MEDIA RELEASE 32 (Part 1) – REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES - 2007
In compliance with Regulation 5 (3) of the Audit (Public Accounts Committee) Regulations 2007 which directs that: “the Committee shall not make the report or its proceedings public until the Prime Minister has tabled the report in Cabinet as required under sub-regulation (1)”, we take pleasure in releasing our main findings for public consumption the REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES - 2007.
Because of the large number of pending reports and the futility of examining the Auditor General’s reports as far back as Year 2000, the Committee, with the concurrence of the Auditor-General, thought it more prudent and more fruitful to cover only the critical reports outstanding in 2005. It would then proceed to scrutinize all the outstanding reports for 2006, 2007, 2008 and 2009. That would cover a total of 36 pending reports out of a total of 80 to be examined in detail by the Committee.
The Committee adopted the following procedures in reviewing the Auditor-General’s Report:
a) Read the Report and identify issues for scrutiny and clarification;
b) Send out a provisional list of questions to the Ministries/Departments/Entities undergoing
investigation and allow a period of at least ten (10) working days before -
c) Calling for interviews – to respond to the questions initially raised and where relevant,
supplementary questions would also be asked and discussed to clarify issues;
d) Make site visits if necessary, either before or after the interview;
e) Writing of PAC Report on its own findings;
f) Submission to His Excellency the President who will subsequently send it to the Prime
Minister;
g) Releasing to the Public only after Cabinet has discussed it.
The Committee takes about four (4) to five (5) weeks to complete its report, but it is often difficult to meet its own set deadline because of the inability of the various Ministries/Departments/ Entities to fully provide all the information required on time.
The Committee was guided by the Auditor-General’s Report and scrutinized only the areas that had been cited in the Audit Report in the first place. The Committee has now completed and submitted to His Excellency the President, thirty -three (33) reports. The Committee had already released thirty (31) of those reports to the media and this is the thirty-second (32) media release which will be in four parts.
There were twenty-four (24) Statutory Authorities which were examined and they will be reported as follows:
Part 1 –
· Agricultural Marketing Authority
· Capital Markets Development Authority
· Fiji Arts Council
· Fiji Institute of Technology
Part 2 -
· Fiji Islands Revenue & Customs Authority
· Fiji Museum
· Fiji National Council for the Disabled Persons
· Fiji Servicemen’s Aftercare Fund
· Fiji Sports Council
· Fiji Visitors’ Bureau
· Korovou Rural Local Authority
Part 3 -
· National Fire Authority
· National Food & Nutrition Centre
· National Substance Abuse Advisory Council
· Navua Rural Local Authority
· Prices and Income Board
· Training and Productivity Authority of Fiji
· Coconut Industry Development Authority of Fiji
Part 4 -
· National Roads Safety Council
· Consumer Council of Fiji
· Fiji Islands Trade and Investment Bureau
· Fiji Audio Visual Commission
· Commerce Commission
· Sugar Industry Tribunal
Part 1
1. AGRICULTURAL MARKETING AUTHORITY
The Committee had difficulties with obtaining the responses to questions that were sent to AMA as the CEO was on suspension and the Acting CEO joined management in October 2010. The situation was further aggravated by the absence of records and files which had been taken by FICAC. All staff and Board Members implicated were no longer with the Authority.
The Committee also summoned and sent specific questions to those who were implicated as well as those who could throw more light on the issues.
Furthermore, the Committee carried out its own investigation with FIRCA, Immigration and Reserve Bank on some of the issues raised.
All the written and oral responses from those interviewed had assisted the Committee in formulating an opinion and endorsing the OAG’s recommendations. In view of the seriousness of some of the breaches, and the inconclusiveness of some of the responses on issues raised by the OAG, the Committee made some recommendations to be investigated by FICAC.
Audit revealed that although AMA was issued an unqualified report, it had breached the requirements of FAS 2 Inventories in not disclosing in the Financial Statements, the accounting policy used for measuring inventories and the cost formulae used.
The following control issues were raised as matters of concern:
VAT Reconciliation - VAT reconciliation had not been prepared since 2004. The Committee was informed that the VAT Reconciliations for 2004, 2005 and 2006 had been carried out and all outstanding VAT arrears had been paid.
