mining Surrender Fees Non-Mining Geotechnical Survey Borehole Construction 2016 ($) 2015 ($) 475,854 336,040 344,897 1,958 1,010 13,982 18,680 72,042 Total Receipts 716,567 547,896 Payments Mining Transfer of Renewal Fees Bond Refund Non-Mining Borehole Construction Geotechnical Survey 96,732 63,300 314,421 25,554 8,705 5,540 Total Payments 354,220 160,032 Net (Deficit)/Surplus 362,347 387,864 Add Balance as at 1 January 4,119,688 3,731,824 Closing Balance as at 31 July 2016 4,482,035 4,119,688 Ministry of Lands and Mineral Resources Section 33: Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 Appendix 33.3: Incomplete Adjustments in Accounts Receivables (SAG 56) Journal ID Date Debit Description Audit Comments JULYAD 31/07/2016 (48,511.85) ADJ OF INTERFUND POST AR1209 30/05/2016 (394.58) P/ASSES REV REC ON 2 AR6747 31/03/2016 3,236.41 GCC REV REC ON 9/3/1 231008 31/03/2016 238.85 JV01/03 231008 31/03/2016 456.53 JV02/03 Posting by Ministry of Economy where the trust account (SLG 89) was
 debited and SAG 56 was credited.
The sum was cleared to BLC twice.

Thus, an outstanding credit balance which needs to be adjusted.

AR yet to be cleared to BLC.

Trust money posted to SAG 56 instead of SAG 52, which is yet to be adjusted.

Trust money posted to SAG 56 instead of SAG 52, which is yet to be adjusted.

231014 31/05/2016 600.85 JV01/05 231014 30/06/2016 600.85 JV01/06   JV1/5 reversed $600.85 is yet to be cleared to BLC.

the clearance to BLC.


JV1/6 done incorrectly overstating SAG 56 by $600.85 and understating BLC by $600.85 231018 30/06/2016 231018 30/06/2016 722.5 No journal description in GL AR of $722.50 was double posted to SAG 56.

One yet to be adjusted.

7,576.23 No journal description in GL AR of $7.576.23 was double posted to SAG 56.

One yet to be adjusted.

231018 30/06/2016 231002 31/01/2016 231018 30/06/2016 231018 30/06/2016 9,424.73 No journal description in GL AR of $9,424.73 was double posted to SAG 56.
One yet to be adjusted.

12,027.99 No journal description in GL AR of $12,027.99 was double posted to SAG 56.

One yet to be adjusted.

12,253.06 No journal description in GL AR of $12,253.06 was double posted to SAG 56.

One yet to be adjusted.

25,993.80 No journal description in GL AR of $25,993.80 was double posted to SAG 56.

One yet to be adjusted.
Total 24,225.37 Ministry of Lands and Mineral Resources Section 33: Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Appendix 33.4: Postings in General Ledger that could not be Substantiated Journal ID DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 DRAW18 AR2002 JULJNL JULJNL JULJNL AR3820 JULJNL JULJNL DRAW18 JULJNL DRAW18 JULJNL AP3803 JULJNL JULJNL AP3163 JULJNL JULJNL JULJNL JULYAD DRAW18 JULJNL JULJNL JULJNL JULJNL JULJNL JULJNL JULJNL JULJNL JULJNL JULJNL AP5750 JULYAD JULJNL JULJNL DRAW18 AP4109 JULJNL JULJNL JULJNL AP4110 Journal Description Amount ($) ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC ADJ OF CR ADJ REC 75% COMPENSATION AR7899 27/10/2015 REVERSAL AR712431/07/2015 AR486223/02/2015 75% COMPENSATION AR0607 29/09/2015 REVERSAL AR8378 6/03/2015REVERSAL 7/19/2016CHQ CSH1 31/07/2016ADJ OF 7/19/2016CHQ CSH1 12/07/2016 REVERSAL MEAL & MILEAGE CL 31/07/2016 REVERSAL 19/06/2015PAYMENT MEAL & MILEAGE CL 31/07/2016 REVERSAL 31/07/2016 REVERSAL 31/07/2016 REVERSAL ADJ OF INTERFUNDREVERSAL 12/1/2015PRESENTE 28/06/2016PAYMENT 30/06/2016PAYMENT 31/07/2016 REVERSAL 31/07/2015 REVERSAL 31/07/2016 REVERSAL 31/07/2016 REVERSAL 31/07/2016 REVERSAL 31/07/2016ADJ OF 31/07/2016 REVERSAL 31/07/2015 REVERSAL PAYMENT OF AIR FARE ADJ OF INTERFUND 18/02/2015 PAYMENT 18/2/2015PAYMENT 14/01/2015PRESENT FORESHORE LEASE T 31/07/2016ADJ OF 31/07/2016 ADJ OF 18/02/2015PAYMENT FORESHORE LEASE F (3.60) (4.40) (4.40) (4.80) (4.80) (6.80) (7.20) (7.50) (7.50) (8.80) (12.16) (28.82) (40.00) (414.20) (460.00) (969.95) (765.92) (1,030.40) (3,081.19) (2,318.40) 97.56 105.00 117.00 130.00 141.84 182.61 264.20 266.04 273.92 283.40 320.23 347.69 400.00 455.73 543.00 584.19 588.80 675.80 686.70 897.00 1,152.50 1,270.00 1,483.50 1,500.18 1,786.40 1,995.98 2,148.80 2,350.00 2,521.00
 2,778.40 2,955.00 3,178.20 4,250.00 Ministry of Lands and Mineral Resources Section 33: Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Journal ID JULJNL JULJNL DRAW18 JULJNL JULJNL AP3819 JULJNL JULJNL JULJNL JULJNL Total Journal Description 12/30/2015 PAYMENT 31/07/2015 PAYMENT 27/02/2015CHQ PRE 23/02/2015 PAYMENT 25/01/2016 PAYMENT RENTAL VUNIWAIWAI 18/02/2015 PAYMENT 1/03/2016 PAYMENT 24/09/2015 PAYMENT 31/07/2016 ADJ OF Amount ($) 4,540.19 5,366.10 8,250.00 11,658.51 13,077.97 14,500.00 18,042.40 29,117.96 31,011.65 4,360.00 $ 167,474.61 Ministry of Lands and Mineral Resources Section 33: Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Appendix 33.5: Unpresented EFT Payments as at 31/7/16 Date EFT No.
Amount ($) 08/04/16 08/04/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 31/05/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 10/06/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/ Ministry of Lands and Mineral Resources Section 33: Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Date EFT No.
Amount ($) 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 Total 9881 9882 9883 9884 9970 216 40 55 127 189 439,587 Ministry of Lands and Mineral Resources Section 33: Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 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 2016, the Ministry will carry out the Fiji Tourism Development Plan, Fijian Made-Buy Fijian Campaign Audit Procedures and a review of the Department of National Trade Measurement and Standards.

The Ministry will also continue with its highly successful micro and small business grant scheme which creates opportunities for many ordinary Fijians and encourages a culture of enterprise and entrepreneurship.
TABLE OF CONTENTS PART A: FINANCIAL STATEMENTS........................................................................................................................................... 1 34.1 34.2 34.3 Audit Opinion ................................................................................................................................. 1 Statement of Receipts and Expenditure ........................................................................................ 1 Appropriation Statement ................................................................................................................ 2 PART B: AUDIT FINDINGS .......................................................................................................................................................... 3 34.4 Backlog of Audited Accounts ......................................................................................................... 3 PART A: FINANCIAL STATEMENTS 34.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Industry, Trade and Tourism resulted in an unqualified opinion.
34.2 Statement of Receipts and Expenditure The Ministry of Industry, Trade and Tourism recorded revenue totalling $727,479 and incurred expenditure totalling $34,371,778 for the seven months period ended 31 July 2016.
Ministry of Industry and Trade Section 34: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Table 34.1: Statement of Receipts and Expenditure for 2016 Description Fees – Miscellaneous Other Revenue TOTAL REVENUE Established staff Government wage earners Travel and communications Maintenance & operations Purchase of goods and services Operating grants and transfers Special expenditures Total Operating Expenditure Capital Purchases Capital Grants and Transfers Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 31 July 2016 ($) 257,404 470,075 727,479 1,700,033 221,837 212,157 402,602 193,551 6,569,031 3,302,537 12,601,748 - 21,422,280 21,422,280 347,750 34,371,778 31 December 2015 ($) 709,746 7,213 716,959 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 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.

Other Revenue increased by $462,862 in 2016 due to Grant-in-aid received from Indian High Commission towards the Micro and Small Business Grant totalling $470,000.
34.3 Appropriation Statement The Ministry incurred expenditure totalling $34,371,778 in 2016 against a revised budget of $58,946,473 resulting in savings of $24,574,695 or 42%.

The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the budget estimate are provided in Table 34.2 below.
Table 34.2: Appropriation Statement for 2016 SEG Item 1 Established staff 2 Government Wage Earners 3 Travel and communications 4 Maintenance & operations 5 Purchase of goods and services 6 Operating grants and transfers 7 Special expenditures Budget Estimate ($) 3,774,396 377,655 451,300 650,300 312,500 11,100,676 7,130,546 Changes ($) - - - (6,422) 6,422 - (30,108) Revised Estimate ($) 3,774,396 377,655 451,300 643,878 318,922 11,100,676 7,100,438 Actual Expenditure ($) 1,700,033 221,837 212,157 402,602 193,551 6,569,031 3,302,537 Lapsed Appropriation ($) 2,074,363 155,818 239,143 241,276 125,371 4,531,645 3,797,901 Ministry of Industry and Trade Section 34: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ SEG Item Total Operating Costs 8 Capital Construction 9 Capital Purchases 10 Capital Grants and Transfers Total Capital Expenditure 13 Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) 23,797,373 - 2,000,000 32,200,000 34,200,000 949,100 58,946,473 Changes ($) (30,108) Revised Estimate ($) 23,767,265 Actual Expenditure ($) 12,601,748 Lapsed Appropriation ($) 11,165,517 30,108 - - 30,108 30,108 2,000,000 32,200,000 34,230,108 - - 21,422,280 21,422,280 30,108 2,000,000 10,777,720 12,807,828 - - 949,100 58,946,473 347,750 34,371,778 601,350 24,574,695 PART B: AUDIT FINDINGS 34.4 Backlog of Audited Accounts Where required under Finance Instruction 16-(8), the recipient shall prepare an acquittal report.
The acquittal report shall provide the following information:  details of grant money expended and unexpended;  grant objectives and targets achieved;  financial statement (audited if practicable) for grants of $20,000 or more.1 The report shall include annual Audited Report 2016 and audit financial statements from a reputable audit firm (due in the 1st Quarter 2017).2 An Audit report on the Financial Activities for the previous year shall be submitted to the Ministry.3 The audit noted that the following statutory authorities have not provided audited financial statements for the operating grants received from the Ministry.
Refer to Table 34.3 for details of grant assistance provided and the status of the audited financial statements.

Table 34.3: Details of Pending Audited Accounts Grant Recipients Tourism Fiji5 Textile Clothing and Footwear Council Total Pending Audited Accounts 2015 2015 2014 2013 Actual Grants ($)4 26,500,000 100,000 100,000 100,000 26,800,000 In the absence of audited financial statements, the Ministry cannot substantiate whether grants were used for the authorized purpose.
1 Ministry of Industry, Trade & Tourism Finance Manual 2013 – Part 3.3.1 2 Grant Agreement 2016 : Page 6 (Tourism Fiji) 3 Grant Agreement 2016: Page 4 (TCF Council) 4 Figures were extracted from Financial Management Information Systems (FMIS) on 26/01/17 5 Tourism Fiji receives operating and capital grant.

The figure is the consolidation of the grants.


Ministry of Industry and Trade Section 34: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Recommendation The Ministry should ensure the grant recipients provide the audited financial statements in a timely manner as required in the grant agreement.
Management Comments  In year 2013, the Ministry analysed the Service Agreements of the Statutory Organizations for previous years and had identified that the clause on “Reporting and Review” should include the submission of Audited Report.

Subsequently, since 2014, the Ministry had made amendments to the Service Agreements and required submission of Audited Reports from all the Statutory Organizations.
 The Ministry has noted the auditors recommendation, and will ensure that the Audited Reports are submitted by the Statutory Authorities as required in the Service Agreement Table below shows the status of pending audited accounts.
Grant Recipients Tourism Fiji Textile Footwear Council Clothing and Pending Audited Accounts 2015 2015 2014 2013 Actual Grants ($) Remarks 26,500,000 2014 accounts is ready for submission and 2015 will be submitted thereafter 100,000 The accounts for 2013, 2014 and 2015 are being audited Earnest and Young.

Will be submitted to OAG as soon as the audited report is received.
100,000 100,000 Ministry of Industry and Trade Section 34: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 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: FINANCIAL STATEMENT .................................................................................................................................. 1 35.1 35.2 35.3 Audit Opinion ........................................................................................................................ 1 Statement of Receipts and Expenditures ............................................................................. 1 Appropriation Statement ....................................................................................................... 2 PART B: AUDIT FINDINGS ............................................................................................................................................... 3 Grants to Fiji Sugar Corporation Limited (FSCL) on Sugar Development ........................... 3 35.4 Anomalies in Revenue records............................................................................................. 4 35.5 Supporting documentation to Vouchers Not Stamped “Paid” .............................................. 6 35.6 No Segregation of Duties ..................................................................................................... 6 35.7 Irregularities in Accountable Advance .................................................................................. 7 35.8 35.9 Anomalies in the Reconciliation of Underline Accounts ....................................................... 9 Appendix 35.1: Examples of PV supporting documents not stamped “Paid” ............................... 11 Appendix 35.2: Details of Travel Advance Irregularities Noted for Accounts Officer ................... 12 PART A: FINANCIAL STATEMENT 35.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Sugar resulted in the issue of an unqualified opinion.
35.2 Statement of Receipts and Expenditures The Ministry of Sugar incurred expenditures totalling $19,841,904 for the seven months period ended 31 July 2016.

Details are shown in Table 35.1.
Table 35.1: Statement of Receipts and Expenditures Description Established staff Government wage earners Travel & communication Maintenance & operations Ministry of Sugar 31 July 2016 ($) 31 December 2015 ($) 166,318 22,857 37,701 51,085 355,591 31,932 49,843 62,214 Section 35: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Description Purchase of goods & services Operating grants & transfers Special expenditures Total Operating Expenditures Capital construction Capital grants & transfers Total Capital Expenditures 31 July 2016 ($) 13,131 2,009,347 221,305 2,521,744 2,745,866 14,322,100 17,067,966 31 December 2015 ($) 14,110 1,429,399 938,170 2,881,259 2,099,179 5,000,000 7,099,179 Value added tax 252,194 599,767 TOTAL EXPENDITURES 19,841,904 10,580,205 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.

The increase in Operating Grants and Transfers funds was due to the commencement of payment of Sugar Council Levy by the Ministry in 2016.
The increase in Capital Construction expenditure was due to the fast tracking of cane access roads maintenance to ensure coverage of as many roads as possible with an estimated 97% of the cane access roads being maintained and repaired before financial period ended 31 July 2016.

The increase in Capital grants and transfers was due to the payment of fertilizer subsidy to South Pacific Fertilizer in 2016.

The payment was made by Ministry of Economy (Head 50) in the financial year 2015.
35.3 Appropriation Statement The Ministry incurred expenditures totalling $19,841,904 against a revised budget of $23,788,345 resulting in savings of $3,946,441.

The savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditures against the revised budget estimates are provided in Table 35.2.
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 Budget Estimate ($) 502,567 68,731 88,000 86,000 21,000 2,009,347 2,945,000 5,720,645 Changes ($) - - - - - - - - Revised Estimate ($) 502,567 68,731 88,000 86,000 21,000 2,009,347 2,945,000 5,720,645 Actual Expenditure ($) 166,318 22,857 37,701 51,085 13,131 2,009,347 221,305 2,521,744 Lapsed Appropriation ($) 336,249 45,874 50,299 34,915 7,869 - 2,723,695 3,198,901 Ministry of Sugar Section 35: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ SEG Item 8 10 13 Capital construction Capital grants & transfers Total Capital Expenditure Value added tax TOTAL EXPENDITURE Budget Estimate ($) 3,000,000 14,722,100 17,722,100 345,600 23,788,345 Changes ($) - - - - - Revised Estimate ($) 3,000,000 14,722,100 17,722,100 345,600 23,788,345 Actual Expenditure ($) Lapsed Appropriation ($) 2,745,866 14,322,100 17,067,966 252,194 19,841,904 254,134 400,000 654,134 93,406 3,946,441 PART B: AUDIT FINDINGS 35.4 Grants to Fiji Sugar Corporation Limited (FSCL) on Sugar Development Grants that are administered by agencies should only be used for the purpose for which Parliamentary or Cabinet approval has been given.1 On 3 May 2016, the Ministry signed an agreement with the Fiji Sugar Corporation Limited (FSCL) for the rehabilitation of the 2016 crops which were damaged by Tropical Cyclone Winston.
The objectives of the grant were as follows.

 To rehabilitate 18,000 hectares of sugarcane which was drastically affected by Category 5 Tropical Cyclone Winston that hit Fiji on Saturday 20/02/16 in the sugarcane district of Rakiraki, Tavua, Rarawai and parts of Lautoka.
The following components to be provided: Fertilizer – Blend C and Herbicides for 18,000 hectares totaling $3,636,000.2  To plant 682 hectares of cane by the end of 2016 planting season with the following component: Land preparation, Seed cane, Fertilizer – Blend A, Herbicide and Drainage for 682 hectares totaling $1,364,000.3 Audit Review of the program records revealed the following anomalies:  The grant of $4.6 million paid to FSCL for the rehabilitation as per the grant agreement, was actually utilised for cane planting program for which Cabinet approval was not obtained by the Ministry.
The grant agreement was also not revised to reflect the changes made to the initial objectives of the grant.

 The cane planting program facilitated by the FSCL included payment for fallow and replant of a total area of 3,425 hectares.

The total payment made by the FSCL in this regard was approximately $6.2million and exceeded the total grant amount received by $1.6million.

Refer to Table 8.1 for details.

