Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1694824096302.pdf (Fiji)
EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Audit Report on Statutory Authorities – December 2014 EXCELLENCE IN PUBLIC SECTOR AUDITING REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI Audit Report on Statutory Authorities December 2014 Statutory Authorities 1.

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Fiji Roads Authority National Food and Nutrition Center Fiji Commerce Commission Consumer Council of Fiji Fiji Medical and Dental Secretariat Fiji National Council for Disabled Persons Fiji Revenue and Customs Authority Fiji Servicemen’s After Care Fund Fiji Higher Education Commission Maritime Safety Authority of Fiji Korovou Rural Local Authority National Fire Authority National Substance Abuse Advisory Council Civil Aviation Authority of Fiji Ra Rural Local Authority Western Division Drainage Board Investment Fiji Council of Rotuma Fiji Independent Commission Against Corruption Telecommunications Authority of Fiji Fiji National Sports Commission Fiji Sports Council REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 1: FIJI ROADS AUTHORITY Programme Statement Fiji Roads Authority (the "Authority" or “FRA”) was established by the Fiji Road Authority Decree 2012 (as amended by the Fiji Road Authority (Amendment) Decree 2012, “Principal Decree”) (“FRA Decree”) to serve the road system needs of the Republic of Fiji.
This decree established the Authority by transferring the operations and assets of the Department of National Roads (“DNR”).
Table of Content SECTION 1: FIJI ROADS AUTHORITY ..................................................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 1.1 Audit opinion ............................................................................................................................................................... 1 1.2 Abridged Statement of Comprehensive Income ......................................................................................................... 1 1.3 Abridged Statement of Financial Position ................................................................................................................... 2 PART B – CONTROL ISSUES ................................................................................................................................................... 3 1.4 Valuation of property, plant & equipment .................................................................................................................... 3 PART A – FINANCIAL INFORMATION 1.1 Audit opinion The audit of the accounts of the Fiji Roads Authority for the year ended 31 December 2013 resulted in the issue of a qualified audit report.
The issue qualified is as follow: As discussed in Notes 1(a) and 1(e) to the financial statements, there were insufficient accounting records and related documents to appropriately account and substantiate the value of property, plant and equipment as at 5 January 2012.

The financial statements consequently included carried forward opening balance for property, plant and equipment of $4.6 billion based significantly on estimates and assumptions, with uncertainty.
Appropriate audit procedures were not able to be carried out to obtain sufficient and appropriate audit evidence over these estimates and valuation.

As a result, the audit was not able to determine the effect of adjustments, if any, on the financial position of the Authority as at 31 December 2013, or on its financial performance and cash flows for the year then ended.
1.2 Abridged Statement of Comprehensive Income Year Ended 31 December Income Grants and contributions Other Income Total Income Expenditure Employee related expenses Maintenance Depreciation and amortisation 2013 ($) 2012 Restated ($) 33,370,264 3,814,739 37,185,003 228,970,812 - 228,970,812 3,664,568 96,239,599 45,178,897 14,297,572 26,009,450 48,429,549 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Year Ended 31 December Other operating expenses Total Operating Expenditure (Deficit)/Surplus for the period Other Comprehensive Income Loss on Asset Revaluation Exchange Difference in Translating Foreign Operation Total Other Comprehensive Income 2013 ($) 2012 Restated ($) 14,556,132 159,639,196 (122,454,193) 17,061,988 105,798,559 123,172,253 (11,034,451) 693,315 (10,341,136) - - - Total Comprehensive (Loss)/Income for the period (132,795,329) 123,172,253 The substantial comprehensive loss recorded in 2013 was largely due to the following:  Government grant for capital expenditure accounted as deferred income in 2013, thus the reduction in total income by $191.8 million from the previous year.
 Major maintenance works outsourced and carried out in 2013 resulted in the increase in total expenditures by 51% compared to 2012.

 Loss on revaluation of quarry assets (held for sale).

The decline in employee related expenses by 290% resulted mainly from the significant reduction in average employee numbers during the year.
1.3 Abridged Statement of Financial Position As at 31 December Cash and cash equivalents Receivables Other Current Assets Assets Held for Sale Property, plant and equipment – non-current Intangible Assets – non-current Total Assets Cash Book Overdraft Payables Provision Deferred Income – non-current Total liabilities Net Assets Other Contributed Equity Accumulated Funds Total Equity 2012 ($) 2012 Restated ($) 1,200 11,234,159 1,782,303 6,429,998 649,482 2,742,768 11,000,000 - 4,801,961,000 4,602,802,360 - 4,821,556,203 4,617,194,610 147,543 2,173,607 49,133,095 37,495,324 177,290,078 266,092,104 - 17,432,257 8,000,000 - 25,432,576 4,555,464,099 4,591,762,034 4,565,087,175 4,468,589,781 123,172,253 4,555,464,099 4,591,762,034 (9,623,076) The increase in liabilities was mainly due to the accounting of capital grants given by Government in 2013 as deferred income.
Increase in payables by 182% was due to high maintenance expenses accrued at year end.

Provision for capital works of $27.7 million in 2013 resulted in the increased total provision recorded in 2013.

Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 This contributed to the decline in net assets by $36,297,935 (1%) at year end.
PART B – CONTROL ISSUES 1.4 Valuation of property, plant & equipment IAS 16 Property, Plant and Equipment require initial recognition of property, plant and equipment at cost.

However, due to the unavailability of accurate and reliable information, MWH NZ Ltd and Landworth PRC were engaged in 2012 and 2013 respectively to value property, plant and equipment belonging to the Authority.
The values allocated to the different classes of property, plant and equipment at the establishment of the Authority as at 5 January 2012 totalled $5.2 billion with carrying amounts at the end of 2012 and 2013 of $4.6 billion and $4.8 billion respectively.

Refer to Table 1.1 for details.
Table 1.1: Property, Plant and Equipment Net Book Balance Classes Land and Building Motor Vehicles Road Systems Furniture & Fittings Plant & Equipment Maritime Systems Work In Progress Total Opening Balance as at 5 January 2012 ($) 206,995,852 1,233,958 4,950,572,562 21,450 20,480,583 44,957,932 $5,224,262,337 Closing Balance as at 31 December 2012 ($) 198,988,742 1,068,796 4,225,320,048 20,988 15,089,707 24,640,183 137,673,896 4,602,802,360 Closing Balance as at 31 December 2013 ($) 191,039,617 1,108,735 4,287,226,006 359,719 1,298,735 23,411,148 297,517,040 4,801,961,000 The following issues of concern were noted:  The unavailability of reliable and accurate integrated information on property, plant and equipment has resulted in the significant use of assumptions and estimates, with uncertainty, to determine the value of property, plant and equipment, and in particular, infrastructure assets.
The audit noted from the 2012 Roading Asset Valuation Report prepared by MWH Ltd various recommendations concerning records management practices with regards to improving the accuracy of future infrastructure assets valuations.

The significant improvement actions recommended in the report indicated that the value of infrastructure assets may not be fairly reflected in the Statement of Financial Position.
 Non-disclosure of information in the financial statements concerning issues such as date of valuation, independent valuer responsible for the valuation, valuation methodology used in the absence of comparable reliable data, significant assumptions in estimating fair value and the extent to which fair value were determined.

 Land was classified into one category of “Land and Building” with no clear distinction between freehold land and leasehold land in the fixed assets schedule.
The land on which depots are built are either under native lease or crown lease but this is not clearly shown in the fixed assets schedule.

Information on land titles could not be confirmed and therefore the audit was not able to determine whether land had been properly accounted for in the financial statements.
Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Various issues of concern regarding the valuation of property, plant and equipment have been considered as a qualification in the Auditor’s Report.

Recommendations  It is recommended that the Authority consider the various issues raised against the valuation and accounting of property, plant and equipment in the books of account.
 Recommendations put forward in the valuation report for road infrastructure should be  seriously considered by the Authority to improve the accuracy of future valuations.

Information regarding the valuation of property, plant and equipment should be fully disclosed in the financial statements.

 Property, plant and equipment should be properly accounted for in accordance with IFRS.
Management Comments Apart from an update to the second paragraph and Table 1.1, Audit’s comments here is a repetition of the 2012 issues and FRA comprehensively responded at that time and for the purposes of the record, this is mentioned again below: ‘The quality of the former DNR’s asset data was extremely poor.

The first pre-requisite for any infrastructure management organization is to know what assets it owns.
A 2009 ADB report entitled ‘Fiji National Transport Sector Plan Update – National land Transport (Subsector) Plan’ (that uses records obtained from the DNR and from the Municipal Councils) says: ‘The national road network comprises approximately 5000 km of main secondary and country roads under the management of the Department of National Roads (DNR) which provide the primary inter- urban and rural public network and the main and secondary roads in the urban municipalities.
There are also approximately 200km of city and town council roads and 1800km of rural access roads developed for agriculture, forestry and rural development……There are 787 bridges…” There is a total of 7,000 km roads and 787 bridges.

Upon the establishment of the FRA we asked the DNR to tell us how many assets it was responsible for.

Its response was 5058 km of roads, 809 bridges and 15 jetties.
From the work the FRA did during the transition year we believe the true figures are more likely to be something like: - DNR Roads - Municipal Council Roads - Rural Access Roads TOTAL - - Bridges - Jetties 4,254 337 6,524 11,115 936 47 This is before the DNR’s information about asset location, material type, condition, capacity, performance, age and remaining life – which was similarly unreliable or (in most cases) non-existent.
(An inspection of the bridges revealed a most alarming situation with many in such poor condition that their immediate closure (including the largest bridge in the Suva CBD) or limitation on their use had to be recommended – a situation not revealed at all by the FRA’s data).

The FRA is therefore having to develop a new asset information system ‘from scratch’.

In these circumstances it simply wasn’t possible to carry out a valuation without using a wide range of assumptions and estimates.
Nor is it likely to be possible to do so until the FRA has more reliable records – which are going to take time.

At this stage the objective is a reliable estimate within 3 years.

Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 We also note that this is apparently the first time the assets have been valued at all.
The asset management system that is being installed now will eventually enable the FRA to report accurately asset quantity, location, capacity, criticality, condition, performance, age and remaining life and historical expenditure information – but the work required before it can do that is likely to take about three years to complete.’ location, material-type, Further update on the current situation as at 5 December 2014: In its response the FRA repeated what it had previously advised the Office of the Auditor General that it will be likely to be mid 2015 before it will be possible to value the assets without having to resort to a wide range of assumptions and estimates.
The purpose of this letter is to update you on the current situation.

To reiterate: (a) The assets can’t be valued at all until we have an accurate understanding of exactly what infrastructure assets the FRA owns.

(They have apparently never been valued by the former Department of National Roads (DNR) in the past).

When the FRA was established in 2012 information transferred from the DNR regarding these sorts of things was virtually nil.
Even the length of roads and the number of jetties and bridges that have to be managed were very significantly wrong.

In the case of the jetties for instance we were told there were 15 – so far we have discovered 47.

Thousands of kilometres of more roads and about 200 additional bridges have also been located.
(b) Having identified what it owns a reliable asset valuation cannot be obtained until the FRA knows the location, material-type, capacity, criticality, condition, performance, age and remaining life of each asset.

Although a top priority this cannot be done overnight.

It is essential the information be gathered in a structured way and be recorded in a form that is going to be able to be properly managed in the future.

It’s also not just a case of ‘looking at each asset’ and deciding a value.
In some cases, especially the bridges and jetties the work involved is very considerable.

A new asset management system was procured, and a programme for its population adopted, in the latter part of 2012.

That programme envisaged population of the new system being substantially complete by the end of 2014/mid 2015.
The current situation is: (a) All roads have been mapped and verified; (b) Details of the condition of all of the sealed roads will be in ‘the system’ by the end of the year; (c) Details of the condition of the major unsealed roads will be in ‘the system’ by July 2015; (d) Basic information regarding 836 bridges is already in ‘the system’.

270 bridges have been inspected this year and the information relating to them will be input by the end of March next year.
(e) Information relating to the jetties is being input as it comes to hand, (f) Street furniture and drainage information will not be able to be entered until the first half of next year; (g) Our expectation is that all of the information will be complete by the end of July 2015.

We therefore confirm that the FRA is ‘on track’ for completion of population of the asset register within the timeframe previously advised.
This means of course that the earliest possible date for an accurate and complete valuation of the assets is July next year and that, as a consequence the FRA will have to accept a qualification to its accounts similar to that which your Office has had to impose for 2012 and 2013.
As I have also advised you previously when the revaluation is done it will be carried out by a party who holds a recognised and relevant professional qualification with recent experience in the location and in the type of assets being valued and (in the absence of specific requirements in Fiji) will be required to be carried out in accordance with the New Zealand Infrastructure Asset Valuation and Depreciation Guidelines issued by the NAMs Group.
Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 2: NATIONAL FOOD AND NUTRITION CENTRE Programme Statement The National Food and Nutrition Centre (NFNC) was created by Government in 1976 and operates as a quasi- government organisation under the Ministry of Health.

It is funded through government subvention.
The objective of the National Food and Nutrition Centre are:    To realise the mandate given by Cabinet to advise the government on the country’s food situation and nutritional status of its population; To co-ordinate programs and activities carried out by government and non-governmental organisations on matters relating to food and nutrition; and To ensure that Fiji’s food and nutrition policy is realised and to improve the nutrition policy is realised and to improve the nutritional status of the population.
On 7th April 1998 Cabinet directed that the National Food and Nutrition Centre be integrated into the Ministry of Health rather than continue to be a stand alone entity.

Consequently, on 21st January 1999, there was an agreement signed between the Government of Fiji and the National Food and Nutrition Centre for the provision of advice to the Fiji Government on the country’s food situation and the nutritional status of its population.
Furthermore, the NFNC will coordinate and monitor all government ministries and non government organisations programs and activities relating to nutrition.
Table of Content 2.1 2.2 2.3 SECTION 2: NATIONAL FOOD AND NUTRITION CENTRE .................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 Audit Opinion ............................................................................................................................................................. 1 Abridged Statement of Financial Performance ......................................................................................................... 2 Abridged Statement of Financial Position ................................................................................................................. 2 PART B – CONTROL ISSUES .................................................................................................................................................. 3 2.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SMEs) ............. 3 2.5 Non Separate Disclosure of Donor Funds ................................................................................................................ 3 2.6 Appointment of Administrative Officer ....................................................................................................................... 4 2.7 Implementation of Salary Increments ........................................................................................................................ 5 Non-Compensation of Long Service Leave .............................................................................................................. 6 2.8 2.9 Missing Payment Vouchers ....................................................................................................................................... 7 PART A – FINANCIAL INFORMATION 2.1 Audit Opinion The audit of the financial statements of the National Food and Nutrition Centre (NFNC) for the year ended 31 December 2013 resulted in the issue of a disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Centre did not prepare its financial statements in accordance with the International Financial Reporting Standards for Small and Medium Sized Entities as required for the general purpose financial statements.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 2.2 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant Government Grant – (FPAN) UNICEF (NIMS/MNP/ Get Ready TOT) Food Based Dietary Guidelines FPAN – Reimbursement to Operations WHO – Projects Bank Interest Food and Agriculture Organisation Other Income Total Receipts Payments Salaries, Wages and Related Expenses Fiji Plan for Action Capital Expenditure Food Based Dietary Guidelines Publications Health Promoting Schools Office Expenses Other Expenses Total Payments Net Surplus/(Deficit) for the year 2013 ($) 2012 ($) (144,546) The Centre recorded a surplus of $25,873 in 2013 compared to a deficit of $144,546 in 2012.
The surplus was a result of an increase in WHO grants by $108,087 or 274% in 2013 compared to 2012.

The Centre also received fundings from UNICEF for various projects in 2013 which were not available on 2012.
2.3 Abridged Statement of Financial Position As at 31 December Assets Cash at Bank FEA Deposit Telephone Deposit Total Assets Liabilities VAT Payable Total Liabilities Net Assets Total Accumulated Funds 2013 ($) 2012 ($) 327,494 50 297 327,841 42,434 42,434 285,407 285,407 305,551 50 297 305,898 46,364 46,364 259,534 259,534 The Centre’s net assets increased by $25,873 or 10% in 2013 compared to 2012 as a result of an increase in cash at bank and the decline in VAT payable.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 PART B – CONTROL ISSUES 2.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SMEs) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Centre did not prepare its annual financial statements under IFRS for SMEs.

The IFRS for SMEs has simplifications that reflect the needs of users of SMEs financial statements and cost-benefit considerations.

Thus, the annual financial statements prepared by the Centre are contrary to the IFRS for SMEs.

Recommendation The Centre should work towards the adoption of IFRS for SMEs in preparing its financial statements.
Management Comments No comments provided.

2.5 Non Separate Disclosure of Donor Funds It is essential for recipients of grants to prepare separate financial statements to ensure accountability and transparency in the use of donor funds.

In 2013, the Centre received a total grant of $426,480 from the Ministry of Health.

Of the total operational grant of $426,480, the sum of $200,000 was for the Fiji Plan of Action for Nutrition.
Apart from the Ministry of Health grant of $426,480, the Centre received a total of $276,147.73 from other donor agencies to undertake different projects in 2013.

Refer to Table 2.1 below for details.


Table 2.1: Details of Donor Funds Received Donor Agency Project World Health Organisation United Nations Children’s Emergency Fund Get Ready Training of Trainers & National Iron Health Promoting Schools & Micronutrient Supplementation Total Amount ($) 147,539.53 126,932.20 274,471.73 The audit noted that the Centre failed to provide separate financial statements of total donor funds received and utilized.
1 Fiji Institute of Accountants Annual Report for 2011 – page 14 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 In absence of separate financial statements for the donor agencies and government grant, users of the financial information may not be able to determine funds provided by the donors and the government of Fiji and expense incurred from donor funds and government grant.
Recommendation The Centre should ensure that separate financial statements are prepared to disclose the donor funds and government grant.

Management Comments No comments provided.

2.6 Appointment of Administrative Officer The position of the Administrative Officer became vacant as the previous incumbent, Mrs. Kesaia Catanasiga, resigned from the Centre with effect from 24/06/13.

The Centre advertised the vacant position of Administrative Officer in the Fiji Sun on 27/04/13.
A total of 27 applications were received by the Centre for the position but only 2 applicants were shortlisted for the interview.

The Centre recruited Mrs. Jennifer Turaga (FNPF 1422419) as an Administrative Officer with effect from 24/06/13.

The audit noted the following anomalies:  It is essential for the incumbent to have been appointed as an Executive Officer for 2 to 3 years, have passed form 7 Accounting with computer skills and passed Government service exams E, S, H (1) and (2).
It is desirable for the incumbent to have Diploma in Accounting and/or a Degree in Management or Public Administration or Business Studies and/or equivalent.2 The Minimum Qualifications as per the Public Service Commission for Administrative Officer is an undergraduate degree in Management and Public Administration or Business Management with relevant experience.
Mrs. Jenifer Turaga obtained a Diploma in Frontline Management, and passed Government service exams H (1), H (2), S and E. Despite not meeting the MQR Mrs. Jennifer Turaga was still appointed as the Administrative Officer.

The finding indicates that the Centre did not comply with MQR while filling the vacant post of Administrative Officer.
 A salary grade of SS03 between the scale $20,945 to $26,770 will be offered to the successful candidate.3 The interview panel recommended that Mrs. Jenifer Turaga be appointed to the position of Administrative Officer with salary of $22,169 per annum.

However the interview panel’s recommendation was not signed by the members.
Mrs. Jenifer Turaga was appointed to the 2 Administrative Officer Vacancy Advertisement Dated 27/04/13 3 Administrative Officer Vacancy Advertisement Dated 27/04/13 Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 position of Administrative Officer on a 3 year contract with 24/6/13.
However, the Officers employment contract stated that the Officer shall receive an annual salary of $26,770 that is the maximum of the scale SS03.

The Manager NFNC, Mrs. Ateca Kama stated that the increase in salary was awarded due to the experience and competence of Mrs. Jenifer Turaga.

The audit could not substantiate the salary paid to Mrs. Jenifer Turaga as there was no approval sought from the Ministry of Health for paying the Officer salary above the minimum level.
In addition, the Officer did not meet the MQR and no evidence provided for her competence.

 It is essential for an organisation to conduct reference checks of all candidates prior to the recruitment.

The Centre could not provide the audit with evidence of conducting reference checks.

The finding indicates that proper procedures were not followed in recruiting Mrs Jennifer Turaga as Administrative Officer.
Recommendations The Ministry of Health should:     ensure that the best candidate is appointed based on merit and the MQR; ensure that appropriate approval is sought for any change in recommended salary; ensure reference checks are made prior to appointment; and investigate the Officers appointment and salary scale and take appropriate action.

Management Comments No comments provided.


2.7 Implementation of Salary Increments The National Food and Nutrition Centre (Centre) is a statutory organisation established in 1982.

The Centre’s overall mandate was to advise the Government on ways and means of utilising food resources of the country to the optimum by the people.

The audit noted the following:  That Centre implemented the salary increment approved by the government in its 2014 budget.
The Centre awarded salary increments to 9 of its employees with effect from 1/1/14 even though there was no increase in their annual operating grant since 2013.

The Administrative Officer, Mrs. Jenifer Turaga stated that since they have been operating within the bounds of Public Service Commission Regulations, they were entitled for the salary increments.
However, the Centre failed to obtain approval from the Ministry of Health prior to payment of salary increments since there was no Council to oversee their operations.
Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The finding indicates that Centre awarded increments in salary without the appropriate authority as it was not approved by Ministry of Health The salary increments may lead to the forgoing of some goals and objectives as additional funds were not provided for in the Centres 2014 budget.
 The Centre awarded the salary and wage increments to 9 of its established staff and also 2 of its un-established staffs respectively.

The Driver/Messenger, Mr David Anand Prasad was not awarded the increase.

The audit findings revealed that Mr David Anand Prasad was appointed to the position on 01/09/86.

Mr Anand Prasad served the Centre for 27 years as at 31/12/13.
The Administrative Officer, Mrs Jenifer Turaga agreed that the wage increment was not awarded to the Driver/Messenger, Mr David Anand Prasad.

Mrs Jenifer stated that this was because Mr David Anand Prasad was receiving $5.30 an hour whilst the government wage earners were receiving $4.77 an hour for the similar post.

The Centre failed to seek approval from its line Ministry (Ministry of Health) whether or not the wage increment should be given to Mr David Anand Prasad.
The findings shows that the salary increase was not authorised since it was not approved by the Ministry.

Recommendation The Ministry of Health should investigate: the salary increase without proper approval and take appropriate action; and   why no wage increase was awarded to the driver.

Management Comments No comments provided.


2.8 Non-Compensation of Long Service Leave Officers shall be granted long service leave of 56 consecutive days on completion of 20 continuous years of service.4 Mr Mohammed Asim joined the Centre on 27/6/88.

He completed 23 years of service and retired from the service on 29/7/11.
Review of his personal file revealed that Mr Asim did not take his long service leave during his employment with the Centre however he was not compensated for his unutilized long service leave on his retirement.

Mr Asim was owed $3,998.46 by the Centre in lieu of his unutilised long service leave of 56 days.

The audit also noted that the Centre was advised in 2011 to pay the amount due to Mr Asim but the Centre did not comply with the audit recommendations.
4 General Orders 2011, Section 706 (a) (iii) Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Failure to pay outstanding long service leave compensation may lead to legal action taken by Mr Mohammed Asim against the Centre.

Recommendation The Centre should pay Mr Mohammed Asim a total of $3,998.46 for his long service leave entitlement due to him.

Management Comments No comments provided.


2.9 Missing Payment Vouchers It is vital to keep a proper record of all payment vouchers.

The audit noted that several payment vouchers for payments made in 2013 were missing as the Centre’s Officials could not provide these payment vouchers for audit verifications.

Some of these missing payment vouchers were used to make large payments.

Refer to Table 2.2 for examples of missing vouchers.
Table 2.2: Examples of Missing Payment Vouchers Cheque Number 8448 8449 8453 8454 8455 8457 Total Payee Davuilevu Methodist School Dilkusha Girls School Hilton Special School John Wesley Primary School Qelemumu Primary School Navai Primary School Amount ($) 5,000.00 3,000.00 3,800.00 3,500.00 5,000.00 5,000.00 25,300.00 This indicates that the Centre did not properly maintain accounting records.

This shows poor record keeping and lack supervision by the Manager.
In absence of these vouchers audit could not substantiate payments made to various schools in 2013 totalling to $25,300 and there is a high risk of misappropriation of funds.

Recommendations The Ministry of Health should:   ensure that all payment vouchers are properly filed and kept in secured place; and investigate and take disciplinary action against the Manager for poor supervision and not performing her duties diligently.

Management Comments No comments provided.


Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI__________________________________2014 SECTION 3: FIJI COMMERCE COMMISSION Programme Statement Fiji Commerce Commission (“Commission”) is the competition regulator of Fiji.
The Commission is an independent statutory body established under Section 7 of the Commerce Commission Decree 2010 to ensure the integrated framework for the regulation of monopoly market structures; encourage competition, prevent restrictive trade practices, ensure consumer protection, and undertake pricing of public utilities and other price controlled items.
The objectives of the Fiji Commerce Commission are clearly outlined in Section 2 of the Commerce Commission Decree 2010 and are as follows:     The promotion of the interests of the Consumers; The promotion of the effective and efficient development of industry trade or commerce; The need to secure effective competition in industry, trade or commerce; and To ensure equitable returns for businesses with fair and reasonable prices charged to consumers.
The Commission has the following objectives in relation to regulated industries and access regimes-   To promote effective competition in the interests of consumers; To considerations; To ensure non-discriminatory access to monopoly and near monopoly infrastructure or services.
facilitate an approximate balance between efficiency and environmental and social  Table of Contents SECTION 3: FIJI COMMERCE COMMISSION ........................................................................................................... 1 FINANCIAL INFORMATION ............................................................................................................... 1 PART A Audit Opinion ............................................................................................................................................ 1 3.1 Abridged Statement of Comprehensive Income ....................................................................................... 1 3.2 Abridged Statement of Financial Position ................................................................................................. 2 3.3 PART A FINANCIAL INFORMATION 3.1 Audit Opinion The audit of the financial statements of the Fiji Commerce Commission for the year ended 31 December 2013 resulted in an unqualified audit report.
3.2 Abridged Statement of Comprehensive Income Year ended 31 December Income Government Grant Professional Fees Spot Fine Other Income Total Income 2013 ($) 2012 ($) 1,524,020 73,988 10,435 50,777 1,659,220 1,520,895 117,226 109,251 53,878 1,801,250 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI__________________________________2014 Year ended 31 December Expenditure Personnel Expense Operating Expenses Administrative Expenses Depreciation Total Expenditure Net (Deficit)/Surplus 2013 ($) 2012 ($) 1,192,189 316,764 112,412 65,683 1,687,048 (27,828) 1,202,142 288,459 130,680 70,082 1,691,363 109,887 The deficit of $27,828 recorded in 2013 was due mainly to the reduction in income, specifically, professional fees and spot fines, compared to 2012.
3.3 Abridged Statement of Financial Position As at 31 December Assets Cash at bank and on hand Deposits Other receivables Property, Plant & Equipment – non-current Total Assets Liabilities Accounts Payable Other current liabilities Deferred Income – non-current Total Liabilities Net Assets Accumulated Fund 2013 ($) 2012 ($) 63,280 7,585 72,303 336,319 479,487 13,005 46,269 182,477 241,751 237,736 237,736 84,531 7,585 62,414 206,731 361,261 1,800 49,625 35,743 87,168 274,093 274,093 Net assets of the Commission decreased by $36,357 or 13% in 2013 compared to 2012.
This was due the increase in Deferred Income which also resulted in the high Deferred Income recorded in 2013.

The Commission purchased motor vehicles in 2013, thus the increase in property, plant and equipment.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI _______________________________________2014 SECTION 4: CONSUMER COUNCIL OF FIJI Programme Statement The principal purpose of the Council is to provide the protection and promotion of consumer interests, informing consumers of their rights and responsibilities and mobilising consumers to achieve fairness and safety in the marketplace.
Table of Contents SECTION 4: CONSUMER COUNCIL OF FIJI ......................................................................................................................... 1 PART A – FINANCIAL POSITION ............................................................................................................................................. 1 Audit Opinion ............................................................................................................................................................ 1 Abridged Statement of Financial Performance ........................................................................................................ 1 Abridged Statement of Financial Position ................................................................................................................ 2 PART B – CONTROL ISSUES ................................................................................................................................................... 2 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) ........... 2 4.1 4.2 4.3 4.4 PART A – FINANCIAL POSITION 4.1 Audit Opinion The audit of the financial statements of the Consumer Council of Fiji for the year ended 31 December 2013 resulted in the issue of a disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Council did not prepare its financial statements in accordance with the International Financial Reporting Standards for Small and Medium Sized Entities for the general purpose financial statements.
4.2 Abridged Statement of Financial Performance Year Ended 31 December Income Government Grant Other Income/Grant Grant from EU Sundry Income Deferred Grant Income Total Income Expenditure Depreciation Rent and rates Resource Materials including radio programs Salaries, wages and related payments Telephone and postage charges Travelling expenses Sundry expenses Total Expenditure 2013 ($) 2012 ($) 643,344 3,015 38,410 6,547 18,735 710,051 18,735 54,914 0 510,333 14,334 8,133 148,058 754,507 591,949 6,952 201,395 19,039 20,937 840,272 20,937 50,061 126,420 451,103 14,244 17,239 262,734 942,738 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI _______________________________________2014 Year Ended 31 December Net Deficit for the year 2013 ($) (44,456) 2012 ($) (102,466) The Council recorded a deficit of $44,456 in 2013 compared to a deficit of $102,466 in 2012.
This was due to the decrease in total expenditures by 20% in 2013 compared to 2012.

However the Council need to ensure that total expenses incurred does not exceed its total income.
4.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash on hand and at bank Other current assets Total Current Assets Non – Current Assets Property, plant and equipment Total Non – Current Assets Total Assets Current Liabilities Accounts payables and accruals VAT Payable Provision for annual leave Other current liabilities Total Current Liabilities Total Liabilities Net Assets Accumulated Funds and Reserves 2013 ($) 2012 ($) 122,281 13,676 135,957 26,708 26,708 162,665 13,671 76,977 10,785 26,708 128,141 128,141 34,524 34,524 165,794 11,870 177,664 38,153 38,153 215,817 14,557 72,317 11,810 38,153 136,837 136,837 78,980 78,980 The Council’s total assets decreased by $53,152 or 25% in 2013 while total liabilities decreased by $8,696 or 6.4% for the same year.
The Councils current ratio (current assets/current liabilities) decrease to 1.06 compared to 1.3 in 2012.

This indicates that the Councils ability to meet current liability with its current assets available has weakened further in 2013.

The Council need to take appropriate action to reduce its liabilities in coming years to improve its liquidity position.
PART B – CONTROL ISSUES 4.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Council did not prepare its annual financial statements for the years ended 31 December 2011 to 2013 under IFRS for SME’s.
1 Fiji Institute of Accountants Annual Report for 2011, Page 14 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI _______________________________________2014 The IFRS for SME’s has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.
Thus, the annual financial statements prepared by the Council are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.

Recommendation The Council should work towards the adoption of IFRS for SMEs in preparing the financial statements.

Council’s Comments The Council was not aware of this requirement and the audit team did not raise the issue in the previous years.
Therefore, the Council prepared its 2013 financial statements under Fiji Institute of Accountant (FIA) standards.

The Council has taken note of the recommendation made by the auditors and it will now work towards getting its 2013 and 2014 financial statements under IFRS for SMEs.

Further OAG Comments The onus is on the Council and the Council’s Accountant to keep up to date on the developments in accounting profession.
The Office of the Auditor General does not provide advisory services as it would create self-review threat to objectivity.
Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI______________________________________2014 SECTION 5: FIJI MEDICAL AND DENTAL SECRETARIAT Programme Statement Fiji Medical and Dental Secretariat is established pursuant to section 25 of the Medical and Dental Practitioners Decree 2010 as a body corporate with perpetual succession and a common seal.
The core functions of the Fiji Medical and Dental Council are as follows:         To provide administrative and secretarial services to, and as directed by, each Council, and any committee established by either Council.

To establish, maintain and publish the medical and dental registers required by this Decree.

To receive and process applications for registration on any of the registers and refer every application duly made to the relevant Council for decision.
To receive and process applications from registered persons for practice licenses.

To receive and process notifications about medical and dental practice matters from members of the public, registered persons and health service providers.

To receive and to process forthwith complaints about registered persons and refer them to relevant Professional Conduct Committee or Council as appropriate.

To refer disciplinary decisions of either Council to the Tribunal as appropriate.
To perform other functions assigned to the Secretariat by either Council from time to time in order to promote the objects of this Decree.
Table of Content SECTION 5: FIJI MEDICAL AND DENTAL SECRETARIAT ................................................................................................. 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ....................................................................................................................................................... 1 Abridged Statement of Financial Performance .................................................................................................... 2 Abridged Statement of Financial Position ............................................................................................................ 2 PART B AUDIT FINDING ................................................................................................................................................... 3 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) ...... 3 5.1 5.2 5.3 5.4 PART A – FINANCIAL INFORMATION 5.1 Audit Opinion The audit of the financial statements of the Fiji Medical and Dental Secretariat for the year ended 31 December 2012 resulted in the issue of a Disclaimer of Opinion.
The Financial Statements were required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium Entities (“IFRS for SMEs”).

The Secretariat was yet to comply with IFRS for SMEs as required for general purpose financial statements.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI______________________________________2014 5.2 Abridged Statement of Financial Performance Year Ended 31 December Revenue Government Grant Subscription Other Income Total Revenue Expenditure Salaries/Wages & Related Costs Repairs & Maintenance Other Operating Expenses Total Expenditure Surplus for the year 2012 ($) 2011 ($) 84,461 166,183 11,282 261,926 112,823 458 57,895 171,176 90,750 152,472 184,590 12,209 349,271 101,555 1,590 43,518 146,663 202,608 The Secretariat recorded a surplus of $90,750 in 2012 compared to $202,608 in 2011.
The decline in the surplus was due to decrease in government grant and income from member subscription in 2012.
5.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash at Bank Security Deposit Other Debtors Total Current Assets Non-Current Assets Property, Plant & Equipment Total Non- Assets Total Assets Currents Liabilities Trade and Other Payables Non Currents Liabilities Deferred Revenue Total Liabilities Net Assets Total Accumulated Funds 2012 ($) 2011 ($) 324,887 300 400 325,587 54,249 54,249 379,836 208,395 300 246 208,941 58,602 58,602 267,543 31,966 6,069 54,249 86,215 293,621 293,621 58,602 64,671 202,872 202,872 The Secretariat’s net asset increased by $90,749 or 44.7% in 2012 compared to 2011.
The increase in net assets was due to the increase in cash at bank.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI______________________________________2014 PART B AUDIT FINDING 5.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Secretariat did not prepare its financial statements for the year ended 31 December 2012 under IFRS for SMEs.

The IFRS for SMEs has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.