Inventory System - Audit reported the following anomalies in the accounting of inventory by AMA;
i. Stock take sheets were not signed or verified by the person that carried out the stock take at the end of 2006;
ii. No inventory cards were maintained for the receipt and issue of inventory;
iii. The closing stock could not be substantiated as there were no stock sheets kept; and
iv. The Financial Statements had not reflected the Accounting Policy that was used for measuring inventories and the cost formulae.
Provision for Doubtful Debt -The Authority had not made any provision for Doubtful Debts for 2 debtors namely Tropical Fresh and PAC Asia Produce when it appeared that recoveries would be doubtful.
Consultancy Services - Tenders were not called for the entire consultancy works undertaken by the Authority. One of the companies (Aus Pac Asia Consultant) engaged was owned by one of the Board members (John Low). Mr. Low had not declared his interest. There were other irregularities noted not only in this project but in other projects requiring consultancy service.
Unauthorised Payments to Board Members - Two (2) Board members namely Mr. John Low and Mr. Dinesh Shankar were paid $1,200.00 each by the Authority for attending a Strategic Planning Workshop and an additional $730.00 was paid to Mr. Dinesh Shankar for being away from his business. First of all, no reason was given for the payment of $1,200.00 to each of the Board member, and to confuse the issue further, why was an additional $730.00 paid as compensation.
Advance to Rewa Rice Limited - The Authority had made an advance payment of $100,000.00 to Rewa Rice Limited for the 15 year lease of its Nausori Property. Furthermore, there was an additional $50,000.00 that was paid in advance for another piece of land.
Loss in Trading Activities - As at 31/12/2006, there were significant losses in a number of trading activities which included root crops, seafood and honey, thus incurring gross losses of over $115,000.00.
Anomalies in Awarding of Tender - A small chartered accounting firm was appointed to conduct due diligence on the proposed merger with Food Processors Limited even though there were others which included a bigger accounting firm that had a lower bid.
Conflict of Interest -Some Board members had claimed for consultancy work, mileage claims and other charges on work undertaken for the Authority. Audit could not verify whether the consultancies were called for tender because tender files and documents were not made available nor were any Board approvals given apart from queries raised in Board meetings.
Dealings by Capital Foreign Exchange -The Authority had planned to set up a ginger factory and in the process identified a ginger processing equipment which was to be purchased from China but to be paid in US dollars. Quotes on exchange rates were obtained from 6 different foreign exchange agencies. However, the Capital Foreign Exchange (CAMBIO) which had not submitted any quotes, was chosen to facilitate the transfer of funds for the Authority. The agency was partly owned by a Board Member, Mr. John Low. Audit noted that no board approval was given for CAMBIO to apply for the advance import payment from the Reserve Bank, as a Foreign Exchange Agency. Furthermore, no company seal was used on the application form as evidence to perform the transaction. Fortunately, the deal was aborted.
Unnecessary Travelling Costs – A business trip to Malaysia incurred extra costs because of stopovers in Sydney and Singapore. The Committee viewed the route taken by two members of the delegation as unnecessary.
Unaccounted Inventory - Audit noted variances of 8,206 kg (equivalent to 2 truckloads of ginger) between the quantities of ginger purchased from farmers and the amount sold to Freshpac Ginger (Fiji) Limited. That difference was a result of illegal sales to another competitor by an employee of AMA.
The Committee recommended that FICAC should urgently investigate the irregularities highlighted in the Report.
2. CAPITAL MARKETS DEVELOPMENT AUTHORITY
There was a dramatic increase in the ‘Other Income’ for 2006 compared to 2005 by approximately 207%. There was also an increase in the Authority’s current assets in 2006 compared to 2005 resulting from the Authority’s investment of $100,000.00 from the Investor Compensation Fund deposited at the Westpac Bank, as the Authority’s term deposit.
Capital Markets Development Authority was not able to differentiate the renewal of licence fees from the fees collected for new licences.
It was noted that most of the Authority’s depreciated assets were still in working condition and the Authority agreed to revalue them according to FAS 16.
3. FIJI ARTS COUNCIL
Originally established in 1965 as a charitable organisation, the Fiji Arts Council had grown in its responsibility as a body that promoted Art and Craft, especially the promotion and revival of traditional ones.