Table 35.3: Utilisation of Grant as at 31 December 2016 Mill Lautoka Rarawai Labasa of No.
Growers 356 1,230 1,473 Total Grant Paid Out ($) 521,425 2,082,740 3,107,582 Hectares Paid (Unit) Fallow 235 1,013 1,088 Replant 62 163 592 Hectares Paid (Unit) 297 1,176 1,681 1 Ministry of Sugar Finance Manual 2013: Part 3 Introductory Paragraph 2 Grant Agreement between MOS and FSCL for Sugar Development Plan 2016 – Clause 2.1.

3 Grant Agreement between MOS and FSCL for Sugar Development Plan 2016 – Clause 2.2.
Ministry of Sugar Section 35: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Mill Penang Total of No.

Growers 280 3,339 Total Grant Paid Out ($) 486,935 6,198,682 Hectares Paid (Unit) Fallow 258 2,595 Replant 14 831 Hectares Paid (Unit) 272 3,425  Project reports were not submitted to the Ministry on a quarterly basis.

Instead, only one progress report was submitted on 31 December 2016, which was for work carried out for the whole year.
The audit findings indicate that proper procedures were not followed in utilisation of government grant by FSCL.

Recommendations The Ministry should ensure that:  proper approvals are obtained before the funds are utilised for other purposes and grant agreements are revised accordingly.

 physical inspections are carried out in the field to verify that the works carried out are in line with the requirement of the grant agreement.
 the grant is released on a quarterly basis after quarterly reports have been received and verified.

Ministry’s Comment The overall objective of this cane planting/development grant was to increase cane production.

However, after TC Winston struck the decision was made to assist those worst hit by TC Winston in Rakiraki, Tavua, Rarawai and parts of Lautoka.
However, by the time the grant agreement was signed (May 2016), it was discovered that the cane crop on farms initially identified in these priority areas had recovered and there was no need for rehabilitation, and so the fund was utilized for cane replanting.

For that reason, there was no need to obtain approval.

The Ministry notes and agrees that this is an area needing improvement which it will undertake to address jointly with FSCL and Sugar Cane Growers Council representatives.
The Ministry also notes the three recommendations which it will address in future.
35.5 Anomalies in Revenue records When cash or bank cheques are received, the Accounts Officer shall immediately issue an official receipt.4 An officer appointed to represent the government on any Board in an official capacity must pay Board fees received into the Consolidated Fund Account.5 The Director of Sugar was appointed to represent government on the following boards in 2016: 1) Fiji Sugar Corporation Limited 4 Ministry of Sugar Finance Manual 2013: Section 5.3.1 5 Finance Instruction 2010: Part 4:Division 4: Section 26 Ministry of Sugar Section 35: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ 2) Sugar Cane Growers Council 3) Sugar Cane Growers Fund (Chairman) 4) South Pacific Fertilizers Audit review of Ministry’s records revealed the following anomalies;  The Ministry did not have revenue records such as government receipt book, revenue collectors’ analysis sheet and bank lodgments forms to receive and bank revenue.
 In 2016, the Ministry received a total of $8,142 as board sitting allowance for the Director of Sugar for attending board meetings for which official government revenue receipts were not issued.

Although the allowances were banked, the revenue was not posted in the FMIS general ledger hence was not reflected in the Ministry’s Statement of Receipts and Payments as at 31 July 2016.

Refer to Table 35.4 for details.
Table 35.4: Board sitting allowance for the Director Sugar Stakeholders Purpose South Pacific Fertilizers Fiji Sugar Corporation Ltd South Pacific Fertilizers Fiji Sugar Corporation Fiji Sugar Corporation South Pacific Limited Total Fertilizers 4th quarter allowance 2015 Directors fees 1st quarter 1st quarter allowance Meeting Allowance 2nd quarters Directors Fees Directors allowance for 2nd quarter 2016 Amount ($) Date 1,614 06/01/16 1,531 31/03/16 1,614 22/04/16 238 24/05/16 1,531 08/07/16 1,614 19/07/16 8,142 Date Lodge to the Bank 11/01/16 12/04/16 29/04/16 08/06/16 13/07/16 26/07/16 As a result, the Ministry’s revenue in the Agency Financial Statement is understated by the same amount.
There is a risk that the Ministry is receiving other forms of revenues or cash without being recorded or lodged into the consolidated fund account of government.

Recommendations The Ministry should:   immediately liaise with the Ministry of Economy for revenue records.

ensure that official government revenue receipts are issued for all cash/cheques received and related revenue records including the revenue collectors’ analysis sheets and bank lodgement clearance form are updated accordingly.
 all cash/cheque received by the Ministry are recorded in the appropriate FMIS general ledger allocations.

 consider appointing a competent officer immediately to oversee the overall operations of the Ministry’s Accounts Department.
Ministry’s Comment Ministry of Sugar Section 35: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The Ministry has deposited the funds received as board sitting allowances and deposited in the CFA as outlined in the section 26 of the Financial Instruction 2010.

The Ministry notes the recommendation to further strengthen its revenue records both in official receipts and FMIS.
In terms of appointment of accounts officer as stated in recommendation, the Ministry of Sugar is currently in process of recruiting a new competent accounts officer.

The post was advertised on 14/01/2017 and was readvertised on 11/03/2017.
35.6 Supporting documentation to Vouchers Not Stamped “Paid” Immediately after payment has been effected, the Accounts Officer must stamp ‘paid’ on all vouchers and supporting documentation to avoid any double payments.6 In contrary to the above, the audit noted that all supporting documentations to the payment vouchers for all payments totalling $20,020,988 made during the year were not stamped “PAID”.
However, it was noted that only the payment voucher was stamped “PAID” but was not dated which indicates the date upon which the payment had been effected.

Refer to Appendix 35.1 for examples.

The above finding indicates non-compliance to standing financial regulations and accounting policies of the Ministry and the failure to address the above increases the risk of double and fraudulent payments being made.
Recommendations The Ministry should:   ensure that all vouchers and supporting documents are stamped "paid” and dated; and strengthen supervisory checks over processing of payments.

Ministry’s Comment The Ministry agrees that only the payment vouchers were stamped “Paid”.

The Ministry has improved on this by procuring a “date paid stamp” on 28th February, 2017.

The Ministry notes the recommendation to strengthen its supervisory checks to ensure all vouchers and supporting documents are stamped.
35.7 No Segregation of Duties The Accounts Officer must ensure that payments documents are processed correctly by having different officers involved in the process.

He/ She must make sure that different officers are assigned to: i. raise orders; ii.

approve purchase; iii.

receive ordered goods; iv.

approve invoices for payments; v. review and reconcile financial records before payments are done; vi.
signs cheques.7 6 Ministry of Sugar Finance Manual 2013: Part 2: 2.8.9 7 Ministry of Sugar Finance Manual 2013 – Section 14.2.1 Ministry of Sugar Section 35: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The audit noted that the Accounts Officer was involved in all phases of the procurement process and there was no segregation of duties within the Accounts Section of the Ministry.

Refer to Table 35.5 for details.
Table 35.5: Absence of Segregation of Duties Process Job Description Raise Orders Approve Purchases Payments Receive ordered goods Approve invoices for payments Review and reconcile financial records before payments are done; Signs cheques Accounts Payable process in FMIS Raise of payment voucher AP Process in FMIS Schedule Payment Printing of Cheques Disbursing of payments in FMIS Post Project Officer Accounts Officer Director Sugar : Limit $70,000 Accounts Officer: Limit $10,000 Project Officer Accounts Officer Account Officer Clerical Officer Project Officer Accounts Officer Accounts officer Director Sugar Senior Research Officer Accounts Clerk Despite the issue being raised in previous audit reports, no action has been taken by the Ministry.
As a small department, the above issues continue to exist and it increases risk of public funds being misappropriated through fraudulent acts without being detected on a timely basis.

Recommendation The Ministry should consider reviewing the job descriptions and tasks carried out by the accounting officers to ensure that control measures are in place to safeguard public funds.

Ministry’s Comment The Ministry agrees that only three staff are performing all the accounting functions.
Ministry has improved on this by recruiting an Assistant Accounts Officer on 10/03/2017.

In addition, the Ministry is in the process of recruiting an Account Officer to ensure that there is segregation of duties.

35.8 Irregularities in Accountable Advance When applying for a travel advance, the travelling officer must provide the following information: travel itinerary; i. ii.

estimated costs of travel including accommodation and meals; iii.
purpose of travel & office who approved the travel.8 8 Ministry of Sugar Finance Manual 2013 – Paragraph 8.1.4 Ministry of Sugar Section 35: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ A travelling officer shall recoup the travel advance within seven days of completing travel by submission of an acquittal report with supporting documents.9 If an advance has not been fully expended, the travelling officer must repay the balance within seven days of completing travel.10 Where an advance has not been acquitted within seven days of travel, the Accounts officer shall effect recovery through salary deduction form the concerned officer’s salary within six (6) nights.11 If actual expenses incurred were more than the advance, the travelling officer may be refunded the additional amount.
The refund shall only be paid after supporting documents substantiating the additional expenses have been provided.12 Upon clearance of the advance, the Accounts Officer shall update the debtors register, offset the advance account and debit the appropriate expenditure account.13 The Accounts Officer must not certify a payment as correct unless they are satisfied that the expenditures account it is charged to is correct.14 Audit review of the advance records revealed the following irregularities in regards to advances issued to the Accounts Officer (EDP no.
60106).

 Travel advances were not acquitted with proper source documentations and within the stipulated timeframe.

 Several advances issued were still outstanding and acquittal records were not provided at all.

The advances were yet to be recovered from the Officer as at audit date15.

 Request for travel and claims made by the officer were not properly justified and scrutinized hence additional claims for refunds were made to the officer upon return to office.
 Moreover, it was noted that several accountable advances issued for meals, subsistence and payment of airfare amounting to $4,720 were charged to personal emoluments allocation (1- 35101-35101-010301).

Refer to Appendix 35.2 for details.

 Retirement of advance details was not updated in the Advance Register.

Therefore, it was difficult to confirm whether all advance paid to staff of were retired.
The abuse of travel advances is evident which indicates that controls over payment and retirement of advances are not working effectively.

In the absence of proper controls, there is a high risk of funds being misappropriated without being detected on a timely basis.

Recommendations The Ministry should ensure that:  Duties performed by the Accounting Officers is reviewed, segregated and supervised.
9 Ministry of Sugar Finance Manual 2013 – Section 8.1.11 10 Ministry of Sugar Finance Manual 2013 – Section 8.1.12 11 Ministry of Sugar Finance Manual 2013 – Section 8.1.14 12 Ministry of Sugar Finance Manual 2013 - Paragraph 8.1.13 13 Ministry of Sugar Finance Manual 2013 – Section 8.1.16 14 Ministry of Sugar Finance Manual 2013 – Section 2.8.4 (v) 15 27/01/17 Ministry of Sugar Section 35: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________  Proper measures are put in place to ensure that all travel advances requests made are properly justified before they are approved.
 Proper source documentations are provided and thoroughly scrutinized to substantiate claims made.

 All travel advances are cleared within seven days upon return and any outstanding amount plus interest should be immediately recovered through salary deductions from officers concerned.
 Meals and subsistence claims expenditure incurred are charged to the correct allocation in the Travel and Communications allocations (SEG 3); and  All relevant details are updated in the Accountable Advance Register upon retirement.

Ministry’s Comment The Accounts Officer was terminated on 28th December, 2016 and the matter was referred to the FICAC.
35.9 Anomalies in the Reconciliation of Underline Accounts 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 reconciliations16.
A ledger reconciliation statement shall be signed and dated by Accounts Officer.17 Audit review of the Ministry’s Underline Accounts revealed the following anomalies:  Reconciliations were prepared for three to four months instead of on a monthly basis.

 Reconciliations prepared were not reviewed and signed by the Preparer, Accounts Officer and Director.

Refer to Table 35.6 for details.


Table 35.6: Status of Underline Accounts Reconciliations FMIS GL allocation Description 1-35101-35101-530301 Drawings BSP Suva- Sugar GL Balance as at 31/07/2016 ($) 2,641,683.10 Remarks  Reconciliations not prepared monthly.
Only two January-April, 2016 reconciliations prepared for   May-July, 2016  Reconciliations not signed  A variance of $7,342.08 was noted between the balances as per FMIS general ledger and the Ministry’s Reconciliations for the as at 31/07/16  A variance of $10,391 was noted between the 2015 GL closing balance and the 2016 opening 16 Ministry of Sugar Finance Manual 2013 – Section 13.3.3 17 Ministry of Sugar Finance Manual 2013 – Section 13.3.5 Ministry of Sugar Section 35: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ FMIS GL allocation Description GL Balance as at 31/07/2016 ($) Remarks 1-35101-35101-570301 Advances 2,588.05  Reconciliations not prepared monthly.
Only two balance as per the Ministry’s Reconciliations 1-35101-35101-570101 AP Prepaid Expenses - 1-35101-35101-861301 1-35101-35101-861920 Deposits and Retention Money 1,913.84 reconciliations prepared for   May-July, 2016 January-April, 2016  Reconciliations not checked Accounts Officer and not signed by Director Sugar  Reconciliations not prepared monthly for Jan to May.
Only three reconciliations prepared    January-May, 2016 June, 2016 July, 2016  Reconciliations not checked Accounts Officer and not signed by Director Sugar  Reconciliations not prepared monthly for Jan to May.
Only one reconciliations prepared which is for:  January-May, 2016  No reconciliation was provided for June to July 2016  Reconciliations not checked Accounts Officer and not signed by Director Sugar The above denotes the controls in the Accounts Section are not working and there is lack of oversight over its operations.

The audit findings indicate that the Ministry will not be able to detect errors and omissions in the respective accounts on a timely basis.
Recommendations  The Accounts Officer should prepare all the reconciliations on a monthly basis and submit the, to Ministry of Economy with copy filed for records.

 Reconciliation of all underline accounts must be signed by the preparer and checked and endorsed by the supervisor and Director.

Ministry’s Comment The Ministry has improved on the monthly reconciliation and has been submitting reconciliations to the Ministry of Economy on monthly basis.
Ministry also ensures that the said documents are signed by the preparer, checked and endorsed by the Director before it is submitted to the Ministry of Economy.
Ministry of Sugar Section 35: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Appendix 35.1: Examples of PV supporting documents not stamped “Paid” Cheque EFT Date 06/07/16 08/07/16 14/07/16 14/07/16 14/07/16 21/07/16 21/07/16 21/07/16 21/07/16 22/07/16 22/06/16 22/07/16 22/07/16 22/07/16 02/09/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 22/07/16 / Cheque/ EFT No.
2527 2532 2541 2542 2543 2578 2579 2580 2581 2597 2598 2599 2600 2602 2603 2604 2614 2615 2616 2617 2618 Particulars Upgrading of Cane Access road at Bucaisau Labasa Upgrading of Cane Access Road at Rarawai sector Upgrading of Cane Access Road at Wainikorp sectot Upgrading of Cane Access Road at Wailevu Upgrading of cane Access road at Bucaisau sector Upgrading Cane Access Roads at Wailevu sector Upgrading Cane Access Road at Vunimoli sector, Labasa Upgrading Cane Access Roads at Nawaicoba sector Upgrading Cane Access Roads at Mota sector Upgrading Cane Access Roads Upgrading Cane Access Roads at Drasa sector Upgrading Cane Access Roads at Tagitagi sector, Tavua Upgrading of Cane Access Roads at Wailevu sector Upgrading cane access roads at Ellington sector Upgrading of Cane Access Road at Bucaisau sector Upgrading Cane Access road at Bucaisau sector Labasa Upgrading Cane Access Road fo Ellington sector Upgrading Cane Access Road at Leqaleqa sector Upgrading cane access road at Drasa sector Upgrading of Cane Access Road at Cuvu sector Upgrading Cane Access Road at Drasa sector Amount ($) 47,500 26,150 32,000 48,100 25,400 33,300 43,800 18,600 47,750 20,700 31,750 28,320 15,160 50,000 22,000 17,800 40,000 47,998 43,190 37,900 41,060 Ministry of Sugar Section 35: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Appendix 35.2: Officer Date 25/01/16 Cheque # 2302 Details of Travel Advance Irregularities Noted for Accounts Details of Travel 25/01/16 – 01/02/16 regularising Ministry of Sugar accounts at Ministry of Economy Remarks Amount ($) 1,223  As at date of audit,18 the advance have not been retired  Subsistence Allowance form filled was not clear  Original subsistence allowance filled was not     submitted for audit Imprest receipt form was used as receipts to substantiate the taxi fare paid Taxi fare from Town House to Ministry of Economy and return which amounting to $10 appears excessive.
Total taxi fare claim from Town house to Ministry of Economy and return amounted to $50 for 5 trips In one instance amount written in words in the Imprest form shows $10 whilst the amount in figures shows $35 Imprest receipt form was also used to substantiate the fare from Lautoka to Suva and return which amounted to $60  An amount of $30 paid as miscellaneous was not substantiated.
This claim was for recharge cards Total officer $875.00.Total receipts amount as per hotel receipts $830 accommodation paid the to  21/03/16 2376 28/03/16 – 02/04/16 accounts FMIS verification the at Ministry of Economy 1,008 20/04/16 2413 20/04/16 – 22/04/16 Accounting Heads meeting 346  Advance retirement overdue by 11 days  Use of imprest voucher to substantiate bus fares from Lautoka to Suva and return which amounted to $80.00 Taxi claim from Elixir hotel to Ministry of Economy and return was $10 which appears excessive Total taxi fare claim which amounted to $40 was not substantiated   Recharge card claim of $60 was not substantiated  Total accommodation paid to the officer $675.00, total amount as per hotel receipts $1,768.00.
Excess claim of $1,093.00  A refund of $1,282 was claimed by the officer after completion of travel (Cheque # 2414 of 20/04/16)  No supporting documents, estimated cost of accommodation was not included in the request, hotel rates was not provided  Advance retirement overdue by 38 days  Subsistence and meal claim filled with no  supporting documents Total Claim Traveling Suva and return $70.00 Accommodation $408.00 Meals $81.00 Total $559.00 A reimbursement of $213 was claimed by officer after completion of travel (Cheque # 2463 of 31/05/16) 18 27/01/17 Ministry of Sugar Section 35: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Date 13/05//16 Cheque # 2440 03/06/16 2468 23/03/16 2376 Details of Travel 15/05/16 – 18-05/16 the Civil attending Service Reform Management Training at GTC 07/06/16 – 11/06/16 Clarification at Ministry of Economy Accountable advance 28/03/16 – 02/04/16 for FMIS verification at the of Ministry Economy FMIS unit Accountable advance 15th May to 17th May attending Civil for Service reform training management at government training centre Advance for 02/04/16 – 09/04/16 Accountable advance for Accounting Heads meeting Accountable advance 07/10/16 – 11/10/16 to be at Ministry of Economy final clearance of accounts for Accountable advance 14th September to 17th for September assisting project officer and in updating shortlisting of applicants in Suva Accountable advance 21st September to 27th September to be at Ministry of Finance to verify accounts and 13/05/16 3302 20/04/16 2414 31/05/16 2463 04/10/16 2734 12/09/16 2701 21/09/16 2725 19 27/01/17 Ministry of Sugar Amount ($) Remarks 924  Advance retirement overdue by 11 days 708  Advance not retired at date of audit.19 1,008 924  Use of imprest voucher to substantiate bus fares from Lautoka to Suva and return which amounted to $80.00 Taxi claim from Elixir hotel to Ministry of Economy and return was $10 which appears excessive Total taxi fare claim which amounted to $40 was
 not substantiated   Recharge card claim of $60 was not substantiated  Total accommodation paid to the officer $675.00, total amount as per hotel receipts $1,768.00.
Excess claim of $1,093.00 Imprest form used to substantiate the amount of $140 for travelling to Suva and return and the taxi fare from hotel to the training venue   Claim of recharge for $100 for the 2 officers was   not substantiated Total accommodation paid in to the officer $504, total claim as per hotel receipts $$776.00 The approval to stay for extra night i.e Friday was not submitted.
 A refund of $380 was claimed by the officer after completion of travel voucher # 3329 of 31/05/16 1,282  Advance still outstanding 647  This amount represents the various claims by the Accounts Officer with no supporting documents attached to the voucher.
This was posted directly to the expenditure allocation SEG 1 and SEG 3 909 Hotel receipt number 9820 of 26/10/16 issued by the officer showed an amount of $675.00, whereas the confirmation by the Ministry to the Hotel shows same receipt number with an amount of $100.

