Report of the Auditor General Part IV – 2012 – on Accounts of Public Authorities and Statutory Bodies and Government Owned Companies
Mentions of people and company names in this document
It is not suggested or implied that simply because a person, company or other entity is mentioned in the documents in the database that they have broken the law or otherwise acted improperly. Read our full disclaimer
Document content
-
Report of the Auditor-General – 2012 on the Accounts of Public Authorities and Statutory Bodies established under the Act of Parliament and Government Owned Companies established under the Companies Act
Part IV
? Public Bodies and their Subsidiaries ? National Government Owned Companies ? National Government Shareholdings in Other Companies ? Projects
Phone: (+675) 3012200 Fax: (+675) 325 2872 Email: [email protected] Website: www.ago.gov.pg
21 October, 2013
The Honourable Theodore Zurenuoc, MP The Speaker of National Parliament Parliament House WAIGANI National Capital District
Dear Sir,
In accordance with the provisions of Section 214 of the Constitution of the Independent State of Papua New Guinea, I forward herewith a copy of my report signed on 21 October, 2013 upon the inspection and audit of the financial statements of the Public Bodies and their subsidiaries and National Government owned companies for tabling in the National Parliament. This Report (Part IV) also contains information on companies in which the Government does not hold majority interest. Section E of this Part of the Report contains information on the status of certain entities which have ceased operations and those entities audits of which have been in arrears.
Yours sincerely,
-
Page 2 of 307
-
PHILIP NAUGA Auditor-General
Level 6 PO Box 423 TISA Investment Haus WAIGANI, NCD Kumul Avenue, NCD Papua New Guinea
REPORT OF THE AUDITOR-GENERAL – 2012 PART IV TABLE OF CONTENTS
PARA SUBJECT PAGE NO. NO.
General V A. Foreword V B. Authority to Audit V C. Audit of Public Bodies VII D. Appointment and use of Authorised Auditors VII E. Executive Summary VIII Attachments A – E XVI SECTION A PUBLIC BODIES AND THEIR SUBSIDIARIES PARA SUBJECT PAGE NO. NO. 1. Foreword 1 2. Bank of Papua New Guinea 3 3. Border Development Authority 5 4. Civil Aviation Safety Authority of Papua New Guinea 10 5. Cocoa Board of Papua New Guinea and its Subsidiaries 11 5A. Cocoa Stabilization Fund 14 6. Cocoa Coconut Institute Limited of Papua New Guinea 16 7. Coffee Industry Corporation Limited and its Subsidiaries 22 7A. Coffee Industry Fund 29 7B. Patana No. 61 Limited 31 8. Government Printing Office 34 9. Immigration and Citizenship Service Authority 37 10 Independence Fellowship Trust 40 11. Independent Consumer and Competition Commission 41 12 Independent Public Business Corporation and its Subsidiaries 43 12A. Aquarius No. 21 Limited 55 12B. General Business Trust 56 12C. PNG Dams Limited 62 12D. Port Moresby Private Hospital Limited 66 13. Industrial Centres Development Corporation 67 14. Investment Promotion Authority 70 -i-
-
Page 3 of 307
-
15. Kokonas Indastri Koporesen and its Subsidiaries 72 15A. Papua New Guinea Coconut Extension Fund 73 15B. Papua New Guinea Coconut Research Fund 74 16. Legal Training Institute 75 17. Mineral Resources Authority 83 18. Motu Koitabu Council and its Subsidiary 85 18A. Tabudubu Limited 86 19. National Agriculture Quarantine and Inspection Authority 87 20. National Agriculture Research Institute 90 21. National AIDS Council Secretariat 92 22. National Broadcasting Corporation 94 23. National Capital District Commission and its Subsidiaries 98 23A. National Capital District Botanical Enterprises Limited 104 23B. Port Moresby City Development Enterprises Limited 105 24. National Cultural Commission 106 25. National Economic and Fiscal Commission 107 26. National Fisheries Authority 109 27. National Gaming Control Board 112 28. National Housing Corporation 117 29. National Maritime Safety Authority 118 30. National Museum and Art Gallery 121 31. National Narcotics Bureau 122 32. National Research Institute 123 33. National Road Safety Council 125 34. National Roads Authority 127 35. National Training Council 130 36. National Volunteer Service 131 37. National Youth Commission 132 38. Oil Palm Industry Corporation 134 39. Ombudsman Commission of Papua New Guinea 138 40. Pacific Games (2015) Authority 139 41. Papua New Guinea Forest Authority 140 42. Papua New Guinea Institute of Medical Research 145 43. Papua New Guinea Institute of Public Administration 146 44. Papua New Guinea Maritime College 147 45. Papua New Guinea National Institute of Standards and Industrial Technology 150 46. Papua New Guinea Radio Communications & Telecommunications Technical Authority (PANGTEL) 151 47. Papua New Guinea Sports Foundation 155 48. Papua New Guinea University of Technology and its Subsidiary 157 48A. Unitech Development and Consultancy Company Limited 161 49. Parliamentary Members’ Retirement Benefits Fund 165 50. PNG Waterboard 166 51. Public Curator of Papua New Guinea 167 52. Security Industries Authority 168 53. Small Business Development Corporation 169 54. Tourism Promotion Authority 170 55. University of Goroka and its Subsidiary 172 55A. Unigor Consultancy Limited 174 56. University of Natural Resources and Environment 179 57. University of Papua New Guinea and its Subsidiary 182
