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Audit report raises common issues

Manasa Kalouniviti
Friday, May 19, 2017

THE Office of the Auditor-General (OAG) had issued a qualified audit opinion on the accounts of the Ministry of Agriculture for the 2015 financial year and yesterday the ministry made submissions to the Public Accounts Committee (PAC) on the audit issues raised by the OAG on the accounts.

The ministry's principal accountant Sikeli Baleisuva outlined the issues which gave rise to the qualification providing reasons for the ministry's shortcomings on these issues.

While the five issues outlined are serious accounting and audit issues, there have been common issues with other ministries and departments and while they have been correctly raised by the OAG, it needs the urgent attention of the ministries concerned and the Ministry of Economy.

Common issues among ministries in most AOG findings have included:

* trading and manufacturing account (TMA) balance sheets containing unsubstantiated balances;

* unsubstantiated closing stock balances in TMA trading accounts or no independent stocktake undertaken at all;

* unreconciled variances in FMIS general ledger cash balance and bank reconciliations;

* trust account receipts and payments closing balance not reconciling with cash at bank FMIS general ledger balance; and

* competency of Board of Surveys (BoS) or no BoS undertaken at all making the statement of losses unreliable.

These are serious audit issues for private sector businesses and early attention to them could mean life and death for that particular business.

Meanwhile the deputy chairman of PAC Mohammed Dean, when the PAC members asked why the Ministry of Agriculture did not conduct BoS, said: "The reason we are asking is that the Board of Survey is getting to be a common issue raised in our meetings on the Auditor-General's findings."

It is common business practice that all losses of fixed assets occurring during the year must be recorded because they form a substantial portion of the business and the individual cost of any asset is normally high.

Mr Baleisuva told PAC members: "We do agree that we did not conduct a Board of Survey in 2015, however, this was done in 2016 at the beginning of the year.

"The reason was that it is very difficult to get an independent person from outside the ministry to be present at the BoS as was the requirement."

Opposition PAC member Ratu Sela Nanovo said: "No Board of Survey in 2015, but it was done in 2016. Can the Ministry of Economy tell this committee if this practice is acceptable?"

A representative of the Ministry of Economy said while the issue was for a BoS to be conducted once a year, section 49 of the Finance Instructions allowed bigger ministries to have a cyclical ones every three years.

Ratu Sela said: "In my understanding, any loss relating to fixed assets after a BoS should be taken up in that year's financials so that all losses related to that year was taken into account in that year's accounts."

The PAC was chaired by Mr Dean with government alternate member Alivereti Nabulivou sitting in for Alex O'Connor and Opposition members Ratu Sela and Aseri Radrodro.

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