Weak internal controls at the Tavua Town Council increased the risk of fraud, potential misappropriation of funds and inaccurate financial reporting, according to the Auditor-General’s Report on Municipal Councils recently tabled in Parliament.
The Auditor-General issued a modified – qualified opinion on the council’s financial statements covering the 2021 to 2023 financial years.
Among the weaknesses identified was the council’s failure to prepare monthly bank reconciliation statements between January and July 2022.
The audit also found there was no bank audit certificate for one of the council’s accounts, while an undeposited amount of $430 appearing in a bank reconciliation statement could not be verified because subsequent bank statements were not provided.
Physical counts of council assets were not periodically conducted and assets were not tagged, while weaknesses were also identified in revenue management.
“These control weaknesses increase the risk of fraud, potential misappropriation of funds, and incorrect financial reporting,” the report stated.
The audit also raised concerns over the council’s VAT records.
Tavua Town Council was unable to provide VAT reconciliations supporting payable balances of $38,226 in 2021 and $38,695 in 2022.
For 2023, auditors were unable to verify a further VAT payable balance of $18,001 because reconciliation statements and supporting documents were not provided.
Questions were also raised over the council’s treatment of government grants and deferred income.
The report found the council had not complied with relevant financial reporting requirements in recognising government grants and had failed to disclose certain unfulfilled conditions attached to grants.
Auditors were also unable to fully verify market fees, public convenience income and rates.
Unreconciled differences of $9,086 in 2021 and $4,995 in 2022 were identified between the rates listing and financial statements.
A further $8,345 variance was identified between the disclosed compensation for key management personnel and supporting information supplied by the council.
The audit said this prevented it from determining whether the reported key management compensation of $43,704 was fairly disclosed.
The findings form part of the Auditor-General’s broader examination of financial reporting and governance across Fiji’s municipal councils.