-
Page 4 of 307
-
57A. Unisave Limited 221 57B. Univentures Limited 222 SECTION B – NATIONAL GOVERNMENT OWNED COMPANIES PARA SUBJECT PAGE NO. NO. 58. Foreword 225 59. Air Niugini Limited 227 60 Livestock Development Corporation Limited 230 61. Mineral Resources Development Company Limited 234 62. Motor Vehicles Insurance Limited 241 63. National Airports Corporation Limited and its Subsidiaries 244 63A. Airport City Development Limited 249 63B. PNG Air Services Limited 250 64. National Petroleum Company of PNG (Kroton) Limited 252 65. NCD Water and Sewerage Limited (Eda Ranu) 253 66. Papua New Guinea Ports Corporation Limited 255 67. PNG Power Limited 258 68. Post PNG Limited 274 69. Telikom PNG Limited and its Subsidiaries 277 69A. Kalang Advertising Limited 280 69B. PNG Directories Limited 282 SECTION C – NATIONAL GOVERNMENT SHAREHOLDINGS IN OTHER COMPANIES PARA SUBJECT PAGE NO. NO. 70. Foreword 285 71. Bougainville Copper Limited 287 72. CTP (PNG) Limited 289 73. Gogol Reforestation Company Limited 290 74. Ok Tedi Mining Limited 291 75. Pacific Forum Line Limited 292 76. PNG Sustainable Development Program Limited 293 SECTION D – PROJECTS PARA SUBJECT PAGE NO. NO. 77. Foreword 297 78. Civil Aviation Development Investment Program (CADIP) 299 79. Lae Port Development Project 300 80. National Capital District Commission Urban Youth Employment Project 302 81. Port Moresby Sewerage System Upgrading Project (POMSSUP) 303 82. Productive Partnership in Agriculture Project 304 SECTION E – PROBLEM AUDITS PARA SUBJECT PAGE NO. NO. 83. Foreword 309 83.1 Exclusion of Entities from Future Reports 309 84. Audits in Arrears 310 84.1 General 310 84.2 Responsibility for preparation of Financial Statements 310 84.3 Legislative Requirements 311 84.4 Current Year Audits (2012 Audits) 311 84.5 Status of Current Year Audits 313 84.6 Audits in Arrears (2011 and prior years) 315 84.7 Long Outstanding Financial Statements 318 84.8 Status of Audits as at 30 June 2013 321 Acknowledgements 323
-
Page 5 of 307
-
Schedule A – Current Year Audits 325 Schedule B – Status of Audits in Arrears 328 Schedule C – Long Outstanding Financial Statements 330 Schedule D – Non-Operational Entities and Others 332 Schedule E – Prior year Audits completed during 2012/2013 333 Schedule F – Status of Audits during the year 2012/2013 336
GENERAL
A. FOREWORD
My Annual Report to the National Parliament for the 2012 financial year is presented in four Parts. Part I deals with the Public Accounts of Papua New Guinea. Part II deals with National Government Departments and the Provincial Treasury Offices, whilst Part III deals with the audit of the Provincial Governments and Local-Level Governments.
Part IV (this Part) of my Report deals with Public Bodies and their Subsidiaries, Government Owned Companies and National Government?s shareholdings in Other Companies. This Report is divided into five sections. Section A deals with Public Bodies and their subsidiaries, Section B deals with National Government owned companies, Section C deals with Companies in which the National Government has shareholdings and Section D deals with Projects implemented by the Entities. Section E is an additional section which provides details of entities that have ceased operating and those other entities the audits of which have been in arrears due to non-submission of financial statements.
The audit findings contained in Sections A, B and D of this Report have been reported to the management of the respective entities and to the responsible Ministers.
B. AUTHORITY TO AUDIT
B.1 Constitution
Under Section 214(2) of the Constitution of the Independent State of Papua New Guinea, I am required to inspect and audit all bodies set up by Acts of the Parliament, or by Executive or Administrative Act of the National Executive for governmental or official purposes unless other provisions are made by law in respect of their inspection and audit.
I am also empowered under Section 214(3), if I consider it proper to do so, to inspect and audit and report to the Parliament on any accounts, finances or property of a body, insofar as they relate to, or consist of, or are derived from public moneys or property of Papua New Guinea.