Thus, the annual financial statements prepared by the Secretariat are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.
Recommendation The Secretariat should work towards the adoption of IFRS for SMEs in preparing the financial statements.

Secretariat’s Comments Fiji Medical and Dental Secretariat was not aware of the implementation of IFRS by FIA nor was it disclosed to us by the auditors in the 2011 audit report.

Since it was brought to our attention during our 1st meeting with the auditors for 2012 financials, rest assured we will be abiding by it for 2013 financials.
We have called for expression of interest for reputable accounting firms to implement IFRS.

1 Fiji Institute of Accountants Annual Report for 2011 – page 14 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 6: FIJI NATIONAL COUNCIL FOR DISABLED PERSONS Programme Statement The Fiji National Council for Disabled Persons (FNCDP) was established under Act No.

21 of 1994.
The functions of the Council are as follows:         To be a coordinating body for all organizations dealing with the care and rehabilitation of the disabled; To formulate a National Policy that would ensure that services are provided to all disabled persons in Fiji; To seek financial assistance from the Government and aid donors for itself and registered organisation providing service to disabled persons; To draw up a National Plan of action for rehabilitation services and implement such plan; To organise national seminars and workshops relating to the problems and needs of disabled persons and assist in the training of personnel involved in the care, training, education and rehabilitation of disabled persons; To create public awareness of the problems and the aspirations of disabled persons through educational media; To regularly inform the appropriate Minister(s) of the Government of the problems and need of disabled persons and seek solutions to such needs; To establish a National Rehabilitation Fund, the purpose of which will be to attract national and international contributions in terms of funds, expertise, material and equipment to be used in implementing; and  Periodically review the National Policy and National Plan of action for the purpose of determining their continued relevance to local, regional and international realities.
Table of Content SECTION 6: FIJI NATIONAL COUNCIL FOR DISABLED PERSONS .................................................................................. 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion .......................................................................................................................................................... 1 6.1 6.2 Abridged Statement of Financial Performance ...................................................................................................... 2 Abridged Statement of Financial Position .............................................................................................................. 2 6.3 PART B - CONTROL ISSUES ................................................................................................................................................ 3 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) ......... 3 6.4 Investment Account ................................................................................................................................................ 3 6.5 PART A – FINANCIAL INFORMATION 6.1 Audit Opinion The audit of the financial statements of the Fiji National Council for Disabled Persons (FNCDP) for the year ended 31 December 2013 resulted in the issue of a disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Council did not prepare its financial statements in accordance with the International Financial Reporting Standards for Small and Medium Sized Entities (IFRS for SMEs) as required for the general purpose financial statements.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 6.2 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant European Union Other Income Total Receipts Payments Salaries, Wages and Related Expenses European Union Project Disability Data Statistic Survey Travel and Subsistence Telephone/Fax Board & Committee Expenses Maintenance & Repairs International Disabled Persons Day Fiji Vocational Technical Training for Disable People Workshop/Training Programmes Caregiver Allowance Office Equipment Other Expenses Total Expenditure Net Surplus/(Deficit) for the year 2013 ($) 2012 ($) (9,438) The Council recorded a surplus of $66,433 in 2013 compared to a deficit of $9,438 in 2012.
This was mainly due to the increase in Government Grant by $30,000 or 12% and receipt of grant totalling $81,100 from the European Union in 2013.

No grant was received from the European Union in 2012.
6.3 Abridged Statement of Financial Position As at 31 December Assets Cash at Bank Telephone Deposit Share in Unit Trust of Fiji Total Assets Total Accumulated Funds 2013 ($) 2012 ($) 165,102 600 13,549 179,251 179,251 100,240 600 11,978 112,818 112,818 The Council’s total assets increased by $66,433 or 59% in 2013 compared to 2012 as a result of the increase in cash at bank.
This was due to the increase in Government Grant by $30,000 or 12% and receipt of grant totalling $81,100 from the European Union in 2013.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 PART B - CONTROL ISSUES 6.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Council did not prepare its annual financial statements for the year ended 31 December 2013 under IFRS for SMEs.

The IFRS for SMEs has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.

Thus, the annual financial statements prepared by the Council are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.
Recommendation The Council should work towards the adoption of IFRS for SMEs in preparing the financial statements.

Management Comments Currently the Secretariat is liaising with a Chartered Accountants firm to assist in this area and if we are in time to enforce this for 2014 then we will otherwise it will be taken up by 2015.

6.5 Investment Account The Unit Trust of Fiji sells units at their selling price (cost price) and the units keep on increasing as and when re-invests are made.
The re-investments are sold at the selling price at the time of re- investment and thus increase in units.

Once the units are withdrawn it is paid at the re-purchase price declared at the time of withdrawal.

The selling and the re-purchase price also changes depending on the market.

The Council bought 18,868 units at the selling price of $1.59 per unit totaling $30,000 from the Unit Trust of Fiji in 1995.

The Council has been re-investing the dividends at the selling price at that time.
The units had been escalating over the years and reached 69,606 units in 2007 when it decided to withdraw 46,808 units with the dollar value at $57,716 but the re- purchase price was not indicated.

A balance of 22,798 units valued at $6,465 remained with the Unit Trust of Fiji as at 31/12/07.

After this withdrawal the trend of re-investing the dividends has been continuing.
The audit noted a variance of $25,126.88 between the balance of $13,549 as shown in the Council’s financial statements and the balance of $38,675.88 as shown in the audit confirmation from the Unit Trust of Fiji.

As at 31 December 2013 the Council had 28,026 units of investment with the Unit Trust of Fiji.

The Council was not able to reconcile the variance.

Unit Trust of Fiji did not indicate the basis of deducting the units such as FIFO or LIFO methods when the units are redeemed.
Therefore the Council could not reconcile its records with that of Unit Trust of Fiji.

1 Fiji Institute of Accountants Annual Report for 2011 – page 14 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 As a result audit could not verify the correctness of the balance of $13,549 as shown in the Council’s financial statements as at 31 December 2013.
Recommendation The Council should make an effort to reconcile their books with that of the Unit Trust of Fiji to ensure that the investment amount stated in the financial statements can be relied on.

Management Comments It has been agreed by the Council the funds to be withdrawn by the end of this year to purchase new Council’s vehicle thus the Unit Trust account will be withdrawn.
Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 7: FIJI REVENUE & CUSTOMS AUTHORITY Programme Statement The Fiji Revenue and Customs Authority (FIRCA) was established as a statutory authority under the FRCA Act 1998 and encompasses the operations of the former Fiji Islands Inland Revenue and the Fiji Islands Customs Services.

FIRCA commenced operations on January 01, 1999.


The FRCA Act specifies the following functions of the Authority:  To act as agent of the State and to provide services in administering and enforcing the laws specified in the First Schedule of the Act.

 Generally to exercise all functions and perform duties carried out by the Inland Revenue Services and the Fiji Islands Customs Service.
To advise the state on matters relating to taxation and customs and excise and to liaise with appropriate Ministries and statutory bodies on such matters.

To represent the State internationally in respect of matters relating to taxations or customs and excise; and To perform such other functions as the Minister may assign the Authority.

   Revenue Collection Division The Taxation Division has two major units namely, the Revenue Collection Section and the Risk and Compliance Section.
The Revenue Collection Section is the operational arm, which deals with, return lodgements, assessments and collection of revenue.

Also, the Revenue Collection Section is responsible for processing Income Tax and VAT returns lodged by all taxpayers.

Their function includes:  Customer enquiry services; Lodgement of returns;  Tax assessments on returns lodged;   Issue tax assessment statements;  Collect tax revenue; and  Provide tax advice and education.
The Risk and Compliance Section is responsible for recovery and compliance issues.

It also ensures that taxpayers, traders and other stakeholders comply with various legislations administered by FRCA.

The division also identifies, analyse and manages risk areas.

The Division is structured with four broad sections namely Large International Compliance, Small/Medium Compliance, Strategic Intelligence & Risk Profile and Debt Management & Lodgement Enforcement and Investigation.
Customs Services Division The Customs Division is responsible for: collection of Revenue for FRCA in the customs area; acts as a principal agency for Border control; and    Cargo clearance and a trade facilitator in allowing movement of goods, people and services from one foreign port to another.
The Division provides information on security measures to all its stakeholders; it provides business support to corporate bodies, the private sector and works in partnership with business entities to protect copyright, trade mark, counterfeiting, etc.

The Division also acts on behalf of other public agencies in carrying out their responsibilities and functions at the border, and administers all Customs Laws and Regulations.
It represents the organization and the Government internationally to bodies such as World Customs Organization (WCO), World Trade Organization (WTO), Oceania Customs Organization (OCO) and the Regional Intelligence Liaison Office (RILO) and provides advice to the Private and Public sector.
Its main functions are revenue collection, trade facilitation, warehousing, international trade, industry support providing information on tariff and trade, valuation, making recommendation under section 10 and 11 to the Minister for Finance, amending National Legislation to facilitate in implementing revised or new changes and Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 resource allocation.
Units that fall under Border Management are: Wharf Area, Outstations, Customs Examination Branch, Customs Marine Unit and Primary Line.

Corporate Services Division The Corporate Services Division offers support functions to the Customs and Taxation Divisions of the Authority.

The Corporate Services Division comprises of eight sections namely; Information Technology, Finance, Legal, Policy, economic analysis and research, Human Resources, Training & Development, Records Management and Internal Assurance.
Table of Content 7.4 7.5 7.4.1 7.1 7.2 7.3 SECTION 7: FIJI REVENUE & CUSTOMS AUTHORITY .......................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 2 Audit Opinion - 2013 ................................................................................................................................................ 2 Abridged Statement of Financial Performance ........................................................................................................ 3 Abridged Statement of Financial Position ................................................................................................................ 3 PART B - CONTROL ISSUES ................................................................................................................................................... 4 Accounting Issues ................................................................................................................................................... 4 Discrepancies in the Job Evaluation Exercise .................................................................................................... 4 Customs Division Issues ......................................................................................................................................... 5 Lautoka Customs Division .................................................................................................................................. 5 7.5.1 Nadi Customs Division ........................................................................................................................................ 6 7.5.2 Customs Head Quarters - Suva .......................................................................................................................... 7 7.5.3 Recommendation No.
53 (File T67/2/2013) .................................................................................................................... 11 MCS Ltd – (Approval No.

58 & 148) ................................................................................................................................ 11 Organisation A (Approval No.

228) vs. Organisation B (Approval No.
215) .................................................................... 13 (Company A) vs. (Company B) ....................................................................................................................................... 13 Bond Warehouse No – S00120....................................................................................................................................... 17 Bond Warehouse No – S00117....................................................................................................................................... 18 Bond Warehouse No – S00146....................................................................................................................................... 19 Bond Warehouse No – S00124....................................................................................................................................... 19 Bond Warehouse No – S0018......................................................................................................................................... 20 Inland Revenue Services Department – Suva Head Quarters .............................................................................. 21 Duplication of Tax Identification Numbers (TIN) ............................................................................................... 21 Taxpayers with identical bank account numbers .............................................................................................. 22 Discrepancies in payment of PAYE taxes and filing of returns ......................................................................... 23 Recurring Control Issues .................................................................................................................................. 25 APPENDICES ........................................................................................................................................................................... 29 Appendix 7.1: Departure Taxes Reconciliation .................................................................................................................. 29 Appendix 7.2: Details of Hanging Entries ........................................................................................................................... 30 Appendix 7.3: Taxpayers with More Than One Tax Identification Number ........................................................................ 31 Appendix 7.4: Details of Taxpayers Using the Same Bank Account .................................................................................. 36 Appendix 7.5 Details of Discrepancies in Payment of PAYE Tax and Filing of Returns .................................................... 58 7.6.1 7.6.3 7.6.4 7.6.5 7.6 PART A – FINANCIAL INFORMATION 7.1 Audit Opinion - 2013 The audit of the financial statements of the Fiji Revenue and Customs Authority (Authority) for the year ended 31 December 2013 resulted in the issue of an unqualified audit report.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 7.2 Abridged Statement of Financial Performance Year Ended 31 December Revenue Grants from Government Fees and Charges Other Income Total Revenue Employee Costs Recurrent Expenditure Total Expenditure Net Surplus for the Year 2013 ($) 2012 ($) 35,643,719 7,274,307 2,739,926 45,657,952 28,241,973 11,413,859 39,655,832 6,002,120 32,173,913 6,517,888 2,892,725 41,584,526 23,975,842 11,861,645 35,837,487 5,747,039 The Authority recorded a net surplus by $6,002,120 during 2013 which increased by $255,081 or 4% compared to the year 2012.
The increase in net surplus was attributed to the increases in government grant by $3,469,806 or 11% and fees and charges by $756,419 or 12%.

Total expenditure noted an increase in 2013 by $3,818,345 or 11% due to an increase in employee cost by $4,266,131 or 18%.

The increase in employee cost is the result of a job evaluation exercise and the performance bonus paid to staffs.
7.3 Abridged Statement of Financial Position As at 31 December 2013 ($) 2012 ($) 14,970,388 26,217,823 2,475,633 16,758,808 60,422,652 4,534,291 18,355,917 22,890,208 37,532,444 21,965,613 23,715,673 1,964,737 15,975,410 63,621,433 3,940,118 16,146,751 20,086,869 43,534,564 Cash at bank Investments Other current assets Property, plant & equipment Total Assets Current Liabilities Deferred grant income Total Liabilities Net Assets Equity Accumulated Funds Asset Revaluation Reserve Total Equity Total assets increased by $3,198,781 or by 5% due to an increase in Cash at Bank by $6,995,225 or 47%.
The increase in cash at bank was the result of the receipt of interest from term deposits which matured at the end of its investment term.

32,424,090 5,108,354 37,532,444 38,426,210 5,108,354 43,534,564 Total liabilities declined by $2,803,339 or 12% in 2013 compared to 2012.

This was attributed to decreases in creditors and accruals by $825,078 or 21%.
Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 PART B - CONTROL ISSUES 7.4 Accounting Issues 7.4.1 Discrepancies in the Job Evaluation Exercise The FRCA Board meeting on 03 July 2012 agreed for the implementation of the 2011 Job Evaluation to be backdated effective from January 1st, 2012.
In addition, the Board agreed that the salary adjustment for 110 staff positions to be factored into the 2013 budget at a cost of $396,016.1 The purpose of the Job Evaluation Exercise is to correct the remuneration given to staffs.

2 Contrary to the Board’s decision, the audit noted that the Authority paid out an additional $109,427.573 during 2013 to 155 officers without the approval of the Board.

Thus the Authority incurred a total pay-out of $505,443.57 to 265 officers.
In addition, those pay-outs included Officers on acting positions between the periods 1st January 2012 to 31 January 2013 which either moved up or down the salary band after the job evaluation exercise without any recovery made from those officers whose acting salary bands were moved down.

Refer to Table 7.1 for examples where recoveries were not made.
Table 7.1: Exercise Staffs who’s Acting Salary Bands moved down after the Job Evaluation Officer’s EDP # Acting Period 49761 65794 65762 65753 16/03/12 – 10/04/12 12/06/12 – 02/07/12 18/07/12 – 17/10/12 18/10/12 – 14/01/13 01/08/12 – 31/10/12 01/11/12 – 31/12/12 07/08/12 – 06/09/12 07/09/12 – 06/12/12 07/12/12 – 06/01/13 07/01/13 – 31/01/13 20/02/12 – 19/05/12 01/08/12 – 31/10/12 01/11/12 – 31/12/12 Base Salary (before JER) ($) 31,880.00 31,880.00 31,880.00 31,880.00 21,878.00 21,878.00 21,878.00 21,878.00 21,878.00 21,878.00 21,878.00 21,878.00 21,878.00 Acting Salary (before JER) ($) 41,346.00 41,346.00 41,346.00 40,409.00 29,427.00 29,427.00 41,346.00 41,346.00 41,346.00 33,027.00 29,427.00 29,427.00 29,427.00 Base Salary (after JER) Acting Salary (after JER) Difference to be recovered from staff ($) 33,027.00 33,027.00 33,027.00 33,027.00 22,504.00 22,504.00 27,188.00 27,188.00 27,188.00 27,188.00 22,504.00 22,504.00 22,504.00 ($) 41,284.00 41,284.00 41,284.00 41,284.00 28,130.00 28,130.00 33,985.00 33,985.00 33,985.00 33,985.00 28,130.00 28,130.00 28,130.00 ($) 123.52 66.17 291.16 277.93 158.91 103.53 469.73 1,327.50 428.88 388.04 156.50 156.50 156.50 Discussions with the National Manager Finance revealed that payments were based on past practices of making payment of arrears to all its staffs.
However the audit could not establish why the authority of the Board was not complied with.

The above is a blatant disregard to the Board’s decision which warrants immediate disciplinary action.

It also indicates the lack of coordination between the Human Resource and Finance section during the exercise to ensure that all relevant factors were considered before making those payments.
1 FRCA Circular No.34/2012 2 FRCA Board Paper (2012) dated 3rd July 2012 3 Approved by National Manager Finance Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Recommendation The Authority should recover those payments which did not have the endorsement of the Board and disciplinary actions instigated against the National Manager Finance for approving the payments without the Board’s authority.
Authority’s comments: The same issue was previously raised by the FRCA Internal Audit team and clarifications on the JE Exercise were made to the Audit Board Committee.

It was then agreed that a Board Paper be made and presented at the next full Board meeting.

The Authority shall proceed based on the full Board decision.
7.5 Customs Division Issues 7.5.1 Lautoka Customs Division 7.5.1.1 Unpaid Overtime, Meals and Transportation (C1) Claims Every application made by employees for C1 (beyond normal working hour’s clearance) shall be made before 1200 hours on any weekday and specifies the extra period during which the attendance is required and the nature of work to be performed.4 The review for the C1 claims by Inspection officers noted that a total of 158 C1 claims amounting to $28,047 remained unpaid by Customs agents at year end.
These pending claims relates to overtime hours, meals and transportation expenses for attending to official customs engagements outside normal working hours from April to December 2013.
Discussions with the officer in-charge revealed that the delays emanates from various reasons such as; - The agents do not pick the C1 copy from the Authority to make these payments; - Some agents pick the C1 copies but make batch payments at month end; - Agents lose the C1 copies issued to them; - Some agents make payments from their central office; and - Laxities of agents to make prompt payments to Customs despite follow ups over telephone and electronic mails.
While there are outstanding C1 claims payable by agents, Customs officers continued to provide services for these agents.

The findings indicate that the process to involve agent to clear any outstanding CI claims prior to be provided with future inspections have not been strengthened.

In addition with the current trend, the longer it takes for these agents to settle their outstanding C1, the higher the risk that these claim become irrecoverable.
Recommendations The future provision of services to those agents owing payments to the Authority should be dependent on a credit threshold set by Customs.

4 Customs Regulation Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The Authority should continuously follow up with Customs Agents for the payment of the pending overtime claims.
Authority’s comments The management team for Customs border control had conducted meeting with their team leaders within their respective division regarding to the outstanding C1 payments ,Steps below has are in Motion to address Concerns ; o Drafting and implementation of SOP as well as designing a flow chart to simplify the process in the SOP o SOP and flow chart to be circulated to all officers, to ensure the vigilance of officers when charging C1 o Utilising of the customs recovery unit for the application of section 95 of the Customs ACT (ie imposed upon non- payment within given time frame of 7 working days) o Assigned C1 officer to monitor overtime transaction and payment by agents.
C1 officer will also be responsible for submitting reports on a fortnightly basis as time frame of payment is 7 working days.

This is the way forward by management to secure the recovery of revenue to both organization and staff before this process is adopted o Process will be automated into ASYCUDA WORLD roll out.

Manager Border has assured that he will look at the outstanding C1‟s from now onwards to ensure that the similar queries will not be repeated.
7.5.2 Nadi Customs Division 7.5.2.1 Collection of Departure Tax from Exempted Passengers This Decree may be cited as the Airport Departure Tax (Amendment) Decree 2012 and deemed to have come into force on 1st January, 2012.5 Section 3 of the Airport Departure Tax Act 1986 is amended by deleting “$100” and substituting “$150”.
6 The following passengers shall be exempted from the payment of a passenger service charge; a) Head of State b) Transit passengers scheduled to depart within 12 hours of arrival from outside Fiji, c) Children under 12 years of age, d) Aircraft crews travelling on duty, including positioning crews7 Our review of the Departure Tax collections made by the Authority noted the following; - The gross departure tax collections made by the Authority in 2013 totalled $102.2 million recording a surplus collection of $3.1 million compared to the total departure payable for all the passengers departing Fiji.
Refer to Appendix 7.1 for details.

- Out of the total surplus collection of $3.1 million made, $243,897 was collected by the Authority through demand letters for recovery of arrears and short payments while $2.9 million surplus collection of departure tax collection was attributed to the airline companies charging departure 5 Airport Departure Tax (Amendment) Decree 2012, Decree No.12 of 2012, section (1) 6 Customs Regulations 1986 – section 63.
7 Civil Aviation Authority (Passenger Service Charge) Regulations 1994 – section 4 Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 tax on those passengers exempted under the Civil Aviation Authority (Passenger Service Charge) Regulations, 1994 and subsequent Airport Departure (Amendment) Decree.
- The exempted passengers include those passengers in transit passengers scheduled to depart within 12 hours of arrival from outside Fiji, children under 12 years old and diplomats.

The surplus collection clearly indicates that airline companies are charging departure taxes on exempted passengers without any remedial action taken by the Authority to address this issue.
Moreover, there is also a risk that some airline companies may be charging departure tax on exempted passengers and not remitting the same to the Authority.

Failure to address the timeliness and proper verification of the correctness of the airport departure tax received from various airlines defeats the intention of the decree and undermines the revenue collection for government.
Recommendations The Authority should consider carrying out awareness with the airline companies on the requirements and applicability of the Airport Departure Tax Decree and ensure that the tax is charged correctly and correctly remitted to the Authority.

Authority’s Comments Departure Tax Unit occasionally meets up with all the airlines and keeps all the airlines in the loop.

Awareness was conducted in 2013 via e mail and this will be reviewed in 2015.
DTU is currently waiting the gazetting of DTU Officers concerning Instrument of Delegation of TAD Powers by Legal section.

This will enable DTU to conduct Airlines audits under TAD decree and follow money trail of Departure Tax.

After this audit, DTU will be able to determine what the Airlines collect and what they pay us.

Furthermore DTU is waiting for the structure to be approved by FRCA board before we are empowered by more human resources.
7.5.3 Customs Head Quarters - Suva 7.5.3.1 Analysis of Customs Government Import Duty Foregone through Concession Granted by Section 10 (Sub section 1) of the Customs Tariff Act stipulates that the Minister may after receiving recommendation from the Comptroller may consider to reduce or refund the whole or part of fiscal duty and import excise duty paid or payable by a person or organization in respect of goods imported into Fiji, if the Minister is satisfied that: 8 (a) the goods imported or being imported act as a relief in the event of a disaster declared by the Government as a national disaster; (b) the importer of the goods is a person or organization covered under any International Agreement or Convention between the respective Governments or Parties; (c) The importer of the goods is a registered religious or charitable organization and that any reduction or refund of such duty is, in the circumstances, justifiable having regard to the purpose for which the organization was established; (d) The reduction or refund of fiscal duty will contribute an identifiable benefit to the country.
8 Customs Tariff Act 1986 – s10(1) Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Unless otherwise indicated by the Minister, the reduction or refund approved under subsection (l) (d) shall remain in force for a period of 12 months after approval.
9 For the purposes of subsection (l) (d), the applicant for a concession must: (a) make application in writing to the Comptroller; (b) set out in the application the detail of the concession sought and its fiscal duty value; and (c) outline the benefit to the country that the concession will provide.
10 The review of the duty collected by Customs on imports against total import duty foregone due to concessions granted by government revealed that the percentage of total duty foregone to total customs revenue collections increased over the years from 2009 to 2012 but decline in 2013.

Refer to Table 7.2 and Figure 7.1 below for details.
Table 7.2: Customs Import Revenue Collection vs. Customs Imports Duty Foregone Year Total Customs Import Duty Foregone Amount (Fiscal duty, Import excise, Import VAT) Total Customs Import Revenue Collection (Fiscal duty, Import excise, Import VAT) % of Import Duty foregone to Total Import Customs collections 2009 ($) 2010 ($) 2011 ($) 2012 ($) 2013 ($) 229,769,987 193,508,543 339,201,378 564,572,911 339,067,234 555,622,829 601,158,071 693,992,669 722,711,148 873,270,474 41% 32% 49% 78% 39% Figure 7.1: Customs Import Revenue Collection vs. Customs Imports Duty Foregone Total Customs Import Revenue Against Total Customs Import Revenue Forgone Amount ($) (000's) 1,000,000 800,000 600,000 400,000 200,000 0 Revenue ($) Duty Forgone ($) 2009 2010 2012 2013 2011 Year The total import duty foregone declined by $36.2 million in 2010 compared to duty foregone by government in 2009, however, in 2011, the total import duty foregone increased by $145.7 million.
The import duty foregone to total import customs collections for the years 2009 was 41%, then decreased to 32% during 2010 but increased to 49% during 2011 and then increased exorbitantly to 78% during 2012 but decreased to 39% during 2013.
9 Customs Tariff Act 1986 – s10(2) 10 Customs Tariff Act 1986 – s10(3) Report of Statutory Authorities – December 2014 Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 7.5.3.2 Analysis of the Various Duty Concession Approvals Section 10 (Sub section 1) of the Customs Tariff Act stipulates that the Minister may after receiving recommendation from the Comptroller may consider to reduce or refund the whole or part of fiscal duty and import excise duty paid or payable by a person or organization in respect of goods imported into Fiji, if the Minister is satisfied that 11 (a) the goods imported or being imported act as a relief in the event of a disaster declared by the Government as a national disaster; (b) the importer of the goods is a person or organization covered under any International Agreement or Convention between the respective Governments or Parties; (c) The importer of the goods is a registered religious or charitable organization and that any reduction or refund of such duty is, in the circumstances, justifiable having regard to the purpose for which the organization was established; (d) The reduction or refund of fiscal duty will contribute an identifiable benefit to the country.
Unless otherwise indicated by the Minister, the reduction or refund approved under subsection (l) (d) shall remain in force for a period of 12 months after approval.

12 For the purposes of subsection (l) (d), the applicant for a concession must: (a) make application in writing to the Comptroller; (b) set out in the application the detail of the concession sought and its fiscal duty value; and (c) outline the benefit to the country that the concession will provide.
13 Section 11 (subsection 1) of the Customs Tariff Act further stipulates that the Minister may, subject to such conditions as he may consider necessary, remit or reduce duty payable in respect of imported machinery and equipment (including parts and materials) if he is satisfied it is to be used in a manufacturing or production process which will promote or create the development of industry in the country.
The concession approval process under section 10 and 11 of the Customs Tariff Act normally involves the following steps; Step 1- The concession applications can be made with the Minister of Finance (through Ministry of Finance and Office of the Prime Minister) requesting for concession on duty on their imported items.
Step 2 – Upon receipt of the application, the Ministry of Finance will than seek the Comptroller of Customs advice and recommendation in relation to the approval of the concession application before a final decision is being made by the Minister.

Step 3 – Advice/ Recommendations are than issued by the Comptroller of Customs to the Ministry of Finance for the consideration and final approval by the Minister of Finance.
Step 4 – After obtaining the Minister of Finance approval, the Ministry of Finance will then advice the applicant of the final decision made by the Minister through a formal correspondence.

A copy of the correspondence is copied to the Comptroller of Customs.
11 Customs Tariff Act 1986 – s10(1) 12 Customs Tariff Act 1986 – s10(2) 13 Customs Tariff Act 1986 – s10(3) Report of Statutory Authorities – December 2014 Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Our review of the concession approval processes revealed the following findings: FBL - File T67/9/2013 – Recommendation No.
397 Concession code 236 of the Customs Tariff Act applies to those manufacturers or producers approved by the Minister importing goods other than machinery equipment and motor vehicles (including parts and materials) of the approved goods falling under chapter 82 to 96 of the Tariff Act on the condition that the materials are to be used by the manufacturer in the manufacture of the approved goods.
Concession code 232 of the Customs Tariff Act applies to a person or organisation importing goods approved by the Minister for entry at reduced duty rates under Section 10 of the Customs Tariff Act.
Concession application was lodged with the Comptroller of Customs by an accounting firm on behalf of their client namely FBL on 27 September 2013 seeking duty free concession on the importation of the following items: - Pre Engineered Building Structures including 50m x 30m x 7m building materials, steels and panels and - Water blocking lines including filter, conveyer, filter, pet floor to make bottles and packaging machinery (item B).
The concession application was made with the Comptroller of Customs on 27 September 2013 and the Comptroller’s recommendations forwarded to the Ministry of Finance on 09 October 2013.

The audit noted that the Acting Minister of Finance had already granted the approval on 03 October 2013 for both the items to be imported under concessionary rate of zero per cent duty and 15% VAT.
The Comptroller of Customs on 09 October 2013 recommended that in the absence of any concession provisions on the importation of Prefabricated Building Structures, the application for concession was declined, while only the Water blocking lines including filter, conveyor, pet floor to make bottles and packaging machinery were eligible for duty concession under Code 236(iii) to Part 3 of the Customs Tariff.

Consequently, the total duty foregone by government was $133,779.
Refer to Figure 7.2 and Figure 7.3 below for the pre-engineered fabricated Building Structure being built in Nasau, Nadi.

Figure 7.2 Pre-engineered fabricated building structure Figure 7.3 Container load of building materials The granting of concession for the pre-engineered fabricated building structures does not fall under the ambit of the Ministerial powers to grant concession as imported items under Code 236 and 232 of the Customs Tariff has to be used in a manufacturing or production process.
Report of Statutory Authorities – December 2014 Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 This approval defeats governments’ regulations and its intention to promote the development of the building and construction industry in the country.

Recommendation No.
Recommendation No.

53 (File T67/2/2013) Persons or bodies eligible for concession under Code 217 includes any international air service, local air service (for flights within Fiji) approved by the Minister responsible for Civil Aviation; an aerial survey enterprise for the Government of Fiji; any other organisation approved by the Minister of Civil Aviation.
Goods imported eligible for duty concession includes aircrafts, aircraft equipment, aircraft stores, ground equipment and spare parts, only under the following conditions: Aircraft – imported goods are solely for use on an international air service, any local air service (for flight within Fiji), or an aerial survey enterprise for the Government of Fiji.

Aircraft equipment – imported goods are solely for use or available for use on board an aircraft during the flight.
Aircraft stores – are on board an aircraft during flight Ground equipment – solely for use in the maintenance, repair and servicing of an aircraft on the ground.
Spare parts – are solely for incorporation in an aircraft The audit noted that the concessionaire had previously been granted concession under Code 217 of Part 3 of the Customs Tariff Act in 2004 for leasing of one on Cessna 182 Aircraft VH – PQR from an Australian company and also on spare parts and fuel with free fiscal and 12.5% VAT for each importation.

On 9 September 2012, the concessionaire applied for extension of duty concession under the same concession code 217.
Accordingly, the Comptroller of Customs recommended to decline the extension as the type of activities carried out by the operator was not within the scope of Code 217 Part 3, which applied only to aircrafts and other goods imported by operators operating as an international or local airline.
However, the concession was granted by the Acting Minister of Finance under section 10 of the Customs Tariff Act, even though the aircrafts, aircraft equipment, aircraft stores, ground equipment and spare parts were not in the Section 10 approved list of items for 2012 to 2013.

MCS Ltd – (Approval No.


58 & 148) The initial concession application made by MCS Limited on 06 December 2012 was declined by the Acting Minister of Finance on 17 January 2013 following the Authorities recommendation that the portable sawmill is within the ambit of the Customs Tariff at 5% fiscal, free import excise, and 15% VAT payable.
However, the same request was later considered by the Authority when the Ministry of Fisheries and Forests applied on behalf of the company supporting the importation of the portable sawmill at concessionary rates of duty.

The concession was granted under the current Section 10 Item 6 of the Customs Tariff Act following a site inspection and review of the actual manufacturing process by the Authority.
Report of Statutory Authorities – December 2014 Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Discussions with the responsible officers revealed that the initial application may have been declined due to the non-availability of officers to conduct inspection of the manufacturing process at the site.
The examples discussed above showed the blatant disregard to the concession approval process where clarity is needed on section 10 and 11 of the Customs Tariff Act that does not clearly address the following questions: 1.

2.

3.

Does the Minister have the power within the ambit of Section 10 and 11 to waive the age limit of imported vehicles under the Customs Prohibited Imports and Export Regulation?
Does the Minister have the power to grant concessions without obtaining recommendations of the Comptroller under Section 10 and 11 of the Customs Tariff Act?

Does the Minister have the powers to overturn the Comptrollers recommendations and grant concession accordingly?

Failure to address the above provides room for abuse of powers and could result in substantial amount of government revenue foregone.
These issues also reflect on the undermining of governments own laws and regulations put in place to protect and promote local business and the people.

Recommendations The Authority should ensure that;  a detailed standard operating procedure for the Concession approval process is developed and strictly adhered to and there is clarity on the key questions raised by audit relating to Ministerial powers as provided under section 10 and 11 of the Customs Tariff Act.
 an awareness on the legislations and concession approval process is carried out to ensure that the general public and other stakeholders are informed and to adhere to the processes.

Authority’s Comments In the 2015 Budget Summary and Budget Supplement it has been agreed that a committee will be established for the establishment of a committee to assess and make recommendations on Customs Tariff Section 10 applications if it is outside the ambit of Concession Codes or Standing Section 10 approvals.
The committee to be chaired by Ministry of Finance however; the final approval will rest with the CEO of the Fiji Revenue and Customs Authority.
7.5.3.3 Inconsistency on the Concession Codes Interpretations Concessionaires registered as charitable or religious organisations are given free duty and free VAT for the importation of donated items.14 Concession code 215 applies to registered charitable and religious organisations (free fiscal, free excise, free VAT) on the conditions that the goods are a gift to or are imported by or on behalf of the organisation and that goods are distributed free to hospital patients and persons in need of support, or are used for the free treatment, assistance or education of such persons.
14 Customs Tariff Act – Section 10 (1) (c) & Code 215 of Part 3 of the Customs Tariff Act Report of Statutory Authorities – December 2014 Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The audit noted inconsistency when dealing with concessionaires’ application.

Refer below for examples on the inconsistent interpretations of concession codes below: Organisation A (Approval No.

228) vs. Organisation B (Approval No.


215) The “Organisation A” being a religious organisation applied for duty concession on the importation of 40,000 boxes of donated gift boxes to be distributed to the poor children of Fiji.

The Authority granted free concessions but charged 15% VAT to Organisation A.
On the other hand, another religious organisation “Organisation B” applied for duty concession under the same concession code on the importation of 100 cartons of donated canned food for distribution to the poor and needy people in Fiji.

The Authority granted free concession without charging VAT to religious organisation B.
While both the applicants were both religious organisations with donated imported items for distribution to the poor people of Fiji, there were inconsistencies on the concession codes interpretations.

(Company A) vs. (Company B) Concession code 244 applies to companies or entities granted approval under the New Short Life Investment Scheme importing capital equipment and machinery.
The provisional approval is required from the Ministry of Finance for goods to be imported under free fiscal, free excise and 15% VAT.