The receipt was issued on 08/06/16.

This issue was raised by the Ministry to FICAC for further investigation 555 1,032 The officer was suspended in December 2016.
No records were made available to indicate that the advance was cleared prior to her suspension Section 35: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Date Cheque # Details of Travel Amount ($) Remarks 02/11/16 2773 26/11/16 2784 clear drawings reconciliations and to update GL reports Accountable advance 03/11/16 – 05/11/16 to clear board of survey at Ministry of Economy Accountable advance TOD to Ministry of Economy on 14/11/16 – 15/11/16 403 555 Ministry of Sugar Section 35: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 __________________________________ Section 36 Ministry of Public Enterprises and Government Printing Roles and Responsibilities The Ministry of Public Enterprises oversees and implements reform programs, provide the performance and operations of public policy recommendations and monitors enterprises to increase efficiency and effectiveness in terms of financial growth and improvements in services to the public.
The Government Printing and Stationery Department is responsible for printing Government documents and the Laws of Fiji.

The Department is managed by the Government Printer who currently reports to the Permanent Secretary for Public Enterprises.
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 Trading and Manufacturing Account ................................................................................ 3 36.4.1 Manufacturing Account – Trading and Manufacturing Activity ......................................... 3 Trading Account – Trading and Manufacturing Activity ................................................... 3 36.4.2 Profit and Loss Statement – Trading and Manufacturing Activity .................................... 4 36.4.3 Balance Sheet – Trading and Manufacturing Activity ...................................................... 4 36.4.4 PART A: FINANCIAL STATEMENTS 36.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Public Enterprises and Government Printing resulted in an unqualified audit opinion.
36.2 Statement of Receipts and Expenditure The Ministry collected agency revenue totalling $53,892 and incurred a total expenditure of $10.3 million for the seven-months period ended 31 July 2016.

Details are provided in Table 36.1.
Table 36.1: Statement of Receipts and Expenditure for 2016 Description Agency revenue Total Revenue Established staff 31 July 2016 ($) 53,892 53,892 31 December 2015 ($) 45,334 45,334 1,169,718 2,174,400 Ministry of Public Enterprises and Government Printing Section 36: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 __________________________________ Description 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 31 July 2016 ($) 180,792 45,076 250,950 34,821 4,620,000 41,225 6,342,582 - 3,958,334 3,958,334 31 December 2015 ($) 223,242 60,227 433,120 33,105 4,190,989 43,897 7,158,980 - 2,000,000 2,000,000 38,899 75,973 10,339,815 9,234,953 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.

Revenue collected was from sale of publications by the Government Printing Department.

Total revenue increased by 19% in 2016 compared to 2015 due to increase in sale of publications.
The increase in operating and capital grants paid to the Bio Security Authority of Fiji for the first and second quarters of 2016 resulted in the high total expenditure in 2016 compared to 2015.

36.3 Appropriation Statement The Ministry incurred expenditure totalling $10.3 million in 2016 against a revised budget of $16 million, resulting in a saving of $5.7 million or 56%.

The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.
Details of expenditure against the revised budget are provided in Table 36.2.
Table 36.2: Appropriation Statement for 2016 SEG Item Established Staff Unestablished Staff Travel & Communication Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditure Total Operating Costs Capital Constructions Capital Grants and Transfers Total Capital Expenditure Value Added Tax Budget Estimate ($) 3,085,745 390,249 80,800 598,000 74,750 6,055,046 75,000 10,359,590 - 5,650,000 5,650,000 74,600 Changes ($) (15,196) 15,196 - - - - - - - - - - Revised Estimate ($) 3,070,549 405,445 80,800 598,000 74,750 6,055,046 75,000 10,359,590 - 5,650,000 5,650,000 74,600 Ministry of Public Enterprises and Government Printing Actual Expenditure ($) Lapsed Appropriation ($) 1,900,831 224,653 35,724 347,050 39,929 1,435,046 33,775 4,017,008 - 1,691,666 1,691,666 35,701 Section 36: Page 2 1,169,718 180,792 45,076 250,950 34,821 4,620,000 41,225 6,342,582 - 3,958,334 3,958,334 38,899 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 __________________________________ SEG Item TOTAL Budget Estimate ($) 16,084,190 Changes ($) - Revised Estimate ($) 16,084,190 Actual Expenditure ($) 10,339,815 Lapsed Appropriation ($) 5,744,375 36.4 Trading and Manufacturing Account The Trading and Manufacturing Account (TMA) relates to the Government Printing Department.
The significant variances in the balances recorded in the various accounts detailed on Tables 36.4.1 to 36.4.4 are due mainly to the differences in the financial period reported and reduced operations in 2016.
36.4.1 Manufacturing Account – Trading and Manufacturing Activity Description Raw Materials (01/01/16) Add: Purchases Less: Raw Materials (31/07/16) Raw Materials Used Add Work in Progress(01/01/16) Direct Cost Direct Labour Less: Work in Progress (31/07/16) 31 July 2016 ($) 626,880 237,753 864,633 482,827 381,806 31 December 2015 ($) 596,167 1,017,694 1,613,861 626,880 986,981 246,041 352,944 - 4,671 - 117,505 13,854 246,041 Cost of Manufactured Goods Transferred to Trading Account 618,664 1,211,389 36.4.2 Trading Account – Trading and Manufacturing Activity Description 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 Gross Profit Transferred to Profit and Loss Statement 31 July 2016 ($) 702,352 664,111 618,664 1,282,775 670,049 612,726 89,626 31 December 2015 ($) 1,901,530 749,851 1,211,389 1,961,240 664,111 1,297,129 604,401 Ministry of Public Enterprises and Government Printing Section 36: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 __________________________________ 36.4.3 Profit and Loss Statement – Trading and Manufacturing Activity Description Income Gross Profit transferred from Trading Account Expenses Maintenance & Operations Special Expenses Total Expenses Net Profit 31 July 2016 ($) 31 December 2015 ($) 89,626 604,401 55,242 - 55,252 34,384 76,670 6 76,676 527,725 36.4.4 Balance Sheet – Trading and Manufacturing Activity Description Accounts Payable Deposits & Deductions Total Equity TOTAL LIABILITIES & EQUITY Cash at Bank Account Receivable IC Raw Materials Work In progress Finished Goods for sale TOTAL ASSETS 31 July 2016 ($) 31 December 2015 ($) 15,598 56,913 2,705,570 2,778,081 974,284 637,067 482,827 13,854 670,049 2,778,081 15,598 44,523 3,457,516 3,517,637 1,186,488 794,117 626,880 211,494 698,658 3,517,637 Ministry of Public Enterprises and Government Printing Section 36: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE
 2017___________________________________ Section 37 Ministry of Local Government, Town Country Planning and Environment Role and Responsibilities The Ministry of Local Government, Town Country Planning 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 Audit Opinion ............................................................................................................................ 1 37.1 Statement of Receipts and Expenditure .................................................................................. 2 37.2 Appropriation Statement .......................................................................................................... 3 37.3 Statement of Losses ................................................................................................................ 3 37.4 37.5 Trust Fund Account Statement of Receipts and Payments ..................................................... 3 PART B: AUDIT FINDINGS .................................................................................................................................. 4 37.6 37.7 37.8 37.9 37.10 37.11 37.12 37.13 37.14 37.15 37.16 37.17 Failure to Prepare of Salaries and Wages Reconciliations ...................................................... 4 Delay Implementation of the Laqere Waste Transfer Station Project ...................................... 5 Failure to Implement Projects .................................................................................................. 6 Unreconciled Main Trust Fund Account Balance – Department of Environment .................... 7 Significant Outstanding Debtors for Naboro Landfill ................................................................ 9 Overcharging of VAT on Revenue ......................................................................................... 10 Non Submission of Acquittals from Municipal Councils ......................................................... 11 Backlog Audited Financial Statements – Municipal Council and Statutory Authority ............ 11 Anomalies in General Ledger Accounts Reconciliations
 ....................................................... 13 Missing Payment Records – Payment Voucher for Accounts Payable ................................. 14 Panellist for Directors Position ............................................................................................... 15 Board of Survey not conducted .............................................................................................. 15 PART A: FINANCIAL STATEMENT 37.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Local Government, Town Country Planning and Environment resulted in a qualified audit opinion.
The qualifications are as follows:  The Environment Trust Fund account for the Ministry had a closing balance of $2,781,989 for period ended 31 July 2016.

The Ministry did not maintain proper records including cash books.

Proper bank and trust reconciliations were also not performed for the trust account.
As a result, the Ministry of Local Government, Town Country Planning and Environment Section 37: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ audit was not able to ascertain the accuracy and correctness of the amount reflected in the trust account.

 The Ministry did not carry out an annual board of survey to verify the existence and condition of all assets under its authority contrary to Section 49 of Finance Instructions 2010.
The last survey was carried for the financial period ended 31 December 2015.

37.2 Statement of Receipts and Expenditure The Ministry of Local Government, Town Country Planning and Environment recorded revenue totalling $344,426 and incurred expenditure totalling $25,228,885 for the seven months period ended 31 July 2016.

Details are provided in Table 37.1.
Table 37.1: Statement of Receipts and Expenditure for 2016 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 31 July 2016 ($) 31 December 2015 ($) Value Added Tax 287,086 497,263 TOTAL EXPENDITURE 25,228,885 24,585,109 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.
Ministry of Local Government, Town Country Planning and Environment Section 37: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The increase in expenditure for capital construction in 2016 was due to contractual payments towards the Stage two construction of Naboro Landfill and consultancy payment for Waste Transfer Station.
The increase in expenditure for capital grants and transfers was due to significant payments made for the re-development of Albert Park and Churchill Park projects, capital grants disbursed to the National Fire Authority and payment of challenge and investment funds to various municipal councils.
37.3 Appropriation Statement The Ministry of Local Government, Town Country Planning and Environment incurred expenditure totalling $25,228,885 in 2016 against a revised budget of $35,041,515 resulting in saving of $9,812,630 or 28%.

The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the revised budget are provided in Table 37.2.
Table 37.2: Appropriation Statement for 2016 SEG Item Budget Estimate ($) Appropriation Changes ($) Revised Estimate ($) Actual Expenditure ($) Lapsed Appropriation ($) 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 Value Added Tax TOTAL EXPENDITURE 3,206,032 148,936 201,030 301,200 203,836 1,807,620 3,380,489 9,249,143 3,722,232 900,000 20,484,240 25,106,472 685,900 35,041,515 37.4 Statement of Losses - - - - - - - - - - - - - - The Ministry did not report any loss for the financial period ending 31 July 2016.
The Ministry did not carry out an annual board of survey to verify the existence and condition of all assets under its authority contrary to Section 49 of Finance Instructions 2010.

37.5 Trust Fund Account Statement of Receipts and Payments The Environment Main Trust Fund Account had a balance of $2,781,989 for the financial period ending 31 July 2016.
The Ministry recorded revenue totalling $1,529,659 and expenditure totalling $1,642,276 resulting in a loss of $112,617 for the seven months period ended 31 July 2016.
Details of receipts against the payments are provided in Table 37.3 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Table 37.3: Trust Account Statement of Receipts & Payments for 2016 Description RECEIPTS Ozone Depletion Substance (ODS) Fines Waste and Environment Impact Assessment Environment Trust Convention on International Trade in Endangered Species Total Receipts PAYMENTS Ozone Depletion Substance (ODS) Fines Waste and Environment Impact Assessment Environment Trust Convention on International Trade in Endangered Species Total Payments Net (Loss)/Surplus Balance as at 1 January 31 July 2016 ($) 31 December 2015 ($) 233,080 1,201,105 88,467 7,007 1,529,659 22 1,256,149 245,750 140,355 1,642,276 455,628 2,200,699 276,904 193,982 3,127,213 773 2,500,490 601,067 1,369 3,103,699 (112,617) 23,514 2,894,606 2,871,092 Closing Balance as at 31 July 2,781,989 2,894,606 PART B: AUDIT FINDINGS 37.6 Failure to Prepare of 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.1 The Accounts Officer is responsible for the safekeeping and proper maintenance of all accounting records or documents.2 The payroll report shall be handed to the Accounts Officer Ledgers or Clerical Officer who is responsible for preparing the salary reconciliation (this officer must not be involved in payment process or the preparation of input forms).3 The salary reconciliation must reconcile the difference between the previous fortnight payroll report and the current report, and must be prepared prior to each pay date.
The salary reconciliation shall be signed by the Assistant Accountant and forwarded to the Senior Accountant with a copy to the Ministry of Finance, within one week from the pay date.4 The Ministry of Local Government, Town Country Planning and Environment salaries and wages expenditure totalled $1,664,868 for the period 01/01/16 – 31/07/16.

The audit noted that the Ministry did not prepare salaries and wages reconciliation for the period.

Refer to Table 37.4 for details.
1 Ministry of Finance Instructions 2010 – Section 17 (7) 2 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 19.2.1 3 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 4.6.3 4 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 4.6.4 – 4.6.5 and Ministry of Finance 2010 Instruction 17 (7) Ministry of Local Government, Town Country Planning and Environment Section 37: Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Table 37.4: Detail of Salaries & Wages for 01/01/16 – 31/07/16 Description Established Staff Government Wage Earners Total Total Amount ($) 1,545,967 118,901 1,664,868 In the absence of timely reconciliations, the Ministry will not be able to detect fraud, errors and omissions in the payment of salaries and wages.
Recommendation The Senior Accountant should ensure that salary and wages reconciliation are performed on a timely basis and filed accordingly.

Ministry’s Comments 1.

OAG’s recommendation is noted.

2.

Inadequate staffing in Accounts was an attributing factor.

There were three Accounts Staff (SAO/AO/AAO) and two Clerical Officer to attend to the daily operational duties.

3.

Although the Ministry has been allocated two (2) Budgetary Allocations- Heads 23 and 37, Housing under Head 23 for approx.
$25m budget, there is no separate accounting team for Department of Housing but the same team as mentioned in (3) above.

4.

Management is addressing the current staffing problem through the 20172018 budget submissions for the establishment of a Principal Accounts Officer also to substantively fill the two other vacant Clerical Officer posts.
37.7 Delay Implementation of the Laqere Waste Transfer Station Project Each year, the Appropriation Act and Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.5 Proper planning for projects is to be carried out as soon as Parliament approves the National Budget so that the funds allocated are effectively used within the fiscal year and that the objective of funds allocated are fully achieved.
The Ministry of Local Government, Town Country Planning and Environment was provided a total of $4,021,250 in the 2014 to 2016 budget estimates to construct the Laqere Waste Transfer Station.

However, the audit noted that the project is yet to be completed.

Refer to Table 37.5 for details.


Table 37.5: Details of Budgeted Funds Allocated from 2014 to 2016 for Waste Transfer Stations Year 2014 2015 2016 Total Budget Amount ($) 1,000,000 1,000,000 2,021,250 Actual Expenditure ($) Remarks 0 Planning and Design works stage.

The amount was re-deployed by Ministry of Finance since the Ministry failed to commence with the project works.

Implementation of construction Works and set up to commence 135,607 157,005 Completion of construction works and set up.
However the amount incurred was for the hiring of consultants.

4,021,250 292,612 5 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 2.1.2 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The audit finding indicates that the Ministry did not properly plan the construction works to be undertaken on the waste transfer stations.
As a result, substantial amount of funds allocated in the budget estimates have not been utilized.

Recommendation  The Ministry should ensure that the waste transfer station project is properly planned and implemented.

Ministry’s Comments OAG’s recommendation is noted.


 The Ministry has carried out fourth round of community consultation in Kalabu, Wakanisila and neighbouring community on February 16, 2017 on the Waste Transfer Station development; however the communities present during the consultation were strongly against the development.
 For this, the Ministry is committed to revisiting the Kalabu community for another round of awareness as much resources have been spent towards the establishment of the WTS in Laqere.