B.2 Audit Act
By virtue of Section 214(4) of the Constitution, the Audit Act, 1989, which became effective from 1 May, 1989, provides more details of my functions under sub-sections (1), (2) and (3) of the Constitution. The Audit Act that was derived from the Constitution elaborates the functions and the duties of the Auditor-General. This Act was amended in 1995, and the relevant provisions of the amended Act are explained below.
-
Page 6 of 307
-
B.3 Auditing and Reporting Requirements
In Section 8, sub-sections 2 and 4 of the Act were amended to include provisions governing the auditing and the reporting requirements of public bodies including government owned companies incorporated under the Companies Act, 1997.
B.4 Matters of Significant Importance
Under Section 8(2) of the Act, I am required to inspect and audit the accounts and records of financial transactions and the records relating to the assets and liabilities of these public bodies and their subsidiaries, and to report to the Minister vested with the responsibility for the public body and the Minister in charge of Finance any irregularities found during the inspection and audit.
B.5 Audit Opinion on Financial Statements
Section 8(4) of the Act requires me to audit the financial statements of the public bodies and to report an opinion to the aforementioned Ministers on:
(i) whether the financial statements are based on proper accounts and records; (ii) whether the financial statements are in agreement with those accounts and records; and (iii) whether they show fairly the financial operations for the period which they cover and the state of affairs at the end of that period.
B.6 Public Finances (Management) Act, 1995
The submission of the financial statements of the public bodies for audit is required under Section 63(4) of the Public Finances (Management) Act, 1995.
The section requires each public body to prepare and furnish to its Minister before 30 June each year, a report on its operations for the year ended on 31 December preceding, together with financial statements in respect of that year duly audited by me.
The Minister is then required to table the report on the operations and the financial statements, together with my report on the financial statements, at the first meeting of the Parliament after receiving them.
B.7 Companies Act, 1997
I am required to audit National Government owned companies and subsidiary companies under the provisions of the Companies Act, 1997.
Though these companies are registered under the Companies Act, my responsibility to audit them is by virtue of Sections 48 and 63 of the Public Finances (Management) Act and Section 3 of the Audit Act.
C. AUDIT OF PUBLIC BODIES
C.1 Scope of Audit
-
Page 7 of 307
-
The full scope of my audit responsibility in respect of Public Bodies covers the Statutory Bodies and their subsidiaries, National Government owned companies and their subsidiaries, and the companies in which the government has minority interest.
C.2 Audit Objectives
Under the Companies Act, I am required to ascertain whether proper accounting records have been kept; whether the financial statements comply with generally accepted accounting practice; and whether those financial statements give a true and fair view of the matters to which they relate. The Act also requires the auditor to report the instances of non-compliance with these requirements. More details on the audit responsibilities under the Companies Act are provided in paragraph 58 of this Report which covers the National Government owned companies.
C.3 Reporting Framework
My audits are conducted in accordance with relevant Auditing Standards to provide reasonable assurance that the financial statements are free of material misstatements. The audit procedures include examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, evaluation of accounting policies and significant accounting estimates, and ensuring that the financial statements are presented fairly and in accordance with International Accounting Standards and the Statutory requirements.
D. APPOINTMENT AND USE OF AUTHORISED AUDITORS
Section 8(5) of the Audit Act, 1989 (as amended), empowers me to employ registered company auditors to assist me in undertaking my constitutional duties, where such assistance is required.
During the period covered in the Report, I engaged a number of registered company auditors to perform audits of numerous Statutory Bodies and National Government owned companies.
2012 AUDITOR-GENERAL?S REPORT – PART IV
E. EXECUTIVE SUMMARY
E.1 Report Coverage
This Report covers the audit reports issued by my Office on the audits of Public Bodies and their Subsidiaries, Government Owned Companies, Project audits and National Government?s shareholdings in Other Companies during the period July 2012 to June 2013 (2012/2013 Audit Cycle). The Report covers the audits of these entities? financial statements for a number of years, not just 2012.
In 2012 there were 85 public entities subject to audit by my Office, consisting of 70 Public Bodies and their Subsidiaries and 15 National Government Owned Companies. In addition, I have also carried out audits on 5 Projects managed by Public entities as implementing agencies.
I am also responsible for reporting on the audits of 6 Companies, in which the National Government has a minority shareholding, that are audited by the private sector. These are reported under Section C of this Report.
-
Page 8 of 307
-
E.2 Consistency in audit findings over a number of years
The Report?s findings are consistent with those in my previous years? reports that have highlighted my concerns over the number of entities that do not submit current year financial statements for audit, and the poor state of the financial management structure in most public entities whose statements are subject to my audit and inspection.
E.3 Submission of current year Financial Statements
Section 63(4) of the Public Finances (Management) Act, 1995 requires a „… public body to prepare and furnish to its Minister before 30 June each year, a performance and management report of its operations for the year ended 31 December preceding, together with financial statements to enable the Minister to present such report and statements to the Parliament …? Before submitting the financial statements to the Minister, Section 63(4) requires a public body to submit the financial statements to the Auditor-General and for the Auditor-General to report to the Minister in accordance with Part II of the Audit Act, 1989 (as amended).
