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THE CONTROLLER AND CHIEF AUDITOR’S

REPORT TO THE LEGISLATIVE ASSEMBLY

FOR THE PERIOD 1 JULY 1997 TO 30 JUNE 1999

Staff have been using Office telephones for personal calls overseas and whilst these are recorded for payment, considerable calls unpaid are still outstanding in the Department’s records.

Furthermore, staff family members were accessible to use Office phones for personal calls and it was encouraging to find out that the management had put a stop to this practice and staff concerned were reprimanded accordingly;

Casuals in this Department are treated separately from other Government Departments in that they are entitled to 10 days Sick Leave and 10 days Annual Leave. Casuals in all other Government Departments are engaged in terms of Section 58, Public Service Act 1977 and are regulated under Regulations 27, 28, Public Service Regulations 1979. They do not have the privilege of having local leave and sick leave accorded them as enjoyed by casual workers under the Labour Department.

According to the Commissioner of Labour this particular issue has been referred to Cabinet by his Department to have the matter rectified for this category of employees as the terms under which the Public Service Commission employ casual workers contravene the ILO Conventions for being discriminatory.

Audit feels that this matter needs be considered by Cabinet towards amending the Public Service Act to accord the Public Service casuals the same privilege of leave entitlements as enjoyed by workers in the Labour Department and in the private sector.

(a) The Post and Telecommunications Department had since the audit to 30 June 1993 not yet produced the accounts for the years 1 July 1993 to 30 June 1999.

The last audit as reported to Parliament to 30 June 1993 drew the attention of management to the fact that the accounts compiled by a seconded Accounting Consultant was prepared from incomplete records and procedures to substantiate the accounts transactions proved impracticable and a disclaimer was the conclusion audit could arrive at;

(b) Apart from surprise cash checks that were made covering the Posts and Telecommunications Department, the audit of the Department was pending till the accounts were produced for the years 1994 to 30 June 1999.

However, the Post Office Act 1972 was amended by the Postal and Telecommunications Service Act 1999 whereby the Department of Posts and Telecommunications was replaced by the Ministry of Posts and Telecommunications with functions restricting to the administration and “development of an efficient and commercially viable communications policy for Samoa” and all postal and telecommunication services were taken over by a licensed provider of services under Section 8, Postal and Telecommunication Services Act 1999.

This licensed provider of services is the Samoa Communication Services Limited, registered under the Companies Act 1955, and the Government is the sole shareholder as authorised under Section 65A Public Moneys Act 1964.

The Samoa Communications Limited had assumed the administration and operation of all postal and telecommunications services under a Sale and Purchase Agreement with Government since 1 July 1999. In the absence of any audited financial statement for the Posts and Telecommunications Department for the years up to 30 June 1999, the Audit Office was asked to examine the Statement of Financial Performance (equating to a Profit and Loss Account) and a Statement of Financial Position (the Balance Sheet) prepared by the Department to provide a base for the commencement of financial record keeping and operation of the services provider, the Samoa Communications Limited.

The Accounting Firm of Lesa ma Penn was contracted by the Ministry of Posts and Telecommunications to prepare the financial accounts for the Department for the years 1 July 1993 to 30 June 1999. The work is in progress as this report is prepared.

(i) Throughout the period under review, it was quite noticeable that actual receipts against budget revenues fall far short of the Estimates. The Department could not provide any satisfactory explanations for the persistent shortfalls noted particularly in two of the major revenue items against estimated receipts projections in the period under review.

It can only mean that either the Revenue projections were unrealistic or that the Department was not performing effectively and honestly in collecting revenues.

(ii) Audit found that 17 receipt books used by the Prime Minister’s (PM) Department were not recorded as issued to the PM’s Department in the Treasury Register of numbered Forms, and furthermore that 36 receipt books recorded by the Treasury as issued to the PM’s Department were not accounted as received in the Department Register of numbered forms. Yet, the same 36 receipt books were in fact received and used by the Department.

This state of poor record keeping can legitimately contribute to the unfavourable variances realised in the Revenue Budget comparisons for the years covered in the audit examination. The Department has been advised to carefully review the accounting procedures and internal control measures so that all revenues collectible for the Department are properly accounted for and that accounting records are registered and filed accordingly.

(i) This item has been the subject of many a scandalous melee and for the period under review, Audit discovered that the lack of internal control procedures in the ordering, receiving and issuing of passports have largely contributed to the many problems surrounding passports. Areas of serious concern to audit were in the ordering and the issuing of passports from the main Office to the Immigration Division and to the Overseas Missions.

Audit at the start took physical count of all passports on hand, and there were 13,965 Passports on hand in the Main Office made up as follows:

All of these passports were not recorded as received in the Main Register of Passports. Audit was informed that only when passports were issued out, only then, the issues would be recorded in the Register. Otherwise, they would be stacked in boxes within the confines of the Department. This is quite alarming that all these important documents ordered, printed, received but were not properly recorded and acknowledged by the Department.

Audit noted that there were two separate passports for Parliament – one was designated, Member of Parliament and the other was classed as Parliamentary Passport. Audit could not obtain a satisfactory explanation from the Department how these passports were so categorised nor was there any authority available for these Parliamentary Passports to be so printed.

Whereas, the only entries in the Main Register were for those passports issued out to either the Immigration Section, to any of the Overseas Mission Offices, or the New Zealand Overseas High Commission Offices, there were many passports not entered in the Main Register of Passports, but appeared in the Returns of Passports issued by the Overseas Missions as noted hereunder. Furthermore, passports entered in the Main Passport Register as issued to a particular Overseas Mission turned out to be issued from a different Mission Office.

