There are 14 provinces in Fiji comprising 190 districts and 1172 iTaukei villages.
Each province has a provincial council that promotes the health, peace, order, welfare and good government of iTaukei residing in that province and is funded by tax-payers money.
An Auditor-General’s report released recently contained audits for 42 provincial council financial statements from the years ending December 31, 2013 to the year ended December 13, 2015.
The Auditor-General stated the audits for all Provincial Councils are in backlog by seven years.
The issues discovered by the audit require immediate attention and prompt actions by the iTaukei Affairs Board and the provincial councils to improve governance and financial accountability.
The Auditor-General found good governance and internal controls were lacking because regulations, formal policies and procedures to govern all aspects of the Provincial Councils’ operations were not reviewed and updated for a long period of time or they did not exist.
This had not been given due consideration over the years.
In addition, records management is poor resulting in missing financial records.
There is no policy currently existing that is directed towards effective records management, said the Auditor-General.
Some provincial councils had made large investments and or provided loans and advances to provincial companies.
The Auditor-General said it was difficult to obtain confirmation and information on the establishment and the current operation of most provincial companies as information and records were not available.
Ba Provincial Council – Disposal of investment not supported
The council disposed B Holdings Ltd investment of $ 1,987,644 in 2013.
However, there was no documentation to support this disposal in terms of proper authorisation.
In addition, there was no trail of cash inflow to the council from this disposal.
There is high-risk that proper process or approval may not have been obtained prior to the disposal of the investment.
The disposal of this investment had a great impact on the net assets of the council.
Bua Provincial Council – Advance to BB Provincial Holdings Ltd
The council has recorded receivables from BB Provincial Holdings Ltd $330,913 for the financial year ending December 31, 2013, December 31, 2014 and December 31, 2015 which has remained static from prior years.
This receivable relates to advance given by the council to the BB Provincial Holdings Ltd.
Audit found lack of documentary evidence to support the accuracy of this balance.
Lack of documentary evidence can be hinderance in the recovery of the advance.
Since these are related party transactions there may be concern on how these advances were approved.
The council indicated that there is a current loan repayment plan signed between the council and the company directors of BB Provincial Holdings Ltd whereby the directors have agreed to make $50,000 per year.
Cakaudrove Provincial Council – Amount owed by C Provincial Holdings Company Ltd
The council has recorded receivables from C Provincial Holdings Ltd amounting to $2,000,000 which has remained static for the years December 31, 2013, December 31, 2014 and December 31, 2015.
During the audit it was noted that share certificate held with the C Provincial Holding Company Ltd clearly indicated the council incorrectly recorded this investment as receivables.
Lau Provincial Council – Advances to L Shipping
The council in its financial statements has disclosed that it provided a number of advances to L Shipping totalling to $108,892 in the prior years.
Audit noted that the amount remained static for the financial year ending December 31, 2013, December 31, 2014 and December 31, 2015.
According to the council, the advance was to assist X Trader, particularly the repair of the vessels.
The council also disclosed that the recovery would be made when X Trader is in full operation.
However, this did not happen.
Audit found lack of supporting documents for the approval of the advances.
The council indicated that the advance was internally arranged by the then chairperson of Y L Company and the Roko Tui Lau.
Namosi Provincial Council – Receivable with ND Company
The council recorded a balance of $774,310 as ND Company – TAB/SBAU Loan for the years 2013-2015.
This amount has remained static from prior years.
The council could not provide documentary evidence for the recoverability of this amount.
In absence of the appropriate documentations audit could not substantiate how these funds were approved for lending to N D Company.
The council has mentioned in its comments that this has been long pending issue between Namosi Provincial Council and N D Company.
The council further indicated that discussions are underway on recovery measures and there are positive indications on recovery.
Serua Provincial Council – Amount owed by SIC Ltd
The council has recorded receivable from SIC Ltd amounting to $401,817, $402,116 and $402,217 in the financial year ending December 31, 2013, December 31, 2014 and December 31, 2015 respectively.
There are lack of documentations to support the authorisation and recoverability of this receivable.
Since this is a related party transaction, there can be issues on conflict of interest and concern on how these funds were approved for lending to SIC Ltd.
The Auditor-General stated the delay in the audits is primarily due to the non-submission of draft financial statements to the auditor-general for
audit, by the legislated date of April 1, annually.
The Auditor-General said of the 221 draft financial statements received by the Auditor- General, the audits of 193 or 87 per cent financial statements for the 14 provincial councils have been completed for the financial years up to December 31, 2015.