In 2003, the Fiji Arts Council recorded a surplus of $10,544.00 in comparison to the deficit of $9,954.00 recorded in 2002. The surplus was attributed to the 99% increase in sponsorship. In 2003 too, Fiji had hosted 2 one-off huge celebrations or events that required a lot of cultural input and participation and financial assistance and those were:
i. Fiji Week Celebrations - The Ministry of Home Affairs had provided the funds and the Council was mainly involved in assisting the Celebration Committee in delivering its core function and seeing that the cultural component of the celebration was implemented.
ii. The SPG Arts Exhibition 2003 - was held in Suva and was undertaken to coincide with Fiji’s hosting of the South Pacific Games, 2003. The participants included visual artists from around Fiji. The SPG Art Exhibition Initiative was done to help artists gain an incentive (income-wise) from a huge gathering such as the South Pacific Games, and also make provision for their recognition at the regional level since those participating and supporting the SPG event came from across the Pacific and the world.
There was also “Other Income” generating activities accrued internally through Fiji Arts Council engagement, participation and fundraising initiatives other than those received as grant from Government or through sponsorship by external stakeholders.
4. FIJI INSTITUTE OF TECHNOLOGY
The Fiji Institute of Technology recorded a surplus of $667,165.00 in 2004 compared to $442,377.00 in 2003 from its Statement of Financial Performance. That resulted in the increase in the total revenue by 13% which was mostly from student fees (from increase in number of students).
The Institute had a huge increase in the Cash and Cash Equivalents in 2004 by 248% compared to year 2003 in its Financial Position.
The Net Assets increased by $667,167.00 or 6% in 2004 compared to 2003 as a result of the increase in total assets by 11%.
The Institute arranged for an independent valuation of its properties, plants, machineries and other chattel that were valued at $30,872,201.00 in June 1997. Based on that valuation, the Institute submitted a draft Cabinet Paper on 3rd September 1997 to the Ministry of Education to obtain Parliament’s approval for the transfer of its assets from Government to the Institute. Parliament was yet to approve the transfer of the assets during the period of the 2004 Audit.
The FIT 2006 Act provided for the transfer of all assets, but that did not eventuate. The Fiji National University (then FIT), in 2010 was conducting the valuation of all its assets which would be recorded in its books.
There were anomalies identified from the review of the Fiji Institute of Technology’s fixed assets. A detailed list of all fixed assets was maintained in the Institute’s data system.
All land titles of FIT owned properties were available except for the land owned by the Government.
The Institute’s bank balances were not included in the Institute’s books of accounts as at 31st December, 2004. That bank account belonged to Technical Vocational Education Training (TVET) for which the Deputy Director of the Institute was acting as a Trustee.
MEDIA RELEASE 32 (Part 2) – REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES - 2007
As part of the media release from the Public Accounts Committee issued earlier relating to Media Release 32(Part 1) on the findings of four (4) Statutory Authorities - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES – 2007, the Public Accounts Committee now releases a list of anomalies/breaches based on its findings on the following seven (7) Statutory Authorities:
1. FIJI ISLANDS REVENUE AND CUSTOMS AUTHORITY
The correctness of the total revenue collected in 2006 could not be established as the auditors were denied access to taxpayers’ records.
Although the stipulated levy for evasion of duty was 3 times the value of goods or $5,000.00 whichever was greater, the Customs Department was using an instruction from the Chief Executive Officer to charge only 25% of the value instead.
Short Payment on Customs Duty continued to rise. Appropriate actions were not being taken and because the returns were not being submitted to the Ministry of Finance, these were not being included in the Arrears of Revenue.
The total of fines on short payment of duty totalled $601,655.11. That amount had been accumulating over four years.
Hanging entries continued to be an issue of concern at the time of audit as the outstanding amounts continued to increase considerably. At the time of audit the total outstanding at Suva Wharf was $354,635.00 and at Lautoka $308,502.15.
The Authority found it difficult to process refunds for fuel concessions to bus operators because verification of claims was cumbersome due to the difficulty of establishing the accuracy of fuel consumption based on route licences.