 At the same time the Ministry is exploring new sites.
37.8 Failure to Implement Projects Each year, the Appropriation Act and Budget Estimates set out details of the appropriations that Cabinet approves for spending by each agency.6 The Department of Town/Country Planning and Environment was provided a sum of $2.67 million in the 2016 budget estimates to carry out three projects, namely Valelevu Sports Complex, Lautoka Botanical Garden Swimming Pool and the New Town Development in Nabouwalu in Bua.
Audit review of the above projects revealed that the Department did not utilise the funds provided by government and the projects were not implemented.

Refer below for details of the funds provided and the reason for the non-implementation of the projects.
Table 37.6: Details of Project Not Implemented Project Budget Amount ($) Utilised Amount ($) Remarks Department of Local Government Valelevu Sports Complex Lautoka Swimming Pool Botanical Garden 500,000 250,000 Department of Town and Country Planning New Town Nabouwalu, Bua, Development- 1,920,000 0 0 0 Project was delayed due to the Cyclone Winston in February 2016.
The subdivision scheme plan had not been approved by TLTB as the formal development lease from TLTB was returned to TLTB due to typing errors and other anomalies noted in the formal development lease document.

The Ministry received in December 2016.


Only then can the subdivision formal Development lease the 6 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 2.1.2 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Project Budget Amount ($) Utilised Amount ($) Remarks scheme plan be cleared for approval.
Total 2,670,000 Non-implementation of development projects denies the economic development for the people on an improved standard of living.

Recommendation  The Ministry should ensure that proper planning is carried out for all capital projects and these implemented in a timely manner with progress reports provided to all key stakeholders.

Ministry’s Comments The two projects highlighted, Valelevu Sports Complex and Lautoka Botannical Garden Swimming Pool, did not commence as scheduled.
Both projects scheduled from May, 2016 were delayed due to: 1.

Cyclone Winston, as both Municipal Councils mobilised resources for Winston’s rehabilitation works.

2.

The introduction of new fiscal year, Aug16-Jul17, was also an attributing factor.

Please note the following: New Town Development required a dedicated officer, hence an engineer, assigned to ensure that the project progresses.
Any project plan is a plan and its success rate should be measured, in mindful of the corresponding resources and variables.

It is necessary to state for the record that the non-utilization of project funds is the result of the slow recruitment of a qualified engineer.

The Ministry had to re-advertise in early 2016 with Director Town Country Planning (DTCP) finally having an engineer in mid-June 2016.
DTCP consider it necessary to have the engineer on this project given the scope from inception to completion of civil works.

Efforts for the recruitment of an engineer had even begun from 2014-2015.

During the first six months of 2016, the department had been facilitating and coordinating the subdivision scheme plan with the engaged surveying consultant Cadastral Solutions Limited.
The scheme plan had been drawn and finalized however there were issues of existing leases within the Development lease given to the Ministry.

It was important to have this discussed and clarified with TLTB.

The formal Development Lease (DL) from TLTB sent to DTCP got returned due to typo-errors and anomalies and the DL itself finally made its way to the Ministry in December 2016.

Only then can the subdivision scheme plan be cleared for approval and this has just been cleared last week.
Please also note that all expenditure relating to New Town Development in 2016 to date, are considered as administrative.

i.e.

site meetings, scoping etc.

Hence, results in the non-utilization of New Town Development budget funds.
37.9 Unreconciled Main Trust Fund Account Balance – Department of Environment Within 5 days after the end of each month, the assistant accounts officer shall prepare trust reconciliation to reconcile trust account balances to the ledger total and the trust bank account7 7Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 15.4.1 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ 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.

Unreconciled items must be investigated and resolved promptly.8 All bank accounts must be reconciled monthly.
The bank reconciliation shall list the outstanding cheques and other reconciling items and must be signed and dated by the responsible officer.9 The audit noted a variance of $17,210 between the trust fund cash at bank balance of $2,764,779 recorded in the general ledger and the trust fund liability account balance of $2,781,989 as at 31 July 2016.

Refer to Table 37.7 for details.


Table 37.7: Details of Trust Fund Account Balance Year Trust Fund Cash ($) 2016 2,764,779 Trust Fund Liability Account ($) 2,781,989 Variance Amount ($) 17,210 The audit further noted that the Department of Environment trust fund cash at bank account maintained at Westpac Bank Corporation did not reconcile to the general ledger balance as at 31/07/2016.
A variance of $544,564 exists between the trust fund cash at bank recorded in the general ledger ($2,764,779) and the bank balance ($3,309,343) contrary to section 32(6) of Finance Instructions 2010.

Refer to Table 37.8 for details.


Table 37.8: Variance in Trust Fund Cash at Bank Balances Description Cash at bank balance as per general ledger (FMIS) Cash at bank balance as per bank confirmation Variance Amount ($) 2,764,779 3,309,343 544,564 The audit also noted that there was no evidence to indicate that the reconciliation was reviewed by the Senior Accounts Officer for its correctness.

Variances in reconciliations indicate the risk of errors and omissions and possible fraud.
Recommendation  The Ministry should ensure that monthly reconciliations are properly carried out and reconciled to the general ledger records and any variances are investigated and rectified on a timely basis.

Ministry’s Comments OAG’s recommendation is noted.


The variance of more than $500,000 was inherited during transition of the Department of Environment from the Ministry of Lands in 2010.It is to be noted that the variance is reducing every year and the Ministry is committed to regularise the anomaly inherited against the FMIS records/assistance.
Inadequate staffing in Accounts was an 8 Ministry of Finance Instructions 2010, Section 58 (2-3) 9 Ministry of Finance Instructions 2010, Section 32 (6) Ministry of Local Government, Town Country Planning and Environment Section 37: Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ attributing factor.

There were three Accounts Staff (SAO/AO/AAO) and two COs to attend to the daily operational duties.
Reconciliation with FMIS records was carried out but due to unavailability of records from Department of Lands, the variance exists to-date.

Thus, a recommended way forward is to request for Write-Off to MOE of the variance in the Bank Balance against the General Ledger (GL) Balance.

37.10 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.10 The Contractor, H. G. Leach (Fiji) Ltd 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 08/08/16 was $1,329,904 out of which $253,454 has been outstanding for more than 90 days.
The audit established that $524,291 or 39% of the total debts was owed by the four Municipal Councils out of which $218,744 has been outstanding for more than 90 days.

Refer to Table 37.9 for details.


Table 37.9: Breakdown Details of Outstanding Debt Debtor Nasinu Town Council Suva City Council Nausori Town Council Lami Town Council Ministries & Departments Private Companies Total Amount Owed as at 08/08/16 ($) 252,147.75 188,042.84 73,841.41 10,259.06 668,358.74 137,254.14 1,329,903.94 Percentage of Total Debtors (%) 18.96 14.14 5.55 0.77 50.26 10.32 100.00% Although this issue has been raised in previous years audit reports, no improvements have been noted.
Failure by the Contractor to effectively manage the debtor balances will increase the risk of bad debts and will exert pressure on the Ministry to meet any operational shortfalls.

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 owed by municipal councils.
Ministry’s Comments 10 Contract Agreement between H.G Leach (Fiji) Ltd and MLGUDHE clause 2.5 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The Ministry is committed to working with the Contractor in the collection of debts from Councils following the meeting in Feb, 2017 and thus the Environment Landfill Officer has been assigned to assist the Contractor in following-up with any future debts.
37.11 Overcharging of VAT on Revenue Section 15 of the Decree was amended by deleting “fifteen” and substituting “nine”.11 If the percentage of VAT decreases, a registered person must sell goods and services at a price which reflects the actual percentage VAT decrease.12 A registered person who fails to comply with subsection (1) shall be liable to a fine not exceeding $50,000 which must be payable by that registered person within 21 days of notification by the Chief Executive Officer.13 The audit noted that the VAT on revenue was charged at 15% instead of the revised rate of 9%.
The general ledger system records of the Ministry indicated that the VAT charged on revenue totaling $174,573.91 for the period amounted to $26,229.60.

Refer to Tables 37.10 and 37.11 for details.
Table 37.10: FMIS Figures as at 31/07/2016 Allocation Description 1-37101-37999-230307 FEES-TOWN PLANNING 1-37201-37999-230307 FEES-TOWN PLANNING 1-37201-37999-863201 VAT ON REVENUE Table 37.11: VAT on Revenue FMIS Amount as at 31/07/16 ($) 1,526.45 173,047.46 26,229.6014 Description Amount as per FMIS ($) VAT as per FMIS (15%) ($) VAT as per Audit (9%) ($) Variance ($) Fees – Town Planning 174,574 26,230 15,712 10,518 As a result, the Ministry has overcharged individuals and businesses an amount of $10,518.
The above finding indicates that the Ministry did not abide with the current VAT amendment and there is a lack of control since the error was not detected by the Ministry.

Recommendations The Ministry should:   ensure that VAT is charged at the correct rate; and liaise with FRCA for any adjustments to its VAT account.

Ministry’s comments 1.

OAG’s recommendation is noted.

2.

The anomalies were detected and have been corrected.
11 Value Added Tax (Budget Amendment) – 22 of 2015: Part 3 12 Value Added Tax (Budget Amendment) – 22 of 2015: Part 5.1 13 Value Added Tax (Budget Amendment) – 22 of 2015: Part 5.3 14 General Ledger System credit amount as at 31/07/16 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ 3.
VAT -9% is being charged on Fees collected by Department of Town & Country Planning and Department of Environment.

4.

Accounts have consult FRCA on the anomalies detected and correct VAT is being charged.

37.12 Non Submission of Acquittals from Municipal Councils The recipient of the Grant Assistance shall prepare an acquittal report.
The acquittal report shall provide details of grant money expended and unexpended.15 The audit noted several grant recipients did not submit acquittals detailing the utilization of grants provided by the Ministry.

Refer to Table 37.12 for details.


Table 37.12: Examples of Grant Recipients that Failed to Submit Acquittals Grant Recipients Lami Town Council Nadi Town Council Savusavu Town Council Sigatoka Town Council Tavua Town Council Ba Town Council Grant Amount ($) 198,072 755,000 250,000 845,000 488,000 1,463,928 Similar concerns were raised in previous years’ audit.

In the absence of acquittals, there is a lack of transparency and accountability on how funds are utilized by the grant recipients.
Recommendations The Ministry should:  strictly follow up with the grant recipients to submit their acquittals in a timely manner; and  not provide new grants unless acquittals have been provided for previous grant payments.

Ministry’s Comments Subject allocated grants were released to the respective Municipal Councils at the end of June, 2016.

Project preparatory works commenced in July, 2016 and Department of Local Government has been maintaining acquittals for the subject works on a quarterly basis.
In addition, field visits and meetings are held in between Department of Local Government and respective Town Councils on a quarterly basis.
37.13 Backlog Audited Financial Statements – Municipal Council and Statutory Authority The recipient of the Grant Assistance shall provide financial statement (audited if practicable) for grants of $20,000 or more.16 15 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 3.3.1 16 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 3.3.1 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ The Ministry provided grants to various Municipal Councils and to National Fire Authority for capital works.
The audit noted that the following Municipal Councils and National Fire Authority have not provided audited financial statements for the grants received from the Ministry to carry out capital projects.

Refer to Table 37.13 for details.
Table 37.13: Examples of Municipals that Failed to Submit Audited Financial Statements Grant Recipient Last Audited Account Grant Provided Since Last Audited Account 2011 2012 2013 2014 2015 2016 ($) ($) ($) ($) ($) ($) Total Grant Provided ($) Nadi Town Council Lami Town Council Savusavu Town Council Tavua Town Council Ba Town Council Sigatoka Town Council Lautoka City Council Suva City Council National Fire Authority 2013 - - - 844,000 295,410 755,000 1,894,410 2013 - - - 143,160 613,000 198,072 954,232 2010 - - - 75,000 162,035 250,000 487,035 2014 - - 2014 - - 2015 - - - - - - 158,685 488,000 646,685 - 203,500 1,463,928 1,667,428 - - 845,000 845,000 2013 - - - 500,000 293,250 2,814,240 3,607,490 2010 - - 452,355 - 10,000,000 7,000,000 17,452,355 2013 - - 1,746,329 3,900,000 3,476,088 5,300,000 14,422,417 In the absence of audited financial statements, the Ministry cannot substantiate whether grants were used for the authorised purpose.
Recommendation The Ministry should ensure that grant recipients provide the audited financial statements on a timely basis.

Ministry’s Comments Department of Local Government and Municipal Councils have been meeting on the subject.

During the meeting held in February, 2017 all Municipal Councils have agreed to submit draft accounts for external audit before 30th August, 2017.
Reason for delay in submission over the last two to three years has been that Municipal Councils have been informed to upgrade financial statements to International Financial Reporting Standards to avoid disclaimer opinion.

National Fire Authority annual accounts 2014 shall be submitted to the Office of the Auditor General in April, 2017, 2015 and 2016 draft annual accounts are planned to be submitted before end of August 2017.
National Fire Authority has been traditionally waiting for the clearance of a financial year report before submitting the following year draft accounts to ensure verified opening balances are captured.

Department of Local Government has informed National Fire Authority to submit all previous year draft accounts to office of the Auditor General and following audit carry upgrade following year’s accounts as deemed necessary.
Ministry of Local Government, Town Country Planning and Environment Section 37: Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ 37.14 Anomalies in General Ledger Accounts Reconciliations 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.17 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.18 The audit noted that the Ministry did not prepare and submit monthly reconciliations or reconciliations prepared were not checked by senior officers for various general ledger accounts for the period January to July 2016.
Refer to Table 37.14 for details.

Table 37.14: Details of Anomalies for General Ledger Accounts Reconciliations General Ledger Account Numbers General Ledger Account Description 1-37101-37999-530301 DRAWINGS BSP SUVA- LOCAL GOVT.

Closing Balance as at 31/07/2016 ($) 1,185,831 1-37101-37999-570301 ADVANCES 61,202 1-37000-00000-840000 ACCOUNTS PAYABLE 45,194 Audit Remarks The Reconciliation that the Ministry provide was not signed and checked by the responsible officers.
- The Reconciliation that the Ministry provide was not signed and checked by the responsible officers.

- The amount disclosed in the reconciliation totaled $11,966 contrary to the closing balance of $61,202 hence a variance of $49,236 was noted.

- The Reconciliation that the Ministry provide was not signed and checked by the responsible officers.

- The amount disclosed in the reconciliation totaled $61,983 contrary to the closing balance of $45,194 hence a variance of $16,789 was noted.
1-37000-00000-860000 9-37000-00000-520000 9-37000-00000-560000 9-37000-00000-840000 9-37000-00000-860000 DEPOSITS & RETENTION MONEY DOMESTIC BANK BALANCES ACCOUNTS RECEIVABLE (AR) ACCOUNTS PAYABLE DEPOSITS & RETENTION MONEY 43,655 The Ministry did not prepare any reconciliation.

2,764,779 2,805 10,127 672.52 The Ministry did not prepare any reconciliation.

The Ministry did not prepare any reconciliation.

The Ministry did not prepare any reconciliation.

The Ministry did not prepare any reconciliation.


9-37000-00000-890000 CONSOLIDATED TRUSTED FUND 2,781,989 - The Reconciliation that the Ministry provide was not signed and checked by the responsible officers.

- July Reconciliation was not prepared and provided to audit.

Absence of reconciliations will result in the Ministry failing to detect irregularities in respective accounts in a timely manner.
17 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 17.2.5 18 Ministry of Finance Instructions 2010, Section 60 (1) (a) Ministry of Local Government, Town Country Planning and Environment Section 37: Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ As a result, the audit was not able to fully ascertain the correctness of the balances reflected in the Ministry’s general ledger accounts.
Recommendations The Ministry should ensure that:   the monthly reconciliations for the various general ledger accounts are prepared, signed and submitted for Permanent Secretary’s endorsement in a timely manner; and signed reconciliations are submitted to Ministry of Economy and a copy is retained by the Ministry for records purposes.

Ministry’s Comments 1.

OAG’s recommendation is noted.

2.

Inadequate staffing in Accounts was an attribute.


There were three Accounts Staff (SAO/AO/AAO) and two COs to attend to the daily operational duties.

3.

Although the Ministry has been allocated two (2) Budgetary Allocations- Heads 23 and 37, Housing under Head 23 for approx.

$25m budget, there is no separate accounting team for Department of Housing but the same Team as mentioned in (3) above.

4.
4.

Management is addressing the staffing problem through the 2017-2018 Budget submission for the establishment of a PAO and to substantively fill two other vacant Clerical Officers.
37.15 Missing Payment Records – Payment Voucher for Accounts Payable Agencies must ensure that all commitments and invoices are promptly and accurately recorded in the accounting system to meet management and external reporting needs.19 All be processed through payment vouchers prepared by the Clerical Officer (Accounts Payable).
Separate vouchers are to be used for separate payees and for the payment of different services.20 payments must The audit could not review payments totalling $118,485 as payment vouchers were missing.

Refer to Table 37.15 for details.
Table 37.15: Missing Payment Voucher – Standard Expenditure Group 84 Date Allocation 29/06/2016 13710137999840602 Cheque Number 000000042260 Vendor FIRCA 29/06/2016 93730137999840602 000000042260 FIRCA 29/06/2016 13710137999840602 000000042260 FIRCA 29/06/2016 13710137999840602 000000042260 FIRCA Total Amount ($) 67,644 43,995 6,754 92 118,485 In the absence of payment vouchers, the audit could not sight evidence of proper authorisation and ascertain whether the payment were adequately approved and paid to bona fide recipients.
The above may indicate that basic internal control procedures were not adhered to which poses risk of misappropriation of funds.
19 Ministry of Finance Instructions 2010: Section 53.1 20 Ministry of Local Government, Housing and Environment Finance Manual 2013, Section 2.8.2 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ Recommendations The Ministry should ensure that:  system of record keeping is reviewed and strengthened; and  all the payment vouchers and supporting documents are made available for audit purposes.
Ministry’s Comments 1.

OAG’s recommendation is noted.

2.

Record maintenance has been improved.

37.16 Panellist for Directors Position Panel members will all be at or above the level of the position;21 The job description of the Director Local Government (DLG) as advertised states “the Director Local Government (DLG) will investigate performance of councils and special administrators and work closely with the Special Administrator’s”.
The role of the DLG requires monitoring and helping in manage special administrators and their municipal councils.

