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  Auditor General’s Office

  Report of the Auditor-General 2014
  of Papua New Guinea

  Report of the Auditor-General

  2014
  40th Independence
  Anniversary
  Part 4

  Part 4
  Govt. Print – 357/220.09/2015

• Page 2 of 396

• Part 4
  Report of the Auditor-General
  2014

  on the Accounts of Public Authorities and Statutory Bodies established
  under the Act of Parliament and Government Owned Companies
  established under the Companies Act

  __________________________________________________________
   Public Bodies and their Subsidiaries

   National Government Owned Companies

   National Government Shareholdings in Other Companies

  Auditor-General’s Office of Papua New Guinea

• Page 3 of 396

• Page 4 of 396

• Phone: (+675) 3012200 Fax: (+675) 325 2872 Email: agopng@ago.gov.pg Website: www.ago.gov.pg

  24 July 2015

  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 24th July 2015 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 D 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. Further, the status of eleven Project Audits are summarised and the details are
  covered in my Special Project Audits Report to the Parliament.

  Yours sincerely,

  PHILIP NAUGA
  Auditor-General

  Level 6 PO Box 423
  TISA Investment Haus WAIGANI, NCD
  Kumul Avenue, NCD Papua New Guinea

• Page 5 of 396

• Page 6 of 396

• 2014 AUDITOR-GENERAL’S REPORT – 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 …………………………………………………………………………………………………………..vi
  D. Appointment and use of Authorised Auditors …………………………………………………………………………. viii
  E. Executive Summary …………………………………………………………………………………………………………… viii
  Attachments A – E ……………………………………………………………………………………………………………. xviii

  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
  3A. Papua New Guinea Maritime Transport Limited ………………………………………………………….. 9
  4. Civil Aviation Safety Authority of Papua New Guinea ………………………………………………………………. 10
  5. Cocoa Board of Papua New Guinea and its Subsidiary ……………………………………………………………. 17
  5A. Cocoa Stabilisation Fund ………………………………………………………………………………………… 18
  5B. Cocoa Pod Borer Project Fund ………………………………………………………………………………… 19
  6. Cocoa Coconut Institute Limited of Papua New Guinea……………………………………………………………. 22
  7. Coffee Industry Corporation Limited and its Subsidiaries ……………………………………………………….. …23
  7A. Coffee Industry Fund………………………………………………………………………………………………. 24
  7B. Patana No. 61 Limited…………………………………………………………………………………………….. 25
  8. Government Printing Office ………………………………………………………………………………………………….. 26
  9. Independence Fellowship Trust …………………………………………………………………………………………. ..27
  10. Independent Consumer and Competition Commission …………………………………………………………….. 28
  11. Independent Public Business Corporation and its Subsidiaries ………………………………………………… 31
  11A. Aquarius No. 21 Limited ………………………………………………………………………………………….. 39
  11B. General Business Trust …………………………………………………………………………………………… 43
  11C. PNG Dams Limited ………………………………………………………………………………………………… 44
  11D. Port Moresby Private Hospital Limited ………………………………………………………………………. 48
  12. Industrial Centres Development Corporation ………………………………………………………………………….. 51
  13. Internal Revenue Commission. …………………………………………………………………………………………….. 55
  14. Investment Promotion Authority …………………………………………………………………………………………… 57
  15. Kokonas Indastri Koporesen and its Subsidiaries ……………………………………………………………………. 58
  15A. Papua New Guinea Coconut Extension Fund …………………………………………………………….. 60
  15B. Papua New Guinea Coconut Research Fund …………………………………………………………….. 61
  16. Legal Training Institute ………………………………………………………………………………………………………… 62
  17. Mineral Resources Authority ……………………………………………………………………………………………….. 63
  18. Motu Koitabu Council and its Subsidiary ………………………………………………………………………………… 71
  18A. Tabudubu Limited ………………………………………………………………………………………………….. 73

  -i-

• Page 7 of 396

• PARA SUBJECT PAGE
  NO. NO.