Despite these legislative requirements, 51 entities had not submitted their 2012 financial statements to be audited and overall some 55 financial statements for 2011 and prior years had not been submitted for audit (Refer Table 1).
The details of the audits in arrears and those entities whose financial statements have been outstanding for a number of years are shown in Attachment „B?.
Table 1
STATUS OF AUDITS DURING THE YEAR 2012 (END OF 2012/2013 CYCLE)
Year
Audits Completed
Audits Substantially Completed
Audits in Progress
Audits to Commence Shortly Financial Statements not Submitted
Total 2012/2013
Total 2011/2012 2012 9 12 7 11
-
Page 9 of 307
-
51 90 85 2011 32 7 11 6 25 81 73 2010 20 12 6 2 11 51 43 2009 10 9 2 – 4 25 23 2008 6 4 1 – 4 15 13 2007 2 7 – – 3 12 7 2006 2 4 – – 3 9 7
-
Page 10 of 307
-
2005 2 3 1 – 2 8 7 2004 2 3 1 – 2 8 5 2003 – 3 1 – 1 5 – Total 85 64 30 19 106 304 263
Table 1 also shows that 179 audits were completed, substantially completed or still in progress as at 30 June, 2013. The details are graphically depicted in Attachment „C?, which also included the arrears of prior years. Table 1 also shows that of the 85 audits completed, only 9 were for the current year (2012), with 19 current year audits substantially completed or were in progress. A further 11 audits were to commence shortly. Graphical description of status of current year (2012) audits (excluding arrears) is given in Attachment „A?. The list of entities is at Schedule „A? (i), (ii), (iii) and (iv).
E.4 Type of Audit Opinions Issued1
In the period covered by the audit, 85 audit opinions were issued. Of the 85 audit opinions issued, 20 were unqualified, 34 were qualified, 30 were Disclaimer Opinions and 1 Adverse Opinion.
-
Page 11 of 307
-
1 The types of audit opinions are: Unqualified Opinion – A Company’s financial statements are presented fairly, in all material respects in conformity with generally accepted accounting principles. Qualified Opinion – The financial statements “except for” certain issues fairly present the financial position and operating results of the firm. The except for opinion relates to inability of the auditor to obtain sufficient objective and verifiable evidence in support of business transactions of the Company being audited. Disclaimer Opinion – When insufficient competent evidential matter exists to form an audit opinion due to scope limitation or uncertainties. Adverse Opinion – The Company’s financial statements do not present fairly the financial position, results of operations, or changes in financial position or are not in conformity with generally accepted accounting principles.
Of the 20 unqualified opinions issued, 15 related to prior years and only 5 were for 2012 as follows:
(i) Bank of Papua New Guinea; (ii) Post (PNG) Limited; (iii) Productive Partnership in Agriculture Project; (iv) National Agriculture Research Institute; and (v) NCDC Urban Youth Employment Project.
Four of the qualified opinions related to 2012 and others were for prior years. The high numbers of Disclaimer Audit Opinions issued are reflection of the poor state of accounting record keeping in a number of public bodies.
The list of entities and the type of audit opinions issued during the period July 2012 to June 2013 are provided in Attachment „D?.
E.5 Key Findings
The key findings from the audits centered on the non-submission of the financial statements, non-compliance with the Salaries and Conditions Monitoring Committee (SCMC) regulatory mechanisms for salaries and wages, lack of basic accounting records and ineffective internal control systems. These issues are highlighted in the paragraphs below.
E.6 Non-Submission of Financial Statements
As stated earlier, Section 63(4) of the Public Finances (Management) Act, 1995, requires each public body to prepare and furnish to its Minister before 30 June each year, a report on its operations for the year ended 31 December preceding together with financial statements in respect of that year duly audited by me for tabling in Parliament.
This legislative requirement has not been strictly adhered to by all respective public entities? management. To comply with this requirement, the financial statements are required to be submitted to my Office well before 30 June each year for my audit and inspection. Consequently, out of 85 public entities and 5 Projects only 39 (35 entities and 4 projects) have submitted their financial statements for 2012 (Refer Schedule A (i), (ii), (iii) and (iv) for my audit and inspection up to the time of preparing this Report. A total of 51 (50 entities and 1 project) failed to comply with these provisions (Refer Schedule A(v)).
-
Page 12 of 307
-
The non-compliance of the public entities mentioned above has resulted in:
(i) My Office not being able to report adequately on the accountability of the use of public resources in a timely manner;
(ii) A build up of audits in arrears; and
(iii) The non-tabling of Annual Reports on performance and management by public entities in the Parliament.