The post of Director Local Government was advertised on 21/05/15 and a successful candidate was appointed on 16/09/2015.
The audit noted that the three member interview panel for the position comprised of Special Administrators of two Municipal Councils with the outgoing Director of Local Government as the third member and Chairman of the panel; Having two Special Administrators on the interview panel to select the Director Local Government defies open-recruitment practices implying subordinate officers have had an influence on the interview results of their former supervisor and the appointment of their new supervisor who was also one of their colleagues from another municipal council.
Recommendation The Ministry should ensure that the interview panel members are above the level of the position being filled.

Ministry’s Comments The Ministry affirmed that there was no conflict of interest in the Director of Local Government recruitment as due process of the Open Merit Recruitment policy was carried out by the Ministry.

Director Housing was also a member of the selection panel which was not mentioned by OAG.
Proper documentation of every activity of the selection process was effected and properly kept.
37.17 Board of Survey not conducted 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 21 Open Merit Based Recruitment and Selection Guideline Section 4.2 Ministry of Local Government, Town Country Planning and Environment Section 37: Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________________ 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.22 Annual board of survey must be conducted by three 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.23 The audit noted that the Ministry did not conduct a Board of Survey for the period ended 31 July 2016.

The last survey was carried for the financial period ended 31 December 2015.

In the absence of a Board of Survey report for the period, the Statement of Losses (Other than money) could not be substantiated.
Recommendation The Ministry should ensure that a Board of Survey is carried out in accordance with Section 49 of the Finance Instruction and a copy is readily available for audit verification.

Ministry’s Comments Ministry is currently organising a BOS for the period Jan-Jul 2016 to be submitted on 31st May 2017 to MOE and OAG.
22 Ministry of Finance Instructions 2010 - Section 49.1 23 Ministry of Finance Instruction 2010 – Section 49(2) Ministry of Local Government, Town Country Planning and Environment Section 37: Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Section 40 Ministry of Infrastructure and Transport Roles and Responsibilities 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, through the Department of Transport, provides the regulatory framework for the implementation of an efficient and affordable land and maritime transport systems.

The transport sector is one of the principal drivers of economic growth as it provides the mobility and infrastructure that link people with jobs and goods with markets.
Government Shipping Services provides Government with a specialised fleet of six vessels that allow it to transport Government officials as well as machinery, building supplies, rural-development materials, livestock and any other cargo needed for development projects.

The Department of Meteorology is critical for 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 which include the provision of electricity services to remote and 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 industrial sectors and for land transport.
The Department of Water and Sewerage is responsible for the development of the water supply and sanitation sector policies to ensure the provision of safe, clean drinking water and efficient sanitation services to all communities.
Table of Content PART A: FINANCIAL STATEMENTS .......................................................................................................................... 2 40.1 Audit Opinion ............................................................................................................................................................... 2 40.2 Head 40, 41 and 43 - Statement of Receipts and Expenditures ................................................................................. 3 40.3 Appropriation Statement ............................................................................................................................................. 4 40.4 Trade and Manufacturing Account (TMA) ................................................................................................................... 5 40.5 Trust Fund Account ..................................................................................................................................................... 8 PART B: AUDIT FINDINGS ......................................................................................................................................... 9 40.6 Trading and Manufacturing Account (Fund 4) ............................................................................................................. 9 40.6.1 Variance between Consolidated TMA Bank Account balance and FMIS General Ledger balance .............. 9 Ministry of Infrastructure and Transport Section 40 : Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 40.6.2 Recording of TMA Sales and Accounts Receivable in FMIS General Ledger ............................................ 10 40.6.3 Valuation of Inventories ............................................................................................................................... 11 40.6.4 Anomalies in VAT reflected in the Deposits and Deductions Balance ........................................................ 12 40.6.5 Unreasonable Ceilings
 for the TMAs........................................................................................................... 12 40.6.6 Anomalies in determining the Sale Price for Joinery TMA .......................................................................... 13 40.6.7 Joinery Items Sold at a Loss ....................................................................................................................... 14 40.6.8 Anomalies in Joinery and Plumber Shop TMAs .......................................................................................... 15 40.6.9 Anomalies in Plumber Shop and Plant Hire TMA ........................................................................................ 18 40.7 Underline Accounts ................................................................................................................................................... 20 40.7.1 Anomalies in Operating Fund Account ........................................................................................................ 20 40.8 Headquarters ............................................................................................................................................................ 22 40.8.1 Provision of Electricity in Rural Areas ......................................................................................................... 22 40.8.2 Poor Monitoring of Bua/Macuata Solar Home Systems Projects ................................................................ 24 40.8.3 Anomalies in Project Records and Delay in Project .................................................................................... 25 40.8.4 Internal Controls Weaknesses .................................................................................................................... 26 40.8.5 Payment of VAT from SEG 13 for Operating Grant .................................................................................... 28 40.8.6 Anomalies in Revenue – Fiji Meteorological
 Services................................................................................. 29 40.9 Head 41 – Water Authority of Fiji .............................................................................................................................. 30 40.9.1 Recurring Issue on Retention Funds from the Department of Water and Sewerage .................................. 30 40.10 Follow-up Issues ....................................................................................................................................................... 31 APPENDIX 40.1: DETAILS OF SHIPPING FRANCHISE COSTS PAID FROM SEG 13................................................... 34 APPENDIX 40.2: DETAILS OF UNSUBSTANTIATED RETENTION AND SECURITY DEPOSITSError!
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PART A: FINANCIAL STATEMENTS 40.1 Audit Opinion The audit of the 2016 accounts of the Ministry of Infrastructure and Transport resulted in the issue of a qualified audit report.

The qualification issues were as follows: 1.

Several Trading and Manufacturing Accounts (TMA) did not disclose Cash at Bank account in the TMA balance sheet as at 31 July 2016 although significant amount of receipts and payments were recorded in the TMA profit and loss statements.
Separate cash account general ledgers were also not maintained for these TMAs.

In addition, Consolidated TMA balance sheet had Cash at Bank balance of $3,766,112 while consolidated bank reconciliation balance was $2,493,936 as at 31/07/16 resulting in a variance of $1,272,176.

2.

A variance of $210,188 also existed between the subsidiary debtors’ records and the FMIS accounts receivable balance as at 31 July 2016.
Since the Ministry did not reconcile the two records, I was not able to ascertain the correctness of nil accounts receivable balance stated in the Consolidated TMA balance sheet as at 31 July 2016.
Ministry of Infrastructure and Transport Section 40 : Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ 40.2 Head 40, 41 and 43 - Statement of Receipts and Expenditures The Ministry recorded revenue totalling $635,011 and incurred expenditure totalling $58,631,803 for the seven months period ended 31 July 2016.

Details are provided in Table 40.1.
Table 40.1: Head 40 - Statement of Receipts and Expenditure Description Miscellaneous Revenue Reimbursements for Meteorological Services Commission Registration Revenue from Cartage of Freight 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 31 July 2016 ($) 351,404 217,392 6,021 1,350 58,844 635,011 6,421,197 5,074,436 808,876 4,757,990 945,856 11,473,112 156,220 29,637,687 15,793,736 97,024 10,829,721 26,720,481 2,273,635 58,631,803 31 December 2015 ($) 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 The Water Authority of Fiji recorded expenditure totalling $101,123,170 for the seven months period ended 31 July 2016.
Refer to Table 40.2 for details.
Table 40.2: Head 41 - Statement of Receipts and Expenditure for 2016 Description EXPENDITURE Operating grants and transfers Total Operating Expenditure Capital grants and transfers Total Capital Expenditure 31 July 2016 ($) 31 December 2015 ($) 37,095,110 37,095,110 63,156,625 63,156,625 64,028,060 64,028,060 131,064,796 131,064,796 Total Expenditure 101,123,170 194,221,421 The Fiji Roads Authority recorded expenditure totalling $186,015,975 for the seven months period ended 31 July 2016.
Refer to Table 40.3 for details.
Ministry of Infrastructure and Transport Section 40 : Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.3: Head 43 - Statement of Receipts and Expenditure for 2016 Description EXPENDITURE Operating grants and transfers Total Operating Expenditure Capital grants and transfers Total Capital Expenditure 31 July 2016 ($) 31 December 2015 ($) 10,751,013 10,751,013 18,234,379 18,234,379 175,264,962 175,264,962 541,162,298 541,162,298 Total Expenditure 186,015,975 559,396,677 The financial year end for Government was changed from 31 December to 31 July in accordance with the Financial Management (Amendment) Act 2016.
The financial statements for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a 12-month period, thus the significant variances with the comparative balances.

40.3 Appropriation Statement The Ministry of Infrastructure and Transport incurred expenditure totalling $58,631,803 in 2016 against a revised budget of $122,232,205 resulting in savings of $63,600,402 or 52%.
The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the revised budget are provided in Table 40.4.
Table 40.4: Head 40 - Appropriation Statement SEG Item & of Goods & Grants Established Staff Government Wage Earners Travel & Communication Maintenance & Operations Purchase Services Operating Transfers Special Expenditures Total Operating Costs Construction Purchases Capital Grants & Transfers Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) 15,327,356 9,328,028 1,227,120 9,131,219 2,055,392 Changes ($) - - - 4,000 (20,000) Revised Estimate ($) 15,327,356 9,328,028 1,227,120 9,135,219 2,035,392 Actual Expenditure ($) 6,421,197 5,074,436 808,876 4,757,990 945,856 Lapsed Appropriation ($) 8,906,159 4,253,592 418,244 4,377,229 1,089,536 23,001,858 - 23,001,858 11,473,112 11,528,746 1,336,813 61,407,786 25,781,671 7,376,605 23,500,000 56,658,276 4,166,143 122,232,205 1,352,813 16,000 61,407,786 - 25,795,239 13,568 7,376,605 - 23,486,432 (13,568) 56,658,276 - - 4,166,143 - 122,232,205 156,220 29,637,687 15,793,736 97,024 10,829,721 26,720,481 2,273,635 58,631,803 1,196,593 31,770,099 10,001,503 7,279,581 12,656,711 29,937,795 1,892,508 63,600,402 The Water Authority of Fiji incurred expenditure totalling $101,123,170 in 2016 against a revised budget of $250,444,383 resulting in savings of $149,321,213 or 60%.
The large savings was due to Ministry of Infrastructure and Transport Section 40 : Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the revised budget are provided in Table 40.5.
Table 40.5: Head 41 - Appropriation Statement for 2016 SEG Item 6 10 Operating Grants & Transfers Total Operating Costs Capital Grants and Transfers Total Capital Expenditure TOTAL Budget Estimate ($) 74,190,219 74,190,219 176,254,164 176,254,164 250,444,383 Changes ($) - - - - - Revised Estimate ($) 74,190,219 74,190,219 176,254,164 176,254,164 250,444,383 Actual Expenditure ($) 37,095,110 37,095,110 64,028,060 64,028,060 101,123,170 Lapsed Appropriation ($) 37,095,109 37,095,109 112,226,104 112,226,104 149,321,213 The Fiji Roads Authority incurred expenditure totalling $186,015,975 in 2016 against a revised budget of $555,675,337 resulting in savings of $369,659,362 or 67%.
The large savings was due to the budget being for the whole of 2016 while expenditures were only for seven months up to 31 July 2016.

Details of expenditure against the revised budget are provided in Table 40.6.
Table 40.6: Appropriation Statement for 2016 SEG Item 6 10 Operating Grants & Transfers Total Operating Costs Capital Grants and Transfers Total Capital Expenditure TOTAL Budget Estimate ($) 19,909,283 19,909,283 615,766,054 615,766,054 635,675,337 Changes ($) - - (80,000,000) (80,000,000) (80,000,000) Revised Estimate ($) 19,909,283 19,909,283 535,766,054 535,766,054 555,675,337 Actual Expenditure ($) 10,751,013 10,751,013 175,264,962 175,264,962 186,015,975 Lapsed Appropriation ($) 9,158,270 9,158,270 360,501,092 360,501,092 369,659,362 40.4 Trade and Manufacturing Account (TMA) TMA (Trading and Manufacturing Account) is established under the Revolving Fund Account for the purpose of trading or production of goods and services for sale to other departments, statutory bodies or individuals.
Trading involves the buying and selling of goods.

Manufacturing involves the conversion of one type of good or material to another through the application of labour and facilities.

Since government is a non-profit organization, the immediate objective is to serve the requirements of ministries and departments and statutory bodies and at least at recouping costs.
Profitability is secondary objective to the extent that it will justify or increasing or broadening government services to meet the demands of users.
Altogether there are Three Divisions with 17 TMA entities, The 17 TMA Entities compromises of Divisional Engineer Central Eastern (DECE) ( Plumber shop , Joinery , Workshop Wages , Lube Bay, Plant Hire , Fuel & Oil) Divisional Engineer Western (DEW) ( Fuel and Oil , Plant Hire , Workshop Wages , Joinery, Plumber shop) and Divisional Engineer Northern (DEN) (Joinery, Plumber shop, Fuel and Oil, Plant Hire , Block Shed , Workshop Wages) Ministry of Infrastructure and Transport Section 40 : Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Joinery TMA Joinery receives bulk of its work from the Building Section in the form of Capital Works Projects, Maintenance of public buildings, interior fit-outs and furnishing of these quarters.
These buildings are standard designed structures for residential quarters, office accommodation and other institutional buildings.

The Joinery also fabricates wall framings, roof trusses, fixtures, manufacturing of all types of furniture has and dressed timber of required sizes as per details in the standard design.

Plumber shop TMA Plumbing receives bulk of its work from the Building Section in the form of Capital Works Projects, Maintenance of public buildings.
These buildings are standard designed structures for residential quarters, office accommodation and other institutional buildings.

The Plumber shop also fabricates water tanks, ridge caps, Barge flashings, roof trusses, fixtures, manufacturing of all types of flashings to buildings and required sizes as per details in the standard design.
Fuel and Oil Fuel and Oil is one of the basic core values of operation within the Ministry of Infrastructure and Transport especially the Department of Works in the Central/Eastern.

It serves as a backbone, set to a higher standard for effective improvement of our daily operation.

It also enhances a better service delivery required as a business entity to display its potential and quality service to its customers.
The products which consist of diesel, petrol, brake fluid, premix, SAE 30, Tellus 46 and many more is brought from Total Fiji at a retail price.

Lube Bay The core role of the Lube Bay is to provide lubrication services to the customers to ensure it fulfils customer satisfaction concurrently ensure a healthy income for the Business sustainability.

It consists of a wide range of product which are bought from a lesser price and in return sold out to customers as to market price.
Lube Bay is open to all government vehicles and at present the major customer is plant pool and few other ministry that are still finding it suitable and convenient.

Plant Hire The main role of this business entity is to provide a reliable and cost-effective means of transportation to customers ensuring that it meets customer expectations in terms of service delivery and in concurrence with the workers fulfilment of attaining a healthy income and proper Fleet Management System.
Periodically, the Business’s principal earning source is derived from the hiring of all of its resources ranging from light vehicles, heavy vehicles, heavy machineries and plants.

In such way, the Business is able to satisfy its workers through the provision of a persistent wage and meeting certain expenditures ensuring the overall financial status is well retained.
Workshop Wages The Workshop provides mechanical services to Plant Pool, Water & Sewerage, Buildings, Hospitals and other client ministries in delivering of Capital and on – going projects.

The Workshop can provide widest range of engineering services available in the country.
Ministry of Infrastructure and Transport Section 40 : Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Blocks shed The Block shed TMA was setup to support the needs of the Building and Roads Section in terms of facilitating the supply of concrete products (blocks, V – drains, road kerbs, marker posts, slabs and other non-structural concrete products needed for building and road construction.
That was during the time when the Roads Section was still part of Department of Works.

These buildings are either residential Quarters accommodation for government officials, government office buildings and institutional buildings.

That traditional role has remained since its inception until this day.

The volume of work that the Block shed TMA undertakes each year varies depending on the needs of other government ministries and department.
Table 40.7: Manufacturing account Description 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 Table 40.8: Trading account Description Sales Finished Goods (01/01/16) Add: Cost of Manufactured Goods Cost of goods available for sale Less: Finished Goods (31/7/16) Cost of Goods Sold Gross Profit transferred to Profit & Loss Table 40.9: Profit & Loss Statement Description Income Gross Profit transferred from Trading A/C Other income Total Income Expenses Travel and communications Maintenance and operation Purchase of Goods and Services Ministry of Infrastructure and Transport 31 July 2016 ($) 253,933 1,231,423 1,485,356 294,851 1,190,505 2,324,661 44,203 3,559,369 37,027 3,522,342 31 December 2015 ($) 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 31 July 2016 ($) 5,337,334 244,586 3,522,342 3,766,929 206,315 3,560,613 1,776,721 31 December 2015 ($) 9,070,829 277,391 5,337,118 5,614,509 244,586 5,369,923 3,700,906 31 July 2016 ($) 31 December 2015 ($) 1,776,721 277 1,776,998 187,957 1,376,062 19,699 3,700,906 616 3,701,522 165,803 1,504,555 12,193 Section 40 : Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Description Special Expenses Total Expenses Net Profit Table 40.10: TMA Balance Sheet Description Liabilities Accounts Payable Unearned Revenue Total Liabilities Equity TMA Accumulated (Loss)/Surplus TMA Surplus Total Equity Total Equity and Liabilities Assets Cash at Bank Accounts Receivable Deposits, Deductions & Retention money Inventory Total Assets 40.5 Trust Fund Account 31 July 2016 ($) 3,705 1,587,423 189,575 31 December 2015 ($) 1,669 1,684,220 2,017,302 31 July 2016 ($) 31 December 2015 ($) 27,143 196,704 223,847 (503,108) 4,702,397 4,199,289 4,423,136 3,766,112 - 118,832 538,192 4,423,136 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 The Ministry's Department of Energy Trust Fund Account is guided by the Rural Electrification Policy (REP) 2016 approved by the Minister for Infrastructure and Transport.
In 2008, this Policy was amended whereby the community contribution for all rural electricity schemes was reduced from 10 per cent to 5 per cent.