  19. National Agriculture Quarantine and Inspection Authority …………………………………………………………. 74
  20. National Agricultural Research Institute …………………………………………………………………………………. 80
  21. National AIDS Council Secretariat ………………………………………………………………………………………… 83
  22. National Broadcasting Corporation ……………………………………………………………………………………….. 94
  23. National Capital District Commission and its Subsidiaries ………………………………………………………… 95
  23A. National Capital District Botanical Enterprises Limited ……………………………………………….. 101
  23B. Port Moresby City Development Enterprises Limited ………………………………………………… 103
  23C. Port Moresby Nature Park Limited ………………………………………………………………………….. 105
  24. National Cultural Commission …………………………………………………………………………………………….. 107
  25. National Economic and Fiscal Commission ………………………………………………………………………….. 108
  26. National Fisheries Authority ……………………………………………………………………………………………….. 112
  27. National Gaming Control Board ………………………………………………………………………………………….. 114
  27A. National Gaming Control Board Community Benefit Fund Trust. ……………………………….. 120
  28. National Housing Corporation …………………………………………………………………………………………….. 124
  29. National Information and Communication Technology Authority ………………………………………………. 126
  30. National Maritime Safety Authority ………………………………………………………………………………………. 127
  31. National Museum and Art Gallery ……………………………………………………………………………………….. 130
  32. National Narcotics Bureau ………………………………………………………………………………………………….. 135
  33. National Research Institute ……………………………………………………………………………………………….. 141
  34. National Road Safety Council …………………………………………………………………………………………….. 144
  35. National Roads Authority……………………………………………………………………………………………………. 147
  36. National Training Council ………………………………………………………………………………………………….. 153
  37. National Volunteer Service …………………………………………………………………………………………………. 157
  38. National Youth Commission ……………………………………………………………………………………………….. 162
  39. Office of Climate Change and Development ………………………………………………………………………… 163
  40. Oil Palm Industry Corporation ……………………………………………………………………………………………. 165
  41. Ombudsman Commission of Papua New Guinea ………………………………………………………………….. 166
  42. Pacific Games (2015) Authority …………………………………………………………………………………………… 169
  43. Papua New Guinea Accident Investigation Commission …………………………………………………………. 170
  44. Papua New Guinea Immigration and Citisenship Service Authority ………………………………………….. 172
  45. Papua New Guinea Forest Authority ……………………………………………………………………………………. 174
  46. Papua New Guinea Institute of Medical Research …………………………………………………………………. 182
  47. Papua New Guinea Institute of Public Administration …………………………………………………………….. 186
  48. Papua New Guinea Maritime College …………………………………………………………………………………. 189
  49. Papua New Guinea National Institute of Standards and Industrial Technology …………………………. 194
  50. Papua New Guinea Sports Foundation ……………………………………………………………………………….. 199
  51. Papua New Guinea University of Technology and its Subsidiaries …………………………………………… 218
  51A. National Analytical and Testing Services Limited. ……………………………………………………… 225
  51B. Unitech Development and Consultancy Company Limited …………………………………………. 226
  52. Parliamentary Members’ Retirement Benefits Fund ………………………………………………………………. 227
  53. Public Curator of Papua New Guinea…………………………………………………………………………………… 228
  54. Security Industries Authority ……………………………………………………………………………………………….. 232
  55. Small Business Development Corporation …………………………………………………………………………… 236
  56. Tourism Promotion Authority ……………………………………………………………………………………………… 237
  57. University of Goroka and its Subsidiary………………………………………………………………………………… 238
  57A. Unigor Consultancy Limited…………………………………… .. ……………………………….246
  58. University of Natural Resources and Environment ………………………………………………………………… 247
  59. University of Papua New Guinea and its Subsidiaries ……………………………………………………………. 256
  59A. Unisave Limited …………………………………………………………………………………………………… 258
  59B. Univentures Limited ……………………………………………………………………………………………… 261
  60. Water PNG ………………………………………………………………………………………………………………………. 262

  -ii-

• Page 8 of 396

• SECTION B – NATIONAL GOVERNMENT OWNED COMPANIES

  PARA SUBJECT PAGE
  NO. NO.