Refunds on rebates on tyres and fuel had been long outstanding due to budgetary constraints.
The operation of many of the Open Bonded Warehouses was in breach of the regulations as some vehicles kept in the warehouses were found to have had parts missing or the vehicles damaged.
An audit check noted that a vehicle with registration number EV144 had been used on the road without the proper registration and payment of the relevant duties.
Vehicles in Open Bonded Warehouses were kept in the open at the mercy of the elements effectively speeding up depreciation and loss of duty income for Government.
A large number of manifests had not been received and some dated back to 2004. That indicated a potential loss of revenue to Government as duty paid was not reconciled with aircraft cargo manifests.
The increase in number of flights had put a lot of pressure on the limited staff numbers. Staff numbers had not increased whilst flight numbers had increased considerably.
2. FIJI MUSEUM
Although the Financial Statement for 2003 for the Fiji Museum showed that Government grant was reduced from 2002; the Management of the Museum proved otherwise and showed that the grant had, in fact, increased from 2002.
The Committee was of the view, that the differences between audit figure and Museum figures ought to have been resolved at the ‘exit’ interview stage during audit.
The Management of the Museum had not been updating its fixed assets register.
In terms of accounting of VAT, the Museum had been having the same difficulties in 2003. However, the Museum had since appointed the accounting firm of Ernst & Young Co. Ltd. which had helped to rectify the anomalies.
The Museum had not fully grasped the significance of developing its own ‘Procedures Manual’ for its accounts and staff recruitment & salary structure, despite the recommendation being reiterated in previous audit reports.
3. FIJI NATIONAL COUNCIL FOR DISABLED PERSONS
The Council recorded a deficit of $49,467.00 in 2006 compared to a surplus of $64,978.00 in 2005. That resulted from the increase in total expenditure by $105,789.00 or 62%.
The Council sold 17,001 units from its Unit Trust of Fiji investment in 2005 to purchase land at Macuata for building FNCDP Centre in Labasa.
The pilot project for the Domain Home which was $12,480.00 was for homeless women. That project was now null and void due to the changes in the Public Service Commission Regulation on Government Quarters.
The Council received $37,000.00 for one (1) project for Fiji Vocational Training Centre for the Disabled. In 2005, it also had funds for the Nausori Special School, thus the Council had a decrease in ‘Other Income’. Although cash had been received for projects to be undertaken in 2005, they had not been completed and they were put on hold. The Nausori Special School Project fund was still with the Council’s Account awaiting the Executive approval.
4. FIJI SERVICEMEN’S AFTERCARE FUND
The Fund’s total expenditure increased by 12% in 2005 compared to 2004. The increase in payments was due to beneficiaries allowances and other expenditures. That contributed to the decline in surplus to $35,878.00 in 2005 compared to $77,863.00 in 2004.
The Fund had an increase of $55,441.00 or 16% in the Accumulated Funds in 2005 compared to 2004. The increase was due to the increase in Cash held at Bank from Government Grant the previous year. The Committee noted that the total revenue for the year, 2004 declined by 9% as a result of the decrease in grants from Government. There was an increase in the ‘Other Income’ of approximately 95% in 2004 compared to 2003.
5. FIJI SPORTS COUNCIL
The Fiji Sports Council was financed through Government grants as well as through funds from the two lotteries: Pacific Instant Lotteries and Tattslotto Fiji. As the licensed holder of the lotteries, the Fiji Sports Council was to receive all the funds due to the country’s licence holder, and that represented the local Government’s commission which was to be Government’s contribution to the Fiji Sports Council in lieu of Government’s annual grant. However, in 2008, Government imposed a 15% Gambling Turnover Tax or GTT on the Pacific Instant Lottery thus effectively removing all the income paid to the Fiji Sports Council. Since July 2008 therefore, the Fiji Sports Council had not received any income from Pacific Instant Lotto as the Council had to pay the whole of what it received to FIRCA.
The Fiji Sports Council was in a fluid and informal situation after the South Pacific Games. There was no properly designated Council Board appointed. Two successive Chairmen of the Board had been appointed but they took on the position full-time as the CEO and Chairman. Another major problem was that the CEO left in 2006 and no CEO of the Council had been appointed till late 2010.