(i) Passports missing from the Main Office Register but returned issued from the following Offices:

(ii) Passports recorded in the Main Register as issued to the following Overseas Missions, yet the Missions never included them in their returns whether they were issued and whether they were paid for:

(iii) Passports that are missing from the Main Register and no explanation could be obtained from the Department as to the where about of the same:

There is a very saddening image conveyed by these figures, not only from our Overseas Missions but devastatingly from the Main Office in the Prime Minister’s Department.

With so many passports not accounted for considerable amount of revenues properly due to Government appeared unduly lost if not willfully misappropriated. There appeared no control whatsoever being ever exercised by management over the issuing and storing of passports.

Unless management exercises some care and gives due consideration over the control and proper administration of passports being one of the most valuable assets of Government, there will always be damaging scandals over passports in the future and Government will always be losing out of her most needed revenues as passports are being improperly and negligently handled. This certainly defeats Government’s objectives of accountability, transparency and efficiency in the Government service.

Apart from the loss of revenues from Passports as noted, the illegal issuance of Passports to foreigners as in the Chinese Passport scandal, has far reaching detrimental effects to our small Island Nation. Whilst Government encourages friendly diplomatic relationships with other countries to enable our people to emigrate for many obvious reasons, the illegal issuance of Passports to foreigners for personal pecuniary gains of those involved, our Samoan heritage and all the values associated therewith can shamefully be lost too as new and more new foreigners as citizens are seen busy working around the country.

Accounting and record keeping is appalling. No audit work could be made as vouchers, receipt books etc., could not be located.

Management’s attention had been drawn to this fact and positive action should be taken to remedy this deficiency;

The Department did not keep any records of where and how this Aid fund was spent on. Management was advised through the Management letter to keep proper accounting records of Aid funds received and details of each payment made in the disbursement of this Aid and any other Aid Funds so that a statement could be made to the Donor of how Aid Funds were utilised. This lack of accountability is prevalent in most of these Aid recipient Departments and is quite appalling and must be rectified. Treasury should take responsibility in monitoring these Aid Funds.

10.12.1 The Samoa House, Karangahape Road, Auckland, New Zealand – 1989 to 1999

The Samoa House Operation is under the administration of the Treasury Department. However, the management of the Samoa House was assigned under the Management Agreement in 1994 to a New Zealand company, Beresford Property Management Limited.

The terms and conditions of this Management Agreement appear to be withheld by Treasury although several assignments of management interests had since taken place, without a Management Agreement Deed then properly executed. At the last Audit, Ralph Henry Properties Limited was managing the Samoa House Operations, under the same terms and conditions stipulated in the Official Management Agreement in 1994 with Beresford Properties Management Limited.

There had been no proper financial accounts prepared for the Samoa House Operations except a Statement of Receipts and Payments for each year since 1971.

This statement of Receipts and Payments is prepared from incomplete records which Audit found that receipts issued could not be tallied to receipts in the Cash Book, and that payments made were not supported by documentations attached to vouchers.

Because of the significance of this fact, Audit could not express an opinion as to the fairness of the results of operation of the Samoa House for the years examined.

Samoa House commercial site is leased out to tenants under lease agreements. The rents from these leases are the main source of revenues for the operation of the Samoa House.

It was noted that some leases had not been signed and that the Clause on Outgoing where tenants were to contribute to overhead of shared utilities was not enforced if not bothered to execute.

There are outstanding lease rentals and in one case, rentals of over $20,000 is in arrears and there appears no positive action taken by Treasury to recover and bring up to date those long outstanding lease rentals.

This account operates solely by the Manager under the Management Agreement. All lease rentals are paid into this account and it is from this account that the operation of the Samoa House is funded from.

Payments made are not supported by proper invoices and if invoiced were raised, they were never fully documented to prove the propriety of claims so made. Hence, the resort of Audit to disclaim the statement of receipts and payments produced for all the years under audit examination.

The Samoa House at 263 Karangahape Road valuation in 1998 was estimated at NZ$6 million dollars, inclusive of the land.

The property at Remuera where the Consulate is located was valued in 1998 at about NZ$2 million dollars.

(a) The Samoa House and the Consulate are valuable assets of Government and for the Samoa House to be poorly administered and inefficiently managed, considerable revenues due to Government are unfortunately being lost for want of accountability, transparency and efficiency;

(b) The Audit of the Treasury Department proper is in progress as this report goes to print.

	IMMIGRATION-PASSPORTS			PRINTING AND PUBLICATIONS
	BUDGET	ACTUAL	VARIANCE	BUDGET	ACTUAL	VARIANCE
1991/1992	1,094,517	79,200	(1,015,317)	664,731	770,000	105,269
1992/1993	1,454,162	894,000	560,162	862,153	800,000	(62,153)
1993/1994	1,581,084	1,400,000	(181,084)	782,328	800,000	17,672
1994/1995	1,251,992	1,000,000	(251,992)	421,855	850,000	428,145
1995/1996	1,064,154	1,044,000	(20,154)	576,446	850,000	273,554
1996/1997	1,988,100	1,594,021	(394,079)	1,050,000	665,469	(384,531)
1997/1998	2,500,000	1,754,859	(745,141)	1,120,000	762,349	(357,651)
1998/1999	2,500,000	1,815,490	(684,510)	1,000,000	617,273	(382,727)
	13,434,009	9,581,570	(3,518,601)	6,477,513	6,115,091	(362,422)