Responsibility for Submission of Financial Statements
An entity?s management is responsible for preparing and presenting financial statements for my audit and inspection. It is also the responsibility of management to ensure that an adequate and effective internal control system is maintained to ensure that complete and accurate financial statements are produced on a timely basis.
My Office recommends
(iv) A vigorous enforcement of the provisions of Section 63 of the Public Finances (Management) Act; and
(v) A legislative requirement to make the renewal of contracts of Chief Executive Officers subject to submission of financial statements and prudent financial management.
These recommendations are to help achieve financial management accountability and good governance in the public sector.
Details of audits that have gone into arrears due to non-submission of financial statements from 2011 or earlier are given below in Table 2 and Schedule „C?.
Table 2
Financial Statements not Submitted
No. Section Para. No. Entity Year No. of Audits 1 A 8 Government Printing Office 2010 & 2011 2
-
Page 13 of 307
-
2 A 12A Aquarius No. 21 Limited 2011 1 3 A 12D Port Moresby Private Hospital Limited 2011 1 4 A 17 Mineral Resources Authority 2011 1 5 A 21 National AIDS Council Secretariat 2011 1 6 A 23A National Capital District Botanical Enterprises Limited 2008 – 2011 4
No. Section Para. No. Entity Year No. of Audits 7 A 23B Port Moresby City Development Enterprises Limited 2008 – 2011 4 8 A 25 National Economic and Fiscal Commission 2011 1 9
-
Page 14 of 307
-
A 28 National Housing Corporation 2011 1 10 A 30 National Museum and Art Gallery 2011 1 11 A 31 National Narcotics Bureau 2003 – 2007 5 12 A 35 National Training Council 2011 1 13 A 38 Oil Palm Industry Corporation 2011 1 14 A 40 Pacific Games (2015) Authority 2011 1 15 A 41 Papua New Guinea Forest Authority 2010 & 2011 2 16 A 45 Papua New Guinea National Institute of Standards & Industrial Technology 2010 & 2011 2 17 A 47 Papua New Guinea Sports Foundation
-
Page 15 of 307
-
2006 – 2011 6 18 A 48 Papua New Guinea University of Technology 2010 & 2011 2 19 A 48A Unitech Development and Consultancy Company Limited 2011 1 20 A 51 Public Curator of Papua New Guinea 2004 – 2008 5 21 A 52 Security Industries Authority 2010 & 2011 2 22 A 55 University of Goroka 2011 1 23 A 55A Unigor Consultancy Limited 2010 & 2011 2 24 A 57 University of Papua New Guinea 2009 – 2011 3 25 B 60 Livestock Development Corporation Limited 2011 1 26
-
Page 16 of 307
-
B 64 National Petroleum Company of PNG (Kroton) Limited 2011 1 27 D 81 Port Moresby Sewerage System Upgrading Project 2010 & 2011 2
Arrears Reduction Strategies
During the last Audit Cycle, I have taken steps as in the past to remind various entities of their responsibilities to submit the financial statements on a timely basis. These steps include but are not limited to the following:
(i) Forwarding reminder letters to entities on a regular basis until the submission of the financial statements.
(ii) Copies of these reminder letters were forwarded to the Public Accounts Committee and to the Secretary for Finance for their necessary action.
(iii) My officers have visited various entities and had meeting with the Chief Executive Officers regarding non-submission of the financial statements and drew their attention to the responsibility under the Public Finances (Management) Act and resultant breach of the Public Finances (Management) Act.
E.7 Non-Compliance of the Salaries and Conditions Monitoring Committee Act, 1988
The SCMC was established as the regulatory mechanism for salaries and wages in the public sector. Sadly, some public bodies do not comply with the provisions of this Act because of legislative changes in their constituent Acts. As a result, these bodies pay salaries and allowances without any monitoring from this Committee. Consequently, they have contravened Section (3) of the Salaries and Conditions Monitoring Committee Act, (SCMC) 1988 which stipulates:
“(1) The provisions of this Act apply notwithstanding anything in any other law relating to the determination of salaries and conditions or employment of employees of a public authority; and (2) Where by or under any law, power is given to a public authority, to determine or vary the salaries and conditions of employment of employees of the public authority, that power shall be exercised subject to this Act.”
E.8 Non-compliance with the Audit Act, 1989
Some entities owned by the State have amended their enabling Acts to exclude my Office from performing the audit of those entities and appointed their own auditors in contrary to the Audit Act. The following state owned entities have appointed their own Auditors.