The following issues and irregularities arose from the lack of commitment given to the future of the Council:
· The Council did not have an annual budget which would forecast income from such activities as hiring of facilities, naming rights, etc.
· There was no set policy with no signed agreements that were still valid between the Council and the various bodies of the Sporting Federation for the use of the Council’s facilities.
· The Fiji Sports Council had lumped everything including, land, grounds, stadium, equipment, etc. into a ‘single value’ where it simply stated- “land and improvements”. There was no policy as to what needed to be entered into the Fixed Asset Register.
· The Council has had no audited accounts since 2006 when its books were last audited.
The Council, with a properly constituted Board and a designated Chairman and a CEO, has already addressed or is progressing with its efforts to address the problems cited above.
The Council was also able to address most of the irregularities and weaknesses in Control Issues such as Long Outstanding Balances; Debtors’ Reconciliations; Creditors Reconciliation; Debit Balances; Payroll Reconciliation; by putting in a new operating account system – WINBIZ - in 2010.
6. FIJI VISITORS BUREAU
The Report showed anomalies in the ‘Promotion Accounts’ where monies received from Tourism Organisations were deposited. The Promotion account was created to cater for promotion and marketing of tourism in Fiji.
However, the Bureau clarified that it had followed proper procedures of first transferring the funds from Promotion Account into its Operating Account before expending the funds.
The issue of payment of insurance premium for its staff by the Bureau had already been rectified as the individual staff members were expected to pay their own insurance premiums.
There were some differences of opinion between the Bureau and the Auditor-General on the terminology ‘consultant’ used in the report. The report rightly pointed out that such appointments ought to have been advertised whereas the Bureau was of the view that such surveys were routine work and could be assigned to those who had carried them in previous years. However, the Bureau was reminded by the Committee that for transparency purposes, it ought to advertise/call for expressions of interest for any activity that entailed public funds.
7. KOROVOU RURAL LOCAL AUTHORITY
The financial operations of the Korovou Rural Local Authority were not according to the standards required. Records were not available to verify some of the income received as fees for garbage and market stalls as the Supervising Officer had requested the files for internal audit purposes.
A list of arrears of garbage fees was not maintained although the Authority did claim it to be. There was no system that was kept and maintained from year to year.
The work of maintaining finance and other records were not regularly updated and checked by supervisors to ensure that sudden departures of officers did not leave the Authority in dire consequences.
The omission of the established procedure for the tender for the construction of the market was nullified by the revelation that the work was largely voluntary, cost effective and of great benefit to the locality and the community at large.
Garbage services were being provided in spite of the expiry of contracts leaving the Authority vulnerable. A precarious position existed in the Authority as it had no lease or other written permission for the use of the Nabilo land as a garbage dump.
MEDIA RELEASE 32 (Part 3) - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES – 2007
As part of the media release from the Public Accounts Committee issued earlier relating to Media Release 32 (Parts 1 & 2 ) which reported on the findings of eleven (11) Statutory Authorities - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES – 2007, the Public Accounts Committee now releases a list of anomalies/breaches based on its findings on the following seven (7) Statutory Authorities:
1. NATIONAL FIRE AUTHORITY
There was no separation of Doubtful Debts and Professional Fees in the NFA accounts as they were included in the `Others’ component amounting to $808,509.00.
The aggregate total of water meters that were subject to payment of water meter levy of 0.50 cents per month per meter had not been revealed in the Auditor-General’s Report. Had that been done, the estimation of water meter levy arrears could be reliable in assisting NFA to know the actual accrued levy arrears. The current three months’ return on levy revenue received and consequential arrears advice could not assist the NFA in determining its true position as far as the accrued levies were concerned.
For instance, the problem at Denarau Island Resort which had been included in the Nadi Fire District made NFA’s work difficult, because the problem was initially created by PWD Water and Sewerage Department for installing only one Master Water Meter for the whole island. The problem was having one water bill shared out to all the residents who had objected strongly. The issue had since been resolved and the residents have been installed with separate water meters and billed separately.
With annual average arrears of $6,271.04, the aggregate total for the four subsequent years (2007 – 2010) would be $25,084.16. That total could continue to increase at that rate if the Water and Sewerage Department and the Water Authority of Fiji condoned the situation to continue to the detriment of NFA’s financial management. PWD had indicated to NFA that it would not be able to provide the necessary information to them.