The audit noted that importations of noodle flavours (tastemakers) by these two companies are importing the same product.

While the same concessionary rate of duty are applied, audit noted that noodles flavours(tastemakers) imported by Company A are processed through Concession Code 236 whereas the importations done by Company B are processed through Concession Code 232.
The audit noted that Company A imports noodles flavours (tastemakers) in 24 kilogram which are than repacked into smaller sachets at their factory in Fiji.

Our review of the concession duty approvals granted to Company A noted the following; - The Authority initially granted company A to import raw materials at concessionary rates of free fiscal plus VAT under the Short Term Incentive Package (STIP) for a period of 12 months with effect from 17 November 2006.
Upon the expiry of the 12 months period, the rates stipulated under concession code 236(1) of Part III of the Customs Tariff would apply.

- However, Concession code 236(1) applies to a manufacturer or producer approved by the Minister.

Audit could not ascertain whether there was any Ministerial approval obtained by the Authority for the grant of the concessionary rate of duty after the expiry of the initial 12 months concessionary period.
- In contrast to the above, the audit noted that Company B also imports noodles flavours (tastemakers) in packed small sachets at the same concessionary rates of duty under Concession code 232 where the Ministers approval are granted under Section 10 of the Customs Tariff Act.
Report of Statutory Authorities – December 2014 Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 - Moreover, audit noted that noodles flavours are sold together with the noodles hence it does not meet the conditional requirements of concession code 232(1) which states that the goods are not for sale and to be used exclusively for purposes for which the concession is granted.
The audit also noted that the Post Compliance Audit team of the Authority had issued Short Payment Advices (SPA) totalling $640,977 to Company A in 2013 on the basis that Concession Code 236(1) was not applicable as noodles flavours (tastemaker) were considered to be a final product and not as raw materials used for the manufacture of noodles.
These SPAs were later withdrawn after the in- house committee that addresses tariff classifications and valuations issues decided that tastemakers were considered a raw material.

The above cases denote the inconsistency in the interpretation of the concession code by Customs as relevant concession legislations is silent on supplementary final products.

This has resulted in the substantial loss of customs revenue foregone for government.
Failure to address the above increases the risk of revenue leakage as interpretation are at the custom officers’ discretion.

Elements of fraud and thefts cannot be eliminated as this may allow officers to interpret the Tariff Act to suit their own agenda out of which they may seek to gain financially.

Recommendations The Authority should develop Standard Operating Procedures to incorporate procedures that are not explicitly outlined in the Act which are simple and easily understood by Customs officers.
The in-house committee should be proactive in reviewing major SPA’s before they are issued to ensure consistency in the application of the customs tariff act.

Authority’s comments Comments duly noted.

Requests for concessions which do not fall within the ambit of Concession Codes or Standing Section 10 approvals will now be handled by the Committee which will be chaired by the MOF.
7.5.3.4 Possible Duty Foregone on Departure Clearance of Yacht SY “OKEANOS” Concession code 228 of the Customs Tariff Act applies to entries for ships and aircrafts provided that bona fide tourists import the vessel/ aircraft solely for pleasure cruising in the Fiji Islands for a period of not exceeding eighteen (18) months.
Our review of the investigation carried out noted the following; - Upon arrival in Fiji on 09 April 2013, the master of the yacht indicated to Customs of its intention of coming to Fiji to cruise or visit the Fiji Islands and to conduct research/studies with the University of the South Pacific and Government.
- However, the audit noted that the yacht was cleared by Customs under Code 228 with zero duty and zero VAT payable which is only applicable for vessel solely for pleasure cruising in the Fiji Islands.
- A media article published on 20th May 2013 highlighted that the yacht “SY OKEANOS” was used to conduct research and studies in Fiji, which prompted the Customs Investigation Branch (CIB) to Report of Statutory Authorities – December 2014 Page 14 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 carry out an investigation as the yacht was initially cleared under Code 228 of the Customs Tariff Act.
- On 24th July 2013, the CIB issued an email directive to the management of Customs Boarder Control division not to give any coastal clearance or clearance for departure on the yacht “SY OKEANOS” as the investigation on the yacht had commenced.

- However, on 15th August 2013 information received by Customs Headquarters that the said yacht had arrived in Rotuma and might depart for Tuvalu on 20 August 2013.
Despite having this information, the customs officer based in Rotuma was not advised of the investigations carried out by CIB to stop the yacht from departing the Fiji waters.

- As a result, the “SY OKEANOS” left the Fiji waters, the file was proposed for closure and the investigation was ceased thus foregoing possible customs duty.

There was no further investigation into the loopholes in the system to determine reasons for the ignorance to the information provided by CIB.
The above indicates that the advance arrival notice was not properly vetted by Customs and possible tax avoidance with actions of yacht owners visiting the country.

In addition, this issue highlights the poor coordination and communication between Customs Head Quarters and other customs officers based in ports of entry.
Recommendations The Authority should ensure having coordinated information sharing between Customs stations or port of entry and Headquarters in terms of providing alert to prevent any possible tax evasion or tax avoidance of yacht owners.

The Authority should consider collecting “security bonds” from yachts that have dual (cruising and other purposes) purposes of coming to Fiji while awaiting approvals from relevant agencies.
The Authority should carry out a thorough investigation into the clearance of the SY OKEANOS to leave the Fiji Waters and disciplinary actions imposed on officers if found to be breaching the Customs Act.

Authority’s Comments The auditor‟s comments and recommendations are dully noted.
To avoid similar occurrences in future especially in dealing with officers in remote areas like, Rotuma we have formulated a combine mail address for all boarding officers in Fiji (including Rotuma) and the intelligence section known as “Yacht Report” When alerts are forwarded to this address the alert would be received by all Boarding Officers including Rotuma Port.

This would ensure that all alerts are disseminated and would be received at all ports of entry.
The recommendation of imposing „Bond Security” is not supported.

While the spin – off benefits derived from the industry is not huge in terms of monetary, the small business enterprises are thriving from the income from the yachties.

OAG‟s recommendations have been noted and the Authority will carry out further investigations into the clearance of SY OKEANOS.
Report of Statutory Authorities – December 2014 Page 15 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 7.5.3.5 Corporation Governance Issues - Approval of Board for Operational Matters It is Board’s policy that no Director is to interfere in the management or operations of the Authority at any time.

The Board’s role is to govern the organization and not to manage it.
Any request from management or staff to a Director for advice or assistance with an operational matter, is to be referred by that Director to the CEO for action.15 If the Comptroller is satisfied that a person owes duty or has outstanding fines or penalties under the Customs Act 1986 or Customs Tariff Act 1986 or Excise Act 1986 may leave Fiji without discharging such duty, fines or penalties under the Customs Act 1986, Customs Tariff Act 1986 or Excise Act 1986 or without securing such duty, fines or penalties, the Comptroller may issue a departure prohibition order against the person prohibiting the departure of the person from Fiji for another country.16 The Comptroller may, where he or she is satisfied that a person has committed an offence against this Act in respect of which a pecuniary penalty is provided or in respect of which any goods are liable to forfeiture, compound such offence and may order such person to pay such sum of money, not exceeding the maximum amount of the pecuniary penalty to which such person would have been liable if he or she had been prosecuted and convicted for the offence, as he or she may think fit; and he or she may order any goods liable to forfeiture in connection therewith to be condemned provided that the Comptroller shall not exercise his or her powers under the provisions of this section unless such person in writing admits that he or she had committed the offence and requests the Comptroller to deal with such offence under the provisions of this section.17 A follow up review of the Departure Prohibition Order (DPO) and Compounding form approval process noted that the Chairman of the FRCA board was approving all DPO’s and Compounding forms issued in 2013 after being vetted by the management of the Authority contrary to section 143c and 155 of the Customs Act.
Table 7.3: List of DPO / Compounding Forms Approved by the Board Chairman Case File Number DPO / Compounding Dates Sent for Board Approval Date Approved / Received Approximate Time Taken FSCIB/V/2013/02 FSCIB/G/2013/05 FSCIB/G/2013/22 FSCIB/G/2013/19 FSCIB/G/2013/20 FSCIB/G/2013/35 FSCIB/G/2013/36 FSCIB/G/2013/21 FSCIB/G/2013/34 FSCIB/V/2013/04 FSCIB/G/2013/37 FSCIB/G/2012/16 FSCIB/G/2013/26 FSCIB/G/2012/05 FSCIB/G/2013/04 FSCIB/V/2013/02 DPO Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding Compounding 09/08/13 13/08/13 13/06/13 09/07/13 27/05/13 13/08/13 12/09/13 12/09/13 22/08/13 13/09/13 19/08/13 21/10/13 13/05/13 25/11/13 26/07/13 22/10/13 15 FRCA Corporate Governance Charter 16 Customs Act – s143C 17 Customs Act – s155 Report of Statutory Authorities – December 2014 09/08/13 10/09/13 01/07/13 10/09/13 01/07/13 10/09/13 24/09/13 24/09/13 10/09/13 24/09/13 10/09/13 12/12/13 01/07/13 12/12/13 10/09/13 12/12/13 - 1 month 1 month 2 months 2 months 1 month 12 days 12 days 1 month 11 days 1 month 2 months 2 months 1 month 2 months 2 months Page 16 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 While audit noted the involvement of the Board in the operations of the Authority in regards to issuance of DPO and Compounding of customs offences under section 155 was to ensure that there is some degree of certainty and consistency on the disposition of offences, audit is of the view that the involvement of the Board may be bordering on the non-compliance with the Authority’s Corporate Governance Charter.
Moreover, this approval process also defeats the purpose of having the Authority’s corporate governance charter in place and the Authority’s operations will continuously be undermined by the Board Chairman’s involvement.

Despite the issue raised in the previous year’s audit reports, no action has been taken by the Authority to address the above.
Recommendations The Authority should immediately take necessary actions to ensure that the Boards interference into the operations is not entertained and should be limited to the governing of the organisation only.

All DPO’s and Compounding forms are to be only approved by the CEO in accordance with provisions of the Customs Act.

The Authority should ensure that FRCA Corporate Governance Charter is complied with at all times.
Authority’s Comments The FRCA Board is appointed under section 4 of the FRCA Act and under the said section they are the Members of the Authority.

Authority is defined in section 2 of the FRCA Act as the Fiji Revenue & Customs Authority.

As members of the Authority, the Board appoints the CEO under section 27 of the FRCA Act who as the CEO of FRCA also holds office as the Commissioner Inland Revenue, Comptroller of Customs and Commissioner Stamp Duties.
Furthermore the CEO is responsible to the Authority for the proper administration and management of the affairs of the Authority in accordance with the policy laid down by the Authority and be responsible to the Authority for the administration and enforcement and collection of revenue under the laws specified in the 1st Schedule which amongst others include the Customs Act.
Therefore as the CEO of FRCA his functions really is to execute the policy laid down by the Authority the membership of course consist of the Board members led by the Board Chairman.

Since Customs Act is part of the laws to be enforced and administered by the AUTHORITY as set out in the 1st Schedule of the FRCA Act it is safe to suggest that the intervention of the Board into the operations of the Authority is proper as it is the Board which appoints the CEO/Comptroller/CIR/Commissioner Stamp Duty.
Finally it is to be noted that the involvement of the Board in the operations of the Authority in regards to issuance of DPO and compounding of customs offences under section 155 is only to ensure that there is some degree of certainty and consistency on the disposition of offences.

The Board has agreed that once they are satisfied with the way offences and disputes settlements are managed then they will review their position on their current practice.
7.5.3.7 Control Weaknesses over Customs Bonded Warehouse Records and Stock Bond Warehouse No – S00120 If the owner does not lawfully remove any goods, but excluding goods specified in subsection (2), which have been deposited in a bonded warehouse within one year of the date of their deposit in the warehouse, the Comptroller may, after giving one month's notice of his or her intention, proceed to sell Report of Statutory Authorities – December 2014 Page 17 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 the goods in the prescribed manner or otherwise dispose of the goods, and the proceeds of any sale of such goods shall be dealt with in accordance with the provisions of Section 63.18 The warehouse keeper shall mark the containers or lots of any warehoused goods in such manner as the proper officer may direct and shall, subject to any further directions, keep them so marked while they are warehoused.19 Physical inspection of records at the bonded warehouse operated by the company noted the following discrepancies; - There were variances between the quantity (weight) of goods as per the open declaration listing (ASYCUDA) and the quantity (weight) of the goods as per the bond register maintained by the bond keeper.
Refer to Table 7.4 below for details: Table 7.4: Details of variance in balances SAD no.
Product Code C62923 C62923 C62923 C62923 C62923 C62923 C62923 C62923 C62923 C62923 D046 D047 D049 D051 D059 D060 D061 D062 D063 D064 Balance (Weight) as per the ASYCUDA 461 855 475 475 437 437 413 413 413 413 Balance (Weight) as per the Bond Register 520 676 416 260 520 520 364 364 364 364 Variance (59) 179 59 215 (83) (83) 49 49 49 49 - Physical verification of expired goods against the expired declaration list (ASYCUDA) in the bonded warehouse proved futile as the goods could not be located in the bonded warehouse.
Numerous goods were not marked and not stored properly for easy identification thus increases risk of abuse and theft.

- The audit also noted that customs entries relating to goods imported in 2003 and 2004 were still hanging in the ASYCUDA system, hence the integrity of the data in the ASYCUDA system is questionable as goods are no longer in the bond.
The hanging entries are attributed to input errors or incorrect weight entered by the agents in the entries which were not properly checked by Customs when assessing the entries for removal of the items from the bond.

- In addition, no remedial action is taken by Customs to clear the hanging entries which have accumulated over the years.

Refer to Appendix 7.2 for examples.


Bond Warehouse No – S00117 - The audit noted that stock balances as per the ASYCUDA generated expired declarations listing report relates to goods imported from the years 2005 to 2011 by the warehouse S00117.

However these goods no longer exist in the bonded warehouse.

These are hanging entries in the ASYCUDA system resulting from input errors and improper verification of the entries when goods were removed from the bond.

Refer to Table 7.5 below for examples.
18 Customs Act – Revised to 21st January 2013: Sections 52(1) 19 Customs Act – Revised to 21st January 2013: Sections 42(4) Report of Statutory Authorities – December 2014 Page 18 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Table 7.5: List of Hanging Entries SAD no Date Product Code Balance C22162 C48705 C48406 C11028 C43540 10/05/05 22/09/05 21/10/08 12/03/10 08/09/11 584A 514C 861B 859B 284D 1.0 ltr 0.60 pcs 1.0 ltr 0.75 ltr 1.0 ltr Bond Warehouse No – S00146 - A physical verification of balances of stock as per the ASYCUDA open declaration listings noted that stocks of umbrellas with product code 30 and 31 revealed stock balances of 84 and 406 pieces respectively without any stock physically stored in the warehouse.
The custom entry C26176 of 23/05/12 is relevant.

- Moreover, our review of the removal entries noted that the above was attributed to the incorrect input of quantity in the supplementary units tab of the entry by the customs agents.

The customs entry C27568 of 30/05/12 is relevant.

Bond Warehouse No – S00124 - Our review of the warehouse records maintained by the bond keeper differed from the records maintained in the ASYCUDA system by Customs.
In addition, customs entries and removal entries from the warehouse did not match.

Hence customs entries were noted to be hanging since 2006.

Refer to Table 7.6 for examples.

Table 7.6: Details of Difference in Records Maintained Customs Record Bond Keepers Records Remarks Receiving SAD no.

Product Code Receiving SAD no.

Product Code Clearing SAD no.
C42618 of 18/09/08 C36067 of 12/08/08 C51911 of 20/11/09 C17576 of 21/04/10 C60664 of 09/12/10 C51261 of 19/09/12 608 622C 629C 671C 735C 607C of C7413 18/05/07 C38349 of 29/08/07 C49709 of 27/10/07 C17985 of 04/05/09 C13806 of 30/03/10 C18042 of 30/04/07 PC608 C27911 of 25/06/08 PC622C C58929 of 13/12/07 PC629C C51963 of 20/11/09 PC671C C15885 of PC735C 13/04/10 Prohibited import PC607C C21208 of 17/05/07 Customs records does not match the bond keepers record records does not Customs match the bond keepers record Customs records does not match the bond keepers record records does not Customs match the bond keepers record Customs records does not match the bond keepers record records does not Customs match the bond keepers record - Moreover customs records C47697 dated 13/09/2006 was still hanging in the ASYCUDA records relating to a forklift unit that did not arrive in Fiji.
Report of Statutory Authorities – December 2014 Page 19 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bond Warehouse No – S0018 The audit noted that stock balances as per the ASYCUDA generated expired declarations listing report contains a long list of expired entries dating back to the period 1999 to 2008 without any physical stock stored in the warehouse.
These are hanging entries in the ASYCUDA system resulting from input errors and lack of proper verification of the entries lodged and removed from the warehouse.

Refer to Table 7.7 below for examples.

Table 7.7: List of Hanging Entries SAD no.
Date Item No C2143 C2565 C2906 C11054 C27933 C27933 C27933 C44695 C8634 C54808 C50868 C55716 C15887 01/10/99 05/10/99 06/10/99 17/11/99 27/06/00 27/06/00 27/06/00 20/10/00 25/02/00 20/12/00 16/11/01 12/12/01 06/04/00 01 01 01 01 03 06 09 03 01 10 01 01 01 Product Code None None None None 003 006 None None None S050 190A 193A 001 Balance 875 kgs 1,071 kgs 7,830 kgs 9,461 kgs 54,000 pieces 6,000 pieces 26,380 pieces 1,980 pieces 525 pieces 516pieces 768 pieces 564 pieces 8,017,180 pieces The anomalies noted from the above warehouses indicate the following;  Customs entries were not properly verified by the warehouse customs officers when entering or removing goods from the customs bonded warehouse;  The laxity of the Customs division to continuously monitor bonded cargo in terms of the approved warehousing period and disposal of the said goods should they expire;  The ASYCUDA system input risk is very high resulting in the incorrect quantities being entered by the agents on the customs entry.
Failure to address the above issues increases the risk of revenue leakage as bonded goods may be removed without detection and foregoing the duty payable on the imported items.

Recommendations The Authority should regularly monitor the bonded warehouses to ensure that bonded goods are cleared within the approved warehousing period.

Stock take of Customs bonded goods should be carried out on a regular basis to ensure that information in the ASYCUDA are correctly updated.
The reports on the expired declarations listings are generated on a monthly basis by the Warehouse section with necessary action to be taken accordingly.

A reconciliation team should be temporarily set up to reconcile all warehouse records in ASYCUDA to ensure that warehouse data on the ASYCUDA system are reliable for prudent decision making purposes.
Report of Statutory Authorities – December 2014 Page 20 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 More awareness should be carried out with the Customs Agents in terms of the input of data into the system and continuously infringing agents being dealt with by the Authority.

Authority’s comment Comments and recommendation have been duly noted.

Warehouse Section is presently addressing the queries on bonded Warehouses.
Stock-take is carried out by Compliance Section as per their audit plan.

However warehouse section does monthly print-out on goods overdue for removal from warehouse and before the expiry of the storage period a reminder notice is sent on the 11th month to all warehouse keepers to clear the goods before the expiry date.

Failures to clear the goods then goods are advertised for Auction Sale.
7.6 Inland Revenue Services Department – Suva Head Quarters 7.6.1 Duplication of Tax Identification Numbers (TIN) A Tax Identification Number (TIN) is a unique identifier issued to each person by FRCA to identify all categories of Tax and Duty payers and is used by the person to comply with Tax and Customs legislations.

The use of a TIN helps the Authority in handling queries, trace correspondences, and store information for each person that is registered for Customs and Tax purposes.
The audit on the business (Form B) taxpayer records revealed that numerous taxpayers did have more than one Tax Identification Numbers (TIN).

Refer to Appendix 7.3 for details.


Explanation provided by officers in the PAYE section revealed that the possibility of generating the same TIN for different taxpayers could be due to the following reasons: • • The old system of registering TIN did not require old birth certificates and valid ID to confirm identity of the taxpayer as now a requirement for new registrations; and Registration of taxpayers outside Fiji Revenue and Customs Authorities office.
This issue highlights the weaknesses and can create opportunities for tax evasion and fraudulent activities to occur.

This could lead to a high risk of revenue leakage if the controls in the Fiji Integrated Tax System (FITS) is not constantly reviewed, tested, and strengthened.

Recommendation The Authority should immediately review the taxpayer registration process to ensure that duplication of TINs are minimised and avoided.

Authority’s Comments The issuance of TIN is computer generated.
The details given by T/P in the registration form are captured in the system.

The FITS system is to check for any same or similar details already in the system and flag out to the user to ensure no duplication of TIN.

If nothing is flagged out then the system generates TIN.

Authority had been conducting data cleansing activities for the past years to eliminate duplicated TINS.

The TIN registration process and system controls had been strengthened from 2012 with the assistance of FRCA Internal Assurance.
Duplicated TINS highlighted would mostly for periods prior to 2012.

Authority will review the duplicated TINS detected for Data cleansing required.

Risk Review of TIN Registration process on-going by the Authority for mitigation of extreme risks.
Report of Statutory Authorities – December 2014 Page 21 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 7.6.3 Taxpayers with identical bank account numbers If you are expecting the return to give you a refund, and you wish to have the refund sent directly to a bank account, write the bank name, branch and account number in the box provided.

The bank account must belong to you.


Our review on the business (Form B) taxpayer records revealed that various taxpayers were using the same bank account for deposit of tax refunds.

Refer to Appendix 7.4 for details.

While the relationship between spouses sharing the same bank account can be clearly established, the audit noted that numerous tax refunds were deposited into other bank account numbers not linked to the taxpayer.
In addition, audit was unable to establish the link to the other bank account provided by the taxpayer.

Tabulated below are some taxpayers whose refunds have been deposited into other taxpayers’ bank accounts.
Table 7.8: Refunds deposited into other Taxpayers bank accounts TIN # 41324804 Return Number 2973377 Return Year 2010 Taxpayers Bank Account Details Account # 10994034 (ANZ) 161902405 3002690 2010 ANZ Bank acct # 05698930 201161308 3111622 2011 ANZ Bank acct # 10852067 131881105 201372717 2641942 2819801 2977202 3131079 2764293, 2596793, 2929743, 3113574, 3300927 2008 2009 2010 2011 2009, 2008, 2010, 2011, 2012 Deposited ANZ Bank 1150681 Deposited BSP acct # 1150681 (Nausori Branch) Comments Tax refund of $1,473 for the tax year 2010 was deposited into BSP Bank Account number 998904 which is the same bank account number provided by taxpayer with TIN 121307503.
Tax refund of $28.03 for tax year 2010 deposited into the ANZ acct # 9805360 which is the same bank account number provided by taxpayer with TIN no.

32200506.

Tax refund of $1,074.61 for tax year 2011 deposited into the ANZ acct # 10852067.

The same bank account number was used by taxpayer no.

195988307 for the deposit of his refunds in 2011 (2008 return).
Taxpayers ANZ bank account number 1150681 is also the same as the bank account number provided by taxpayer (TIN#: 201372717), however with the BSP bank.

Taxpayer currently has bank acct with Bred Bank acct # 107812019.

However, refund of $542.42 for tax year 2011 deposited into BSP acct # 1150681.

This was also the same for refunds from tax year 2006 - 2010.

However, refund of $542.42 for tax year 2011 deposited into BSP acct # 1150681.

This was also the same for refunds from tax year 2006 - 2010.
Report of Statutory Authorities – December 2014 Page 22 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The Authority relies on the information relating to bank account provided by the Taxpayer and there are no other checking mechanisms in place to verify the correctness and relations between the taxpayer and the bank account submitted.
On the other hand, the banks only concern is the validity of bank account numbers given by the Authority for depositing refunds.

In the absence of an effective security mechanism in place to verify that the bank account number provided are correct, valid, and actually belong to the taxpayer being assessed, the use of one bank account by many taxpayers increases the risk of collusion and the possibility of the creation of bogus taxpayer names to facilitate the leakage of funds also cannot be ruled out.
Recommendations: The Authority should consider implementing a policy whereby bank statements are attached to the tax returns as an evidence of the ownership of bank account.

The Authority should consider strengthening the controls of the FITS to generate exceptions reports to assist in the monitoring and managing the risk of fraud.

Authority’s Comments Audit finding noted and that there is currently no mechanism in place for FITS to check same bank account no.

with various other tax payers.


This issue is phasing out slowly as we are moving towards self-assessment and accordingly the risk expected is very minimal now.

However a FITS report is always available to be generated to check the same account number for two or more taxpayers.

This is an on-going data cleansing exercise.

A control measure as a FITS upgrade to flag out two different TINs showing same bank account is to be explored.
Noted that different TINS with same bank a/c numbers for different banks is not an issue.

It was a coincidence that account numbers for ANZ and BSP are same.

7.6.4 Discrepancies in payment of PAYE taxes and filing of returns A taxpayer required to file a tax return under a tax law must, in addition to any requirements under the tax law, file the return in the approved form and in the manner required by the CEO.
If a taxpayer has failed to file a tax return as required under a tax law, the CEO may, by notice in writing, require the taxpayer to file the return by the date set out in the notice.
A person who fails to file a tax return or lodge any other document as required under a tax law is liable in the case of a failure to file tax return under which tax is payable, for a penalty of 20% of the amount of tax outstanding under the return or in any other case, for a penalty of $1 for each day of default.20 Our review of the annual total PAYE remittances made by the Taxpayer A (50-17459-0-9), Taxpayer B (50-17639-0-3) and Taxpayer C (50-17365-0-5) on behalf of their employees in 2012 noted the following anomalies;  The PAYE tax deducted by the employer from these non-resident employees were relatively low compared to the high income earned by these employees; 20 Tax Administration Decree 2009- s43 Report of Statutory Authorities – December 2014 Page 23 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014  Moreover, PAYE tax were deducted from employees who do not have tax identification numbers and remitted to the Authority;  Several non - resident employees failed to lodge their 2012 annual tax returns in the year 2013 and majority of these employees also failed to lodge their 2010 annual tax returns;  Total amount of PAYE paid by Taxpayer A (50-17459-0-9) as per STA is $205, 277.55 compared to $56,758.54 as per the total of tax deducted from all the employees in the P4-1 slip.
A variance of $148,519.01 was noted.

 Total amount of PAYE paid by Taxpayer B (50-17639-0-3) as per the STA was $128,802.96 compared to $23,738.31 as per the total of tax deducted from all the employees in the P4-1 slip.

A variance of $105,064.65 was noted.

 Total amount of PAYE paid by Taxpayer C (50-17365-0-5) as per the STA was $15,625.70 compared to $1,146,267.99 as per the total of tax deducted from all the employees in the P4-1 slip.

A variance of $1,130,642.29 was noted.


The Authority could not provide comments during the audit on the variances noted above.

Refer to Appendix 7.5 for details.

The above discrepancies may be attributed to the lack of effective monitoring mechanisms to ensure that all non-resident employees are registered for tax purposes and that the correct amount of PAYE taxes are paid and posted to the correct tax ledger.
The Authority in failing to have in place frequent and effective monitoring mechanisms may hinder proper reconciliations of tax ledgers.

This may also imply inaccurate tax collection figures reported by the Authority.

Recommendations The Authority should ensure that;  Registration processes are reviewed and proactive measures to be put in place to ensure that all non-resident employees in Fiji are registered for tax purposes at the commencement of their employment.
 Relevant employers are closely monitored and tabbed to ensure that PAYE taxes paid are correct in all aspects.

 All the highlighted variances should be properly reconciled and all pending reconciliations are updated as well.

Authority’s Comments •The recommendations are noted.

•All short payments as a variance are collected by collection process of DMS.

•However overpayments are normally further reconciled manually by the Inspectors.
Report of Statutory Authorities – December 2014 Page 24 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 7.6.5 Recurring Control Issues 7.6.5.1 Mandatory Returns on Levies not Lodged and payments made past the legislated due dates The licensed telecommunication service provider shall on or before 15 days after the last day of each month, lodge a return in the approved form and pay the levy due.21 The bank shall, on or before 15 days after the last day of each month, lodge a return in the approved form and pay the levy due.22 The insurance company shall on or before 20 days after the last day of each month, lodge a return in the approved form and pay the levy that due.23 The audit noted that taxpayers failed to lodge returns in the approved forms when making payments to the Authority contrary to the requirements under Section 7 of the Income Tax Act.
Therefore, the accuracy of payments being made could not be verified against the companies Statement of Tax Account.

Refer to Table 7.9 for details of this companies and months in which the return forms were not lodged.
Table 7.9: Details of Levy Returns not lodged in 2013 Levy Types T.I.N Telecommunication Levy Third Insurance Levy Party 50-08737-0-8 50-16456-0-9 50-00061-0-4 50-08066-0-7 50-11005-0-4 40-00009-0-9 40-00093-0-0 40-00025-0-9 Credit Card Levy 50-16365-0-4 50-00002-0-4 Monthly Returns not Lodged for 2013 March, May to December January, March, May to December Branch Suva Suva Suva, Labasa, Nadi Suva, Labasa, Nadi, Lautoka Suva to May, June, August December May to December May to December May to December May to August September to December March, May, June, July, September, August, November, October, December.
November 50-02633-0-7 February, May, November Furthermore, audit noted that companies remitting the telecommunication, third party and credit card levies are making payments between 6 to 16 days past the legislated due dates.

Refer to Table 7.10 for details.
Table 7.10: Telecommunications, Third Party Levy & Credit Card Levy Delayed Payment T.I.N Month Due Date Payment Date Days Lapsed Telecommunication Levy 21 Revised Income Tax Act Chapter 201 – Section 7F (3) 22 Revised Income Tax Act Chapter 201 – Section 7G (3) 23 Revised Income Tax Act Chapter 201 – Section 7H (3) Report of Statutory Authorities – December 2014 Page 25 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 T.I.N Month Due Date Payment Date Days Lapsed 15/02/2013 28/02/2013 50-16456-0-9 January 15/09/2013 23/09/2013 50-10599-0-9 August 50-15986-0-6 15/02/2013 27/02/2013 January 28/03/2013 15/03/2013 February 30/04/2013 15/04/2013 March 15/05/2013 31/05/2013 April 15/06/2013 28/06/2013 May 15/07/2013 31/07/2013 June 30/08/2013 15/08/2013 July August 15/09/2013 30/09/2013 September 15/10/2013 31/10/2013 15/11/2013 29/11/2013 October 15/12/2013 31/12/2013 November 15/01/2014 31/01/2014 December 13 days 8 days 12 days 13 days 15 days 16 days 13 days 16 days 15 days 15 days 16 days 14 days 16 days 16 days Third Party Levy 50-08066-0-7 Credit Card Levy 50-16365-0-4 August July 50-00003-0-4 20/08/2013 26/08/2013 6 days 15/09/2013 27/09/2013 September 15/10/2013 29/10/2013 15/01/2014 31/01/2014 December 15/02/2013 27/02/2013 January 15/03/2013 28/03/2013 February 15/04/2013 26/04/2013 March 15/05/2013 31/05/2013 April 15/06/2013 28/06/2013 May 15/07/2013 26/07/2013 June July 15/08/2013 28/08/2013 September 15/10/2013 30/10/2013 15/11/2013 26/11/2013 October 15/01/2014 31/01/2014 December 12 Days 14 Days 16 Days 12 Days 13 Days 11 Days 16 Days 13 Days 11 Days 13 Days 15 Days 11 Days 16 Days Discussions with the relevant officers revealed that the return forms are self-assessed and manually administered, however, as at audit date24, it was noted that only credit card levy module is now in place while modules for the other levies are yet to be implemented.
In the absence of the relevant modules in place, the Authority will not be able to access real time information to assist in the reconciliation of return forms of the levy remitting companies; hence the accuracy of revenue collected cannot be validated.

Recommendation The Authority should ensure that strategies to be put into place to administer these new levies with proper planning with minimal hiccups.
24 28/08/14 Report of Statutory Authorities – December 2014 Page 26 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Authority’s Comments •Recommendations are noted.

•The module for the levies needs to be implemented.

•The specifications are with IT.

•The Credit Card Levy module was implemented early 2014 •Third Party and Telecommunications Levy modules yet to be created by IT.
•Due to reprioritising the levies modules have been delayed in creating, testing and implementation.
7.6.5.2 Outstanding Capital Gains Tax (CGT) from Undertaking/Arrangement Made By Agent The capital gain made by a person on the disposal of a capital asset is the consideration received on the disposal reduced by the cost of the asset at the time of the disposal.25 A person must keep such accounts, documents, and records as to enable the computation of the capital gains tax payable by the person in respect of the disposal of a capital asset.26 The CEO may disallow the inclusion of the amount of expenditure in the cost of an asset if a person is unable, without reasonable excuse, to produce a receipt or other record of the expenditure.27 As at audit date28, a total of $62,703 of Capital Gain Tax remained uncollected by the Authority.
These outstanding taxes relate to those CGT certificates issued as early as January 2013 and remain unpaid by agents, who are normally solicitors.

Refer to Table 7.11 for details.
Table 7.11: Unpaid CGT Undertaking by Agents (2013) T.I.N 11-17542-0-9 14-81229-0-7 50-07329-0-0 16-25386-0-5 03-10509-0-8 50-01765-0-1 03-10509-0-8 13-07175-0-8 11-08725-0-0 11-08725-1-1 Total Date CGT Issued Certificate 29/04/2013 30/10/2013 25/11/2013 26/11/2013 11/12/2013 11/12/2013 16/12/2013 30/01/2013 31/01/2013 CGT Amount Payable ($) No update in the system 3,200.00 6,000.00 3,000.00 2,000.00 35,420.00 3,562.67 8,145.00 1,375.00 62,702.67 The above may indicate the laxity of the CGT section in following up for the payment of these taxes.
Failure to promptly follow up on these outstanding taxes increases risk of this revenue being written off and uncollectible.

Recommendation The Authority should promptly follow up with the agents for the payment of outstanding Capital Gains Taxes.

Penalties should be imposed and accumulated for these unpaid taxes as a deterrent for delaying payments.
25 Capital Gains Tax Decree 2011 – Section 10 (1) 26 Capital Gains Tax Decree 2011 – Section 17 (1) 27 Capital Gains Tax Decree 2011 – Section 17 (3) 28 14/05/2014 Report of Statutory Authorities – December 2014 Page 27 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Authority’s Comments The availability of funds for payment is dependent on the settlement of the transaction.
Normally undertaking is received from Trust Account where proceeds from sale will be deposited before disbursement to vendor and CGT certificate released to facilitate settlement to take place.

Sometimes if settlement is delayed, then recovery of the same is also delayed.