(i) Petromin Limited
-
Page 17 of 307
-
(ii) National Development Bank Limited
E.9 Lack of Basic Accounting Records and Inadequate Control Systems
As reported in previous years, I noted serious deficiencies in accounting and record keeping and maintenance of internal controls during the course of audits. These deficiencies, which contributed to the limitation on the scope of my audit procedures, included:
(i) bank reconciliation statements not being prepared in a timely way or not being prepared at all; (ii) transactions not having supporting documentation; (iii) fixed asset registers not being properly kept or maintained; (iv) no consistent and proper valuation of assets; (v) physical asset stock-takes not being carried out; (vi) property being acquired or disposed of without proper procedures being followed; (vii) failure to comply with International Financial Reporting Standards in the preparation of the financial statements; (viii) travel and other allowances not being fully acquitted;
(ix) Internal Revenue Commission (IRC) regulations on payment of taxes not being followed; (x) entities paying housing allowances and Boards members allowances without tax but allowing officers to pay the tax; (xi) accounting, administrative and procedural manuals not being available; (xii) public servants serving on Statutory Boards receiving Board allowances contrary to regulations; (xiii) ineffective internal audit functions; and (xiv) ineffective budget controls.
The above factors contributed to the limitations on the scope of my audits which resulted in issuance of Disclaimer Audit Opinions in respect of many of the reports issued during the year, as shown in Attachment „D?.
E.10 Poor Financial Management
Over a number of years, I have expressed my concern about public bodies? poor accounting records, weaknesses in internal controls and management information systems, and non- compliance with legislative requirements and International Financial Reporting Standards.
I also consider that a large number of Chief Executive Officers do not pay sufficient attention to financial management in their entities. In my view, the concept of effective, prudent and efficient financial management is yet to be absorbed by many Chief Executive Officers.
E.11 Recommendations for Improvement
Consistent with comments in previous years? Reports, I will report to the Parliament in future that proper accounting records and adequate internal control systems must exist in all public entities subject to my audit. For that to be achieved, I believe that Chief Executive Officers are required to exercises proper leadership that provides an environment where there is:
(i) Timely submission of financial statements; (ii) Improved record keeping and documentation;
-
Page 18 of 307
-
(iii) Maintenance and provision of quality information; (iv) Effective implementation of internal control systems; and (v) Entity financial management that is carried out by qualified and experienced accountants.
E.12 Improvement Strategies
In my view, for improvement to occur:
(i) Chief Executive Officers must employ well trained accounting staff to manage the financial affairs of the organisation;
(ii) Chief Executive Officers must understand the value of and how to implement a strong governance framework and their performance assessed against implementation of the framework;
(iii) Parliament must increase its reviews of the management of public entities and provide Chief Executive Officers with the incentives to improve their management structures; and
(iv) Department of Finance must exercise its discretion to invoke Section 63(8) of the Public Finances (Management) Act, 1995 (as amended) by withholding funds for those entities that have not submitted their financial statements until the financial statements are submitted and/or completion of the audit.
E.13 Structure of the Report
This Report is structured as follows:
Section A – Public Bodies and Their Subsidiaries; Section B – National Government Owned Companies; Section C – National Government Shareholdings in Other Companies; Section D – Projects; and Section E – Problem Audits.
ATTACHMENT „A?
STATUS OF CURRENT YEAR AUDITS 2012
No. Status of Current Year Audits Number of Entities
2012 2011 (1) Audits completed and reports issued thereon (Schedule A) 9 8 (2) Audits substantially completed (Schedule A) 12
-
Page 19 of 307
-
4 (3) Audits in progress (Schedule A) 7 8 (4) Audits to commence shortly (Schedule A) 11 14 (5) Financial Statements not submitted (Schedule A) 51 51 (6) Audit Portfolios transferred to Provincial Government Audit Branch (Schedule A)
2
2 (7) Others – National Government shareholdings in other companies (Schedule D) 6 6
98 93
Please refer to Pages 325 to 336 for Schedules A to F.
ATTACHMENT „B? STATUS OF AUDITS IN ARREARS BY NUMBER OF AUDITS (2011 AND PRIOR YEARS)
No. Status of Audits in Arrears by No. of Audits (2011 & Prior Years)
Number of Audits
2012 Report 2011 Report (1) Audits substantially completed (Schedule B) 52 52 (2) Audits in progress (Schedule B)
-
Page 20 of 307
-
23 24 (3) Audits to commence shortly (Schedule B) 8 11 (4) Financial Statements not submitted (Schedule B) 55 34
138 121
ATTACHMENT „C? STATUS OF AUDITS AS AT 30 JUNE 2013
No. Status of Audits Number of Audits
2012/2013 2011/2012 (1) Audits completed and reports issued thereon (Schedule A & E) 85 65 (2) Audits substantially completed (Schedule A & B) 64 56 (3) Audits in progress (Schedule A & B) 30 32 (4) Audits to commence shortly (Schedule A & B) 19 25 (5) Financial Statements not submitted (Schedule A & B) 106 85
-
Page 21 of 307
-
304 263
ATTACHMENT „D?