  61. Foreword …………………………………………………………………………………………………………………………. 271
  62. Air Niugini Limited …………………………………………………………………………………………………………….. 273
  63 Livestock Development Corporation Limited …………………………………………………………………………. 278
  64. Mineral Resources Development Company Limited……………………………………………………………….. 279
  65. Motor Vehicles Insurance Limited ……………………………………………………………………………………….. 285
  66. National Airports Corporation Limited and its Subsidiary ………………………………………………………… 289
  66A. Airport City Development Limited …………………………………………………………………………… 290
  67. NCD Water and Sewerage Limited (Eda Ranu) …………………………………………………………………….. 291
  68. NPCP Holdings Limited and its Subsidiaries …………………………………………………………………………. 295
  68A. National Petroleum Company of PNG Investments Limited. …………………………………………. 296
  68B. National Petroleum Company of PNG (Kroton) Limited ……………………………………………….. 297
  68C. National Petroleum Company of PNG Pipeline and Gas Supply Limited. ……………………….. 298
  69. Papua New Guinea Ports Corporation Limited ………………………………………………………………………. 299
  70. PNG Air Services Limited ………………………………………………………………………………………………….. 302
  71. PNG DataCo Limited……………………..……………………………………………………………………304
  72. PNG Power Limited …………………………………………………………………………………………………………… 306
  73. Post PNG Limited …………………………………………………………………………………………………………….. 308
  74. Telikom PNG Limited and its Subsidiaries ……………………………………………………………………………. 311
  74A. Kalang Advertising Limited …………………………………………………………………………………….. 313
  74B. PNG Directories Limited ………………………………………………………………………………………… 314

  SECTION C – NATIONAL GOVERNMENT SHAREHOLDINGS IN OTHER COMPANIES

  PARA SUBJECT PAGE
  NO. NO.

  75. Foreword …………………………………………………………………………………………………………………………. 317
  76. Bougainville Copper Limited ……………………………………………………………………………………………….. 319
  77. Gogol Reforestation Company Limited…………………………………………………………………………………. 321
  78. Ok Tedi Mining Limited………………………………………………………………………………………………………. 322
  79. PNG Sustainable Development Program Limited ………………………………………………………………….. 323

  -iii-

• Page 9 of 396

• SECTION D – PROBLEM AUDITS

  PARA SUBJECT PAGE
  NO. NO.

  80. Foreword………………………………………………………………………………………………………………………… 327
  80.1 Exclusion of Entities from Future Reports ………………………………………………………………… 327
  81. Audits in Arrears ……………………………………………………………………………………………………………… 328

  81.1 General ……………………………………………………………………………………………………………… 328
  81.2 Responsibility for preparation of Financial Statements ……………………………………………… 328
  81.3 Legislative Requirements …………………………………………………………………………………….. 329
  81.4 Current Year Audits (2014 Audits) …………………………………………………………………………. 329
  81.5 Status of Current Year Audits ……………………………………………………………………………….. 331
  81.6 Audits in Arrears (2013 and prior years) …………………………………………………………………. 333
  81.7 Long Outstanding Financial Statements …………………………………………………………………. 336
  81.8 Status of Audits as at 30 June 2015 ………………………………………………………………………. 339

  Acknowledgements ………………………………………………………………………………………………………….. 341
  Schedule A – Current Year Audits ………………………………………………………………………………………. 344
  Schedule B – Status of Audits in Arrears ……………………………………………………………………………… 348
  Schedule C – Long Outstanding Financial Statements ………………………………………………………….. 351
  Schedule D – Non-Operational Entities and Others ………………………………………………………………. 353
  Schedule E – Prior year Audits completed during 2014/2015………………………………………………….. 354

  -iv-

• Page 10 of 396

• GENERAL

  A. FOREWORD

  My Annual Report to the National Parliament for the 2014 financial year is presented
  in four Parts. Part I deals with the Public Accounts of Papua New Guinea (PNG). 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 four sections:
   Section A deals with Public Bodies and their subsidiaries;
   Section B deals with National Government owned companies;
   Section C deals with the Companies in which the National Government has
  shareholdings; and
   Section D is an additional section which provides d