These debts are however secured before issuance of CGT Certificate.
Report of Statutory Authorities – December 2014 Page 28 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 APPENDICES Appendix 7.1: Departure Taxes Reconciliation MONTHS PASSENGER CLASSIFICATION DEPARTURE TAX TOTAL PASSENGERS EMBARKING (A) TOTAL PASSENGERS UNDER 12 YRS TOTAL DIPLOM ATS TOTAL PAX TRANSIT WITHIN 12HRS TOTAL EXEMPTE D (B) TOTAL FOREI GN MILITA RY PERSO NALS PAYING PAX TOTAL PAYABLE (A-B) *$150 (A-B) TOTAL RECEIPTED BY FRCA ($) OVER/ UNDER COLLECTION ($) January February March April May June July Aug Sept October Novembe r Decembe r Total (1,014,932) (389,911) (341,905) (39,183) (226,719) (350,251) 20,437 (410,595) (91,983) (257,019) 8,690,850 8,751,420 (60,570) 55,617 660,155 8,342,550 99,023,250 8,369,339 102,212,669 (26,789) (3,189,419) Report of Statutory Authorities – December 2014 Page 29 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Appendix 7.2: Details of Hanging Entries SAD No.
Date Product Code Quantity (Units) C55677 C55677 C55856 C55856 C55818 C62978 C62978 C63350 C63431 C63431 C63431 C63431 C63431 C63434 C63434 C63674 C10355 C05603 C10366 C31287 C38166 C38166 C38166 C62116 C62118 14/11/03 14/11/03 16/11/03 16/11/03 15/11/03 19/12/03 19/12/03 22/12/03 22/12/03 22/12/03 22/12/03 22/12/03 22/12/03 22/12/03 22/12/03 23/12/03 03/02/04 02/05/04 02/03/04 28/06/04 04/08/04 04/08/04 04/08/04 08/12/04 08/12/04 A040 A042 A282 A284 A212 412F 413F 438E 437E 438E 439E 428E 433E 374E 231B 336 342 149C 0005 A575 A623 A625 A626 A815 A823 452 1,716 480 540 480 720 360 450 1,404 1,800 600 1,800 582 540 1,000 10,200 1,491 2,700 1,200 1,475 7,640 1,872 1,644 1,392 2,019 Report of Statutory Authorities – December 2014 Page 30 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Appendix 7.3: Number Taxpayers with More Than One Tax Identification TIN Bank Account Number Bank Code BRD BRD ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ BSP CNB ANZ ANZ BOB BOB BOB BOB BOB BOB ANZ ANZ CNB BSP WBC WBC BSP CNB Report of Statutory Authorities – December 2014 Page 31 REPORT OF
 THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 TIN Bank Account Number Bank Code CNB CNB BSP WBC CNB CNB ANZ ANZ ANZ ANZ BOB BOB ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ CNB CNB CNB BSP ANZ ANZ CNB CNB BSP CNB BSP BSP ANZ ANZ ANZ ANZ BSP CNB ANZ CNB ANZ ANZ BSP CNB ANZ ANZ ANZ ANZ BSP Report of Statutory Authorities – December 2014 Page 32 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 TIN Bank Account Number Bank Code 6127964 62631940 62631940 6451470 6451470 6576680 6576680 6804608 6804608 6938213 6938213 7001031 7001031 7023124 7023124 7141536 7141536 7167655 7167655
CNB WBC WBC CNB CNB BSP CNB BSP BSP CNB CNB BSP CNB ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ BSP CNB BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ BSP CNB ANZ ANZ ANZ ANZ BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB Report of Statutory Authorities – December 2014 Page 33 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 TIN Bank Account Number Bank Code BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BSP BSP WBC WBC BSP BSP WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC Report of Statutory Authorities – December 2014
 Page 34 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 TIN 114326805 191348008 194291200 115246607 115396603 Bank Account Number Bank Code 9802438763 9803075432 9803075432 9803096479 9803096479 WBC WBC WBC WBC WBC Report of Statutory Authorities – December 2014 Page 35 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Appendix 7.4: Details of Taxpayers Using the Same Bank Account Bank Account Number Bank Code TIN WBC WBC BRD BRD BRD BRD WBC WBC WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC WBC WBC WBC WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ Report of Statutory Authorities – December 2014 Page 36 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code 05667560 05667560 07215726 07215726 07215726 0781860430 0781860430 08430730 08430730 08472374 08472374 0875623040 0875623040 08926090 08926090 10018381 10018381 1003067 1003067 10044355 10044355 10045542 10045542 1014728 1014728
 1020210 1020210 1029075 1029075 10460375 10460375 1047153 1047153 10481942 10481942 10486010 10486010 10588114 10588114 1060173 1060173 1060173 1060173 10605709 10605709 10605709 10660443 10660443 10745408 ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ BSP BSP ANZ ANZ ANZ ANZ BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ TIN Report of Statutory Authorities – December 2014 Page 37 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC CNB BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ TIN 80065702
195328107 142612107 44460400 120623608 80065702 193003303 193003314 120681408 23047103 160233601 122536702 192995504 195486104 31518703 30885217 40241216 41609600 41504305 41764305 70010402 70010505 70010608 Report of Statutory Authorities – December 2014 Page 38 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ CNB BOB BOB BSP BSP BSP BSP ANZ ANZ ANZ ANZ CNB BSP ANZ ANZ ANZ BSP BSP ANZ ANZ ANZ ANZ BSP CNB ANZ ANZ CNB ANZ ANZ TIN Report of Statutory Authorities – December 2014 Page 39 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ ANZ BSP BSP BSP ANZ
2007980 2007980 201242 ANZ ANZ BSP BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ CNB CNB CNB BSP ANZ ANZ ANZ BSP BSP CNB BSP BSP CNB ANZ ANZ BOB BOB BOB BOB BOB WBC WBC CNB ANZ CNB CNB ANZ ANZ CNB CNB CNB CNB BSP BSP BSP CNB BSP BSP TIN Report of Statutory Authorities – December 2014 Page 40 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code BSP BSP BSP CNB ANZ BSP CNB WBC WBC ANZ ANZ WBC WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ BOB BOB ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ TIN Report of Statutory Authorities – December 2014 Page 41 REPORT OF THE AUDITOR
 GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC WBC WBC BSP BSP BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ BSP BSP BSP CNB ANZ ANZ CNB ANZ CNB BSP ANZ ANZ BOB BOB ANZ ANZ ANZ ANZ HBB BSP BOB BOB BSP BSP ANZ ANZ BSP CNB BSP TIN Report of Statutory Authorities – December 2014 Page 42 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code BSP BSP CNB CNB CNB WBC WBC BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC BSP BSP WBC WBC BSP BSP CNB CNB CNB BSP CNB CNB WBC WBC BSP BSP WBC WBC TIN 231589103 132143204 183405009 114406604
WBC TIN Report of Statutory Authorities – December 2014 Page 43 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code WBC WBC WBC CNB CNB WBC WBC CNB CNB CNB CNB CNB ANZ ANZ ANZ BSP BSP BSP BSP WBC WBC CNB CNB ANZ ANZ ANZ ANZ BSP BSP ANZ ANZ ANZ CNB ANZ ANZ BSP BSP BSP BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ BSP ANZ ANZ TIN Report of Statutory Authorities – December 2014 Page 44 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code 5538942 5553278 5553278 5603550 5603550 561817 561817 5658986 5658986 5662528 5662528 5662528 568289 568289 568289
ANZ ANZ ANZ BSP CNB ANZ ANZ BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ CNB BSP ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ ANZ BSP ANZ ANZ CNB ANZ BSP BSP CNB CNB BSP BSP BSP BSP WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ TIN Report of Statutory Authorities – December 2014 Page 45 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ ANZ ANZ WBC WBC ANZ ANZ BSP CNB CNB CNB CNB CNB BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC WBC WBC ANZ ANZ ANZ ANZ BSP BSP BSP BSP ANZ ANZ ANZ ANZ BSP BSP WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ TIN 31403106 181512901 31850700 195119907 163854706 230155505 230155516 182069107 183169101 111007808 191355400 142869101 80721404 123503105 160102002 161883409 194300100 231016609 250151307 100300604 190638005 190638016 30289008 80604606 191590203 191590306 160483516 160483505
 131692107 132800907 195594003 202563905 10190308 31009706 70174508 121734101 192232403 42911003 30492109 231525204 130459004 130459015 112598309 112598402 110268002 41408504 70703409 132179900 70683804 Report of Statutory Authorities – December 2014 Page 46 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code CNB CNB BSP BSP BSP BSP BSP BSP BSP BSP BOB BOB CNB CNB CNB CNB BSP CNB CNB CNB BSP BSP BSP BSP BSP CNB BSP CNB CNB CNB BSP ANZ ANZ ANZ ANZ ANZ CNB CNB ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ CNB CNB TIN Report of Statutory Authorities – December 2014 Page 47 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code 7685941
7655949 7672806 7672806 7674825 7674825 7685941 7685941 7689184 7689184 7736237 7736237 CNB CNB ANZ ANZ ANZ ANZ BSP BSP ANZ ANZ ANZ CNB ANZ ANZ ANZ CNB CNB BSP ANZ ANZ BSP ANZ ANZ ANZ ANZ BSP BSP BSP BSP ANZ ANZ BSP BSP BSP BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ CNB ANZ ANZ ANZ BSP ANZ TIN Report of Statutory Authorities – December 2014 Page 48 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code BSP BSP ANZ ANZ BSP BSP CNB BSP CNB BSP BSP BSP BSP BSP BSP ANZ BSP BSP WBC WBC ANZ BSP ANZ ANZ WBC WBC BSP BSP BSP BSP ANZ ANZ BSP BSP ANZ ANZ BSP BSP ANZ ANZ ANZ ANZ BOB ANZ ANZ ANZ ANZ ANZ BSP TIN Report of Statutory
70570601 201418406 160444308 Report of Statutory Authorities – December 2014 Page 49 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code BSP ANZ ANZ WBC WBC BSP BSP BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ BOB BOB BSP ANZ BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BSP BOB BOB BOB BOB TIN Report of Statutory Authorities – December 2014 Page 50 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code 91030100002740 91030100002740 91030100002749 91030100002749 91030100002749 91030200000106 91030200000106 91030400000069 91030400000069 91030400000069 9104010000 9104010000 91040100000540 91040100000540 91040100001184 91040100001184 91040100001485 91040100001485 91040100002353 91040100002353 91040100002531 91040100002531 91040100005210 91040100005210 91040100005531
 91040100005531 91040100007397 91040100007397 91040100007904 91040100007904 91040100008485 91040100008485 91040100009632 91040100009632 91040100010866 91040100010866 91040100010866 9104019222 9104019222 91050100000486 91050100000486 91050100000486 91050100001237 91050100001237 91050100001606 91050100001606 91050100002349 91050100002349 91050100002434 BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB TIN Report of Statutory Authorities – December 2014 Page 51 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB BOB ANZ ANZ ANZ ANZ ANZ BSP ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ ANZ TIN 192468606 160616808 112759001 183676003
ANZ TIN Report of Statutory Authorities – December 2014 Page 52 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code ANZ ANZ ANZ ANZ ANZ ANZ BSP CNB WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC TIN Report of Statutory Authorities – December 2014 Page 53 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code
 WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC TIN Report of Statutory Authorities – December 2014 Page 54 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC
 WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC TIN Report of Statutory Authorities – December 2014 Page 55 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC WBC TIN Report of Statutory
163305707 163871101 131777314 Report of Statutory Authorities – December 2014 Page 56 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Bank Account Number Bank Code 9803989152 9803998849 9803998849 9804656685 9804656685 9804734029 9804734029 9846114 9846114 9846114 9874287 9874287 9874287 9874287 9929454 9929454 9945499 9945499 WBC WBC WBC WBC WBC WBC WBC ANZ ANZ ANZ ANZ ANZ ANZ ANZ BSP BSP ANZ ANZ TIN 135366101 121403603 121340209 20137504 110906009 100202708 43172708 191870200 230974601 194698201 21336508 140418301 21336601 21835502 132345105 22718006 41838600 194346304 Report of Statutory Authorities – December 2014 Page 57 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Details of Discrepancies in Payment of PAYE Tax and Appendix 7.5 Filing of Returns Employee Name Yanzhou Xie TIN # No TIN Zhanli Gong 07-13915-0-6 Hengjun Tang 20-23916-0-1 Xining Jin No TIN Kejun Ma 13-51857-0-2 Ruili Li 12-50918-0-2 Jianping Liu 12-51853-0-9 Jie Liu 12-51852-0-6 Fengnian An 01-26215-0-5 Qingfeng Cheng 03-25232-0-9 Zhenyu Chen 26-01186-0-2 Feng Na No TIN Wenhua Ding 04-53155-0-5 Yongqiang Deng Zhiping Deng 04-58348-0-4 No TIN Deng Fei 04-17752-0-6 Zhongyu Chen 03-26205-06 Ganggang Yuan 25-02973-0-6 Tao Zhang 26-00960-0-5 Ruibin Zhang 26-00962-0-1 Qiang Zhang 26-00375-0-3 Yanhai Zhang 26-00961-0-8 Junping Zhao 26-00618-0-5 Period Employed 01/03/12 31/12/12 01/04/12 31/12/12 01/04/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 01/03/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 17/09/12 31/12/12 1/1/2012 31/12/12 29/06/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 30/06/12 31/12/12 06/07/12 31/12/12 13/02/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 17/09/12 31/12/12 17/09/12 31/12/12 18/05/12 31/12/12 17/09/12 31/12/12 17/09/12 31/12/12 - - - - - - - - - - - - - - - - - - - - - Gross Wages ($) 24,804.00 Tax Deducted ($) Audit Observations Reg.
Date 477.06 No return lodged by TP.

36,812.00 599.88 No return lodged by TP.

9/5/2011 26,707.50 150.50 33,256.00 563.53 lodged by 2010 return was the last return the taxpayer.

No 2012 return lodged No return lodged by TP.

29/10/10 N/A 36,951.00 628.65 No return lodged by TP.

20/04/12 19,296.00 374.87 No return lodged by TP.

23/07/12 30,914.00 42.00 No return lodged by TP.

16/10/12 36,503.93 486.34 No return lodged by TP.

16/10/12 10,347.00 479.11 No return lodged by TP.


11/12/2012 36,534.00 84.00 16,079.00 439.29 2010 return lodged in Sept 2011 was the last return lodged to FRCA No return lodged by TP.

19/10/10 16/10/12 15,124.00 437.83 No return lodged by TP.

N/A 26,337.50 80.69 No return lodged by TP.

23/07/12 44,755.50 458.50 No return lodged by TP.

25/11/13 18,523.00 - No return lodged by TP.


N/A 28,597.50 178.27 - 37,623.00 84.00 - 38,000.00 - 63,393.00 804.43 2010 return lodged in Sept 2011 was the last return lodged to FRCA 2010 return lodged in Sept 2011 was the last return lodged to FRCA 2010 return lodged in Nov 2011 was the last return lodged to FRCA No return lodged by TP.

29/09/09 29/10/10 2/6/2010 3/5/2011 27,708.00 194.31 No return lodged by TP.

3/5/2011 24,892.00 540.18 No return lodged by TP.


10/8/2010 31,495.00 541.96 No return lodged by TP.

3/5/2011 26,973.50 73.22 No return lodged by TP.
20/12/10 Report of Statutory Authorities – December 2014 Page 58 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Employee Name Peng Zhang TIN # 26-01331-0-8 Yong Zeng 25-02855-0-7 Period Employed 01/01/12 31/12/12 01/01/12 31/12/12 Zhenlong Yu 25-05598-0-4 Jiahui Zhou 26-00473-0-0 Changhe Yu No TIN Yawei Yang 25-05593-0-9 Zhanzhen Liu 12-49707-0-8 Yang Zhiming No TIN Rujiang Zheng No TIN Keliang Ma 13-45584-0-8 Lidong Jiang 10-07514-0-8 Jianfeng Wang 23-12840-0-2 Tianpeng Song 20-20955-0-9 Suifeng Wang 23-12842-0-8 Shaohua Wang 23-25934-0-2 Qiang Wang 23-27712-0-0 Guohai Chen 03-46656-0-2 Chen Chao 03-46662-0-1 Yunfei Cai 25-05852-0-1 Jianxi Chang 03-46810-0-6 Wuying Cai 03-48593-0-6 Jian Guo Cai No TIN Bingsheng Shi 19-89867-0-6 01/01/12 31/12/12 17/09/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 17/09/12 31/12/12 17/09/12 31/12/12 01/01/12 31/12/12 09/06/12 31/12/12 10/09/12 31/12/12 24/04/12 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 23/07/13 31/12/12 01/01/12 31/12/12 01/01/12 31/12/12 29/06/12 31/12/12 4/10/12 31/12/12 05/11/12 31/12/12 03/01/12 31/12/12 03/01/12 31/12/12 - - - - - - - - - - - - - - - - - - - - - Gross Wages ($) 36,153.00 Tax Deducted ($) Audit Observations Reg.
Date 684.13 No return lodged by TP.

20/08/13 36,623.00 84.00 32,479.00 584.29 36,556.00 84.00 34,914.00 555.66 Return type - B, Nature of business - Manufacturing of Garments, no return lodged till to date No return lodged by TP.

2010 return lodged in Nov 2011 was the last return lodged to FRCA No return lodged by TP.

3/12/2007 20/04/12 19/10/10 N/A 39,466.00 479.83 No return lodged by TP.

17/04/12 36,402.00 679.95 No return lodged by TP.

20/04/12 45,180.00 - No return lodged by TP.


N/A 36,623.00 29,782.50 84.00 75.79 No return lodged by TP.

N/A No return lodged by TP.

3/5/2011 22,926.00 491.10 No return lodged by TP.

23/07/12 36,124.00 84.00 - 65,853.72 561.78 - 37,705.00 84.00 34,000.00 - 2010 return lodged in Nov 2011 was the last return lodged to FRCA 2010 return lodged in Nov 2011 was the last return lodged to FRCA 2010 return lodged in Sept 2011 was the last return lodged to FRCA No return lodged by TP.
29/10.10 28/08/09 29/10.10 28/09/11 19,246.00 567.81 No return lodged by TP.

21/05/12 32,537.00 522.08 No return lodged by TP.

25/04/12 36,220.55 601.90 No return lodged by TP.

25/04/12 42,900.34 457.66 No return lodged by TP.

16/10/12 27,259.00 - No return lodged by TP.

15/05/12 34,944.29 368.71 No return lodged by TP.

19/12/12 20,224.50 129.50 No return lodged by TP.

N/A 20,959.00 0 No return lodged by TP.


20/04/12 Report of Statutory Authorities – December 2014 Page 59 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 8: FIJI SERVICEMEN’S AFTER-CARE FUND Programme Statement A committee appointed by the Minister of Finance manages the Fund which was established generally for the aid and care of ex-servicemen and their dependents.
The broad scope of activities is covered under Section 13 of the Fiji Servicemen’s After-Care Fund Act.
The mission or core business of the Fund is in the following areas:       To provide funds for the maintenance and welfare of persons who have served at any time during the war in or with the Fiji Naval or Military Forces or any branch of the Allied Forces or any Allied Merchant Service or any Nursing Service attached to any of the Allied Forces and for the aid and care of the wives, widows, children and other dependents of such persons; To provide such persons or any of them with medical care and surgical appliances; To provide for the education of the children such persons or any of them; To assist such persons or any of them to fit and equip themselves for any profession, trade or calling; To make loans to persons specified above, subject to such conditions the committee may think fit; To make the payment of all reasonable costs, charges and expenses of the Committee or incidental to the applications and the administration of the Fund.
Table of Content 8.1 8.2 8.3 SECTION 8: FIJI SERVICEMEN’S AFTER-CARE FUND ..................................................................................................... 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ...................................................................................................................................................... 1 Abridged Statement of Financial Performance ................................................................................................... 2 Abridged Statement of Financial Position ........................................................................................................... 2 PART B – CONTROL ISSUES ................................................................................................................................................ 2 Non - Reconciliation of Accounts ....................................................................................................................... 2 Favouritism in Temporary Employment .............................................................................................................. 3 Staff Appraisal..................................................................................................................................................... 4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) ...... 5 Fund’s Budget ..................................................................................................................................................... 5 Anomalies in Finance Manual ............................................................................................................................. 6 Transfer of Funds................................................................................................................................................ 6 MYOB Accounting System.................................................................................................................................. 7 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 PART A – FINANCIAL INFORMATION 8.1 Audit Opinion The audit of the financial statements of the Fiji Servicemen’s After-Care Fund for the year ended 31 December 2011resulted in the issue of disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Fund did not prepare its financial statements in accordance with the International Financial Reporting Standards for Small and Medium Sized Entities as required for the general purpose financial statements.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 8.2 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant Other Total Receipts Payments Beneficiary Payments Staff/Personnel Costs Other Operating & Administration Expenses Total Payments Net (Deficit/ Surplus for the Year 2011 ($) 2010 ($) 5,580,448 72,843 5,653,291 5,792,349 241,175 6,033,524 5,474,571 239,139 116,280 5,829,990 (176,699) 5,441,791 213,902 143,622 5,799,315 234,209 The Fund realized a deficit of $176,699 in its operation in 2011 compared to a surplus of $234,209 in 2010 due to decrease in government grant by $211,901 or 3.7% and decrease in other receipts by $168,332 or 69.8%.
8.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash at Bank Total Assets Accumulated Funds 2011 ($) 2010 ($) 142,215 142,215 142,215 318,914 318,914 318,914 The Fund’s current assets which constitute cash at bank balance declined by $176,699 or 55.4% in 2011 compared to 2010.

The decrease in cash at bank was mainly due to decrease in government grant and other receipts.
PART B – CONTROL ISSUES 8.4 Non - Reconciliation of Accounts The Secretary is responsible for ensuring that regular reconciliations are undertaken at the end of each month.1 The audit noted that reconciliations were not carried out for salaries and wages, PAYE and FNPF for the year 2011.

The issue was also highlighted in 2010 however no action was taken by the Fund.

The Fund has poor controls in salaries and wages, PAYE and FNPF payments.
Hence there is a high risk of fraudulent payments or misappropriation of funds.

1 Financial Management Procedure Manual – Fiji Servicemen’s After-Care Fund (Reconciliation 4.1) Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Recommendation The Fund must ensure that regular reconciliations for salaries and wages, PAYE and FNPF are carried out.

Management Comments No comment received from the Fund.
8.5 Favouritism in Temporary Employment The Equal Employment Opportunity Policy is intended to provide all Public Service officers with a guide to fairness and equity in employment decisions in the areas of recruitment, promotion, transfer and training on the basis of merit.2 Before either a letter of appointment or contract of appointment is issued, a candidate selected for appointment must undergo medical examination and be passed as being in all respects physically and mentally fit by an authorised Medical Officer.3 The employee must have a satisfactory police record.4 The position of a Clerical Officer was vacant from 26/04/11 to date of audit.5 The Fund appointed a Ms. Salote Tagicakiverata as a Temporary Relieving Clerical Officer (TRCO) on 19/12/11.
The review of the appointment of the TRCO revealed the following anomalies.

 The vacant Clerical Officer position was not advertised in the local dailies to seek expressions of interest from suitably qualified candidates.

In addition the officer was appointed as a TRCO from 19/12/11 to 23/12/11, 9/1/12 to 13/1/12 and 22/4/13 to date of audit6 without being interviewed.

 The TRCO’s details in the personal file revealed that she is related to the Assistant Secretary.
 The Fund did not issue appointment letter to the officer on her temporary appointment.

She was paid wages at the rate $4.36 per hour for 37 hours per week by the Fund.

 The Fund did not obtain Police and Medical Clearance reports prior to the appointment of the Officer.

 Her qualification was also not available in her personal file.

As result audit could not establish if the appointment was based on merit as required by the Public Service Commission.
Such findings clearly indicate that the appointment was made on favouritism and nepotism as the appointment was not made through an open and competitive selection process.
Recommendations The Secretary should ensure that:  The officer’s appointment as TRCO is terminated immediately; 2 General Orders 2011, – 1224 (b) 3 General Orders 2011, Section 203 (a) 4 General Orders 2011, Section 203 (b) 5 29/9/14 6 01/10/14 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014   the vacant position for the Clerical Officer is filled following a proper recruitment process; and the matter is investigated and appropriate disciplinary action taken against Officer’s responsible for making appointment without following proper procedures.
Management Comments No comment received from the Fund.

8.6 Staff Appraisal The performance management system is the assessment of an officer’s performance which is to be reported in the ‘Performance Assessment and Development Form.7 Salary increase should be given based on staff performance and Committee’s approval.

The audit noted that seven Officers of the Fund were awarded salary increase which was approved by Fund’s Secretary for the year 2011.
However the salary increase was not based on staff performance or job evaluation exercise.

The audit also noted that the Committee approval was not obtained for the salary increase.

In addition the salary increase was not budgeted for.

Refer to Table 8.1 for details.
Table 8.1: Details of Salary Increment – 2011 Name of Staff Position Jone Kotobalavu Tikiko Vulaca Ovalase Toduadua Akisi Laveti Marica Waqanivere Fane Bogidrau Soko Qionirokoi Total Secretary Accounts Officer Disbursement Officer Payroll Officer Senior Disbursement Officer Reconciliation Clerk Disbursement Officer Salary 2010 ($) 48,206 17,935 12,735 23,646 19,033 13,627 13,171 148,353 Salary 2011 ($) 50,164 18,468 13,171 24,636 20,018 14,084 13,627 154,168 Increment ($) 1,958 533 436 990 985 457 456 5,815 Percentage Increased 3.9 2.9 3.3 4.0 4.9 3.2 3.3 Proper procedures were not followed for the salary increase.
The findings indicate abuse of powers by the Secretary.

Hence the salary increase approved by the Secretary was unauthorised.

Recommendation The Fund Committee should investigate the matter and take appropriate action for unauthorized salary increase to Fund’s staff.

Management Comments No comment received from the Fund.
7 General Orders 2011, Section 406 Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 8.7 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.8 The audit noted that the Fund did not prepare its annual financial statements for the year ended 31 December 2011under IFRS for SME’s.

The IFRS for SME’s has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.

Thus, the annual financial statements prepared by the Fund are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.
Recommendation The Fund should work towards the adoption of IFRS for SME’s in preparing the financial statements.

Management Comments No comment received from the Fund.
8.8 Fund’s Budget The Secretary and the Assistant Secretary will examine current year expenditure and forecast likely expenditure for the following year taking into account the level of expenditure during the current year.9 Estimates should take into account likely numbers of recipients for the following year, forecasted cola allowances, and staffing, in addition to administrative costs under the parameters of the Annual Corporate Plan.10 The Secretary must ensure that expenditure for the current year is incurred within the approved amount set in the budget.11 The Fund did not have a budget for the year 2011.
According to the Assistant Secretary, Mrs. Vasiti Fuli the approved budget was misplaced by the Fund.

The Fund did not have the budget for the year 2010 either and provided similar reason during the audit of 2010 accounts.

The audit is of view that the Fund may not have prepared the budget at all.

Due to laxity and poor record keeping the Fund was not able to provide budget for audit purposes.

As a result the audit could not ascertain whether the expenses incurred by the Fund were actually budgeted for.
The finding shows poor control over expenditure by the Fund.

In the absence of a budget the Fund would not be able to control over expenditure.
8 Fiji Institute of Accountants Annual Report for 2011, Page 14 9 Financial Management Procedure Manual – Fiji Servicemen’s After-Care Fund, Section 1.2 10 Financial Management Procedure Manual – Fiji Servicemen’s After-Care Fund, Section 1.3 11 Financial Management Procedure Manual – Fiji Servicemen’s After-Care Fund, Section 2.3 Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Recommendations The Fund committee should:   investigate whether the budget for 2011 was prepared by the Secretary; and take appropriate action against the Secretary for not maintaining a budget.
Management Comments No comment received from the Fund.

8.9 Anomalies in Finance Manual Finance Manual generally contains pertinent accounting rules and other information for a business or organization.

It provides accounting procedures and guidelines to be followed to ensure consistency and control for organisations operations.
The audit noted that the Finance Manual used by the Fund does not stipulate procedures for receipting cash, banking revenues, the rate for study allowance, education eligibility and maximum re- imbursement for medical.

The Fund had also implemented Mind Your Own Business (MYOB) accounting software.

However the Funds Finance Manual was not reviewed to include the accounting procedures required for using MYOB.
The finding shows that the Funds Finance Manual has not been reviewed since its adaptation in 2001.

The weaknesses noted in the Manual may result in inconsistency in accounting procedures adopted and inadequate controls.

Recommendation The Fund should review its Finance Manual to include the accounting procedures required for using the MYOB.

Management Comments No comment received from the Fund.
8.10 Transfer of Funds The Committee in its meeting on 18/11/09 endorsed that $60,000 be transferred from the Main Account (ANZ Account Number 8519427) to Operational Account (ANZ Account Number 10420592) each month to cater for administration costs.

The audit noted the following anomalies in the transfer of funds.

 Based on the Committees approval for monthly transfer of $60,000 the total funds to be transferred per year should be $720,000.
However the Fund transferred a total of $914,949.65 in 2011 from the Main account to Operating.

The Fund did not seek the approval from the Committee for the transfer of funds in excess of $720,000.

Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014  The transfer of $60,000 per month from the Main account to Operating account could only be authorised by Committee of Management.
However out of a total of $914,949.65 transferred to the Operating account in 2011 total of $906,445.69 was authorised by the Assistant Secretary who did not have the authority to transfer of funds.

The above findings indicate that the Fund did not follow proper procedures for transfer of funds.

As a result, the funds transferred in excess were $60,000 per month were unauthorised.
Recommendations The Fund should ensure that: the approval limit for the amount to be transferred is adhered to at all times; and   appropriate disciplinary action is taken against the Assistant Secretary for transferring funds in excess of her authorised limit.

Management Comments No comment received from the Fund.
8.11 MYOB Accounting System In 2010, the Fund engaged Datec Fiji Limited for the supply and installation of Mind your Own Business (MYOB System) Accounting Software at a total cost of $5,182.20.

The software was installed by the Fund to automate its financial record keeping and reporting.

As at the date of audit12, the Fund entered its financial data in the MYOB System till February, 2011 only.

The Fund is yet to enter the financial data from March 2011 onwards.
Failure to fully utilize the MYOB System has resulted in the delay in preparation of the financial statements for the years 2011 to 2013.

Due to poor supervision and monitoring by the Assistant Accounts Officer, posting of financial data into the MYOB System was not done beyond March 2011.

The finding indicates that the Fund has not obtained value for money it invested in the MYOB System.
Recommendation The Fund should ensure that financial data is posted up to date in the MYOB System to prepare outstanding financial statements.

Management Comments No comment received from the Fund.
12 2/10/14 Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_______________________________________2014 SECTION 9: FIJI HIGHER EDUCATION COMMISSION Programme Statement The Fiji Higher Education Commission was established on 14 October 2008 under the Higher Education Commission Promulgation (Promulgation No.

24 of 2008).
The functions of the Commission are to:  Register and regulate higher education institutions according to the provisions of the promulgation;  Foster and safeguard the national interest, the interest of students and parents, and also of local higher education providers;  Establish national standards for different qualifications;  Oversee the review process of higher education institutions;  Provide assurances that the programme developed by the institutions meet national standards;  Promote the development of Fiji as a knowledge society;  Allocate government funds marked for higher education annually to higher education institutions according  to a transparent and well-publicised criteria for allocation; Foster co-operation among higher education institutions and linkages between higher education institutions and industry;  Maintain a database of higher education information;  Develop or cause to be developed an academic broadband facility for use by higher education institutions; and  Make recommendations to the Minister with respect to issues consistent with its functions including special projects.
Table of Content 9.1 9.2 9.3 SECTION 9: FIJI HIGHER EDUCATION COMMISSION ........................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 Audit Opinion ........................................................................................................................................................... 1 Abridged Statement of Financial Performance ........................................................................................................ 2 Abridged Statement of Financial Position ................................................................................................................ 2 PART B – CONTROL ISSUES ................................................................................................................................................... 2 9.4 Non-Adoption of International Financial Reporting Standards for Small ................................................................. 2 Medium Entities (IFRS for SME’s) ......................................................................................................................................... 2 Financial Statements ............................................................................................................................................... 3 9.5 PART A – FINANCIAL INFORMATION 9.1 Audit Opinion The audit of the financial statements of the Fiji Higher Education Commission for the year ended 31 December 2013 resulted in the issue of a Disclaimer of Opinion.
The Financial Statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium Entities (IFRS for SMEs).

The Commission was yet to comply with IFRS for SMEs as required for general purpose financial statements.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_______________________________________2014 9.2 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant Fiji National University (FNU) Grant Total Receipts Payments Employee cost Consultancy expenses Allowances Standard setting committees Travel and Subsistence Training facilities and materials Equipment and Furniture Other Expenses Total Payments Surplus for the year 2013 ($) 2012 ($) 1,305,000 1,305,000 651,558 653,475 1,305,033 626,816 13,137 79,221 - 45,690 - 122,081 124,392 1,011,337 293,663 509,283 177,985 41,807 15,272 43,363 2,200 - 162,416 952,326 352,707 The Commission recorded a surplus of $293,663 in 2013 compared to $352,707 in 2012.
The decrease in surplus was due to the increase of expenditure by $59,011 or 6%.

9.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash at Bank and on hand Total Assets Accumulated Funds 2013 ($) 2012 ($) 981,180 981,180 981,180 687,517 687,517 687,517 The Commission’s cash at bank increased by $293,663 or 43% in 2013 compared to 2012 due to increase in Government Grant.
PART B – CONTROL ISSUES 9.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.

The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Commission did not prepare its financial statements for the year ended 31 December 2013 under IFRS for SMEs.
The IFRS for SMEs has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.
1 Fiji Institute of Accountants Annual Report for 2011 – page 14 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_______________________________________2014 Thus, the annual financial statements prepared by the Commission are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.

Recommendation The Commission should work towards the adoption of IFRS for SMEs in preparing the financial statements.
Commission’s Comments The recommendation raised has been duly noted.

The commission had prepared its financial statements in accordance with Fiji Accounting Standards for its accounts for the year ending 31st December 2013.

As a new approach FHEC has started transiting to accrual accounting for the current financial year, 2014.

FHEC will also be presenting its financial accounts for the year 2014 in accordance with IFRS for SME’s.
9.5 Financial Statements An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

On the accrual basis, items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definitions and recognition criteria for those items.2 The audit noted that the financial statements for the Commission as at 31 December 2013 were prepared under the cash basis of accounting.
Hence the effects of the transaction were not recognised when they occurred and they were not reported in the financial statements.

This also resulted in items such as property, plant and equipment, accounts receivable, accounts payable and prepayments not reported in the financial statements.

The Commission’s financial statements for the year ended 31 December 2013 do not reflect the true financial position of the Commission.
Recommendation The Commission should prepare its financial statements on accrual basis of accounting in future.

Commission’s Comments The Commission agrees with the recommendation to transit to the accrual basis of accounting and to implement the change effective for reporting of the financials for year 2014.