The policy was silent with respect to changing supply between diesel and solar schemes or incorporating either system to one another to improve overall reliability of supply for example in the cases of hybrid systems.
The revised REP of 2016 constitutes a number of important changes that harmonizes with the Green Growth development model pursued by the nation in line with the vision of the UN framework of “Energy for All”; that electricity is now a basic necessity for life and sustainable development.
These vital changes include:  Waiver of community contribution to reciprocate community contribution in kind;  Removal of finite assistance for diesel schemes recipients making them eligible for electrification via renewable based technologies like solar home systems; Increase in the Fiji Electricity Authority’s annual Rural Electrification fund; Increase in validity of FEA Rural Electrification scheme quotations; and    The handover of Solar Home Systems ownership and maintenance to community’s and recipients.
Ministry of Infrastructure and Transport Section 40 : Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The trust fund is used to deposit the receipts from the following operational activities:  Solar Home Systems (SHS)  FEA House Wiring  Performance Bond for House wiring, supply of materials for 3200 SHS  Bio Gas Table 40.11 Department of Energy Trust Fund Account Description Opening Balance at 1 January RECEIPTS FEA Grid & House wiring Bond Payment Solar Home Payments Biogas Biofuel Bank Interest Total Receipts PAYMENTS FEA Grid & House wiring Contractual House wiring Bond Payment Connection Fee Solar Home Payments Biogas Biofuel Refunds Bank Fees Write Off Total Payments Net Receipts Payments Closing Balance as at 31st July 2016 31 July 2016 ($) 31 December 2015 ($) 3,637,247 3,344,443 46,527 - 94,961 100 300 2,059 143,947 - 10,568 112,376 4,603 - - - 1,301,492 839 - 1,429,878 (1,285,931) 2,351,316 751,683 212,601 657,814 - 2,019 3,129 1,627,246 363,898 - 37,688 20,233 1,137 10,681 11,378 - 266 889,161 1,334,442 292,804 3,637,247 PART B: AUDIT FINDINGS 40.6 Trading and Manufacturing Account (Fund 4) 40.6.1 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 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 – JUNE 2017___________________________ The Ministry showed Cash at Bank balance of $3,766,112 in its consolidated TMA Balance Sheet as at 31 July 2016.
However, the consolidated cash at bank reconciliation had a balance of $2,493,936 indicating variance of $1,272,176 between the two records.

The variance was due to the non-posting into the FMIS general ledger of revenue receipts totalling $1,070,320 and payments totalling $2,342,496.

The case has been under investigation by FICAC since 2009.

Refer to Table 40.12 for details.


Table 40.12: Details of Unposted Receipts and Payments TMA Buildings TMAs (Plumber shop/Joinery) Mechanical TMAs Total Unposted Receipts ($) 1,070,320 - 1,070,320 Unposted Payments ($) Variance ($) 1,842,986 499,510 2,342,496 772,666 499,510 1,272,176 Due to lack of supervisory checks by Accounting Officers, errors and omissions and possible fraud in the bank reconciliations were not detected by the Ministry.
Recommendations The Ministry should ensure that:   all reconciliations prepared are thoroughly checked by the Senior Accounts Officer; and variances noted are investigated and appropriate action taken to rectify them.

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.
40.6.2 Recording of TMA Sales and Accounts Receivable in 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.3 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.4 2 Finance Instructions 2010, Section 30 (1) 3 Finance Instructions 2010, Section 30 ( 2) 4 Finance Instructions 2010, Section 30 ( 3) Ministry of Infrastructure and Transport Section 40 : Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The TMA Manager shall update the FMIS on a daily basis to ensure that revenues and expenses are recorded under the correct period (month) to which they belong.5 The audit noted that the Ministry was recording TMA sales on cash basis of accounting hence TMA credit sales were not recorded in the FMIS general ledger.
However, manual records of credit sales were maintained by the respective divisions.

As a result, the Account Receivables Schedule total for all the TMA’s had a balance of $210,188 while the FMIS general ledger showed nil balance for Accounts Receivable as at 31 July 2016.Therefore, the Sales amount reflected in the Consolidated TMA Trading Account and the Total Assets in the Consolidated Balance Sheet are understated by $210,188.
The above findings indicates poor record keeping in the Ministry’s Accounts Section resulting in credit sales not being properly accounted for.

Recommendation The Ministry should ensure that the accounts receivables schedules are updated and reconciled with the FMIS general ledger on a monthly basis.

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 is 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.

40.6.3 Valuation of Inventories Inventories must be valued at the lower of cost or net realisable value.
Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realise.

Estimates of net realisable value also take into consideration the purpose for which the inventory is held.6 The Ministry’s Consolidated TMA Balance Sheet recorded closing inventory of $538,192 as at 31/7/16.

However, the audit noted that inventory was valued at cost and not at net realizable value.
With no assessment of net realisable value or current replacement cost of inventories being carried out, the Ministry is unable to accurately determine the future economic benefits to be realised from their sale, exchange, distribution or use.

As a result, the closing inventory was incorrectly stated in the Consolidated TMA Balance Sheet as at 31/7/16.

Recommendation The Ministry must ensure that closing inventory is recorded at the lower of cost or net realisable value.
5 Trading and manufacturing Account Policy (June 2005) Section 8.10 6 International Accounting Standards 2.9 - Inventories Ministry of Infrastructure and Transport Section 40 : Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Ministry’s Comments The TMA reporting structure was set up by Ministry of Economy since the inception of the Ministry’s TMA entities.

The Ministry has been in compliance to the Ministry of Economy established format.
However, the Ministry acknowledges the audit recommendation and has advised Asset Management and Monitoring Unit (AMMU) on the reporting of inventory.

Furthermore, the Ministry highlights that TMA Finished Goods are standard items which have standard price values and raw materials are valued at cost.

Such issues will need to be considered by the AMMU for recording at the lower of cost or Net Realizable Value and then the Ministry will be able to follow an amended reporting structure.
40.6.4 Anomalies in VAT reflected in the Deposits and Deductions Balance Liability accounts, by convention, should always have credit balance in the accounts.

The Deposits and Deductions is a liability account which had a debit balance of $118,834 in the TMA consolidated balance sheet as at 31/07/16.
The account operates as an operating trust fund account that consists of other moneys such as salary deductions payable to other entities such as insurance premium deductions from employees, Fiji National Provident Fund deductions from employees etc.

and VAT postings on receipts and payments.

The Ministry records these moneys in the trust fund account to be paid to relevant authorities in the following month.
The audit noted that there was a variance of $166,095.64 between the total amount of VAT receivable as per the FMIS GL balance of $193,804.44 and the total VAT refunds receivable as per the FRCA Statement of Tax Account of $27,708.80 as at 31/7/16.

Furthermore, the audit could not substantiate the variance as VAT reconciliations were not prepared by the Ministry.

The above finding is a result of the lack of proper supervision on the reconciliations carried out on these accounts.
Recommendations The Ministry should:   take appropriate action to rectify the anomaly; and ensure that adequate training is provided to its accounting staff especially in accounting of TMA operations.

Ministry’s Comments These are the VAT refunds not received from FRCA which has been accumulating for years.

These allocations, 863201, are all vat codes used by the 3 Divisions which we have been highlighting to FRCA that they need to refund this as TMA is operating as a business entity.
40.6.5 Unreasonable Ceilings for the TMAs All TMA Accounts in the respective Divisions must comply with the TMA approved cash ceilings by Ministry of Economy as follows: Ministry of Infrastructure and Transport Section 40 : Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.13: Details Cash Ceilings for TMA7 TMA Fuel and Oil Plant Hire DEN ($) 200,000 400,000 DECE ($) 200,000 400,000 DEW ($) 200,000 400,000 The purpose of the Plant Hire TMA is to deliver a reliable and cost-effective means of transportation to customers and the purpose of the Fuel and Oil TMA is to sell to customers at an approved Ministry of Economy selling price to make marginal profit.
The Ministry is required to remit the excess cash ceiling to the Ministry of Economy.

The audit noted that the current TMA ceilings have not been revised downwards after the transfer of the Department of National Roads to Fiji Roads Authority and the Department of Water to Water Authority of Fiji.

The reduction of the ceiling will ensure that more cash is remitted by the Ministry to the Consolidated Fund Account and would reduce the risk of misuse and misappropriation of cash.
Recommendation The Ministry should liaise with the Ministry of Economy to consider reducing the cash ceilings for the Fuel and Oil and Plant Hire TMA’s.

Ministry’s Comments The Ministry will liaise with Ministry of Economy for a review of the ceiling as per the recommendations by OAG.
40.6.6 Anomalies in determining the Sale Price for Joinery TMA Goods or services shall only be sold at the prices set out in the Schedule of Prices by Ministry of Finance.8 Any proposed changes in prices must be submitted through the Ministry of Finance to Cabinet for approval unless there is a revenue retention arrangement with the Minister for Finance.9 The mark-up for non-standard items manufactured by the Joinery TMA ranges from 10-15%.
The TMA Joinery uses a Joinery Worksheet to record details of materials and labour used to manufacture a particular non-standard item.

The final cost in the Joinery Worksheet with a mark-up of 10 -15% determines the sale price of the non-standard item.

The audit noted several instances where the Joinery Worksheets were not updated.

Important details such as cost of materials and labour were not recorded.
In addition, the approved basis or guideline by the Ministry of Economy on determining the mark up of 10-15 % charged by the Joinery TMA was not produced for audit.

As at the date of audit (4/11/16), the mark-up was determined by the Foreman as the position of Supervisor was vacant.

Refer to Table 40.14 for details.
7 Ministry of Infrastructure and Transport Agency Finance Manual 2016, Section 6.6.2 8 Ministry of Infrastructure and Transport Agency Finance Manual 2016, Section 6.2.3 9 Ministry of Infrastructure and Transport Agency Finance Manual 2016, Section 6.2.4 Ministry of Infrastructure and Transport Section 40 : Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.14: Details of Items Sold Without Updating the Joinery Worksheet Job No.
Job Details Total Cost as per Joinery Worksheet D 75 Dressing of timber No details of the percentage of mark up.

D 68 Doors No details of the percentage of mark up.

No details of the percentage of mark up.

Receipt No.

546315 546303 546328 Amount Collected ($) Remarks 131 Selling price and profit be cannot margin determined 1,690 Selling price and profit be cannot margin determined.

641 Selling price and profit be cannot margin determined No details of the percentage of mark up.
Not attached with quotation Receipt not attached with quotation Selling price and profit be margin determined cannot Joinery Worksheet Incomplete.

No details of the percentage of mark up.

546345 500 Selling price and profit be cannot margin determined D 80 D 81 D 84 Payment of materials Door and window stopper Non standard cupboard – The above findings indicate lack of proper supervision and monitoring on the sales made by the Joinery TMA by senior officers.
In addition, the absence of approval from the Ministry of Economy led to revenue collection by the Ministry not being properly authorised.

In the absence of updated Joinery Worksheets, the audit could not ascertain whether the items were sold at a profit or breakeven was achieved.
Recommendations The Ministry should ensure that:    proper monitoring and supervision is provided to subordinate staffs; any change in fees and charges is approved by the Ministry of Economy; and Joinery Worksheets are updated and sale price determined.

Ministry’s Comments The audit recommendation is acknowledged.

The department ensures that worksheets are updated and all costs are recorded in determining the Sale price.
The Accounts Officers also do verification of the worksheets so that cost accuracy is maintained and mark-up are monitored.
40.6.7 Joinery Items Sold at a Loss Trading and Manufacturing Accounts are government owned entities that are operated on a semi- commercial basis and within the limits of a prescribed ceiling set by the Minister for Finance; to Ministry of Infrastructure and Transport Section 40 : Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ provide goods, services or works cost-effectively, whilst increasing the returns that are realised from them.10 The prices quoted to the customers for non-standard items were determined by the Joinery Foreman.
The audit noted instances where the prices quoted to the customers for non-standard items were less than the total cost of manufacturing as per the Joinery Worksheet.

Thus the items were sold at a loss by the Ministry.

Refer to Table 40.15 for examples.

Table 40.15: Examples of Variance between Quotation and Selling Price Job No.
Job Details Cost as per Quotation to Customer ($) Total Cost as per Joinery Worksheet ($) D 49 Double Bed with mattress and 3 drawers 600 D 53 King size bed with drawers, Linen cupboard 1,100 D 74 Double bed with mattress D 85 Door framing 380 154 1,124 1,572 467 174 Amount Paid ($) 100.00 500.00 600.00 500.00 380.00 153.60 Item Sold at a Loss by ($) 524 472 87 20 The above finding results from inaccurate calculation of price by the Joinery Section.
There is high risk that Joinery TMA will be recording losses by manufacturing non-standard items and selling them at prices lower than the costs of manufacture..

Recommendation The Ministry should ensure that the prices quoted to the customers are properly calculated to include the total cost of materials, labour and mark-up charged.

Ministry’s Comments The audit recommendation is acknowledged.

The department ensures that the manufacturing cost do not exceed the selling/estimated prices.
The Accounts Officers in the department verifies the Job cards to ensure that such losses do not incur in future.
40.6.8 Anomalies in Joinery and Plumber Shop TMAs The PAO, SAO, AO and AAO have the sole authority to approve all journal adjustments.11 The Clerical Officer (Ledgers) must ensure that the Journal Vouchers are numbered in sequential order with all supporting documents attached to the voucher.12 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; 10 Trading and Manufacturing Account Policy 2015, Introductory Paragraph 11 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 16.1.1 12 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 16.1.2 Ministry of Infrastructure and Transport Section 40 : Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ iii.
the correct allocations have been debited and credited.13 The Clerical Officer (Ledgers) must ensure that the approved Journal Vouchers must be posted into the appropriate ledger and the general ledger system (FMIS).14  The audit noted that the sales journals were prepared, approved and posted into the FMIS solely by the AAO responsible for TMA Joinery Account.

In addition, the journals for the Joinery and Plumber Shop TMA did not have adequate supporting documents.
There was no basis on how the transfer of accrued revenue for the projects which were to be completed for the Ministry from the operating budgetary allocations was journalised to record as sales.

Details such as the amount charged for materials used, direct labour and mark-up were not attached.

Refer to Table 40.16 for details.

Table 40.16: Details of Journals prepared, approved and posted by AAO JV No.
Journal Period Amount Particulars Joinery TMA 415028 March 16 38,150 Cash flow for Joinery for the month of March ($) 415123 June 16 218,000 Cash flow for Joinery for the month of June 415145 415071 July 16 May 16 26,570 Closing of accrued income transfer to sales 54,500 Cash flow for the month of July 415060 April 16 65,400 Cash flow for the month of April 415013 February 16 70,000 Cash flow for the month of February 415031 March 16 103,550 Cash flow for on-going projects for Joinery 2016 Plumber Shop TMA 415090 May 2016 196,200 Cash flow for the month of May (Ecological Purification System - $70,000 and Relining Projects $110,000 (Central Police Station), Samabula, Nasese and Nasova Relining)) 415121 415066 June 2016 April 2016 90,000 Cash flow for June 2016 87,200 Additional cash flow for April 415144 415014 February 2016 July 2016 73,317 Closing of Accrued Income 40,000 Cash flow for February Details of limited Supporting Documents Attached Emails between Chief Clerk and AAO for monthly cash flows Emails between Chief for Clerk and AAO monthly cash flows FMIS GL Printout Emails between Chief for Clerk and AAO monthly cash flows Internal memo for cash flow for the month of April Email between Chief Clerk and AAO for monthly cash flows Email between Chief for Clerk and AAO monthly cash flows Email between Clerk and AAO for monthly cash flows Email between Clerk and AAO for monthly cash flows FMIS GL Printout Email between Clerk and AAO for monthly cash flows 13 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 16.1.3 14 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 16.1.4 Ministry of Infrastructure and Transport Section 40 : Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Furthermore, upon discussion with the Clerical Officer (EDP No.
90825) responsible for preparing the journal vouchers, the audit was informed that the journals were prepared and forwarded by the AAO (EDP No.

53975) to the Clerical Officer to sign the journals as verified and endorsed.

 The audit also noted instances where receipts for Joinery TMA were wrongly posted into the Plumber Shop TMA general ledger.

As a result, the revenue for Plumber Shop TMA was overstated and the Joinery TMA was understated by $10,020.

Refer to Table 40.17 for examples.


Table 40.17: Examples of Receipts for Joinery TMA posted in the Plumber Shop Date JV Ref 415119 17/6/16 22/6/16 Total (sample only) Receipt No.

546319 546327 Amount ($) 9,775 245 10,020  The audit further noted instances where receipts for the Plumber Shop TMA were posted into the Joinery TMA general ledger.

As a result, the revenue for Plumber Shop TMA was understated and the Joinery TMA was overstated by $2,547.

Refer to Table 40.18 for examples.


Table 40.18: Examples of Receipts for Plumber Shop posted in the Joinery TMA Date JV Ref Receipt No.

546358 415147 20/7/16 546111 19/1/16 28/7/16 546365 Total (sample only) - - Amount ($) 1,907 540 100 2,547 The above findings are a result of work of subordinates not being properly supervised by Senior Officers and failure to maintain proper records.
In the absence of proper supporting documents, the audit could not substantiate the correctness of the journal vouchers for TMA Sales.
Recommendations The Ministry should ensure that:      adequate supervision is provided to subordinate staffs; all officers comply with the requirements of its Finance Manual; there is adequate segregation of duties between those responsible for preparing, approving and posting of the journal vouchers; the journal vouchers include supporting documents of the breakdown of jobs to be carried out for that particular month; and all misallocations in the general ledger are immediately adjusted to reflect the correct revenue for both TMAs.
Ministry of Infrastructure and Transport Section 40 : Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Ministry’s Comments The Division has been short of Supervising Officers during this period thus the AAO was acting and approving the journals.

However the Ministry has appointed an Acting Senior Accounts Officer to oversee the responsibilities of Head of Section for Accounts.
The Ministry ensures compliance with the requirement of the Finance Manual as the Principal Accounts Officer has been regularly visiting the Divisions for such trainings.

The appointment of the Acting SAO ensures that the Journal Vouchers are supported with supporting documentary evidence before they are approved for posting.

The audit recommendation is acknowledged and Ministry will ensure the Divisions adhere to the audit recommendation as stated.
40.6.9 Anomalies in Plumber Shop and Plant Hire TMA The Foreman and Supervisor must record all manufacturing jobs on a job record sheet.

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

type of work carried out; iii.

number of hours spent on job; iv.

materials used and the costs.