Government was also not remitting NFA’s 25% of minimum contribution as per NFA’s annual budget despite numerous submissions.
Three consultants engaged for the three specific consultancy works were made without tender and were selective. A Tender Board should be appointed to evaluate and award tenders under formal contracts. The practice of awarding selective tenders through kinship and nepotism was fraudulent and therefore criminal.
2. NATIONAL FOOD & NUTRITION CENTRE
The Centre had a total staff strength of 10. The number had been the same for many years. All their salaries were given directly by the Ministry of Health as a grant.
The Centre operated on a small budget. Shortfalls in salary grants were normally met by additional funds from the Ministry of Health. Operational expenditure shortfalls were covered by savings.
The Centre had accumulated funds that were held in its own account. Those funds were used for its small works and projects as well as providing a buffer fund for when quarterly allocations were delayed.
3. NATIONAL SUBSTANCE ABUSE ADVISORY COUNCIL
For many years the National Drug and Substance Abuse Advisory Council operated on limited capacity running only on Government grants. It lacked the resources to do outreach and community awareness with only 3 staff and no vehicles.
Support for the Council was obtained after the statistics was established on the use of illegal substances in schools and the community.
The Council was now functioning well as all accounts and activities were monitored closely by management.
4. NAVUA RURAL LOCAL AUTHORITY
The Navua Rural Local Authority was established under Section 10 of the Public Health Act to provide sanitary services to the area of Navua. It was financed through fees such as garbage, market, and other fees.
There was a huge decrease in Carrier Base fees from over $4,000.00 in 2004 to a mere $1,070.00 in 2005 because of the issuance of the lease to Post Fiji Ltd. by the Ministry of Lands, causing confusion as to who should be receiving the Base fees from carrier owners. The dispute had yet to be resolved.
The Ministry of Multi-Ethnic Affairs provided funds for the public toilet construction which was completed in 2005.
The substantial increase in the Wages and Salaries in 2005 was caused by a decision of the Board to increase the salary of the Clerk from $5,000.00 to $8,000.00.
A Garnishee Order had been issued on the Authority’s bank account because the Authority had lost its court case taken against it by Mr. Pratap Singh who had taken the Authority to court for illegally dumping refuse on his property. The Authority was ordered to pay $10,200.00 but had not been able to do so, hence the Garnishee Order.
The restrictions placed on the Cash at Bank through a Garnishee Order forced the Authority to seek assistance from the Central Board of Health (CBH) which then allowed the Authority Secretary to use an account with ANZ titled, “Fiji Institute of Environment”. The evasive strategy used has made it difficult for the Authority to access records because it also had other transactions being the account used by Health Inspectors throughout Fiji. For instance, Audit had revealed that there had been a shortfall in the lodgment, but the Authority could not verify the amount because it had difficulty accessing the records of transactions. Furthermore, the Authority was not in a position to carry out any investigation regarding the possible misuse of the shortfall of $3,630.92.
Currently, because the Authority was still unable to access the ANZ account due to the Garnishee Order, the Authority has had to open another account at the Colonial Bank in 2008 and daily deposits were transacted through it – Account # 6966965.
5. PRICES AND INCOMES BOARD
From the figures in the Board’s 2006 Financial Statement, it was deduced that the Board’s Other Income had reduced in 2006 in comparison to its 2005 income. However, on delving deeper, it was revealed that in the 2005 figures, there was included certain sales of used vehicle which was more than the value at the time it was disposed of.
6. TRAINING AND PRODUCTIVITY AUTHORITY OF FIJI
The Bank Reconciliation for December 2005 and 2006 showed an increase by $749,133.54, cash afloat increased by $400.00 and CND cash on hand as at 31st December, 2006 was $143,793.00.
The increase in total liabilities from grants payable, sundry creditors and accruals in 2006 were due to the grants payable decrease from $6.9 million to $6.7 million. The increase in sundry creditors and accruals due to training demands increased expenditure through purchases of materials and services.
A Board of Survey was conducted in 2006. Four years later TPAF still did not carry out the revaluation of Property, Plant & Equipment. However, TPAF has since created and appointed a Fixed Project Officer under contract.