As eluded above, we have started the necessary transition towards accrual accounting in this current financial period 2014.
The Commission is, however, of the stand that in the circumstances whereby its financials for 2013 were reported under cash basis of accounting, the financial reported is a true reflection to that extent, acknowledging the indicated shortcomings of the reporting system used for 2013.
2 Guide for Micro-Sized Entities Applying the IFRS for SMEs (2009) Section G 12 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI____________________________________2014 SECTION 10: MARITIME SAFETY AUTHORITY OF FIJI Programme Statement The Maritime Safety Authority of Fiji acts as a regulator, responsible for Fiji’s maritime safety, protection of the marine environment and regulation of search and rescue and hydrographical services.
The Authority transitioned from a Government Department to a Commercial Statutory Authority in 2011 through the Maritime Safety Authority of Fiji Decree 2009.
Table of Content SECTION 10: MARITIME SAFETY AUTHORITY OF FIJI ...................................................................................................1 PART A – FINANCIAL INFORMATION ................................................................................................................................1 10.1 Audit Opinion 2013 ...............................................................................................................................................1 10.2 Abridged Statement of Comprehensive Income ..................................................................................................1 10.3 Abridged Statement of Financial Position ............................................................................................................2 PART B - CONTROL ISSUES ..............................................................................................................................................3 10.4 Treatment of Government Grants ........................................................................................................................3 PART A – FINANCIAL INFORMATION 10.1 Audit Opinion The audit of the financial statements of the Maritime Safety Authority of Fiji for the year ended 31 December 2013 resulted in the issue of a qualified audit report.
The issue qualified is as follow: The Authority in accordance with a circular issued by the Ministry of Public Enterprises accounts for all government grants received from 1 January 2011 as capital contributions.
This was a departure from the International Financial Reporting Standard (IFRS) for Small and Medium–sized Entities (SME) Section 24 – Government Grants which requires government grants to be recognized in profit or loss as income when grant proceeds are receivable or when performance conditions are met.
Had the Authority complied with IFRS for SMEs, the impact would be an increase in income and retained earnings by $4,931,299 and $13,769,039 respectively and reduction in capital contribution by $13, 769,039.
10.2 Abridged Statement of Comprehensive Income For the Year ended 31 December Revenue Qualification and Licensing Standard and Compliance Light Dues Other Income Total Revenue 2013 ($) 2012 ($) 273,717 364,544 618,048 38,362 1,294,671 319,280 334,458 545,674 96,509 1,295,921 Report of Statutory Authorities –December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI____________________________________2014 For the Year ended 31 December Expenditure Staff Cost Administration Expenses Depreciation Expenses Other Operating Expenses Total Expenditure Total Comprehensive Loss 2013 ($) 2012 ($) 1,774,897 420,516 576,948 921,372 3,693,733 (2,399,062) 1,695,453 294,605 514,350 707,582 3,211,990 (1,916,069) Total expenditure increased by 15% or $0.48 million in 2013 compared to the previous year.
This was attributed to the Authority continuing to establish/enhance its systems and processes after assuming its full roles and responsibilities in 2012 and conducting extensive stakeholder awareness.

Had the Authority recognised government grants in accordance with IFRS for SMEs, the result would be a net surplus.
10.3 Abridged Statement of Financial Position As at 31 December Assets Cash & Cash Equivalents Trade and Other Receivables Prepayments and Deposits Property, plant & equipment (Non-current) Total Assets Liabilities Trade and Other Payables Provision for employee entitlement Total Liabilities Net Assets Equity Capital Contribution Accumulated Funds Total Equity 2013 ($) 2012 ($) 4,430,464 583,676 53,262 5,819,860 10,887,262 3,622,203 239,037 648,463 3,953,135 8,462,838 190,591 98,044 288,635 10,598,627 332,108 64,340 396,448 8,066,390 13,769,039 (3,170,412) 10,598,627 8,837,740 (771,350) 8,066,390 The increase in net assets by $2.5 million was largely due to the increase in assets, specifically, cash & cash equivalents, trade and other receivables and property, plant and equipment.
The Authority acquired additional Aids to Navigation amounting to $1.6 million.

Increase in government grant received by the Authority by $0.9 million also contributed to the increased cash at bank balance at year end.
Report of Statutory Authorities –December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI____________________________________2014 PART B - CONTROL ISSUES 10.4 Treatment of Government Grants The objective of IFRS for SMEs section 24 Government Grants is to prescribe the accounting and reporting for government grants and the disclosure of other forms of government assistance.
An entity shall recognize government grants as follows: a) a grant that does not impose specified future performance conditions on the recipients is recognized in income when the grant proceeds are receivable; b) a grant that imposes specified future performance conditions on the recipient is recognized in income only when the performance conditions are met; and c) grants received before the income recognition criteria are satisfied are recognized as a liability.1 The Authority has assessed its accounting policy with regards to the recognition of government grants based on the circular issued by the Ministry of Public Enterprise on 14/03/13.
The circular stated that any recent government grant or special funding to State Owned Enterprises be treated as capital contribution rather than revenue from the year 2010 onwards in accordance with Cabinet Decision No, 357 of 2012.

The Authority’s records indicate that had it complied with IFRS for SMEs Section 24 – Government Grants, for the year ended 2013 the impact would be an increase in income and retained earnings by $4,931,299 and $13,769,039 respectively and reduction in capital contribution.
Recommendation The Authority should consider reviewing its accounting policy in respect of accounting of government grants including assessing and correcting the treatments made in previous years.

Authority’s Comments MSAF duly acknowledges the Auditor General’s recommendations and advises as follows: The Authority is in the process of officially writing to the Permanent Secretary of Ministry of Public Enterprise to inform them to reconsider the decision on the treatment of grants.
The intention is to ensure that Section 24 is complied with.

If the decision is reconsidered by the Ministry, all adjustments for prior years will be reflected in the 2014 financial reports.
1 Section 24 – Government Grant - IFRS for SMEs Report of Statutory Authorities –December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014 SECTION: 11 KOROVOU RURAL LOCAL AUTHORITY Programme Statement The Korovou Rural Local Authority is established under section 10 of the Public Health Act.
The Authority is responsible for the provision of sanitary services such as garbage collection, the operation of market, community centre and public health projects.

The Authority charges garbage fees, market fees, and other charges to meet the costs of these services.
Table Of Content 11.1 11.2 11.3 SECTION: 11 KOROVOU RURAL LOCAL AUTHORITY ................................................................................................ 1 PART A – FINANCIAL INFORMATION ............................................................................................................................ 1 Audit Opinion - 2011 ....................................................................................................................................... 1 Abridged Income Statement 2011 .................................................................................................................. 1 Abridged Balance Sheet 2011 ........................................................................................................................ 2 PART B: CONTROL ISSUES............................................................................................................................................ 2 11.4 Basis of Accounting and Disclosure of Assets and Liabilities ............................................................................ 2 11.5 Payment Vouchers not provided for audit review ............................................................................................... 3 11.6 Non-preparation of Bank Reconciliations ........................................................................................................... 3 11.7 Anomalies in Revenue Collection Process......................................................................................................... 4 PART A – FINANCIAL INFORMATION 11.1 Audit Opinion - 2011 The audit of the financial statements of the Korovou Rural Local Authority for the year ended 31 December 2011 resulted in the issue of a disclaimer audit opinion as follow: Appropriate accounting records to verify the amounts stated in the Authority’s financial statements for the year ended 31 December 2011 were not made available for audit.
11.2 Abridged Income Statement 2011 Year Ended 31 December Revenue Market Fees Government Grant Other Income Total Revenue Expenditure Sanitary Services Market Services Administration and General 2011 ($) 2010 ($) 33,335 10,000 6,460 49,795 26,317 39,711 3,536 40,428 25,000 5,937 73,377 17,075 40,046 4,834 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014 Year Ended 31 December Total Expenditure Result for the year from Ordinary Activities 2011 ($) 69,564 (19,769) 2010 ($) 61,955 11,422 The Authority recorded a deficit of $19,769 in 2011 compared to a surplus of $11,422 in 2010.
This was due to the decreases in government grant by $15,000 (60%) and market fees by $7,093 (18%) compared to year 2010.
11.3 Abridged Balance Sheet 2011 As at 31 December Current Assets Cash at Bank Other Receivables Total Assets Accumulated Funds Opening Balance Net Surplus/(Deficit) Total Accumulated Funds 2011 ($) 2010 ($) 1,620 7,530 9,150 28,919 (19,769) 9,150 28,919 0 28,919 17,497 11,422 28,919 The decrease in total assets was due to decrease in cash inflow from the Authority’s operation through decrease in government grants and market fees revenue.
PART B: CONTROL ISSUES 11.4 Basis of Accounting and Disclosure of Assets and Liabilities Before 1st April in each year, the local Authority shall deliver to the Auditor General a statement of account, known as the Sanitary Services Account, showing all moneys received and expended in respect of its nightsoil or garbage removal services for the year ended on the immediately preceding 31 December, together with a balance sheet as at that date.1 The Authority has adopted the cash basis of accounting for financial reporting for the year ended 31 December 2011.
The audit noted that the Authority have yet to recognize its properties, equipment, debtors, creditors and prepayments into the balance sheet as required under section 52 Regulation 7(4) of the Public Health (Sanitary) regulation.

In addition, the Statement of Revenue and Expenditure has also yet to account the revenue not yet received, prepayments (if any) and expenditure not paid at balance date.
Therefore the balance sheet for the year ended 31 December 2011 is limited as the Authority's assets and liabilities are not fully disclosed.
1 Public Health (Sanitary) Regulation, Section 52 Regulation 7(4) Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014 Recommendation The Authority should comply with section 52 regulation 7(4) of the Public Health (Sanitary) Regulation as the balance sheet should have information detailing all assets and liabilities which is a reflection of the financial position for the Authority at a point in time.
Management Comment No comment received from the Authority.
11.5 Payment Vouchers not provided for audit review The Management of the Authority are responsible for the preparation and fair presentation of the financial statements in accordance with generally accepted accounting principles which include designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material miss-statements, whether due to fraud or error, selecting and applying appropriate accounting policies.
The presence of a reliable and easy to follow audit trail is an indicator of good internal controls.

The Authority during the audit was unable to furnish the payment vouchers for the months from March to December 2011 for audit.
During our email discussions with the Authority who revealed that the payment vouchers have been misplaced by the Central Board of Health Internal Auditors.2 Furthermore, audit noted that the Central Board of Health (CBH) internal auditor had migrated without handing over the investigation papers and the investigations could not proceed.
The absence of an audit trail hindered the progress of the audit as the Authority was trying to locate those payments vouchers and supporting documents kept with Central Board of Health.

Recommendation The Central Board of Health should take initiative to secure any records taken from the Authority and kept in a secured place as it has compromised the investigations.
The Authority should request Central Board of Health to complete its investigation and resolve the allegation of misappropriation of funds and report them to Police if there are elements of fraudulent intentions.

Management Comment No comment received from the Authority.

11.6 Non-preparation of Bank Reconciliations 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 officer3.
2 Email from Vakaruru (Secretary of Korovou Rural ) dated 07/10/13 3 Finance Instructions 2010 - Regulation 32(6) Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014 The audit noted that the Authority failed to prepare monthly bank reconciliations for its Sanitary and Market account for the year ended 31 December 2011.
Refer to Table 11.1 for details: Table 11.1: Non Preparation of Bank Reconciliation Bank Name Account Name Account No.

Bank of South Pacific KRLA – Sanitary Account KRLA – Market Account 1201649 1201650 Total Balance as at 31/12/11 ($) 9,125 25 9,150 In addition, audit noted that there was an unaccounted cash of $7,530 between the cash book and the bank statement records for the year 2011.
Refer to Table 11.2 below for details: Table 11.2 Variances in Cash book reconciliation Cash book Variance Cash at Bank as at 01/01/11 Add Receipts Less Payments Cash at Bank as at 31/12/11 Less Closing balance as per bank statement as at 31/12/11 Variance ($) 28,919 49,795 (69,564) 9,150 1,620 7,530 This implies on the laxity of supervising Officer at the Accounts section to prepare monthly bank reconciliations.
Non-preparation of monthly bank reconciliation could lead to financial frauds being undetected.

Recommendations   The Council should ensure that monthly bank reconciliations are prepared for all bank accounts and supervisors carry out surprise cash count and review the work of officers on a weekly basis.

The Authority should investigate the variance of $7,530 and put in control measures to minimize the risk of theft and misappropriation of Authority funds.
Management Comment No comment received from the Authority.

11.7 Anomalies in Revenue Collection Process An official government receipt must be issued for all monies received4.

For internal control purpose, a cancelled receipt should be marked “cancelled” and retained in the receipt book.
4 Finance Instruction 2010 – Regulation (20)(6) Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014 The revenue collector should maintain a cashbook to record the cash receipts and payments detailing the dates of receiving cash, receipt number and amount.

For expenditure, details includes name of payee, voucher number and amount should be recorded.
The following anomalies were noted in the revenue collection process:  The Authority maintained two receipt books which has the same receipt numbers.

The audit noted that signatures on the original receipt books were issued by the Market Master while the duplicate books were issued by the former Clerk, Seini Wati for revenue collection purposes.

For details of receipt book refer Table 11.3 below.
Table 11.3 Duplicate Receipt Books Receipt Numbers Number of Books Collection Original Book ($) Collection Duplicate Book ($) 44501-44600 44601-44700 44701-44800 44801-44900 44901-45000 Total 2 2 2 2 2 10 310.50 279.60 262.80 279.60 310.50 350.70 351.60 373.60 361.20 378.40 1,443.00 1,815.50  Moreover, audit noted that the receipt numbers 44858 and 45001 were cancelled without being retained in the book;  The audit noted that the cash book transactions dates did not correlate with the saving bank account transactions.
The cashbook recorded the fees collected transactions for the month from 04 January 2011 to 19 August 2011 whilst the saving bank passbook showed that the bank transactions dates were between 4 January 2011 to 12 April 2011, then from 1 September 2011 to 29 December 2011.

Moreover, the Authority could not provide an explanation for these variations in dates for these accounting records.
The practice adopted by the Authority is viewed with suspicion and misappropriation of funds cannot be conclusion unless a detailed investigation is carried out.

The above anomaly implies poor control over revenue system and the lack of supervisions to the officer responsible for revenue collection and recording the cash books.

Recommendations     The Authority should ensure that official receipts are issued to customers upon receipt of monies.
The Authority should cancel revenue receipts with same numbers and these be destroyed accordingly under proper supervision to certify that the books have been destroyed.

The Authority must ensure that all cancelled receipts are attached in the receipt books.

The Authority should ensure that all revenues collected from the use of the market space and public convenience is accurately accounted.
Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_________________________________2014  The Authority should carry out an investigation against the former officers responsible for revenue collection and report them to Police for an investigation.

Management Comment No comment received from the Authority.
Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 12: NATIONAL FIRE AUTHORITY Programme Statement The National Fire Authority (NFA) was established as a corporate body in 1994 under the National Service Act 1994.
The duties of the Authority are: integral        establish Fire Districts in the areas to which they cover and ensure that the District Fire Officer conforms to the NFA Act and maintains an efficient fire service having regard to the life and property, which he is under an obligation to protect and to the financial capacity of the district; coordinate the units of fire services for the purposes of fire protection, reinforcement at serious fire or other emergencies; encourage, supervise or carry out fire prevention activities and also experiment or research work with respect to fire service methods, equipment, organization or coordination with other services; establish courses of training and generally direct the training of the members the fire services; provide for the inspection of training of brigades, and for such degree of standardization of plan, equipment and training as it considers necessary for combined operations; inspect in relation to fire safety premises whether public or otherwise; arrange for obtaining, by inspection or otherwise, information required for fire fighting purposes with respect top the character of the building and other property in the Fire District and in any area in which the Authority is under an obligation to protect, the available water supplies, means of access thereto, and other material circumstances; provide consultancy services on fire fighting and fire fighting equipment and   Perform such other duties as the Minister may from time to time direct.
Table of Contents 12.1 12.2 12.3 SECTION 12: NATIONAL FIRE AUTHORITY ...................................................................................................................... 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ........................................................................................................................................................ 1 Abridged Statement of Financial Performance .................................................................................................... 2 Abridged Statement of Financial Position ............................................................................................................ 2 PART B – CONTROL ISSUES ................................................................................................................................................ 3 Fire Levy Received from Insurance Companies .................................................................................................. 3 12.4 Water Levy Received From Water Authority of Fiji .............................................................................................. 4 12.5 Absence of Contract Agreement for Tower Services ........................................................................................... 5 12.6 Variances between the General Ledger (GL) and Fixed Asset Register (FAR) ................................................... 6 12.7 Idle Scooters ........................................................................................................................................................ 6 12.8 12.9 Non Recording of Assets ..................................................................................................................................... 7 12.10 Unreconcile Variance ........................................................................................................................................... 8 Inventory .............................................................................................................................................................. 9 12.11 PART A – FINANCIAL INFORMATION 12.1 Audit Opinion The audit of the financial statements of the Authority for the year ended 31 December 2011 resulted in the issue of an unqualified audit report.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 12.2 Abridged Statement of Financial Performance Year Ended 31 December Income Fire Levy Government Grant Other Income Total Income Expenditure Personnel Expenses Depreciation & Amortization Others Total Expenditure Net Surplus/(Deficit) for the Year 2011 ($) 2010 ($) 7,000,765 889,509 1,693,395 9,583,669 5,479,044 899,104 2,176,341 8,554,489 1,029,180 6,261,037 1,233,889 1,616,865 9,111,791 5,333,048 905,639 2,006,220 8,244,907 866,884 A surplus balance of $1,029,180 was realised from the Authority’s operation in 2011 compared to $866,884 in 2010.
This was largely due to increase in fire levy and other income by 12% and 5% respectively in 2011.
12.3 Abridged Statement of Financial Position As at 31 December Assets Cash & Cash Equivalents Trade & Other Receivables Inventories Property, Plant & Equipment Total Assets Liabilities Trade & Other Payables Employee Entitlement Deferred Revenue Total Liabilities Net Assets Accumulated Funds Retained Profits Total Accumulated Funds 2011 ($) 2010 ($) 2,103,881 1,670,141 145,372 5,693,335 9,612,729 1,049,612 185,066 130,395 1,365,073 8,247,656 1,165,678 1,473,806 80,849 5,918,499 8,638,832 986,571 425,805 7,980 1,420,356 7,218,476 8,247,656 8,247,656 7,218,476 7,218,476 The Authority’s retained profit improved by $1,029,180 or 14.2% in 2011 compared to 2010.
This was mainly due to increase in total assets by $973,897 or 11.2% and decrease in total liabilities by $55,283 or 3.9%.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 PART B – CONTROL ISSUES 12.4 Fire Levy Received from Insurance Companies The Minister may from time to time, after consultation with the Commissioner of Insurance and other person or persons he deems appropriate, make in such form and containing such details (including provision for the payment of interest) as he may determine, a levy order imposing a levy on any insurance policy or class of insurance policy written in Fiji and the amount payable under such levy order shall be paid to the authority at the time and manner specified in such levy order provided that a levy order may make different provisions in relation to different classes of insurance policies.1 According to the Insurance Policy Levy Order issued in 1995, the following prescribed fire service levy or individual contribution shall be charged for each class of insurance policy specified below, where the inception date is on or after the 1st day of August 1995: a) Commercial Fire Policies: all policies covering commercial (non-domestic) property for the peril of fire.
This will include fire, industrial all risks and contractors all risk policies.

Prescribed levy – 0.06% of the policy sum insured or total value of the property whichever is greater.

b) Domestic Fire Policies: all policies covering domestic property for the peril of fire.

This will include house owners, householders and contract works policies.
Prescribed levy – 0.06% of the policy sum insured or total value of the property whichever is greater.2 The Authority received a total of $7,000,764.21 from Insurance Companies for the year ending 31/12/11 as fire levy.

However, the audit noted that the Authority did not verify in any way to ascertain the amount paid by insurance companies was correct.

Refer to Table 12.1 below for details of amount received.
Table 12.1: Details of Fire Levy for 2011 Insurance Company Tower Insurance Queensland Insurance New India Marsh Dominion Insurance AON Sun Insurance Unity Brokers Labasa Town Council Total Fire Levy Fire Levy Received 2011 ($) 1,345,339.78 2,331,014.69 1,914,428.99 337,275.24 234,773.55 184,721.98 635,534.75 405.00 17,270.23 7,000,764.21 Under the current arrangement the Authority accepts the amount paid by the Insurance Companies as correct.
As a result audit could not ascertain whether the Authority was receiving the correct amount as fire levy from respective Insurance Companies.
1 National Fire Service Act, 1994 section 29 () Insurance Companies Contributions 2 Insurance Policy Levy Order - National Fire Authority Compliance and Levy Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Recommendation The Authority must verify the amount paid by Insurance Companies as fire levy to ensure correct amount is received.
Management Comments The Authority has an Audit and Compliance Officer who has been given the task to verify that insurance levy that is levied on any insurance policy or class of insurance policy written in Fiji and that such levy are correctly calculated and remitted to the Authority on a timely manner.

Currently we are maintaining records to all levies received and questioning the insurance companies on big variances.
We have met with some Insurance companies in relation to fire levy and expect to verify their records soon.

CEO had conducted random testing this year of some of the big organizations but full audits will be conducted in 2014.
12.5 Water Levy Received From Water Authority of Fiji In order to raise any amount required to be contributed by it towards the annual expenditure of the Authority, the Minister in consultation with the Authority may make and levy for that purpose a rate on each water meter from the owner or occupier of any premises within any fire district.
Provide that the owner of any property which is already under an insurance policy levy may apply to the Authority from exemption from any levy made under this section.3 The prescribed levy on each water meter shall be 50 cents per month as effective from the 1st day of August 1995.4 The Authority recognised total of $581,487 as Water Levy in the financial statements.

The audit noted that the Authority did not verify with WAF to ascertain that the correct amount was paid.
Under the current arrangement the Authority accepts the amount given by WAF for water levy as correct without any verification.

As a result audit could not ascertain whether the amount of Water Levy received from WAF was correct.

Recommendations The Authority should:  verify the amount paid by WAF as water levy to ensure that the amount received are  correct; and take general ledger balance into the financial statements.
Any adjustments to the ledger balances to be carried out through appropriate journals.

Management Comments As stated above, the Audit and Compliance Officer will be tasked to verify that the water levies are calculated on all water meters within fire boundaries and those levies are correctly calculated and remitted to the Authority on a timely manner.
NFA, WAF and MOF met and approved that WAF does a monthly reconciliation of their accounts and this is submitted with the approval for payment from the Ministry of Finance.
Monthly 3 National Fire Authority Service Act 1994, section 30 Levy on Water Meters 4 Levy on Water Meter Order, 1995 – National Fire Authority Compliance and Levy Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 reconciliations are submitted to NFA and payment is now received regularly.

Further verification will be done with the WAR prior to year end.
12.6 Absence of Contract Agreement for Tower Services Public Tenders to be called for goods and service in excess of $10,000.00.5 The Authority engaged the services of Elecom’s Tower Services since 2005 for its repeater rental which is installed at each fire station and fire trucks.

These enable communication over the air by the use of towers throughout Fiji.

The audit noted that the Authority does not have a valid contract agreement between the Authority and Elecom Services since 2005.
The audit further noted that the Authority continued to engage Elecom’s Tower services for its services in 2011.

A total of $41,085.69 was paid to Elecom Services in 2011 for the monthly repeater rental fee.

Refer to Table 12.2 below for payment details.
Table 12.2: Payment to Elecom Services Date 05/01/11 01/02/11 11/03/11 12/04/11 04/05/11 03/06/11 22/06/11 22/06/11 10/07/11 04/08/11 05/09/11 11/10/11 03/11/11 05/12/11 Total Cheque Number 36389 36692 36927 37351 37241 37554 37690 37690 37820 38005 38239 38515 38745 38951 Invoice Number 14595 15009 15022 15040 15050 15462 15040 15050 15472 15483 15491 15405 15410 15428 Amount ($) 3,585.70 3,450.00 3,450.00 3,000.01 3,000.00 3,000.00 449.99 449.99 3,450.00 3,450.00 3,450.00 3,450.00 3,450.00 3,450.00 41,085.69 Without a valid contract agreement it may be difficult to resolve any disputes that may arise between the parties.
Recommendation The Authority should draw up an agreement with Elecom for the provision of Tower services.

Management Comment Your comments are noted.

We have now tendered the provision of Tower service and are in the process of finalizing the agreement with the successful bidder.
5 Financial Instructions, National Fire Authority Section 6.2 (c ) Competitive Quotations/Tenders Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 12.7 Variances between the General Ledger (GL) and Fixed Asset Register (FAR) All amounts stated in the financial statements should be traced to general ledger balance.
The amount for property, plant and equipment in the general ledger should reconcile with the amount in the Fixed Asset register.

The audit noted that property, plant and equipment and the depreciation amounts recorded in in the general ledger and were not the same as the Authority’s Fixed Asset Register.

Refer to Table 12.3 below for details.
Table 12.3: Variances between GL/FS and FAR Assets Fire Tender Acc Depreciation – Fire Tender Communication Equipment Acc Depreciation – Communication Equipment Fire Fighting Gear Furniture & Fittings Acc Depreciation – Furniture & Fittings Computer Equipment Acc Depreciation – Computer Equipment Asset - Others Acc Depreciation – Asset Others GL/FS Figure ($) 4,235,320 (2,472,339) 545,650 (422,667) 1,540,664 144,750 (126,995) 199,642 (139,608) 226,022 (184,620) FAR Figure Variance ($) 4,233,422 (2,471,774) 546,640 (423,318) 1,540,493 145,069 (127,067) 199,383 (139,692) 240,965 (183,721) ($) 1,898 565 (990) (651) 171 (319) (72) 259 (84) (14,943) 899 The audit also noted that the amount for most of the property, plant and equipment stated in Note 8 of the financial statements did not match with the amounts stated in the FAR.
The amount in Note 8 of the financial statements was from the general ledger.

The variances indicate that general ledger balance for property, plant and equipment are not reconciled with FAR.

Recommendations The Authority should:   ensure that all assets are properly recorded in the general ledger and the fixed assets register; and the property, plant and equipment balance in the general ledger is reconciled with FAR.

Management Comments Your comments are noted.


We note that there is difference between GL and FAR and that this relates to prior years which we will rectify in our 2012 audit.

12.8 Idle Scooters In 2011, the Authority acquired 8 Scooters at a total cost of $13,913.

The Scooters were distributed to the Fire Stations in the various divisions and 2 of them were kept at Headquarters.
Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 The audit at Headquarters on 24/07/13 revealed that 2 Scooters were not in working condition.

Discussion with the Plant Manager revealed that the Scooters were of inferior quality and were in operation for only a few months.

The Scooters distributed to the other divisions had similar problems.
In addition the audit noted that the Scooters valued at $13,913 were included in the FAR even though it was impaired.

The Authority was not able to provide any details about the purchases of scooters for verifications.

As a result audit could not be established whether proper procurement procedures were followed.

Recommendation The Authority should investigate the purchase of scooters and take appropriate action Management Comments Your comments are noted.
We will investigate the purchase of the scooters and if necessary and possible take necessary action since there has been a change in the management staffs.

12.9 Non Recording of Assets Either on the satisfactory receipt of newly purchased goods or transfer of existing assets, the relevant cost centre manager must ensure that the relevant asset register has been updated with the required information.6 On 06/05/11, the Authority purchased 20 Breathing Apparatus costing $47,739.
The audit noted that the items were neither updated in the asset register nor in the General Ledger.

The 20 Breathing Apparatus were not included in Note 8, Property, Plant and Equipment in the financial statements.

As a result total asset was understated in the financial statements by $47,739.

The above indicates poor control over stores and there is a high risk of misappropriation of stores.
Recommendation The Authority should ensure that all assets acquired are properly recorded in the Asset Register and the General Ledger to be updated accordingly.

Management Comments Your comments are noted.

As stated above, for any purchases or release of items from the stores staff personal, station and inventory stock cards are now utilized and items procured and or released from the stores, the stock cards are appropriately updated.
6 Finance and Accounting Directions, section 9.4.1 Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 12.10 Unreconcile Variance The general ledger amounts in the financial statements should match with amounts recorded in the general ledger at balance date.

Any variance between ledger balance and the subsidiary record should be reconciled.
The audit noted variance in some of the accounts balance and the general ledger balance or the reconciliation balance.

These include:  A variance of $107,105 in VAT amount between the Authority’s general ledger amount and audit reconciliation.

The Authority recorded a VAT Receivable of $10,847 in the financial statement whereas the audit reconciliation had a VAT Payable of $96,258.
 A variance of $8,797.50 in Trade Debtors amount between the Authority’s general ledger amount and the amount stated in the aged receivables.

The Authority’s general ledger showed a balance of $401,350.01 whereas the Aged Receivables had a balance of $410,147.51.

The amount ($401,350) was recorded in the financial statements.

 The Authority recorded a Prepayment of $68,136 in the balance sheet.

Included in the Prepayment is an “Adjustment to 2010 opening $8,872.73”.
The Authority was not able to provide the details of the adjustment for audit verifications.

 The Authority recorded a Prepayment of $68,136 in the balance sheet.

Included in the Prepayment was a prepayment to Aon Medical Insurance of $53,043.

However out of this $17,289 was paid in 2012 and not prepaid in 2011.

As a result the Prepaid Insurance was overstated by $17,289 in 2011.

The Authority did not adjust the amount despite audit advised to adjust this amount.
The above shows that reconciliations were not carried out by the Authority on a regular basis which resulted in the variances.
Recommendations The Authority should ensure that:  reconciliations are carried out for VAT paid and received and adjust the account accordingly;  debtors aging is properly carried out;  all adjustments made is supported by the proper evidence and documentation and adjustments made with proper disclosures; and  The Prepaid Insurance amount is adjusted to report true amount for prepaid insurance.

Management Comment Comments are noted.


We will carry out necessary monthly reconciliations now and do the necessary adjustments on a monthly basis.

We are also willing to adjust the 2011 financial statements if need be.

Report of Statutory Authorities – December 2014 Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 12.11 Inventory Tally cards should be maintained to record all inventories purchased and issued.
Tally cards should be updated when inventors are received or issued.

The audit also noted that no record such as tally card was maintained for inventory at the Communication Department.

The audit further noted that no stocktake was carried out for inventories at Communication department, Transport – others and Transport – Rubia in 2011.
As a result audit cannot ascertain whether the inventory amounts for the Communication department ($89,585), Transport – others ($1,405) and Transport – Rubia ($1,228) recorded in the general ledger and the financial statements were correctly stated.

Recommendations The Authority should ensure that;  proper records are maintained for all inventories; and  stocktake is carried out at year-end and a report maintained.

Management Comment Your comments are noted.


Due to the items being kept by different departments, it was assumed that Department heads would have had conducted the yearly stock take but unfortunately.

We now are conducting our Annual Stock Take to ascertain that the records are properly maintained and there are if any minimal stock loss.
Report of Statutory Authorities – December 2014 Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 13: NATIONAL SUBSTANCE ABUSE ADVISORY COUNCIL Programme Statement The National Substance Abuse Advisory Council is a statutory body that was enacted in Parliament on 12 May, 1998 and launched on March 1, 1999.
This is in recognition of the growing incidence of drug and substance abuse in the country and the detrimental effects it has on health, our society and the economy.

The Council is responsible to the Government for developing a comprehensive substance abuse prevention education and research effort in Fiji under a grant to the Ministry of Education from the Ministry of Finance.
The primary objectives of the Council are to:  Promote a healthy lifestyle and safer drinking practices, and the development and promotion of actions and advice which will reduce alcohol-related and substance abuse problems for the nation; and  Implement strategic plans which will promote health awareness attitudes, collate and disseminate information and statistics on the prevalence of use and abuse of substances, produce publications and researched reports and advise government on policies to reduce problems related to the abuse of alcohol and other substances.
The activities being conducted at present are funded by the World Health Organisation, as government funding is limited to remuneration Table of Contents SECTION 13: NATIONAL SUBSTANCE ABUSE ADVISORY COUNCIL ............................................................................. 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ........................................................................................................................................................ 1 Abridged Income Statement ................................................................................................................................. 1 Abridged Balance Sheet ....................................................................................................................................... 2 PART B – CONTROL ISSUES ................................................................................................................................................ 2 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) ....... 2 13.1 13.2 13.3 13.4 PART A – FINANCIAL INFORMATION 13.1 Audit Opinion The audit of the financial statements of the National Substance Abuse Advisory Council for the year ended 31 December 2013 resulted in the issue of a Disclaimer of Opinion.
The Financial Statements were required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium Entities (“IFRS for SMEs”).

The Council was yet to comply with IFRS for SMEs as required for general purpose financial statements.
13.2 Abridged Income Statement Year Ended 31 December Revenue Government Grant 2013 ($) 2012 ($) 350,000 350,000 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Year Ended 31 December MOE Extra funding UN Women Miscellaneous Total Revenue Expenditure Payroll Expenditure Other Operating Expenses Capital Expenditure Total Expenditure Net (Deficit)/ Surplus for the year 2013 ($) 26,000 2,500 7,017 385,517 246,145 195,223 15,740 457,108 (71,591) 2012 ($) 0 50,847 4,660 405,507 207,536 111,692 16,536 335,764 69,743 The Council recorded a deficit of $71,591 in 2013 compared to a surplus of $69,743 in 2012.
This was mainly due to increase in payroll and other operating expenditures for the Council.

13.3 Abridged Balance Sheet As at 31 December Current Assets Cash at Bank Total Assets Accumulated Funds Opening Balance Net (Deficit)/Surplus Total Accumulated Funds 2013 ($) 2012 ($) 14,845 14,845 86,436 (71,591) 14,845 86,436 86,436 16,693 69,743 86,436 The Council’s cash at bank and accumulated funds decreased by $71,591 or 82.8% in 2013 compared to 2012.
This was mainly due to increase in total expenditure by $121,344 or 36%.

PART B – CONTROL ISSUES 13.4 Non-Adoption of International Financial Reporting Standards for Small Medium Entities (IFRS for SME’s) Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SME Standard from 1st January 2011, need to comply with that Standard.
The old Fiji Accounting Standards (FASs) have been withdrawn.1 The audit noted that the Council did not prepare its annual financial statements for the years ended 31 December 2013 under IFRS for SMEs.

The IFRS for SMEs has simplifications that reflect the needs of users of SMEs’ financial statements and cost-benefit considerations.

Thus, the annual financial statements prepared by the Council are contrary to the International Financial Reporting Standards for Small and Medium Sized Entities.
1 Fiji Institute of Accountants Annual Report for 2011 – page 14 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Recommendation The Council should work towards the adoption of IFRS for SMEs for preparing the financial statements.