The Clerical Officer (TMA) must maintain up-to-date and accurate ledgers which record: i. administrative and overhead expenditures incurred in operating the TMA; ii.
inventory items bought, processed and sold; iii.

sales and debtors; iv.

creditors and commitments; v. cash payments and receipts; vi.

property, plant & equipment values and depreciation costs.15 The PAO, SAO, AO, AAO must not certify a payment as correct unless they are satisfied that the expenditure account it is charged to is correct.16  TMA Plumber Shop receives bulk of its work from the Building Section in the form of Capital Works Projects and Maintenance of public buildings.
It also manufactures water tanks, ridge caps, barge flashings, roof trusses, fixtures, manufacturing of all types of flashings to buildings in required sizes.17 The audit noted a variance of $354,217 in the total sales between the Job Record Sheet (JRS) and the general ledger for the Plumber Shop TMA as at 31/7/16.

Refer to Table 40.19 for details.
15 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 6.2.3 – 6.2.5 16 Ministry of Infrastructure and Transport Agency Finance Manual 2016, Section 2.8.4 17 Plumber shop Business Plan - Section 2.0 Profile Background Ministry of Infrastructure and Transport Section 40 : Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.19: Variance between the Job Record Sheet and General Ledger Total Sales as per Job Record Sheet ($) 412,419 (VEP) Total Sales as per General Ledger ($) 766,636 (VEP) Variance ($) 354,217  The audit also noted instances where payments were incorrectly charged to expenditure allocations that did not relate to that expenditure type for the Plumber Shop and Plant Hire TMAs.
Refer to Table 40.20 for examples.

Table 40.20: Examples expenditure mispostings Date Cheque No.

13/7/16 663837 17/6/16 822753 Amount Payee Details ($) 12,161 Payee A Being payment for for Joinery materials Shop Allocation Incorrectly Charged to 4-40252-91011- 260101 Materials Purchases Plumber Shop Direct – 8,000 Payee B Being payment for the hire of LC Senikabuta Barge to cart machines from Beqa to Suva.

– digger (Transporting and 10 wheeler truck from Beqa to Suva.)
4-40258-91011- 260403 Repair and maintenance of Fixed Assets – Plant Hire Allocation that should have been Charged to This is a Joinery expense, TMA incorrectly charged to Plumber shop.

Correct allocation: 4-40258-91011- 260101 Correct allocation to be charged is 4- 40258-91011- 260406 – Lease and Rent payments.

The above findings indicate lack of monitoring and supervision by Senior Officers on the tasks carried out by junior officers at the Plumber Shop and Plant Hire TMA.
Recommendations The Ministry should ensure that:  work of subordinate officers are monitored and supervised;  the variance in sales between the JRS and general ledger is identified and adjusted to reconcile the two records;  adequate supporting documents are attached to journal vouchers; and  expenditure is properly reviewed by senior officers and posted to their correct allocations in the general ledger.
Ministry’s Comments The Division has been short of Supervising Officers during this period thus the AAO was acting and approving the journals.

However the Ministry has appointed an Acting Senior Accounts Officer to oversee the responsibilities of Head of Section for Accounts.
Ministry of Infrastructure and Transport Section 40 : Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The variance was due to the Cash Flow issue whereby no Job Record Sheet (JRS) was issued for such funding.

However, the Division has started to issue JRS based on the Cash Flow to capture the flow of funding.

This has also been addressed via the trainings carried out by PAO whereby a revised JRS was designed and implemented.
The audit recommendation is acknowledged.

The Division monitors periodic monthly reconciliations by Chief Clerks to detect and regularise any mispostings in a timely manner.

The department ensures that expenditures are properly monitored and posted to correct allocation upon review by the Accounts Officers.
40.7 Underline Accounts 40.7.1 Anomalies in Operating Fund Account 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.
All consolidated reconciled accounts must be verified by SAO, AO and AAO and be submitted to Ministry of Finance through PSIT within two weeks after the closing of each monthly account.18 Audit review of Operating Trust Fund Account for the year ended 31/7/16 revealed the following anomalies.

 The Ministry had five Programs and 20 Activities in the approved budget under Head 40 for 2015 and 2016.
Budgetary program numbers 5, 6 and 7 from 2015 were changed as Programs 3, 4 and 5 in 2016 under the same Head.

Refer to Table 40.21 for details.

Table 40.21: Changes in Programs from 2015 to 2016 under Head 40 Program No.

5 6 7 2015 DECE – Works Department of Energy Department of Water and Sewerage Program No.
3 4 5 2016 Department of Water and Sewerage Department of Energy Department of Water and Sewerage As at date of audit (18/10/16), the Ministry was yet to transfer the closing credit balances of $1,859,557 as at 31/12/15 for various operating trust fund accounts from Programs 5, 6 and 7 to Programs 3, 4 and 5 as opening balances as at 1/1/16.

Refer to Table 40.22 for details.
18 Ministry of Infrastructure and Transport Agency Finance Manual 2016, Section 17.2.5 Ministry of Infrastructure and Transport Section 40 : Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.22: Details of Operating Trust Fund account balances not transferred from 2015 to 2016 Allocation Details 1-40101-40999-861923 Uniform Deduction - Transport 1-40501-96991-861923 Payroll Deduction Agriculture 1-40501-95991-861924 Payroll Deduction - Central Finance 1-40501-96991-861933 NUPW Credit Union 1-40501-97991-861933 NUPW Credit Union 1-40501-96991-861104 208 PD Rent H/A Unest 1-40501-97991-861104 208 PD Rent H/A Unest 1-40501-96991-861106 390 PD Gov Water Rates Chrgs 1-40601-84999-861106 390 PD Gov Water Rates Chrgs 1-40501-96991-861202 241 PD CMLA 1-40501-97991-861202 241 PD CMLA 1-40502-95212-861202 241 PD CMLA 1-40501-96991-861204 244 PD - LICI 1-40501-97991-861204 Payroll Deductions-LICI 1-40501-97991-861501 286 PD Fiji Public Service Ass 1-40501-96991-861525 316 PD Service Worker Cu 1-40501-97991-861525 316 PD Service Worker Cu 1-40501-96991-861532 YYY PD Public Employee Union 1-40501-96991-861537 Carpenters Finance Fiji Ltd 1-40501-96991-861606 346 PD Maintenance -Lautoka 1-40501-97991-861899 440 PD Fixed Rent 1-40501-97991-861901 201 PD Tax Arrears / PAYE 1-40501-96991-861911 385 PD Sports & Social 1-40501-97991-861911 385 PD Sports & Social 1-40501-96991-861920 501 PD Employees FNPF 1-40501-96991-861934 NUPW Welfare Total 1-40601-84999-861920 501 PD Employees FNPF 1-40601-91991-861920 501 PDE Employees FNPF 1-40601-84999-862102 Total JC Retention Money 2015 ($) (251.25) (374.49) (466.78) (48.98) (20.00) (364.77) (210.00) (72.99) (758.50) (175.06) (2,276.08) (50.00) (285.87) (133.46) (36.91) (529.99) (90.00) (19.49) (175.99) (39.99) (97.38) (0.02) (29.99) (0.01) (4,098.01) (60.97) (10,666.98) (23,288.08) (154,365.28) (1,681,904.09) (1,859,557.45) 2016 ($) (251.25) (374.49) (466.78) (48.98) (20.00) (364.77) (210.00) (72.99) (758.50) (175.06) (2,276.08)
 (50.00) (285.87) (133.46) (36.91) (529.99) (90.00) (19.49) (175.99) (39.99) (97.38) (0.02) (29.99) (0.01) (4,098.01) (60.97) (10,666.98) (23,288.08) (154,365.28) (1,681,904.09) (1,859,557.45)  In addition, details of Security Deposits totalling $13,209 and Tender deposits totalling $951,202 were not provided by the Ministry despite several requests.
Refer to Table 40.23 for details.
Table 40.23: Details of Uncleared Operating Trust Fund Balances from 2013 to 2016 Allocation Details 1-40301-99991-860101 Security Deposits 1-40301-99991-860103 Tender Deposits 1-40501-83999-860101 Security Deposits 1-40501-83999-860103 Tender Deposits 1-40601-84999-862102 JC Retention Money 2013 ($) 2014 ($) 2015 ($) 2016 ($) - - (13,209.05) (951,202.35) - (964,411.40) - - (13,209.05) (951,202.35) (1,681,904.09) (2,646,315.49) - - (13,209.05) (951,202.35) (1,681,904.09) (2,646,315.49) (13,209.05) (951,202.35) - - (1,681,904.09) (2,646,315.49) There was no evidence to indicate that appropriate action was taken by the Ministry taken to clear the amounts.
Ministry of Infrastructure and Transport Section 40 : Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The above findings reflect lack of proper monitoring and supervision by the officers at the Ministry to clear the operating trust account in a timely manner.
Recommendations The Ministry should:    liaise the Ministry of Economy FMIS section on the correct classification of the trust accounts above; ensure that operating trust account balance are supported; and clear the credit amounts from its operating trust fund account in a timely manner.

Ministry’s Comments The issue has been raised in previous OAG audit reports and has been discussed in the Public accounts Committee on 3rd May 2017.
These balances are inherited figures from past years during the inception of FMIS and figures have been stagnant over those years.

There were no supporting documents available over the years as only figures were transferred from the old manual system to FMIS.

However, the Ministry prepares monthly Trust Fund Account reconciliations which are submitted to Ministry of Economy as required.
40.8 Headquarters 40.8.1 Provision of Electricity in Rural Areas It is the intention of Government that social benefit of electricity is made available to all rural areas in the shortest time possible.
Social benefit of electricity is provided to as many Fiji villages and settlements as possible within the bounds of funds allocated annually by Government and/or aid.19 40.8.1.1 “Grid Extensions” Projects yet to commence A total of $21.06 million has been paid for 72 “grid extension” to provide electricity (power poles and electricity lines) in rural areas for the last four years.
The audit noted that out of the total $21.06 million paid for 72 “grid extensions” projects for the last four years, works for projects totalling $20.48 million or 57 “grid extensions” (79%) is yet to commence.

Refer to Table 40.24 for details.


19 Ministry of Infrastructure & Transport, Rural Electrification Policy 2016 – section 3.1.6 Ministry of Infrastructure and Transport Section 40 : Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.24: Details of Payments for “Grid Extension” Projects Year Total Amount Paid Ministry’s Contribution Community Contribution No.
of Grid Extensions 2016 2015 2014 2013 Total ($) 12,156,119 5,399,227 2,721,024 780,573 21,056,943 ($) 12,156,119 5,174,845 2,287,324 741,544 20,359,832 ($) --- 224,383 160,078 39,029 423,490 11 34 25 2 72 Grid Extension yet to commence ($) 12,156,119 5,326,682 2,328,275 669,764 20,480,840 No.
of Grid Extensions 10 27 19 1 57 Per cent (%) 91 79 76 50 79 40.8.1.2 “Grid Extensions” paid for in 2016 A total of $7.063 million was paid for “grid extensions” to provide electricity services via “Grid Extension Agreement” number REU-02-17 ($3.648 million) and REU-04-08 ($3.415 million) dated 29th July 2016.
These included: the village of Nabukelevu & Nuku village in Serua ($930,389), Sector 1-4, 7 & 8 Cocoa Road, Navunisoroa, Nataveira & Navutu village in Naitasiri ($828,400), Wainicoce, Vatubo & Waikubukubu village in Tavua ($708,500), Nasebitu, Naituvatuva and Nalidi village in Wainibuka ($697,183) and Qiolevu Road Settlement & Sawani in Naitasiri ($483,600) and 24 other rural electrification projects totalling $3.415 million in the central, western and northern divisions.
The audit noted the following anomalies from the review of the “Grid Extension Agreement” numbers REU-02-17 and REU-04-18 (“the agreement”) entered into by the Department of Energy:  The timeline for the completion of the “grid extension” in the five villages is agreed upon as 2016 – 2018.20 Specific timelines for the completion of the each “grid extension” is not stated.
 The “detail of works” for the “grid extensions” in Schedule 2 of the agreement does not have timelines for the completion of the works in stages that includes the negotiations and the consent of the landowners to construct the power poles, the drawing of the design & the scope of work and the construction of the “grid extensions”.21  The “project plan” following the payment for the “grid extensions” in the villages as per the agreement were yet to be finalised between the Department, the contractor and the Department of National Planning (now Strategic Planning Office) as at 12 September 2016 – the date of the audit.22  Although the Department of National Planning is mentioned in the agreement for a consultative project plan, it is not represented in the signing of the agreement.
The above findings indicate that despite the significant funding, the implementation of the “grid extensions” to improve the lives of the rural communities is largely yet to be implemented.
20 Grid Extension Agreement, reference, REU-02-17 & REU-04-08, dated 29 July 2016, section II, paragraph 2 21 Grid Extension Agreement, reference, REU-02-17 & REU-04-08, dated 29 July 2016, section V, paragraph 2.2 and Schedule 2 22 Grid Extension Agreement, reference, REU-02-17 & REU-04-08, dated 29 July 2016, section V, paragraph 2.1 Ministry of Infrastructure and Transport Section 40 : Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Recommendations The Ministry through the Department of Energy:   should be pro-active in the monitoring of the timely implementation of “grid extensions” projects as per the “Grid Extension agreement” addressing the key issues noted in the implementation of the agreement; and enquire with the contractor on the status of the “grid extensions” projects since 2013 or any that may be pending prior to this.
Ministry’s Comments The audit recommendation is acknowledged.

The Fiji Electricity Authority (FEA) is the sole supplier responsible for the Generation, Transmission and Retail of electricity on the larger islands, Viti Levu, Vanua Levu and Ovalau, which account for some 90% of the country’s population.

For all future grid extension projects the Ministry will now propose to FEA to have the specific timelines incorporated for each stage of works for grid extension projects.
The contracts have been vetted by the Solicitor General’s office.

It would therefore be sufficient to allow the progress of each stage in schedule 2 to be complete within the general timeline stipulated in the signed contracts.

This is to allow flexibility for each stage due to unforeseen circumstances that may arise such as delays in wayleave negotiations etc.
The Department of National Planning is an important stakeholder and the overall monitoring body with respect to the progress of grid infrastructure projects.

To this effect, National Planning is part of the monthly monitoring consultations for these projects.

However, the Solicitor General’s office did not deem it necessary for representation in signing of the agreement.
For future grid extension projects, the Ministry will recommend to the Solicitor General’s office to remove the mention of the Department of National Planning.
40.8.2 Poor Monitoring of Bua/Macuata Solar Home Systems Projects The main objective of the maintenance and servicing works of Individual Solar Home Systems in Bua and Macuata was to provide reports of maintenance works carried out for 895 Solar Home Systems in Macuata and 918 Solar Home Systems in Bua as specified in the agreement.23 The GTB approved cost for the maintenance and servicing works for Macuata and Bua was $69,989 and $71,787.60, respectively.
The audit noted that the comments in the inspection report of the houses visited by the contractor indicated that several houses could not be accessed during the inspection.

Refer to Table 40.25 for details.

Table 40.25: Details of Houses not accessed by the Contractor Report Bua – 3rd Quarter Bua – 4th Quarter No.
of Houses not Accessed 57 292 23 Contract Agreement between the Ministry and Contractor for Bua and Macuata, Clause 1, Objectives Ministry of Infrastructure and Transport Section 40 : Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Report Macuata – 3rd Quarter Macuata – 4th Quarter No.

of Houses not Accessed 3 125 The Senior Scientific Officer (EDP No.
91628) explained that the reasons for the houses not being visited by the Contractor was that the customers may have been out in the farms during the contractor’s visit; customers tampering with their systems and not paying their monthly bills and the contractor not having any spares to repair the systems to be operational.

However, the Ministry did not provide a list of house owners for which the meters were tempered with and those not paying their monthly bills.
The audit findings indicate lack of proper monitoring and supervision of the maintenance works by Ministry officials resulting in government’s interest not being fully protected.

Recommendation The Ministry should liaise with the village Turaga Ni Koro and Divisional Engineers for the access to customers’ residence.

Ministry’s Comments The issue of contractor not able to access the systems is mainly due to houses being closed.
Some causes identified for house closed:  Owners and family in Suva or Labasa – School Children schooling in the City  Owners went to their farms  Owners closed their house and went to farms to avoid the warning or fine issued by DoE because they must have tampering with their systems  House vacant and no idea where the owner is 40.8.3 Anomalies in Project Records and Delay in 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.24 The audit noted in the review of the project records for Repair and Upgrade of Public Building maintained by the Divisional Engineer Central Eastern (DECE) Office that project records were not properly maintained.

The following anomalies were noted.


 Complete payment details were not entered in the manual ledgers for three different projects namely Laucala Meteorological Office Quarters, Lami Government Shipping Services (GSS) Quarters and DPP’s Office Building 30.

Details only of requisitions made for the materials required in the project were entered.

As a result, the audit could not quantify actual cost incurred in each of the three projects mentioned above.
24 Ministry of Infrastructure & Transport Agency Finance Manual 2016, Part 2: Expenditure Opening paragraph Ministry of Infrastructure and Transport Section 40 : Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________  The project for the Repair and Upgrade of DPP’s Office Building 30 commenced on 9/3/16 and was expected to be completed by 15/7/16.

However, the project was delayed for 52 days due to the change in government financial year to 31 July 2016.
Supervisor Buildings informed audit that the contracts for the project workers were terminated on 31 July 2016 to coincide with the government financial year end.

In addition, lack of required resources such as permanent carpenters also contributed to the delay in completion of works.

The project recommenced on 22/9/16 and the expected completion date was revised to 21/12/16.
The above findings indicate poor project management and record keeping by the Divisional Engineer Central Eastern (DECE) which resulted in delay in completion of the project.

Recommendations The Ministry should ensure that:   individual projects costs are properly accounted in the respective ledgers; and all projects are completed within the agreed time frame.
Ministry’s Comments The Division had encouraged the use of Expenditure Ledger in addition to the Site Ledger as currently practice by the Division compared to previously.

This practice ensures improvement in the reporting and analysis of each project since all information will be captured in the Expenditure Ledger.