Various software modules for different accounting functions were employed. There were Sun Systems, Integrated Student Management Systems, LECO System and WINBIZ.
Where inconsistencies arose in the records in the Accounts Department, verifications would be made to compare with the individual statement files in the Training Department. Students were advised to produce evidence of payments should they have queries against the amounts shown as outstanding on their part.
All accounts over two years old were considered doubtful debts and referred to enforcement officers and solicitors.
Hitherto, TPAF was testing new software (PPMS) which could generate all relevant reports including aged reports. LECO system produced reports useful to management.
In 2006 the Levy Department had four (4) enforcement officers headed by a Levy Officer. The staff was increased in 2007 by three including a Levy Auditor and a Litigation Officer.
Reconciliation had been carried out monthly to rectify over-accrued and under-accrued balances in the Clearing Accounts.
Extensive review was made on the Debtors Account to determine doubtful debts as at the end of 2006.
To clear staff advances and dues owed before leaving TPAF, the staff had to complete the TPAF Staff Exit Form.
7. COCONUT INDUSTRY DEVELOPMENT AUTHORITY
CIDA recorded a surplus of $98,148.00 in 2004 as compared to a deficit of $302,885.00 in 2003. That was due to:
· the increase in oil and coconut meat sold by the Authority; and
· the stringent control that was exercised over the Authority’s expenditure.
MEDIA RELEASE 32 (Part 4) - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES – 2007
As part of the media release from the Public Accounts Committee issued earlier relating to Media Release 32 (Parts 1, 2 & 3) which reported on the findings of eighteen (18) Statutory Authorities - REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – AUDIT OF THE ACCOUNTS OF STATUTORY AUTHORITIES – 2007, the Public Accounts Committee now releases a list of anomalies/breaches based on its findings on six (6) of the following Statutory Authorities: (the findings reported in italics were not originally part of the Auditor-General’s Report, but were independently pursued by the Committee)
1. NATIONAL ROADS SAFETY COUNCIL
The Council’s income and expenditures did not reflect net of VAT, so it was given a `qualified’ audit report for its 2003 Financial Statement.
The Council’s grants from Government had been reduced by over $120,000.00 in comparison to its 2002 figures, thereby impacting on the effectiveness of the work of the Council as that was the only source of funding.
The Council was recently merged with the Land Transport Authority and it is hoped that the move will enhance its work and give it more visibility.
2. CONSUMER COUNCIL OF FIJI
The Council had not revalued its Property, Plants & Equipment in 2006 resulting in the issuance of a ‘qualified’ audit report for its Financial Statement.
Although the Council did not have a large portfolio of Property, Plants and Equipment, it did carry out a revaluation in 2009.
There was an increase in the Council’s ‘Other Income’ by $40,000.00 due to the sale of proceeds over the net book value of assets, and also due to an increase in the funds given for the payment of COLA as agreed by Government.
The issue of over payment to Mr. Swani Maharaj, the former Chairman of the Council, had been overpaid salary while he was acting as the CEO of the Council. The issue had since been resolved. Mr. Maharaj had fully reimbursed the amount to the Council.
3. FIJI ISLANDS TRADE AND INVESTMENT BUREAU
The Fiji Islands Trade and Investment Bureau was established to promote and facilitate investment and export. In that respect, FTIB became Government’s vehicle in the generation of activities in the Government Tax Free Zone at Kalabu. Hence FTIB began building new factories and borrowing money to finance the capital works for the construction of Factory 7 and the conversion of Factory 5 at the Kalabu Tax Free Zone. Factory 7 was later occupied by Alpha Ropes Limited and Factory 5 was occupied by Quest Fiji Limited (currently known as ANZ Pacific Operations). Factory 5 and Factory 7 have both been fully paid off.
FTIB recorded an increase in income from $2,738,681.00 in 2005 to $3,153,041.00 in 2006 having generated close to $180,000.00 per month as income. However, the situation changed negatively with vacant factories at Kalabu, but even the reduced monthly income of $150,000.00 had given ample cash flow for FTIB to pay off loans at a faster rate than as per the specified term in the loan agreement.