Council’s Comments The above recommendation is noted and the Council will work towards the adoption of IFRS for SMEs in preparing the Financial Statement.
Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 14: CIVIL AVIATION AUTHORITY OF FIJI Programme Statement The Civil Aviation Authority of Fiji (CAAF) is an aviation regulatory authority and is responsible to discharge its functions on behalf of the Fiji Government under its responsibility to the Chicago Convention on International Civil Aviation Organisation (ICAO).
The Authority regulates the activities of:       airport operators; air traffic control and air navigation service providers; airline operators; pilots and air traffic controllers, aircraft engineers, technicians and airports; airline contracting organisations; and international air cargo operations.
Table of Contents SECTION 14: CIVIL AVIATION AUTHORITY OF FIJI .............................................................................................................. 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 Audit Opinion ........................................................................................................................................................... 1 Abridged Income Statement .................................................................................................................................... 1 Abridged Balance Sheet .......................................................................................................................................... 2 Excessive leave entitlement .................................................................................................................................... 2 Travel allowance ...................................................................................................................................................... 3 14.1 14.2 14.3 14.4 14.5 PART A – FINANCIAL INFORMATION 14.1 Audit Opinion The audit of the financial statements of the Civil Aviation Authority of Fiji for the year ended 31 December 2013 resulted in the issue of an unqualified audit report.
14.2 Abridged Income Statement Year Ended 31 December Revenue Revenue from operations Government grant Other income Total Revenue Expenditure Administrative expenses Operating expenses Personal expenses Total Expenditure Operating loss before tax Income tax benefit/(expense) 2013 ($) 2012 ($) 1,386,172 300,000 381,862 2,068,034 (1,213,227) (580,073) (2,376,846) (4,170,146) (2,102,112) 1,420,928 1,018,045 300,000 451,614 1,769,659 (1,069,513) (633,316) (2,446,985) (4,149,814) (2,380,155) (658,711) Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Year Ended 31 December Net Loss after tax 2013 ($) (681,184) 2012 ($) (3,038,866) The Authority’s net loss declined by $2,357,682 or by 78% in 2013 compared to 2012.
This was mainly attributed to incurrence of income tax benefit of $1,420,928 in 2013 compared to income tax expense of $658,711 in 2012.

The Authority’s revenue from major operations increased by $368,127 or 36% in 2013 due to the increase in airworthiness, pilots/engineers licences and airport license fees.
14.3 Abridged Balance Sheet As at 31 December Assets Cash and cash equivalents Trade Receivables Investments Other current assets Income tax refundable Property, plant and equipment Other non-current assets Total Assets Liabilities Creditors and other payables Employee benefits Total Liabilities Net Assets Shareholders’ equity Reserves Retained Earnings Total shareholders’ equity 2013 ($) 2012 ($) Net assets of the Authority declined by $634,793 or 4.2% in 2013 compared to 2012.
This was mostly attributed to withdrawal of investments of $2,000,000 during the year to fund the Authority’s operations.

PART B – AUDIT FINDINGS 14.4 Excessive leave entitlement Annual leave should be liquidated regularly at times mutually agreed between the parties and no accumulation of leave shall be allowed beyond six months of the following year.1 The Authority owed a total of $132,673 to seven employees who have accumulated leave balance over 50 days.
Refer to Table 14.1 for details: 1 Annex 3 - General Terms and Condition of Service of the Contract of Service dated 1 July 2010 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Table 14.1: Staff with excessive accumulated leave balance Name EDP No.

Ajai Kumar Suresh Kumar David MacDonald Isei Tudreu Etuate Rakuro Jasmel Singh Theresa O Levestam Total 17042 17052 12064 17145 17050 17183 17177 No.
of leave days 149 177 160 81 59 70 69 Amount ($) 38,612 24,801 20,557 16,022 10,973 10,886 10,822 132,673 Accumulation of annual leave may affect the liquidity of the Authority in the future when the leaves benefits are en-cashed.

Recommendation The Authority should encourage its staff to utilise their leave when due.

Authority’s Comments The comment is noted.

The Authority has a leave plan and leave is continuously liquidated subject to exigencies of work.
Leave accumulated by David McDonald includes 135 days long service leave which he is entitled to under his existing Terms & Conditions of Service between CAAF and Fiji Public Service Association.

Some leave accumulated by Ajai Kumar and Suresh Kumar relate to a period when they could not be released as the housing estate which comprised of 224 tenants, was managed by the Authority.
14.5 Travel allowance Employees who owe any advance will have such outstanding advance recovered from personal claims submitted or from their pay if the advance is not cleared within fourteen days of return to the existing place of work.2 As of the date of the audit3 , the Authority had a balance of $16,776 for travel advance having not been cleared by the staffs of the Authority within fourteen working days of returning to the existing place of work.
Staff not clearing the funds on time may indicate that funds may have been misused.

Recommendation The Authority should follow up and effect recovery actions accordingly.

Authority’s Comments The comment is noted.

Staffs are paid allowances at the UNDP per diem rates which are based on fixed itinerary.

There is, therefore, no possibility of misuse of funds as no surplus other than the entitlement is paid.
There was only one instance where additional money was paid which arose from flight delay overseas and staff had to stay extra days.

Advances are reconciled monthly and followed up when staff return from overseas.

The requirement to lodge the claim within 14 days is for administrative expediency.
2 Civil Aviation Authority Finance Manual, Section 7.47 3 27 March 2014 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 15: RA RURAL LOCAL AUTHORITY Programme Statement The Ra Rural Local Authority and all other local authorities were established under section 10 of the Public Health Act (1985).
The Authority is responsible for the provision of sanitary services such as garbage collection, the operation of market, community centre and public health projects.

The Authority charges garbage fees, market fees and other charges to meet the cost of these services.
Table of Contents SECTION 15: RA RURAL LOCAL AUTHORITY ....................................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 15.1 Audit Opinion - 2010 ................................................................................................................................................. 1 15.2 Abridged Statement of Financial Performance ......................................................................................................... 2 15.3 Abridged Statement of Financial Position ................................................................................................................. 2 PART B – CONTROL ISSUES ................................................................................................................................................... 3 15.4 Reconciliation not prepared ...................................................................................................................................... 3 15.5 User pay toilet account .............................................................................................................................................. 3 15.6 Presentation of financial statements ......................................................................................................................... 4 PART A – FINANCIAL INFORMATION 15.1 Audit Opinion - 2010 The audit of the financial statements of the Ra Rural Local Authority (RRLA) for the six month period ending 30 June 2010 resulted in the issue of a qualified audit report.
The issues qualified are as follows:  The Statement of Revenue and Expenditure has been prepared using the cash basis of accounting and does not take into account revenues not received and expenditures not paid at balance date.

Similarly, the Statement of Financial Position does not incorporate debtors, prepayments, creditors and accruals and is therefore a limited statement of financial position contrary to section 7(4) of the Public Health (Sanitary Services) Regulations.
 The Authority did not perform bank reconciliation for User Pay and Grant Account for the period ended 30 June 2010.

Consequently, bank account balances for these two accounts could not be substantiated for completeness.

Accordingly, the audit was not able to confirm whether the cash at bank of $25,131 is fairly stated in the Statement of Financial position.
 The Authority failed to maintain proper records of its market fees, taxi and carrier fees, rent and hall hire revenue and garbage fees revenue for the period ended 30 June 2010.

Consequently, the audit was not able to perform necessary audit procedures to substantiate the completeness and accuracy of these revenues.

Accordingly, the audit was unable to confirm whether these revenue are fairly reported in the Statement of revenue and expenditure.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 15.2 Abridged Statement of Financial Performance Items Revenue Garbage fees Government grant Market fees Rent/Hire of Hall Taxi and Carrier fees User pay toilet Other revenue Total Revenue Expenditure Garbage contractor Materials & tools Salaries, wages and related payments Capital Other expenses Total Expenditure Net (deficit)/surplus balance for the year Period Ending 30 June 2010 ($) 2009 ($) 9,285 3,409 17,724 2,577 3,060 11,022 1,537 48,614 4,800 595 21,881 13,963 13,780 55,019 (6,405) 11,044 36,500 33,329 6,955 3,200 24,171 3,931 119,130 9,600 344 48,188 27,928 22,500 108,560 10,570 The Authority recorded a deficit of $6,405 as at 30 June 2010 compared to a surplus of $10,570 as at 31 December 2009.
The incurrence of a deficit is mainly attributed to the Authority’s operation being transferred to Rakiraki Town Council from 1st of July 2010.

Consequently, the income statement is only prepared for a period of 6 months.
15.3 Abridged Statement of Financial Position As at Assets Cash at bank VAT receivable Total Assets Liabilities VAT payable Total Liabilities Net Assets Accumulated Funds 30 June 2010 ($) 31 December 2009 ($) 25,131 - 25,131 1,516 1,516 23,615 23,615 29,951 69 30,020 - - 30,020 30,020 The Authority’s net assets position decreased by $6,405 or 21% for 2010 compared to 2009.

This is due to the Authority’s operation being transferred to Rakiraki Town Council from 1st of July 2010.
Consequently, the movement of assets and liabilities only reflect up to 30th of June 2010.

Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 PART B – CONTROL ISSUES 15.4 Reconciliation not prepared Reconciliation is the process of comparing and matching figures from the accounting records against those shown on third parties records.
Since there are timing differences between when data is entered in the third parties systems and when data is entered in the Authority's general ledger, there is sometimes a normal discrepancy between account balances.

Audit noted that the Authority did not perform any reconciliation for the following accounts.

Refer to Table 15.1 for details.


Table 15.1: List of Accounts Not Reconciled Account Name User Pay bank account Grant account VAT payable Balance as at 30 June 2010 15,914.70 6,554.60 1,516.00 Non preparation of above reconciliation exposes high risk of incorrect financial reporting.

Additionally, risk of mismanagement of funds is high.

Recommendation The Authority should ensure that reconciliation is prepared, reviewed and approved on a timely manner.
Authority’s comments Yes agreed and shall adhere to above, timely reconciliation is being done.
15.5 User pay toilet account For the purpose of any audit, an auditor may by notice in writing require any person holding or accountable for any books, records, accounts, vouchers, deeds, contracts or other documents which he may require for the purpose of such audit or examination to appear before him at the time and place specified in the notice and to produce any such document as aforesaid for his inspection.1 The Authority charges $0.20 to each person every time the public convenience at the market is used.
Before the daily cash collected is banked, the caretaker uses part of the revenue to pay for purchase of toilet papers and other materials for the daily operation of the public convenience.

Audit was not provided with the details of the expenses incurred during the six months period together with the relevant supporting documents to ascertain those expenses.

Refer to Table 15.2 for each month’s expense amount.
1 Local Government Act Section 52 (1) Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Table 15.2: Userpay monthly expenses as per General Ledger Month January February March April May June Amount $ (VIP ) 900.75 875.25 650.70 378.67 937.95 1,370.79 Total 5,114.11 The absence of a daily expense records with its supporting documents increases the risk of cash revenue being misused by the user pay toilet caretaker.
Recommendation The Secretary of the Authority should ensure that a daily expense record system is implemented and maintained by the user pay toilet caretaker and this record should be verified and signed off by the Secretary within a reasonable time ensuring its accuracy.

Authority’s comments All of above is now being handled by the Rakiraki Town Council 15.6 Presentation of financial statements A complete set of financial statements includes the following components: a.

Balance Sheet b.
Balance Sheet b.

Income Statement c. Statement showing either: i. all changes in equity ii.

changes in equity other than those arising from capital transactions with owners and distribution to owners d. Cash flow statements; and e. Accounting policies and explanatory notes Section 7 (4) of the Public Health Act states that the Authority shall deliver to the Auditor General a statement of account showing all monies received and expended together with a balance sheet.
The Authority adopted cash basis of accounting for financial reporting.

With the cash basis of accounting, the Authority has not disclosed in the financial statements the property plant and equipment debtors, creditors, prepayments and other accruals.

The financial statements for the year ended 30 June 2010 do not reflect the true financial position of the Authority; hence it is a limited statement of financial information.
Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Recommendations  The Authority should adopt accrual basis of accounting in order to fairly reflect the financial operations during the financial period.

 The Authority should comply with the requirements of the Public Health Act while preparing the financial statements to be sent to the Auditor General.
Authority’s comments Will adhere to this however local authority now does not do revenue collection.

Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 16: WESTERN DIVISION DRAINAGE BOARD Programme Statement The Western Drainage Board was established under the Drainage Act, 1973.
The Board is responsible for the maintenance and improvement of drainage of all land within the Western Division drainage area.

Furthermore, subject to any approval or consent which may be required under the Act, the Board may carry out such works and issue such orders concerning drainage works as it deems necessary for the improvement of drainage within the division.
The Board has powers to make, assess and levy rates required to cover the costs of improving, constructing and maintaining drainage works, the carrying out of any drainage measures and the operating costs of the Board.
Table of Contents SECTION 16: WESTERN DIVISION DRAINAGE BOARD ...................................................................................................... 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 16.1 Audit Opinion ........................................................................................................................................................... 1 16.2 Abridged Statement of Financial Performance ....................................................................................................... 1 16.3 Abridged Statement of Financial Position ............................................................................................................... 2 PART B – CONTROL ISSUES ................................................................................................................................................. 2 16.4 Non-Compliance to IFRS for SMEs ........................................................................................................................ 2 16.5 Variance between Contract Amount and Actual Claim ........................................................................................... 3 16.6 Valuation of Plant and Equipment ........................................................................................................................... 4 PART A – FINANCIAL INFORMATION 16.1 Audit Opinion The audit of the financial statements of Western Division Drainage Board for the year ended 31 December 2012 resulted in the issue of a disclaimer of opinion.
This was due to the following:  The financial statements submitted by the Board for the year ended 31 December 2012 was not prepared in accordance with the International Financial Reporting Standards for Small and Medium Enterprises (IFRS for SMEs) as required for general purpose financial statements.

Accordingly, the audit was not able to determine the impact on the financial statement of the Board, if any, adjustments which may be necessary if the financial statements were prepared under IFRS for SMEs.
16.2 Abridged Statement of Financial Performance Year Ended 31 December Income Government Grant 2012 ($) 2011 ($) 677,125 512,489 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Year Ended 31 December Other Income Total Operating Income Expenditure Wages and Salaries Vehicle and Maintenance Drainage Maintenance Other Expenditure Total Operating Expenditure Net (Deficit)/ Surplus for the year 2012 ($) 21,109 698,234 47,000 34,030 517,862 96,282 695,174 3,060 2011 ($) 8,966 521,455 56,180 21,988 364,577 52,318 495,063 26,392 The net surplus declined by $23,332 (88%) in 2012 compared to 2011 mainly due to the increase in the drainage maintenance expenses and other expenses by 42% and 84% respectively.
This is despite an increase in government grant by $164,636 or 32%.
16.3 Abridged Statement of Financial Position Year Ended 31 December Current Assets Cash Financial Assets – Term Deposits Receivables Total Current Assets Non Current Assets Property, Plant & Equipment Total Non Current Assets Total Assets Current Liabilities Creditors & Other Accruals Provisions Total Current Liabilities Total Liabilities Net Assets Total Accumulated Funds 2012 ($) 2011 ($) 276,355 132,684 16,911 425,950 11,742 11,742 437,692 151,737 3,541 155,278 155,278 282,414 282,414 200,113 127,314 7,812 335,239 18,259 18,259 353,498 71,580 2,564 74,144 74,144 279,354 279,354 Net assets increased by $3,060 or 1% in 2012 compared to 2011 due to the significant increase in cash balance despite an increase in creditors and other accruals by 112%.
The increase in cash balance was mainly attributed to increase in government grant in 2012.

PART B – CONTROL ISSUES 16.4 Non-Compliance to IFRS for SMEs Smaller accounting entities will, following Fiji Institute of Accountant’s adoption of the IFRS for SMEs from 1st January 2011, need to comply with that Standard.

The old Fiji Accounting Standards (FASs) have been withdrawn.
However, the new SME Standard will only apply to SMEs that1: 1 Fiji Institute of Accountants Annual Report 2011 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 (a) do not have public accountability; and (b) publish general purpose financial statements.
An entity with “public accountability” is defined as one whose debt or equity instruments are traded in a public market or one which holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.

Audit noted that the Board’s financial statements for the year ended 31 December 2012 were not prepared in accordance with the IFRS for SMEs.

As a result, the financial statements were not in accordance with the current reporting standards.
Recommendation The Board should ensure that its financial statements are prepared in accordance with the IFRS for SMEs.

Boards’ Comment The Board has noted the recommendation.

As advised by [contracted accounting firm] that the financial statements were prepared for the purpose of the Board’s financial reporting and auditing.

It was not prepared for FRCA hance they have not prepared in accordance with the IFRS and it would have been more costly.
The Board relied on the services of the Chartered accounting firm to prepare standard financial statements for reporting and advise the board accordingly about the new accounting standards and requirements.

[The Accounting firm] has been preparing the Board’s account for more than 10 years now.

The Board will ensure that the Fiji Institute of Accountants adoption of the International Financial Reporting Standards will be adhered to in future.
16.5 Variance between Contract Amount and Actual Claim The Western Division Drainage Board entered into four contracts for each year in 2011 and 2012 for the upgrading and maintenance and upgrading of drainage in the western division.

Refer to Table 16.1 below for details.
Table 16.1: Variance between Contract Amount and Actual Amount Contract Number WDDB 01/11 WDDB 02/11 WDDB 03/11 WDDB 04/11 Total WDDB 01/12 WDDB 02/12 WDDB 03/12 WDDB 04/12 Total Contract Sum ($) Claims ($) Variance ($) % of contract sum claimed Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Audit noted that the work carried out and total amount claimed by the Contractors were substantially less than the contract amount ranging from twenty to sixty per cent as shown in Table 16.1 above.
The amount claimed by contractors related to actual work being carried out.

The above indicates that proper feasibility study was not carried out on the scope and cost of drainage maintenance works.

Hence, information given out during the tender for contract works was misleading.

It also demonstrates that contracts were not properly monitored to ensure that payments and works are carried out in accordance with the signed contract.
Recommendation  The Board should ensure that contract payments and works are carried out in accordance with the signed contract terms and conditions.

 Proper justification should be provided for the variances noted above.
Management Comment When tenders are called in the daily newspaper seeking tenders from contractors and once the contractors pick the tender documents, they are aware through the ‘ Instructions to Tenderers’ that: ‘ the quantities set out in the Bill of Quantities are estimated only and their accuracy will in no way affect the validity of the contract based thereon.
The rate, prices and totals are required for the comparison of tenders received and will not necessarily represent the sum paid to the contractor for the execution of the work.

The actual sum paid will be determined by measuring the work executed in accordance with the contract and valuing at the rates or prices inserted by the Contractor in the Bill of Quantities.’ The Board has annual capital works budgets and all the maintenance works will be carried out within that budget.
The Board engineer will estimate the works and provide engineers estimate.

If the contractor tender in high rates, then certain works will have to be shelved in order to cater within the year’s allocated budget.

There will be variances.

However, the Board has noted the recommendations made and will ensure that works are not underestimated.

All the works were being carried out in accordance with the signed contract terms and agreement.
16.6 Valuation of Plant and Equipment The frequency of revaluations depends upon the movement in the fair values of the items of property, plant and equipment being revalue.

When the fair value of a revalue asset differs materially from its carrying amount, a further revaluation is necessary.

Some items of property, plant and equipment may experience significant and volatile movements in fair value thus necessitating annual revaluation.
Such frequent revaluations are unnecessary for items of property, plant and equipment with only insignificant movements in fair value.

Instead, revaluation every three or five years may be sufficient.2 The audit of Fixed Assets records noted the following anomalies:  Assets were listed in groups (e.g.

office furniture, office equipment, furniture and fittings) in the Fixed Asset Register (FAR), rather than individual asset making it difficult to trace the existence of assets in the FAR and vice versa.
2 Fiji Accounting Standard 16 – Section 32 Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014  Most of the plant and equipment reflected in the FAR had been fully depreciated with zero written down value but are still being used by the Board.

Also no revaluation policy on fully depreciated assets exists.

Refer to Table 16.2 below for examples.
Table 16.2: Valuation of Plant and Equipment Assets Office Furniture Office Furniture (Oct 2005) Filing Cabinet (July 2006) Furniture & Fittings Motor Blower (March 2002) Computer (Dec 2002) Motor Blower (Sep 2004) Furniture & Fittings (June 2005) Office Equipment (August) Office Equipment (December) Vehicle – EN 598 (Oct 2004) Vehicle – EW 934 (Dec 2005) Written Down Value 31/12/12 ($) 0 0 0 0 0 0 0 0 0 0 0 0  The board also does not have an asset capitalization policy in place.
The above anomalies may indicate that the amount recorded as plant and equipment in the financial statement may not be reported at its fair value.

Recommendations  The Board should conduct a board of survey for all its fixed assets and update its FAR accordingly with all individual assets.

All assets that are not in working conditions should be written off; otherwise should be considered to be revalued.
 The Board should have a capitalization policy in order to ensure that items falling under the definition of fixed assets are properly disclosed in the Financial Statement.

Board’s Comments The Board has small asset listings and seldom purchase items.

The last Board of Survey was carried out on 19/08/11.

The Board has a fixed asset register and expendable register or tally cards that is updated regularly and is up to date.
Due to fewer movements of items and small listings, Board of Survey is carried out at an interval of 3-5 years.

The items listed in the table above have depreciated to zero value but they are in good condition, serviceable and are being used.

These items do have current market values.

Annual valuations will incur additional costs for the Board.
Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________ 2014 SECTION 17: INVESTMENT FIJI Programme Statement Investment Fiji is established to promote and facilitate investment and export of Fiji.
Its objectives are to:  promote investment in and development of industries, ventures and enterprise that enhance employment opportunities, increases exports, reduce imports or are otherwise beneficial to the economy of Fiji; assist other persons or bodies in the establishment or expansion of any such activities; undertake product and market development and research either alone or jointly with any other person; act as an agent for the Government on such matters as may be delegated to it; advise on policies that would further the economic development of Fiji; advise the Minister on appropriate administrative machinery to facilitate economic development;       make grants for the purposes related to the discharge of its functions under the Act; and  Generally to do all those things as may be incidental to or consequential upon the exercise of its powers or functions under this Act.
Table of Content SECTION 17: INVESTMENT FIJI ........................................................................................................................................... 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 17.1 Audit Opinion - 2013 .............................................................................................................................................. 1 17.2 Abridged Income Statement ................................................................................................................................... 1 17.3 Abridged Statement of Financial Position .............................................................................................................. 2 PART B – CONTROL ISSUES ................................................................................................................................................ 3 17.4 Non- Disclosure of Conflict of Interest by Executive Chairman .............................................................................. 3 PART A – FINANCIAL INFORMATION 17.1 Audit Opinion The audit of the financial statements of Investment Fiji for the year ended 31 December 2013 resulted in the issue of an unqualified audit report.
17.2 Abridged Income Statement Year ended 31 December Income Government grant Other income Trade promotion Total income Expenditure Personnel expenses Operating expenses 2013 ($) 2012 ($) 1,086,957 703,904 194,438 913,044 414,894 202,769 1,985,299 1,530,707 829,228 336,280 824,332 349,605 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________ 2014 Year ended 31 December Administrative expenses Depreciation Finance cost Trade promotion expenses Total expenditure 2013 ($) 247,133 102,190 2,299 2012 ($) 267,146 118,609 684 210,503 203,384 1,727,633 1,763,760 Net (deficit) / surplus for the year 257,666 (233,053) Investment Fiji recorded a net surplus of $257,666 in 2013 compared to a net deficit of $233,053 in 2012.
The surplus realized in 2013 was attributed to the increase in other income by $289,010 and grant revenue by $173,913.

Other income increased due to increase in registration fees collected in 2013.
17.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash on hand and at bank Receivables Total Current Assets Non - Current Assets Property, plant and equipment Total Non-Current Assets Total Assets Current Liabilities Trade creditors and accruals Income received in advance Provisions Interest bearing borrowings Total Current Liabilities Non-Current Liabilities Provisions Interest bearing borrowings Total Non-Current Liabilities Total Liabilities Net Assets Total Equity 2013 ($) 2012 ($) 692,608 45,473 738,081 192,976 192,976 931,057 83,023 - 29,015 12,301 124,339 37,926 21,527 59,453 183,792 747,265 747,265 470,170 42,072 512,242 293,125 293,125 805,367 169,430 11,300 38,785 12,301 231,816 50,124 33,828 83,952 315,768 489,599 489,599 Investment Fiji recorded an increase in net assets by $257,666 or 53% in 2013 compared to 2012.
This is due to the increase in cash by $222,438 or 47%, and the decline in trade creditors and accruals by $86,407 or 51%.

Additionally, the increase in total equity is a result of a net surplus of $257,666 in 2013 compared to a deficit of $233,053 in 2012.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________ 2014 PART B – CONTROL ISSUES 17.4 Non- Disclosure of Conflict of Interest by Executive Chairman It is a good governance practice that any material interest of a relevant person that may lead to an actual, perceived or potential conflict of interest must be disclosed.
Our review of a tender process for printing and designing of annual report of Investment Fiji revealed that the Executive Chairman failed to disclose his interest on tender of services for the reports.

The Executive Chairman is the CEO and founder of F1 mobile which in two occasions showed its interest in quoting for the printing and designing of annual report for Investment Fiji and the design works for the 2014 Westpac Prime Minister’s Exporter of the Year Award.
Refer to the Table 17.1 and 17.2 for the details of the tenders.

Table 17.1: Tender for Design and Printing Work of Annual Report for 2012 Company Name Amount ($) Web media Universal Print 8,962.50 4,600.00 Pacific Reach Ltd 10,002.50 F1 mobile No cost provided.

The CEO called for the expression of interest to be re-advertised as there were no reputable entities as per above whom Investment Fiji can rely on to provide the service.
However, audit did not sight any documentary evidence to indicate this was approved by the Board.

Refer to Table 17.2 for the resubmission of the tender.
Table 17.2: Re – Submission of Tender for Design and Printing of Annual Report for 2012 Company Name Amount ($) Redox Print Promotion 3,400.00 Siyaahi 4,500.00 Tahila Group 4,600.00 Max Marketing & Publishing Ltd 6,800.00 Oceanic Communication Ltd 13,552.60 The audit was informed that the Tender committee agreed to award the tender to Siyaahi after reviewing the quality of prints and its competitive price.
However, the Tender Committee’s decision was rejected by the CEO and tender was given to Max Marketing & Publishing Ltd at a revised cost of $3,600 for printing while the F1 mobile carried out the designing works with no cost.

The audit did not cite the full Board approval for the award of the tender to Max Marketing & Publishing Ltd for printing and F1 mobile for designing.
The audit further noted that on 10th of May, 2014, Investment Fiji called for Expression of Interest (EOI) to secure a company to do the design works for the 2014 Westpac Prime Minister’s Exporter Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________ 2014 of the Year Awards.

F1 mobile again tendered for the design works and the Executive Chairman did not disclose his interest.
The above shows disregard of practices for good governance at the Board level.

Recommendations  The Board of Investment Fiji should ensure that there is a collective decision on the awarding of any tender.

 Conflict of interest should be properly disclosed by any member of the organization including the Board of the Directors pertaining to any personal gain whether monetary or in form of mileage.
Management Comments The non-disclosure of interest by the Executive Chairman in the two incidence noted by the audit would be brought to the Board’s attention in an effort to rectify the matter.

The point raised by the audit has been noted that any conflict of interest needs to be properly disclosed beforehand.

Investment Fiji also notes that a collective decision needs to be reached for awarding any tender.
Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 18: COUNCIL OF ROTUMA Programme Statement The principal purpose of the Council is to consider good governance and wellbeing of the Rotuman Community in the island as may be directed by the Minister or may seem to them to require their attention; and to administer the Rotuman Development Fund established by Act, and to carry out all functions as may be required by law or necessary or desirable in connection with such fund.
Table of Contents 18.4 18.5 18.6 18.1 18.2 18.3 18.7 18.8 18.9 SECTION 18: COUNCIL OF ROTUMA .................................................................................................................................... 1 PART A – FINANCIAL POSITION ............................................................................................................................................. 2 Audit Opinion ............................................................................................................................................................ 2 Abridged Statement of Financial Performance ........................................................................................................ 2 Abridged Statement of Financial Position ................................................................................................................ 2 PART A – FINANCIAL POSITION ............................................................................................................................................. 3 Audit Opinion ............................................................................................................................................................ 3 Abridged Statement of Financial Performance ........................................................................................................ 3 Abridged Statement of Financial Position ................................................................................................................ 3 PART A – FINANCIAL POSITION ............................................................................................................................................. 4 Audit Opinion ............................................................................................................................................................ 4 Abridged Statement of Financial Performance ........................................................................................................ 4 Abridged Statement of Financial Position ................................................................................................................ 4 PART A – FINANCIAL POSITION ............................................................................................................................................. 5 18.10 Audit Opinion ............................................................................................................................................................ 5 18.11 Abridged Statement of Financial Performance ........................................................................................................ 5 18.12 Abridged Statement of Financial Position ................................................................................................................ 5 PART A – FINANCIAL POSITION ............................................................................................................................................. 6 18.13 Audit Opinion ............................................................................................................................................................ 6 18.14 Abridged Statement of Financial Performance ........................................................................................................ 6 18.15 Abridged Statement of Financial Position ................................................................................................................ 6 PART A – FINANCIAL POSITION ............................................................................................................................................. 7 18.16 Audit Opinion ............................................................................................................................................................ 7 18.17 Abridged Statement of Financial Performance ........................................................................................................ 7 18.18 Abridged Statement of Financial Position ................................................................................................................ 8 PART A – FINANCIAL POSITION ............................................................................................................................................. 8 18.19 Audit Opinion ............................................................................................................................................................ 8 18.20 Abridged Statement of Financial Performance ........................................................................................................ 8 18.21 Abridged Statement of Financial Position ................................................................................................................ 9 PART A – FINANCIAL POSITION ............................................................................................................................................. 9 18.22 Audit Opinion ............................................................................................................................................................ 9 18.23 Abridged Statement of Financial Performance ........................................................................................................ 9 18.24 Abridged Statement of Financial Position .............................................................................................................. 10 PART A – FINANCIAL POSITION ........................................................................................................................................... 10 18.25 Audit Opinion .......................................................................................................................................................... 10 18.26 Abridged Statement of Financial Performance ...................................................................................................... 10 18.27 Abridged Statement of Financial Position .............................................................................................................. 11 PART A – FINANCIAL POSITION ........................................................................................................................................... 11 18.28 Audit Opinion .......................................................................................................................................................... 11 18.29 Abridged Statement of Financial Performance ...................................................................................................... 11 18.30 Abridged Statement of Financial Position .............................................................................................................. 12 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 PART A – FINANCIAL POSITION 18.1 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 1996 resulted in the issue of a disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.2 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant Administration Development Bus Transport Education Miscellaneous Total Receipts Payments Administration Development Education Bus Transport Miscellaneous Total Payments Net Surplus for the year 1996 ($) 1995 ($) 0 43,523 121 4,542 3,987 108,694 160,867 28,381 450 12,099 16,653 98,239 155,822 5,045 54,207 22,428 426 3,777 29,013 52,258 162,109 42,900 2,185 60,321 38,258 15,982 159,646 2,463 The Council recorded a surplus of $5,045 in 1996 compared to a surplus of $2,463 in 1995.
This was due to the decrease in total expenditures by 2% in 1996 compared to 1995.
18.3 Abridged Statement of Financial Position As at 31 December Assets Cash at bank Shares at Cost Fiji Government Securities Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Total Accumulated Funds 1996 ($) 1995 ($) 32,418 12,000 200,000 244,418 69,872 69,872 174,546 174,546 (31,767) 12,000 0 (19,767) 10,732 10,732 (30,499) (30,499) The Council’s net assets increased by $205,045 or 672% in 1996 compared to 1995 due to increase in cash at bank.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 PART A – FINANCIAL POSITION 18.4 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 1997 resulted in the issue of a disclaimer of opinion.
The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.5 Abridged Statement of Financial Performance Year Ended 31 December Receipts Administration Development Bus Transport Education Miscellaneous Total Receipts Payments Administration Development Education Bus Transport Miscellaneous Total Payments Net Surplus for the year 1997 ($) 1996 ($) 17,892 253 27,332 0 4,276 49,753 14,215 500 0 23,499 2 38,216 11,537 43,523 121 4,542 3,987 108,694 160,867 28,381 450 12,099 16,653 98,239 155,822 5,045 The Council recorded a surplus of $11,537 in 1997 compared to a surplus of $5,045 in 1996.
This was due to the decrease in total expenditures by 75% in 1997 compared to 1996.
18.6 Abridged Statement of Financial Position As at 31 December Assets Cash at bank Shares at Cost Fiji Government Securities Investment at Unit Trust Total Assets Liabilities Current Liabilities Total Liabilities Net Assets 1997 ($) 1996 ($) 29,165 12,000 0 155,661 196,826 10743 10,743 186,083 32,418 12,000 200,000 0 244,418 69,872 69,872 174,546 Total Accumulated Funds 186,083 174,546 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The Council’s net assets increased by $11,537 or 7 % in 1997 compared to 1996 due to decrease in current liabilities.
PART A – FINANCIAL POSITION 18.7 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 1998 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.8 Abridged Statement of Financial Performance Year Ended 31 December Receipts Administration Development Bus Transport Education Miscellaneous Total Receipts Payments Administration Development Education Bus Transport Miscellaneous Total Payments Net Surplus for the year 1998 ($) 1997 ($) 25,921 1,605 38,484 0 2,487 68,497 16,950 3,256 0 24,888 3,653 48,747 19,750 17,892 253 27,332 0 4,276 49,753 14,215 500 0 23,499 2 38,216 11,537 The Council recorded a surplus of $19,750 in 1998 compared to a surplus of $11,537 in 1997.
This was due to the increase in total receipts by 38% in 1998 compared to 1997.
18.9 Abridged Statement of Financial Position As at 31 December Assets Cash at bank Shares at Cost Fiji Government Securities Investment at Unit Trust Total Assets Liabilities Current Liabilities Total Liabilities Net Assets 1998 ($) 1997 ($) 37,483 12,000 0 167,092 216,575 10,742 10,742 205,833 29,165 12,000 0 155,661 196,826 10743 10,743 186,083 Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 As at 31 December Total Accumulated Funds 1998 ($) 205,833 1997 ($) 186,083 The Council’s net assets increased by $19,750 or 11 % in 1998 compared to 1997 due to increase in cash at bank.
PART A – FINANCIAL POSITION 18.10 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 1999 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.11 Abridged Statement of Financial Performance Year Ended 31 December Receipts Administration Development Bus Transport Education Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Surplus for the year 1999 ($) 1998 ($) 29,120 1,010 38,555 2,015 0 70,700 14,115 13,759 33,263 6,189 67,326 3,374 25,921 1,605 38,484 0 2,487 68,497 16,950 3,256 24,888 3,653 48,747 19,750 The Council recorded a surplus of $3,374 in 1999 compared to a surplus of $19,750 in 1998.
The decrease in surplus was due to increase in total payments by 38% in 1999 compared to 1998.
18.12 Abridged Statement of Financial Position As at 31 December Assets Cash at bank Shares at Cost Fiji Government Securities Investment at Unit Trust Total Assets Liabilities 1999 ($) 1998 ($) 18,285 12,000 0 179,271 209,556 37,483 12,000 0 167,092 216,575 Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 As at 31 December Current Liabilities Total Liabilities Net Assets 1999 ($) 349 349 209,207 1998 ($) 10,742 10,742 205,833 Total Accumulated Funds 209,207 205,833 The Council’s net assets increased by $3,374 or 1.6% in 1999 compared to 1998 due to increase in investment in Unit Trust.
PART A – FINANCIAL POSITION 18.13 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2000 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.14 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant – Fijian Affairs Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Surplus for the year 2000 ($) 1999 ($) 97,400 15,917 10,840 37,957 12,494 174,608 15,080 5,256 44,373 13,015 77,724 96,884 0 29,120 1,010 38,555 2,015 70,700 14,115 13,759 33,263 6,189 67,326 3,374 The Council recorded a surplus of $96,884 in 2000 compared to a surplus of $3,374 in 1999.
This was due to the increase in total receipts by 147% in 2000 compared to 1999.
18.15 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost 2000 ($) 1999 ($) 103,228 12,000 18,285 12,000 Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 As at 31 December Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2000 ($) 191,212 351,867 658,307 349 349 657,958 657,958 1999 ($) 179,271 0 209,556 349 349 209,207 209,207 As at 31 December 2000, the Council had net assets of $657,958 in 2000 compared to $209,207 in 1999.
This was due to new investment made by the Council in Yasana Holdings.