TYPES OF AUDIT OPINIONS ISSUED
(i) UNQUALIFIED OPINION
No. Section Para. No. Entity Year No. of Audits 1 A 2 Bank of Papua New Guinea 2012 1 2 A 9 Immigration and Citizenship Service Authority 2010 1 3 A 10 Independence Fellowship Trust 2011 1 4 A 15 Kokonas Indastri Koporesen 2011
-
Page 22 of 307
-
1 5 A 15A Papua New Guinea Coconut Extension Fund 2011 1 6 A 15B Papua New Guinea Coconut Research Fund 2011 1 7 A 16 Legal Training Institute 2011 1 8 A 20 National Agriculture Research Institute 2012 1 9 A 32 National Research Institute 2011 1 10 A 54 Tourism Promotion Authority 2011 1 11 B 68 Post PNG Limited 2012 1 12 B 69A Kalang Advertising Limited 2011 1 13 B
-
Page 23 of 307
-
69B PNG Directories Limited 2010 & 2011 2 14 D 79 Lae Port Development Project 2010 & 2011 2 15 D 80 National Capital District Commission Urban Youth Employment Project 2011 & 2012 2 16 D 82 Productive Partnership in Agriculture Project 2011 & 2012 2
20 (ii) QUALIFIED OPINION
No. Section Para. No. Entity Year No. of Audits 1 A 3 Border Development Authority 2010 1 2 A 5 Cocoa Board of Papua New Guinea 2011 1 3 A
-
Page 24 of 307
-
5A Cocoa Stabilization Fund 2011 1 4 A 7 Coffee Industry Corporation Limited 2011 1 5 A 7A Coffee Industry Fund 2011 1 6 A 7B Patana No. 61 Limited 2011 1 7 A 11 Independent Consumer and Competition Commission 2012 1 8 A 12 Independent Public Business Corporation 2010 1 9 A 12B General Business Trust 2011 1 10 A 13 Industrial Centres Development Corporation 2009 1 11 A 14 Investment Promotion Authority 2011
-
Page 25 of 307
-
1 12 A 19 National Agriculture Quarantine and Inspection Authority 2012 1 13 A 26 National Fisheries Authority 2010 & 2011 2 14 A 27 National Gaming Control Board 2012 1 15 A 29 National Maritime Safety Authority 2010 & 2011 2 16 A 33 National Road Safety Council 2010 & 2011 2 17 A 37 National Youth Commission 2011 1 18 A 38 Oil Palm Industry Corporation 2009 & 2010 2 19 A 44 Papua New Guinea Maritime College 2008 1 20 A
-
Page 26 of 307
-
56 University of Natural Resources and Environment 2010 1 21 B 59 Air Niugini Limited 2011 1 22 B 61 Mineral Resources Development Company Limited 2010 1 23 B 62 Motor Vehicles Insurance Limited 2009 1
No.
Section
Para. No.
Entity
Year
No. of Audits 24 B 63 National Airports Corporation Limited 2010 1 25 B 63B PNG Air Services Limited 2011 1 26 B 65 NCD Water and Sewerage Limited (Eda Ranu)
-
Page 27 of 307
-
2011 & 2012 2 27 B 66 Papua New Guinea Ports Corporation Limited 2011 1 28 B 69 Telikom PNG Limited 2011 1 29 B 69A Kalang Advertising Limited 2010 1
34 (iii) DISCLAIMED OPINION
No. Section Para. No. Entity Year No. of Audits 1 A 6 Cocoa Coconut Institute Limited of Papua New Guinea 2008 – 2011 4 2 A 8 Government Printing Office 2009 1 3 A 12 Independent Public Business Corporation
-
Page 28 of 307
-
2011 1 4 A 12C PNG Dams Limited 2004 – 2011 8 5 A 22 National Broadcasting Corporation 2010 & 2011 2 6 A 23 National Capital District Commission 2009 1 7 A 41 Papua New Guinea Forest Authority 2008 1 8 A 46 Papua New Guinea Radio Communications and Telecommunications Technical Authority (PANGTEL) 2010 1 9 A 48A Unitech Development and Consultancy Company Limited 2010 1 10 A 55A Unigor Consultancy Limited 2004 – 2009 6 11 A 57 University of Papua New Guinea 2008 1 12
-
Page 29 of 307
-
B 60 Livestock Development Corporation Limited 2009 1 13 B 66 Papua New Guinea Ports Corporation Limited 2010 1 14 B 67 PNG Power Limited 2010 1
30 (iv) ADVERSE OPINION
No. Section Para. No. Entity Year No. of Audits 1 A 48 Papua New Guinea University of Technology 2009 1
1
85 (v) INTERNAL CONTROLS REVIEW REPORTS
-
Page 30 of 307
-
No. Section Para. No. Entity Year No. of Audits 1 A 57 University of Papua New Guinea 2007 – June 2010 1
1
86
ATTACHMENT „E?