The Bureau showed an increase in its non-current assets by almost $2m. – due mainly to the Factory 5 conversion work costing $2.27 million. In spite of the heavy outlay, Quest Fiji as tenants, were currently paying close to $50,000.00 in rental every month.
Future Directions For Kalabu Tax Free Zone
A current loan was taken by FTIB to do major work for Mindpearl, a back-office Call Centre, which was a Government initiative programme. The major conversion work amounted close to $8 million. The company has since been in operation for almost one year.
Kalabu Tax Free Zone has recently been transferred back to the Ministry of Finance, and FTIB would no longer be responsible for the promotion and development of industries/business within the zone.
4. FIJI AUDIO VISUAL COMMISSION
The Fiji Audio Visual Commission was established for the purpose of developing a local film industry and its first major project was the multi-million dollar studio at Yaqara.
The total revenue increased substantially by 39% in 2006 and one of the reasons being an increase in levies received from film producers (from $17,850.00 in 2005 to $296,729.00 in 2006). The levies collected by the Commission was 0.75% of the total budget of the following film productions:
· In 2006, Pirate Islands Fiji Limited paid a total of $112,701.88 for the production of ‘Pirate Island 2’.
· Fine Arts (Fiji) Limited paid a total of $197,391.38 for its production of ‘Boot Camp’.
· Modern Cartoons (Fiji) Limited paid a total of $20,081.25 for the film, ‘Elf Strike’.
An additional expenditure item in 2006 was for the AV Open Day which included a total expenditure of $102,652.00. The AV Open Day was part of the Kula Film and Dance Awards being held for the first time in 2006 and since becoming an annual event in the FAVC’s calendar for local promotions. The Kula awards was to provide an avenue for young people to unleash their talents in the area of creative arts, and to consider the various opportunities in the audio visual industry as career opportunities.
The issue of insurance premium had previously been a subject of audit query. The Ministry of Finance had then made its position clear, but in spite of the clarifications in 2005 and 2006, FAVC continued to pay out insurance premiums for the staff and Board.
Update on Yaqara Studio City
Yaqara Studio City project was a private investment, with Government intending to give tax incentives to the residents who would establish themselves within the zone. It was envisaged that Yaqara would be set up as a $200 million investment, and it would build facilities for production houses to be setup within the zone. As incentives, the same production houses would be given tax free status under Corporate tax. However, ever since it was gazetted in 2004, nothing had been built on the site except for a Telecom satellite dish. Originally the investor was Paradise Entertainment Limited, but it changed its name to Yaqara Studio Limited, and that particular company was listed on the Stock Exchange, but it had also been removed since from the listing.
The FAVC was currently engaged in determining the agencies that were involved in the initial approval stages with a view to having the zoning revoked because of the lack of activity on the Yaqara Studio City Zone.
5. COMMERCE COMMISSION
The Commerce Commission’s objective was to ensure non-discriminatory access to monopoly and near monopoly infrastructure or services, and it performed its functions in relation to regulated industries and Fair Trading Decree.
The deficit of $11,540,000.00 shown in the Abridged Statement of Financial Position resulted from the adoption of the accrual accounting method.
6. SUGAR INDUSTRY TRIBUNAL
All Sugar Industry Tribunal administrative expenses including remuneration and allowances were paid from its Consolidated Fund.
The Average Statement of Financial Performance submitted by the Tribunal showed a surplus in 2006 amounting to $2,948.00, in comparison to a loss of $32,873.00 in 2005.
The Sugar Industry Tribunal rejected the claim made in the Auditor-General’s Report that it had received an increase in grant in 2005.
In 2005 the Tribunal received $370,850.00 and paid VAT $41,206.00 and was left with a balance of $329,644.00. It then purchased a motor vehicle at a cost of $44,625.00.
In 2005 the balance of Government grant was $285,019.00. The deficit in that year was due to the accruals of $59,544.00 shown in the Audit Report for 2005. The accruals for 2005, however, were paid in 2006.
Basically, the Auditor-General was quoting the aggregate total, whereas the Sugar Industry Tribunal was quoting the additional amount to the aggregate total of Government grant. Both parties’ differences in their own presentations of a common arithmetical error had been fully explained and reconciled.