PART A – FINANCIAL POSITION 18.16 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2001 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.17 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant – Fijian Affairs Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Deficit/ Surplus for the year 2001 ($) 2000 ($) 367 27,573 3,706 29,131 19,414 80,191 12,948 6,214 130,877 7,570 157,609 (77,418) 97,400 15,917 10,840 37,957 12,494 174,608 15,080 5,256 44,373 13,015 77,724 96,884 The Council recorded a deficit of $77,418 in 2001 compared to a surplus of $96,884 in 2001.
This was due to the increase in total payments by 103% in 2001 compared to 2000.

Revenue also decreased by $94,417 or 54%.
Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 18.18 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2001 ($) 2000 ($) 15,590 12,000 201,065 352,234 580,889 349 349 580,540 580,540 103,228 12,000 191,212 351,867 658,307 349 349 657,958 657,958 As at 31 December 2001, the Council had net assets of $580,540 compared to $657,958 in 2000.
This was due to a decrease in cash at bank of $87,638.

PART A – FINANCIAL POSITION 18.19 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2002 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.20 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant – Fijian Affairs Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Surplus/Deficit for the year 2002 ($) 2001 ($) 28,984 258,834 1,241 29,128 4,381 322,568 135,074 7,304 135,058 3,599 281,035 41,533 367 27,573 3,706 29,131 19,414 80,191 12,948 6,214 130,877 7,570 157,609 (77,418) The Council recorded a surplus of $41,533 in 2002 compared to a deficit of $77,418 in 2001.
This was due to the increase in total receipts by 302% in 2002 compared to 2001.
Report of Statutory Authorities – December 2014 Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 18.21 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2002 ($) 2001 ($) 15,672 12,000 213,532 381,218 622,422 349 349 622,073 622,073 15,590 12,000 201,065 352,234 580,889 349 349 580,540 580,540 As at 31 December 2002, the Council had net assets of $622,073 compared to $580,540 in 2001.
This was due to an increase in investment in Yasana Holdings Limited by $28,984.

PART A – FINANCIAL POSITION 18.22 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2003 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.23 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant – Fijian Affairs Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Surplus for the year 2003 ($) 2002 ($) 0 154,731 133 28,740 2,331 185,935 146,230 0 36,439 0 182,669 3,266 28,984 258,834 1,241 29,128 4,381 322,568 135,074 7,304 135,058 3,599 281,035 41,533 The Council recorded a surplus of $3,266 in 2003 compared to a surplus of $41,533 in 2002.
This was due to the decrease in total receipts by 42% in 2003 compared to 2002.
Report of Statutory Authorities – December 2014 Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 18.24 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2003 ($) 2002 ($) 5,857 12,000 226,613 381,218 625,688 349 349 625,339 625,339 15,672 12,000 213,532 381,218 622,422 349 349 622,073 622,073 As at 31 December 2003, the Council had net assets of $625,339 compared to $622,073 in 2002.
This was due to an increase in investment in Unit Trust by $13,081.

PART A – FINANCIAL POSITION 18.25 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2004 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.26 Abridged Statement of Financial Performance Year Ended 31 December Receipts Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Development Bus Transport Miscellaneous Total Payments Net Deficit/Surplus for the year 2004 ($) 2003 ($) 21,662 108 29,124 1,532 52,426 95,964 0 23,925 0 119,889 (67,463) 154,731 133 28,740 2,331 185,935 146,230 0 36,439 0 182,669 3,266 The Council recorded a deficit of $67,463 in 2004 compared to a surplus of $3,266 in 2003.
This was due to the decrease in total receipts by 72% in 2004 compared to 2003.
Report of Statutory Authorities – December 2014 Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 18.27 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2004 ($) 2003 ($) 10,225 12,000 240,557 547,885 810,667 349 349 810,318 810,318 5,857 12,000 226,613 381,218 625,688 349 349 625,339 625,339 As at 31 December 2004, the Council had net assets of $810,318 compared to $625,339 in 2003.
This was due to an increase in investment in Yasana Holdings by $166,667.

PART A – FINANCIAL POSITION 18.28 Audit Opinion The audit of the financial statements of the Council of Rotuma for the year ended 31 December 2005 resulted in the issue of a disclaimer of opinion.

The disclaimer of opinion was issued on the basis that the Council was not able to provide appropriate supporting documents to verify the amounts and disclosures stated in the financial statements.
18.29 Abridged Statement of Financial Performance Year Ended 31 December Receipts Government Grant – Fijian Affairs Administration Development Bus Transport Miscellaneous Total Receipts Payments Administration Bus Transport Total Payments Net Deficit for the year 2005 ($) 2004 ($) 0 6,240 146 35,238 1,798 43,422 110,172 37,926 148,098 (104,676) 0 21,662 108 29,124 1,532 52,426 95,964 23,925 119,889 (67,463) The Council recorded a deficit of $104,676 in 2005 compared to a deficit of $67,463 in 2004.
This was due to the increase in total payments by 23.5% in 2005 compared to 2004.
Report of Statutory Authorities – December 2014 Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 18.30 Abridged Statement of Financial Position As at 31 December Current Assets Cash at bank Shares at Cost Investment at Unit Trust Investment at Yasana Holdings Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Accumulated Funds 2005 ($) 2004 ($) 19,931 14,400 255,115 547,885 837,331 0 0 837,331 453,200 10,225 12,000 240,557 547,885 810,667 349 349 810,318 557,876 As at 31 December 2005, the Council had net assets of $837,331 compared to $810,318 in 2004.
This was due to an increase in investment in Unit Trust by $14,558.
Report of Statutory Authorities – December 2014 Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 SECTION 19: FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION (FICAC) Programme Statement The Fiji Independent Commission Against Corruption (FICAC) was established on the 4th of April 2007 to investigate acts of corruption by public officers, employees of government and government – related organisations.
The Fiji Independent Commission Against Corruption is governed by the FICAC Promulgation 2007 and to maintain its independence, it reports directly to His Excellency the President.
Table of Contents 19.1 19.2 19.3 SECTION 19: FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION (FICAC) .......................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 Audit Opinion ........................................................................................................................................................... 1 Abridged Statement of Financial Performance ........................................................................................................ 1 Abridged Statement of Financial Position ................................................................................................................ 2 PART B – CONTROL ISSUES ................................................................................................................................................... 2 Non Compliance with IFRS for SMEs ...................................................................................................................... 2 Incorrect Classification of Accounts ......................................................................................................................... 4 Salary Increment Contrary to Annual Performance Report ..................................................................................... 6 Excessive Leave Carried Forward ......................................................................................................................... 10 Breach of Tender Contract Agreement – HQ Office Renovation ........................................................................... 12 19.4 19.5 19.6 19.7 19.8 PART A – FINANCIAL INFORMATION 19.1 Audit Opinion The audit of the financial statements of the Fiji Independent Commission against Corruption for the year ended 31 December 2013 resulted in the issue of a qualified audit report.
The Fiji Independent Commission against Corruption (FICAC) is a Government statutory body and the financial statements are required to be prepared in accordance with the International Financial Reporting Standards for Small and Medium Entities (IFRS for SMEs).

FICAC is yet to comply with IFRS for SMEs as required for general purpose financial statements.
Accordingly, the audit was unable to determine the impact on the financial statement of FICAC if any, adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.
19.2 Abridged Statement of Financial Performance Year Ended 31 December Income Government Grants 2013 ($) 2012 ($) 6,858,083 6,388,803 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Year Ended 31 December Total Revenue Expenditure Salaries and Wages Legal Fees – Local and Overseas Fixed Assets Traveling Local and Expatriate Other operating expense Total Expenditure Net Surplus/(Deficit) for the year 2013 ($) 6,858,083 2012 ($) 6,388,803 3,943,997 409,000 478,019 311,470 2,190,463 7,332,949 (474,866) 3,501,029 216,000 796,544 281,406 1,842,566 6,637,545 (248,742) FICAC’s operation was fully funded by the Government with salaries and wages making up the major component of the expenditure.
The Government grant to FICAC increased by $469,280 or 7% in 2013.

19.3 Abridged Statement of Financial Position As at 31 December Assets Cash at bank Receivables Total Assets Liabilities Creditors and other accruals Total Liabilities Net Assets Net Accumulated Fund 2013 ($) 2012 ($) 458,175 203,382 661,557 339,790 339,790 321,767 321,767 947,562 97,467 1,045,029 248,396 248,396 796,633 796,633 The Commission’s net assets decreased by $474,866 or 60% in 2013 compared to 2012.
This was due to the decrease in cash holdings by $489,387 (52%).

The increase in operating expenditures by $695,404 or 10% in year 2013 contributed to the decline in cash holding.

PART B – CONTROL ISSUES 19.4 Non Compliance with IFRS for SMEs The Fiji Institute of Accountants Act is an Act of Parliament which establishes the Fiji Institutes of Accountant (FIA) in Fiji.
The Fiji Institutes of Accountant is the designated body regulated under law to establish Accounting and Auditing profession and standards in Fiji.

It is a member body of the worldwide International Federation of Accountants and is dedicated to achieving International Reporting Standards by adopting the International Financial Reporting Standards (IFRS) including the IFRS for SMEs for all accounting periods beginning from 1st January 2007.
The SMEs that cannot fully adopt the full IFRS will adopt IFRS for SMEs.

The objective of IFRS for SMEs is to provide a simplified, self-contained set of accounting principles that are appropriate for smaller, non-listed companies and are based on full IFRS.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 The IFRS for SME will only apply to SMEs that do not have public accountability1 and publish general purpose financial statement.2 The review of the financial statements reveals the following anomalies;    The financial statements were not prepared in accordance with the IFRS for SMEs despite meeting the criteria for SMEs above; The financial statements were prepared on semi-accrual basis of accounting; The following financial account balances were not reported on accrual basis; o Purchases of Motor Vehicle o Purchases of Electronics o Purchases of Office Furniture and Equipment o Purchases of Server and Software Equipment o Depreciation o Provision for Depreciation o Realisation of Deferred Income o Realisation of Grant Income o Deposits and Security Bonds o Gains/Losses from Disposal of Assets o Rent Due o Prepayments o Leases The commission agreed that the 2013 financial accounts would be reported on accrual basis in the 2012 general report, however the Commission fail to abide to their comments.3 The non-compliance above is a breach of FIA rules and regulation hence the commission’s reporting structure is not appropriate and to the required standards for the small medium entities operating in Fiji.
It is apparent that the financial statements would be materially misstated if the Commission continues to report on semi-accrual accounting and disregard the IFRS for SMEs reporting standards adopted by FIA.

Non-compliance will result in the non-disclosure of relevant and required financial reporting information.

Recommendations   The Commission should comply with IFRS for SMEs.

The Commission may consider external assistance of a Chartered Accountant to assist in the adoption of the IFRS for SMEs.
Commission’s Comments The Manager Finance has discussed on several occasions with senior officials of the OAG that the Commission has commenced the roll over to accrual accounting which will align the Commission’s financial accounts to be prepared in accordance with IFRS for SMEs from 2014.The discussion was held with the following officers; - Former Director of Audit - 17/08/2012 1An entity with “public accountability” is defined as one whose debt to equity ratio instrument are traded in a public market or one which holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary business 2Decision by the National Regulatory Authority and Standard Setters for Accounting and Auditing in Fiji - FIA 32012 Office of the Auditor General Report - Management Comments.
Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 - - Audit Managers - 17/05/2013 Director of Audit - 30/01/2014 The Manager Finance again reminded the ‘current Director’ in their meeting on 30/01/2014 that the Commission’s 2013 financial accounts is prepared on semi accrual basis and also explained the process that has been undertaken by the Commission to roll over to accrual accounting.
The Manager Finance also raised his concerns on the delay in the changeover to accrual accounting due to; i.

The verification of historical cost for fixed assets purchased in the year 2007.The finance was handled by Attorney General’s office and the source documents are in their custody.

ii.

Most of the fixed assets such as computer and laptops purchased at that time have zero book value now and what method of revaluation could be used to reflect these assets in the balance sheet.

iii.
iii.

Making adjustment for depreciation (to capitalise asset) since all fixed assets have expensed off.

The OAG would agree that the changeover of accounting style is not a small exercise and as per your recommendation, the Commission will require the assistance of a Chartered firm to provide advice on the changeover.

The Commission will ensure that the financial accounts for 2014 are prepared in compliance with IFRS for SME’s.
19.5 Incorrect Classification of Accounts The IFRS for SME’s state that entity should disclose class of property plant and equipment in the financial statements according to the classification that was deemed appropriate to the entity.
The principal issue for accounting for property, plant and equipment are the recognition of the assets, the determinations of their carrying amounts and the recognitions of the depreciations chargers and impairments losses.4 The reviews of the financial account balances reveal the following incorrect classifications of accounts;  The financial statement does not reflect the value of all the fixed assets under the ownership of the Commission.
As a result the depreciation expenses and provision for depreciation were not realised for all the Commission’s fixed assets owned;  All Fixed Assets procurements were expensed and not capitalised.

These include purchase of motor vehicle and other equipment such as computers, office furniture’s which cost more than $3505.

The audit noted that the Commission have a total of $2,020,110 worth of fixed assets in its custody.
Refer Table 19.1 below for details of motor vehicle costing $125,800 acquired during the years which were expensed.

Table 19.1: Details of Motor Vehicle Purchase Date 22/2/2013 Cheque No 8309 Particulars Purchase of one only Toyota Prado for office use (HB 894) Amount (VEP) ($) 109,391 4 IFRS for SMEs workbook -3001 – Section 17 – Property Plant and Equipment Disclosures.
5 Commission Standing Orders, Chapter 4 – Inventory Manual – Section 13.1 – PPE is considered as stores and item worth $350 and more are classified as stores.

Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014  A total of $18,232 depreciation value was calculated by the Commission; however the Commission did not account and disclose the depreciation value in the books.
Hence the provision for depreciation of $18,232 were also not accounted and disclosed in the financial statements;  Prior year purchases of vehicles with a monetary value of $1,129,458 have also followed similar practices thus a total depreciation value of $197,871 have not been fully recognised;  The Financial Statement Accounting Policy does not state and disclose the motor vehicle depreciation methods and rates used by the Commission;  The Commission failed to realise the portion of deferred income from the purchase sourced from grant monies and accounted it in the financial statements;  The audit noted refundable bonds and securities totalling $16,271 paid for office rents were incorrectly classified under office rent expenses.
Refer Table 19.2 below for details; Table 19.2: Details of Refundable Bond Classified as Rent Expenses Date 20/3/13 Cheque No 8433 11/11/13 TOTAL 9445 Particulars Amount (VEP) ($) Anomaly Bond payment of CRCP Office at level 5 Vinod Patel Building, Stewart Street, Suva Bond Payment of Labasa Office 6,866 Rent security deposit has been expensed instead of balance receivables sheet.
in 9,405 16,271  Moreover audit also noted a total of $41,954 FEA security deposits were wrongly classified as expenses consequently understating the receivables balance under current assets.
Refer Table 19.3 below for details; Table 19.3: Expenses Details of Refundable FEA Security Deposit Classified as Electricity Account number Station Security Deposit Paid (VIP) ($) Anomaly 2625446313 2625448813 2625564112 2625448713 2625564012 2625449013 2625563912 2625491012 2301670110 2627817911 2627819311 2351170112 Total Suva Suva Suva Suva Suva Suva Suva Suva CRCP Office, Suva Lautoka Lautoka Labasa 1,257 Cash security deposits held at Fiji Electricity Authority was not recorded as receivables 1,518 (current assets) in the balance sheet.
4,300 1,861 4,735 1,453 3,771 7,723 4,000 3,796 3,119 4,420 41,954  The Provisions for leave liability account balance was understated whereby two officer’s leave balances totalling $1,541 was not incorporated accordingly.
Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014  Further reviews reveal that Lautoka office rent instalment of $8,000 paid to the landlord for Lautoka office were incorrectly recorded in the Rent Expenses – HQ general ledger account6 rather than Rent Expenses - Lautoka.
Failure to correctly record all the financial transaction in the correct general ledger account and disclose and account all the required financial information in the financial statement will result in the misstatement of the financial statement.

Hence the accounts would not be fairly stated and correctly reflect the financial position of the Commission.
Recommendations  The Commission should comply with IFRS for SMEs 17 and ensures that all accounts affected by the capitalisation of fixed assets are disclose and treated accordingly in the financial statements.

 The Commission should ensure that all incorrect classification of accounts identified above are adjusted accordingly in the 2014 general ledger system.

 The Commission should ensure that all financial transaction is properly accounted in the financial statement.
Commission’s Comments As stated earlier the Commission has made a commitment to roll over to accrual accounting that will align the Commission’s financial accounts to be prepared in line with IFRS for SME’s 17 which will basically take care of capitalising assets and proper recording of financial transactions.

19.6 Salary Increment Contrary to Annual Performance Report It is essential for the general efficiency of FICAC that all annual review reports on its Officers be detailed and candid.
Increase of salary or promotion of an officer shall solely depend on the rating of the officer’s performance throughout the year.7 FICAC awards increment to its officers subject to the performance, measured in line with the individual officers key result areas outlined in their annual review report.8 An officer does not qualify for increment if he/she fails to perform as expected with the key result areas identified in the annual review report.9 “Good” performance was given 50% of increment ($500), “very good” was given one increment ($1,000) and outstanding performance of double increment ($2,000).10 The Commissioner may, with the prior approval of the President, by standing order modify the application to officers of public service or government regulations or administrative rules.11 Review of the annual salary increment revealed that salary increment of $53,500 was awarded to officers contrary to the annual performance assessment of $13,500 that was supposed to be paid.
Refer Table 19.4 below for details of staff’s performance review points awarded contrary to the entitled performance review points as per the performance assessment report.
6 General Ledger Account for Rent Expenses – HQ - 60000-50000-1004-100-00 7The Commission Standing Orders – FICAC Policy - Chapter 1 - Section 4.10.1 8The Commission Standing Orders – FICAC Policy - Chapter 1 - Section 4.11.1 9The Commission Standing Orders – FICAC Policy - Chapter 1 - Section 4.11.2 10 Analysis of FICAC Salary Structure – Corporate Services Committee, Page 2 11 FICAC Promulgation No.
11 of 2007 - Section 11 (2) Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Table 19.4: Details of Performance Review for Randomly Selected Employees 12 EDP No.
Increment Amount Performance Review Comment Entitle Performance Review Points ($) Difference ($) Very Good Good Very Good Restructure of salary Very Good Good Good Good Good Good Good Very Good Very Good Very Good Very Good Outstanding Very Good 1,000 500 1,000 1,000 500 500 500 500 500 500 1,000 1,000 1,000 1,000 2,000 1,000 2,000 500 2,000 4,000 6,000 1,500 2,000 2,500 500 1,000 2,500 3,000 (500) 3,500 4,500 2,000 3,000 Total 53,500 13,500 40,000 The increment of salary of officers is contrary to its standing operating orders for salary increments and promotions of staff.
Inconsistent increment in salary creates subjectivity to awards system that could be detrimental to the Commission.

Recommendations  The Commission should ensure that staffs are awarded the salary increment according to their annual performance review.

 Standard Operating Orders 4.10.1 to 4.11.2 should be strictly complied with by the Commission.

 The Commission should review and benchmark the annual performance assessment criteria before any further pay-outs of increment in salary is made.
 The Commission should make available the authorization of the standing order in accordance with section 11 (2) of the FICAC promulgation 2007.

Commission’s Comments EDP No.


Old Salary ($) New Salary ($) Increment Amount ($) Performance Review Comment Difference Commission's comments Salary increment entitlement as per performance review 38 40,000 43,000 3,000 Very Good 1,000 2,000 166 18,000 19,000 1,000 Good 500 500 The officer is on the same level as HODs, hence his salary was elevated to that of a HOD.

Support staff are employed on a lower scale and observed on a regular basis.
As part of the organization's development plan, officers are coached through their first year and then given 12Data obtained from the Individual Annual Review Assessment Reports Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 EDP No.
Old Salary ($) New Salary ($) Increment Amount ($) Performance Review Comment Salary increment entitlement as per performance review Difference Commission's comments 117 40,000 43,000 3,000 Very Good 1,000 2,000 146 4,000 Restructure of Salary 40,000 appropriate responsibility & salary according to their strengths, abilities and performance.

The officer was promoted to Manager Finance on 1 December 2011 and after 12 months of service and performance review.
He has been remunerated the base salary of Manager Finance in compliance with the FICAC Salary Scale.

No Comments 70 32,000 39,000 7,000 Very Good 1,000 6,000 oversees operational of In the salary restructure conducted by the Corporate Service Committee, the officer holds the position of CI West.

In this position, the & officer both administrative the West functions office.
Considering his position as Officer in Charge of our West office, the officer received 2 increments in addition to his salary (which has been elevated to match that of the Chief Investigator - North).

You will note CI Suva is not entitled to this '2 increments' as he only focuses on the operational side for Suva office.
35 31,000 33,000 2,000 Good 500 121 18,500 21,000 2,500 Good 500 168 15,000 18,000 3,000 Good 500 173 12,000 13,000 1,000 Good 500 72 9,500 11,000 1,500 Good 500 2,000 Further, once the officer is no longer the Officer in Charge of the West office, his salary will be reduced by $2,000 (2 increments).

This was clearly highlighted to the officer in his posting order and a copy of the same is filed in his personnel file which you had reviewed.
1,500 The officer was promoted to the position of Principal/Senior Officer and accordingly, her salary was adjusted.

The officer was promoted to Team Leader and accordingly, her salary was adjusted according to her new position.

This is clearly stated in the letter filed in her Personnel file which you had reviewed.

Financial Investigators are employed by FICAC on a lower salary and after a year of service, we review their performance & qualification and adjust their salary accordingly.
This is similar to the appointment of graduate trainee and upon satisfactory completion probationary period they are placed on the right salary point.

Support staff are employed on a lower scale and observed on a regular basis.

As part of the organization's development plan, Officers are coached through their first year and then given appropriate responsibility & salary according to their strengths, abilities and performance.
In accordance with the Prime Minister's comments that the lowest salary grade for Civil Servants into consideration and elevated the officer's salary accordingly.

This elevated salary includes the increment she received post appraisal.

is $10,000, we 1,000 2,500 took 500 this Report of Statutory Authorities – December 2014 Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 EDP No.
Old Salary ($) New Salary ($) Increment Amount ($) Performance Review Comment Salary increment entitlement as per performance review Difference Commission's comments 170 15,000 18,000 3,000 Good 500 2,500 151 26,000 30,000 4,000 Very Good 1,000 3,000 156 10,500 11,000 500 Very Good 1,000 (500) 137 13,500 18,000 4,500 Very Good 1,000 3,500 140 28,500 34,000 5,500 Very Good 1,000 4,500 185 35,000 39,000 4,000 Outstanding 2,000 2,000 187 12,000 16,000 4,000 Very Good 1,000 3,000 Financial Investigators are employed by FICAC on a lower salary and after a year of service, we review their performance & qualification and adjust their salary accordingly.
This is similar to the appointment of graduate trainee and upon satisfactory completion of probationary period they are placed on the right salary point.

to Professional The officer was promoted Standards Officer which included additional responsibilities.

Hence, her salary was adjusted to reflect the above.

Not all Officers are automatically given a salary increment during their appraisal.

Some Officers still have weaknesses which they need to improve on before their next appraisal.
During this period, the Officer is coached and her performance assessed accordingly.

Support staff are employed on a lower scale and observed on a regular basis.

As part of the organization's development plan, Officers are coached through their first year and then given appropriate responsibility & salary according to their strengths, abilities and performance.
The officer had served 3 years as legal officer (Grade I) and having assessed her performance and the recommendation by Manager Legal, she has been appointed to legal officer (Grade II) in compliance with the Legal Officer Grade II salary scale.

Her HOD provided his justification which was into consideration.

The same justification was provided for the other Lawyers but never highlighted in the previous year's audit query.
The officer was given an on- grade transfer to take up Manager Community Relation (MCR)duties with no change in salary and upon six months review on the MCR position his salary was elevated in line with the MCR salary scale, we are gradually elevating his salary.

We cannot immediately adjust his salary in line with other HODs as he is still trying to grasp the requirements of his new position.
The officer was appointed as complaints Officer in October 2012 and later given an on –grade transfer as Assistant inventory officer with added responsibilities but no change in salary.

In late October 2013 and at the time of his annual appraisal he was appointed as Administrative Assistant added responsibilities, reason being his salary was elevated to Admin officer level.

Support staff are employed on a lower scale and observed on a regular basis.
As part of the organization's development plan, Officers are coached through then given appropriate their their responsibility & salary according strengths, abilities and performance.

first year and given more Inventory taken the to Report of Statutory Authorities – December 2014 Page 9 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 EDP No.
Old Salary ($) New Salary ($) Increment Amount ($) Performance Review Comment Salary increment entitlement as per performance review Difference Commission's comments Total 53,500 13,500 40,000 Further OAG comments Apart from the Annual Performance Report which authorised the increment of $13,500, the Commission did not provide any documentation to authorise the extra increments totalling $40,000.
19.7 Excessive Leave Carried Forward Officer may be allowed to carry over up to a maximum of ten (10) working days leave entitlement from one leave year to the following year.

Any unused annual leave exceeding ten working days in each year automatically lapses in the following year.13 The audit noted substantial annual leaves balances held with officers.

Refer Table 19.5 below for details of randomly selected officers.
Table 19.5: Officers Details of Excessive Annual Leave Carried Forward For Randomly Selected EDP No.

Salary/Rate Leave year ($) 35,500 09/10/2013-08/10/2014 27,500 20/05/2013-19/05/2014 22,000 16/06/2013-15/06/2014 18,000 24/01/2014-23/01/2015 19,000 05/05/2013-04/05/2014 31,000 01/12/2013-30/11/2014 011 085 089 168 162 066 Total The list above is not exhaustive.
Days carried forward Daily Rate Monetary Value ($) ($) 45 32 15 18 14 26.39 136.54 105.77 84.62 69.23 73.08 119.23 6,144 3,385 1,269 1,246 1,023 3,147 16,214 The audit further noted that some officers had been compensated for leaves more than 10 days upon resignation and termination.
Refer Table 19.6 below for details: Table 19.6: Details Leave Compensation Paid For Randomly Selected Officers No EDP No Status Last Day Days compensated 1 2 3 155 044 061 Resignation Resignation Resignation 21/06/13 01/11/13 08/11/13 13 10.5 12 Annual Salary ($) 12,000 22,000 35,000 Daily Rate 14 46.15 84.62 134.62 Total ($) 600 888 1,615 13 FICAC Standing Orders, Chapter 1, Paragraph 10.4.7, Page 36 14 Annual salary/260 Report of Statutory Authorities – December 2014 Page 10 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 No EDP No Status Last Day Days compensated 030 4 TOTAL Termination 25/09/13 17 Annual Salary ($) 30,000 Daily Rate 14 115.38 Total ($) 1,962 5,065 Substantial leave balances could affect the Commissions operations should officers resign or retire.
It also affects the health of officers for not taking leave when due.

As such, net assets of the Commission will continue to deteriorate due to the continuously carrying forward of substantial leave balances to the next financial year.

Recommendation The Commission should ensure that Officers are encouraged to take their leave when due without hindering the continuity of the Commission’s functions.

Commission’s Comments Officers are constantly reminded to take leave when due.
However, circumstances do arise preventing officers from completing their annual leave.

In certain situations, Officers proceeding on leave are called back to work and their leave cancelled.

For instance, the officer (EDP 011) had a balance of 45 leave days in 2013.

He could not take leave during the year as he is the Investigator Officer for the PWD & various stationery companies’ case.
Once the first & second phases of the case were presented in Court, the Officer immediately took leave reducing the number of leave days to 17.08 days.

The Officer will proceed on leave again once the third phase of investigations is presented in Court.

Nonetheless, the recommendations by the Auditors are noted and we have implemented the automatic cancelling of excessive leave days when an Officer's anniversary is due.

EDP No.
EDP No.

Salary /Rate ($) 011 35,500 085 27,500 089 22,000 168 18,000 162 19,000 066 31,000 Total Leave year Days carried forward Daily Rate ($) Monetary Value ($) Commission's comments 09/10/2013- 08/10/2014 20/05/2013- 19/05/2014 16/06/2013- 15/06/2014 24/01/2014- 23/01/2015 05/05/2013- 04/05/2014 01/12/2013- 30/11/2014 45 136.54 6,144 32 105.77 3,385 15 84.62 1,269 18 69.23 1,246 14 73.08 1,023 26.39 119.23 3,147 16,214 Current leave balance is 17.08 days.
Officer was called back to work to continue with investigations in the PWD case.

The Officer will proceed on leave again once the third phase of the PWD case is presented in Court.

Leave balance of 14 days which the Officer was compensated for as he had accumulated additional days after his anniversary.

Officer has been notified to reduce her annual leave days or forfeit the extra days on her anniversary.
Officer has been notified to reduce his annual leave days or forfeit the extra days on his anniversary.

Officers have been notified to reduce their annual leave days or forfeit the extra days on their anniversary.
Report of Statutory Authorities – December 2014 Page 11 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 19.8 Breach of Tender Contract Agreement – HQ Office Renovation No alterations should be made to the basis of designs on which the tender documents have been prepared and tenders invited, except for purposes such as clarification of details or for the acceptance of alternative designs as permitted by the conditions of tender.15 In the event that exceptional circumstances have arisen such that part or the whole of the tender designs must be altered appropriate approval should be sought to make the necessary amendments or cancel the tendering exercise with a view to re-tendering.
The decision not to accept any tender in a tender exercise must be made by the Tender Board16.

One of FICAC’s objectives in procurement is to obtain goods and services at the best value for money taking into account not only the competitiveness in prices, but also compliance with users’ requirements, reliability of performance, qualitative superiority, whole-life costs and after-sale support, where applicable.

It is not in the interest of FICAC to accept an unreasonably low bid.
The Tender Board should adopt a flexible approach and reject bids that have been priced unreasonably low.17 The audit noted the following anomalies in engaging a contractor for renovation works at Headquarters office;  The tendered renovation works at Headquarter was awarded to the successful bidder for a contract amount of $49,353.
The audit noted that additional variations cost of $10,618 was paid for the renovation works, hence a total amount of $59,971 was paid to the contractor;  The audit further established that two other companies tendered an amount of $26,450 and $58,937 for the works however the nominated contractor was chosen as the company has tendered $49,353 for the complete renovation works.

Refer Table 19.7 below for details of payment made which exceeds the contract amount tendered.
Table 19.7: Details of Payments exceeding Contracted Sum Date 27/09/13 Cheque Number 9289 30/12/13 9680 Total PO Number Particulars 3778 First progress payment for the renovation work for Level 1 and 4 3778 & 3896 Final payment for the renovation works at Level 1 and 4 and additional renovation works at level 1 (HQ), Complaints Department.

Amount ($) 20,000 39,971 59,971  The audit further established that the variation cost of $10,618 was not included in initial tender approval.
The above anomalies could indicate that either lack of detail planning of scope of works by the Commission or unreliable information provided by nominated contractor.

As a result the Commission incur extra cost from not engaging the most economical or cost-effective contractor.
15 FICAC Standing Orders, Tender Procedures, Section 5.5.1 16 FICAC Standing Orders, Tender Procedures, Section 5.5.2 17 FICAC Standing Orders, Tender Procedures, Section 6.14.2 Report of Statutory Authorities – December 2014 Page 12 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI________________________________________2014 Recommendations    The Commission should ensure that alterations are not made to initial contract after contract is finalized and awarded.
The Commission should ensure that all renovation works required are all included in the tender advertisement.

The Commission should ensure that the contracted company complies with the contract agreement to avoid additional cost incurred.

Commission’s Comments The Commission takes note of the auditor’s recommendation that alteration should not be made to initial contract; however there may be instances in which additional work is warranted to meet the specification required by the Commission.
Report of Statutory Authorities – December 2014 Page 13 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 20: TELECOMMUNICATIONS AUTHORITY OF FIJI Programme Statement The Telecommunications Authority of Fiji was established under the Telecommunications Promulgation 2008, which provides for the constitution of the Authority and the manner in which it may function, levy and collect licences, exercise powers and expand funds.
The principal activities of the Authority are to provide rapid expansion of reliable and as affordable as possible telecommunications services on an equitable basis, with particular improvement in rural areas; promote efficient investment and innovation in telecommunications network and services; provide fair competition among service providers and allowing market forces to operate; provide and promote appropriate consumer protection and other safeguards in relation to telecommunications services where market forces are insufficient.
Table of Contents 20.1 20.2 20.3 SECTION 20: TELECOMMUNICATIONS AUTHORITY OF FIJI ........................................................................................... 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ........................................................................................................................................................ 1 Statement of Receipts and Payments .................................................................................................................. 2 Statement of Financial Position ............................................................................................................................ 2 PART B - CONTROL ISSUES ................................................................................................................................................ 2 Basis of Accounting .............................................................................................................................................. 2 Requirements of the Telecommunications Promulgation 2008 ............................................................................ 3 Board of Directors and Chief Executive Officer .......................................................................................... 3 Annual Report ............................................................................................................................................. 4 Reporting of Receipts and Payments VAT Inclusive ............................................................................................ 4 Failure to Develop a Finance Manual ................................................................................................................... 5 Accounting for Government Revenue .................................................................................................................. 5 20.6 20.7 20.8 20.5.1 20.5.2 20.4 20.5 PART A – FINANCIAL INFORMATION 20.1 Audit Opinion The audit of the financial statements of the Telecommunications Authority of Fiji (“Authority’) for the year ended 31 December 2013 resulted in the issue of a disclaimed opinion.
The basis for the disclaimer of opinion is as follows: The financial statements of the Authority for the year ended 31 December 2013 was not presented and prepared in accordance with the International Financial Reporting Standards for Small and Medium Entities (IFRS for SMEs) as required for its general purpose financial statements.
Accordingly, the Auditor General was unable to determine the impact on the financial statements, if any, of adjustment which may be necessary if the financial statements were prepared under IFRS for SMEs.
Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 20.2 Statement of Receipts and Payments Year ended 31 December Receipts Government Grant Miscellaneous Total Receipts Administration Expenses Operating Expenses Capital Expenses Value Added Tax Total Payments Net Deficit 2013 ($) 2012 ($) 384,646 52,081 436,727 237,443 197,578 19,290 66,360 520,671 (83,944) 639,115 104,891 744,006 225,139 272,183 345,806 77,936 921,064 (177,058) Total receipts declined by $307,743 as a result of decreases in government grant and miscellaneous revenue.
The Council however excised tighter control over both operating and capital expenses resulting in the decline in net deficit by $93,114 or 53%.