COMPARATIVE AUDIT OPINIONS ISSUED (2009 – 2012)
No. Section Para. No. Entity Comparative Years
2012 2011 2010 2009 1 A 2 Bank of Papua New Guinea Unqualified
-
Page 31 of 307
-
Unqualified Unqualified Unqualified 2 A 3 Border Development Authority
Qualified Unqualified 3 A 5 Cocoa Board of Papua New Guinea
Qualified Qualified Qualified 4 A 5A Cocoa Stabilization Fund
Qualified Qualified Qualified 5 A 6 Cocoa Coconut Institute Limited of Papua New Guinea
Disclaimer Disclaimer Disclaimer 6 A 7 Coffee Industry Corporation Limited
Qualified Qualified Qualified 7 A 7A Coffee Industry Fund
Qualified Qualified Qualified
-
Page 32 of 307
-
8 A 7B Patana No. 61 Limited
Qualified Qualified Qualified 9 A 8 Government Printing Office
Disclaimer 10 A 9 Immigration and Citizenship Service Authority
Unqualified New 11 A 10 Independence Fellowship Trust
Unqualified Unqualified Disclaimer 12 A 11 Independent Consumer and Competition Commission Qualified Unqualified Unqualified Unqualified 13 A 12 Independent Public Business Corporation
Disclaimer Qualified Qualified 14 A 12B
-
Page 33 of 307
-
General Business Trust
Qualified Unqualified Unqualified 15 A 12C PNG Dams Limited
Disclaimer Disclaimer Disclaimer 16 A 13 Industrial Centres Development Corporation
Qualified 17 A 14 Investment Promotion Authority
Qualified Qualified Unqualified 18 A 15 Kokonas Indastri Koporesen
Unqualified Unqualified Unqualified 19 A 15A Papua New Guinea Coconut Extension Fund
Unqualified Unqualified Qualified 20 A 15B Papua New Guinea Coconut Research Fund
Unqualified
-
Page 34 of 307
-
Unqualified Qualified 21 A 16 Legal Training Institute
Unqualified Unqualified Unqualified 22 A 19 National Agriculture Quarantine and Inspection Authority Qualified Qualified Qualified Qualified 23 A 20 National Agriculture Research Institute Unqualified Unqualified Unqualified Unqualified 24 A 22 National Broadcasting Corporation
Disclaimer Disclaimer Disclaimer 25 A 23 National Capital District Commission
Disclaimer 26 A 26 National Fisheries Authority
Qualified Qualified Qualified 27
-
Page 35 of 307
-
A 27 National Gaming Control Board Qualified Qualified Qualified Qualified 28 A 29 National Maritime Safety Authority
Qualified Qualified Qualified 29 A 32 National Research Institute
Unqualified Unqualified Unqualified 30 A 33 National Road Safety Council
Qualified Qualified Qualified 31 A 37 National Youth Commission
Qualified Qualified Qualified 32 A 38 Oil Palm Industry Corporation
Qualified Qualified 33 A 39 Ombudsman Commission of Papua New Guinea
-
Page 36 of 307
-
Unqualified Unqualified 34 A 41 Papua New Guinea Forest Authority No reports issued for the years 2009 to 2012 35 A 44 Papua New Guinea Maritime College No reports issued for the years 2009 to 2012
No.
Section Para. No.
Entity Comparative Years
2012 2011 2010 2009 36 A 46 Papua New Guinea Radio Communications and Telecommunications Technical Authority (PANGTEL)
Disclaimer Disclaimer 37 A 48 Papua New Guinea University of Technology
Adverse 38 A 48A Unitech Development and Consultancy Company Limited
-
Page 37 of 307
-
Disclaimer Disclaimer 39 A 54 Tourism Promotion Authority
Unqualified Unqualified Unqualified 40 A 55A Unigor Consultancy Limited
Disclaimer 41 A 56 University of Natural Resources and Environment
Qualified Qualified 42 A 57 University of Papua New Guinea No reports issued for the years 2009 to 2012 43 B 59 Air Niugini Limited
Qualified Qualified Qualified 44 B 60 Livestock Development Corporation Limited
Disclaimer 45 B
-
Page 38 of 307
-
61 Mineral Resources Development Company Limited
Qualified Unqualified 46 B 62 Motor Vehicles Insurance Limited
Qualified 47 B 63 National Airports Corporation Limited
Qualified New 48 B 63B PNG Air Services Limited
Qualified Qualified Qualified 49 B 65 NCD Water and Sewerage Limited (Eda Ranu) Qualified Qualified Qualified Qualified 50 B 66 Papua New Guinea Ports Corporation Limited
Qualified Disclaimer Disclaimer 51 B 67 PNG Power Limited
-
Page 39 of 307
-
Disclaimer Disclaimer 52 B 68 Post PNG Limited Unqualified Unqualified Unqualified Unqualified 53 B 69 Telikom PNG Limited
Qualified Unqualified Qualified 54 B 69A Kalang Advertising Limited
Unqualified Qualified Qualified 55 B 69B PNG Directories Limited
Unqualified Unqualified Unqualified 56 D 79 Lae Port Development Project
Unqualified Unqualified New 57 D 80 National Capital District Commission Urban Youth Employment