The delay in the implementation of the project was solely due to the unexpected change of the financial year by Government.
40.8.4 Internal Controls Weaknesses Each month, the Accounting Head must provide a signed and dated report to the Permanent Secretary to advise whether all reconciliations and checks required in the agency’s Finance manual have been carried out; and the current status of any unresolved external or internal audit issues.25 The audit noted that the monthly signed report was not provided to the Permanent Secretary contrary to section 60 of the Finance Instructions 2010.
As such, the following internal controls were neither checked regularly nor in place for the financial period ended 31 July 2016:  Unresolved audit issues continued in the new financial year.

Refer to section 7.4 for matters raised as “follow-up” issues.

 The following administrative controls were absent: o The Ministry carried out beacon works in February and June at Ellington, Bau and Ovalau waters, respectively.
However, the Ministry did not provide for audit the reports on the beacon works carried out in February at Ellington waters for verification contrary to section 2.8.4 of the Ministry’s 2016 Agency Finance Manual; 25 Finance Instructions 2010, Section 61, Assurance to Permanent Secretary Ministry of Infrastructure and Transport Section 40 : Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ o The Ministry paid a sum of $6,862,847 VIP to FEA on 29 July 2016.
The Ministry did not monitor the works on a weekly basis.

Although progress reports were requested by audit on 5/9/16, no updates were provided contrary to the Agreement between the Ministry of Infrastructure and Transport and FEA for the establishment of the FEA Somosomo Hydro Power Depot in Taveuni.
o Several instances were noted where the Ministry was incorrectly clearing the retirement of accountable advance to the revenue allocations contrary to section 10.1.15 of the Ministry’s 2016 Agency Finance Manual.

Refer to Table 40.26 for examples.

Table 40.26: Details of Accountable Advance retired to Revenue allocation Date 7/6/16 10/6/16 15/6/16 20/6/16 27/6/16 Revenue Receipt No.
313248 313249 313250 154751 154752 154753 Amount ($) Comments 555 Retirement of Accountable Advance 5 Retirement of Accountable Advance - Levuka Trip 18 Retirement of Accountable Advance 30 40 Retirement of Accountable Advance - Training in Nadroga / Navosa 309 Retirement of Accountable Advance - training in Northern Division o The revenue receipt book in use for the Energy Trust Fund account as at date of audit on 12/10/16 was from the receipt numbers 897001 - 897050.
Two receipt books with receipt numbers 897051 - 897100 and 897101 - 897150 were unused while two receipt books with receipt numbers 897151 - 897200 and 897201 - 897250 were already used.

Hence these receipt books were not issued in numerical sequence.

Refer to Table 40.27 for details.

Table 40.27: Details Receipt Books Used by the Ministry Receipt Book No.
Sequence Status In Use 897001 – 897050 897051 – 897100 Unused 897101 – 897150 Unused 897151 – 897200 Used 897201 – 897250 Used o Receipt books issued to the field officers to collect revenue for the Solar Home Systems were not fully used.

Although, the books with unused receipts were kept by the cashier in a safe under lock and key, the pages of the unused receipts were not recorded.

Refer to Table 40.28 for details.


Table 40.28: Details of Receipt Books Used by the Ministry Sequence 511351-511400 511651-511700 511701-511750 Used 511351-511388 511651-511657 511701-511705 Unused 511389-511400 511658-511700 511706-511750 o The Ministry paid for an outstanding account from 2013 in 2016 contrary to section 17.2.4 of the Ministry’s 2016 Agency Finance Manual.

Refer to Table 40.29 below for details.


Ministry of Infrastructure and Transport Section 40 : Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Table 40.29: Outstanding account from 2013 Date Payee 5/7/16 Taubmans Paints EFT No.

2808 Invoice No.
2808 Invoice No.

SINV-030221 & SINV030222 Invoice Date 29/8/13 Particulars Being payment for the purchase of 18 by 10 litre red paint for the works carried out by Industrial Marine Limited Engineering (IMEL) for the Barge Vualiku in 2013.

Amount ($) 15,556 (VIP) The above finding is an indication of the weaknesses in the internal controls in the Ministry which can result in misstatements in the financial reporting and fraud and misappropriation.
Recommendations The Ministry should ensure that:     records relating to project works are properly maintained and provided for audit review; retirement of accountable advance are journalised correctly; receipt books for the Energy Trust Fund are used in numerical sequence and all unused receipts are properly recorded in a register; and current year’s expenditures are settled within the current financial period and not carried forward to the next financial year.
Ministry’s Comments Every month there is a meeting on Rural Electrification Projects with FEA and also the representatives from Ministry of Economy on the said projects.

The monthly update on the Rural Electrification Projects is provided to the Ministry of Infrastructure & Transport for monitoring purposes.

The Trust Fund Receipt Books are used to receipt the Solar Rental Bills, Performance Bond, Connection Fees deposits of the department.
The receipt book sequence numbers are not used sequentially as the Receipt Books are issued to Authorised Revenue collectors to collect the solar rental bills arrears in mainland and maritime zones.

The collections are reconciled and lodged as per the receipts.

40.8.5 Payment of VAT from SEG 13 for Operating Grant In line with Sections, 3(5) and (6) of the VAT Decree 1991; all grant monies are VAT inclusive; i.e.
all grant recipients must meet the VAT from the allocation provided under SEG 6 and/or SEG 10.

VAT is not provided under SEG 13.26 The audit noted that the Ministry paid VAT from SEG 13 for the tendered shipping companies under the Shipping Franchise Scheme Program in SEG 6 contrary to Finance Circular 16/2010.

The total VAT paid from SEG 13 for the Shipping Franchise Operating Grant Scheme for the period January – July, 2016 amounted to $56,064.

Refer to Appendix 40.1 for details.


26 Finance Circular No: 16/2010 – Clause 5.2 Ministry of Infrastructure and Transport Section 40 : Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ The finding indicates lack of proper monitoring and supervision by senior officers on the processing of payments by the Ministry.

As a result, SEG 6 has understated by $56,064 while SEG 13 has been overstated by the same amount.
Recommendation The Ministry should ensure that payment of VAT is made from the correct allocation.

Ministry’s Comments The audit recommendation is acknowledged.

The separation of VAT from SEG 6 and posting in SEG 13 was an inadvertent error as there were staff rotation in the Accounts Section and the incoming payments officers were not experienced in facilitating Shipping Franchise Scheme subsidy payments.
40.8.6 Anomalies in Revenue – Fiji Meteorological Services The Cabinet on 16/08/05 approved that Airports Fiji Limited (AFL) reimburse Fiji Meteorological Services (FMS) 50% Meteorological Aviation costs of Nadi Terminal, Nausori International and En- route only and backdating to July 1997; and approved that a review to be funded by FMS of the structure of costs be undertaken and a contract should be entered into between FMS and AFL for the provision of weather services to the aviation industry with effect from January 2006.
27 AFL on 15/4/08 wrote a letter to FMS agreeing to pay $50,000 per month until an independent study is carried out.

The FMS from 2006 to 31/7/16 recorded arrears of revenue amounting to $2,671,056 from AFL.

The audit noted that after a lapse of 11 years, FMS is yet to carry out a review of the cost structure with AFL and finalise the agreement for the provision of weather services.

The audit further noted variance in revenue from AFL amounting to $103,710 for the period ended 31/7/16.
The difference is due to a debit posting of $86,957 and charging of VAT at 15% instead of 9% totalling $16,753.

No supporting documents were provided for the debit posting of $86,957.

The findings indicate non - compliance of the Ministry with Cabinet Decision on 16/08/05 and the lack of monitoring by senior officers of the Department.

As a result, the revenue is understated by $ 103,710 in the Statement of Receipts and Payments.
Recommendations The Ministry should ensure that:  AFL complies with the Cabinet Decision and reimburse the FMS 50% of the costs of meteorological services provided; 27 Cabinet Decision CP (05)310 dated 16/8/05 Ministry of Infrastructure and Transport Section 40 : Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________  a review of the cost structure on the provision of meteorological services to the aviation industry is carried out; and  revenue is correctly posted in the FMIS general ledger.
Ministry’s Comments The FMS is currently in a series of consultations with AFL in regards to the reimbursement of costs of meteorological services.

Currently, FMS is also working on a mutually agreed formula for determining the value of the meteorological services provided to AFL and to mutually agree on the cost to be reimbursed.

Once there is an agreement from both stakeholders, a submission will be made by the Ministry to Parliament for approval.

FMS is currently working on this review process.


The Ministry has conducted staff rotation exercise in 2016 which has seen improvements in the accounting and financial activities of FMS.

In taking such measures, the Ministry ensures proper accounting processes and procedures are being exercised and any irregularities detected and regularised.
40.9 Head 41 – Water Authority of Fiji 40.9.1 Recurring Issue on Retention Funds from the Department of Water and Sewerage 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”.28 The audit noted that the Ministry maintained retention money totalling $1,161,883.81 deducted from the contractors engaged in water and sewerage projects in the Ministry’s Operating Trust Fund account number 1-41201-85999-860101.

As at 31/07/16, the Operating Trust Fund account had a balance of $1,161,883.81 as retention money.
The retention money reflected in the Operating Trust Fund account were not supported by actual cash to pay off these liabilities.

Furthermore, the audit noted that neither the contractors have made any claims for the payment of retention security nor does the Ministry have the supporting documents such as contract documents, completion certificates and progress certificates for the payment of security deposits.
The Department has been carrying forward these balances from the year 2009 and it is highly unlikely that these payments will be made in future as all records relating to the payments were not properly handed over to Water Authority of Fiji from the Department of Water.

Although, the Ministry maintained a register for the receipt and payment of retention money, the audit could not ascertain the accuracy and correctness of the register as details pertaining to payments were not provided.
Refer to Appendix 40.2 for details.

28 Ministry of Infrastructure and Transport, 2016 Agency Finance Manual, Section 15 Ministry of Infrastructure and Transport Section 40 : Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ As a result, the Operating Trust Fund account was over stated by $1,161,883.81 as at 31/7/16.
Recommendation The Ministry should liaise with the Water Authority of Fiji to locate the documents relating to the payment of retention deposit monies from the contractors.

Ministry’s Comments The department had consulted Ministry of Finance on maintaining of a separate bank account for the retention funds held.

Ministry of Finance advised that this fund should be maintained in the Operating Trust because it is not an active monetary account.
These funds were retained from payment made to the contractors as security which would have been paid to the contractors upon satisfactorily completion of the project.

Funds are released only when a Completion Report with all supporting documents is submitted by Water Authority of Fiji (WAF) to Director of Water and Sewerage confirming on the completion of the project.

The funds maintained in this account were retained prior to the transition of WAF which continued after 2010.
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 sum of $1,161,883.81 has been retained in Operating Trust under DWS which doesn’t have any budgetary provision under 2015 Budget.
Current status: The Ministry had submitted the request to transfer the liability of $1,161,883.81 under Ministry of Economy which is pending for approval as this still appears under Ministry Accounts.

40.10 Follow-up Issues During the 2016 audit, the status of the matters reported in the previous year was followed up.

These matters have remained outstanding as actions were yet to be taken by the Ministry to resolve them.
The status of outstanding issues is tabulated below: Table 40.30: Follow-up on Previous Year Accounting and Control Anomalies Issues Recommendations Current Status The Department should ensure that tally cards are updated regularly to record movement of stores; appropriate disciplinary action taken against for not those performing duties diligently.

responsible their and TMA Department of Government Shipping Services Anomalies in Maintenance of Tally Cards.
The Department keeps 4 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 the tally cards for Office Supplies and Repair and Maintenance materials for the year 2015.

The Department started maintaining the tally cards for these stores from the year 2016.
The audit - Storeroom visit done on 11/1/17 - The storeroom does not have a storeman to look after the store items and update the tally cards.

- Currently, one staff (marine engineer) is partly looking after the stores and updating the tally cards.

- Tally cards are not up to date.

Store is recorded in the delivery book.

From here tally cards.


- Discussions with Director GSS revealed that the post has been advertised and interviews will be the staff updates taken out items are the Management’s Proposed Action 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.
Ministry of Infrastructure and Transport Section 40 : Page 31 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Issues Recommendations Current Status Management’s Proposed Action noted that the tally cards were not updated by the Departments storeman as of the date of audit on 31/3/16 for the Office Supplies, Fuel and Lubricants, Repair and Maintenance materials stores.

Department of Energy 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 EPCL for $53,543.20 and $510,416 respectively.

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 Terms and conditions of the contract are complied with at all times.

conducted by the end of this month.


The delay is mainly for the late supply of materials from FEA who is a sole supplier.

No response provided.

The delay is for the late supply of is materials; responsible supply of materials for the two project and not the contractors themselves.

department the the for of construction The Electrical Overhead Grid Extension Works and Connection to 24hr Supply to Kadavu and Muana Hydro project was to be completed by 31/08/14 and 31/07/14 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.

The audit noted the inspection report after the completion date the works were still in progress.

that as per to The Department was not able provide the actual completion date of the completion the project and 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 from both contractors.

Revenue Arrears System Scheme.

for Solar Home 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 Update its arrears records on a monthly basis to fairly represent arrears of revenue; and As of the date of audit on 20/1/17, the Ministry was yet to update the arrears of revenue for Solar Home Systems.

No response provided.

that concerted effort Ensure is made to recover the arrears to avoid write offs.
Ministry of Infrastructure and Transport Section 40 : Page 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Issues Recommendations Current Status Management’s Proposed Action revenue for the Solar Home System Scheme as at 30/6/15 was $548,124.

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.
A balance of $392,676.20 or 72% of the total arrears of $548,124 was yet to be recovered by the Department as at 31/1/16.
Ministry of Infrastructure and Transport Section 40 : Page 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ APPENDIX 40.1: DETAILS OF SHIPPING FRANCHISE COSTS PAID FROM SEG 13 Shipping Route Tendered Company Upper Southern Lau Company A Northern Lau Company B Company C Lower Southern Lau Company D Rotuma Company E Northern Vanua Levu Eastern Company F Yasawa Company G Yasayasa Moala Company H Company I Company J Kadavu Company K Lomaiviti Company L Company M Cheque No.
Payment Allocation to SEG 13 ($) Ministry of Infrastructure and Transport Section 40 : Page 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017___________________________ Shipping Route Tendered Company TOTAL Cheque No.
Payment Allocation to SEG 13 ($) 2075 2130 2204 2212 2239 908.26 908.26 908.26 908.26 908.26 $56,064.25 Ministry of Infrastructure and Transport Section 40 : Page 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Section 49 Peacekeeping Missions Roles and Responsibilities Peacekeeping Missions The Fiji Military Forces and Fiji Police Force contributes troops to successive international peacekeeping operations for the United Nation (UN) sanctioned missions (United Nations Disengagement Observer Force, United Nations Assistance Mission for Iraq, Multinational Force and Observers) in Syria, Iraq and Sinai.
The UN Security Council mandate for peacekeeping operations calls for security personnel deployed to conflict zones under UN authority to disengage the conflict parties; create conditions for peaceful settlement of a conflict;  maintain or restore international peace and security;    monitor ceasefire peace agreements; and  render 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 2016 accounts of the Department of Peacekeeping Mission resulted in an unqualified audit opinion.
However, Management’s attention was drawn to the following:  The Peacekeeping Mission did not carry out a board of survey to verify the existence and condition of assets under its authority contrary to Section 49 of the Finance Instruction 2010.

49.2 Statement of Receipts and Expenditure The Department of Peacekeeping Mission incurred expenditure totalling $41,760,365 for the seven months period ended 31 July 2017.

Refer Table 49.1 for details.
Table 49.1: Statement of Receipts and Expenditure for 2016 Description RECEIPTS State Revenue Total State Revenue Agency Revenue Miscellaneous 2016 ($) 2015 ($) --- --- --- --- --- --- --- --- Peacekeeping Missions Section 49: Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ Description 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 Total Capital Expenditure Value Added Tax TOTAL EXPENDITURE 2016 ($) 2015 ($) --- --- 39,524,162 --- 119,031 27,354 1,674,140 --- 247,280 41,591,967 --- --- --- 168,398 41,760,365 66,632,091 --- 159,635 38,152 1,109,406 --- 476,610 68,415,894 --- --- --- 195,494- 68,611,388 The financial year end for Government was changed from 31 December to 31 July as stipulated in the Financial Management (Amendment) Act 2016.
The financial statement for the period ended 2016 reflect transactions for a seven-month period whereas the financial statements for the year ended 2015 is for a twelve month period, thus the significant variances with comparative balances.

The increase in expenditure for Purchases of Goods and Services in 2016 was due to procurement of clothing, uniform and footwear for officers deployed for overseas mission during the period.
49.3 Appropriation Statement The Department of Peacekeeping Mission incurred expenditures totalling $41,760,365 in 2016 against a revised budget of $78,972,275 resulting in a significant savings of $37,211,910 or 47%.

The significant savings was primarily due to the budget being for twelve months while expenditures incurred were only for the seven months up to 31 July 2016.

Details of expenditures against the budget estimates are provided in Table 49.2.
Table 49.2: Appropriation Statement for 2016 SEG Item Established Staff Government Wage Earners Travel & Communications Maintenance & Operations Purchase of Goods & Services Operating Grants & Transfers Special Expenditures Total Operating Costs Capital Expenditure Capital Construction Capital Purchases Grants & Transfers Total Capital Expenditure Budget Estimate ($) 72,574,879 --- 122,758 180,146 3,264,192 --- 2,302,200 78,444,175 --- --- --- --- Changes ($) --- --- 1,000 (1,000) --- --- --- --- --- --- --- --- Revised Estimate ($) 72,574,879 --- 123,758 179,146 3,264,192 --- 2,302,200 78,444,175 Actual Expenditure ($) Lapsed Appropriation ($) 39,524,162 33,050,717 --- 119,031 27,354 1,674,140 --- 247,280 41,591,967 --- 4,727 151,792 1,590,052 --- 2,054,920 36,852,208 --- --- --- --- --- --- --- --- --- --- --- --- Peacekeeping Missions Section 49: Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI – JUNE 2017 ____________________________ SEG Item 13 Value Added Tax TOTAL EXPENDITURE Budget Estimate ($) 528,100 78,972,275 Changes ($) --- --- Revised Estimate ($) 528,100 78,972,275 Actual Expenditure ($) 168,398 41,760,365 Lapsed Appropriation ($) 359,702 37,211,910 Peacekeeping Missions Section 49: Page 3