20.3 Statement of Financial Position As at 31 December Cash Total Assets Accumulated Funds 2013 ($) 141,990 141,990 141,990 2012 ($) 225,934 225,934 225,934 The Authority operates on a cash basis of accounting.

The decrease in cash at bank at year end by 37% was largely attributed by the decrease in government grant received by the Authority in 2013.
PART B - CONTROL ISSUES 20.4 Basis of Accounting The Telecommunications Authority of Fiji is a Government Statutory body which is required to publish audited financial statements in its annual report.

The Authority is therefore required to prepare its general purpose financial statements in accordance with accounting standards determined or issued by the Fiji Institute of Accountants.

The concern regarding the basis of accounting adopted has been highlighted to the Authority since 2011.
In July 2010, the Fiji Institute of Accountants adopted the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) effective from January 2011.

The standards apply to small and medium-sized entities that publish general purpose financial statements.

Since its establishment, the Authority has adopted cash basis of accounting in the preparation and presentation of its financial statements submitted for audit.
With this basis of accounting, the costs of all fixed assets are expensed, therefore not recognised in the Statement of Financial Position.

In addition, receivables and payables are also not captured in the financials.
Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 The Authority explained that the lack of capacity has prevented the move towards accrual based accounting or compliance with accounting standards determined or issued by the Fiji Institute of Accountants.

The Authority has provided the same explanations for the past four years.
Non-compliance with IFRS for SMEs is the basis for the Disclaimer of Opinion on the financial statements of the Authority for the year ended 31 December 2013.

Recommendation It is strongly recommended that the Authority prepare and present its general purpose financial statements in accordance with the accounting standards issued by the Fiji Institute of Accountants.
Management Comments Telecommunications Authority of Fiji (TAF) Board has decided that they will prepare and present its general purpose financial statements in accordance with the accounting standards issued by the Fiji Institute of Accountants from 2014.

20.5 Requirements of the Telecommunications Promulgation 2008 20.5.1 Board of Directors and Chief Executive Officer Section 6 of the Telecommunications Promulgation 2008 establishes the Board of the Authority to be appointed by the Minister.
The Board must meet at least once a month, which the Chairperson shall convene.1 The Board has the power to appoint a Chief Executive Officer of the Authority on such terms and conditions as the Board may determine.2 The audit noted that there was no board meeting held in 2013, although there was an established Board for the Authority.

This was confirmed by the Accountant during the audit when minutes of board meetings were not provided for audit purposes when requested.
In addition, the audit also noted that the Authority has been without a Chief Executive Officer for a number of years.

As a result, the Board has been taking an active role in the management and operations of the Authority.

Recommendations  The Authority should ensure that the requirements of the Telecommunications  Promulgation of 2008 are complied with.

It is recommended that the role of the Board and that of Executive Management be separated.
Management Comments The Board has been unable to meet due to some members of the Board holding Management positions within several Key Government Ministries.

However the board remains in close contact through emails and carry out decision making through the use of flying minutes.
Also some of the board members have many official 1 Telecommunications Promulgation 2008 s9(1) 2 Telecommunications Promulgation 2008 s11(1) Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 international meeting commitments that conflict with tentative times of the scheduled board meeting.
Also it has been difficult to find additional board members given the travel ban that were imposed on Officials appointed to such positions by Government.

However we are hopeful that will not be a problem now with the removal of the travel bans.

We would like to point out that the inability for the board to meet has in no way impacted the operations of TAF.

However the board will make the necessary submission with regards to your recommendation to the Ministry, for appropriate action.
The Authority welcomes your recommendation and will make appropriate determination on the advertising of key positions this year.

It was necessary for the board to have a direct role in the activities of TAF, given there were no senior managers to oversee implementation of critical projects.

We hope that with the removal of travel sanctions in recent months by foreign government, we will have a better response from more qualified candidates for these positions now.
20.5.2 Annual Report The Authority must, in accordance with the prescribed procedures, cause to be prepared an annual report of its activities during the previous financial year.3 The annual report of the Authority must incorporate its audited accounts.4 A performance measure in the Performance Agreement signed between the Government and the Telecommunication Authority of Fiji was the preparation of the annual report.5 The audit noted that the Authority has not prepared any annual report since its establishment.
The Authority has not complied with the requirements of the Telecommunications Promulgation 2008 and its Performance Agreement.

Recommendation The Authority should prepare Annual Reports and publish its audited financial statements.

Management Comments The Authority welcomes your recommendation and will prepare and publish the annual reports and financial statements.
20.6 Reporting of Receipts and Payments VAT Inclusive An entity shall exclude from revenue all amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes.6 The review of the draft financial statements submitted for audit revealed that receipts and expenditures were presented in the Statement of Receipts and Payments at VAT inclusive balances.

However, the General Ledger closing balances were reported at VAT exclusive amounts.
This issue has already been highlighted in previous years’ audit reports without any action taken by the Authority.

The audit also noted that the Authority did not disclose the use of the gross basis method in the financial statements.
3 Telecommunications Promulgation 2008 s26(1) 4 Telecommunications Promulgation 2008 s26(3) 5 Telecommunication Authority of Fiji Performance Agreement-Appendix C 6 IFRS for SMEs - Measurement of Revenue s 23.4 Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Reporting VAT inclusive amounts will distort the results of the financial performance of the Authority as presented in the financial statements.
Recommendation It is recommended that the Authority use the General Ledger as the basis of drawing up its draft financial statements and present the financial statements VAT exclusive unless the Authority can show that the impact of VAT is not significant.

Management Comments For the financial year end 2014 Authority will use the General Ledger as the basis of drawing up its draft financial statements and present the financial statements VAT exclusive.
20.7 Failure to Develop a Finance Manual A Finance Manual sets out policies and procedures needed for the efficient and effective management of the entity and effective operation of internal controls.7 The audit noted that the Authority has yet to develop a finance manual outlining its accounting processes and procedures.

The cause of the issue, according to the Authority, has been attributed to the lack of capacity.

The issue had been continuously raised with the Authority since its establishment.
Recommendation The Authority should consider developing its own Finance Manual detailing processes and procedures and internal controls to govern the accounting functions of the Authority.

Management Comments As per the TAF Board instructions TAF is using the Government’s Financial Management Act 2014, in the absence of its own Accounting Manual.

TAF will be developing its Accounting Manual as soon as necessary capacity is built into its existing structure.
20.8 Accounting for Government Revenue Revenue is the gross inflow of economic benefits arising from the ordinary operating activities of an entity.8 Revenues collected by the Authority are government revenue deposited to the Consolidated Fund of Government.

However, on certain instances, receipts were deposited into the Authority’s bank account and later transferred to the Consolidated Fund.
And to account for this, the Authority credited revenue and debited expenditure when the funds are transferred to the Consolidated Funds.

This is shown as CFA Revenue in Note 2 and Note 4 of the financial statements for the year ended 31 December 2013.
7 Ministry of Finance Proforma Finance Manual 2011 8 International Accounting Standards 18.7 Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 The accounting practice of recognising government revenue in the Income Statement and offsetting the balance by expensing the same amount when funds are transferred to the Consolidated Funds is not in compliance with IFRS for SMEs.
Receipts and payments have been overstated by $11,450 and $11,585 respectively.

Recommendation The following journal entries are recommended to resolve the above issue.

 Receipt and deposit in the Authority’s bank account: DR – Cash CR – Payable (Government – Ministry of Finance)  Transfer of funds to the Consolidated Fund: DR – Payable (Government – Ministry of Finance) CR - Cash Management Comments From 2014 TAF will pass the journal entries as recommended by Office of the Auditor General.
Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 21: FIJI NATIONAL SPORTS COMMISSION Programme Statement The Fiji National Sports Commission was established on 22 January 2013 under the Fiji National Sports Commission Decree 2013 in order to guide and enhance the delivery of sports programmes in Fiji through a coordinated approach at all levels of participation by government, statutory bodies and the community and to ensure the development of sports in Fiji and for related matters.
Table of Content SECTION 21: FIJI NATIONAL SPORTS COMMISSION ........................................................................................................ 1 PART A – FINANCIAL INFORMATION .................................................................................................................................. 1 Audit Opinion ........................................................................................................................................................ 1 Abridged Statement of Financial Performance ..................................................................................................... 1 Abridged Statement of Financial Position ............................................................................................................. 2 PART B AUDIT FINDING ................................................................................................................................................... 2 Fiji Rugby Union Acquittals ................................................................................................................................... 2 21.1 22.2 21.3 21.4 PART A – FINANCIAL INFORMATION 21.1 Audit Opinion The audit of the financial statements of the Fiji National Sports Commission for the year ended 31 December 2013 resulted in the issue of an unqualified audit report.
22.2 Abridged Statement of Financial Performance Year Ended 31 December Revenue Operating Grant Sports Grant Other Operating Revenue Total Revenue Expenses Sports Grant Expenses Administrative Expenses Depreciation Personal Expenses Operating Expenses Total Expenses Net Operating Surplus for the Period 2013 ($) 793,981 1,896,055 23,488 2,713,524 1,875,963 141,151 20,220 211,422 247,857 2,496,613 216,911 Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 The Commission recorded a surplus of $216,911 in 2013 which was the first year of operations.
21.3 Abridged Statement of Financial Position As at 31 December Current Assets Cash at Bank Prepayment Other Current Assets Total Current Assets Non-Current Assets Property, Plant & Equipment Total Non- Assets Total Assets Currents Liabilities Trade and Other Payables Employee Entitlement Deferred Revenue Finance Lease Liability Total Current Liability Non-Current Liabilities Finance Lease Liability Total Liabilities Net Assets Total Accumulated Funds 2013 ($) 209,186 6,485 845 216,516 337,017 337,017 553,533 2,268 5,638 98,070 42,232 148,208 188,414 336,622 216,911 216,911 The Commission recorded net assets of $216,911.
PART B AUDIT FINDING 21.4 Fiji Rugby Union Acquittals Fiji National Sports Commission provides grants to sporting bodies.

The recipients are required to submit audited acquittals with payment vouchers and receipts after using the funds.1 Fiji National Sports Commission disbursed a grant of $333,000 to Fiji Rugby Union (FRU) for participation and preparation of the National Rugby Sevens Team in the Sevens World Cup held in Russia in year 2013.
The review of the acquittal submitted revealed the following anomalies:  Out of the total sum disbursed, FRU failed to provide supporting documents for $47,123.93 used for the participation and preparation of the National Rugby Sevens Team in the Sevens World Cup.

Refer to Table 21.1 for details.


1 Fiji National Sports Commission Grant Management Guideline Manual Section 7.1(b) Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Table 21.1: Details of Grant Date Cheque No2.
Amount ($) 11/06/13 2668 19/06/13 2715 20/06/13 2719 20/06/13 2721 01/07/13 2792 17/07/13 2850 28/08/13 2991 Total 23,940.00 9,761.00 23,520.00 10,163.00 105.00 8,264.00 632.68 Payments With Supporting Document ($) 23,476.75 - - 5,745.00 40.00 - - Total Amount Without Supporting Document ($) 463.25 9,761.00 23,520.00 4,418.00 65.00 8,264.00 632.68 47,123.93 In the absence of acquittals the Commission could not substantiate whether FRU has utilized the grants for the purpose it was given.
 Out of the total grant fund, expenditure incurred totalling $177,481.47 did not relate to participation and preparation of the National Rugby Sevens team in the Sevens World Cup.

Refer to Table 21.2 below for details.
Table 21.2: Details of Expenditure Date Cheque Number Particulars 04/03/13 012721 Payment of Allowances and Camp Expenses for Hong Kong and Japan Amount ($) 14,535.00 11/03/13 012742 Payment of Allowances and Camp Expenses for 15,885.00 Hong Kong and Japan 15/03/13 012765 Payment of Allowances and Camp Expenses for 41,572.00 Hong Kong and Japan 10/04/13 10/04/13 2485 Payment of Visa Fee for Team Members and Management at the British High Commission 2456 Payment of Allowances and Expenses for Scotland 6,100.00 11,617.50 and London Sevens 16/04/13 2492 Payment of Allowances and Expenses for Scotland 14,990.00 and London Sevens 24/04/13 2496 Payment of Allowances and Expenses for Scotland 19,640.00 and London Sevens 26/04/13 2499 Payment of Allowances and Expenses for Scotland 53,141.97 and London Sevens Total 177,481.47 The findings indicate that the grant funds were not used for the purpose it was given.
Failure by FRU to use the funds for the purpose it was provided indicates that the FRU did not comply with the Grant Agreement.

In addition there is a risk of mismanagement of grant funds.
Recommendations The Commission should:  ensure that the grant recipients provide proper acquittal reports together with supporting documents; and 2 FRU Cheque Number Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014  further investigate the utilization of grant by FRU and take appropriate action.
Management Comments We agree that Fiji Rugby Union (FRU) was unable to fully acquit to our satisfaction the $333,000 grant disbursed for the participation and preparation of the National Rugby Team in the 2013 Rugby World Cup.
After various meetings with FRU acting Finance Manager, acting CEO and consultation with the Permanent Secretary - Ministry Of Finance we found the following:  Finance Manager and Finance Officer of FRU left employment that had better understanding of the transactions and source documents.

Some payment vouchers were missing altogether.

Some payment vouchers had no supporting documents.

   Proper filing of finance documents were not in place.
A total of $47,123.93 could not be reconciled as proper source documents were not attached to the Payment Vouchers.

We also noted that other tour expenses amounting to $179,488.47 which was not part of the 2013 Rugby World Cup but was build-up towards 2013 Rugby World Cup but proper source documents was not available.

On 22nd January, 2013 FRU acting CEO and acting Finance Manager wrote to the Commission stating the reasons for not fully acquitting the grant.
On 21st January, 2013 Peter Mazey the Executive Chairman emailed Permanent Secretary – Ministry of Finance requesting he send the Commission a formal letter stating the reason for not fully acquitting the grant On 22nd January, 2013 the PS Finance responded by email stating that, quote “Yes that is what we had agreed” unquote and instructing his Deputy Secretary Budget in the MOF to meet with Kalidas, Finance Manager FRU to resolve the matter.
There were various email correspondence between the Accountant, Fiji National Sports Commission requesting the Finance Manager, Fiji Rugby Union to fully acquit the $333,000 grant disbursed to FRU.

While the Commission was advised by Ministry of Finance to accept the FRU response with regard to the provision of supporting documents for expenditure incurred under this grant we have continued to pursue the matter with FRU.
The appointment in the past couple of months of a new CEO and Finance Manager has meant that we have been able to request they have a relook at their documents especially on this issue and to respond accordingly.

Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 SECTION 22: FIJI SPORTS COUNCIL Programme Statement The Fiji Sports Council was established under the Fiji Sports Council Act (Cap 271A) Rev.

1985.
1985.

The functions of the Council are to: Foster and to promote development of amateur sports and recreation in Fiji; Foster support and undertake the provision of facilities for sport and recreation;    Promote the utilisation of sporting and recreational facilities in Fiji;  Investigate developments in sports and recreation and disseminate knowledge and information about such developments; and  Advise the Minister on any matters relating to sports and recreation.
The Council is responsible for maintaining major sporting grounds and properties and charges fees for its usage.

It also receives grants from government to cover expenses concerning sports developments.
The Council also receives funds from Tattersalls and Pacific Instant Lottery in accordance with the Gambling Turnover Tax Decree 1991 Table of Contents 22.1 22.2 22.3 SECTION 22: FIJI SPORTS COUNCIL .................................................................................................................................... 1 PART A – FINANCIAL INFORMATION ..................................................................................................................................... 1 Audit Opinion ......................................................................................................................................................... 1 Abridged Income Statement .................................................................................................................................. 2 Abridged Balance Sheet ........................................................................................................................................ 2 PART B – CONTROL ISSUES ................................................................................................................................................... 3 Variances in Hiring of Facilities Reconciliation ...................................................................................................... 3 Property, Plant and Equipment Anomalies ........................................................................................................... 5 Loan Agreement Not Drawn Up with Ministry Of Finance ..................................................................................... 6 Going Concern ....................................................................................................................................................... 7 Loss from Operation of Damodar City National Aquatic Center ............................................................................ 8 22.4 22.5 22.6 22.7 22.8 PART A – FINANCIAL INFORMATION 22.1 Audit Opinion The audit of the financial statements of the Fiji Sports Council for the year ended 31 December 2013, resulted in the issue of a qualified audit report.
The issues qualified are as follows: 1.

The carrying amount of property, plant and equipment as at 31 December 2013 was $71,751,048.

The carrying amount was extracted from property, plant and equipment register (PPER) which was not properly maintained and also included large number of assets which could not be identified.
I could not satisfy myself on the existence and completeness of physical assets recorded in the PPER nor the valuation of the cost, depreciation, net carrying amounts and deferred income recorded as at 31 December 2013.
Accordingly, I am unable to verify the reasonableness of the assets depreciation expenses for the year ended 31 December 2013 and carrying values of the property, plant and equipment disclosed in the financial statements as at 31 December 2013 and determine the impact of Report of Statutory Authorities – December 2014 Page 1 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 adjustments, if any, which may be necessary had a complete and accurate PPER not made available for verification.
2.

The Council did not perform proper revenue reconciliation relating to hiring of facilities for the year ended 31 December 2013 totalling $2,692,291.

As a result, I was not able to ascertain that all income have been brought into account during the year ended 31 December 2013.

It is not possible to ascertain the impact on the operating results and cash flows for the year ended 31 December 2013.

3.

Included in the Borrowings and Interest accrual are the amounts $4,070,550 and $22,627 respectively.
The total amount of $4,070,550 represents amount payable to Government.

The loan agreement between the Fiji Government and the Council specifying the terms and conditions of the loan payable to Fiji Government amounting to $4,070,550 as at 31 December 2013 has not been finalized and thus I was unable to ascertain the actual loan amount payable to government as at 31 December 2013.
22.2 Abridged Income Statement Year ended 31 December 2013 Revenue Operating Revenue Other Operating Revenue Interest Income TOTAL REVENUE Expenses Administrative Expenses Depreciation Personnel Expenses Operating Expenses Finance Expenses TOTAL EXPENDITURE NET SURPLUS FOR THE YEAR 2013 ($) 2012 ($) 3,888,491 1,323,899 8,870 5,221,260 222,908 1,274,985 1,600,503 1,883,846 38,524 5,020,766 200,494 3,289,130 1,247,245 27,577 4,563,952 174,891 1,221,068 1,394,368 1,481,346 265,047 4,536,720 27,232 The Council recorded a net surplus of $200,494 in 2013 compared to a net surplus of $27,232 in 2012.
The increase in net surplus was attributed to the increase in operating revenue by $599,361 or 18% as a result of increase in income generated form hiring of facilities.
22.3 Abridged Balance Sheet As at 31 December 2013 Assets Cash and cash equivalents Other Current Assets Property, Plant & Equipment TOTAL ASSETS Liabilities Cash and cash equivalent Trade & Other Payables Other Current Liabilities Borrowings TOTAL LIABILITIES NET ASSETS 2013 ($) 2012 ($) 297,112 1,954,285 71,751,048 74,002,445 3,309,178 2,810,817 62,108,976 68,228,971 380,626 1,216,431 29,422 17,171,766 18,798,245 55,204,200 118,195 3,233,946 18,771 15,936,354 19,307,266 48,921,705 Report of Statutory Authorities – December 2014 Page 2 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 As at 31 December 2013 EQUITY Reserves Deferred Income Accumulated funds TOTAL EQUITY FUNDS 2013 ($) 2012 ($) 108,000 52,750,538 2,345,662 55,204,200 108,000 46,668,537 2,145,168 48,921,705 The Net Asset increased as a result of additional purchases of property, plant and equipment which increased by $9,642,072 or 16% compared to the year 2012.
There was an increase in borrowings following the receipt of additional government grant of $5 million for the loan repayment during 2013.

The total liabilities declined by $509,021 or 3% as a result of decrease in trade and payables by $2,017,515 or 62% compared to 2012.

Total Equity increased by $6,282,495 or 12.8% as the result of additional deferred income of $7,250,000 in relation to the government grant received connecting the ANZ Stadium.
PART B – CONTROL ISSUES 22.4 Variances in Hiring of Facilities Reconciliation Supervisor’s report outlines the use of the facilities, the revenue collected which is submitted to respective operation managers on a monthly basis.

Effective management of revenue reconciliation greatly increases management’s ability to proactively identify and resolve issues that could result in misstatements in financial accounting and reporting records.
By creating and putting in place appropriate reconciliation and information management processes, entities can gain assurance on the completeness of general ledger balances.

The Fiji Sports Council has a total of fifteen revenue generating facilities.

Each facility with its own facility supervisor is responsible for the smooth running and proper functionality of daily operations and recording of relevant expenditures incurred and revenues earned by the facility.
The Operations Manager is responsible for the overall operation of all facilities and oversees all matters related to the use of all of the Council’s facilities.

All facility supervisors report to Operations Manager on a monthly basis which also includes all revenue and expenditure generated by each facility.

The following anomalies were noted on the review of hire of facilities revenue records: 1.
There were a variance of between the Supervisor’s report responsible for these facilities and general ledger records amounting to $726,198.46.

Refer to Table 22.1 for details.
Table 22.1: Variance in Hiring of Facilities Revenue Facility ANZ Stadium National Gymnasium Multipurpose Court Victoria Tennis Courts Facilities Hire ($) 733,836.78 312,728.90 40,956.24 53,373.68 GL Revenue Naming Rights ($) 148,750.00 34,996.32 17,391.24 - Total ($) 882,586.78 347,725.22 58,347.48 53,373.68 Supervisors Report Variance ($) ($) 596,380.73 286,206.05 26,880.42 1,721.57 (1,807.10) 320,844.80 56,625.91 55,180.78 Report of Statutory Authorities – December 2014 Page 3 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Facility National Aquatic & Beach Court National Netball Centre Lawaqa Complex Thompson Park Regional Tennis Court National Fitness Centre Vodafone Arena Ra Sports Ground Hockey Suva Lawn Tennis Court National Beach Court Total Concession Total Revenue from Facilities Hire Facilities Hire ($) 197,090.31 52,819.64 127,705.91 11,184.54 25,957.25 167,560.57 496,556.55 1,141.73 37,541.25 35,210.49 6,181.75 2,299,845.59 392,445.86 2,692,291.45 Supervisors Report Variance Total GL Revenue Naming Rights ($) 50,000.03 - - - 8,713.68 - 123,333.32 - - - - ($) ($) 206,919.75 247,090.34 16,841.10 52,819.64 - 127,705.91 - 11,184.54 - 34,670.93 153,046.98 167,560.57 534,574.07 619,889.87 - 1,141.73 37,541.25 - - 35,210.49 16,417.60 6,181.75 383,184.59 2,683,030.18 1,956,831.72 ($) 40,170.59 35,978.54 127,705.91 11,184.54 34,670.93 14,513.59 85,315.80 1,141.73 37,541.25 35,210.49 (10,235.85) 726,198.46 2.
There was no report prepared by Supervisors for 6 out of the 15 facilities.

The absence of carrying out revenue reconciliations for the year ended 31/12/13 does have an impact on the operating results and cash flows for the year ended 31/12/13.

The above indicates the Council’s laxity for responsible Officers not taking proactive measures to reconcile and strengthen the internal controls over revenues collection processes.
Recommendations The Operations Manager should ensure that facility supervisors prepare monthly reports and submit to Finance Division for revenue reconciliation purposes.

Those variances should be investigated with the Supervisors and reduced to a minimal level.

Management Comments In the 2012 Audit which FSC received final comments in December 2013, the Auditor General’s office made the same comments.

FSC management immediately changed the process effective January 2014.
This 2013 report does not reflect the changes recommended in previous year’s management letter as FSC had just received the comments and implemented changes which include FSC conducting a review of the reports submitted by the Operations Supervisors and found that the reports in some instances failed to take into account the following data: 1.

Figures presented by the supervisors were VAT inclusive while Finance figures are always VEP.

2.

Supervisors did not always include naming rights figures 3.
Finance department usually include income in suspense account and realize them when they fall due which supervisors did not normally consider.

This will however be reflected in 2014 Report.


The monthly report process has been modified in 2014 as recommended to include Manager Finance who will then consult with the Revenue Clerk to verify and reconcile reports against the General Ledger and this is sent to Operations Manager for supervisors to review against their records before confirming as financial report for the preceding month.
The Ops Manager himself overlooked these remaining 6 facilities Report of Statutory Authorities – December 2014 Page 4 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 22.5 Property, Plant and Equipment Anomalies It is a good internal control measure that the Property, Plant and Equipment register of the Council is properly maintained at all times containing information such as full description of an asset, serial number, location, date purchased, assets properly classified, additional costs relating to the purchase or installation of the assets to be included as part of the asset and not as individual line items, and depreciation adequately charged.
The following anomalies were noted during the review of Property, Plant and Equipment records:  The property, plant and equipment register (PPER) as at 31/12/13 was not properly maintained and recorded as large number of assets could not be identified.

Thus the assertions of the existence and completeness of physical assets recorded in the PPER cannot be validated.

 A variance of $54,244,450 was noted between the general ledger closing balance and the trial balance submitted by the Council.
 There was a variance of $20,368,092 between the financial statements and fixed assets register relating to written down values opening and closing balances, additions and disposals amounts to fixed assets.
Refer to Table 22.2 for examples: Table 22.2: Variances between Financial Statement and Fixed Assets Register Description Opening WDV as at 01/01/13 Closing WDV as at 31/12/13 Additions to Fixed Assets Disposals to Fixed Assets Total Balance as per FS ($) 62,108,976 71,751,048 10,928,057 11,000 144,799,081 Balance as FAR ($) 52,796,894 61,588,583 10,045,512 - 124,430,989 Variance ($) 9,312,082 10,162,465 882,545 11,000 20,368,092 Discussions held during the audit revealed that the Council has engaged a consultant to review the fixed asset register by addressing those anomalies regards property, plant and equipment.
This is anticipated to be completed by end of the year 2014.

Recommendations The Council should reconcile those variances between the general ledger and the fixed assets register.

The Council should ensure that additions/disposal of property; plant and equipment are properly taken up in the fixed assets register so that it can be fairly reflected in the financial statement.

The Council should tag all property, plant and equipment for easy identification to/from the PPE register.
Management Comments The Fiji Sports Council has engaged SouthPac Advisory Chartered Accountant to examine the existing fixed asset register, identify systematic inaccuracies and deficiencies, reviewing existing depreciation rates and Report of Statutory Authorities – December 2014 Page 5 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 methods and examining and composing of work in progress relating to the 2012/2013 redevelopment project of ANZ Stadium and this has been extended to all assets and currently a full valuation of all property is being undertaken by the Valuation Department at the Ministry of Lands.
An Equipment Officer commenced with FSC in January 2013 and one of his core responsibilities was to tag all assets and load onto PPE register which is an ongoing exercise.

22.6 Loan Agreement Not Drawn Up with Ministry Of Finance It is important that loan agreement is made between the borrower and the financier and the terms and conditions of such borrowings be complied at all times.
On 30/08/2005, the Cabinet agreed that government will repay Fiji Sports Council’s loan from Fiji National Provident Fund (FNPF), with an amount of $321,000 to be paid as instalment.

The Cabinet also agreed that a loan agreement between the Council and the Government be drawn up to facilitate repayment by the Council of the total sum paid by government to FNPF, consistent with the Financial Management Act 20041.
The audit noted that the Government has made repayments on behalf of the Fiji Sports Council in respect of the loan the Council has with the Fiji National Provident Fund and that the Council owes Government $4,070,550 being loan repaid as at 31/12/13.

However, the formal agreement to be drawn up between the Government and Fiji Sports Council in relation to the terms and condition of this financial arrangement are yet to be finalised.
The absence of a formal agreement, the Council is not able to correctly classify the amount payable into current and long term liabilities thus affecting the Council’s working capital.

Moreover, the audit noted that confirmation from Ministry of Finance regarding the loan liability from Fiji National Provident has a variance of $23,663.30.

Refer to Table 22.3 for details.


Table 22.3: Variance in FNPF Loan Balance and Ministry of Finance Records Particulars Balance as per Council records Balance as per MOF records Variance Amount ($) 4,070,550.00 4,094,213.302 23,663.30 Discussions with the Ministry of Finance (MOF) revealed that necessary documentation pertaining to the loan is ready for execution but the Council has requested to convert the loan into grant3.
Without any agreement, the Council is unable to regulate the mutual promises made by the Council from Ministry of Finance.

Recommendations   A formal agreement should be drawn up between the Council and the Government to regulate the mutual promises made between them.

The Council should ensure that its records are reconciled with the Ministry of Finance figures to accurately reflect the amounts owed to government.
1 CP(05)320 2 Letter from Ministry of Finance dated 13/10/14 3 Email from Nemaia Dawai of Ministry of Finance dated 21/11/14 Report of Statutory Authorities – December 2014 Page 6 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Management Comments The Council has endeavored through letters and meetings to make arrangements to have this matter clarified and settled.
A response from the Ministry of Finance(MOF) stated that MOF requested that FSC focus instead on the current Government guaranteed grant.

Discussion to draw formal agreement with government is still in process.

22.7 Going Concern It is always necessary that the Company operates with positive net assets to be sustainable in the long run.

When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern.
An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so4.

The audit noted that as at 31 December 2013 the negative working capital with the Council’s current liabilities exceeding its current assets by $8,046,396.

In addition, the negative working capital has been the trend for the past seven year.
Refer to Table 22.4 below for details: Table 22.4: Deficiency in Working Capital form 2007 - 2013 Financial Year 2007 2008 2009 2010 2011 2012 2013 Deficiency in working capital ($) 1,500,990 1,588,682 2,376,467 2,098,493 2,618,040 5,506,875 8,046,396 Working capital ratio 0.4:1 0.43:1 0.31:1 0.4:1 0.35:1 0.53:1 0:21:1 In addition, the cash flow statement of the Council showed negative cash flows from operations during the year 2013.
Net cash outflow from operating activities was $1,716,824 for 2013 which indicates that income generated by the Council from operating activities are not sufficient to meet day to day operations.

Recommendations The Council should put in place mitigating factors to reduce the unfavourable working capital ratio and finalise its loan agreement with Ministry of Finance.
Necessary disclosures to show the Council’s ability to continue as a going concern as required under International Accounting Standards 1, Paragraph 25 should be disclosed as Note 1 of the Accounts.
4 IAS 1 – Para 25 Report of Statutory Authorities – December 2014 Page 7 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Management Comments The Fiji Sports Council Act dictates that “the funds of the Council shall comprise.....of all money paid to the Council by way of grant or loan from the Consolidated Fund for the purposes of the Council” In a normal business, only the shareholder can correct a situation where there is a working capital deficiency and in this case, the only shareholder is the Government.
In the past, Government would fund capital projects like Lawaqa Park but failed to provide funds to manage the assets and therefore there is always likely to be a Working Capital deficiency.

It is to be noted that depreciation is an immediate cost that also goes into business on donated assets.

FSC notes your comments and the Board has instructed the CEO to prepare a cabinet paper requesting approval to have all debt transferred to equity.
This can only be approved by Cabinet and will improve the working capital deficiency.

22.8 Loss from Operation of Damodar City National Aquatic Center The enterprise is normally viewed as a going concern that is continuing operations in the foreseeable future.

Hence, it is imperative that Council generates adequate revenue from its operations so that it is able to meet short as well as long term obligations.
The audit noted that the Damodar City National Aquatic Centre continued to incur losses from its operations.

A summary of income and expenditure relating to National Aquatic Centre at each respective balance dates abstracted from the Council’s record for the last six financial years showed continuous losses for the period 2007 to 2012.

Refer to Table 22.5 for details.
Table 22.5: Losses for the Past Seven Years from National Aquatic Centre Financial Year Ending 2007 2008 2009 2010 2011 2012 2013 Income Expenditure Loss ($) 132,983.39 120,437.45 122,045.17 167,132.52 187,227.86 206,882.79 244,402.34 ($) 154,595.42 192,423.79 203,112.67 232,566.29 294,745.37 313,652.08 296,840.40 ($) 21,612.03 71,986.34 81,067.50 65,433.77 107,517.51 106,769.29 52,438.06 The above trend indicates that the Centre has put a strain on the Council’s finances and the ability to maintain higher profit in other profitable operations of the Council.
Furthermore, audit noted that seven (7) council’s facilities incurred losses during 2013.

Refer to Table 22.6 below for details.
Table 22.6: Losses from Fiji Sports Council Facilities Facility National Stadium National Aquatic Centre Income ($) 860,815.92 244,402.34 Expenditure ($) Loss ($) 1,296,926.77 436,110.85 52,438.06 296,840.40 Report of Statutory Authorities – December 2014 Page 8 REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF FIJI_____________________________________2014 Facility Lawaqa Complex Thompson Park Regional Tennis Court Ra Sports Ground Suva Lawn Tennis Court Total Income ($) 127,705.91 10,974.54 32,545.73 1,141.73 32,887.96 1,310,474.13 Loss Expenditure ($) ($) 79,699.80 207,405.71 11,392.22 22,366.76 17,989.70 50,535.43 22,884.15 24,025.88 34,803.18 1,915.22 1,932,904.13 622,430.00 The above indicates strategies put in place may have not been effective to reduce operational costs and maximising revenues through stringent operating policies with constant reviews of fees structure.
Recommendations The Council should relook at the cost of maintaining these facilities and put in strategies to minimise unnecessary costs and improve on reducing the losses by providing incentives as to increase the usage of these facilities.

Management’s comment The Council is consistently driving programmes to increase usage of this facility from teen pool parties to Mum and Bubs Aqua sessions to birthday parties and annual fun days.
It has successfully brought new programmes into play that has contributed to much needed income for Damodar City Aquatic Centre.

At all facilities, we have reviewed the staff roster to ensure consistent delivery without reducing our liability.

At all venues there is ongoing management of supplies to ensure we are constantly reviewing purchases.

For e.g., our pool chemical supplies are checked quarterly to ensure the quality of the water is not affected.
Historically, Aquatic centres do not make money due to the high overhead costs involved.

Strategies have been put in place at FSC to generate additional income.

The Council recognises the interest on a loan arranged by Government.

The 3 grounds, Lawaqa Park, Thompson Park and Rakiraki Grounds were arranged for the Council to manage due to political decisions made at that time for Navua, Rakiraki and Sigatoka.
Due to the fact that these grounds are not in population centres, they were never viable and today, despite reducing rates at these centres, the Council still finds it a challenge to generate regular income at these facilities.

The Council is governed by the fact that we are there to foster support and undertake provision of facilities for sport and recreation as dictated in our FSC Act and not necessarily to make a profit.
The expenditure noted for the ANZ Stadium is for the full 12 months whereas the income generated was during the 7 months in 2013 that the Stadium was open for.

Report of Statutory Authorities – December 2014 Page 9